Starbucks becomes a microlender? (Or: Capitalism becomes a charity case)

Joe Nocera highlights Starbucks' new effort in the NYT:

Here’s the idea they came up with: Americans themselves would start lending to small businesses, with Starbucks serving as the middleman. Starbucks would find financial institutions willing to loan to small businesses. Starbucks customers would be able to donate money to the effort when they bought their coffee. Those who gave $5 or more would get a red-white-and-blue wristband, which Schultz labeled “Indivisible.” “We are hoping it will bring back pride in the American dream,” he says. The tag line will read: “Americans Helping Americans.”

It didn’t take long for Starbucks to find the perfect financial partner: Community Development Financial Institutions, or CDFIs. These are lenders, mostly under the radar, that specialize in underserved communities. Most, but not all, CDFIs are nonprofit, and their loan default rates are extremely low. “We specialize in expending credit, getting paid back, and paying back our investors,” says Mark Pinsky, whose organization, Opportunity Finance Network, acts as an umbrella group to the best of them.

It seems to me this is a variation on microlending, usually a developing-world phenomenon to help the poor develop their own businesses. It could be effective. But I'm worried about one thing: Starbucks' effort reduces new and small businesses, essentially, to charity cases.

And maybe that's the way it has to be in 2011 America. But—since I'm not a socialist, and want to actually see markets made to work for the maximum public good—I'd rather see Starbucks put its muscle behind a Kickstarter-style operation that lets entrepreneurs raise capital by going directly to the customers for their products. That lets businesses that have an actual market for their ideas rise to the top rather quickly, instead of going through a bureaucracy—even a well-intentioned one—that'll have more of a hit-miss rate. And Kickstarter-type operations strengthen capitalism by providing investors with a return on investment—even if that return is simply the product being manufactured—instead of the warm glow of nebulously "saving American jobs."

I'm grateful that Starbucks CEO Howard Schulz is thinking about this kind of stuff. But Starbucks didn't start out as a charity case; it created a product that people liked, and became fabulously successful doing so. For the next generation of businesses to succeed and provide jobs, they'll have to do the same thing. In this case, maybe it's better that we ask Americans to be investors instead of donors.

Dennis Prager: Occupy Wall Street is like Hitler

Dennis Prager goes there in his column for NRO today:

The major difference between Hitler and the Communist genocidal murderers, Stalin, Mao, and Pol Pot, was what groups they chose for extermination.

For Hitler, first Jews and ultimately Slavs and other “non-Aryans” were declared the enemy and unworthy of life.

For the Communists, the rich — the bourgeoisie, land owners, and capitalists — were labeled the enemy and regarded as unworthy of life.

Hitler mass-murdered on the basis of race. The Communists on the basis of class.

Yes, this is a column about the Occupy Wall Street movement. And it's clear that Prager would rather resort to tired old anti-Communist tropes rather than seriously examine the complaints of the protesters. Here's Prager, not getting it:

Being on the left means that you divide the world between rich and poor much more than you divide it between good and evil. For the leftist, the existence of rich and poor — inequality — is what constitutes evil. More than tyranny, inequality disturbs the Left, including the non-Communist Left. ... Non-leftists who cherish the American value of liberty over the left-wing value of socioeconomic equality, and those who adhere to Judeo-Christian values, do not regard the existence of economic classes as inherently morally problematic. If the poor are treated equally before the law, are given the chance and the liberty to raise their socioeconomic status, and have their basic material needs met, the gap between rich and poor is not a major moral problem.

I'll distill that last sentence down to three rules: If the poor get to play by the same rules as the rich, have an opportunity for economic mobility, and can feed and house themselves, there's no problem.

Here's the problem: At least two of those three conditions aren't met in America today. First: Do the poor get to play under the same rules as the rich? We already know that if a poor man and a rich man step into court charged with the same crime, the rich man is much more likely to walk away free. Beyond the arena of criminal law, though, I outsource my commentary to one of Andrew Sullivan's readers:

When the financial industry came to the brink of collapse because of the reckless behavior of these "too big to fail" corporations, we saw an amazing ability for our government to come together to bail them out. In return, they've repaid the favor by working night and day to lift the already watered-down provisions of the Dodd-Frank reforms so they can continue with their same insanity, and to basically act like spoiled, entitled brats towards those of us who saved their butts in the first place.

Contrast this with any legislation in Congress that might actually help out rank-and-file Americans, and suddenly everything becomes gridlocked and impossible to achieve. From out here, it appears that when you have a lobby on your side, government works, and if you don't, well tough luck.

Rich financial institutions get bailed out; regular Americans are left to flounder. One of the three legs on Prager's stool is looking mighty shaky.

How about the second leg? Can Americans live the Horatio Alger dream and transform themselves from nothing into something by dint of hard work? Maybe. But it doesn't seem to happen as often as it used to. The Brookings Institution (PDF) analyzed the situation in 2008:

The view that America is “the land of opportunity” doesn’t entirely square with the facts. Individual success is at least partly determined by the kind of family
into which one is born. For example, 42 percent of children born to parents
in the bottom fifth of the income distribution remain in the bottom,
while 39 percent born to parents in the top fifth remain at the top. This is
twice as high as would be expected by chance. On the other hand, this
“stickiness” at the top and the bottom is not found for children born into
middle-income families. They have roughly an equal shot at moving
up or moving down and of ending up in a different income quintile than their parents.

There is less relative mobility in the United States than in many other
rich countries. One well-regarded study finds, for example, that the
United States along with the United Kingdom have a relatively low rate
of relative mobility while Canada, Norway, Finland, and Denmark
have high rates of intergenerational mobility. France, Germany, and
Sweden fall somewhere in the middle.

In sum: inequalities of income and wealth have clearly increased, but the
opportunity to win the larger prizes being generated by today’s economy
has not risen in tandem and has, if anything, declined.

In short: If you're born rich or poor, you're likely to remain rich or poor. Those born middle class have more mobility up or down—but remember, this is before it became clear what devastation was being wrought by the Great Recession. In any case, you have a better chance of rising up if you're born in a socialist hellhole like Canada than you are in the United States. The opportunities just aren't there like they used to be. The second leg of Prager's three-legged stool is also increasingly shaky.

Finally: Do the poor have their basic material needs met? Prager might have his strongest case here: America's poor are more likely to have cars, TVs, microwaves and other items that might be considered luxuries ... if one compares them to the very poorest people on earth. On the other hand, the U.S. Department of Agriculture (PDF) estimated in 2010 that 14.5 percent of all households were "food insecure" —meaning at some point in a year, there wasn't enough access to food "for an active,
healthy life for all household members." In 5.4 percent of households, some people had to do without meals because there wasn't enough money to buy food. But I acknowledge: Your mileage may vary whether you consider this an indictment of our entire society.

Still, it would seem by Prager's own estimation, we're facing a real problem of inequality in this country. The playing field isn't even and hard work (if you can find it) won't help you get ahead. Meanwhile, the rich can fail and still be fabulously successful—not because of nest eggs or smarts, but because the government had their backs.

I doubt that Prager would agree with this assessment. But in his leap to compare the OWS protesters to genocidal tyrants, he fails to consider that they might actually have something to protest against. He fails to contemplate that many of us who are sympathetic to the protesters don't hate the rich—we just don't want them consolidating their gains through government action unavailable to the rest of us. Some conservatives are sympathetic to that notion. Too bad Prager isn't.

Today in Philadelphia police corruption

A 21-year veteran Philadelphia police officer was arrested Monday and charged with theft, receiving stolen property, and related offenses.

Kevin Workman, 47, was arrested following an investigation conducted by the Internal Affairs Bureau and the District Attorney's Office. The Police Department did not provide further details about the case.

via philly.com

No, college doesn't guarantee you a good job. But that's missing the point of Occupy Wall Street.

Many of the protesters I have met are understandably ruffled that they are unemployed, and they often finish their remonstrations with a non-sequitur, delivered as if it were a knockout blow: “And I went to college!” Well, one might ask, “So what?” 

I first noticed this “college = good life” fallacy back in England. A close friend of mine was looking for a job straight out of college, and remained unemployed for six months while he searched for what he described as a “graduate job.” Outside of those careers that rely on specific skills and expertise — doctors, veterinarians, and so forth — I have never been sure quite what this term means. My friend has a degree in modern history. Congratulations! But there is no obvious career path for this qualification. Why should it lend itself more to working in, say, finance than to working in a 7-Eleven? Compare this attitude to that exhibited by another friend of mine — a recently naturalized American citizen. After her parents escaped from the Soviet Union in the mid-1980s and fled to the United States, her engineer father worked as a garbageman for five years until he found a job which tallied more closely with his abilities. At no point did he complain. Was it a waste of talent? Undoubtedly. Did he have a right to a “post-graduate job”? No. That’s just not how free economies work. 

via nationalreview.com

Charles Cooke, who wrote this bit for NRO, is right. He's also missing the point, to some extent. The point being: That median incomes have stagnated and dropped in recent decades; that financiers and bankers—who presumably have MBAs that make them exquisitely qualified to do the work they do—have managed to live high on the hog at taxpayer expense while touting the virtues of the market for everybody else; that unemployment persists above 9 percent, and when you count people who are underemployed or who have simply given up looking for work, that number really doubles.

There's not enough jobs, and those jobs aren't paying very well. It's easy to mock the guy with the modern history degree. But there hasn't been an outcry in recent years—except in certain, seasonal agricultural fields that are usually served by immigrant labor—that there are plenty of jobs for taking if only people had the right qualifications. There are something like four or five job-seekers for every available job in the United States. Would the dynamic be different if there weren't so many liberal arts majors out there? I've seen no evidence for that.

Stu Bykofsky's really bad bicycling idea

 Traffic Court President Judge Thomasine Tynes, the new love of my life, wants to require the registration of bikes, just like other vehicles. When that idea was proposed two years ago by Councilmen Frank DiCicco and Jim Kenney, pedalists howled like coyotes.

How dare they be asked to register? Condensed, and translated, the cyclists said, kind of like Dr. Seuss: "We are green! We are keen! We do not pollute the air! Registration is not fair!"

Bicycling for Dummies 101 (There may be a quiz at the end): Under Pennsylvania law, bicycles are vehicles and must obey vehicular laws. That includes riding in the same direction as traffic, no blowing red lights, full stops at stop signs, no sidewalk-riding in business districts unless, chronologically, you are a child. (Acting like a child isn't good enough).

If bikes are vehicles, you logically can ask why they shouldn't be registered like other vehicles - and the judge has.

Tynes' reasons include the ability to return stolen bikes, raising revenue and law enforcement. Having a visible license plate would help cops find bicyclist hit-and-run artists. Just like cars.

via philly.com

Byko goes on to point out that states like Kansas have a law requiring bicycles to be registered. That may be, but I know of very few people who actually did that when they bought a bike—the few who did were die-hards who owned really expensive bicycles they'd want to trace in the event they were stolen. Registration worked as a means to assist bike owners, not—as in Byko's vision—to bring the weight of the state down on them.

Hey: I want to punch every bicyclist who brushes past me or my 3-year-old son on the sidewalk. It may happen if he ever gets knocked down. But Bykofsky's plan is too much—a scheme that would make outlaws of a great many bike owners, or force the rest into Philadelphia's soul-destroying bureaucracy. Bykofsky has written wistfully about the destruction of downtown Detroit and the possibilities for re-creating the city that such devastation has offered; his bike-registration plan would probably harm the vibrancy of Center City Philadelphia to such a degree that it would help bring about his dark vision.

We're at war in Afghanistan. We're at war *with* Pakistan.

FORWARD OPERATING BASE SHARANA, Afghanistan — American and Afghan soldiers near the border with Pakistan have faced a sharply increased volume of rocket fire from Pakistani territory in the past six months, putting them at greater risk even as worries over the disintegrating relationship between the United States and Pakistan constrain how they can strike back.

Ground-to-ground rockets fired within Pakistan have landed on or near American military outposts in one Afghan border province at least 55 times since May, according to interviews with multiple American officers and data released in the past week. Last year, during the same period, there were two such attacks.

via nytimes.com

'The Beautiful Struggle,' Occupy Wall Street, and the task of preparing for adulthood

Today I finished Ta-Nehisi Coates' memoir of growing up in West Baltimore in the 1980s, "The Beautiful Struggle," and found myself quite unsettled. Coates is of my generation, but his urban upbringing is about a million miles away from my rural Kansas adolescence. He had aging Black Panthers, the crack epidemic, and Chuck D. I had Friday night high school football games, spinning donuts in the county fairgrounds parking lot, and hair metal. And yet, in some respects, I identified: I too was often lost in a sci-fi fog, not really seeing the world around me clearly, and sometimes I got by on what other people perceived as my potential smarts rather than on clearly and efficiently applying those smarts to the tasks at hand.

Why would that unsettle me? Because, frankly, I'm not sure I've ever emerged from that fog the way Coates seems to by the end of the book. That troubles me for myself, but that also troubles me as I seek to guide my own young son in his growing process. I don't expect that I'll resort to the belt-swinging methods used by Coates' father. But for whatever reasons, the book has me questioning myself: Am I a purposeful adult? Am I setting the right example for my son? Do I know how to give him the tools he'll need to become a purposeful adult? How, frankly, do I raise my son to be a man—and yet to be a feminist man, a wise man, eschewing misogyny and false power and adopting real responsibility? (It occurs to me that a return to the Mennonite church might provide some support on the latter front, believe it or not. Too bad I'm an unbeliever.) I am full of doubt.

The book—and if you're a fan of Coates' blogging, you really should read it—also brought to mind another issue: The kids at Occupy Wall Street.

I call them "kids" even though the ones I've seen on video (or in my own excursion to Occupy Philadelphia) are adults: Folks in their twenties and thirties. And yet it's easy to think of them as "kids." You don't see many people who have children of their own, nor are many of them walking away from 40-hour-a-week professional jobs to join the protest. The relative joblessness is a reason for the protest, yes, but it's also an enabler.

It's easy to cherrypick the loons and and starry-eyed utopians, of course, and conservative web sites have done a fantastic job at that. But a closer look reveals that many of the protesters aren't the radical fringe, exactly: They're scions of privileged middle-class upbringings, people for whom college was a given—and then, at the very least, a reasonably lucrative, reasonably fulfilling career after that. They look at the country that's been left to them on the cusp of adulthood, and see that everything they prepared for—during childhoods in Internet-swaddled, SUV-wrapped formative years—has disappeared, and that what's left is something they're not prepared to handle.

Don't get me wrong: There are very real issues of income inequality and the damage it does to our democracy at stake in these protests, and I'm glad Occupy Wall Street has managed to push those issues to a wider audience. But I can't help but wonder if a necessary and sufficient foundation of the protests is that we, as a society, have failed to be good at producing actual adults. We've gotten good at creating expectations without expecting much in return.

Conservatives, in particular, like to point and laugh at the childishness of protesters who seem to expect something for nothing. I suspect part of the problem here is narcissistic consumerism unleashed by the markets that conservatives love so. But I do wonder if we shouldn't be asking ourselves—again, and some more, ad infinitum—are we preparing our children to be responsible adults? Are we offering them the right examples? Are we teaching them how to roll with the punches, both real and metaphorical? And is this a question left to individuals, or something we need to work out more broadly, as a society?

Ta-Nehisi Coates grew into a man, in part, because the streets of West Baltimore forced him to literally understand how to take responsibility for his very life at a young age. But I don't think we need to plant our kids in crime and poverty in order to engender a sense of seriousness in them.

I am rambling here. These thoughts are half-formed an unfinished, and it may be that I don't give enough credit to the thoughtfulness and responsibility of the protesters. (As I've mentioned previously, I have been impressed by their ability to spontaneously create an orderly community, at least in Philadelphia.) But my sense of things is that the Occupy Wall Street protests have the blessing of forcing us to wrestle with real issues, and the curse of failing to put away childish things. And I wonder about my own role in that dynamic.

Update: I won't claim this as my best-ever post. But Coates' book hit me hard somehow. And I'm struggling to articulate why that is or what it should mean. Sometimes I have to write to work things out. And sometimes that means embarrassing myself publicly.