Waffling. Income Inequality and Non-profit Work

So let's bring this home.




I read this article a month or two ago, and I keep coming back to it.  It's about a charity named JIFFI that some students at Notre Dame started, essentially lending money in order to help people break out of dependence on payday loans and other crazy/high interest rate loans. 




A bit of background.  While I'm not sure this technically falls under the category of a micro-loan it's based on a rather similar concept.  I've personally been following the concept of micro-lending for years now - ever since I heard about the Grameen Bank back in college - and the basic idea is pretty simple.  Let's say I make money driving a rickshaw.  I make $20 a day, but I have to pay $10 a day to rent the equipment.  If I take out a small loan, I can pay back that loan with my profits and eventually own the rickshaw free and clear...and basically double my income (once the rickshaw is paid off).  Same principle can also be applied to getting a cow, which can make a huge difference in household income as I start selling off milk, butter, yogurt and cheese.  Or buy chickens so I can start selling eggs.


I like the idea that we can use loans and financing in a positive way, rather than adding to the growing income inequality we see today.



Programs like this, to me, sound like the exact reverse of an anecdote that I sometimes ponder about how and why some people profit off of debt.  This anecdote, btw, also makes me think of Shay's Rebellion.




Both raise great questions about the role of debt, financing, and self-sufficiency in an economy (as well as the potential for unrest if the system is not perceived as just.)




So I have this idea in my head of a non-profit like JIFFI, described above.  It might focus on more than just predatory payday lending, maybe try to provide a lower interest rate for debtors who have never missed a payment.  It would not really be debt consolidation, because most of the debt consolidation programs I see really fall under bankruptcy regulations.




The only problem is...well, there's a ton of problems with this:

There’s other non-profits doing similar work.  I would need a business plan, and how much is realistic?  $1 million?  More?  Less?  I don’t know enough about banking, or government regulations for non-profits and banking.  I don’t have any backers.  I don't even know anybody who could be a backer.  I suck at fundraising (as the annual Big Brothers Big Sisters bowling fundraiser reminds me).  I don't really know much about grant writing, or whether I could get enough grant money to make it work.  It’s too idealistic.  Too risky.  I have a mortgage and car payments and don't really want the uncertainty.  I don't know enough about underwriting, or the credit system.

And on, and on, and on.  Yet I keep circling back to it.  It would be something...meaningful.  It could make a huge difference in people's lives.  And what would it be like to see sand start sliding down the sand dune?

Various Broad Brushstrokes on Income Inequality

Lunchtime edition part II:

There are so many underlying assumptions that I’m not quite sure where to start, particularly if I don’t want to get bogged down in pedantic details.

Let’s start by saying I want to improve our quality of life.  I like to think about things holistically, try to identify which parts could be the underlying key to making big changes.  A tipping point, if you will.  I think (in a world of finite resources) that we have to be smart about where we put our efforts.  A combination of the inkblot counterinsurgency strategy and Malcolm Gladwell’s tipping point.

That’s nice and broad, and you can apply that way of thinking to almost any issue you care about.  You can also apply it internationally or domestically.  (If I had the resources, I’d have one department focus on each).

Let me narrow it down a bit, for now.  I want to look at domestic (i.e. US) income inequality.

Even bringing it down to that, this is a broad topic with all sorts of different underlying assumptions and strategies.  It’s all tied up with whatever your thoughts are on capitalism, the free market, government intervention, etc.  I think you’ve heard it all before, and probably aren’t open to changing them.

I want to brainstorm/muddle through a couple ideas that appeal to me.

First:  Our Founding Fathers believes in the importance of independent small businesses.  Technically, farmers.  Jefferson did the Louisiana Purchase in part because he thought that large quantity of land would help ensure a large quantity of small family-owned farms.  Those small family-owned farms had an independence hard to imagine these days.  Sure, they had to take out a loan and buy seed-stock and farming equipment…but they weren’t some salaried stiff working for a large corporation.  With the shrinking of farmers as a portion of our population, the growth of corporations, etc…more and more Americans are dependent on other people to make a living.  By ‘other people’ I ultimately mean the 1%.  There is a lack of independence that stifles us. 

Second: There’s a competing worldview of competition and scarcity versus abundance.  That is – are we fighting for larger portions of one small pie?  Or trying to grow the pie so we all can have larger portions?  Does your success mean less for me?  Or more for all of us?  Are we doomed to compete to be at the top of the pyramid?  Or can we invert the pyramid so we can support a large portion of people at the top?  (i.e. the truly wealthy can live off of capital gains.  Can we get to the point where more and more people are living off capital gains…and if so, what would that do to the economy?  Would it cause inflation, if we had four times as many people making a livable wage off of investments?  Or would it create an economic boom as more people could afford to spend on various consumer items.  There’s a lot more to this, but again I don’t want to get dragged down into the weeds.)

Tied in with this – do we need fear as a motivator, to boost productivity?  Or are we more productive coming from a sense of security?  Are we more creative when we’re forced to be, in order to make a living?  Or when we know we can afford to take our time and really come up with something amazing?

Third: People who aren’t wealthy often don’t know how to handle a large quantity of money.  Lottery winners, for example, often wind up exactly where they were before winning the lottery.  Handling wealth…well, I’m not wealthy so I can’t prove I understand this.  But someone I knew once said that you should never spend your principal.  If you are lucky enough to get a windfall, you should invest it and learn how to live off that 6% (give or take) profit from the investment.  (By my calculations, you’d need at least $1 million in principal.  Assuming you can earn 6% off that it would give you a yearly income of around $60,000 to live off of.  No…not crazy rich, though it sounds like that to the vast majority of us who don’t have a million to invest.  But that can make you pretty comfortable if you don’t blow it all on expensive items.)

This, btw, is extremely hard to do if you don’t already have money.  Many people are living paycheck to paycheck, and have a hard enough time setting aside money for their 401K much less getting to the point where they can live off capital gains.  What’s even crazier is that those with less money wind up spending more (in terms of interest rates, etc) just because they are more of an investment risk.  I get the free market principles behind why this is the case, and I understand that a higher interest rate is better than the inability to get any sort of loan at all.  But it’s also kind of crazy when someone has been successfully making their payments for years, and yet doesn’t qualify for a lower interest rate.  You’d think it be even easier to make the payments if they’re smaller than what they’re currently paying!  If they’re able to pay their current bills, and aren’t late, then why would the system consider them a risk that justifies a higher interest rate?  There’s something kind of screwy about that…

And finally, for this post, number four:  How does the growing rate of automation and industrialization affect all of this?  The low-skilled jobs are going away.  It will be harder and harder to make a living if you don’t have the resources to become high skilled.  Can we transition to an economy full of higher skilled individuals?  Or is it inevitable that more people are going to fall out of the economy, with all the consequences that entails?  And if that does happen, how much will that lead to future instability, as the have-nots get shut out?

How to Change the World - A Theory

Lunch-time edition:


I sometimes ponder the connection between the micro and macro levels.





That's a broad statement, but true.  What's the connection, for example, between your economic activity as on a small scale (microeconomics) and economic activity on a large scale (macroeconomics).  Or between physics at a size smaller than Planck's constant, versus Newtonian physics at the level we see every day?  The macro, after all, is made up of the micro (again...tiny grains of sand that add up to one big sand dune).






And I think of that, sometimes, as applied to changing the world.  You can try to change in broad brushstrokes.  Focus on getting mosquito nets, for example, to reduce the impact of malaria in Africa.  Or focus on a more micro level, like volunteering as a mentor with Big Brothers Big Sisters.






Why choose one over the other?  I can't help thinking that a mentorship program like BBBS is more...in depth.  When I think of how people change, its normally because of long term and daily interactions.  There's no silver bullet, no shortcuts.  True change comes from the type of involvement you have with your family and friends.  I believe that's one of the underlying reasons why research repeatedly shows that economic segregation is bad.  Bad for rich, bad for poor...bad in part because there are few role models of success for the poor when all they know is other poor people.  And there's a lack of understanding on the part of the rich, when their only experience with poverty is to come sweeping in with charity.






Having that level of interaction, that type of involvement, is slow.  Time consuming.  You can only help one person or one family at a time, because who has the energy (or capability) to have that kind of relationship with hundreds?  Big Brothers Big Sisters is a great program, yet they struggle to find enough mentors. 


Funny enough, it's also some of the most rewarding experiences available.  Being a Big Sister is a bit like being an aunt, or other caring relative.  All those studies on happiness discuss the importance of having a caring connection with the people around us.  Family.  Friends.  Mentors and mentees.  This is what makes life worth living...and yet so many people are too busy to support it, and would rather just give a donation. 






I do see the appeal of working on a large scale.  It can seem more satisfying, in that you can help so many more people all at once.  But there are dangers to that, as well.  It can be more impersonal.  De-humanizing.  I think some of the criticisms about foreign aid are, in part, because it's so bureaucratic.  Disempowering.  You don't get the sense that they care about you, as an individual.  Or that they are giving you a choice, a say in your own life.  It can come across as patronizing, an "I know better than you what will fix you (and boy, do you need fixing.)"


In my own life, I've travelled so much that I feel more connected to the macro (i.e. national politics, world events) than I do to my own personal micro (i.e. the events affecting the town I live in.  Or even my state.)  Yet all those national events - like our upcoming presidential election - are made up of any number of micro events.  The local political structure that tries to get out the vote.  The local politics and history that determine our voting districts.  I'm more likely to know the presidential candidates than the candidates running for my state representative, or mayor.


But I digress.  The point I was getting at is that in-depth, micro activities (if they have enough support) can lead to some truly amazing macro changes.  And that maybe, just maybe, it's better to focus on growing and nurturing those small changes instead of trying to make a sweeping big change.


Stay tuned for part II.

Speaking of Horrible Events

Two of my current 'horrifying news' stories:

The water crisis in Flint, Michigan.  As more and more details come out it's so horrible I can't even.  Like literally, thinking about it makes me so mad I don't want to start.  If I did, who knows when I'd stop?

The second one:  Hillary's e-mails.

Yeah, yeah.  I  mostly blew off the Benghazi hearings, as typical Republican witch hunting.  But the e-mails? 

Before I go any further, I think I need to share a link.  This is actually even better than one I found yesterday, because it goes into a lot of detail on what it takes to get material from one classified network to another.  I didn't realize until I saw articles like this how little people knew about the process.  I can remember what a headache it was to get material off one network and onto another...going down a security level, that is.  I had to e-mail it off to the right department, where they would check the material to make sure it didn't have anything too high for the network we were sending it to.  They'd e-mail it back to me on the desired network when they were done, if it all checked out.

Yes, there are issues with over-classification.  And in some situations (I imagine diplomatic talks that you participate in) it may not really seem like classified material at the time.  I'll leave it to the FBI to sort out whether or not a crime has been committed.

That said - if known classified material was deliberately sent to an unclassified network (ANY unclassified network!!! Not just 'a private e-mail server') then that's a Big. Friggin. Deal.

It's huuuuuuuuuuuuuuuge.  It is going to jail level bad.  Everybody I know who's been in intel understands that.  We all know that if we had done what appears to have happened, we'd be facing some sort of judicial proceedings.

And so it horrifies me, absolutely  horrifies me, how many people are giving Hillary a pass on this one!  Yes, I know the Republican candidates are horrible.  I don't think Trump has a chance in hell in the general election, but I could be wrong.  I know Hillary has been pushed as 'the establishment' candidate...

But if they overlook this, in their rush to help support her, then it typifies everything that is so scary and disturbing about  America today.  It shows that power trumps justice.  That someone who, at a minimum, is responsible for creating the environment where something like this could happen, would be a potential President.

I don't care about Benghazi.  I don't want to see any of the current Republican candidates as president.  But I sure as hell don't want to see Democrats ignore or minimize these e-mail problems, and I find it very disturbing that so many respected institutions are acting like this is no big deal.  (If 'everyone is doing it', as one alleged, than we've got an even bigger problem than I thought.)

One Tiny Grain of Sand Sliding Down

The military taught me a certain kind of ettiquette:

- Don't criticize if you can't offer a better solution.
- No excuse, sir.
- I don't know, but I will find out.

For the most part, I get it.  As a people leader myself I get tired of complaints and criticism that doesn't really help.  Yet trying to abide by those rules makes things difficult...

Because I just don't want to sound like just another whiner.  Complainer.  Or an armchair quarterback telling everyone else what 'ought' to be done, when I'm not making it happen myself.

There's so much going on in the world today.  So much that I find disturbing, and horrifying.  I ask myself when things changed, why it didn't seem like this when I was younger.  Or maybe it's always been like this and I just didn't know. 

I think that last one is the most likely, particularly when I consider the age of songs like "We Didn't Start the Fire", or "It's the End of the World as We Know It".

So yes, things are pretty awful out there.  I've got my own ideas on what we can do about it, of course,  But so does everyone else.  I think mine are better, naturally, but why would anyone support my ideas over anyone else's?!?

Which is the critical part, I think.  Not coming up with ideas, not executing them.  But getting enough supporters to actually make a difference.  (And not just supporters, in terms of people.  I have to make a living somehow.  Like everyone else, I'd love to combine my own natural interests with a career.  But I don't want to get into that, right now.)

Anyways.  What's frustrating is I don't feel like it matters how many times we share a link on Facebook, for example.  Or hit 'Like' on an article. 

Or it does, but only to a small degree.  One more grain of sand sliding down a sand dune that's already in movement.