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There is surprising consensus between the left and right about microfinance: both camps believe that it is one sure way of removing poverty. The announcement last week that Muhammad Yunus, the founder of Bangladesh's pioneering microcredit institution, the Grameen Bank, had won the Nobel peace prize provides the ultimate imprimatur on the idea that microfinance works for the poor. Progressives like it because it keeps big business out and establishes a cooperative, self-help model where NGOs play a major part. Free-marketers love microfinance because it keeps out the state and its handouts, and can even teach borrowers responsibility. But is microfinance necessarily a sound proposition for poverty alleviation? Yes, microfinance is good, but that has more to do with social politics than economics.