The Hard Job of Living
The United States ranks 28 amongst its peers in human progress based on a single--yet obvious data point--survival:
The U.S. scores its highest marks in water, sanitation, and child development. That’s the upside. Unsurprisingly, interpersonal violence (think gun crime) takes a heavy toll on America’s overall ranking. Response to natural disasters, HIV, suicide, obesity, and alcohol abuse all require attention in the U.S.
Also noteworthy are basic public health metrics that America doesn’t perform as well on as other developed countries. The U.S. is No. 64 in the rate of mothers dying for every 100,000 births, and No. 40 when it comes to the rate children under age five die.
This week the New York Times had this story on the millions lifted from the ranks of the poor thanks to an improving job market:
More than seven years after the recession ended, employers are finally being compelled to reach deeper into the pools of untapped labor, creating more jobs, especially among retailers, restaurants and hotels, and paying higher wages to attract workers and meet new minimum wage requirements...For those on the lower rungs of the income ladder, a step upward can be profound. For some, it means the difference between sleeping on a friend’s couch and having a home. For others, it is the change from getting shoes at Goodwill to buying a new pair at Target, or between not having the money to buy your daughter an ice cream cone to getting her a bicycle for her birthday.
But in the American Spectator, Stephen Moore refutes the claim of poverty reduction under the current administration:
The absolute number of poor people is so large it is now the equivalent of every resident of California being in poverty. Obama’s record on fighting poverty has been a complete failure... Why is poverty higher? One big reason is that economic growth has been abysmally low over the last decade. With a normal post-World War II recovery, we would have $2 trillion more GDP this year. That’s more than the GDP of Ohio and Pennsylvania combined.
The President's Council of Economic advisers recently released a report arguing that the Obama administration has narrowed inequality as well in three major ways, reports FiveThirtyEight:
First, the administration’s actions during the recession — extending unemployment benefits, temporarily cutting payroll taxes to stimulate growth and bailing out the auto industry, among others — kept unemployment lower than it would otherwise have been. Since recessions tend to hit the lowest-earning workers hardest, policies that mitigate their impact will tend to reduce inequality. Second, the CEA argues that the Affordable Care Act, by making health insurance more affordable for and accessible to low-income workers, has greatly reduced disparities in health care. And third, the CEA argues that the administration’s tax policies — which raised taxes on the rich, cut them for the middle class and expanded programs such as the Earned Income Tax Credit that help poor families — made the tax code more progressive. All told, the CEA estimates that the poorest fifth of American households will earn 18 percent more in 2017 than they would have without the administration’s policies...
It’s too soon to say whether the recent progress on inequality represents a long-term shift or a temporary blip. And even if the gains are real, they have made at best a modest dent in the long-term rise in inequality.
Over at the New York Post, Kaori Markowicz says Americans seem to be economically fragile even at much higher incomes. "People are literally living paycheck to paycheck. That the paychecks are sometimes quite large doesn’t seem to change that dynamic at all."
In other little reported news, there has been an ongoing, multi-state prison strike happening--and some guards also seem to be participating, reports Buzzfeed:
Striking prisoners at Alabama’s Holman prison say they have been joined by an unlikely ally: their own guards. Guards at the facility did not show up for their shifts at 6pm on Saturday, according to organizers of the national prison strike and audio and video accounts from a contraband cellphone inside the facility...
Prisoners at Holman and other prisons across the country — including Florida, South Carolina, and North Carolina — have been striking since September 9th to protest conditions including forced prison labor, which is carried out by about 900,000 of America’s 2.4 million incarcerated population.
The Marshall Project has this primer on the strike to answer such questions as what does the prison workforce do:
They’re not included in standard labor surveys or employment numbers, but at least half the nation’s 1.5 million prisoners have a job. Some states have a work requirement: any able-bodied prisoner must work or face disciplinary consequences. According to DATA1 from the Bureau of Justice Statistics, about 700,000 prisoners have daily jobs, helping to run a prison—mopping cellblock floors, mowing lawns, preparing and serving food. They act as GED tutors, they file papers in the chaplain’s office, and shelve books in the law library. A much smaller portion—an additional 60,000 inmates—participate in “correctional industries” programs designed to mimic real-world jobs; the federal prisons’ Unicor program, which had $472 million in net sales last year, is an example of these programs. An even smaller group (less than one percent of prisoners) work for free-world companies under the auspices of a federal program.
In the Washington Times, Derrick Hollie argues overcriminalization is economically harmful:
More and more Americans are beginning to realize that our criminal justice system isn’t working as it should, and support efforts to fix it. Doing so will limit the far-reaching consequences of the system’s flaws, increase the likelihood that those who have made a mistake will be able to turn their lives around, and lead to a safer society for all. There are many in our jails and prisons who want to “go straight” after they’ve served their time. They deserve an opportunity to find meaningful work and make a positive contribution to society. Neighborhoods and communities will be safer. Our economy and nation as a whole will be bolstered.
You might be interested in this woman's tale of what it is like to be elderly and homeless. And in better news, the New York Times reports that NYC is contemplating a bill that would guarantee poor people access to legal representation in housing court:
Despite $62 million set aside this fiscal year by Mayor Bill de Blasio, a Democrat, to bolster legal help, more than 70 percent of low-income tenants in New York City still go without lawyers in Housing Court, according to a report published in June by the newly created Office of Civil Justice, part of the city’s Human Resources Administration.
With landlords almost always represented by lawyers, tenants are overmatched from the start, tenant advocates and city officials say. Across the city last year, there were nearly 22,000 evictions, with the greatest number in the Bronx.
With presidential debate season underway and a little over a month until the election you might be interested in this primer on the candidates' plans for the economy and economic mobility.
Last week your editor highlighted the illegal activity of Wells Fargo and the fact that top executives may take no responsibility. But some of you might have heard that CEO John Stumpf is forfeiting $41 million in earnings in the aftermath of the scandal, which is still "chicken scratch" in his total compensation reports NBC's Martha White:
Regulations require publicly traded companies to include contract provisions that let a company "claw back" compensation if a top executive is involved in activities that force the company to restate its financial statements.
But often, mistakes that don't rise to the level of criminal behavior aren't enough to trigger a clawback, and cases like the Wells Fargo scandal expose the limitations of these provisions, said Charles Elson, professor and director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.
But it gets worse; a recent NY Times story shows allegations from employees who say they were fired for trying to blow the whistle on the practice years ago:
In trainings, the company repeatedly emphasized the importance of its ethics code and urged employees to call its confidential hotline if they observed anything inappropriate, Mr. Johnson said. But just two weeks after he started working as a business banker in a Wells Fargo branch in Malibu, Calif., his manager began pressuring him to open accounts for his friends and family — with or without their knowledge. When he refused, he was criticized for not being a team player.
Mr. Johnson soon learned that his colleagues routinely opened unauthorized accounts for customers who they thought wouldn’t notice, like elderly clients or those who didn’t speak English well. Disturbed by this practice, he did as he was instructed during training and called the company’s ethics hotline. Three days later, he was fired for “not meeting expectations,” he said.
And apparently our mediocre efforts to mitigate carbon have not paid off, we have reached 400 ppm in CO2 levels, which is considered a climate tipping point. In the NY Times, Hiroko Tabuchi and Clifford Krauss look at the debate over pricing carbon and why some are fighting hard to keep it unvalued:
[S]ome companies, including Exxon, contend that the economics of climate change are unpredictable and that global growth will continue to create demand for resources, making it even more difficult to come up with hard numbers.
Representative Posey is among those who say the federal government has no business forcing businesses to try. He accuses the financial regulator, the Securities and Exchange Commission, of pursuing a political agenda by pressing companies to quantify climate risks...
Advocates of fuller corporate disclosure say the sums at stake are vast. Even under a plan that would limit warming to 2 degrees Celsius — a goal agreed to as part of the Paris deal — climate change could wipe out $1.7 trillion of global financial assets, according to a peer-reviewed study published earlier this year in the journal Nature.
In HistPhil, Paul Brest looks at reconciling corporate social responsibility:
But CSR sometimes requires the firm’s management to compromise the firm’s economic value to a greater or lesser extent. There are four possible rationales for doing so: (1) it is required by law, (2) it is implicitly required by environmental, social, and governance (ESG) criteria, (3) shareholders have signaled their willingness to sacrifice profits to benefit other stakeholders, and (4) moral principles require the firm’s management to take account of the interests of other stakeholders. The last of these is the most interesting.
It is worth emphasizing that moral obligations are different from altruism, which is, by definition, supererogatory...
As the late U.S. Supreme Court Justice Potter Stewart once remarked, “Ethics is knowing the difference between what you have a right to do and what is right to do.”
In Think Advisor, Garvin Jabusch looks at whether public equities can have an impact:
There’s an argument in the world of impact investing that goes something like, "impact happens only through private investments; there is no real impact, apart from shareholder engagement efforts, in public equity investing." An associated perception is that investment impact means capitalizing an enterprise beyond what would happen otherwise, meaning private equity alone has the power to provide real impact. But is this true?
Publicly traded corporations are the largest and most visible social and environmental bellwethers of the global economy, and the high allocation to public equities in most investor portfolios means public equity investing is and must remain one of our key opportunities for impact. To cause a positive impact, families, institutions, and individuals can invest in public companies whose primary businesses activities address pressing social, economic, and environmental challenges at scale.
This does not mean companies with a pretty sustainability report or that are incrementally making their operations less carbon-intensive, but firms that have made it their purpose to enable a better world with an indefinitely sustainable economy. Skipping traditional investment practices to focus on buying these companies sends the clear signals that markets do value solutions, and that markets will devalue businesses that are the leading causes of our most pressing risks.
Fran Seegull and Nancy Pfund in Impact Alpha have an open letter to the presidential candidates in which they make an arguement for more emphasis on the impact economy:
The Impact Economy is rooted in the American ideals of freedom, opportunity, equality and optimism. Indeed, the federal government has a long and bipartisan history of supporting the Impact Economy. From the Community Reinvestment Act (1977) to New Markets Tax Credits (2000) to the Impact SBIC program (2011) to recent rulings from the IRS and the Department of Labor modernizing the concept of fiduciary duty to include impact factors (2015), federal policy has helped catalyze the flow of private investment capital for social and environmental impact and financial returns. Even more opportunity exists to catalyze social and environmental change by bringing together public policy, private capital and entrepreneurship.
It’s beyond debate: impact investing can help us create a more stable, prosperous, equitable and just world for all.