In this issue, your brain on poverty, social mobility's debt dependence, expanding philanthropy's risk appetite and the inequality worries of foundations leaders.
Living in poverty, having so much bandwidth wrapped up in just making it from one day to the next, decreases a person’s — any person’s — cognitive function, making it harder to solve problems, resist impulses, and think long-term. If a well-off professional like Bledsoe were transplanted into a life of poverty tomorrow, he’d lose the same bandwidth too — and his brain function would show it...
The context of “scarcity” — as Princeton University professor of psychology and public policy Eldar Shafir and Harvard University economist Sendhil Mullainathan dubbed it in their influential 2013 book Scarcity: Why Having Too Little Means So Much — actually changes the way we think. We get tunnel vision, able to focus only on the present problem — the thing we lack, or the thing we need to do right now — in a kind of fire-fighting mode, leaving us with less bandwidth for anything else.
Poverty is also hard on the body notes yet more research. In the New York Times, James Hamblin reports that even if folks succeed against the odds they will likely experience more health issues:
Over the past two years, Dr. Brody and colleagues have amassed more evidence supporting this theory. In 2015, they found that white blood cells among strivers were prematurely aged relative to those of their peers. Ominous correlations have also been found in cardiovascular and metabolic health. In December, Dr. Brody and colleagues published a study in the journal Pediatrics that said that among black adolescents from disadvantaged backgrounds, “unrelenting determination to succeed” predicted an elevated risk of developing diabetes...
In the United States, gaps in health and longevity between the wealthy and the poor are some of the greatest in the world. It seems natural to assume that jumping from one stratum to the next — being upwardly mobile — would come with gains in health. And conceivably it could work that way — like if a person won the lottery or achieved overnight fortune from writing a truly insightful tweet. But decades of research show that when resilient people work hard within a system that has not afforded them the same opportunities as others, their physical health deteriorates.
You might also be interested in this PBS video report on poverty and opportunity in America. Over at TalkPoverty, William Elliot discusses our "debt-dependent path" system of moving folks up the income ladder:
I depended on student loans. I earned a bachelor’s degree—and $40,000 of debt to go with it. I managed to pay it off during my service in the military, so I went to graduate school. In record time, I earned a PhD—and another $100,000 of debt.
I’m one of millions on the debt-dependent path to the American Dream. Our journey stands in stark contrast to those who had financial support. My colleague, for example, received her graduate degree from the same university that I attended—but she had help from family. She graduated without student debt, and started building home equity before she turned 25. She even had enough to spare that she was able to take advantage of employer retirement benefits, too. Her four kids will likely have their college paid for before they finish high school.
My colleague still had to work hard. She studied, saved, and scrimped when she had to. But her path was eased because wealth was passed down at critical stages along the way. For most Americans that just isn’t an option.
In the Hill, Peter Cove argues that social safetnet rules should return to stringent work requirements. "With little empirical evidence, empathy seems so much the preferred emotion dictating new public policy—despite its impotence in crafting solutions. Where has benevolence gotten us? Programs ill-conceived, operated by politically-connected community organizations with little competence or tested strategies to reduce poverty."
Research reported by the American Prospect shows that the country's mayor rank socio-economic issues among their top three priorities:
Boston University researchers noted that their third priority, socioeconomic issues like poverty, was “more unexpected,” explaining that “while cities naturally face high demands to support lower income residents, redistributive policies traditionally fall to higher levels of government.”
With the national conversation about cities reverberating around the problem of income inequality, Boston University researchers investigated whether mayors’ key concerns mirrored the rhetoric about income inequality. Asked to choose among income inequality, poverty, the shrinking middle class, and none of the above, more 40 percent of the mayors said that poverty was their top economic concern, followed by the shrinking middle class...
The most sobering finding was that mayors could not really point to any specific American city as a leader in fighting poverty. What is clear is that these urban mechanics have few tools and face big obstacles, such as limited funding and state preemption of local laws, in trying to alleviate poverty. Preemption has prevented liberal mayors in conservative states like Ohio and North Carolina from implementing poverty-eradication measures like a $15 minimum wage.
And then there is this paper from the American Enterprise Institute on reducing inequality through a series of market mechanisms that don't seem much like they would actually help inequality but you decide. The most intriguing might be having the government take "pseudo equity" in corporations in lieu of a corporate tax.
In the Stanford Social Innovation Review, the Kresge Foundation's Rip Rapson the "thoughtful realignment" of social innovation:
It seems unlikely that the new political calculus will necessarily translate into increases in the volume or quality of capital flows to places where the bedrock elements of opportunity are in short supply. There will be a persistent need to prime the pump or fill gaps for investments that spur affordable housing, support small business formation and growth, expand early childhood development opportunities, adapt public infrastructure to adapt to rising sea levels, or seek to even the playing field in so many other ways.
Philanthropic social investing doesn’t seek to substitute for private markets over the longer term. But it does seek to catalyze the markets—providing proof points for private and public investment; catalyzing financial systems to expand their aperture so that they can take in new possibilities of social benefit; and ushering along different combinations of public, private, philanthropic, and nonprofit capital in pursuit of shared goals. What was true before this new administration will be true going forward: We will continue use social investments to help dismantle the persistent and pervasive social, racial, and economic barriers that so shamefully impede pathways to equality and justice for low-income people and people of color.
Also in SSIR, the Center for Effective Philanthropy's Phil Buchanan and Ellie Buteau looks at the things that worry foundation leaders:
Foundation leaders’ anxiety relates to their views of the imperative to make a difference on what they see as the most serious challenges facing society—particularly wealth and inequality, climate change and the environment, and education. These are the big three, cited by 65, 58, and 40 percent of CEOs, respectively, as a pressing issue that will influence society in the coming decades...
“Something needs to change, and we know this,” writes Arcus Foundation Executive Director Kevin Jennings in an essay responding to our report, one of eight we published today in conjunction with the release of our study. Jennings calls for foundations to take more risks: Indeed, embracing risk comes through as the third of three practices more than 60 percent of CEOs see as holding a lot of promise for increasing foundations’ impact in the coming decades.
Over at Fast Company, Ben Paynter reports on Open Road Alliance's new toolkit to help philanthropy think about risk:
[T]he group released what they’re calling a toolkit for groups and funders to manage their own expectations and any concerns that might crop up along the way. It includes 10 ways to judge things like how much risk each party is comfortable with, how much risk they're really taking, and what financial and management procedures might keep progress moving if circumstances change.
As The New York Times reports, this "covers broader areas like helping donors understand their own risk appetite with their grants, and putting together a risk policy statement similar to ones done for a portfolio of investments." That’s an important and long overdue step: When cause groups fail, ultimately it’s the people they’re trying to help that suffer the most.
US SIF says sustainable investing is up 33 percent in the last two years, reports Think Advisor. "The research identified 477 institutional investors, 300 money managers and 1,043 community investment institutions with $8.1 trillion in U.S.-domiciled assets at the beginning of 2016 that apply various ESG criteria in their investment analysis and portfolio selection."
You might be interested to know that Mark Zuckerberg's philanthropy is looking to acquire a company that is developing an artificial intelligence, reports CNBC. "The hope is that the technology will help those in the scientific community more easily discover and share research. "Meta will help scientists learn from others' discoveries in real time, find key papers that may have gone unnoticed, or even predict where their field is headed," the Facebook post reads."
Is licensing a barrier to job creation? In RealClearPolicy, Robert Fellner argues that states like Nevada are too strict in requirements for professional licenses:
In fact, nearly 31 percent of the Silver State’s workforce must first obtain government approval in order to work — the second highest rate nationwide. By comparison, the national rate back in the 1950s was only 4 percent. For many of these professions, licensing is simply inappropriate...
Decades of empirical research has found that the “degree of political influence” is “one of the most important factors in determining whether States regulate an occupation,” according to the authors of the White House report. In other words, excessive licensing laws are often advanced by industry insiders — who directly profit from the ability to legally exclude potential competitors. This is cronyism at its worst. Government should be facilitating Nevadans’ desire to earn an honest living, not restricting them so that the politically connected may profit.
Meanwhile, McKinsey reports automation and how it might affect the future workforce:
Given currently demonstrated technologies, very few occupations—less than 5 percent—are candidates for full automation. However, almost every occupation has partial automation potential, as a proportion of its activities could be automated. We estimate that about half of all the activities people are paid to do in the world’s workforce could potentially be automated by adapting currently demonstrated technologies. That amounts to almost $15 trillion in wages.
The activities most susceptible to automation are physical ones in highly structured and predictable environments, as well as data collection and processing. In the United States, these activities make up 51 percent of activities in the economy, accounting for almost $2.7 trillion in wages. They are most prevalent in manufacturing, accommodation and food service, and retail trade. And it’s not just low-skill, low-wage work that could be automated; middle-skill and high-paying, high-skill occupations, too, have a degree of automation potential. As processes are transformed by the automation of individual activities, people will perform activities that complement the work that machines do, and vice versa.