Tag Archives: poverty

With so many in “deep poverty,” mere poverty is almost like the middle class

29 Sep

Philly poverty

If one of us, or many of us, falls behind, way behind, is it the responsibility of those ahead to pull up the less fortunate, the unfortunate and all those whom fortune has woefully forsaken?

Those living in and around Philadelphia should be giving this serious thought. In this city, the name of which means brotherly love, the economy, the culture, the dynamics, the thoughts and the ideals are too weak to sustain the population. What exists there represents gross failure.

A new report says that 12 percent of Philadelphia residents live in something called deep poverty. Sadly, the times have forced us to look beyond mere poverty, which in Philadelphia is 26 percent.

The city, which I live outside of, ranked highest in deep poverty when compared to the nation’s 10 biggest cities. Nearby Camden, across the river in New Jersey, is not among the biggest and wasn’t ranked. But it has a deep poverty rate of 20 percent and a poverty rate of 43 percent.

From my little cloister, that’s difficult to even imagine.

Deep poverty chartAll these figures come from the U.S. Census’ 2013 American Community Survey, which was recently released.

By definition, a family of three is in poverty if it lives on $20,000 a year. In deep poverty, three survive on $10,000 a year.

In terms of sheer numbers, there are 184,000 people in Philadelphia who are clinging to its lowest rung. Alfred Lubrano, a staff writer for the Inquirer, said that’s about the size of cities like Tallahassee, Florida or Salt Lake City, Utah.

It strikes me as being post-apocalyptic.

But I almost never go to the neighborhoods were the 184,000 live. Camden to me is like Mars.

Still, I can’t help feel as if people like me have somehow failed those in deep poverty, even though many have failed themselves.

In any group, on any place in the world, there are people who do well and people who do not. There are those who need no help and there are the helpless. Now and in the past, however, social units like Native-American tribes or New England colonies or even extended families would try to lift up those that some might describe as laggards. They would do so simply because the unit was a unit and felt responsible for its members. To some degree, we do this in America. We have networks of social services, we have churches and synagogues, and we have government.

Lubrano, the Inquirer reporter, interviewed a Philadelphia women in deep poverty. She is 42 years old, separated with three children ages 7 to 17. Born into an Irish-Italian family, she had dropped out of high school and worked as a cashier. According to Lubrano, she fell into depression and was unable to work. So the government provided her with disability payments of $8,880 a year.

This is a nice gesture, but not a solution to the problem.

So what is? With so many types of poverty, there probably would have to be an assortment of solutions, and even then many couldn’t be reached or helped or encouraged. But it’s for certain a studied, intelligent approach would reduce Philadelphia’s Tallahassee-size problem to perhaps a problem the size of Lost Springs, Wyoming, or Bozeman, Montana.

I lack the training, depth and insight of a social engineer, but one thing I’d like to see in every poor neighborhood is a “Factory of Last Resort.” Employment would be open to all those in poverty and deep poverty who are looking for an out. They would manufacture a mundane but useful item, like brooms or soap. These factories probably would operate at a loss, but there would be incentives to keep loses to a minimum and inch toward profitability. Included with the job would be access to health clinics, day care, a dining hall and dorms.

We would be building the equivalent of an urban kibbutz.

After a time, management positions would go to employees who exhibit leadership skills, the ones who have learned and blossomed from the experience. Awakenings often come with restored dignity.

Those of us who are doing well would be encouraged to buy the brooms and soap as a sign of support. It would be a way for all of us to make our cities whole again and to keep humanity human.

And then, should we want to, we can safely and happily visit the once great and now great-again places like Camden, which spawned RCA Records and Campbell Soup. And the City of Brotherly Love can free itself from the embarrassing irony of its name. It can return to its Quaker roots of service, justice, community, self-improvement and independence.

I love a good city. This would give us more of them.

By Lanny Morgnanesi

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When the poor stop going to McDonald’s, we’re all in trouble

20 Jun

mcdonalds-meal

Businesses like Wal-Mart and McDonald’s haven’t been doing well.

 

People without a lot of money usually go to these places, but because they now have even less money, they’ve stopped going. When people who work at Wal-Mart and McDonald’s can no longer afford to shop and eat there, it’s a sure sign of a coming, broad-based financial decline.

 

It will affect us all, even the rich, who don’t amount to much if they can’t get the poor to give them money.

 

Reports show that the parade of U.S. customers into Wal-Mart fell 1.4 percent during the first quarter. That followed a decline of 1.8 percent in the prior year.

The discount retailer blamed the bad winter weather but also cited cuts in food stamps, higher payroll taxes and the increased cost of health care.

 

You know things are bad when Wal-Mart relies on the food stamp program to move product.

 

Walm-MartRecent U.S. sales at McDonald’s also have declined, by 1 percent. To lure back low-end customers, the burger behemoth increased its value menu, but that hurt profits even more.

 

What’s happening is the downward pressure on income is leading to downward pressure on sales.

 

Henry Ford used to pay his people well so they could buy cars. If Wal-Mart and McDonald’s have any sense, they and the other minimum-wage shops will copy this strategy. Not doing so will have consequences. It could turn the U.S. into another Japan – the bad one, not the good one.

 

Japan was once the globe’s supreme economic power. It made and sold great products while setting new standards for manufacturing. Flush with cash, Japanese investors bought up billions in prime New York real estate, and nearly everything else. During this period, in the mid-80s, I visited Hawaii, which seemed more like Japan. Japanese tourism and culture were so strong that hippie beach bums peddling sailing lessons had to learn Japanese.

 

Then came the bust, the swoon and massive disinflation. It began around 1990. People in the U.S. don’t understand disinflation. It’s when prices fall and fall and fall and still no one buys anything. The economy becomes comatose. Seems impossible, until you look at Japan, where disinflation has been a cruel fact of life for a couple decades.

 

 

According to Bloomberg Businessweek, one contributor to Japan’s disinflation is falling wages. The recent habit of businesses there, as in the United States, is to avoid hiring full-time workers and instead contract with temporary workers who earn less and have no job security. These temps now make up about 40 percent of the Japanese work force. They are paid about 38 percent less than full-time workers.

 

The financial and social divide between the two kinds of workers has grown and is causing multiple calamities. For example, no one wants to marry a temp. This depresses birthrates and is making Japan a nation of elderly people. Banks won’t give temps mortgages, which doesn’t encourage building. These and other negative trends cascade and the country stagnates.

 

In the current era, U.S. corporations have reaped huge profits from selling to the developing world. But those markets, at least to some degree, are cooling and maturing. The bread-and-butter American markets may have to be revived in order to maintain profits. That could require a higher minimum wage and more opportunity for the middle class. The government and the business community finally are waking up to this.

 

The Great Cure for so much – including crime and falling education standards — is to put money back in the hands of traditional spenders. For a time, greed will blind us to this reality. Then the cash register stops ringing and we see.

 

Wal-Mart and McDonald’s — and all the other places where you can work full-time and not earn a living — now see. Each is probably afraid to take the first big step. Sooner or later someone has to, otherwise that first big step will be involuntary and it will send us over a cliff.

 

Think about the return of the 25-cent McDonald’s hamburger. Think about taking the family out for one on a very special night, maybe once every couple of months. That disinflation, and it will make 15 percent inflation seem like good times.

 

Now, we wait.

 

By Lanny Morgnanesi

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Goldman Sachs: Altruism for a profit

27 May

goldman-sachs,jpg

Investment powerhouse Goldman Sachs has made money with schemes that were ingenious, inventive, complex, arcane, morally vacant and, some might say, criminal. Now it hopes to make money by exploiting the dysfunctions of government.

 

Goldman has long mastered the art of generating cash without actually producing a product. Its techniques include:

 

  • Using influence to rig a trading system in its favor.
  • Finding a market where it can buy low and then finding a second market where it can sell high.
  • Identifying gross inefficiencies that are costing someone or something money and offering to fix them.

 

Goldman’s new plan is along the lines of the third. The firm is financing crime reduction measures in Massachusetts in exchange for a percent of what is saved by not having to incarcerate thugs.

 

Ingenious, inventive, complex.

 

New profit center for investors

New profit center for investors

This type of investment carries an extra dividend: It makes Goldman Sachs – a villain in the eyes of the Occupy movement – look like a Good Guy. Indeed, the investment vehicle designed to reduce crime is called a social impact bond, or in Wall Street parlance, an SIB.

 

Some view these investments as a marriage between capitalism and charity, but capitalism is the strong, dominant partner.

 

Bloomberg Businessweek reported on Goldman and the SIBs in early May. Writer Esme E. Deprez cites a prediction by the Rockefeller Foundation that the market for SIBs is growing and by 2015 will reach $500 million.

 

That’s a lot of social impact, enough to give government the idea that it no longer is responsible for maintaining order and structure in society. Or has it already decided that?

 

According to the Businessweek article, Goldman is investing $9 million and betting that crime will go down – or more accurately that young men will spend fewer days in jail.

 

The bonds help fund a program called the Massachusetts Juvenile Justice Pay for Success Initiative. In that program, a non-profit agency called Roca works with young adult males on probation. The agency provides outreach, therapy and training. After two years, participants are supposed to leave, take a steady job and lead a crime-free life.

 

If a graduate stays out of jail for a year, Massachusetts saves $12,400. If the state is able to reduce crime enough to close a 300-person prison, it saves $47,500 per inmate.

 

This is how the SIBs and Goldman get paid off.

 

In this particular case, Goldman has partnered with other investors who financed an additional $12 million in bonds, making the total $21 million.

 

The bonds earn 5 percent no matter what, but pay nothing else until the men in the program manage to spend 22 percent fewer days in jail. There’s a sliding scale for payment, with a maximum of $27 million being paid to bond holders if jail time is reduced by 70 percent.

 

It’s a risk, like a junk bond, but $27 million for a $21 million investment is pretty good money (28 percent profit) and worthy of the risk.

 

Roca had been working with 375 men. With the SIB money, it can handle 550.

 

A skeptic might look at all this and ask:

 

  • Why doesn’t Massachusetts put up the $21 million itself and forego the $6 million payout to investors?

 

  • Why doesn’t society as a whole recognize that employed people from stable families commit fewer crimes?

 

  • Why does the nation exclude million of people from an otherwise viable system of commerce, education and opportunity and allow the existence of acres and acres of urban decay that breed crime and insanity?

 

There are clear answers to these questions. I won’t go into them because our preference is to ignore them, deny them and maintain a monstrous blind spot in spite of religious teachings, well-intended laws and glorious, inclusive rhetoric.

 

But as a culture, we have reached an all-time low when we allow things to get so bad

that Goldman Sachs can make money off our failures. The promise of money, more so than altruism or mere brotherhood, does seem to get things done. Perhaps we can turn the VA hospitals over to Goldman. With all those returning vets, there’s got to be a profit in there somewhere.

 

By Lanny Morgnanesi

 

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On the Coming Middle Class Revolution

29 Sep

inequality

The problems of poverty and inequality have always bothered me. This is so even though I’ve not been poor nor have I ever lived among the poor.

Why then, I ask myself, do I have this strong sense that it is morally wrong to allow the sad side of civilization to exist?

Others are free of this burden, why not me?

The great religions speak against poverty and urge attention and compassion. Yet legislators who profess these faiths will happily cut  $40 billion from the food stamp program.

While my empathy for the poor and the marginal working class is hard to shake, so, too, is my view that the rich and everyone else would benefit financially, spiritually and culturally from a more egalitarian society. They key to this society is the easy ability to get and hold a job that ensures freedom from want.

In such a society, billion-dollar food stamp programs are unnecessary.

You don’t need public housing or a bloated Medicaid system.

And because people would have more pride and self-respect, society would need fewer courts, cops, prisons and mental health facilities.

There would be great savings.

People would have money in their pockets and the business community would thrive.

There is little downside, except perhaps that the very rich would have slightly less money and corporations would not be able to amass huge cash surpluses.

By contrast to this semi-utopia, I find the present oligarchical society unpleasant and dangerous. And let’s face it, Thomas Jefferson aside, that’s what it is – an oligarchy.

The decline of the Great American Cities is but one example of the damage caused by too few people holding too much money, which is unfairly channeled to them through favorable tax policy and special interest legislation. Let them keep what they earn, what they deserve, what they spent a lifetime building, just check their greed when it denies others.

Prior to the great transfer of wealth upward, average people helped keep the cities vibrant by living and working in them. It doesn’t take an archeologist to figure out what went wrong. Go there and see the shells of empty factories right next to abandoned neighborhoods.

There are complex reasons for this, but most damaging has been the systematic dismantling of the middle class.

No nation can be strong without a fully functioning, accessible middle class.

With globalization and the extreme growth of markets in developing countries, this reality has been ignored. It is ignored because the American middle class is needed less and less as consumers of goods and services. Jobs  can be eliminated and wages kept low because support can be found abroad.

A Sept. 17 report by the U.S. Census Bureau says American men who worked full-time in 2012 earned less in real dollars than men in 1973. Yet the GDP in the U.S. has tripled. Where did all that wealth go?

To the top.

fast food strikeAmericans speak well of their one revolution but don’t expect another. Even so, revolution is more common today than ever, and the oligarchy should be cautious not to push too far. For the first time in a very long time, average people are noticing that class warfare is being waged against them. Those who work in the exploitive fast food industry are slowly standing up. They are not asking for $1 more, or $2 more; they basically want their salary doubled to $15 an hour.

That’s bold.

Those fighting for a more equal society have adopted a new name for what they seek: social justice.

That’s convincing and unthreatening. Who could be against that? As a result, their influence is growing.

More than people, however, it is raw statistics – overwhelming and indisputable — that are leading the charge. These figures are so dramatic that a director named Jacob Kornbluth, working with former Labor Secretary Robert Reich, has made a movie out of them.

It’s called “Inequality for All” and is getting wide notice in the media. It won at Sundance. The people seem ready for it.

In such times, even Forbes magazine feels comfortable pointing out that in 35 states welfare payments are higher than minimum wage.

Tim Cook, Apple CEO

Tim Cook, Apple CEO

that the $378 million compensation for Apple CEO Tim Cook is equal to the combined salaries of 6,258 Apple employees.

And for the quaint people who still read books, Sasha Abramsky has written, “The American Way of Poverty: How the Other Half Still Lives.” It suggests that inequality is designed for social control and that poverty is a key component of the American system that, ultimately, will destroy democracy.

Meanwhile, in higher education – once a critical component of upward mobility — there is a great deal of hand wringing over declining enrollment. The concern is that colleges and universities are doing something wrong, and that the traditional model no longer works. In truth, there is nothing wrong with the model. What’s wrong is that without a middle class there isn’t much need for colleges.

Many will close.

Unless … the middle class fights back.

Amazingly, the democratic system allows it to do that. Even though the system is rigged with sophisticated gerrymandering and unrealistic requirements for campaign funding, there is still a way to change government.

The normally passive middle class could rise up. They would do so after watching, reading, fuming, sharing horror stories and trying to support children who can’t find jobs.

If they can begin to organize and act with conviction, they won’t even have to work up a sweat. Real revolution is unnecessary. The attentive members of Congress don’t need a weatherman to know which way the wind blows. They sway easily. They took care of the middle class and built up the economy after World War II.

They can do it again.

The golden years in America – for the middle class and nearly everyone else – were from about 1945 to 1980. Let’s bring them back. All it takes is for several hundred thousand Twitter fanatics to take to the streets, maybe even with assistance from the very poor (the saddest of all). It will be a movement the media will surely glorify as “The American Spring.”

It need not be messy.

We can call it a revolution without it really being one.

We can get people working again and get the economy moving again. Optimism will flourish again. We can reach out and reach up. We can do it all together.

The wonderful thing is the uncompassionate can do this for purely selfish reasons.

As the king said, what you do to the least of my brothers …

By Lanny Morgnanesi

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Thoughts on a Christmas morning.

25 Dec

What would our country be like today if the teachings of Jesus were truly part of our cultural life? For a moment, let’s not complicate things with religion and divinity. Just think of the teachings. Would we allow high unemployment and poverty? Would our economy flourish or sink? Would Christian equality fetter the ambitious? Would a refusal to make war result in a stronger nation or a vulnerable, perhaps occupied nation? Would we all be happier and at peace with ourselves, even if we had to live with less? Maybe living with less is the secret to happiness.

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