Studies Find Microfinance Does Not Reduce Poverty, Assets Do

Mega-MicrofinanceHamburg  Several years ago ACORN International did a research report that seemed heresy to many, but started from the simple proposition that since microfinance is debt, debt does not reduce poverty, therefore the value of microfinance was the same as buying a job through an employment agency: work at a steep price. For many the myth of microfinance will endure and millions of dollars will continue to support what are essentially public and philanthropic investments in banking startups, not for the poor, but for the managers of the debt fueled lending agencies themselves, many of which start as nonprofits and if able to prove out their finances at high interest, convert to for-profits.

Standing out on the ledge of prevailing economic development opinion, I took note of an article in the October 2015 Scientific American that looked at the work of a Yale University based nonprofit called Innovations for Poverty Action and its founder Dean Karlan, an economics professor there. He had become suspicious of microloans while working in South Africa decades ago and seeing people constantly returning to renew loans and understanding that it didn’t add up to getting out of poverty, but instead was little more than a debt treadmill.

At some length he says:

“Over the years microloans kept nagging at my colleagues and me. Fifteen years after my first study attempt in South Africa, we now have seven randomized trials completed on traditional microloans and one on consumer lending back in South Africa…These studies found some benefits of microloans, such as helping families weather hard times, pay off goods over time and make small investments in businesses. But there was no average impact on the main financial well-being indicators – income and household and food expenditures.”

In short maybe the loans didn’t hurt them, but neither did they help them, at least enough to get out of poverty. Furthermore, Karlan noted that these microloan programs were not reaching the poorest of the poor or what they term “ultra-poor,” people living on the purchasing power of $1.25 per day.

Not to just be a Debbie Downer, IPA’s experience argues for providing the poor with a “productive asset” to make a living, giving them training on asset utilization, providing them a direct stipend for daily living or what we used to call in welfare rights – More Money Now!, giving them health support and savings tools, and regular coaching like CEOs get.

It would cost money, but at least it would be money well spent, because monitoring has already established that health and hunger were greatly improved and the very poor were making real progress in areas as diverse as Ethiopia, Ghana, India, Pakistan, and Peru.

Sounds like that could be a way to go if we were really trying to get somewhere.

Puerto Rico Is So Screwed

2000px-Flag_of_Puerto_Rico.svgNew Orleans   Reading the papers on the financial dilemma of the United States’ Puerto Rican colony you get the notion that this is just the Greek mess that we already don’t understand clearly, but in Spanglish and closer to home. Talking to Willie Cosme, veteran of KABF, Local 100, and still host of the ever popular Salsa show on Wade’s World about his return to the island and what he sees firsthand is an eye opener.

First, keep in mind that one-third of the $78 or so billion in debt and missed bond payments that is driving the island to the financial poorhouse is made up of borrowing to essentially handle medical debt since 60% of the island qualifies for Medicaid or Medicare. Brother Cosme says the Medicaid payments are so extreme because so much of the island is now elderly. As the economy has tanked, younger Puerto Ricans have naturally moved to Florida, New York, and elsewhere to find jobs. Dennis Rivera, former head of the New York-based 1199 union and a native of Puerto Rico, is heading up a committee of insurers, hospitals, and unions to see if there’s anything that can be done to save the healthcare system on the island, but that’s still in the hope and a prayer category.

Keep in mind that Puerto Ricans are in the strange situation of being United States citizens, so they can travel and settle anywhere, but as colonists on the island itself they can only vote on state and local elections, not the Presidential election, and of course since they are not a state they have no representative in Congress, even a non-voting one like the District of Columbia. Not being a state means that they also cannot declare bankruptcy as cities and states in the USA can, so the debt just hangs like a weight around their necks. Not being able to vote and without representation, Congress has basically yawned when asked about whether there might be any plan for a bailout.

And, then to make matters worse, there’s the drought. San Juan is now on a water rationing program that gives them three days with no water and one day with water. Some 30 miles out of San Juan where Cosme’s family lives, they are on a one day with and one day without system. The los ninos weather system has dried the island out. Willie reported that some people are so desperate, they are wishing for a hurricane! To keep the tourism industry alive in the hotels and to keep cruise ships still docking, operators are buying water by the tanker truck load, as you can imagine. Opening up travel and tourism to Cuba could be yet another blow to the role of tourism as a driver in the economy, just as the weather is crippling the agricultural production.

Talking to Willie, the notion of Puerto Rico, as the rich door to the Caribbean is replaced by the thought that the island and its people are more like a prisoner in solitary confinement without hope of a parole. They might be called part of our commonwealth, but don’t have access to the common wealth. Their population exceeds that of many states, yet there is no move to fully enfranchise them. Out in the water, out of sight, out of mind.

Right now Puerto Rico is so screwed. We need to do better for our fellow citizens and companeros.

Philosopher Peter Singer’s Advice for the Rich

Peter Singer

Peter Singer

New Orleans     Recently,  I read Princeton University’s professor and philosopher Peter Singer’s books advising on the amount of money we should give and where we should give it in hopes of living a moral life.  The two books, The Most Good You Can Do and Life You Can Save, are really almost the same book, written twice to beat the drum harder and keep the messages being heard.  I don’t say that as a criticism, but a statement of fact.  The message that Singer is trying to get across may have to be repeated, more loudly, ever couple of years.

            The upshot is that Singer recommends that you give at least 5% of your income charitably.  He’s no liberal.  He believes you need to open your wallet to the world’s poor and unfortunate on a global basis, and he wants the dollars to save lives.  His argument there has great appeal as a guide, but as you can imagine his position is controversial, even as he evangelizes and picks up recruits.  I came to read the books inclined to become a fan, given ACORN International’s work and global commitments, but some of his prescriptions are hard to swallow even for me.

            For a philosopher, he is surprisingly infatuated by the algorithms of poverty:  how many dollars can save how many lives.  I’m not sure I trust such a formulaic approach.  He would likely applaud our work in the megaslums of Latin America, Africa, and Asia, but scoff at the attention we also give to the United States, the United Kingdom, France, and Europe.  He understands how the power of money works, but not how power makes change, even on issues like lowering the costs of remittances that would convert into much more money.  From book to book his enthusiasm for money following a simple metrics of poverty grows, especially if some of the founders were former students.  He struggles mightily in these books for example on whether or not Oxfam and its campaigning strategy is worth a dollar or a damn.   In the first book, he comes close to making a case that they are a good place to put your dollars.  In the second book, he is uncomfortable that they are not single-issued with more easily calibrated results and don’t embrace the same assumptions about a purely metrics driven donation space as he would like.

            On the other hand his take down of the Rockefeller Family Fund showed some chutzpah, especially as he easily poked fun at their notion of enabling the rich to make flimsy decisions on their donations in the slender hope that the rich would move to programs more promising in the by and by.  On a moral basis he generally is no fan of money going to art, museums, and cultural projects, while people are starving and hurting, which must make some uncomfortable if they stumble on one of his books.

            For all of the arguments he would make in these two volumes where I would nod in agreement and underline with excitement, I couldn’t shake a nagging uncomfortability.  He doesn’t value work in this fight against poverty.  He pays some faint tribute to it, but essentially brushes aside the notion that individuals can really fight poverty as effectively as money can.  He seems to have made a very utilitarian judgement that effective organizers and change-makers are as rare as hen’s teeth, but money grows on trees, so let’s go put it to work saving lives and doing good. 

           His stories of people getting the religion he’s preaching constantly underscore this calculation for him.  The students who he presents as sucking it up and going to Wall Street to make the most bucks, but are committed to living on less in order to give more, are his heroes.  I found myself wondering if Singer had not been as affected by the proclivities of his students as he was interested in moving them towards his program.  A Google search sent me to an issue of Forbes from 2014 noting that 36% of Princeton graduates go into finance even in the wake of the Great Recession, and suddenly I felt I had a clue for Singer’s argument:  if you can’t fight them, join them.  If they were marching off to Wall Street anyway, why not take a good lick from their checks to save lives and do the most good.   Even his parsing of the contribution level down to 5% to deliver the least pain for the most gain in making converts seemed to address the market for his sale.

            I don’t mean to seem cynical even though I can’t sign up as a true believer.  I’m not going to quit doing the work and just go with my contributions, but I’m going to hope that Singer continues to provoke and prod those that have to heave more at the real issues.  I am a fan of his finger waving at the rich to pony up if they want to claim interest in doing no harm and living a moral life.  I hope he keeps being invited to speak to foundation boards and chides them to do right and do more.  We don’t have to sign his pledge to root for a philosopher speaking more truth to power.

Hillary Rodham on Saul Alinsky, Community Organizing, and Change

Hillary_lede.grid-6x2Montreal     I knew that Hillary Clinton, when still Hillary Rodham, had written her senior thesis at Wellesley College on Saul Alinsky and his work, and I had even talked to her about it briefly over lunch once in Little Rock in the early 1970’s, but I had never actually read it until the link was recently forwarded to me by Camilo Viveiros of the George Wiley Institute in Rhode Island.  It was different than I expected it to be.  First it was much better than I had imagined it might be as a senior thesis.  Secondly, it was different than the reports I had read years ago, when she last ran for President.  Yes, it was a something of a rejection of the Alinsky methods, though admiring of Alinsky, but her objection was largely that his methodology – and vision – did not go far enough, not that it was either too radical or not traditional enough.

She was a diligent student and reading the sources and footnotes, she was a fellow traveler well read in James Ridgeway and Andrew Kopkind, the dominant left journalists of that era and beyond, critical of Daniel Moynihan’s critique, and astutely embracing Warren Haggstrom, a major, though often unrecognized, intellectual influence on all of community organizing, then and now.She also understood deeply, but perhaps too uncritically, the critique of Alinsky and his work by Frank Reissman, the founder of our journal, Social Policy  that I still edit and publish.  She was spot-on in recognizing the Alinsky debt to union organizing and structural models in a way that contemporaries often miss.  On the whole, her thesis is a surprisingly solid piece of work and a good grasp of the issues, while being justly admiring of Alinsky and his belief and commitment to democracy and respectful of community organizing and its role in making change.

She was a left-critic of the War on Poverty, saying…

All too often the War on Poverty with confused intentions and armed with misinterpreted social theory fulfilled Moynihan’s concluding description of the community action programs: “…the soaring rhetoric, the minimum performance; the feigned constancy, the private betrayal; in the end…the sell-out.”

She was not a fan of student organizing in the late 1960’s or what she calls “New Left strategists,”

The problems inherent in such an approach, including elitist arrogance and repressive intolerance, have become evident during recent university crises.  The engineers of disruption, lacking Alinsky’s flexibility in dealing with their “enemy” (i.e. administrators, trustees, etc.), become hardened into non-negotiable situations.  Conflicts then run the possibility of escalating into zero sum games where nobody wins.

Her real critique of Alinsky is that he didn’t go far enough, and the evidence is plentiful in a number of her remarks in the thesis even as she walks a fine line to balance her academic objectives…

  • He realizes that radical goals have to be achieved often by non-radical, even “anti-radical” means.
  • Perhaps, the Alinsky model’s emphasis on local issues and goals determined locally diverts energies from wider or coalition organizations.
  • His belief that the poor can translate apathy into power and then use that power responsibly has, in some cases, proven true. In others, the transition has been dysfunctional either for the community or for the cause of radical change.

Tellingly, even the title of her thesis, “There is Only the Fight…” is a thinly veiled critique that she shares in part with Reissman that he lacked “vision” for a more radical, national change.  She is clearly heavily influenced by her own Wellesley professor, Annemarie Shimony, in putting her perspective together and Shimony’s view that Alinsky was “a showman rather than an activist.”

Undoubtedly, then Hillary Rodham was a “child of the 60’s” who believed it was a time and opportunity for comprehensive change:

Often the application of the Alinsky model in geographically-bound lower class areas assumes an almost bootstrap formula which is too conservative for our present situation.  A People’s Organization of local organizations can at best create new levels of harmony among its members and secure a few material gains.  It is not oriented toward harmonizing competing metropolitan interests in a concert of governmental restructuring.

Clearly, she liked Alinsky and much of the model, but didn’t like the “messy” of student organizing and the New Left, compared to the pragmatic, flexibility of Alinsky approach even while seeing it as lacking “vision” and “too conservative for our present situation.”  In 1969, she wasn’t ready for the barricades, but she wanted to figure out a way to make comprehensive change.   Her thesis is a helpful place to build a more nuanced understanding of Hillary and her quest perhaps, contrary to what many have argued, both pro and con.

ODETTA – This Little Light of Mine

Residential Segregation and Upward Mobility

450New Orleans         Reports of a new study by economists Raj Chetty, Nathaniel Hendren, and Lawrence Katz looking more deeply at the earning records of millions of families who moved to different addresses found that “poor children who grow up in some cities and towns have sharply higher odds of escaping poverty than similar poor children elsewhere.”   As the New York Times summarized, “…the city is especially harsh for boys:  Low-income boys who grew up there in recent decades make roughly 25 percent less as adults than similar low-income boys who were born in the city and moved as small children to an average place.”

I’m scratching my head just a bit wondering what the news is, in all of this.  Are the headlines simply about the fact that rather than just thinking that families are being trapped in poverty in urban neighborhoods and a lot of rural areas and Indian reservations, that now that we have the numbers, we can prove they are trapped?

God knows we have been tricking ourselves, so maybe that’s the point.  Studies by several independent research teams have found that Americans severely misjudge the amount of upward mobility in society through a self-serving psychological conceit:  overestimating upward mobility is self-serving for the rich and justifies their wealth and for the poor provides hope for a brighter future.  Neither is true, but “what the hey!”

The map, county-to-county, is interesting.  You are in trouble living in Tampa, Orlando, West Palm, Atlanta, Chicago, Los Angeles, and New Orleans for sure, and good luck if you live in the Bronx or some parts of Manhattan still.  You live on the Navaho, Northern Cheyenne, or other reservations, luck won’t help you.  The best shot for your family according to the numbers is DuPage County outside of Chicago, if you can afford the rent, and about the same can be said for San Francisco, Salt Lake City – and a whole lot of other places in Utah – Las Vegas, and Providence, as well as some of the suburban counties around them.  You might be able to afford the rent in Altoona and some parts of Pittsburgh.

Sadly for all of the Sunbelt boom, overall if you look at the map of the South your best shot outside of northwestern Arkansas is just getting by and holding your own.   South and North Carolina look like disaster areas or, I guess to be more specific, they look like the Mississippi Delta.  There’s nothing but trouble in all of this.

HUD Secretary Julian Castro says he’s excited about this.  He wants to allocate funding to help families move to higher cost neighborhoods with larger housing vouchers.  This will be an interesting appropriations battle when he goes with that budget to the Republican Congressmen from these suburban districts and asks for more money to move families from the ghetto to their counties.  For a long time residential income and racial segregation has been a concrete ceiling for poverty, and the numbers that prove it aren’t going to be enough to change the hearts and minds of politicians who are committed to no change coming to their areas and the same faces in their electorate.

You can’t have mobility when all the roads are filled with STOP signs.

“Dare You to Move” by Switchfoot – Poverty

Art, Poverty, and George Orwell


orwell1Little Rock       In the New York Times, A.O. Smith, one of their critics who writes frequently about movies, wondered at length in the paper where our artists were when we needed them now to weigh in on the issues of class, race, and galloping inequality in the United States.  Where was a new John Steinbeck writing Of Mice and Men?  Or an Arthur Miller and The Death of a Salesman?   Or Mike Nichols and Silkwood or the more recent Debra Granik film, Winter’s Bone, on the silver screen?  In a surprising rarity, he admitted being obsessed with the economic crises of our time and desperate for voices that spoke to the issue in convincing and moving ways.

            All of which recalled the vivid images of the precariousness of work revealed so starkly in George Orwell’s often neglected classic, Down and Out in Paris and London, which I found myself re-reading recently.  Orwell known best to many readers for his dystrophic 1984 or Animal Farm, wrote of his own experience working as a casual laborer in the back of the house in hotels in London and bistros in Paris.   It is shocking to read because so much of it seems unchanged from what might be reported in numerous cities now, even though Orwell published his book in 1933 in the heart of the worldwide Great Depression.

            Barbara Ehrenreich’s Nickeled and Dimed:  On (Not) Getting by in America updated some pages from Orwell, but her experience still wasn’t the deep dive, emersion and desperation of Orwell, where reading of his time, I felt he might starve to death any minute when he had no clothes left to pawn.

            Orwell describes hunger in a very personal way, “You discover that a man who has gone even a week on bread and margarine is not a man any longer, only a belly with a few accessory organs.”  In another passage, he writes that “Hunger reduces one to an utterly spineless, brainless condition, more like the after-effects of influenza than anything….”  And again, “Complete inertia is my chief memory of hunger….” Yet, on the full side of the Thanksgiving feasting tables, we read more Republican rants about bootstraps and the poor making their way without sufficient food or support?

            Orwell writes with relief in Paris of finding a job as a dishwasher.  The hours are punishing and wage theft is standard, all of which continue to be true for much of precarious employment in the same cities and throughout the world.

“…I set to work rather hurriedly.  Except for about an hour, I was at work from seven in the morning till a quarter past nine at night; first at washing crockery, then at scrubbing the tables and floors of the employees’ dining-room, then at polishing glasses and knives, then at fetching meals, then at washing crockery again, then at fetching more meals and washing more crockery…The work did not seem difficult, and I felt that this job would suit me.  It was not certain, however, that it would continue, for I had been engaged as an ‘extra’ for the day only at twenty-five francs.  The sour-faced doorkeeper counted out the money, less fifty centimes, which he said was for insurance (a lie, I discovered afterwards).”

Besides the fact that Orwell was a gifted observer of his own condition and circumstance, as well as the economic and social conditions around him, it is unsettling to think that 80 years later we have still done so little to deal with inequality and precariousness.

Orwell shares a caveat in this regard though that is worth remembering, because it is less art that holds the answer that A. O. Smith is searching for than social movements.  Orwell warns that,

“A man receiving charity practically always hates his benefactor – it is a fixed characteristic of human nature; and, when he has fifty or hundred others to back him, he will show it.”

Hear!  Hear!