The Web: Forming The economic promise of
April 15, 2010 Mount Holyoke News
online social lending
or echo chambers? BY THU NGUYEN ’12
ASST. PERSPECTIVES EDITOR
oday, one thinks of the finan-
cial sector as a collapsing in-
dustry. Yet the Internet has
given birth to at least one economically promising opportunity—social
BY LAUREN THEURER ’12 The Internet has fostered communica- Set up as wholly Web-based platforms, social lending Web sites
STAFF WRITER tion between diverse people in a way that is match the lender with the borrower on a personal level, rather than pool-
completely unprecedented. One can speak ing deposits of savers and giving loans to borrowers like a traditional
to someone halfway across the world with the click of a button, and dis- bank. Building a community, these platforms make possible the distri-
cover an entirely different worldview. But what happens when such op- bution of small loans at a low interest rate. As a 2006 CNN article pointed
portunities are abused, and people use the Internet to locate out, this model represents “banking minus the bank.”
self-affirming political echo chambers? When one talks about loans of micro size, the concept of microfi-
The Tea Party, a loosely-organized, vehemently outspoken, conser- nance, which has won economics professor Mohammad Yunus the Nobel
vative movement that has been sweeping the nation in the past year, has Peace Prize, quickly comes to mind. In fact, some social lending Web sites
certainly benefited from the Internet. The Web enables Tea Party mem- emerged to help bring international funding to entrepreneurs in devel-
bers to organize, discuss, plan out their protests and promote their oping countries. Kiva.org, one of the first Web sites with such a focus,
events. Yet looking at Free Repubilc.com, a forum of outspoken Tea Party partners with multiple microfinance institutions in all continents. These
supporters, one does not see much debate or dissent. Instead, a very strict institutions use Kiva to post information about borrowers, including the
“party line” is enforced (although there is no particular party to which amount of money needed, their purpose for borrowing and even pictures.
they align themselves, the prevailing opinion is that the Grand Old Party Lenders read about these real people and decide who to support. With
is too liberal, and all its members are Republicans In Name Only) and this structure, Kiva has found a way to effectively tap a very broad re-
anyone who dares to question this dogma is immediately “zotted,” or source and to allow anyone with a credit card or a PayPal account to con-
banned. tribute as little as $25. Kiva has made a total of $130 million credit possible
These opinions are not strictly harmless. Although Free Republic’s for more than 300,000 entrepreneurs around the world and gives lenders
founder, Jim Robinson, claims to be sincerely concerned about the state personal satisfaction from helping another human.
of the country, the forum mainly trades in racist jokes about President In the U.S., online platforms like Prosper and Lending Club have been
Obama and speculations about how socialist the country is becoming. gaining grounds in recent years. These sites, however, work as for-profit
The group’s members even suggest that the best answer for any politi- operations, charging borrowers and lenders a small fee for the transac-
cian stepping out of line is “a lot of rope.” Strong undercurrents of ho- tion and do not limit themselves to microfinance. At Prosper, for example,
mophobia, Islamophobia, and racism abound and are praised by its users. an auction is used to bring borrowers to the most affordable option that
Anything wrong that is done by their folk heroes, such as Glenn Beck, the lender community can offer. In other words, they operate like eBay,
Scott Roeder and James O’Keefe, is explained away, and anything that an online exchange that enables people and stores to offer items for sale
casts the Tea Party movement in a bad light is said to be the work of “lib- through a bidding system, except that the only products are loans. Thus,
eral infiltrators.” Prosper hopes to find a competitive, market-based solution for borrowers.
Everyone has a right to free speech. However, it is troubling that However, Prosper and similar sites face two challenges—preventing
these sorts of echo chambers form and then influence real politics, by predatory lenders from abusing the site and protecting their users from
means of voting drives, protests, call-in campaigns and actual physical the default risk. Still, they have attracted the attention of many financial
threats against politicians. The existence of sites such as FreeRepublic innovators.
propagate certain intolerant views amongst its members, who are also In March 2010, a company called ClickandBuy introduced Buxter, a
led to believe that these views are held by the majority as normative and Facebook application allowing users to transfer money in small amounts.
correct. In the past, this would have been more difficult—one couldn’t just Could this be an early sign of the Facebook-banking era? CNET, a lead-
seek out a site that held the exact same views as them. Newspapers de- ing information and technology news source, predicted the launch of
manded a consideration of different views. Arabic major Hannah Howard Facebook Credits, a platform that would work like a currency to purchase
’12, who hopes to enter a political career, puts it this way, “The Internet virtual items. Other social networks are also evolving with the goal of
lets people think that just because they have an opinion, it means that it's making the lending process truly person-to-person and affordable. Some
a valid, well-reasoned opinion.” This is doubly true for politics. colleges and universities, such as Stanford University, have introduced
One of the most important factors involved in developing a clear po- their students to GreenNote, a social lending service helping students
litical ideology is frequent, open conversation and debate with those who look for education loans from people in their own network and beyond.
do not agree with you. In this way, your opinions are truly put to the test, There is a long way ahead for the concept of social lending. And yet,
and new things are learned. This is not to say that only conservatives are with the explosive growth of social networking and Internet usage, social
guilty of not doing this, as liberals certainly are as well (liberal forum lending promises to bring back financial lending in its most primitive
DailyKOS, for example). A true downside to the Internet’s use for politi- form: person-to-person.
cal action is its reinforcement of echo chambers.
WHEN BLOGGING BECOMES A SECRET POLITICAL TOOL
BY JING GAO ’13 The story began three months ago, when search engine giant As new technologies facilitate the flow of information, it is not surprising that polit-
STAFF WRITER Google caused a controversy by threatening to quit China’s mar- ical movements nowadays have been taking advantage of new social media. And this
ket. I was on my Renren, which is basically a Chinese version of practice is certainly not limited to one nation only. In the U.S., for instance, a 2006 report
Facebook, and saw that there were huge debates about the issue. Some supported for the Joint Special Operations University suggested that military officials should re-
Google, and some stayed on the government’s side. That was where I first encountered cruit prominent bloggers to promote specific messages.
the word “Wumao,” which literally means “five cents” in English. It seemed to me that What most people find troubling is not the fact that there are bloggers working for
every time someone said something pro-government, others questioned if that person the administration. After all, in some countries, newspapers, radio and TV have long
was a “Wumao.” I finally discovered what that bizarre word means—it was rumored that been vehicles for delivering political propaganda. Even in democratic countries, where
the government secretly hired bloggers to post comments and blogs in support of the freedom of speech seems to be deeply rooted in the public consciousness, the neutrality
government’s policies to influence public opinion, and they earned five cents for every and objectivity of the media are fading away. The main problem seems to be that the
comment they put up. government is covert about hiring messengers to spread their propaganda on public
While arguments about Google leaving China gradually left the public sphere, the de- spaces like the Internet.
bate moved on to tackle whether the “Wumao” phenomenon is politically justifed. De- In this way, anonymity becomes a real threat on the Internet. The continuous de-
spite the newness of this term, the practice of governments using secret forms of mand for transparency seems to be the only way to stop the government and certain in-
propaganda has existed for a long time. In the past, when electronic communication did- dividuals from promoting secret agendas, especially on an open platform like the Web.
n’t exist, government officials hired people to spread agenda-driven messages in the pub-