In the New York Times, Thomas Edsall looks at poverty measures in the United States and how they relates to welfare reform:
Despite the rising optimism, there are disagreements over how many poor people there are and the conditions they live under. There are also questions about the problem of relative poverty, what we are now calling inequality. Poverty cannot be viewed in isolation from the larger economy. We must take disparities in the way the benefits of growth and productivity are distributed into account...
According to Edin and Schaefer, the consequence of these changes, taken together, has been to divide the poor who no longer receive welfare into two groups. The first group is made up of those who have gone to work and have qualified for tax credits. Expanded tax credits lifted about 3.2 million children out of poverty in 2013. So far, so good.
The second group, though, has really suffered. These are the very poor who are without work, part of a population that is struggling desperately. Edin and Schaefer write that among the losers are an estimated 3.4 million “children who over the course of a year live for at least three months under a $2 per person per day threshold.”
In the Daily Beast, Harvey Kaye discusses the differences between this so-called "gilded age" and the one a century ago as presented by the book, The Age of Acquiescence. He argues the "rich have won the class war":
In The Age of Acquiescence, Fraser addresses the question that so many of us on the left have been agonizing over for some time: Why do Americans remain so seemingly passive in the face of 40 years of class war from above? A class war from above that has subordinated the public good to private greed, concentrated power and wealth, sent vast numbers of working people into the ranks of the “working poor,” and subjected democratic politics to “plutocratic” control. A class war from above that has engendered nothing less than a Second Gilded Age...
As Fraser presents it: Whereas “Profitability during the first [gilded age]… rested first of all on transforming the resources of preindustrial societies into marketable commodities produced by wage laborers… Profitability during the second… relied instead on cannibalizing the industrial edifice erected during the first, and exporting the results of capital liquidation to the four corners of the earth…” And our vaunted “Prosperity, once driven by cost-cutting mechanization and technological breakthroughs, came instead to rest uneasily on oceans of consumer and corporate debt.” Moreover, while in the first Gilded Age, “the work ethic constituted the nuclear core of American cultural belief and practice,” in the second, we have “an economy kept aloft by finance and mass consumption [based] on an ethos of immediate gratification.” Fraser seeks the answer to America’s pressing mystery in those differences: “Can these two diverging political economies—one resting on industry, the other on finance—and these two polarized sensibilities— one fearing God, the other living in an impromptu moment to moment—explain the Great Noise of the first Gilded Age and the Great Silence of the second?
Meanwhile in the New Yorker, Jill Lepore discusses inequality in the United States and its political ramifications:
What’s new about the chasm between the rich and the poor in the United States, then, isn’t that it’s growing or that scholars are studying it or that people are worried about it. What’s new is that American politicians of all spots and stripes are talking about it, if feebly: inequality this, inequality that. In January, at a forum sponsored by Freedom Partners (a free-market advocacy group with ties to the Koch brothers), the G.O.P. Presidential swains Ted Cruz, Rand Paul, and Marco Rubio battled over which of them disliked inequality more, agreeing only that its existence wasn’t their fault. “The top one per cent earn a higher share of our income, nationally, than any year since 1928,” Cruz said, drawing on the work of Saez and Piketty. Cruz went on, “I chuckle every time I hear Barack Obama or Hillary Clinton talk about income inequality, because it’s increased dramatically under their policies.” No doubt there has been a lot of talk. “Let’s close the loopholes that lead to inequality by allowing the top one per cent to avoid paying taxes on their accumulated wealth,” Obama said during his State of the Union address. Speaker of the House John Boehner countered that “the President’s policies have made income inequality worse.” The reason Democrats and Republicans are fighting over who’s to blame for growing economic inequality is that, aside from a certain amount of squabbling, it’s no longer possible to deny that it exists.
Over at the NYT's Dealbook, the University of California's Steven Davidoff Solomon looks at the effort of pension fund Calpers "to actively press companies to emphasize the environment, diversity and good corporate governance, perhaps even at the expense of profitability":
Corporate sustainability is undoubtedly becoming an increasing phenomenon in corporate America, and not just with shareholders. More and more companies have at least a vice president devoted to sustainable development if not a whole department. It’s a noble effort that can have real consequences for good if it succeeds.
But corporate sustainability is also controversial, and it may be doubly so for Calpers... The first reason is the need for those all-important returns. Calpers was estimated to be underfunded by about 33 percent at the end of 2013 and needs to meet a high annual return goal of 7.5 percent. A careful reading of the Calpers policy shows that it is asserting that long-term value can be created by adopting these practices. The argument is that returns for companies that adopt these practices will be higher because they help the world and help themselves. This justifies the focus because Calpers, as a pension fund, should be primarily focused on returns and indeed has a fiduciary duty to act in its pension holders’ best interests by earning the highest returns it can. Morgan Stanley meanwhile has a new report out on sustainable investing arguing that it matches and sometimes exceeds the performance of traditional investing. Check out this chart:
As your editor has been saying, where the money comes from is increasingly under scrutiny by a public with access to more data about charitable investments. In the Guardian, Tim Smedley weighs in on the growing debate over ethics and financial returns in a British context:
There is also a school of thought that by purposefully holding shares in companies that are unethical, charities can influence them from within. ShareAction, a registered charity, advocates share ownership to table ethical challenges at company AGMs. Its successes include persuading Legal & General to become a Living Wage employer and pulling Unilever and Lloyds out of tax havens.
The choice of where to invest funds, however, is rarely an either/or. Three large investment houses spoken to for this article – Investec, Cazenove and Rathbones – all offer bespoke ethical screening for their charity clients at no extra cost. It is becoming the norm to include the social mission of charity clients in an investment strategy, not the exception. Also, as Bradshaw suggests, “there is increasingly good evidence that good governance, diversity on boards, sustainable practices and acting ethically actually improve the long term prospects of a business”. In other words, investing for ethical reasons can also be the best option financially.
You may also be interested to know the Guardian has started a campaign to encourage the Gates Foundation to divest from fossil fuels. You also might be interested in this new website on "beautiful solutions" highlights attempts to tackle thorny problems around the world. And the Story of Stuff's Annie Leonard is back with this video on why the economic metric should be based on better instead on more:
A Council on Foundations plan to hold a "Shark Tank" style contest at their annual meeting with a prize $40,000 for best idea to strengthen the economy sparked fire from some in the nonprofit sector, including Rick Cohen, who had this to say in the Nonprofit Quarterly:
There is something about putting foundation grants (or a Council on Foundations grant) up to a popular vote that seems to be fundamentally at odds with the notion that philanthropic grantmaking is a deliberative process, warranting more thinking and analysis than “rapid-fire” questions tossed at contestants in Password or Family Feud. If we assume that the Council really means its Philanthropic Challenge as something more than just an entertainment gimmick to keep conference attendees from drifting out to Fisherman’s Wharf, Lombard Street, and the Presidio before the conference wrap-up, then the Council has a lot of repair work to do... At a time when foundations are talking so much about their grantees as partners and stakeholders, this contest tells nonprofits where they really stand in the power relationship.
In the Chronicle of Philanthropy, Maria Mottola, Gail Nayowith, and Jon Pratt contend nonprofits do not need shark tanks:
Nonprofits, especially those that work with the neediest in our society, aren’t contestants. And poverty and hunger aren’t "Jeopardy" categories. Ask any 14-year-old fan of "The Hunger Games" if reality shows are a great model for decision making. Even they know that reducing human experience to a competitive circus is meant to be a dystopian view of society... What we are concerned about, though, is the latest trend toward using amped-up competitions that offer paltry prizes to cash-strapped nonprofits. It seems particularly egregious for a charitable entity — whether the Council on Foundations or a well-meaning venture philanthropist — to give away tax-subsidized money using a high end, adrenaline-fueled sideshow that many nonprofits will find disrespectful at best, demeaning at worst. This trend didn’t pop up overnight. It’s the outgrowth of a slow movement to create a marketplace for social goods and services more like the commercial and financial markets. But these organizations aren’t operating in a regular market and are limited by their business models, which one-time financing schemes won’t begin to solve. They are not substitutes for sustainable private or government investment.
In Slate, Eric Posner looks at Peter Singer's new book on "effective altruism," The Most Good You Can Do and argues it isn't as simple as Singer makes it out to be:
After you resolve to donate your excess wealth to the poor, Singer says, you have an additional ethical obligation to ensure that the money is used in the most effective way possible. This might seem like an obvious idea, but it isn’t. Suppose you donate $5,000 to the local Little League so that it can buy baseball equipment for poor children. You might feel good about yourself, but an effective altruist will realize that this amount of money could be used to buy malaria nets or medicine that would save as many as five lives in a poor country. Then you should ask yourself: Which is better, some kids playing baseball or some kids getting a chance at life? ...So what’s an effective altruist to do? The utilitarian imperative to search out and help the people with the lowest marginal utility of money around the world is in conflict with our limited knowledge about foreign cultures, which makes it difficult for us to figure out what the worst-off people really need. For this reason, donations to Little League and other local institutions you are familiar with may not be a bad idea. The most good you can do may turn out to be—not much.
In a Chronicle of Philanthropy article, William Burckart and Steven Godeke, advisers to philanthropic foundations, say the traditional operating model governing how most foundations is in danger of becoming obsolete.