In Case You Missed It: No More Yielding But a Dream's Inequality

In Case You Missed It

In this issue, why philanthropy has an uphill battle on inequality, more stupid poverty policies, why working at Amazon makes people cry, and the bail trap.

'No More Yielding But a Dream' on Inequality

If you watch or read nothing else, please check out this keynote speech at the Aspen Action Forum in which the New York Times' Anand Giridharadas says we need to get serious on capitalism and the "winners of our age" need to take a harder look in the mirror about how they got there:

 

 

 

 

The Aspen consensus to me in a nutshell is this: the winners of our age must be challenged to do more good but never, ever tell them to do less harm. The Aspen consensus holds that capitalism's rough edges must be sanded and its surplus fruit shared, but the underlying system must never be questioned. The Aspen consensus says give back, which is of course a compassionate and noble thing. But amid the twenty-million-dollar second homes and four-thousand-dollar parkas of Aspen, it is little gauche to observe that giving back is also a band-aid that winners stick on the system that has served them, in the conscious or subconscious hope that it will forestall major surgery to that system -- surgery that might threaten their privileges. The Aspen consensus, I believe, tries to market the idea of generosity as a substitute for the idea of justice. It says, make money in the usual ways and then give some back, whether it's through a foundation or factoring in social impact to your business plan or adding a second or third bottom line to your analysis or giving a left sock to the poor for every right sock you sell. The Aspen consensus says, do more good, not do less harm…

[...] I fear for all of us, myself first and foremost, that we may not be as virtuous as we think we are; that history may not be as kind to us as we hope it will; and that in the final analysis, our role in the inequities of our age may not be remembered well. Now I understand that this may sound strange because the winners of our disruptive stage are arguably as concerned about the plight of the losers as any elite in the history of the world. I think that's true. But the question I'm raising is about what exactly the winners propose to do in response. And I believe the winners’ response -- certainly not always but still too often -- is to soften the blows of the system but to preserve the system at any cost. This response is problematic. It allows far too many of us to stay safe, to evade the hard questions about our role in contributing to the disease we also seek to treat.

Ford's Darren Walker is gaining a lot of attention in his push to tackle inequality. In June, over at CNN, he wrote:

We have affirmed that inequality extends far beyond the wealth gap. Inequality is political, social, and cultural in nature. It contributes to deficits in democracy and discrimination along racial, ethnic and gender lines. It is reflected in rising extremism, acute poverty, and even in the consequences of climate change.

While inequality varies by region, the underlying forces that increase inequality are remarkably constant. From Jakarta to Cairo, Rio de Janeiro to New York City, we found five consistent factors that contribute to inequality.

Walker says these five factors include "pervasiveness of short-term thinking in markets," political institutions dominated by elite interests, a broken social contract, discrimination, and dominant cultural narratives.

Meanwhile, the HistPhil blog has devoted a series of posts to Ford's move on inequality. In this post, historian Alice O'Connor argues that it's interesting the foundation is taking on capitalism:

Ford’s move cuts against recent trends in foundation philanthropy, which if anything has mirrored and reinforced the polarized patterns of capitalism by growing more concentrated in asset distribution, enamored of ideas such as “philanthrocapitalism,” and overt in its efforts to capitalize on, rather than question the political economics that produced the fortunes of the global .01%–of which the Warren Buffett/Bill Gates billionaire “giving pledge” and the hoopla over “social impact bonds” are just two cases in point. It’s also a departure from the foundation’s liberal, but decidedly establishmentarian past, which, right-wing critics to the contrary, has always kept its programming within the boundaries of capitalism as it exists; even at its most innovative, Ford grantmaking has been far more inclined to use its influence to ‘leverage’ markets for program purposes than to question the way the market system works. With this announced change of direction, and accompanying talk of structural and systemic-level intervention, Ford positions itself as a countervailing force to the direction capitalism has and continues to take in its late 20th/early 21st century period of neoliberal restructuring.

The University of San Diego's Victor Fleischer argues that school endowments are more beneficial to money managers than to students...by a lot (FYI this article was sent to your editor by at least six different people):

Last year, Yale paid about $480 million to private equity fund managers as compensation — about $137 million in annual management fees, and another $343 million in performance fees, also known as carried interest — to manage about $8 billion, one-third of Yale’s endowment.

In contrast, of the $1 billion the endowment contributed to the university’s operating budget, only $170 million was earmarked for tuition assistance, fellowships and prizes. Private equity fund managers also received more than students at four other endowments I researched: Harvard, the University of Texas, Stanford and Princeton.

Endowments are exempt from corporate income tax because universities support the advancement and dissemination of knowledge. But instead of holding down tuition or expanding faculty research, endowments are hoarding money.

You also might want to check out this UC Davis commencement speech by DBL's Nancy Pfund on what it means to be part of the "impact generation.


Ill Met by Moonlight, Proud Worker

Pacific Magazine has a series on the future of work you all might be interested in. In this piece, MIT's Robert Solow discusses why wages haven't kept up with the times:

The custom is to think of value added in a corporation (or in the economy as a whole) as just the sum of the return to labor and the return to capital. But that is not quite right. There is a third component which I will call “monopoly rent” or, better still, just “rent.” It is not a return earned by capital or labor, but rather a return to the special position of the firm. It may come from traditional monopoly power, being the only producer of something, but there are other ways in which firms are at least partly protected from competition. Anything that hampers competition, sometimes even regulation itself, is a source of rent. We carelessly think of it as “belonging” to the capital side of the ledger, but that is arbitrary. The division of rent among the stakeholders of a firm is something to be bargained over, formally or informally...

The suggestion I want to make is that one important reason for the failure of real wages to keep up with productivity is that the division of rent in industry has been shifting against the labor side for several decades. This is a hard hypothesis to test in the absence of direct measurement. But the decay of unions and collective bargaining, the explicit hardening of business attitudes, the popularity of right-to-work laws, and the fact that the wage lag seems to have begun at about the same time as the Reagan presidency all point in the same direction: the share of wages in national value added may have fallen because the social bargaining power of labor has diminished. This is not to say that international competition and the biased nature of new technology have no role to play, only that they are not the whole story. Internal social change and the division of rent matter too.

We have this Wall Street Journal story about how post-recession jobs that provide mid-level wages have not recovered. Check out this chart:

Meanwhile, also in Pacific Magazine, Harvard's Richard Freeman weighs in on the worker vs robot debate:

If you own the robot taking your job, you will be better off. If I own the robot taking your job, I will be better off. Tough luck, sucker.

The implication for policy is also clear. To spread the benefits of robotization widely and prevent an inegalitarian nightmare, economic policy should seek to turn workers into the capitalist owners of the robots. The United States needs to encourage greater worker ownership in companies and in capital assets more broadly...

The choice is ours: to develop an economy in which capital/robots work for all of us or to join the robots working for the few owners.

Is the gig economy a good idea? Dave Ashton argues mostly yes. Over at New America, Steven Hill looks at policies needed to provide the growing ranks of freelance workers and "independent" contractors access to the economic safety nets currently out of reach.

Amazon made the news this week for it's brutal work culture that has led many to weep at their desks, reports the New York Times:

Amazon, though, offers no pretense that catering to employees is a priority. Compensation is considered competitive — successful midlevel managers can collect the equivalent of an extra salary from grants of a stock that has increased more than tenfold since 2008. But workers are expected to embrace “frugality” (No. 9), from the bare-bones desks to the cellphones and travel expenses that they often pay themselves. (No daily free food buffets or regular snack supplies, either.) The focus is on relentless striving to please customers, or “customer obsession” (No. 1), with words like “mission” used to describe lightning-quick delivery of Cocoa Krispies or selfie sticks...

A woman who had thyroid cancer was given a low performance rating after she returned from treatment. She says her manager explained that while she was out, her peers were accomplishing a great deal. Another employee who miscarried twins left for a business trip the day after she had surgery. “I’m sorry, the work is still going to need to get done,” she said her boss told her. “From where you are in life, trying to start a family, I don’t know if this is the right place for you.”


 

'Lord, What Fools These Mortals Be' on Poverty

Let's now have a cartoon from the UK:

Raw Story points out the stupid, destructive and perhaps even unconstitutional policies being placed upon America's poor. These range from revoking licenses for failing to pay student loans to harsh financial penalties for minor traffic violations, and maybe even a creative form debtor's prison:

The Supreme Court ruled the imprisonment of poor people for failure to pay legal fees unconstitutional, but many states ignore the law with impunity, as their powerless victims have little recourse to challenge their jailers. In Georgia, to cite one egregious example, authorities prosecuted a mentally ill teenager for stealing school supplies. The cost of her incarceration in juvenile detention centers came to a total of $4,000. The teenage girl was released only after her mother was able to pay the bill in full. In the Georgia case, and many others across America, the state functions as hostage taker, demanding family members pay ransom for the release of their loved ones.

For some good news, Kansas is backing away from a plan that would have limited welfare recipients to $25 withdrawals from an ATM. Small favors readers, small favors.

What is the point of bail after arrest? Well apparently we might be using it to harm rather than help, argues Nick Pinto in NYTimes:

[A]s bail has evolved in America, it has become less and less a tool for keeping people out of jail, and more and more a trap door for those who cannot afford to pay it. Unsecured bond has become vanishingly rare, and in most jurisdictions, there are only two ways to make bail: post the entire amount yourself up front — what’s called ‘‘money bail’’ or ‘‘cash bail’’ — or pay a commercial bail bondsman to do so. For relatively low bail amounts — say, below $2,000, the range in which most New York City bails fall — the second option often doesn’t even exist; bondsmen can’t make enough money from such small bails to make it worth their while...

Across the criminal-justice system, bail acts as a tool of compulsion, forcing people who would not otherwise plead guilty to do so. A 2012 report by the New York City Criminal Justice Agency, based on 10 years’ worth of criminal statistics, bears this out. In nonfelony cases in which defendants were not detained before their trials, either because no bail was set or because they were able to pay it, only half were eventually convicted. When defendants were locked up until their cases were resolved, the conviction rate jumped to 92 percent. This isn’t just anecdotal; a multivariate analysis found that even controlling for other factors, pretrial detention was the single greatest predictor of conviction. ‘‘The data suggest that detention itself creates enough pressure to increase guilty pleas,’’ the report concluded.

Over at the Center for American Progress, Wendy Ortiz discusses the linkages between poverty and climate change taking lessons from California's ongoing drought:

The effects of climate-fueled extreme weather events such as the current California drought, however, are not felt equally. Rather, they exacerbate existing socioeconomic inequalities. In California, communities of color and low-income people living in tribal, rural, and farming communities have been carrying a disproportionate share of the drought’s burden since it began in 2012...

While the drought relief package for small and rural communities is an important step toward addressing the myriad issues that affect access to clean and affordable water, policymakers must do more to protect the livelihoods of low-income communities and communities of color from the direct and indirect consequences of the drought. Agricultural communities throughout the state are suffering from high rates of unemployment, limited and costly access to safe and affordable water, food insecurity, and health issues related to toxic underground water.

You might be interested in this NPR story on homeless families in California, who turn to "budget motels" as shelter. Meanwhile, in the New Yorker Malcolm Gladwell looks at the post-Katrina changes to New Orleans' poor and what it means.

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