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The corporate headquarters of Herbalife, a multilevel marketing company some women join through Grameen America’s microloans program. | Patrick Fallon/Bloomberg via Getty Images
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If you give women microloans to “start a small business,” many of them will sign up for MLMs selling cosmetics and weight loss products.

A decade ago, microloans were considered one of the most promising approaches to alleviating global poverty. The concept is simple: through organizations like Kiva, donors can make small (as little as $25) loans to entrepreneurs in poor countries. The entrepreneurs would use the money to start a business and repay the loan, which could then be used to help someone else. The movement was launched by Bangladeshi economist Muhammad Yunus and his Grameen Bank, which the Nobel Peace Prize winner founded in 1983.

In recent years, though, some of the hype around microloans has cooled. While they can be useful under certain circumstances — like where people have high variation in income and little access to credit — they’re far from a panacea.

As Stephanie Wykstra wrote for Vox in 2019, “Rather than see microcredit as it was portrayed in its heyday — as a way to get people out of poverty — we should see it through a different lens: as a way to expand options for poor people by offering more reliable financial services. Extremely poor people need these services just like everyone else, and the availability of capital to deal with irregular and at times unpredictable incomes is a huge help to them.”

That’s less exciting, but it’s not nothing. Cheap loans probably won’t transform many poor people’s lives, but they can make it a bit easier for them to absorb shocks and smooth out their consumption, and that can still be well worth doing.

A recent study of Grameen America, a Grameen Bank affiliate that makes loans to poor women in the US, brought to my attention some of the genuine benefits that microloans can have in underserved communities, but also a surprising way that microloans can go wrong: if they encourage women to start businesses that are outright scams or pyramid schemes.

A surprising side effect of microfinance

The study, by MDRC, which does evidence-based evaluations of programs for social change, overall finds that Grameen America had the expected small — but good — results for many participants. The women who participated in Grameen’s program were more likely to have credit scores and run small businesses, and they ended up with slightly higher savings than the control group. That might not be life-changing, but it is good news.

However, one detail in the report struck me as worrying. Grameen America only makes grants for women who start or expand small businesses. Some of the women profiled in the MDRC study ran taco stands or hairstyling businesses, home day cares, or Etsy-based craft shops.

But some of them signed up for multilevel marketing businesses, in which you purchase hundreds or thousands of dollars of inventory from a centralized company and then resell it at small margins, all while working to sign up your friends and family members to sell the company’s products as well.

Grameen’s structure — where loan recipients apply for a loan as a group, and support each other in their small businesses at regular center meetings — can mesh well with the MLM model of selling through friends and families. Mercedes, a participant in Grameen America’s loans program who was interviewed in the MDRC piece, described the center meetings as a place where she made sales, said: “We all help each other. … At times, I have made new clients. I have my Mary Kay cards. I pass around my cards while I’m here [in the meeting]. Someone else gives me hers, and I pass around mine. And that’s how it’s done. So that the business is more productive.”

If MLMs are a good thing, then that’s a heartwarming story. But if they’re predatory, then it’s a troubling one. So making sense of Grameen’s track record requires diving into the question of how MLMs work, and whether they’re leaving Grameen recipients worse off.

Multilevel marketing (MLM) companies have been the subject of a long- running campaign by many consumer advocates who argue they should be regulated more strictly, or even banned. Most participants in multilevel marketing schemes earn very little money from selling their products.

Herbalife, an herbal supplement that’s popular for weight loss, is one multilevel marketing scheme that’s popular with some Grameen loan recipients, to the point where some Herbalife sale locations appear to be clustered around Grameen loan offices.

So how profitable is Herbalife? There’s an ongoing tussle between consumer advocates and the company about how much they need to disclose about that. In their mandatory 2020 statement of average gross compensation, the company reported that 90 percent of first-year distributors got paid less than $1,246 a month, and half get less than $200 in a month. That might sound not too bad for a side gig, but that number is before expenses, so if you spent $1,000 buying their products to sell, or if you had any other business expenses like a storefront or advertising, you could actually lose money.

Those participants who find success often earn most of their money from enrolling other participants, which can make the whole thing sound more like a pyramid scheme than a legitimate business. Running a pyramid scheme is illegal, but MLMs are allowed since there is a product, even though they exhibit many pyramid scheme-like structures and incentives.

Nonetheless, many of them have clashed with regulators. In 2016, Herbalife agreed to fully restructure its US operations and paid $200 million in fines in response to a regulator complaint accusing the company of “making false or misleading income representations” and “compensation structure that causes or is likely to cause harm to participants.”

The perils of MLMs

Grameen has taken criticism for years because some of its loan recipients used their loans to run an MLM, but there was still an open question: Was Grameen actually causing recipients to join an MLM, or just giving them financial access that they used to do something they were going to do anyway?

The MDRC report sheds some light on that. “Grameen America increased the rate of women operating a direct-selling/MLM business,” the report concludes. “36 percent of women in the Grameen America group and 26 percent of those in the control group reported operating a direct-selling/MLM business about 36 months after study entry. … Thus, much of the increase in business ownership at 36 months appears to have been driven by operating direct-selling/MLM businesses.”

Another crucial question — whether the women who joined MLMs through Grameen ended up worse off for it — is harder to answer. The study compared the women who got loans through Grameen to a control group, and then conducted some subgroup analyses looking at the outcomes specifically for the women who ran MLMs, as opposed to the women who did something else with their loans.

The problem with subgroup analyses is that, in general, a study that has a large enough sample size to detect the primary effect it is looking for is not going to have a large enough sample size to detect subgroup differences. That makes the MDRC report frustratingly inconclusive on the question of whether the women who joined MLMs through Grameen ended up worse off.

One thing the report measured is “material hardships” — whether the women reported struggling to make ends meet. Grameen loans helped with that — unless you spent them on an MLM. The report finds: “There was no impact on the number of material hardships reported among women who were either already operating or intending to operate a direct-selling/MLM business.”

On the other hand, Grameen’s staff pointed me to a different statistic that was much more positive for the MLMs: The women running MLMs reported higher “net income” than the women running conventional businesses.

“If you ask me as a guess, I would assume they’re not doing as well [as the women who started other businesses],” Stephen Nunez, one of the MDRC study designers, told me, “but unfortunately the subgroup analysis is not powered to give you an answer.”

Complicating matters further, some women do both: running a small storefront, for example, in which they sell both MLM products and other products, or switching what kind of business they spend their loans on over time. “Our members often juggle more than one entrepreneurial activity at a time to make ends meet, so many of them are involved in other entrepreneurship activities while participating in direct sales at the same time,” Grameen told me.

With the small sample and mixed measures, one might end up defaulting to whatever they already believed about MLMs: If you thought they were fine, then this data isn’t going to change your mind, but if you thought they were harmful and a bad idea, this data is certainly not going to reassure you.

I tend to be skeptical about MLMs, so MDRC’s findings — while they also highlight many genuine benefits of the Grameen loan program — do give me serious pause about the value of microloans in the US. It’s not just that they may not be that effective in lifting people out of poverty, but that by making it more likely that participants may end up enmeshed in MLMs, they could be actively making people’s lives worse.

Where recipient autonomy can go wrong

Much of what makes MLMs damaging is that participants are encouraged to aggressively push sales on their friends and families, which means that any gains in income from the participant are often coming at the expense of their immediate community and support network. More fundamentally, going into debt to join an MLM is strongly discouraged by financial experts. Grameen’s microloans have interest rates between 15 and 18 percent (which is not out of line with norms in the industry, but certainly isn’t trivial).

Taking out such a high-interest loan to join an MLM seems unwise, and granting loans to women who express intent to spend the loan on an MLM seems like a bad anti-poverty policy.

“Grameen America does not advise members about their business choice or refuse loans based on business type as long as borrowers can prove their funds are being used for business purposes and the business is legal,” Grameen America told me when I reached out. “It is our experience that our members know how best to put their business loans to use and the type of business they believe will be successful for them. Our data shows many members start off in one kind of business, e.g. direct sales, and then pivot into other types of businesses as they cycle through our program.”

In general, I respect it when charities commit to recipient autonomy.

But Grameen doesn’t just give people loans and trust them to do whatever seems best with the money, like direct cash giving programs. They require recipients to spend the loans on a small business, and they make loan decisions in part based on what business the recipients are running.

One account included in the MDRC report from a person with loan-issuing responsibilities (who is not named) describes the following process: “People who I see have an Herbalife club, I give them $1,000. $1,500 for people who you see walking around with their pursues and clothing [to sell]. … That is, everything is a matter of analyzing the person. If I see a young woman who is selling Mary Kay, mmmh, okay, $1,000.”

Grameen absolutely is deciding what uses of money are legitimate under their program and which aren’t. They’ve chosen to consider multilevel marketing schemes a “small business,” when one could reasonably instead have a policy that a “small business” can’t involve signing up as part of a multilevel marketing/direct selling company.

Effective anti-poverty interventions are hard. But it seems to me there’s some low-hanging fruit here: If you’re going to give people loans to start small businesses, target people who are starting their own businesses rather than joining MLMs.

Kendrick Lamar performs on the Frank Stage on the first day of the three-day Day N Vegas hip-hop music 
festival at the Las Vegas Festival Grounds in Las Vegas. Allen J. Schaben/Los Angeles Times via Getty Images
Kendrick Lamar performs at the Day N Vegas hip-hop music festival in Las Vegas, in November 2021.

The verse articulates the “nature versus nurture” that plays out within children who intrinsically love their family members but learn to resent those who don’t conform to the binary. Lamar shares his adolescent confusion fueled by the hate he witnessed his uncle experience from their family, “Asked my momma why my uncles don’t like him that much. And at the parties, why they always wanna fight him that much.”

For many Black queer folks with nieces and nephews, this is the flip side of an experience that rings true. For the past 15 years, I’ve been an unctie (my recent preferred title as a nonbinary person). My niece and nephew, whom I love unconditionally, have witnessed the vitriol from religious family members who saw me as nothing more than an abomination. They have wondered about the same questions young Kendrick did. I have my one-on-one relationships with them, and they know me as someone loving, caring, and respectful. Still, these two conflicting views create an internal battle of binary ideologies — not around gender, but of what is right and what is wrong. It’s a lot for any child to unpack, and it’s a context that is important to understand when considering the intention of “Auntie Diaries.”

Throughout the song, the homophobic slur appears, first in verse two. Lamar uses it to admit his adolescent ignorance of the word’s harm and how it was commonly understood to be synonymous with joking around. In verse two, Lamar raps:

Back when it was comedic relief to say, “F *****”
F *****, f *****, f *****, we ain’t know no better
Elementary kids with no filter.

There’s truth to these bars. To this day, homophobia and transphobia are justified by comedians. Take, for example, the 2021 high-profile critique of comedian Dave Chappelle’s Netflix special The Closer, which included transphobic jokes. The defense for many is that as long as it’s meant to be a joke, it doesn’t qualify as harm. This ideology is especially present in Black religious communities like the one Lamar grew up in. It’s an ideology that he tries to critique honestly by stating his complacency. But his delivery is clunky at best.

Lamar is as familiar as anyone with the way that words can hurt, especially bigoted words spewed by an outsider.

In 2018, Lamar brought a white fan onstage to rap his 2012 track “m.A.A.d City” with him. The fan rapped the lyrics verbatim, using the n-word numerous times. This led Lamar to cut the fan off, saying, “You gotta bleep one single word.” This event would serve as an example of the harm bigoted words cause to a community when spewed by an outsider who has no right to reclaim them. At the end of “Auntie Diaries,” his cousin Mary-Ann says:

Kendrick, ain’t no room for contradiction
To truly understand love, switch position
“F*****, f *****, f *****,” we can say it together
But only if you let a white girl say “N****”

But while well-intentioned, Lamar still contradicts himself by choosing to say the F-slur on the song in the name of art instead of bleeping it out. “You gotta bleep one single word” doesn’t register here for him. This ultimately outweighs what is a well-intentioned raw reflection and makes it fall flat.

Another harmful misstep is the song’s consistent misgendering, which casts a pall over his attempts to unlearn his ignorance toward queer and trans people. In the song, Lamar raps, “My auntie is a man now. I think I’m old enough to understand now. Drinking Paul Masson with her hat turned backwards.” While acknowledging his uncle is a man, Lamar still refers to him as “auntie” and “her,” invalidating their gender identity. He does this again in verse three, but this time also deadnaming his cousin Mary-Ann. Lamar raps:

Demetrius is Mary-Ann now
He’s more confident to live his plan now.

In verse four, Lamar raps about Mary-Ann, who was more religious and subservient than he was to the spiritual teachings they grew up with. When their preacher singles out Mary-Ann, Lamar begins to question those teachings. He stopped misgendering her, acknowledging that she was exactly who she’s always been: the cousin he had loved since childhood.

The juxtaposition of religion and being queer is one of reality. It’s often assumed queer people aren’t spiritual or cannot hold certain religious beliefs because many organized religions see us as sinful. The same thing happened to me when I came out at 17. The church I grew up in my whole life turned its back on me. The gossip got so bad that I would fake being sick to miss service and bargain internally that all would be fine if I did not act on my supposed sin. But that suppression ate at me from the inside until I realized that if God truly made no mistakes, then I was precisely who I was meant to be.

Seeing such hate led even my own Southern Baptist mother to question her beliefs. We stopped attending church. Something similar clicks for Lamar when his cousin Mary-Ann is singled out by their congregation, as he raps, “The day I chose humanity over religion, the family got closer, it was all forgiven.”

Lamar’s realization — that leading with the heart and loving thy neighbor is the way — is a testament to his attempt to grow more open-minded. He is tying back to the intro of “Auntie Diaries,” about the battle between heart and mind. It shows that while still ignorant, he is willing to start seeing things differently than what he’s known. That sliver of understanding is why I believe the intent behind the song was genuine and not in bad faith. But because of this, it can also be a place for him to receive critique and listen to queer and trans folks so that he can become a true ally.

The subject matter of “Auntie Diaries” should have been handled with more care. True allyship requires nuance, and with more actionable methods, his intentions would be clearer-cut. Perhaps a feature from a queer rapper who could directly speak to the experience of receiving such hate from family would’ve helped the case here. There are many queer rappers who could have fulfilled this gap, including Santana, Lil Nas X, Isaiah Rashad, and others who have the background to discuss these issues. In moments like this, it’s important to amplify and listen to the critiques of queer and trans people who want to be respected as the human beings we are. For many cisgender heterosexual people, doing the bare minimum is seen as full acceptance, despite ignorantly misgendering, deadnaming, and using the F-slur the way Lamar did.

Many of us understand that breaking the binary one was taught is a process. But are we not deserving of that same grace and understanding, to be heard, loved, and shown humanity? I believe we are, and it starts with hearing us out about our firsthand experiences. When we call out the harm done to our community, give us the grace to listen.

A worker drinks water next to power lines during a heat wave in New Delhi, India, on May 2.

Solving this conundrum requires untangling issues of equity and justice, as well as developing better tools for cooling, beyond just ACs. It also requires rethinking the role of cooling in society. It is not a luxury, but a necessity for living in the world that we’ve created for ourselves.

Heat is dangerous and costly, even before it reaches extremes

Ambient temperatures are so foundational to our well- being that it’s easy to overlook their importance and the threat they pose. Extreme heat has been the deadliest weather phenomenon in the United States over the past 30 years, according to the National Weather Service.

That’s because heat has so many ways of hurting people. High temperatures make it harder for humans to shed excess heat. When air reaches temperatures higher than body temperatures, more heat flows into the human body than flows out. That can cause hyperthermia, heat stroke, and death. Some medications can become less effective with heat, while others can make people more susceptible to high temperatures.

During warmer weather, pollutants like ozone form faster, which can lead to breathing problems. In addition, the stress from heat is cumulative. High temperatures at night are particularly worrying because it means people have little relief from the heat during the day. Because of climate change, nights are actually warming faster than daylight hours.

And when extreme heat combines with humidity, the weather can turn lethal. To measure the risk from these conditions, scientists track the wet-bulb temperature, which measures temperature and humidity conditions where water will not evaporate. Higher wet-bulb temperatures mean it’s harder for a person to cool off by sweating. A healthy person can withstand a wet-bulb temperature of 35°C, or 95°F, for six hours. Older adults, young children, and people with underlying health conditions start to suffer at much lower thresholds.

But high temperatures can cause harm well before they reach the tip of the thermometer. For people who work on farms, on construction sites, in kitchens, or in factories, hotter temperatures lead to more injuries. Avoiding these risks has costs, too, as workers weigh lost wages against the potential for harm at work. Even in cooler workplaces like offices, studies have found that high temperatures reduce productivity and performance.

“The knock-on effects of heat are extraordinary,” said Rachel Kyte, dean of the Fletcher School at Tufts University, who coauthored a 2018 report titled “Chilling Prospects: Providing Sustainable Cooling for All.”

That adds up to a huge economic toll. By one estimate, heat costs the US economy $100 billion per year, a number poised to rise to $200 billion by 2030 and $500 billion by 2050, if nothing is done to mitigate climate change or the resulting harm.

There’s some debate among researchers about whether extreme heat poses a greater public health burden than extreme cold, but rising average temperatures mean that record-breaking cold events are becoming much less common, while heat records will continue to inch higher.

High temperatures with little relief could also pose political challenges. “If you can’t get cool, and you have lots of young people living in cities, that is a recipe for social disruption,” Kyte said. “Nothing will radicalize you more than no job, nowhere to get cool, and nowhere to get healthy or safe food.”

Yet in much of the world, air conditioning isn’t treated as essential. In the US, few states have mandates for cooling in housing, whereas most states and municipalities have a minimum heating requirement for landlords. The federal government does offer low-income households money to help pay for energy bills, including cooling and heating, but those households have to have cooling in the first place. AC is not required in federal public housing.

 Genaro Molina/Los Angeles Times via Getty Images
Felisa Benitez, 86, wipes sweat from her brow while taking a break on the porch of her home, where temperatures reached 99 degrees, at San Fernando Gardens public housing in Pacoima, California, in August 2021.

So a huge part of the challenge in preventing harm from heat is getting people and policymakers to recognize the threat and treat cooling as a lifesaving tool.

The climate paradox of air conditioning

Cooling technologies, particularly air conditioning, have been reshaping societies around the world since Willis Carrier invented a device to prevent humidity from messing with ink at a Brooklyn printing plant in 1902.

These changes have had far-reaching and unexpected effects. In his 2014 book How We Got to Now: Six Innovations That Made the Modern World, author Steven Johnson connected the dots between the spread of air conditioning and the election of Ronald Reagan: ACs made the southwestern US more hospitable, and the growing population of the region became an important base of support for Reagan.

Lee Kuan Yew, Singapore’s first prime minister, said air conditioning was the sine qua non of his country’s formation.

There are now roughly 2 billion air conditioners in use around the world today, with half of those units in the US and China alone. Cooling systems like ACs, fans, and ventilation account for about 20 percent of energy use in buildings globally, according to the International Energy Agency. That adds up to two-and-a-half times as much electricity consumed globally for cooling as the entire continent of Africa uses.

Cooling is not just for people. Refrigeration and freezing are essential for producing, storing, and transporting food, medicine, electronics, and, as Carrier found, books. By 2050, AC energy use is poised to triple on its current course, according to the IEA — which is roughly equivalent to the amount of electricity China uses today.

Within the current crop of air conditioners, there is wide variation in efficiency and the power sources they use. The spaces they cool aren’t all insulated the same ways, either.

There is also a huge gap in access. The IEA notes that for the nearly 3 billion people living in the hottest parts of the world, only 8 percent of them have ACs. And within countries, ACs are not distributed evenly. Access varies by income, but also by location. Last summer’s massive heat wave across the Pacific Northwest was especially worrying because so few people in the region have air conditioners due to the ordinarily mild climate. Seattle has the lowest percentage of households with air conditioning of any major metro area in the US. That likely contributed to hundreds of excess deaths.

Disparities in access to air conditioning also fall along racial lines. Black residents in New York City account for half of heat-related fatalities despite being 22 percent of the population; access to air conditioning is a key factor. Another is that neighborhoods with predominantly racial minority residents have fewer green spaces, foliage, and tree cover. Instead, their neighborhoods often have more concrete and asphalt. That worsens the heat island effect and makes temperatures in these areas rise higher than their surroundings.

It’s also a law of nature that you can’t cool a space without heating up another. In cities, the heat from running ACs at night can raise ambient temperatures by 1°C, or 1.8°F.

Air conditioners pose another direct problem for the climate. Many of them use refrigerants that are also powerful heat-trapping gases. Chemicals like hydrofluorocarbons (HFCs) can be upward of 12,000 times more potent at trapping heat in the atmosphere than carbon dioxide. Small coolant leaks multiplied by billions of AC units could be devastating for the climate.

 Wang Biao/VCG via Getty Images
An employee tests the performance of air conditioner units at a workshop in Fuyang, China, in May 2021.

The good news is, there is a lot that can be done. And some of that work is underway now.

Cooling in the climate change era requires a multi-pronged strategy

In current heat waves around the world, the priority must be saving as many lives as possible, even if the only options draw on fossil fuels.

“You can’t not give people power because the only power you can give them is power with too much coal in the energy mix,” Kyte said.

However, taking the temperature down has to remain an urgent priority, even after the weather cools off.

There are many ways to curb the climate impacts of ACs. “The answer lies first and foremost in improving the efficiency of air conditioners, which can quickly slow down the growth in cooling-related electricity demand,” wrote Fatih Birol, executive director of the IEA, in a 2018 report. With greater energy efficiency, air conditioners do more with less. Also, homes and businesses need better insulation and sealing to prevent waste.

Another method is to manufacture more air conditioners that don’t use HFCs or other heat-trapping gases. Many countries, including the US, are phasing out HFCs. The US Senate will soon vote to ratify the Kigali Amendment to the Montreal Protocol, an international treaty that commits to cutting HFCs 85 percent by 2050.

At the same time, there is going to be a massive market for sustainable cooling technologies. “There are billions of people that aspire to be wealthy, and as your income starts going up, you’re going to want to have access to cooling,” Kyte said.

The electricity that powers air conditioners needs to come from sources that don’t emit greenhouse gases, so dialing down coal, oil, and natural gas power on the grid and ramping up wind, solar, and nuclear energy is crucial.

Technology alone is not enough. ACs are only useful for people who work indoors, but millions still labor outside. Reducing outdoor air temperatures requires careful planning to ensure adequate shade and measures like cool roofs. For some jobs, workers will have to take on schedules that keep them out of the sun during the hottest times of day. In some places, the only tolerable times to work outdoors are at night.

Cooling may also require a more collective approach. Rather than installing ACs on every individual home, some areas can use district cooling systems. And in emergencies, people will need public cooling centers.

Regulators need to step in, too. The US currently doesn’t have a national workplace standard for heat exposure, but the Occupational Safety and Health Administration is now in the process of developing a rule to protect workers from high temperatures. Governments also need to enforce tougher standards for energy efficiency in cooling.

The fixes for extreme heat don’t stop at the border. The countries that have historically burned the most fossil fuels now have the wealth to cope with rising temperatures, while those who contributed least to the problem are facing the most dangerous heat with the fewest resources. Ergo, rich countries are obligated to help places facing dangerous heat deploy cooling, and to help pay for it.

“I think that the economic case and the global security case for investing in these countries’ ability to deploy hyper-efficient, nonpolluting technologies is pretty damn clear,” Kyte said. “We’re all living on the same planet.”

So while billions of people are facing more devastating and extreme heat, protecting them and avoiding as much warming as possible benefits everyone on Earth. Air conditioning is now an unfortunate necessity, but it’s also an opportunity to address some of the underlying injustices of climate change.

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