BUS DB Week 2

Reply 1

Why is there a need for organizations like Kiva? Explains the principle of the “invisible hand” according to Adam Smith as related to entrepreneurs

Organizations such as Kiva are needed in order to help with the advancement of small businesses around the world especially in developing countries where funding for small businesses is not readily available to the public. According to Adam Smith's "invisible hand" theory the less control the government has over other people's affairs in the business world the more they will be able to prosper. Basically, he was saying the government needs to take a back seat and allow people to start businesses and be self-sufficient.

Why is lending money to entrepreneurs a better idea in developing an economy than seeking donations to alleviate economic hardships?

When you are lending money to entrepreneurs you are allowing people to become self-reliant on themselves after the initial startup costs of their businesses are taken care of. If I fund 1 business in a small village to help their farm grow larger, then I am essentially helping to feed that village, and provide jobs to people who live in that village. Rather than just sending them money for food, I am providing entrepreneurs in that community a way to make their own life better and better the lives of those around them with the hopes of eventually no longer needed to assist said village. It is basically an investment, versus just giving them something and in a week, they need more food for they have no means to provide for themselves.

Discuss why many think capitalism gives entrepreneurs the best opportunity to be successful. Why would an entrepreneur in the United States need a microloan from Kiva.org?

Capitalism gives entrepreneurs an outlet that has minimal government involvement, thus allowing them to thrive and motivate them to grow their business due to being able to keep all their own profits. The more work you put inside of a business in a capitalist economy the more potential you must generate more cash flow for you and your workers. Unfortunately, due to stereotypes and social stigmas that have been present in this country since it was founded certain groups of people (minorities, women) have a harder time getting loans from banks to fund their small businesses. Regardless of what the reasoning is behind this an organization like Kiva allows these targeted groups to be able to have the same opportunities as majority groups by lending them money to hopefully create a successful business. 

Reply 2

1. There is a need for programs like Kiva because there are a lot of poor communities and people that need financial assistance so that they can build some type of wealth for their families and communities. By them being able to get a lending hand this allows them to spread the wealth to others by creating jobs. Kiva gives them the chance that they would not have gotten from traditional ways of borrowing or gaining capital that is desperately needed.  

 

1. Lending money to the disadvantage entrepreneurs would help them to create jobs and generating wealth that then contributes to the economy in poorer communities.  

 

1. Many think that capitalism gives entrepreneurs the best opportunity to be successful because this gives them the freedom to gain wealth off creating free enterprise. Many entrepreneurs invest their wealth to create companies that then create jobs. Many of these jobs are low paying jobs that are not actually spreading the wealth. The reason there is a need for micro loans like Kiva here in the US because there are so many minorities that are disadvantage and do not meet traditional criteria that others may have that have generational wealth that they advantage to borrow from family or those they know that they are able to borrow from.  Kiva is giving those that need a helping hand to be able to start businesses in their communities that brings jobs to their communities.