HOW THE ELITE SABOTAGE BUSINESS, POLITICS AND HIGHER LEARNING

HOW THE ELITE SABOTAGE BUSINESS, POLITICS AND HIGHER LEARNING

(These thoughts are purely the blunt, no nonsense personal opinions of the author about financial fairness and discrimination and are not intended to provide personal or financial advice.

(The following is a comment on and summary of the excellent book “Winners Take All” and how the elites have taken over the business, political and higher learning institutions of the world.  Following this blog post are important pieces of discussion pulled from the book-forewarning: this is about 25 pages long)

Many are disillusioned by the all powerful control elites seem to have both politically and financially on the world.  The book “Winners Take All-the elite charade of changing the world” by Anand Giriharadas provides thought provoking ideas (as presented below) on how elites have been able to achieve their goals.

The Gilded Age and major changes in citizens’ financial lives helped to propel the advent of elite MarketWorld thought leaders who believe and promote ideas that social change should be pursued principally through free market and voluntary actions, not public life, the law and reform of systems that people share in common.

MarketWorld is an ascendant power elite that is defined by the concurrent drives to do well and do good, to change the world while also profiting from the status quo.  It consists of enlightened business people and their collaborators in the worlds of charity, academia, media, government, and think tanks. It has its own thinkers, whom it calls thought leaders, its own language, and even its own territory – including a constantly shifting archipelago of conferences at which its values are reinforced and disseminated and translated into action.  MarketWorld is a network and community, but it is also a culture and a state of mind.

There are two kinds of thinkers who share a common desire to develop important ideas and at the same time reach broader audiences.

First are “thought leader” thinkers who tend to know one big thing and believe their important idea will change the world.  Thought leaders use spreadsheets and statistical analyses to share their ideas which are often in the future tense like Venn diagrams without noting that the lion’s share of each circle (have and have-nots) remains outside the overlap of win-win.  They give TED talks that leave little space for criticism or rebuttal, and emphasize hopeful solutions over systemic change while taking little risk.

Thought leaders have often presented problems in precisely opposite ways by using their power to cause us to “zoom in” and think smaller.  They focus on vulnerability of poverty, not the wage of inequality. They don’t like “social justice” and “inequality” words, but rather use “poverty” and “fairness” while speaking of “opportunity”.

It is possible to counteract thought leader thinking by getting people to care about problems first by “zooming in” on a vivid person and then getting them to care by “zooming out” from person to see a system.  These thinkers are the “public intellectuals” who as wide-ranging ‘critics’ feel they bear a duty “to point out when an emperor has no clothes”. They are the ones who might give some hope to changing the trajectory of elite MarketWorld thought leaders.

“Zooming in” is known as the “identifiable-victim effect”…..People react differently toward identifiable victims than to statistical victims who have not yet been identified.

The social psychological concept, the one involving “zooming out” is the formal term for the concept “assimilation effect”, and it occurs when people link the personal and specific to the surrounding social context.

Re poverty, inequality and charity:  poverty is a material fact of deprivation that does not point fingers, but inequality is something more worrying:  It speaks of what some have and others lack; it flirts with ideas of injustice and wrongdoing; it leaves many chasing work instead of building livelihoods; it is rational.

MarketWorlders believe poverty can be addressed via charity by writing cheques to reduce that poverty.  “But inequality you can’t, because inequality is not about giving back, but about how you make the money that you’re giving back in the first place.”  Inequality is about the nature of the system. To fight inequality means to change systems as a group of people. With charity the elite work ALONE.

The changes of feudal financial and Gilded Age systems helped to develop organized philanthropy (whose leaders earn million dollar salaries and get tax credits for their charities while getting to keep their wealth) and ideas that after-the-fact benevolence justifies anything-goes capitalism.  The elites today do this from behind private gates, schools, jets: private world-saving behind the backs of those to be saved. Passively they do not reject public solutions in theory, but pursue private ones in practice. The private sector doesn’t merely add to public spheres, they change the language in which public spheres think and act.  This market-based, monetized thinking over all other disciplines and conceptions of value have helped to quickly spur a rising anger, nationalism and right-wing populism.

Thought leader ideas have permeated higher learning institutions.  Young people are taught to see social problems in a “zoom in” fashion by confining questioning to what socially minded businesses they can start up (buy one, give one), but not inequality.  They are persuaded by surrounding cultures that only by learning higher learning protocols can they help millions of people.

The question that elites refuse to ask is:  Why are there in the world so many people that you need to help in the first place?  The very problems elites have self righteously only partially solved have caused unrest because they act and talk in ways that insult, alienate, and energize many of their fellow citizens.

And MarketWorld’s private world-changing, for all the good it does, is also marred by its own “narcissism.”

When society helps people through its shared democratic institutions, it does so on behalf of all, and in a context of equality.  Those institutions, representing those free and equal citizens, are making a collective choice of whom to help and how. Those who receive help are not only objects of the transactions, but also subjects of it–citizens with agency. When help is moved into private spheres, no matter how efficient , the context of the helping is still a relationship of inequality:  the giver and the taker, helper and helped, donor and recipient.

History is not a straight line but a circle of events which repeat themselves such as the Gilded Age.  Many right and left political leaders have bought into the elite thought leader mythology. Are we being moved again to a Gilded age scenario?

To counteract MarketWorld our political institutions–laws, constitutions, regulations, taxes, shared infrastructure:  these million little pieces provide a counterbalance to help hold our democratic (capitalist) civilization together.

CONCLUSION

The one sided financial hegemony that elites have created has been helped by cutting funding to IRS and CRA budgets.  This means there is less money to prosecute financial high crimes of the elite. Shared economies–like Airbnb–do not help those persons of race, singles and poor who do not own homes. The present day college financial scandal provides evidence to the elite greed and graft.   The FAA allowing Boeing to “self-inspect” and SNC Lavalin corruption are clear examples of the private sector going amuck in the absence of laws and regulations counterbalance.

One word comes to the mind of this opinion writer-”brainwashing”. The elites have done a very good job of ‘brainwashing’ the political, financial and higher learning powers that be. At the very least it is “gaslighting”.

Counterbalance of MarketWorlders requires major public action for inequality and social justice change.  It is all about balance between MarketWord and government/politic worlds.

(This blog is of a general nature about financial discrimination of individuals/singles.  It is not intended to provide personal or financial advice.)

 

WINNERS TAKE ALL-The elite charade of changing the world (Anand Giriharadas) Book

MARKETWORLD DEFINITION

Page 30 MarketWorld is an ascendant power elite that is defined by the concurrent drives to do well and do good, to change the world while also profiting from the status quo.  It consists of enlightened business people and their collaborators in the worlds of charity, academia, media, government, and think tanks.  It has its own thinkers, whom it calls thought leaders, its own language, and even its own territory – including a constantly shifting archipelago of conferences at which its values are reinforced and disseminated and translated into action.  MarketWorld is a network and community, but it is also a culture and a state of mind.

HOW DID WE GET TO WHERE WE ARE

P. 18  …In the years since, though, Georgetown and the US and the world at large have been taken over by an ascendent ideology of how best to change the world.  That ideology is often called neoliberalism, and it is, in the framing of the anthropologist David Harvey, “ a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade.”  Where the theory goes, “deregulation, privatization,and withdrawal of the state from many areas of social provision” tend to follow, Harvey writes.  “While personal and individual freedom in the marketplace is guaranteed, each individual is held responsible and accountable for his or her own actions and wellbeing.  This principle extends into the realms of welfare, education, health care, and even pensions.” The political philosopher Yascha Mounk captures the cultural consequences of this ideology when he says it has ushered in a new ‘age of responsibility,” in which “responsibility – which once meant the moral duty to help and support others – has come to suggest an obligation to be self-sufficient”.

P. 19 ….Ronald Reagan and Margaret Thatcher as political figures rose to power by besmirching the role of government.  Reagan declared that ‘government is not the solution to our problem; government is the problem”. Two centuries earlier, the founding fathers had created a constitutional government in order to “form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity.”  Now the instrument had been created, an instrument that helped to make the United States one of the most successful societies in history, was declared the enemy of these things….What their revolution amounted to in practice in America and elsewhere was lower taxes, weakened regulation and vastly reduced public spending on schools, job retraining, parks, and the commons at large.

The political right couldn’t pull off its revolution alone, however.  That is where the need for a loyal opposition comes in. Thus neoliberals cultivated the left half of the political spectrum a tribe they could work with.  This liberal subcaste would retain the left’s traditional goals of bettering the world and attending to underdogs, but it would increasingly pursue these aims in market-friendly ways.  Bill Clinton would become the paterfamilias of this tribe, with his so called Third Way between left and right, and his famous declaration, regarded as historic from the moment it was uttered in 1996, that ‘the era of government is over.”

P. 20 …stirred by a desire to change things, their own ideas and the resources available to them tended to steer them toward the market rather than the government as the place where problems were best solved…that if you really wanted to change the world, you must rely on the techniques, resources, and personnel of capitalism.

P. 26….Sonal Shaw…. established the Office of Social Innovation and Civic Participation under President Obama.  That office, according to its website, was “based on a simple idea: we cannot drive lasting change by creating top-down programs from Washington.”  It was striking statement from a liberal government – but not an uncommon one in an age dominated by market thinking – and it reflected a theory of progress that the rich and powerful could embrace.

THE PUBLIC INTELLECTUAL (CRITIC) VERSUS THOUGHT LEADER

P.91-92….Two kinds of thinkers, who share in common a desire to develop important ideas and at the same time reach a broad audience.  One of these types, the dying one, is the public intellectual whom as a wide-ranging ‘critic’ and a foe of power, ….perhaps stays ‘aloof from the market, society, or the state,” and ….proudly bears a duty “to point out when an emperor has no clothes.”  The ascendant type is the thought leader, who is more congenial to the plutocrats who sponsor so much intellectual production today. Thought leaders tend…to “know one big thing and believe that their important idea will change the world”; they are not skeptics but “true believers”; they are optimists, telling uplifting stories; they reason inductively from their own experiences more than deductively from authority. They go easy on the powerful…..

Public intellectuals argue with each other in the pages of books and magazines; thought leaders give TED talks that leave little space for criticism or rebuttal, and emphasize hopeful solutions over systemic change.  Public intellectuals pose a genuine threat to winners; thought leaders promote the winners’ values, talking up “disruption, self-empowerment, and entrepreneurial ability.”

THREE FACTORS THAT EXPLAIN THE DECLINE OF THE PUBLIC INTELLECTUAL AND THE RISE OF THE THOUGHT LEADER

P. 92 Three factors explain the decline of the public intellectual and the rise of the thought leader.[1] one is political polarization….[2] another factor is a generalized loss of trust in authority…[3] the rising inequality has most altered the sphere of ideas.

….get pulled into MarketWorld’s orbit, how thinkers…are coaxed to abandon their roles as potential critics and instead to become fellow travelers of the winners….. Thinkers are invited to become the elite’s teachers on the circuit of “Big Idea”–TED, South by Southwest, the Aspen Ideas Festival….anything sponsored by The Atlantic.”  These thinkers often find themselves having become thought leaders without realizing it, after “a slow accretion of opportunities that are hard to refuse”.

P. 93 It could be…that even as plutocrats were providing these alluring incentives, less corrupting sources of intellectual patronage were dwindling.  On American campuses in recent decades, the fraction of academics on tenure track has collapsed by half. Newsrooms, another source of support for those in the ideas game, have shrunk by more than 40 percent since 1990.  The publishing industry has suffered as bookstores vanish and print runs dwindle.

MARKETWORLD IDEOLOGY

P. 27 …[History] Today’s problems were too hard for the government.  They had therefore to be solved through partnerships among rich donors, NGOs, and the public sector.  There was no mention of the fact that this method, by putting the moneyed into a leadership position on public problem-solving, gave them the power to thwart solutions that threatened them.

The solution of public problems through public action – changing the law, going to court, organizing citizens, petitioning the government with grievances went all but unmentioned.

P. 30 These elites [thought leaders] believe and promote the idea that social change should be pursued principally through the free market and voluntary action, not public life and the law and the reform of the systems that people share in common; that it should be supervised by the winners of capitalism and their allies, and not be antagonistic to their needs; and that the biggest beneficiaries of the status quo should play a leading role in the status quo’s reform.

P. 31….So successful is the belief in business as the universal access card for making progress, helping people, and changing the world that even the White House, with its pick of the nation’s talent, under Republicans and Democrats alike, grew dependent on the special talents and consultants and financiers in making decisions about how to run the nation.

P. 32 There was a case to be made that the very people being brought in to advise the government on the public good was implicated in many of the public’s most urgent problems.  Management consultants and financiers were critical protagonists in the story of how a small band of elites, including them, had captured most of the spoils of a generation’s worth of innovation.  The financial sector had extracted more and more value from the American economy, at the expense not only of consumers and workers but also of industry itself. More and more of the nation’s financial resources were swilled around Wall Street without taking the form of new investments by companies or higher wages for workers…..[Businesses had been taught] to optimize everything which made their supply chains leaner and their income statements less volatile.  This optimization, of course, made companies less hospitable to workers, who faced things such as layoffs,offshoring, dynamic scheduling, and automation as the downside of corporate progress.  This was part of why their wages stagnated while companies’ profits and productivity rose.

P. 33…. [This] seemed to contribute to the business world’s growing influence over social change.

P. 34….Many of them are trapped in what they cannot fully see. Many of them believe that they are changing the world when they may instead – or also – be protecting a system that is at the root of the problems they wish to solve.  Many of them quietly wonder whether there is another way, and what their place in it might be.

THE DARK SIDE OF THE FINANCIAL WORLDS OF THE ELITES AND THEIR PHILANTHROPY

P. 26...Wealthy donors [like the Beecks who made their money in mining business in South America]often had a financial interest in the world being changed in ways that left things like taxation, redistribution, labor laws, and mining regulations off the table.

P. 35…A charity called Portfolios with Purpose calls itself  “ a powerful platform combining healthy competition with giving” – a short phrase that manages to hit the notes of techno-utopianism, capitalism, and charity.

P. 36 (It goes without saying, for example, that if hedge funders hadn’t been enormously creative in dodging taxes, the income available to foreign aid would have been greater).

P. 40 The increasingly extractive financial sector is in part responsible.  That sector could be arranged in other ways, including tighter regulations on trading, higher taxes on financiers, stronger labor protections to protect works from layoffs and pension raiding by private equity owners, and incentives favoring job-creating investment over mere speculation.  Such measures should help to solve the underlying problem by preventing the capture of the gains from growing productivity….It would serve to further increase an abundant thing likely to be hoarded by elites (productivity), instead of a scarce thing that millions need more of (wages).

P. 41…”-there’s a lot of things for-profit end endeavors are not suited to do, where you need the nonprofit sector, you need the government sector.  But one of the things the for-profit section is great at is self-sustaining because you don’t have to be constantly fund-raising”.

P. 45 The new win-win-ism is arguably a far more radical theory than the “invisible hand”. That old idea merely implied that capitalists should not be excessively regulated, lest the happy by products of their greed not reach the poor.  The new idea goes further, in suggesting that capitalists are more capable than any government could ever be of solving the underdog’s problems.

P. 46 …They describe “philanthrocapitalists” as “hyper agents” who have the capacity to do some essential things far better than anyone else.

P. 47 ….the founder of the Collaborative Fund, a venture capital firm in New York [writes] – Once seen as sacrificial to growth and returns, pursuing a social mission now plays a role when attracting both customers and employees.” [He] used a Venn diagram to illustrate the investment thesis that his firm has created in view of this trend.  One circle was labeled “Better for me (self interest)”; the other was labeled ”better for the world” (broader interest).  The overlap was labelled “exponential opportunity.” A charitable interpretation of this idea is that the world deserves to benefit from flourishing business.  A more sinister interpretation is that the business deserves to benefit from any attempt to better the condition of the world…..P.53 But in…. Venn diagram, it is worth noting that the lion’s share of each circle remains outside of the overlap of the win-win –what mathematicians call the relative complement.

P. 51 …[leader of the Silicon Valley Community Foundation] he was told to stop using the phrase “social justice”.  [So he started to use the word “fairness”].

P. 52 ….Fairness seemed to be more about how people were treated by abstract systems than about the possibility of the winner’s own complicity.

….What these winners wanted was for the world to be changed in ways that had their buy-in – think charter schools over more equal public schools funding, or poverty-reducing tech companies over antitrust regulation of tech companies.  The entrepreneurs were willing to participate in making the world better if you pursued that goal in a way that exonerated and celebrated and depended on them. Win-win.

….leaves many chasing working instead of building livelihoods.

P. 54 …. the effects of a generation’s worth of changes in the lives of working class Americans, rooted in policy choices and shifts in technology and the world situation–including outsourcing, stagnant wages, erratic hours, defanged unions, deindustrialization, ballooning debt, nonexistent sick leave, dismal schools, predatory lending, and dynamic scheduling while doing nothing about these underlying problems.

P. 57 [quote from real life example] “Society tells me that I have to  go to school, get a good job, and then I’ll get a salary, because I am in America….And that’s what I did, and now I’m in debt.  And now I’m suffocating”. [Psychological stress and physical illness].

[Real life] story exposed multiple malfunctions in the machinery of American progress.  It implicated the country’s health care system and the problem of unaffordable drugs, its public transport system, its wage and labor laws; its food system and food deserts, its student debt crisis, its so-called great risk shift, through which corporate America has stabilized its own income statements over a generation of off-loading uncertainty onto workers, and the ways in which shareholders were running companies more and more for themselves, to the detriment of every other stakeholder.

P. 64 …VCs [venture capitalists] and entrepreneurs are considered by many to be thinkers these days, their commercial utterances treated like ideas, and these ideas are often in the future tense: claims about the next world, forged by adding up the theses of their portfolio companies or extrapolating from their own start-up’s mission statement.  That people listened to their ideas gave them a chance to lauder their self-interested hopes into more selfless-sounding predictions about the world. For example, a baron wishing to withhold benefits from workers might reframe that desire as a prediction about a future in which every human being is a solo entrepreneur.  A social media billionaire keen to profit from the higher advertising revenue that video posts draw, compared to text ones, might recast that interest–and his rewriting of the powerful algorithms he owns to get what he wants–as a prediction that “I just think that we are going to be in a world a few years from now where the vast majority of the content that people consume online will be video.” [Mark Zuckerberg did this].

P. 67 …[Shervin Pishevar, a leading venture capitalist in Silicon Valley] was not only casting venture capitalists and billionaire company founders as rebels against the establishment, fighting the powers that be on behalf of ordinary people.  He was also maligning the very institutions that are meant to care for ordinary people and promote equality. He referred to unions as ‘cartels’…..

P. 74 ….the Ubers and Airbnbs and Facebooks and Googles of the world are at once radically democratic and dangerously oligarchic….

P. 77 As America’s level of inequality spread to ever more unmanageable levels, these MarketWorld winners might have helped out.  Looking within their own communities would have told them what they needed to know. Doing everything to reduce their tax burdens, even when legal, stands in contradiction with their claims to do well by doing good. Diverting the public’s attention from an issue like offshore banking worsens the big problems, even as these MarketWorlders shower attention on niche causes.

P. 82 [Silicon Valley]….proposing “a new kind of economy,” as one of its digital pamphlets put it: For all the wonders the Internet brings us, it is dominated by an economics of monopoly, extraction, and surveillance.  Ordinary users retain little control over their personal data, and the digital workplace is creeping into every corner of workers’ lives. Online platforms often exploit and exacerbate existing inequalities in society, even while promising to be the great equalizers.  Could the Internet be owned and governed differently?

“PUBLIC INTELLECTUAL” THINKERS

P. 82…..One heard from speakers ways of thinking that were all but barred from MarketWorld:  the idea that there were such things as power and privilege; that some people had them in every era and some people didn’t; that this power and privilege demanded wariness; that progress was not inevitable, and that history was not a line but a wheel; that sometimes astonishing new tools were used in ways that worsened the world; that places of darkness often persisted even under new light; that people had a long habit of exploiting one another, no matter how selfless they and their ideas seem; that the powerful are your equals as citizens, not your representatives.

The attendees didn’t confine their speech to win-wins.  They spoke of exploitation and abuse and solidarity. They spoke of problems.  They were not bound by the genteel MarketWorld consensus.

THE CRITIC AND THE THOUGHT LEADER

P. 87 …[Amy Cuddy, social psychologist at Harvard] …continued to work on….project to study how men’s hegemony, that most global of phenomena, adapts to local conditions so as to enroot itself.

P. 91-92 [Cuddy – with her Wonder Woman pose]…Without necessarily intending to, she was giving MarketWorld what it craved in a thinker: a way of framing a problem that made it about giving bits of power to those who lack it without taking power away from those who hold it.  She was, to use a metaphor she would later employ, giving people a ladder up across a forbidding wall–without proposing to tear down the wall.

HOW TO MOVE TOWARDS THOUGHT LEADER AND AWAY FROM CRITICAL THINKING

P. 97-100 …The culture was full of instruction….about how to become more hearable as a thinker–how to move toward the thought-leader end of the critic/thought leader continuum….You start to see a few basic dance steps in common–what we call the thought-leader three-step.

“Focus on the victim, not the perpetrator” is first of these steps…..the second step is to personalize the political….This second step was, in a sense, to do the opposite of what a generation of feminists had taught us to do.  That movement had given the culture the phrase “the personal is political”….”Personal problems are political problems”

…In our own time, the thought leaders have often been deployed to help us see problems in precisely the opposite way.  They are taking on issues that can easily be regarded as political and systematic–injustice, layoffs, unaccountable leadership, inequality, the abdication of community, the engineered precariousness of ever more human lives–but using the power of their thoughts to cause us to zoom in and think smaller.  The feminists wanted us to look at a vagina and zoom out to see Congress.  The thought leaders want us to look at a laid-off employee and zoom in to see the beauty of his vulnerability because at least he is alive.  They want us to focus on his vulnerability, not his wage.

The third move is to be constructively actionable.  It is fine and good to write and say critical things without giving solutions–but not if you want to be a thought leader….

P. 103 [paid speeches]…may be right that each speech is its own thing, not enough to corrupt an honest person on its own.  But can a speaking career as a whole never form something like “ties” that have some degree of permanence and a two-way flow of influence and information?

P. 104 The idea that thought leaders are unaffected by their patrons is also contradicted by their very own speakers bureau website, which illustrate how the peddlers of potentially menacing ideas are rendered less scary to gatherings of the rich and powerful.

P. 106 Thought leaders can find themselves becoming like poets speaking a tax collector’s language, saying what they might not say or believe on their own.  And the danger isn’t only in what they say in this new language, but also in the possibility that they might somewhere down the line stop thinking in their native one.

CAN THOUGHT LEADERS TRANSCEND THE PITFALLS OF THOUGHT LEADERSHIP?

P. 117 Amy Cuddy wants to believe the thought leader can use the tricks of her trade to transcend the pitfalls of thought leadership.  She wants to believe there is a micro way into the macro….She thinks the secret to cajoling them toward systemic reform may lie in blending two disparate concepts from her field.  One is about how to get people to care about a problem by zooming in on a vivid person.  The other is about how to get them to care by zooming out from person to see a system.

The first of these concepts is known as the “identifiable-victim effect”…..People react differently toward identifiable victims than to statistical victims who have not yet been identified.  Specific victims of misfortune often draw extraordinary attention and resources. But, it is often difficult to draw attention to, or raise money for, interventions that would prevent people from becoming victims in the first place.

P. 118 …Wondered if a thought leader could use feedback like this to her advantage.  If you want to talk about the structural power of sexism, first make people think of their daughters.

P. 119 ….possibilities of the second social psychological concept, the one involving zooming out.  She felt it might break up this limiting symbiosis. The formal term for the concept is the “assimilation effect”, and it occurs when people link the personal and specific to the surrounding social context.

P. 120 When a thought leader strips politics and perpetrators from a problem, she often gains a access to a bigger platform to influence change-makers–but she also adds to the vast pile of stories promoted by MarketWorld that tell us that change is easy, is a win-win, and doesn’t require sacrifice.

POVERTY VERSUS INEQUALITY AND SOCIAL JUSTICE AND CHARITY

P. 120 What the thought leaders offer Market World’s winners, wittingly or unwittingly, is the semblance of being on the right side of change.  The kinds of change favored by the public in an age of inequality, as reflected from time to time in some electoral platforms, are usually unacceptable to elites….

P. 122 [Bruno Giussani, curator of TED organization].For example, ideas framed as being about “poverty” are more acceptable than ideas framed as being about “inequality”. The two ideas are related. But poverty is a material fact of deprivation that does not point fingers, and inequality is something more worrying:  It speaks of what some have and others lack; it flirts with the idea of injustice and wrongdoing; it is rational. “Poverty is essentially a question that you can address via charity.”  A person of means, seeing poverty, can write a check and reduce that poverty. “But inequality you can’t, because inequality is not about giving back. Inequality is about how you make the money that you’re giving back in the first place.”  Inequality is about the nature of the system. To fight inequality means to change the system. For a privileged person, it means to look into one’s own privilege. And, “you cannot change it by yourself. You can change the system only together.  With charity, essentially, if you have money, you can do a lot of things alone.”

PROGRESSION OF THOUGHT LEADER THINKING

P. 124 Many thinkers cut these moral corners and contort themselves in these ways because they are so reliant on the assent of MarketWorld for building their careers….”If they want to make potential benefactors happy, they cannot necessarily afford to speak truth to money.”

P. 125 It wasn’t necessarily malice or cynicism that sustained these patterns, but something more banal.  The people who served as tastemakers for the global elite were, like many, in an intellectual bubble…the sole way of thinking?  Everybody thinks the same way. In his world, he [Giussani] said, that meant an unspoken consensus (widespread but not total) on certain ideas:  Progressive views are preferable to conservative ones; globalization, though choppy, is ultimately a win-win-win-win; most long term trends are positive for humanity; making many supposed short-term problems ultimately inconsequential; diversity and cosmopolitanism and the free flow of human beings are always better than the alternatives; markets are the most realistic way to get things done.

What this…did was cause his tribe to “ignore a lot of issues that were relevant to other people and not to  us”, culture in a broad sense that then came back and is haunting us [in the form of] rising populist anger.

P. 139  [Sean Hinton, Economic Advancement Program]…..was learning the protocols to work his way into the arena of business….The protocols had grown out of corporate problem-solving, but increasingly MarketWorlders were employing them to elbow into the solution of social problems traditionally considered in other ways, by more public-spirited actors.  And the more people accepted the idea of the protocols as essential to public problem-solving, the more MarketWorld was elevated over government and civil society as the best engine of change and progress.

P. 140 ….young people…..are persuaded by the surrounding culture that only by learning the protocols can they help millions of people…..the bearers of the protocols elbow their way into the solution of social problems simply by offering their own style of diagnoses.

.It is possible to read into this that people are poor because of the absence of these linkages, not because of caste, race, land, hoarding, wages, labor conditions, and plunder, not because of anything anyone did–or is doing–to anyone else; not because of reversible decisions societies have taken.

[TechnoServe] Its managers come, in the main, from corporations, in areas such as investment banking, management consulting, health care, and fund management.

P. 141….Perhaps the clearest signal of…..faith in the power of the protocols to cure injustice–rather than, say, life experience–is the constitution of its board.  Of 28 board members listed online, 26 are white as of last check.

….If TechnoServe emphasizes the missing linkages between poor people and the right information, a rival firm…argues that too many good solutions are too small–another theory of what keeps people poor that, usefully, does not implicate the rich.

WHAT TO DO  ABOUT THE CRISIS OF INEQUALITY AND THE RISE OF ORGANIZED PHILANTHROPY

P. 154 …Ford Foundation and thus in the social justice business….

[from President of Ford Foundation]….letter….had raised, in sharp and provocative language, the question of what to do about the crisis of inequality.  This in itself was disturbing to many rich people, who preferred to talk about reducing poverty or extending opportunity, not about more thoroughgoing reforms that would perhaps require sacrifice….letter squarely blamed the very elites who give back to philanthropy for ignoring their complicity in causing the problems they later seek to solve.

P. 155….had broken what in his circles were important taboos:  Inspire the rich to do more good, but never, ever tell them to do less harm; inspire them to give back, but never, ever tell them to take less; inspire them to join the solution, but never, ever accuse them of being part of the problem.

….He was attempting to revise and update–or perhaps overturn–an old gospel that dates back to an era much like ours, a gospel that had itself transformed earlier American ideas of helping other people.

The late historian Peter Dobkin Hall….an authority on the American giving tradition, traces it back to the late seventeenth and early eighteenth centuries, as the colonial trade in commodities magnified differences in wealth and created “an increasingly visible population of poor and dependent people for whom the public was expected to take responsibility.”

P. 156 A marked feature of American giving before the big age of philanthropy was the helping of the many by the many….

As the nineteenth century drew down, major changes in American life helped to develop this early tendencies into what is today called organized philanthropy.

P. 157 Around the turn of the nineteenth century, a new industrial capitalism flourished. Incredible fortunes were made in railroad, steel, oil, and other factors of a booming nation’s growth.  Much as is the case today, inequality widened as some seized on the new possibilities and others were displaced.  Anger bubbled, and populist impulses surged. The money that was being made in this earlier gilded age was, in the view of the many, unseemly in its quantities, unjust in its provenance, untenable in the power it conferred over a republic breaking out in new populist sentiments.  It was also fuel for new ideas about giving: “Growth in inequality might be a foe to civic comity, but it is a friend to private philanthropy. [Robert Reich].

The new form of charity birthed by this era was the private foundation, which, Reich argues, was different from the charities of the past, both in its scale and in nature.  It was an entity with broad and general purposes, intended to support other institutions and indeed to create and fund new organizations (e.g., research institutes), seeking to address root causes of social  problems rather than deliver direct services (work “wholesale” rather than “retail”), and designed to be administered by private, self-governing trustees, with paid professional staff, who would act on behalf of a public mission.  One other aspect of these foundations was new: their vast resources enabled them to operate on a scale unlike other, more ordinary endowments.

P. 158 These foundations, were, in other words, allowing a small handful of wealthy people like Carnegie and Rockefeller to commit monumental sums of money to the public good and thus gain a say in the nation’s affairs that rivaled that of many public officials….

Despite the scale of the new generosity, there were criticisms.  One had to do with how the money being given had been made.  The new foundations were troubling, as Reich puts it,”because they represented the wealth, potentially ill-gotten, of Gilded Age robber barons.”No amount of charities in spending such fortunes can compensate in any way for the misconduct in inquiring them, said President Theodore Roosevelt.  Memories remained fresh of Rockefeller’s less than benevolent monopoly in oil and less than benevolent allergy to labor unions.

P. 159 Other criticism focused on how the new philanthropy not only laundered cruelly earned money but also converted it into influence over a democratic society. Reich writes that the new foundations “were troubling because they were considered a deeply anti-democratic institution, an entity that could exist in perpetuity and that was accountable except to a hand-picked assemblage of trustees.”

P. 160-162 Andrew Carnegie…helped to found a new vision of philanthropy that not only rebutted the kinds of criticisms that he and others had faced, but effectively delegitimized critics and questioned their right to question….he argued that inequality was the undesirable but inevitable cost of genuine progress.  The “conditions of human life have not only been changed, but revolutionized,” he wrote. Inequality is a better thing than it may seem.

P. 161 This is the first step of the Carnegie’s intellectual two-step:  If you want progress, you have to let the rich people make their money however they can, even if it widens inequality.

P. 164 This is the compromise, the truce, distilled:  Leave us alone in the competitive marketplace, and we will tend to you after the winnings are won.  The money will be spent more wisely on you than by you.  You will have your chance to enjoy our wealth, in the way we think you should enjoy it.

Here lay the almost constitutional principles that one day would govern MarketWorld giving: the idea that after-the-fact benevolence justifies anything-goes capitalism; that callousness and injustice in the cutthroat souk are excused by later philanthropy; that giving should not only help the underdogs but also, and more important, serve to keep them out of the top dog’s hair–and above all, that generosity is a substitute for and a means of avoiding the necessity of a more just and equitable system and a fairer distribution of power.

P. 165 (gala for charity) ….The whole night is divided into two types of performances from the stage.  The young and the helped, mostly black and brown, repeatedly dance for their donors. Then, between performances, older white men are brought up to praise them and to talk about, and be applauded for, their generosity to the program.

Most of the [older white] men work in finance. They include the corporate raiders who, seeking to raise profits by cutting costs, having helped to do away with stable employment. They are the gentrifiers who have pushed real estate prices through the roof and made it harder for families like those of the young dancers to maintain a livelihood in the city.  They are the beneficiaries of tax laws that give carried interest a major break and help to keep the public coffers low and the schools attended by the city’s poor underfunded, thus driving them into the streets and occasionally, when they are lucky, into the charity’s arms.  But these men have been generous, and in exchange for their generosity, these issues will not come up.  No one will say what could be said:  that these precarious lives could be made less precarious if the kind of men who donated to this program made investments differently, operated companies differently, managed wealth differently,  donated to politicians differently, lobbied differently, thought differently about pretending to live in Florida to avoid a minor New York City tax–if, in other words they were willing to let go of anything dear.  It is one night in one city, but it speaks of a broad, unstated immunity deal: Generosity entitles the winners to exemption from questions like these.

WHAT ABOUT CORPORATIONS WHOSE PRACTICES ARE HARMFUL WHILE GIVING HUGE SUMS TO PHILANTHROPY?

P. 176 The Sacklers, Purdue Pharma, developers of OxyContin.

P. 180 Contrary to the picture of helpfulness and cooperation Purdue attempted to paint, Purdue’s employees were actively and secretly trying to prevent West Virginia from imposing any control on the sale of OxyContin.

P.182 ….How did the Sacklers build the 16th largest fortune in the country?…Another answer to that question might be:  by thwarting the guardians of the public good every time they tried to protect citizens….[John Brownlee, U.S. Attorney in Roanoke, Virginia] It was later reported that Brownlee had received an unusual phone call the night before securing Purdue’s guilty plea.  A senior Justice Department official had called Brownlee ..and “urged him to slow down”…Brownlee rebuffed his superior.  “Eight days later,” the Washington Post said, “his name appeared on a list compiled by Elston of prosecutors that officials had suggested be fired.”….It was part of a larger attempted purge of prosecutors by the administration of George W. Bush.  Brownlee kept his job; Elston (senior Justice Department official) lost his amid the controversy of the lists becoming public. And what had occasioned the phone call? According to Elston, his boss, a deputy attorney general name Paul McNulty, had asked him to place the call to Brownlee after receiving a request for more time from a defense lawyer representing a Purdue executive.

P. 185 Hooters [exploitation of women, but many, like Cole who started in Hooters restaurant would progress to upper management]

P. 187 This rather audacious rationalization mingled with other, more plausible-sounding ones such as that if there were going to be bad industries, good people should run them. “If in a free-market society there will be demand, whether it is for sugary products or alcohol or scantily clad waitresses in a restaurant concept, then it will exist.”

P. 188 Cole’s [Hooters] rationalization were strongly and sincerely held.  [If the President of the Ford Foundation] wanted to change the money-making system itself, to change how business is conducted, he was not only up against powerful corporate interests and their lobbyists.  He was up against the psychologies of thousands of people like Cole, and a way of looking at life that didn’t require cynicism or callousness to commit harm.  It was a way of viewing things that inured the viewer to the larger system around you, that made these systems not your problem.

P. 190-195   Laurie Tisch [heiress to Loews Corporation–Loews also purchased a cigarette company]

P .194 This difficulty in escaping the status quo was especially evident in Tisch when it came to the aspect of her fortune that gave her the greatest guilt: her cigarette money.

BRIDGING MARKETWORLD AND THE PUBLIC INTELLECTUAL WORLD

P. 171 At the heart of Carnegie’s message, as Walker [President of Ford Foundation] read it, was the idea of extreme inequality as “an unavoidable condition of the free market system” and of philanthropy as an effective remedy.,,,But then Walker began to go off script.  The giving world, he wrote, needed “to openly acknowledge and confront the tension inherent in a system that perpetuates vast differences in privilege and then tasks the privileged with improving the system.”

P. 173 “….In most areas of life, we have raised market-based, monetized thinking over all other disciplines and conceptions of value.

P.174 …Walker pondered at the pushback he got..–the pleas to “stop ranting at inequality,” to speak of “opportunity” instead.

P. 196 …Walker spoke highly of his own experience in the financial services industry.  It had given him ‘skills’–some of which, presumably, were the protocols he could now tell himself he had redeployed in service of the weak.  It taught him how to multitask, manage a complex portfolio of projects, assimilate data and turn it into insight, have discipline. He wasn’t flattering his audience.  He was reciting the reasons why so many people…, who aspired to help millions of people, went to places like KKR before embarking on their work of changing the world.

P. 197 Eventually, he got to subject at hand.  “We have in America and in the world a level of extreme inequality that–I don’t mean to be hyperbolic–but I think really threatens our democracy.  Because at the core of the American narrative, in our democracy, is a very simple idea of opportunity.”  That’s how he did it: poking them with a thought that might not have been their favorite, and then quickly meeting them where they were, with the language of opportunity, that MarketWorld staple.

…Now, in front of a new generation of the “barbarians at the gate,” he was meeting them where they were.  “The more inequality we get in our system, the less opportunity there is.” he said….

P. 198 [from audience questions] And his subtlety and their imperviousness had conspired to ensure that he was not really heard.

He had been addressing people still in the fearful, climbing season of their lives [young professionals trying to establish themselves].  To get to the “rainmakers’, he said, you had to be in more private settings….

This thought led Walker to the observation that America was becoming privatized now. The American public had their big conversation out there in the messy democracy, and the elite had its own ongoing intramural chat….

P. 199  Walker looked at America today and saw his rich friends building their metaphorical buildings with gates on the outside and discos indoors.  Gated communities. Home theatres. Private schools. Private jets. Privately run public parks. Private world-saving behind the backs of those to be saved.  “Life goes more and more behind the gate,” he said. “More and more of our civic activities and public activities become private activities.”

P. 200 [Walker, President of Ford Foundation joining PepsiCo board] …..The move attracted some criticism, in part because this warrior against inequality would now be earning more than a million dollars a year from the Ford Presidency and this new, very occasional role, and in part because he now bore formal responsibility for what Pepsi did, including the company’s continuing choice to sell its harmful sugary drinks.  The critics could console, or depress, themselves with the thought that he was far from alone: Several of his counterparts at the major foundations served on the boards of firms like Citigroup and Facebook. The fear was that, yet again, MarketWorld would infiltrate and win…But Walker promised and seemed to believe that he would change them, not the other way around.  “I will bring my perspective as the leader of a social justice organization.”

P. 206 ….Walker (said)…. the new UN Week (Clinton Global Initiative) lived at “this intersection of doing well and doing well was doing good.”

P.207 However, Walker said, it was also the case that “philanthropists and commercial enterprises saw in CGI a platform that they could leverage for both doing good and building their brands.”  As a result, self-service flirted dangerously with altruism at CGI, in Walker’s view.

P. 209 ….Eight events had free registration, eight sold paid registration, and forty-eight were invitation-only.  The ratio told a truth about the new MarketWorld UN week: When private actors move into the solution of public problems, it becomes less and less of the public’s business.

FORMER PRESIDENT CLINTON’S PROGRESSION TO LIBERALISM

P. 201 Many of these people had been coming to Bill Clinton’s conference for years. Though they tended to label themselves as givers, philanthropists, social innovators, impact investors, at and the like, recent political upheavals has given their tribe a new name that was sticking.  They were coming to be known, by their friends and enemies alike, as globalists….Around the world, a suspicion seemed to be taking hold that jet-setters solving humanity’s problems in private conclaves was as much a problem as it was a solution.

P. 204  Clinton …(Yale Law School) …had embraced a liberalism that was….a “systems-building philosophy,” whose revelation was “that society, left alone, tended towards entropy and extremes, not because people were inherently awful but because they thought locally.” Private individuals couldn’t be relied to see the big picture of their society…but “a larger entity such as government could.” When he started in public office, Clinton believed public problems were best solved through public service and collective action. During the White House years, though, and even more decisively afterward, he had been won over by theory that it was preferable to solve problems through markets and partnerships among entities private and public, which would find areas of common cause and work together on win-win solutions.

P. 235 ….Clinton’s globalist dream was admirable, but it was also intolerant of other dreams.  It sought to make hard choices seem inevitable and uncomplicated. It sought to blur what happened to be good for the plutocrats in the room with was was good for ordinary people…It was among the things inspiring the revolt by making so many people feel barred from decision-making about the future of their own world.

P. 238 Still, his political opposition as president does not tell the full story of why recent decades have been so gruelling for millions of Americans.  Clinton, like Obama after him, was up against militant conservatives and libertarians, backed by plutocratic donors, who loathed the very idea of public, governmental problem-solving.  To be clear, that is the movement chiefly responsible for market supremacy’s takeover of America and the bleak prospects of millions of Americans. Yet the Republican party represented less than half of the nation, and the Democratic Party had a chance to stand for a robust alternative to market hegemony.  And you could say that it did to an extent–but it often did, under Clinton, and Obama, in a tepid, market-friendly, donor-approved way that conceded so much to government’s haters that the cause lost the fire of purpose.

……Jacob Hacker, Yale political scientist, who was once described as “an intellectual ‘It boy’ in the Democratic Party said, “Many progressives still believe in a role for government that is pretty fundamental, but they have lost faith in the capacity to achieve it, and they’ve in many cases lost the language for talking about it.”  Republicans, he said, are straight forward in their contempt for government. Democrats, especially those of the Clinton school of centrist, triangulating, market-friendly politics, don’t counter the contempt with a vigorous embrace of government…instead speak in a “gauzy” language….Even their proposed policies, though, reflect ambivalence:  health care for all, but not through public provision; help paying for college, but not free college; charter schools, but not equal schools….

P. 239 [Yale political scientist]...this hesitancy and “loss of faith” in government” has “hugely asymmetric effects on the two parties.”  He said, “For Republicans and the right, it is–for the most part, though not always–conducive to their aims, because if the government doesn’t do things, it can often be consistent with what they would like to see happen.  But for the left and the Democrats, it’s a huge loss, because their vision of a good society is one in which a lot of valuable public goods and benefits have their foundations in government action.”

….From an ex-president without legal power but still with the ability to galvanize a movement one could imagine a campaign, modeled on the Progressive Era, to pressure the government to put an end to this abusive profiteering.  Yet his proposed answer was to make it easier for the offending companies to make money selling healthy products.

“If you want to get them to do less harm, it requires innovation, because they will still have to make money, especially for publicly held companies,” Clinton said….The needs of the market came first.  Even a man who had spent his lifetime in politics felt a duty to be solicitous of the business person’s concerns…..

P. 241 Such attempts to work with government, though, were not the same as a conviction in the power of government, the supreme power of government, to better people’s lives….

P. 244 Through it all, Clinton saw truths in the anger bubbling up around him.  He saw how MarketWorld-style change crowded out the habit of democracy. He genuinely worried about young people seeing social problems and, unlike in his activist-prone generation, confining their questioning to what socially minded business they could start up.

CONFLICTS WITHIN MARKETWORLD

P. 210 …the question being asked was: Why do they hate us?  The “they” were the rootless cosmopolitans’ less-rarified fellow citizens, who in one place after another were gravitating to nationalism, demagogy, and resentful exclusion–and rejected some of the elites’ most cherished beliefs:  borderless, market cures for all diseases, inevitable technological progress, benign technocratic stewardship.

…..fellow MarketWorld elites had been drafted into a new class war.  It was no longer rich versus poor but rather people who claimed to belong to everywhere versus people stuck  somewhere–echoing his colleague’s notion of somewhere people and everywhere companies…What went wrong was that the Somewheres were simply no longer fooled by the Everywhere’s performance of concern and charity, and the numbers finally caught up with the Everywheres:  “No prizes for guessing which group is more numerous. No matter how many donations the global elite made, philanthropic and political, we could never quite compensate for that disparity.”

P. 212 [suggestion for change] A new approach has to start from the idea that the basic responsibility of government is to maximize the welfare of citizens, not to pursue some abstract concept of the global good.  People also want to feel that they are shaping the societies in which they live.

Jonathan Haidt [psychology professor, New York University] offered another theory of what went wrong in an essay…”If you want to understand why nationalism and right-wing populism have grown so strong and so quickly, you must start by looking at the actions of the globalists…In a sense, the globalists ‘started it.’”  They started it…because the “new cosmopolitan elite”…acts and talks in ways that insult, alienate, and energize many of their fellow citizens, particularly those who a psychological predisposition to authoritarianism.”

[This blog author’s words–The very problems the elites have self righteously only partially solved have caused the unrest].

P. 213 In Haidt’s analysis, globalism and anti-globalism are both cogent worldviews with valid concerns and data behind them.  There are advantages to a world of free and rampant human mingling and motion, and there are different advantages to stable, tightly bound communities. But…the globalists had so convinced themselves of the moral superiority of openness, freedom, and One World that they were unable to process the genuine fear these things aroused in millions of people.

P. 215-219 [examples of five political figures (Including Clinton)]  P. 220 It was striking to have five political figures share a stage and have not one moment of real argument.  They all seemed to suppose that the good society of entrepreneurs, whose success was tantamount to that of the society itself…

THE ARGUMENT FOR POLITICS

P. 220 One could forget, watching such a civilized group, that traditional politics is argumentative for a reason.  It isn’t that politicians don’t know how to be nice, but rather that politics is rooted in the idea of a big, motley people taking their fate into their own hands.  Politics is the inherently messy business of negotiating and reconciling incompatible interests and coming up with a decent plan, designed to be liked but difficult to love.  It solves problems in a context in which everyone is invited to the table and everyone is equal and everyone has the right to complain about being underserved and unseen. Politics, in bringing together people of divergent interests, necessarily puts sacrifice on the table.  It is easier to conjure win-wins in forums like this one, where everyone is a winner. The consensus was a reminder of all the kinds of people and perspectives that had not been invited in.

P. 222 Had the organizators of CGI truly been interested in why people resented the globalists, they could have invited…Dani Rodrik…an economist at Harvard….he had become one of the more incisive critics of how the globalists’ noble intentions undermine democracy.

”Today,” she [Theresa May, British Prime Minister] said, too many people in positions of power behave as though they have more in common with international elites than with the people down the road, the people they employ, the people they pass on the street.  But if you believe you are a citizen of the world, you are a citizen of nowhere.  You don’t understand what citizenship means.

P. 223 …In other words, politics is about actual places, with actual shared histories. Globalism, chasing a dream of everyone, risks belonging to no one.

For Rodrik, it isn’t just that solving things at the global level (which, in the absence of world government, often means privately, which often means plutocratically) lacks legitimacy. Pushing things up into that realm gives globalists “moral cover or ethical cover for escaping their domestic obligations as citizens of their own national setting.” It is a way of doing good that allows them to ignore the fact that their democracies aren’t working well. Or, even more simply, it allows them to avoid the duty they might otherwise feel to interact with their fellow citizens across divides, to learn about the problems facing their own communities, which might implicate them, their choices, and their privileges–as opposed to  universal challenges ‘like climate change or the woes of faraway places like Rwandan coffee plantations.  In such cases, diffuseness or distance can spare one the feeling of having a finger jabbed in one’s face.

P. 225 …”In an ideal democratic world, where citizenship is fully exercised and participatory, it’s a process of domestic deliberation where you’re testing your idea against other domestic citizens…”

P. 226 …”The locus of politics, I think, is the key issue here,” he said.  “What is the right locus of politics, and who are the decision-making authorities?  Is it these networks and these global get-togethers? Or is it at the national level?”  Who should make change, and where should they make it?

P. 227 …..’Probably people who get together in these congregations [CGI] don’t think of what they are doing as politics,” Rodrik said.  “But of course it’s politics. It’s just politics of a different focus and has a different view of who matters and how you can change things, and has different theory of change and who the agents of change are.”…The problem with the globalists’ vision of world citizens changing the world through partnerships, Rodrik said, is that “you’re not accountable to anyone, because it is just a bunch of other global citizens like you as their audience.”  He added, “The whole idea about having a polity, having a demos, is that there’s accountability within that demos.  That’s what a political system ensures and these mechanisms don’t.”

The political system that Rodrik speaks of is not just Congress or the Supreme court or governorships.  It is all of these things and other things. It is civic life. It is the habit of solving problems together, in the public sphere, through the tools of government and in the trenches of civil society.  It is solving problems in ways that give the people you are helping a say in the solutions, that offer that say in equal measure to every citizen, that allow some kind of access to your deliberations or at least provide a meaningful feedback mechanism to tell you it isn’t working.  It is not reimagining the world at conferences.

P. 228 It isn’t necessarily that simple.  A pair of Stanford sociologists...investigated the question and came up with a surprising answer.  When elites solve public problems privately, they can do so in ways that disrupt it.  The former occurs when elite help “contributes to and enlarges the public goods provided by the state, and attends to interests not readily provided for by the state.”  But the same elite help, backed by the same noble intentions, can instead “disrupt” democracy when it “replaces the public sphere with all manner of private initiatives for special public purposes.”  These latter works don’t simply do what government cannot do. They “crowd out the public sector, further reducing both its legitimacy and its efficacy, and replace civic goals with narrower concerns about efficiency and the markets.”

WOMEN’S EQUALITY

P. 232 Women’s equality, it was now said, was a $28 trillion opportunity.  This had become a near-constant refrain in the MarketWorld–some permutation of the words “women”, “equality”, and “trillion”.  If the logic of our time had applied to the facts of an earlier age, someone would have put out a report suggesting that ending slavery was great for reducing the trade deficit.  “Of course, you should do it because it was the right thing to do, but there’s a strong business case.”…..In other words, of course you should do it because morality is enough, but since we all know morality isn’t actually enough, you should know that the business case is fantastic.

HOW THE PRIVATE SECTION CHANGED THE PUBLIC SPHERE

P. 234 ….The private sector didn’t merely add to the public sphere activities.  It got to change the language in which the public sphere thought and acted.

P. 247 [Henry Crown Fellowship of the Aspen Institute] …The fellowship is a prestigious finishing school to assist the transition from making it in business to making the world a better place.  Its mission is to mobilize a “new breed of leaders” to “tackle the world’s most intractable problems.” But it defines leader in a particular way:  “All are proven entrepreneurs, mostly from the world of business, who have reached a point in their lives where having achieve success, they are ready to apply their creative talents to building a better society.”

P. 248 [Founder of Freelancers Union]…She originally wanted to serve as a broker to help these workers [Uber drivers and magazine writers] buy health insurance as a group.  Then she realized it would be easier and more effective if she simply created the health insurance company herself.  But the economy wasn’t set up for people like (her). A company not run purely in shareholders’ interests risked lawsuits from its investors.  The dominant interpretations of corporate law,….has since the 1970s came to regard companies’ first duty as being to earn a profit from shareholders.

THE RISE OF B CORPORATIONS (BENEFIT)

P. 249 (B corporations) ….do business in a different way….Andrew Kassoy…batted around ideas for addressing this problem, and at last alighted on the vision of creating a parallel capitalist infrastructure, next to the traditional one, in which companies could be more responsible and conscious, and nonetheless raise money from capital markets and comply with the law.  Thus was born the B Corporation, or benefit corporation, as it is also known….

P. 250 …started a nonprofit called B Lab, which gives better-behaved businesses a certification based on a rigorous analysis of their social and environmental practices …Ben and Jerry’s….

…hoped that by certifying conscious companies, they could change the larger system of business….but in the MarketWorld way, they didn’t take on the system directly.  They simply sought to cultivate examples of a different way….

….But now,….B Lab was in the midst of a rethinking process, which was guided by his conviction that “what got us here is not going to get us where we’re going.”

P. 251 The thorniest questions…involved whether to stick to the MarketWorld mantra of “make good easier,” or whether instead to seek to make those who commit harm to pay a higher price–which meant changing the system of business for everyone, fighting in the arena of politics and law rather than the market, and elevating the stopping of bad business over the encouragement of good business….

For example, one of B Lab’s great victories had been the creation of a parallel corporate law, first enacted in Maryland and then adopted in other states, that allowed companies to embed a social mission into their work without fear of legal trouble such as shareholder complaints…Was it more important to make it easier for Etsy to do good, or rather to make it harder for ExxonMobil to do harm?  Was it possible to do both?

Kassoy felt drawn toward the systems work, even though he had devoted the last decade to the other approach.  “I’m not be sure everybody would say this, but I believe there’s a huge role for government regulation of business.  We’re not going to change everybody. We’re not changing human greed. Businesses act badly.”  There were, in particular, “extractive industries where just the existence of the industry” means harm and social costs being dumped on humanity.  “We’re not getting rid of all of those things”…

The United States had millions of corporations and, after a decade of B Lab’s evangelizing, just hundreds of B Corps.  Kasoy, saw now, more clearly than he did at the company’s founding, that solving problems like inequality, greed, and pollution would require more than making good easier.

P. 253 …B Corps were championed all over MarketWorld….the founders were regularly praised by recognized “thought leaders”.

CONFLICT BETWEEN POLITICAL LIBERALS AND MARKET SOLUTIONS

P. 252 He [Andrew Kassoy] was not the only MarketWorlder coming around to the thought that their ways of operating might be inadequate to the actual work of changing the world, or even just one’s own country.  These MarketWorlders, though, often lacked an understanding of how actual change did work, or they felt, sometimes dubiously, that pursuing the other kind of change called upon skills they lacked.  If government was the place you went to change systems, what could they as individuals do? They could petition the government.  They could join movements fighting to change law and policy.  But,…many in MarketWorld were daunted by this approach. He had the feeling that many in MarketWorld do that in their grounding in the norms of business made them ill-equipped for the realm of politics, where win-lose was normal and where fights often had to be picked instead of mutually agreeable deals being struck….It was peculiar, this idea of activism as manipulation; it sounded more like an excuse for not working on systems than a reason.

…..I don’t think that what we’re doing can change capitalism by itself.  But I do believe that what this does is creates a model.” On other days, Kassoy wasn’t so sure about this logic.  He kept coming backing to regulation. “I’m a big-government kind of a person,” he said.  “I believe there’s a very strong role for the state. And I don’t know how to make that happen.”

P. 253 Kassoy’s ambivalence is what Jacob Hacker, the Yale political scientist, seems to have in mind when he speaks of political liberals who are philosophically committed to government, to the public solution of public problems, but who have absorbed, like secondhand smoke, the right’s contempt for public action.  While people on the right believe actively in the superiority of market solutions, liberals like Kassoy do so passively–passively in that they do not reject a public solution in theory, but pursue a private one in practice….And so no one’s really told us government is a good thing for a very long time.” Saying this seemed to make Kassoy reflect on whether he had unwittingly become the last link in this change of liberals consolidating the war on government by proffering private solutions to public problems.

P. 255-256 failure of big banks

CRITIQUE OF MARKETWORLD

P. 256  Chiara Cordelli, an Italian political philosopher at the University of Chicago….sought to unravel some of MarketWorld’s self-justifications.

Take, for instance, the view that MarketWorld has a duty, and right, to address public problems–and indeed, to take a lead in developing private solutions to them.  This…was like putting the accused in change of the court system. The questions that elites refuse to ask, she said, is: Why are there in the world so many people that you need to help in the first place?  You should ask yourself: Have your actions contributed at all to that?….And, if yes, the fact that now you are helping some people, however, effectively, doesn’t seem to be enough to compensate.”

P. 257 Cordelli was speaking of both the active committers of harm and the passive permitters of it.  The committers are what she calls “the easy cases.”…”If you have campaigned against inheritance tax, if you have directly tried to avoid paying taxes, if you supported and directly, voluntarily benefitted from a system where there were low labor regulations and increased precarity,” then, she argues, “you have directly contributed to a structure that foreseeably and avoidably harmed people.”  That is “direct complicity.”

As for the people who don’t help run Goldman Sachs or Purdue Pharma, who live decent lives and attempt to make the world slightly better through the market, Cordelli called them the harder cases….She saw in each of these types of efforts not a single moral act but two.  Alongside the act of helping was a parallel act of acceptance.

P. 258-260…. Economic reasoning dominates our age, and we may be tempted to focus on the first half of each of the above sentences–a marginal contribution you can see and touch–and to ignore the second half, involving a vaguer thing called complicity….

P. 261 As harsh as her criticisms might sound to  them, Cordelli is giving…. others in MarketWorld a way out.  She is confessing, on their behalf, what some of them privately fear to be true: that they are debtors who need society’s mercy and not saviors who need its followership.  She is offering what MarketWorlders so adore: a solution. The solution is to return, against their instincts and even perhaps against their interests, to politics as the place we go to shape the world.

P. 262-263 ….Businesspersons calling themselves “leaders” and naming themselves solvers of the most intractable social problems represent a worrisome way of erasing their role in causing them.  Seen through Cordelli’s lens, it is indeed strange that the people with the most to lose from social reform are so often placed on the board of it. And MarketWorld’s private world-changing, for all the good it does, is also, for Cordelli, marred by its own “narcissism.”…..

When society helps people through its shared democratic institutions, it does so on behalf of all, and in a context of equality.  Those institutions, representing those free and equal citizens, are making a collective choice of whom to help and how. Those who receive help are not only objects of the transactions, but also subjects of it–citizens with agency. When help is moved into the private sphere, no matter how efficient we are told it is, the context of the helping is a relationship of inequality:  the giver and the taker, the helper and the helped, the donor and the recipient.

When a society solves a problem politically and systemically, it is expressing the sense of the whole; it is speaking on behalf of every citizen.  It is saying what it believes through what it does. Cordelli argues that this right to speak for others is simply illegitimate when exercised by a powerful private citizen.  “You are an individual”, she said. “You cannot speak in their name.  I can maybe speak in the name of my child, but other people are not your children.”

“This is what it means to be free and equal and independent individuals and, for better or for worse, share common institutions,” she said.  Our political institutions–our laws, our constitutions, our regulations, our taxes, our shared infrastructure:  the million little pieces that uphold our civilization and that we own together–only these, Cordelli said, “can act and speak on behalf of everyone.”  She admitted, “They often don’t do that.” But that isn’t the way out that MarketWorld so often makes it out to be.  “It’s our job,” Cordelli said, “to make them do that, rather than working to weaken and destroy those institutions by thinking that we can effectuate change by ourselves.  Let’s start working to create the conditions to make those institutions better.”

P. 266 …Goldman Sachs- sponsored lunch…in which the company’s do-gooding was trumpeted and its role in causing the financial crisis went unexamined.

AUTHOR ANAND GIRIDHARADAS’ REMARKS

P. 267 This book is the work of a critic, but it is also the work of an insider-outsider to that which it takes on….

P. 268 (His Professor at Harvard)….was the first to plant in me the the thought that money had transcended being currency to become our very culture, conquering our imaginations and infiltrating domains that had nothing to do with it. (END OF POST)

TAXES: FLAT VS. PROGRESSIVE AND DEBUNKING “THE TAX SYSTEM EXPLAINED IN BEER”

TAXES:  FLAT VS. PROGRESSIVE AND DEBUNKING “THE TAX SYSTEM EXPLAINED IN BEER”

(These thoughts are purely the blunt, no nonsense personal opinions of the author about financial fairness and discrimination and are not intended to provide personal or financial advice.)

Prelude:  Yet again, the tax system explained in beer story is used to ludicrously and simplistically explain the tax system, and no less by the USA White House.  We have been wanting to do a blog post on flat and progressive tax systems comparisons, so here it is. 

The story about “The tax system explained in beer” (democratic) has been flitting around the internet since 2001.  Apparently no author can be identified for the article. The analogy makes the argument that since wealthy people pay the most in taxes, they will also receive the most benefit from a tax cut. It also suggests that wealthy people will leave the US if they are made to pay more in taxes.

It appears that how the reader interprets the article is based on ‘right’ or ‘left’ political thinking, flat versus progressive taxation systems and social democracy or not.

On October 30, 2017 Sarah Huckabee Sanders, USA White House Press Secretary began her daily press briefing pitching USA Trump tax cuts by reciting the article.  Then she said,  “And that, ladies and gentlemen, is how our tax system works,” Sanders continued. “The people who are being paid the highest taxes will naturally benefit from a tax reduction but not the largest benefit. Taxing them too much and they might start drinking overseas where the atmosphere is somewhat friendlier. This is a silly story but it illustrates a very important point. Our tax cuts and reforms will create a fair system that works better for everyone. It will make our country the friendliest in the world for American families trying to build a better life for their children. And for American companies seeking a competitive edge. I will be happy to get that story to everybody so you can get those numbers later. Again, I know that may be an oversimplification but it paints a very good picture of the tax system.”

From the analogy the information is condensed as follows, ‘the premise is every day ten men go out for beer and the bill for all ten comes to $100.  If they paid their bill the way we pay our taxes, it goes something like this…’ (first four people are the poorest).  Based on their incomes, the ten men would pay:

  • The first four men (poorest) would pay   $  0
  • The fifth would pay                                  $  1
  • The sixth would pay                                $  3
  • The seventh would pay                           $  7
  • The eighth would pay                              $12
  • The ninth would pay                                $18
  • The tenth man (richest) would pay          $59  (for a total of $100)

Everyone is happy with this arrangement, until the owner throws them a curveball. Because they are such good customers, he reduces the bill to $80.  It is decided it would be fair to reduce each man’s bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, so each man would now be paying:

(Blog author comment:  Truly funny, the totals add up to $79, not $80, so it appears the bar tender will be short changed by $1.)

  • First four persons        $  0
  • Fifth person                 $  0 (100% saving on prior payment)
  • Sixth person                $  2 ( 33% saving)
  • Seventh person           $  5 (28% saving)
  • Eighth person              $  9 (25% saving)
  • Ninth person                $14 (22% saving)
  • Tenth person                $49 (16% saving) for a total of $79

However, the men begin to compare their savings with those who get the least in percentage of savings complaining the most.

The wealthy get all the breaks. Wait a minute, yelled the first four men, we didn’t get anything at all. This new tax system exploits the poor. The nine men yelled at the tenth and made him feel bad so the next time the tenth man didn’t show up for drinks and the nine sat down and had their beers without him. When it came time to pay the bill, they discovered something important. They no longer had enough money between them all to even cover half of the bill.

For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.’  (End of analogy).

Reader comment:  ‘Yes, the perilous story of the wealthy person who will leave it all behind if the taxes go a percentage point too high…all his businesses, his customers and his suppliers, all his family, his home, his social networks, his local culture, his kids schools, why he’ll just pick up all of that and magically whisk it away to some other place with a lower tax burden for free.  The only thing the story is missing to start with is “Once upon a time…” like all fairy tales’.

 

ANOTHER EXPLANATION OF THE ABOVE ANALOGY

Taken from the following article:   “SA Tax System Explained Through Beer” (based on South African Rand) tax-system-explained-through-beer

‘Economies are not one-liners. We’re talking about systems here – and you can’t talk about taxation and spending without talking about “where did the money come from”.

So let me attempt to re-tell that parable.

Ten Men Walk Into A Bar…And One Of Them Owns The Brewery.  Suppose that every day, ten men go out for beer and the bill for all ten comes to R100.  If they paid their bill the way we pay our taxes, it would go something like this:

  • The first four men (poorest) would         R  0
  • The fifth would pay                                 R  1
  • The sixth would pay                                R  3
  • The seventh would pay                           R  7
  • The eighth would pay                              R12
  • The ninth would pay                                R18
  • The tenth man (richest) would pay          R59 (for a total of R100)

So, that’s what they decided to do.

There are many reasons why the richest man agreed to pay the bulk of the bill, but the important one is that he owned the only brewery in town, and the barman would buy all the beer from him.

The seventh, eighth and ninth men all worked in the brewery, and earned salaries according to their skill level. The sixth and fifth men owned farms which supplied the hops – although they didn’t earn particularly well, because the brewery was the sole buyer and it negotiated quite stiff rates.

The remaining four men were farm labourers who earned enough to eat, but not enough to drink.

The way that the brewery man saw it: the drinks must flow in order for the barman to be in business and sell the beer that the brewery produced.

The ten men were also very protective of their beer industry, and would run any newcomers out of town. This meant that the ten men were the only real regulars at the bar, and the only real source of its income.

So to keep the bar in business and the town happy and the drinks flowing, the richer men would pick up most of the tab. And happily, most of the bill would end up back in the brewery man’s hands anyway.

So the ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the barman threw them a curveball. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by R20”. Drinks for the ten men would now cost just R80.

What he didn’t say is that there had been a bumper season of barley, so the brewery had produced its beer fairly cheaply that month – and the brewery owner had offered the barman a substantial discount on the beer in order to get rid of it.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free. But what about the other six men? How could they divide the R20 windfall so that everyone would get his fair share?

They realized that R20 divided by six is R3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man’s bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.

And so

  • The fifth man, like first four, now paid           R  0 (100% saving)
  • The sixth instead of R3 now paid                 R  2 (33% saving)
  • The seventh instead of R7 now paid            R  5 (28% saving)
  • The eighth instead of R12 now paid             R  9 (25% saving)
  • The ninth instead of R18 now paid               R14 (22% saving)
  • The tenth instead of R59 now paid               R49 (16% saving) for total of R79

Each of the six was better off than before. And the first four continued to drink for free.  But, once outside the bar, the men began to compare their savings.

“I only got a dollar out of the R20 saving,” declared the sixth man. He pointed to the tenth man,”but he got R10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a rand too. It’s unfair that he got ten times more benefit than me!”

“That’s true!” shouted the seventh man. “Why should he get R10 back, when I got only R2? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!”

In their rage, the nine men decided to boycott the bar.

The next night only the tenth man showed up for drinks so he sat down and had the beer on his own. But when it came time to pay the bill, he discovered something important. 90% of the beer had gone unsold, and the barman was threatening to return the stock to him in the morning.

And if the situation remained unchanged, then the barman was planning to shut up shop, and the brewery would have to close, and then everyone would be without jobs.

And that is how our economy works. The people who already pay the highest taxes will naturally get the most benefit from a tax reduction, but the wealthy also have a vested interest in keeping consumers at the table.

That consumption drives the economy and gives value to the businesses that they own. And the hard truth is: if anyone decides to leave the table, then it’s likely that everyone will lose. And it’s really hard to keep everyone happy.

It’s complicated.’ (End)

EXAMPLE OF PROGRESSIVE FEDERAL AND PROVINCIAL 2017 FOR ALBERTANS

For this blog author, the initial article is based on true stupidity and over simplification of the tax system.  In this blog article, an example is used to explain the Canadian and provincial tax system based on a progressive tax system versus a flat tax system. These calculations are examples only.  Also, final taxes will vary based on personal deductions, other deductions, tax credits and loopholes not included here.

The following information outlines the 2017 progressive tax system for Canadian and Alberta families of two or more using 2011 Stats Canada information on incomes for Quintile 1 to 5.  For the tax calculation, the highest income for Quintile 1 to 4 rounded off was used plus an arbitrarily assigned income of $350,000 for Quintile 5.

CANADIAN DISTRIBUTION OF INCOME (from MoneySense 2015 All Canadian Wealth test (moneysense.ca/save/financial-planning/the-all-canadian-wealth-test-2015/)

 

 

  • Quintile 1 up to $38,754
  • Quintile 2 $38,755 to $61,928
  • Quintile 3 $61,929 to $88,074
  • Quintile 4 $88,075 to $125,000
  • Quintile 5 $125,001 and over

Upper income point of quintiles

  • Quintile 1 $  39,000
  • Quintile 2 $  62,000
  • Quintile 3 $  88,000
  • Quintile 4 $125,000
  • Quintile 5 $350,000 (arbitrarily assigned value)

tax

 

 

ANALYSIS

First, it must be stated that all persons identified in the quintiles will not pay the full tax shown in the table since personal deductions, other deductions and tax credits have not been applied.  Also, the ability to use tax loopholes and credits, (more likely to benefit wealthy the most) have not been applied.  Examples are TFSAs (no tax savings on principal amounts, but savings are realized on tax free investments and interest earned on principal) and RRSPs (reduced taxes on employment income for yearly RRSP amounts, but will pay taxes on withdrawals from RRSP, for example, in retirement when income is likely to be less than when employed).  Combined principal amounts for TFSAs for couples now totals almost $100,000 (tfsa-boondoggle-for-singles-and-low-income-canadians).  It is almost 100% certain that couple earning $39,000 will not be able to contribute to TFSAs and RRSPs.

Also, calculations are based on the combined total income for one or two earners in family of two or more.  Taxation will vary based on income earned by each spouse and tax rules for family income.

It is interesting to note percentage of after tax income without application of any other deductions for Quintile 1 to 4 families of two or more persons averages between 70% and 75%, while percentage of after tax income for the richest Quintile 5 $350,000 arbitrarily assigned income for family of two or more is about 60%. The 60% after tax income, however, will increase substantially with the deductions, and tax avoidance, loopholes and credits that wealthy are able to use.

After tax income with no deductions for family of two or more earning $350,000 will be at least $211,078 or $17,590 per month (as compared to only approximately $2,400 per month for Quintile 1 family of two or more persons).  Families earning $39,000 with equal incomes between the spouses at 2,000 annual worked hours each works out to about $10/hr.

If 2015 old flat tax rate of 10% for Alberta is applied to Quintile 5 person earning $350,000 the total tax would only be $35,000 instead of $43,383.  What a difference a progressive tax makes!  The average person does not understand that the first dollar earned is taxed lower than the last dollar earned in the progressive tax system.  The person earning $350,000 pays the exact same tax on the first $125,000 of pay as the person making only $125,000.  That is what makes progressive taxes fair.

From MoneySense article the top income for unattached individuals for Quintile 1 is $18,717 (as compared to $38,754 for family two or more persons), Quintile 2 $23,356 ($61,928 for family two or more persons), Quintile 3 $36,859 ($88,074 for family two or more persons), Quintile 4 $55,498 ($125,000 for family two or more persons), and Quintile 5 $55,499 and over (over $125,000 for family two or more persons).  Analysis shows incomes of families of two or more are at least double or more to that of unattached individuals.  It is almost 100% certain that unattached individuals in Quintiles 1, 2 and 3 will not be able to save by contributing to TFSAs and RRSPs (unless RRSP is a forced contribution through employer).

Income does not include assets that the upper class and wealthy might have such as paid for $600,000 and up housing, investments, etc.

CONCLUSION

Michael Lewis, author of “The Undoing Project” book, describes how a Nobel Prize-winning theory of the mind altered our perception of reality.   Two Israeli psychologists, Daniel Kahneman and Amos Tversky’s work created the field of behavioral economics which revolutionized thinking of how the human mind works when forced to make judgements in uncertain situations.  An example is outcomes of surgery where there might be a 5% chance of death versus 95% chance of surviving the surgery.  When patients are presented with 95% chance of survival rate rather than 5% death rate, they are more likely to go through with the surgery.  The same judgement should apply to tax system based on beer analogy.

For upper class and wealthy, please don’t ‘cry me a river’.  Wealthy need to look at what they have left after taxation instead of what is being taken from them in taxation.  Only when all the tax loopholes, offshore tax havens, and privileging through tax credits like Tax Free Savings Accounts TFSAs that benefit wealthy the most are eliminated so that there is a level playing field and fairness between poor and wealthy, only then can the wealthy ever complain that they are being taxed unfairly.

The wealth gap between the rich and poor needs to be lessened by increasing the minimum wage to an indexed living wage and eliminating the tax deductions, loopholes and tax credits that benefit the wealthy the most (selective-democratic-socialism).

Regarding the ‘The Tax System Explained in Beer’ analogy, we will take the South African Rand analogy as being the more accurate of the two analogies, thank you very much!

Postscript: For those who wish to read more on the debunking of tax system explained in beer analogy, the following online article and reader comments is a great one – (Reality) Check, Please:  Why the Restaurant Analogy Doesn’t Work (Restaurant-Analogy-Doesnt-Work).

UPDATE OCTOBER 31, 2018 – We are very grateful to a reader who pointed out that an error was made in the calculation of information in the table.  The table has been updated.  The update decreases the tax that is paid in the $350,000 Alberta income category.

(This blog is of a general nature about financial discrimination of individuals/singles.  It is not intended to provide personal or financial advice.)

CANADIAN SNOWBIRDS LIKELY RICH CANADIAN FAMILIES FINANCIALLY DISADVANTAGING SINGLES AND THE POOR

CANADIAN SNOWBIRDS LIKELY RICH CANADIAN FAMILIES FINANCIALLY DISADVANTAGING SINGLES AND THE POOR

These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to provide personal or financial advice.

Who are the Canadian Snowbirds (Canadians who spend winter outside of Canada)? They are Canadians who spend up to approximately 182 days or six months out of Canada and in the United States each year usually during the winter season.

A new system is being implemented whereby Canadian snowbirds will be able to be tracked more easily for financial fraud during their snowbird stays.  Some snowbirds think they should be able to stay longer than six months in the USA.

According to MoneySense, ‘Follow the Flock South, October 8, 2013 moneysense more than one million Canadians age 55 and up lead lifestyle of snowbirds.

Avoiding the Snowbirds’ Trap’ thestar article states:

  • ‘that the study by the University of Florida Bureau of Economic and Business Research revealed that Florida’s five-million population over 55 swelled by more than a million people every winter, and 82 per cent of these snowbirds came from Canada.  The study stated that not only are the number of snowbirds continuing to increase, encouraged by the dollar and cheaper real estate, they are getting younger as baby-boomers retire.
  • There are trade-offs that have to be made.  The winter snowbirds have a large impact on life in Florida.  One of the complicating issues is that those people are only in the state for part of the year.
  • State and county governments responsible for roads and transportation are often caught in a quandary of whether or not to improve infrastructure to cope with the winter traffic jams, or plan around the six summer months when the snowbirds have left and roads, public transit, even retail malls are relatively deserted.  One key finding of the study was that 81 per cent or 500,000 snowbirds spending their winters in Florida actually own their secondary home in the sunshine state.
  • Canadians are the biggest foreign purchasers of U.S. residential real estate and own an estimated $50 billion worth in Florida alone.
  • There also has been talk about proposed USA legislation creating a Retirees Visa, increasing the current six-month limit on a winter stay for snowbirds to eight months.’

Canadians snowbirds make their presence felt:  spending $5 billion in 2012, just in the big-four sunshine states of Florida, Arizona, Texas and California alone according to the Canadian Snowbird Association. snowbirds

The following article give some interesting facts of Canadian real estate purchases in the USA:  ‘2015 Profile of Home Buying – Activity of International Clients (Residential) in USA-April/14 to Mar/15′ realtor.org

  • In April, 2014 to March, 2015 homes estimated to be sold to foreign buyers were approximately 209,000 with total sales estimated to be $104 billion.
  • Fourteen per cent were from Canada (29,260 sales) with sales of $11.2 billion ($382,775 per sale).  About 47% of Canadian buyers bought for vacation properties and 12% for vacation and rental.  Types of housing purchased include 46% detached homes, 35% condos, and 12% townhomes.  Remaining 7% were commercial, land and other purchases.  On average Canadian buyers purchased properties valued at $380,000 and about 73% were purchased on an all-cash basis.
  • Dollar value of Canadian sales for 2009 $8.9 billion, 2010 $17.1 billion, 2011 $13.0 billion, 2012 $15.9 billion, 2013 $11.8 billion, 2014 $13.8 billion.
  • Fifty per cent of sales were in the four states of Florida, California, Texas and Arizona.
  • Foreign buyers tended to be upscale buyers (all buyers, not just Canadian) who paid overall USA average house price of $499,600 compared to average USA house price of about $255,600.
  • An average of 8% of USA residents were interested in buying in Canada in 2015.

SO WHO CAN AFFORD TO BUY SECOND PROPERTIES OUTSIDE OF CANADA AND RESIDE THERE FOR SIX MONTHS OF THE YEAR?

According to Statistics Canada there were approximately 5 million seniors age 65 and over in 2011.  About 47% are in family unit of two or more persons, the rest are singles and widowers.

One could probably estimate that most of the Canadian snowbirds are families as singles are less likely to be able to purchase a second home and stay in the USA for six months of the year. (See MoneySense All-Canadian Wealth Test below).   Forty-seven per cent of the 5 million Canadian seniors equals about 2,350,000 family units.  If 80% or 500,000 Canadians own second homes in Florida alone, that is a lot of money flowing out of Canada to the USA (another 20% of Floridian snowbirds do not own second homes in Florida).

WHERE IS ALL THE WEALTH GOING?

While wealthy Canadians are able to buy second homes and spend six month of the year outside the country, singles, poor families and the poor are left behind to support the country with money they don’t have.

One could say that if Canadian governments placed financial values for the country as one of their priorities, they would certainly not give future approval for outside the country stays over six months and they would maybe even shorten the stay to three or four months (added Arpil 26, 2016).

Yes, snowbirds still pay annual income taxes and property taxes, but  their houses are likely sitting empty for half the year.  Yes, they are not taking jobs away from USA citizens, but they also are taking their money away from Canada and spending it in the USA. Comments listed at the end of this post shows how entitled these rich snowbirds feel with no regard to what is happening financially to the country of which they are citizens.  (The last comment is one of better ones).

‘Money Sense “All Canadian Wealth Test’ 2009’ moneysense – Quote:  While incomes are far from equal, wealth is even more unbalanced. The richest 20% of Canadian households control about 69% of the wealth in Canada. The next quintile down possesses a further 20% of the net worth. Not much is left over for other people. The bottom 60% of households control only 11% of Canada’s wealth. In fact, the bottom fifth of the population possess no wealth and actually owe a few thousand dollars more than they own.

Families of Two or more Income 2015 MoneySense All Canadian Wealth Test (based on 2011 data) moneysense.2015

Upper-middle 20% quintile      $88,075 to $125,009

Highest 20% quintile                $125,010 and up

Families of Two or More Wealth 2015 MoneySense All Canadian Wealth Test (based on 2011 data)

Upper-middle 20% quintile       $589,687 to $1,139,488

Highest 20% quintile                 $1,139,489 and up

Above amounts are misleading as they include single parents with children.  If these persons are removed from the totals, net worth is probably much higher.

The Upper-middle 20% quintile of unattached individuals had a net worth of $128,068 to $455,876 and the Highest 20% quintile $455,877 and over.  (Does this include widowers? If it does, they are more likely to have greater net worth than ‘ever’-never married, no kids singles or early in life divorced/separated singles.)

The number of census families in Canada—married couples, common-law couples and lone-parent families equalled about 9.4 million families in 2011.

According to Statistics Canada there were approximately 4,945,055 seniors aged 65 and over in Canada in 2011.

Senior families of two or more persons comprise about 44% of the population, singles 13% and widowers 43%.

Opinion comments submitted by readers in response to the articles

From “Crooked Canadian Snowbirds risk losing their benefits under new security program” bnn.ca/News

-’Crooked Canadian Snowbirds??? Gimme a break.. The snowbirds you are talking about worked hard, saved and now are just wanting to enjoy some winters away from the cold and wet before the rising cost of health insurance keeps them hostage in Canada.  They are not taking any jobs from Americans and are not impairing the Canadian economy in anyway; cut them slack and stop making them out as criminals.

 

-By leaving the country for more than six months, you are spending your money elsewhere and not on the Canadian economy.  You will also lose health benefits such as the provincial health care that is free to Canadian citizens.  If you leave the country for more than six months, you should not be able to retain these benefits.  These are all costly benefits paid into and by taxpayers that should not be taken advantage of by anyone…Winter is only for six months.  I am one of those who runs away from winters, and that is more than enough time!!!’

From “Canadian Snowbirds Risk Losing Benefits under New Exit-Tracking System” snowbirds

-Snowbirds that spend six months in warmer countries pay for all year health care fees (British Columbia), income tax, property tax, but only use it for six months.  The government should be happy with it.  Nobody is exploiting the system.  Seniors have worked all their lives to pay for what the younger generation has now, so now it is time for the younger generation to pay for the next one and leave seniors alone.  They did their jobs and paid their dues.

 

-I used to work for (government) investigations and at that time we were uncovering $10 of fraud for every $1 spent on detecting it.  So you would have expected that the Government would hire more investigators until the ratio became 1-1.  However, it is difficult to convince voters that the government can save money by hiring more public servants.

 

-Provided they also go after rich tax cheats and their offshore tax havens, I’m fine with this.  It’s a myth that if you pay into a program, you’re automatically entitled to a benefit.  You’re only entitled to the benefit if you meet the criteria…in this case, the criteria is that you physically be in Canada for a certain portion of every year.  The programs are most often income supplements…not ‘retire in the sun’ strategies.  To think otherwise is the ultimate ‘entitlement mentality’.

 

-I will be judged for smamming my parents here, but this fits them to a tee.  Many years ago retired…early.  Moved from northern community to a border community.  Shop over the border every single day for everything.  They go to Florida 6 months a year.  Then come home and complain about Canada for the other 6 months.  We discussed (if one could call it) this once.  My parents were once proud Canadians.  Started with little, had children, used all the services available to them, for us.  As soon as they got what they needed.  BOOM.  Repubs overnight.  ‘Why should I pay for health care taxes for someone else?  We are never here’. Reminding them that they were part of the systems they used, while they were a young family fell on deaf ears. Children are not born selfish and greedy.  They are taught these terrible qualities.  I do agree we should be going offshore hunting for tax evaders, but this is a serious issue as well.  I remember suggesting to them ‘Why don’t you just move down there full time’?  Verbatim – ‘We will lose all our pension and health’.  Fools!’

End of comments.

This blog is of a general nature about financial discrimination of individuals/singles.  It is not intended to provide personal or financial advice.

MARITAL STATUS DOES NOT DEFINE FINANCIAL INTELLIGENCE

MARITAL STATUS DOES NOT DEFINE FINANCIAL INTELLIGENCE

These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to provide personal or financial advice.

In the last four posts, financial discrimination of senior singles was discussed.  In addition, two reader letters and response to letters addressing assumptions of married people that singles can live with someone if they lack financial resources, and that financial problems of singles are because their lifestyles are too extravagant was discussed.

It is mind boggling as to why married/coupled people always seem to think that because they are married/coupled they have more financial intelligence and are able to manage their money better than single and divorced/separated persons.  They also almost can never put themselves into the financial shoes of single and divorced /separated persons.

Singles are one the fastest growing demographics in the country, yet they are left out of financial formulas and discussions.

leave it to beaver

WHEN OUR POLITICAL LEADERS MAKE IT SOUND LIKE THE FAMILY FROM ‘LEAVE IT TO BEAVER’ IS STILL THE CANADIAN NORM, THERE ARE CONSEQUENCES FOR THE REST OF THE COUNTRY, SAY SINGLE VOTERS (quote from example #3 article).

 

In this post, the issue of marital status not defining financial intelligence will be discussed by reviewing three examples.

Example #1 and #2 show married/coupled persons are not any better at managing money than single and divorced/separated persons.  Example #3 talks about financial misconceptions about singles.

(Financial profiles from the Financial Post are an interesting study in how persons perceive wealth.  Anyone can submit an email requesting a free family finance analysis.  It is interesting to note that most of the married/coupled requests for financial analysis are from relatively wealthy persons.  These same requests always are requesting financial help because of worry that they will not have enough money to live and retire.)

Example #1, a financial profile of a married couple is as follows:

Calgary Herald, December 12, 2015 Financial Post “Oil Crash Forces  Fix for Couple” – (this profile can be viewed in full online)

This summary is about Gary, 60 and Wendy, 67, an Alberta couple who grew prosperous with Gary’s work as a petrochemical  engineer often earning as much as $200,000 a year doing consulting.  However, his work is now history as a casualty of collapsed oil prices.  Wendy worked as an administrative assistant earning $24,000 a year before she retired in 1990.  Their income at the present time is $2,175 a month and is $3,240 less than their total monthly expenses of $5,415.  They say they need to know if they can survive.  The article does mention one child who is renting one of their rental properties.

Their net worth is $1,867,238.  Their assets include residence $550,000, rental property #1, $460,000, and rental property #2 $430,000.  Their investments include Registered Retirement Savings Plan $132,616, USA 401K in Canadian dollars $250,000, Tax Free Savings Account $39,334, non-registered savings/GICs $174,288 and two cars $17,000.  Their total  liabilities are two mortgages of $186,000 on rental properties.

The financial planner makes the statement:

“When Gary generated an income of $200,000 a year or more, they could afford to ignore investments, rent properties below market value and spend freely”.

The financial planner’s recommendation is get rid of money losing rental property, cut expenses and reallocate assets to cut investment costs.  If they follow the planner’s advice, they should have a before tax income of about $74,000 per year.  With splits of pension income and application of age and pension income splitting credits, they would pay 13 percent tax and have $5,345 a month or $64,140 annual income to spend.  Compare that to reader letter#2, December 12, 215 post that suggested singles with rent or mortgage expenses can live comfortably on a middle class income of $27,000 a year.

It is interesting to note  that their food budget for two people is $1,120 per month and expenses for entertainment are $220 per month.  The financial planner suggests they cut their food budget by $400 and their entertainment budget by $100 per month.

Simple logic without seeking financial planner advice would imply that in order to increase their income they could sell one rental property,  live on the proceeds, then sell the next rental property and live on those proceeds, and finally start taking income from their investments.  They would still have their residence as collateral.  With all their wealth this couple still feel they need to seek financial advice.

If one compares this example to the suggestion from the recent posts that singles can live on $27,000 per year and $200 a month for food, one wonders why this couple would have any financial worries with the wealth that they  have.  Also, reducing their food budget by $400 still allows them to  have a food budget of $350 per person.

Example #2 is taken from a published article “Beyond the Blue Line” by the Canadian Scholarship Trust (CST).

The report showed that approximately 66 per cent of Canadian parents have, or know someone who has, borrowed money or used retirement savings to put their children through extracurricular activities.

In contrast, 48 percent of parents have invested in a Canadian RESP (Registered Education Savings Plan).

CST reported that 43 per cent of parents said they’d borrowed money on a credit card, line of credit, personal or family loan for extracurriculars like hockey. The remaining 23 per cent deferred their retirement or used their retirement savings for extracurriculars.

More than half of Canadian parents (57 percent) said they feel every child should have the chance to play hockey if they want to, ‘because it’s part of growing up in Canada,’ CST said. The percentage represents a drop of more than 10 per cent from last year, when 69 percent said all children should be able to play hockey.

Despite the high rate of borrowing for extracurriculars, nearly half of parents said they knew someone pulling their kids out due to the cost. Thirty per cent said they, or someone they knew, regret the amount of money spent on activities like sports.”

Parents will play financial roulette with their money even though there is less than one per cent chance of their children becoming professional hockey players.

Example #3

This example is taken from the National Post June 12, 2015, : “ They are one of Canada’s fastest growing demographics, so why are politicians ignoring the single voter?” by Claire Brownell,  (article is available online).

This article first talks about:

“Marcel Watier, a single 39 year old, who lives on his own in a rented basement apartment.  He earns a good salary, thanks to a full time job and a part-time job on the side.  He says people think he must be spending his money on stereotypical urban luxuries – dinners out, craft cocktails, a condominium with a pool and a rock-climbing wall – since he doesn’t have a partner or children.  ‘They just see a single guy working two jobs and think I must be rolling in money.  If I was rolling in money, would I be working two jobs?’

In addition to supporting himself, he helps his two sisters, who have eight children between them and a ninth on the way. (The article does not state why he has to do this.)

If those were his children and Walter were married, he would be eligible for a long list of tax breaks, benefits and programs.  As a single person, he’s on his own.  He states: It drives me up the wall to hear the whole ‘selfish single’ term.”

The word single is hardly ever used by politicians.

“The phrase ‘Canadian families’ has been spoken 5,669 times in the House of Commons since 1994″, according to OpenParliament.ca, with Conservatives (Party) accounting for almost half of those mentions.

If Canada’s singles were to get up tomorrow and decide it’s high time they stood up for themselves, they would form a formidable voting bloc.  Maybe it’s time to try.”

Conclusion

The above examples show that marital status does not define financial intelligence; rather it is the belief systems, moral values, and financial values instilled throughout lifetime that define how money will be spent and saved.

It is time that singles be included in financial formulas, not just families.  Instead of politicians promising things to only certain groups of citizens, they should be thinking about how to improve society as a whole.

This blog is of a general nature about financial discrimination of individuals/singles.  It is not intended to provide personal or financial advice.