In this issue, dire famine news, ending opportunity monopolies, financial stability worries, unaffordable housing, and investing in social business leaders.
While the rest of the country's news focused on the Trump administration you might have missed that there are four major famines in the world and the aid is not coming, reports IRIN:
The Nation's Michael Klare reports that we are jeopardy of losing more people globally to starvation and disease in 2017 than we lost in World War II:
Major famines have, of course, occurred before, but never in memory on such a scale in four places simultaneously. According to O’Brien, 7.3 million people are at risk in Yemen, 5.1 million in the Lake Chad area of northeastern Nigeria, 5 million in South Sudan, and 2.9 million in Somalia. In each of these countries, some lethal combination of war, persistent drought, and political instability is causing drastic cuts in essential food and water supplies. Of those 20 million people at risk of death, an estimated 1.4 million are young children.
Back in the United States, Vox's Dylan Matthews is here to tell us child poverty is a disgrace and suggests a universal child benefit like they have in Europe is the solution:
While about 11.8 percent of US children live in absolute poverty (as indicated by the US poverty line), only 6.2 percent of German children do, and only 3.6 percent of Swedish children. The numbers get even worse when you define poverty like most European countries do, as living under half the median income. By that standard, 20 percent of children in the US live in poverty, compared to only about 10.3 percent in Germany or 4.9 percent in the Netherlands. This isn’t exclusively due to child benefits, but they play a crucial role.
The US has only a patchwork system of subsidies for parents, and the major benefit, the Child Tax Credit, is limited in ways that make it unhelpful to the Americans who need cash assistance the most...
The Atlantic's Gillian White looks at new research from MIT's Peter Temin that finds that U.S. economic mobility requires as much as two decades of no mishaps to achieve:
Temin identifies two types of workers in what he calls “the dual economy.” The first are skilled, tech-savvy workers and managers with college degrees and high salaries who are concentrated heavily in fields such as finance, technology, and electronics—hence his labeling it the “FTE sector.” They make up about 20 percent of the roughly 320 million people who live in America. The other group is the low-skilled workers, which he simply calls the “low-wage sector.”...
He writes that the upper class of FTE workers, who make up just one-fifth of the population, has strategically pushed for policies—such as relatively low minimum wages and business-friendly deregulation—to bolster the economic success of some groups and not others, largely along racial lines. “The choices made in the United States include keeping the low-wage sector quiet by mass incarceration, housing segregation and disenfranchisement,” Temin writes.
And how is one to move up from the lower group to the higher one? Education is key, Temin writes, but notes that this means plotting, starting in early childhood, a successful path to, and through, college. That’s a 16-year (or longer) plan that, as Temin compellingly observes, can be easily upended.
In an older piece in The Atlantic, Eric Liu discusses why "opportunity monopolies" are impeding mobility:
Today, much of that Tocquevillian ecology—which lasted well into the mid-20th century—has withered away. What remains, as sociologist Robert Sampson shows in his research on “neighborhood effects,” underscores the concentration of wealth and social capital that caused the withering.
Consider how much PTAs do for affluent public schools in your town and how little they do for impoverished ones. Consider how few low-wage workers become officeholders or organizational leaders. There are fewer places in America now to assert a claim of civic dignity that can counter the experience of economic indignity...
This amalgamation of market power, political voice, and social mobility is the natural outcome of a system left to itself—of laissez-faire ideology. True competition demands an economic and civic program of actively busting “opportunity monopolies” and recycling the unearned privilege that comes with them.
Speaking of monopoly, suppose your loved one is in prison. That institution and all its helpers may have a monopoly on your time and money reports the Guardian's Lisa Riordan Seville and Zara Katz. The piece focuses on Pennsylvania where many of the prisoners are shipped from Philadelphia to rural-located prisons:
A prison is a prison is a prison, some might say. But to the loved ones trying to maintain ties, miles make a difference. To get to prison, one must also have disposable income. To get inside, one cannot have spent time behind bars. In the neighborhoods Kristal’s vans sweep through to pick up customers, the twin punches of poverty and mass incarceration have winnowed the visiting population. Those left, Kristal’s customers, are nearly all working women.
There is an impression that those in prison live on the taxpayer’s dollar. To some extent, it’s true: Pennsylvania spends more than $2bn each year on corrections; nearly $300m goes to prisoners’ education, training and healthcare. But more than $1bn of those dollars go to paying off the debt on buildings, and to the salaries and retirement benefits of employees, many of them in rural counties where the state opened prisons to blunt the pain of factories shuttered.
As the national cost of locking people up ballooned to over $80bn a year, Pennsylvania joined systems across the country in snipping expenses where they could. Cuts came to food, laundry and healthcare. Prisons closed. Commissary prices rose.
Over at the Next Billion, we have a podcast with Rachel Schneider of the Center for Financial Services Innovation about the new book she co wrote with Jonathan Morduch of New York University called “The Financial Diaries, How American Families Cope in a World of Uncertainty”:
Part of what they discovered was that millions of Americans are facing what the book calls “a shocking level” of income and expense volatility – much like what’s experienced in emerging markets, where the financial diaries research method was first popularized. According to Schneider, this insecurity is a key driver of much of the anger and alienation experienced by many Americans, and the social and political upheaval it has sparked.
“The idea of the American dream is core to how we see ourselves in this country: This idea that you can, with a little bit of hard work and some luck, and slow and steady savings, over time, achieve mobility,” she says. “Yet what we saw in our research was that people’s lives actually follow a far different pattern than that. Rather than feeling that they’re in a slow and steady upward climb over time, what we saw was that people often feel really anxious and financially insecure, because near-term financial challenges are so much a part of their lives and mental state that it’s very difficult to think and focus on the long-term.”
The Economic Policy Institute has released a new report on the why raising the minimum wage would boost the earnings of some 40 million Americans and increase their spending power:
In 2016, the federal minimum wage of $7.25 was worth 10 percent less than when it was last raised in 2009, after adjusting for inflation, and 25 percent below its peak value in 1968.
This decline in purchasing power means low-wage workers have to work longer hours just to achieve the standard of living that was considered the bare minimum almost half a century ago. Over that time, the United States has achieved tremendous improvements in labor productivity that could have allowed workers at all pay levels to enjoy a significantly improved quality of life (Bivens et al. 2014). Instead, because of policymakers’ failure to preserve this basic labor standard, a parent earning the minimum wage does not earn enough through full-time work to be above the federal poverty line.
The Pacific Standard's Dwyer Gunn says yes robots are coming for your jobs and have been for years:
Angry blue-collar workers, particularly in the Rust Belt, voted for a candidate who promised to go after immigrants and factory workers in China and Mexico who were allegedly stealing “American” jobs. Robots didn’t get much attention, even though the occupations and workers most affected by robots so far have been, according to Acemoglu and Restrepo, “routine manual, blue collar, assembly and related occupations” and “workers with less than college education.”...
While most economists believe that the economic threat posed by China is declining, the opposite is true of automation. In the decades to come, more and more American workers — from retail workers to truck drivers — will be at risk of losing their jobs due to automation. If the past is a reliable indicator, these trends will place grave stress on our social compact and our democracy.
Citylab looks at why "affordable housing" isn't all that affordable:
Perhaps the central problem of housing affordability is one of scale—the number of units that we’re able to provide is too small. That’s true whether we’re talking about through Section 8 vouchers (that go to only about 1 in 5 eligible households), or through inclusionary zoning requirements (which provide only handfuls of units in most cities).
The very high per-unit construction costs of affordable housing only make the problem more vexing: the pressure to make any project that gets constructed as distinctive, amenity-rich and environmentally friendly as possible, means that the limited number of public dollars end up building fewer units. And too few units—scale—is the real problem here.
In the Stanford Social Innovation Review, Darren Walker discusses the Ford Foundation's commitment of $1 billion in endowment funds for mission investing:
Since the 1980s, divestment movements around the world have asked institutional investors, in particular, to consider how their investments are related to the wider world. Whether they were demanding divestment from tobacco, fossil fuels, or apartheid South Africa, these movements reminded us that our investments are part of a broad ecosystem of consequences, intended and unintended—consequences we realized we could not ignore.
Today, we have an opportunity to build on this proud, powerful legacy. Previous divestment movements tried to prevent investors from harming society; now, institutional investors can begin to move from “do no harm” to exploring how to “do more good.”
Over at Inside Philanthropy, Mike Scutari looks at the movement to educate more socially-minded business leaders via philanthropy:
[A]lthough it's not explicitly evident in any of these profiled gifts, there may also be an element of self-interest at play, as well. Businesspeople are on the front lines of a tumultuous economic landscape characterized by rising inequality, an evolving job market, and pervasive middle class angst. For those who dare to look beyond quarterly reporting figures, a population of less affluent citizens means less purchasing power, and less purchasing power means less profit.
In other words, for funders intimately familiar with "the system," a more experiential, immersive, and—dare I say it—ethical approach to business education could, quite possibly, contribute to a less harsh and destabilized economic order.
Also in Inside Philanthropy, David Callahan looks at the divide between older philanthropists and and their younger, less traditional counterparts:
The biggest shift in the past 20 years is that the prime movers in philanthropy are no longer legacy foundations, as was true during the second half of the 20th century. When I first started paying close attention to philanthropy in the mid-1990s, it was a world dominated by endowed institutions created by industrialists who had long ago passed from the scene.
Today, the most important players in philanthropy are living donors. That’s not to say that legacy foundations don’t remain hugely influential and, in plenty of cases, quite creative and dynamic (despite what you might hear from dismissive tech types like Sean Parker). But their importance in relative terms has steadily diminished, as new mega-givers have arrived on the scene. In a growing array of fields — such as K-12 education, scientific research, criminal justice reform and environmental conservation — money from living donors plays a dominant role. This shift is likely to accelerate in coming years.