The Next Mortal Combat Match-Up: Thrift vs. Debt?

Ohio State University’s Devfinance listserv, an email network for students, practitioners and researchers of development finance and economics, is one of my go-to lists for fresh debates and hot-off-the-press publications and research on all sorts of microfinance issues. Every once in a while it’s also surprisingly entertaining. Take, for example, last week’s pro-thirft/anti-debt post announcing a new competition to develop a thrift-focused video game (re-posted here with permission from Jane, the original author):

It’s not as cool as buying a beneficent bank in Bali or doing an IPO or private placement, nonetheless it is a counterpoint to the current credit mania.

The Peter G. Peterson Foundation is sponsoring a campaign to encourage personal and governmental frugality in the U.S. One element of this is issuing what they call an INDEBTED $10,000 Challenge. It is aimed at college students and will award $10,000 to the student(s) who develop the most effective video game about the U.S. fiscal mess. I suspect they would like to see the video game promote saving.

On the one hand, the Peterson Foundation joins the Templeton Foundation in suggesting that thrift, after all, might not be such a bad idea. On the other hand, a gaggle of other foundations, government organizations, and disaster relief agencies are pushing debt as the next best thing to ice cream. Besides being highly profitable for a few — both in low-income countries and on Wall Street — the finance industry can also be extremely entertaining to watch!

Will the microfinance industry counter the Peterson Foundation heresy by promoting a competing video program whose end point is getting all of the poor women in the world in debt? Perhaps the prize could be a $10,000 loan (at say, a 100% interest rate) for the college student(s) who develop(s) the best debt-extolling video.

For all her sassy sarcasm, Jane reveals here a growing trend within the financial services field, not only in the United States but in developing countries around the world: a disillusion with unchecked debt as an economic empowerment or poverty reduction strategy (i.e., microcredit abroad or credit-fueled consumer spending here in the U.S.). However, the credit crisis in the US (and subsequent global financial meltdown) has also prompted microfinance and financial services practitioners to think about, and in this case, advocate for the reemergence of a once-heralded yet long-abandoned concept: thrift.