In this issue, debate over the pre-election jobs reports, measuring well-being instead of growth, the rise of the new investor, and the challenges of minority-led nonprofits.
The government released a pre-election-day jobs report and some people saw it as good news and others as way to point out shaky ground for American workers. The New York Times' Patricia Cohen reports that the latest report confirms steady economic growth for the last eight years:
More than seven years after the recession ended, employment gains have been remarkably steady, finally leading to a noticeable rise in earnings. Consumers are confident enough to open their wallets and spend. Gas is cheap, home prices are bouncing back and interest rates are low. Since 2010, 15 million jobs have been created. With unemployment below 3 percent in some metropolitan areas like Denver and Madison, Wis., many employers now complain about a shortage of qualified workers.
But Breibart's Wayne Allen Root, relying on analysis from ZeroHedge, finds the report to be a sign of a "Taco Bell economy":
The new jobs report is out and it’s another clunker. We added another 425,000 Americans NOT in the workforce. We also found out that multiple jobholders- meaning Americans forced to hold 2 or 3 jobs just to make ends meet- just rose to 8.05 million, the highest of this century.
We also found out that between March of 2010 and today, under Obama, our economy has gained 547,000 low-wage bartender and waiter jobs, while losing 36,000 high-paying manufacturing jobs.
The economy is a disaster. The GDP for the past 8 years is the worst in the history of America. 94 million working age Americans aren’t working. More than 100 million Americans are on welfare checks. More Americans have joined the food stamp rolls under Obama than have joined the job rolls. More businesses close each day than open, for the first time in the history of America.
In the New Yorker, Adam Davidson discusses the political divide over reading economic data and concludes that America has been successful because of a robust system:
The societies with the most robust systems for forcing the powerful to accommodate some of the needs of the powerless became wealthier and more peaceful. Good rules persuaded people with ambition and ideas to invest in the future, trusting that stability and rule of law would protect them. Most nations without institutions to check the worst impulses of the rich and powerful stay stuck in poverty and dysfunction.
In the Asia Times, McGill's Reuven Brenner concludes U.S. political discontent is actually produced from "a pretense of caring" via government spending:
Most universities these days are in the business of printing credentials, prolonging adolescence, teaching jargon rather than educating the youth to solve problems and carry out civil discourse; with faculties leading by example and producing plenty of heavily subsidized noise. The “pretense of caring” about education brought about a generation of frustrated, delusional youth, having high expectations, expecting certificates to bring them good jobs, even though they have no skills to solve any problems...
The above is a brief sketch of a good chunk of what is happening in the US in this election year, the conflict between the “establishment” — part of which has become establishment not because of talent and skill, but centralization of powers to spend in the hands of unaccountable politicians and bureaucracies. This description has nothing to do with right and left, or any “ism”: It is a perfect reflection of Orwell’s Animal Farm, where the pigs wrote a beautiful constitution to make one cry and where all animals were equal before laws. But the pigs then managed to tax all the animals except themselves — and they lived like … OK, pigs, until the farm collapsed.
Also in the New York Times, Eduardo Porter looks at the fortunes of U.S. workers:
Poorer households did get a bigger raise, proportionally, than the rich did last year. But that looks like a bug, not an enduring feature of the American economy. The data does little to suggest that the American economy has managed to overcome its perhaps most debilitating weakness: inequality.
Despite last year’s gains, the bottom 60 percent of households took a smaller share of the income pie than four decades ago. The bottom 20 percent took in only 3.4 percent of all income — compared with 5.6 percent in the mid-1970s. The richest 5 percent of Americans, by contrast, have done much better for themselves — taking in about 22 percent of the nation’s income, 6 percentage points more than they did in 1975...
Fans of the American flavor of capitalism will surely argue that such inequities are irrelevant now that the floor seems to be rising for everybody. But income isn’t the only way to measure prosperity; by many other metrics, Americans’ well-being remains pretty low. Whether it is life expectancy or infant mortality, incarceration or educational attainment, countless statistics offer a fairly dark picture of the American experience. It is a picture of prosperity that consistently leaves large numbers of Americans behind.
Similarly, the Atlantic's Alana Semuels ask if economic growth is really the benchmark we should be using to indicate progress:
[D]espite a growth rate that has averaged three percent over the last 60 years (which is quite robust), there are still 43 million Americans living in poverty, and most people’s wages are essentially unchanged from the end of the Reagan administration. In fact, the median income of households in 2014 was 4 percent lower than it was in 2000, despite positive economic growth in all but two of the years during that time period. For half a century, developed nations have focused on how to make their economies grow faster, hoping that strong growth would improve life for all their populations. But what if growth isn’t the key to raising the standard of living across a society?...
For most economists, the idea of focusing on something other than GDP growth is heresy. But developed nations may have to start thinking more seriously about the idea. That’s because of the simple fact that economic growth has been anemic since the recession, and no one is quite sure what to do about it. Though the Bureau of Economic Analysis said in October that the GDP increased 2.9 percent in the third quarter, it had grown at a rate of roughly 1 percent for the previous three quarters. Economists aren’t exactly sure why growth has slowed so much. Steinbaum, of the Roosevelt Institute, told me that economists aren’t even really sure what exactly causes growth, or a slowdown.
The Daily Beast's Yashar Ali looks at the conventionally invested portfolio of Jill Stein and finds it differs greatly from her stated values:
Stein said that she has “explored” more socially responsible funds but “found their investments in fracking and large-scale biofuels not much better than the non-green funds. I have not yet found the mutual funds that represent my goals of advancing the cause of people, planet, and peace.”
While Stein claims that she had difficulty finding funds that aligned with her values, she didn’t explain why she chose to remain in funds that are completely disjointed from her values.
Meanwhile, nonprofit employees find themselves in a bind when it comes to retirement plans. In Institutional Invester, the Sustainability Accounting Standards Board's Jean Rogers argues that young people and women are redefining what "reasonable investor" means:
Millennials are twice as likely as members of older generations both to invest in companies and funds that seek specific social or environmental outcomes and to shun investments in businesses that engage in unethical activity. And although the majority of individual investors say they care about sustainable investing, women express higher interest than do men, 76 percent to 62 percent.
Millennials and women want to invest with sustainability performance in mind, but they lack the data to do so. Although some companies prepare sustainability reports, each report is unique, covering different issues using different metrics, making it difficult for investors to compare corporate performance on critical dimensions of sustainability.
This dearth of information is especially problematic for Millennials. According to Accenture, a majority of them identify as “self-directed” investors, taking time to research options and check multiple sources before making major decisions.
A Conscious Capitalism CEO summit happened, reports Rachel Emma Silverman in the Wall Street Journal:
With a mix of executive speakers and touchy-feely frills such as a storytelling booth and “vulnerability wall,” the three-day summit at the Hyatt Regency Lost Pines illustrated the contradictions inherent in the role of the CEO circa 2016: beholden to shareholders but increasingly called upon by young workers and customers to show what they are doing to make the world a better place, or at least not a worse one.
“It can be lonely doing what we are doing,” said Doug Levy, CEO of TapGoods, a Dallas equipment-rental startup. Mr. Levy, the chairman of the event, has attended the summit for the last decade to make common cause with similarly motivated leaders. “I feel like I found my tribe.”
In the naughty corporate corner, we have drug giant GlaxoSmithKline which is being hit with "record penalties" by the Chinese government for bribery. Also facing penalties are a number of big banks, some of whom are in the Too-Big-to-Fail or Too-Big-To-Jail category, writes RealClearMarkets' Aaron Klein:
Banking regulators from Switzerland are reportedlylobbying the U.S. government to consider the impact their banks have on the entire financial system ("systemic importance") when considering the size of fines to impose for past illicit actions. Swiss banks are not alone, as an earlier $10 billion fine to the French bank BNP Paribas resulted in French President Hollande complaining to President Obama about it. Financial markets are now rattled over a potential $14 billion fine to Germany'sDeutsche Bank. Given the Bank's existing problems, this fine could be large enough to trigger some of the alarm bells instituted post financial crisis on systemically important financial institutions...
American policy makers should arrive at two fundamental conclusions, which should be clearly articulated: When wrong-doings occur, the size and scope of the penalty will be proportional to the crime and the laws and regulations governing that crime. An institution's financial size, interconnectedness, or other systemically important functions should not factor in to any decisions on punishment - and should be true for all financial firms, foreign and domestic.
The New York Times' David Gelles evaluates whether it is ethical for someone like the Ford Foundation's Darren Walker to sit on the board of a corporation like Pepsi:
[I]t seemed discordant to some critics when, this month, Mr. Walker joined the board of PepsiCo. Pepsi, after all, makes the bulk of its money by selling sugary drinks and fatty snacks. What’s more, there is a well-established link between obesity and economic inequality. His new Pepsi connection raised the question: Would Mr. Walker’s day job and his new board duties be working at cross-purposes?
As Pepsi’s newest board member, Mr. Walker is now accountable for all that Pepsi is doing — for its noble efforts to promote health, but also for its other activities. There does not appear to be a direct conflict of interest for Mr. Walker: The Ford Foundation, which provides about $500 million in grants annually, has not funded organizations working specifically to combat obesity or diabetes. But Mr. Walker acknowledged that colleagues have expressed skepticism about his work with Pepsi, and said he was sensitive to the optics.
Inside Philanthropy's David Callahan sees Walker's move as a good thing:
[C]orporations are most likely to initiate change and then live to up their rhetoric if they are being pounded from the outside by activists, regulators, and the media. But the shift toward corporate responsibility is likely to happen faster if there’s both external and internal pressure.
The idea that foundation leaders like Walker should only work the outside game doesn’t make any sense to me. A number of foundations – most notably Robert Wood Johnson and Bloomberg Philanthropies – already are bankrolling outside critics taking on Big Food. (Bloomberg has also been making big political contributions to target sugary beverages.) This funding is critical, and we could use more of it. But if you believe the above theory of corporate change, we also want more questioning voices inside companies – and ideally in board rooms. Studies show, for example, that corporations with more diversity and women on their board are more socially responsible.
In the Nonprofit Quarterly, Candi Cdebeca says minority-led nonprofits face a capital problem:
What we have found as an organization whose mission is to effect policy change is that it is much more difficult to capture impact when you engage in advocacy and systems transformation work. Several of our partners in transformation work find themselves in this same predicament—unless they have a very strong board and very strong funding—and such advocates can survive difficulties without the pressure that the very same type of organization led by a person of color or a person who has lived in poverty has. In short, if you have a nonprofit doing advocacy work, you are almost politically destined to fail. If your organization speaks for the people and is run by the people it serves, then by default you likely do not have the same social capital, financial capital, or political capital that you need to truly influence policy.
You are then faced with the dilemma we face. If, for example, your issue area is disrupting the cycle of poverty, you have the following choices: (a) decrease salaries at all levels and employ others at minimum wage in order to continue to advocate for disrupting the cycle—while your organization and the communities you serve remain living in poverty; (b) take a different approach by providing direct services and bringing in more funding while working toward systems change on the side; or (c) relinquish control over executive-level positions to bring in someone with higher levels of capital of all types (likely not reflective of the community served) to increase political viability—which would likely have the effect of watering down the agenda to something “safer” or something insufficient for the issue overall.