Posts tagged money

I'm not sure this a helpful model for charity per se, but it does feel a bit like a prophetic act. I wonder if our dollar-distributor would have fared much better near the same spot 20 or 50 or 100 years ago. An economist would likely note that what our prophet found out was that most people priced the amount of effort and risk involved in figuring out what was really going on, making a promise to a stranger, and then either carrying it out or reneging on it, at something more than a buck.

re: art, cultural worlds, economics, money, prophesy

Nate:

About the same time that Ibnale was handing out umbrellas, Brett Lockspeiser took $100 worth of dollar bills to the 16th Street Mission BART Station and held up a sign.

"I will give you $1 for you to give to someone else," the sign said. Throughout the evening rush, Lockspeiser stood in the station, trying to give away dollar bills.

"Everyone though I was trying to scam them," he said. "They wanted to know what I was up to. I told them they just had to promise to give the $1 to someone else."

After three hours, Lockspeiser had managed to give away only $52. One passer-by did not take the $1 but, suspecting that Lockspeiser was down and out, handed him a pair of socks.

What the recession is making possible for many Americans.

re: family, happiness, horizons of the possible, money, recession, wealth

Nate:

No one wishes for hardship. But as we pick through the economic rubble, we may find that our riches have buried our treasures. Money does not buy happiness; Scripture asserts this, research confirms it. Once you reach the median level of income, roughly $50,000 a year, wealth and contentment go their separate ways, and studies find that a millionaire is no more likely to be happy than someone earning one-twentieth as much. Now a third of people polled say they are spending more time with family and friends, and nearly four times as many people say their relations with their kids have gotten better during this crisis than say they have gotten worse.

A consumer culture invites us to want more than we can ever have; a culture of thrift invites us to be grateful for whatever we can get. So we pass the time by tending our gardens and patching our safety nets and debating whether, years from now, this season will be remembered for what we lost, or all that we found.

For some reason the LA Times has categorized this story under "Science & Medicine." Curiouser and curiouser.

re: branding, charity, copyright, cultural worlds, entertainment, film, gold, idols, money

Nate:

And the Oscar for best Hollywood courtroom drama goes to . . . the Academy of Motion Picture Arts and Sciences. The golden statuette was awarded Monday by a Los Angeles Superior Court jury, which ruled that if Mary Pickford’s heirs want to sell it, they have to offer it to academy officials for $10 instead of auctioning it off for as much as $800,000. Academy leaders took a Rancho Mirage woman, her daughter and a cousin to court after the women announced plans to sell the Oscar presented in 1930 to the silent-movie star known as “America’s sweetheart” and donate the proceeds to charity.

One of the terrible paradoxes of American church life is that generosity declines (on a percentage basis) with income. The richer we become, the less we feel able or willing to give money away. There is no surer evidence that Mammon is, as Jesus suggested, more a devious demon than a neutral force. That is one of many reasons that our family gives away 10% of the gross income from our first salary (Catherine's) and my writing and speaking income, and started giving away 20% of the gross income when we added a second salary (mine). (We also save somewhat more on a percentage basis.) I have been tithing since I was 18 and am far wealthier (in assets and income, but most of all in friends and joy) than I ever imagined becoming. I mention these personal specifics because when it comes to money, as mentioned in this excerpt, American Christians are afflicted with a deadly vagueness and unhealthy notions of privacy. We need to bear public witness to just how good it is to give money away. I admit I am sometimes daunted by the amount we give—it is hard to give it effectively and it means that we forego, for example, private education for our children, which would otherwise be within our means. But it is worth it, every penny, and our goal is to give away even more.

re: community, economics, generosity, money, stewardship

Andy:

[According to the new book Passing the Plate,] twenty percent of American Christians (19 percent of Protestants; 28 percent of Catholics) give nothing to the church. Among Protestants, 10 percent of evangelicals, 28 percent of mainline folk, 33 percent of fundamentalists, and 40 percent of liberal Protestants give nothing. The vast majority of American Christians give very little—the mean average is 2.9 percent. Only 12 percent of Protestants and 4 percent of Catholics tithe.

A small minority of American Christians give most of the total donated. Twenty percent of all Christians give 86.4 percent of the total. The most generous five percent give well over half (59.6 percent) of all contributions. But higher-income American Christians give less as a percentage of household income than poorer American Christians. In the course of the 20th century, as our personal disposable income quadrupled, the percentage donated by American Christians actually declined.

In Chapter 3, the authors evaluate nine frequently offered hypotheses to explain this modest giving. They conclude that five have substantial validity: 1) many Christians have not seriously wrestled with their own tradition’s theological teaching on giving; 2) many churches simply accept low expectations for giving and therefore provide little communal support for generosity; 3) some Christians question the reliability of the churches and organizations requesting funds; 4) because of near total privatization and lack of accountability in the area of charitable giving, there are no real consequences for stinginess; 5) most Christians give on an occasional basis when they feel like it, rather than in a disciplined, planned, structured way.

The most penetrating idea in this column by former Treasury Secretary Lawrence Summers is stated obliquely, but it's crucial. "Finance-led growth is problematic." Economies grow when real innovations—Summers mentions my favorite example of a complex cultural good, the interstate highway system—help human beings cultivate and create the real world. They become frothy and unstable when finance becomes the primary arena where wealth is made and talent is invested. One of the most promising side effects of the current crisis is the likelihood that a generation of Ivy League students will shy away from investment banking and put their skills to work elsewhere. Unless, of course, they all become lawyers. :)

re: economics, energy, finance, infrastructure, money

Andy:

Economists do not understand what drives productivity growth very well. However, we know these facts: productivity grew rapidly after the second world war and then sometime between the late 1960s and mid-1970s it slowed dramatically only to re-accelerate to record levels in the mid-1990s. Unfortunately, even before the downturn, underlying productivity growth appeared to be slowing.

The most plausible explanation is that an array of transforming investments and technologies – the interstate highway system, widespread air travel and the expansion of electronics – were spurs to growth during the postwar period. Eventually their impact dissipated and, as energy costs rose, growth slowed until the information technology revolution kicked in during the 1990s. Unfortunately, the IT supply shock that powered the economy in the 1990s and early part of this decade appears to be diminishing.

So there is a need to ensure that the pressure to increase spending is directed at areas where it will have the most transformational impact. We need to identify those investments that stimulate demand in the short run and have a positive impact on productivity. These include renewable energy technologies and the infrastructure to support them, the broader application of biotechnologies and expanding broadband connectivity, an area where the US has fallen behind.

The crisis has also reminded us of the lessons of the technology bubble, Japan’s experience in the 1990s and of the US Great Depression – that finance-led growth is problematic. The wealth and income gains from the easy availability of credit were highly concentrated in the hands of a fortunate few. The benefits also proved temporary. In retrospect, the fact that 40 per cent of American corporate profits in 2006 went to the financial sector, and the closely related outcome – a doubling of the share of income going to the top 1 per cent of the population – should have been signs something was amiss.

We can never really predict what the effects, and interpretations, of our cultural offerings will be in the long run, as the man who cowrote (with Oliver Stone) the iconic 1980s film Wall Street has had ample occasion to discover. Sometimes we're even remembered for the opposite of the point we were trying to convey. Every time I see the phrase "Orwellian" used, I feel a similar sort of empathetic pang for old anti-totalitarian George Orwell.

re: business, elites, entertainment, horizons of the possible, money, movies

Nate:

Gekko’s character was written to create an engaging, charming, but deceitful and brutal being. I have nevertheless run into quite a number of younger people, who upon discovering that I co-wrote the film, wax rhapsodic about it . . . but often for the wrong reasons.

A typical example would be a business executive or a younger studio development person spouting something that goes like this: “The movie changed my life. Once I saw it I knew that I wanted to get into such and such business. I wanted to be like Gordon Gekko.”

The flattery is disarming and ego-stoking, but then neurons fire and alarm bells go off. “You have succeeded with this movie, but you’ve also failed. You gave these people hope to become greater asses than they may already be.”

New automotive technology expands, and simultaneously contracts the horizons of the possible. The place to find more fuel-efficient cars? The future ... and the past.

re: cars, horizons of the possible, money, nostalgia, pollution, technology and change, transit

Nate:

“In the 1970s, ‘80s and ‘90s, carmakers all offered super-high-efficiency cars,” says Eric Noble, president of the Car Lab, an auto industry research and consulting group. “Now that consumers are clamoring for them, those cars are pretty much all gone.”

For the 1992 model year, car buyers had the choice of 33 cars that had a combined city and highway EPA rating of at least 30 miles per gallon. For the current model year, there are 12. And though the 1990s had its share of gas guzzlers, it’s notable that the two-wheel-drive Ford Explorer from 1992 had better fuel efficiency (17 mpg) than the same model in 2008 (which gets 16).

With demand for efficiency surging, carmakers are racing to improve their lineups. General Motors Corp., which currently doesn’t have any cars that top 30 mpg combined, said last month that it would spend $500 million to produce a new compact car for 2011, the Cruze, that would reach 45 mpg on the highway. That’s about 13 mpg below the rating for its most fuel-efficient Geo Metro 14 years ago.

More news from the exciting (really!) field of Behavioral Economics.

re: behavior, disciplines, economics, horizons of the possible, money, poverty

Nate:

Quit smoking without a patch. Committed Action to Reduce and End Smoking is a savings program offered by the Green Bank of Caraga in Mindanao, Philippines. A would-be nonsmoker opens an account with a minimum balance of one dollar. For six months, the client deposits the amount of money she would otherwise spend on cigarettes into the account. After six months, the client takes a urine test to confirm that she has not smoked recently. If she passes the test, she gets her money back. If she fails the test, the account is closed and the money is donated to a charity. MIT’s Poverty Action Lab found that opening up an account makes those who want to quit 53 percent more likely to achieve their goal. No other antismoking tactic, not even the nicotine patch, appears to be so successful.

Stop compulsive gambling. Over the past decade, several states, including Illinois, Indiana, and Missouri, have enacted laws enabling gambling addicts to put themselves on a list that bans them from entering casinos or collecting gambling winnings. The underlying thought is that many people who have self-control problems are aware of their shortcomings and want to overcome them. Sometimes recreational gamblers can do this on their own or with their friends; sometimes private institutions can help them. But addicted gamblers might do best if they have a way to enlist the support of the state.

Dollar a day. Teenage pregnancy is a serious problem, and girls who have one child, at, say, 18, often become pregnant again within a year or two. Several cities, including Greensboro, North Carolina, have experimented with a “dollar-a-day” program, by which teenage girls with a baby receive a dollar for each day that they are not pregnant. Thus far the results have been extremely promising. A dollar a day is a trivial amount to the city, even for a year or two, so the plan’s total cost is extremely low, but the small recurring payment is just enough to encourage some teenage mothers to take steps to avoid getting pregnant again. And because taxpayers end up paying a significant amount for many children born to teenagers, the costs appear to be far less than the benefits. Many people are touting “dollar a day” as a model program.

How could I not link to a column that so eloquently describes the way that culture creates "the horizons of the possible"? Brooks is spot on. Now the culture-making question: what cultural goods could we shape or create that would change "the culture of debt"?

re: consumption, debt, horizons of the possible, money, stewardship

Andy:

Individuals don’t build their lives from scratch. They absorb the patterns and norms of the world around them.

Decision-making — whether it’s taking out a loan or deciding whom to marry — isn’t a coldly rational, self-conscious act. Instead, decision-making is a long chain of processes, most of which happen beneath the level of awareness. We absorb a way of perceiving the world from parents and neighbors. We mimic the behavior around us. Only at the end of the process is there self-conscious oversight.

According to this view, what happened to McLeod, and the nation’s financial system, is part of a larger social story. America once had a culture of thrift. But over the past decades, that unspoken code has been silently eroded.

Culture-predicting = Culture-Making?

re: business, finance, future, horizons of the possible, investing, kevin kelly, money, predictions, trends

Nate:

Kevin Kelly says:

  Warren Buffett recently bet an ambitious hedge fund operator $1 million that they won’t beat the returns of S&P 500 after their extremely hefty fees are accounted for. Buffett claims investors will do as well with a no-load index fund over the ten years of the bet. He has long been critical of the performance claims of hedge funds, and his bet is intended to put his money where his mouth is.

Buffett’s million dollar bet was made on Long Bets, the accountability mechanism founded in 2002 by Stewart Brand and myself, and operated by Long Now Foundation. The intention of Long Bets is to encourage responsibility in prediction-making (by keeping a public roster of predictions), to encourage long-term thinking (by offering a opportunity to shape a long-term bet), and to sharpen the logic of forecasting (by recording the logic of predictions and bets.)

In order to make a Long Bet, bettors need to lay out their reasoning. It’s worth reading the two sides’ very short arguments about investing because the two extremes of investment advice are contrasted in them. Buffett, as usual, is stunningly clear in his argument, which ends:

A number of smart people are involved in running hedge funds. But to a great extent their efforts are self-neutralizing, and their IQ will not overcome the costs they impose on investors. Investors, on average and over time, will do better with a low-cost index fund than with a group of funds of funds.