For must reads this week, we start with this piece from Daniel Medina in the Guardian on how the mainstream media is failing the public interest by not devoting more coverage to U.S. poverty and the working class. Meg Jacobs over at the progressive Democracy Journal looks at two books focused on the ills of austerity and why policy goes after the wrong economic culprits. There's also this really neat New York Times interactive that depicts Fed chair candidate Janet Yellen’s thinking on the interrelationship between inflation and unemployment. Lastly, this paper from the San Francisco Federal Reserve Bank explains why we will not become a nation of part-timers.
Spending my time listing direct and indirect harm to people and the economy especially the poor is part of my job, but the abject stupidity that now passes for American governance ... oh forget it. Let's hear from cartoonists Randy Bish and George Danby:
In parts of the country, programs have already stopped providing services. The National Head Start Association has estimated that an additional nineteen thousand children aren’t in preschool now. Last week, low-income families in central and northern Florida found out that their children’s Head Start programs had closed. Nationally, nearly two dozen major Head Start programs due to get their grants on October 1st have been affected. (The timing of the funding is staggered, so for each month that goes by without a resolution to the standoff, more state programs will run out of money.) The federal government has also stopped sending funds to states for Temporary Assistance for Needy Families (TANF), which provides cash benefits to more than four million people. No states had ceased making TANF payments as of Sunday, but Michigan announced early in the shutdown that it could run out of funds within a couple weeks if the shutdown continues.
Nonprofits are supposed to be a private provider of services to supplement government but hey, they are getting shafted too because many rely on federal funding, says Lisa McClintock over at Guidestar: Nonprofits paid nearly 10 percent of all U.S. wages in 2010, according to the National Center For Charitable Statistics. This means at least 10 million people will not be paid, and millions more who rely on nonprofit programs will be left in the dark (some literally). Popular sentiment is that the shutdown cannot extend past October 17, the date Treasury Secretary Jack Lew said the U.S. coffers would run out of money. Nonprofits have already felt the effects. And now let’s hear from Sarah Kendzior over at Al Jazeera on the philosophical divide that has led us into this mess:
In 1964, President Lyndon B. Johnson declared a War on Poverty. Over the next half century, the war on poverty turned into a war on the poor. This war was once disguised as "compassionate conservatism" and debated with words like "responsibility" and "opportunity". Compassionate conservatism assumed that we could take care of ourselves so we did not need to take care of each other. It was an attractive concept, simultaneously exalting the successes of America while relieving the individual of responsibility for those whom it failed. Many good people believed in it. Today the attack on the poor is no longer cloaked in ideology – it is ideology itself... The government shutdown only formalizes the dysfunction that has been hurting ordinary Americans for decades. It is not a political shutdown but a social breakdown. Fixing it requires a reassessment of value – and values.
Debra Chachra over at the Guardian also had words on the shutdown and how charities cannot and should not be expected to replace government because it's not efficient:
We live in an enormous, connected web of systems, and some building blocks of our civilization just can't be addressed by individuals or small groups of people. Most of us flat-out don't have the expertise to deal with them. Those groceries are the end-point of a global supply chain – how do we keep our food safe? Our transportation systems span the continent – how do we get travelers where they're going, safely and on time? Epidemiologists track diseases that emerge on other continents, long before they reach our neighborhoods. The idea that we live in self-sufficient communities where we can all watch out for each other is long gone. So, while I regularly donate to charities and I believe they play an important role in society, I don't want them in lieu of more efficient systems. I don't want to go to fundraisers to pay the medical bills of artists; I want them to have health insurance. I want to be able to go to meetings on the other side of the country and buy chicken for dinner without worrying about my safety. And I want programs like WIC to provide services that reduce the need for more expensive interventions.
In Dissent Magazine, Joanne Barkan argues large philanthropic institutions operate under an "arrangement [that] remains thoroughly plutocratic: it is the exercise of wealth-derived power in the public sphere with minimal democratic controls and civic obligations." Barkan goes on to list a number of "reforms" she thinks are needed:
Big philanthropy is overdue for reform. The goal should be to reduce its leverage in civil society and public policymaking while increasing government revenue. Some possible changes seem obvious: don’t allow administrative expenses to count toward the 5 percent minimum payout, increase the excise tax on net investment income, eliminate the tax exemption for foundations with assets over a certain size, and replace the charity tax deduction with a tax credit available to everyone (for example, all donors could subtract 15 percent of the total value of their charitable contributions from their tax bills). In addition, strict IRS oversight of big philanthropy—especially all the “educating” that looks so much like lobbying and campaigning—is crucial. Another reform would require private foundations to “spend down” their endowments over a designated number of years. They would no longer exist in perpetuity. This idea has some promise of success: the living donors of several mega-foundations, including Bill and Melinda Gates, have already decided to spend down and are recruiting others to do the same.
Over at Dowser, Deloitte's William Eggers and Paul Macmillian discuss how social entrepreneurs are bypassing traditional solutions such as government and philanthropy and creating a "solutions economy." Can business solve poverty? A bunch of folks at a recent Aspen event seem to think so according to Fast Company. At the Huffington Post, Unilever CEO Paul Polman says market "short-termism" is part U.S. economic woes and his company isn't playing anymore:
If business is to regain the trust of society, it must start to tackle the big social and environmental issues that confront humanity, especially at a time when governments seem increasingly to be caught in shorter and shorter election cycles and have a hard time internalizing the global challenges in an increasingly interdependent world. As I have said many times, "business cannot be a mere bystander in the system that gives it life."
Former Campbell's CEO, Doug Conant in MckInsey similarly argues that corporate philanthropy can serve as business development. "I observed that the more we leveraged our business resources to deliver social value to the communities around us, the more engaged our employees became and the better we performed in the marketplace," Conant writes. Yet, SelfishGiving author Joe Waters says “corporate giving is dead,” and counsels nonprofits to focus on individual donors. Meanwhile, this a TEDX talk from Harvard’s Michael Sandel looks at ills in the U.S. shift from a market economy to "a market society," where increasingly everything is for-sale (his 2012 Atlantic piece was featured in a previous newsletter).
I am going to break editorial practice on sourcing all the content used because I am not sure who did this cartoon, but it was too good to pass up given the ongoing U.S. fiscal fights:
It seems intuitively obvious that living in poverty is stressful, but the New York Review of Books discusses a new book by Sendhil Mullainathan and Eldar Shafir that looks at how daunting amounts of scarcity diminishes people’s cognitive capacity:
Because they lack money, poor people must focus intensely on the economic consequences of expenditures that wealthy people consider trivial and not worth worrying over. Those without a lot of time have to hoard their minutes, and they may have trouble planning for the long term. The cash-poor and the time-poor have much in common with lonely people, for whom relationships with others are scarce. When people struggle with scarcity, their minds are intensely occupied, even taken over, by what they lack.
In a Washington Post interview, Mullainathan said that was important to look at the issue of scarcity as opposed to poverty because it can help bridge the empathy gap since people who feel other types of scarcity have this same capacity deficit. “You can get some people to sympathize with the poor, but to empathize is actually very hard, because most people are not poor.” Panera CEO Ron Shaich, who recently took the food stamp challenge, found out the difference between empathy and sympathy, he writes in the New Pittsburgh Courier:
I thought I knew a thing or two about hunger. I've met thousands of people who struggle to feed themselves and their families, visited dozens of soup kitchens, food pantries, homeless shelters and food banks, and worked closely with nonprofit organizations like Feeding America in developing five "Panera Cares" community cafes with no set prices. I really thought I understood the scope of the problem. But let me tell you something -- I had no clue. My SNAP Challenge last week taught me that merely observing someone else's plight does not hold a candle to consciously altering your habits to better understand what it might be like to live someone else's life.
To complement these observations is this op-ed from Daniel Goleman in the New York Times on whether inequality can be solved without addressing the empathy divide that comes with it. Meanwhile the Center on Budget and Policy Priorities says the poverty rate has remained virtually frozen despite economic growth because of scarcity in unemployment insurance:
If UI had not become less effective at reducing poverty among unemployed workers between 2010 and 2012, the poverty rate would have fallen over that period to 14.7 percent, CBPP calculations show. UI will become still less effective if Congress fails to extend emergency benefits for the long-term unemployed, which expire at the end of December. UI benefits kept 1.7 million people — jobless workers and their families — above the poverty line in 2012, according to Census figures released in September.