When Justice Costs Less Than Injustice

Pragmatic Idealism

Image Credit: Pixshark

I suppose that in an ideal world we wouldn't care about the financial implications of injustice; doing the right thing ought to be sufficient motivation.  Of course, that's not always the case, and rather than restricting ourselves to the high road, I think it's preferable to adopt an approach I like to call Pragmatic Idealism (PI).  The PI mentality says that, on the whole, people want to do good, but in reality a lot of factors can get in the way: inertia, politics, financial concerns, entrenched interests, and the like.  The best way forward, therefore, is to chip away at those barriers while continuing to appeal to the public's sense of right and wrong.

Take homelessness, for example.  One would be hard-pressed to find people in support of the disadvantaged living on the street, but at the same time it can be equally hard to garner support for programs that have a cost.  Put another way, how many of us would vote for tax increases so as to fund proven, effective models for putting the homeless into permanent, safe, and affordable housing?

The Chance to Speak

The Power of the Spoken Word
I don't think it's a stretch to say that were it not for his oratorical skills, Barack Obama would not be president of the United States; before his speech at the 2004 Democratic National Convention he was a complete unknown on the national stage.  In the same vein, it's hard to imagine the civil rights movement without the soaring rhetoric of Dr. King.

Photo credit: Minnesota Historical Society

In both cases, success was made possible by an army of lawyers, accountants, organizers, strategists, marketers, policymakers, and protesters.  Civil rights had the Southern Christian Leadership Council, the NAACP, the Nonviolent Student Coordinating Committee, the ACLU, and others;  Obama had the Democratic party machine, his own campaign team, and countless other entities supporting him. Yet the spoken and written word were what gave these movements their raison d'etre.

On Taxes on the Poor & the Rich

Source: 401(K) 2012

The State of State Taxes
President Obama's recent State of the Union speech consisted of a number of proposals and policy ideas, one of which touched on a point of great contention in this country: tax policy.  The left says that the rich don't pay their fair share, and the right argues that the poor get a free ride.  Sure, there's more nuance to the political differences--but not much!  This conflict makes Obama's proposal to "...extend tax credits to the middle class by hiking taxes on wealthier Americans and big banks..." (The Huffington Post) that much more interesting.

Lost in the vitriol about tax breaks and rates are the facts.  That's a shame, because facts happen to be useful when making policy decisions, especially those related to the nation's finances.  Fortunately, a fascinating report by the Institute on Taxation and Economy Policy provides just that information.  Titled Who Pays: A Distributional Analysis of the Tax Systems in All Fifty States, the report "...assesses the fairness of state and local tax systems by measuring the state and local taxes that will be paid in 2015 by different income groups as a share of their incomes."

Behavior Change Through Contracts--With Yourself

Contracts, Contracts, Contracts...

Image Credit: Gold Lawn Firm

We often signal our intentions by signing a contract, be it at a gym, financial institution, or food coop. Contracts serve a legal function, but they can have the added benefit of financially and morally binding us to stick to a behavior--healthy eating, working out, building credit.  And it turns out that a lot of research in behavioral economics is showing that these instruments are indeed highly useful motivational tools; only the most effective contracts turn out to be those we sign with ourselves.

These tools are called commitment devices, defined as "strategies whereby people agree to have a penalty imposed on them (that is, they agree to incur a loss) if they do not reach a particular goal" (World Development Report 2015).  A whole host of free and low-cost websites and apps have cropped up to offer people commitment devices; these include Beeminder, stickK, 21 Habit, and Go Fucking Do It (yes, that's actually what it's called!).  They all have their quirks, but the basic idea is the same: you commit to a goal, such as to run 3 times per week, and if you don't meet it you allow the company to charge your credit card.  SticK's model is really interesting: if you miss your goal, not only are you charged, but the funds get donated to a cause in which you don't believe (e.g., if you are pro choice, the funds will go to a pro life organization).

On Balancing Risk & Rewards In Lending to the Poor

Photo Credit: David Yu

Mission Versus Business
Here's a fundamental challenge in our business: the greater the alignment between our lending and our mission, the greater the strain on our loan portfolio performance.  Phrased another way, the highest impact loans--those to ex-offenders, domestic violence survivors, and the temporarily homeless-- are also the riskiest.  This is through no fault of their own; rather, it's simply a result of the tremendous strain that personal and financial instability places on a person.

As a nonprofit, it is incumbent on us that we adhere to our mission, which is to use financial services to create pathways out of poverty.  Yet as a business, especially as one that debt finances its lending operations, we must also ensure that we are fiscally sound.  To address this tension, we've taken several approaches.  First and foremost, the interest rates we charge are designed to compensate for higher losses.  In fact, whenever someone questions why we charge 30% on Emergency Loans, our answer is simple: losses are around 15% and servicing costs are very high.  That said, we don't really care who pays the interest; funders are welcome to subsidize the loans so that the borrower pays a lower rate!

On the Arts & Wealth

The Power of Live Theatre (yes, I prefer the British spelling!)

The Walt Disney Concert Hall in LA cost $240 million (Photo Credit)

Growing up I was privileged in many ways, one of them being the number of plays, musicals, and concerts I had the opportunity to see.  I distinctly remember dressing up for the show, the architecture of the theatres, the voices and movements of the actors.  Several theatrical experiences stand out as seminal moments in my development as a person in general and a writer and poet in particular.  For instance, a number of years ago my parents and I went to see The Glass Menagerie at a small playhouse in Burbank, CA.  The play, which is a masterpiece, came to life thanks to absolutely brilliant acting; when the curtain finally came down I was transfixed.

Live theatre, when done well, can be a transformational experience.  It opens the mind, stirs the soul, and awakens the senses.  In short, it can play a critical role in a person's life--making them more cultured, thoughtful and self-aware.  Unfortunately, as I've grown older and become more involved in fighting poverty and injustice, I've found myself increasingly concerned that all too often the arts are by the rich, about the rich, and for the rich.

On Dogs, Humans & Personal Responsibility

Dogs--We Sure Love 'Em

A loving and loyal friend. Image credit: Wikimedia.org

Take a dog lover to an animal shelter and you will almost certainly hear some variation of, "What did the dog to do deserve being here?"  And unless it is particularly vicious, the answer is: nothing.  We don't blame dogs for being strays, and we are sad to know that so many of them live out their days in small cages in noisy, dirty pounds, often destined to be euthanized.

Our love of dogs is understandable.  By and large, they are loving companions.  They bring us joy and friendship.  They guard us and guide us and support us.  And in exchange, we Americans spend just under $56 billion on them!