Thursday, August 27, 2009

Financial Literacy is a Key to Reform

According to a study commissioned by the National Council on Economic Education, only 7 of the 50 United States require high school students to received financial education in the schools. This has led to an epidemic of financial illiteracy. For example, Braun Mincher, a financial literacy specialist reported these results from an online survey he administered:
  • only 50% of those surveyed knew that property tax and mortgage interest are tax deductible
  • only 33% knew that APR stands for “annual percentage rate”
  • only 32% could name the required deductions that are taken from their paycheck.
I remember spending hours learning (or trying to learn) to understand calculus or trigonometry, but I have no memory of spending five minutes learning how to shop for insurance or how to balance my checkbook or how to decide whether I could afford a vacation. Some of this may have been covered in “Home Economics” but I skipped that class as often as possible because I could not learn how to operate the sewing machine.

I bring this up because I am constantly puzzling about how to make taxes seem interesting to people and I think part of the problem is that most people understand very little about their own finances, and asking them to understand the various kinds of taxes attached to almost every financial transaction is just beyond the realm of possibility.

For example, many progressive tax reformers suggest getting rid of the mortgage interest deduction because it is wildly regressive, with far greater deductions going to high wage earners. The tax savings for households earning more than $250,000 is 10 times the tax savings for households earning between $40,000 and $75,000 a year, according to recent research by James Poterba and Todd Sinai. The deduction may encourage people to buy bigger and more expensive homes than they can afford, and it does not really help a low income person buy a home. Canada does not have a mortgage interest deduction. There are good arguments in favor of the deduction also, but all of this is moot if no one understands mortgage interest in the first place.

Ditto for the discussion about whether capital gains should be taxed less, the same as, or more than, income. Since most people don’t know how it is taxed now, (far less than income) or how it was taxed under President Eisenhower (more than income), they will not be able to join the debate.

And without robust, vibrant, knowledgeable debate about taxes and tax policy, we will stay a nation that claims to believe in equality, but in practice implements systems that on a daily basis make a minority of people richer and richer and the majority poorer and poorer. Financial literacy may be the needed first step for any real meaningful reform.

Thursday, August 20, 2009

Paying for pollution

Today’s morning paper had this headline, “Fish Fail Mercury Test” with the subhead, “Toxin found in 100 percent of samples from streams across the U.S.; industrial pollution blamed.”

Basically, a federal study of mercury contamination released Wednesday described testing fish from nearly 300 streams across the country and finding mercury in EVERY SINGLE FISH of over the 1,000 fish that were examined. In what was apparently supposed to pass as the good news in this story, the Federal study also noted that ONLY 25% of fish had mercury levels exceeding what the Environmental Protection Agency says is safe for people eating “average” amounts of fish. The EPA defines average as about one fish meal every two weeks, which is far less than many people living on the east and west coast would eat, and a fraction of what many Asian Americans eat.

To me, this kind of study reinforces the fact that water must be seen as part of the commons, and our water commons has been enclosed by pollution. In order to clean up water (and air, and over a long period of time, fish), corporations must be required to pay for the total cost of all they produce, from acquisition to disposal. Waste created by production of goods (or in this case energy, as most of the mercury came from coal fired power plants) is called “externalities.” But many of us commoners believe that if industry had to take responsibility for the waste it produces, it would figure out how not to produce it. Simply trading carbon credits is not going to solve the waste problem ultimately. A high tax on waste and a high tax deduction on no-waste, and tax credits for waste reduction will cause corporations to use their research arms and their vast creativity to create clean ways to produce goods, and to recycle or re-use the by products of production.

The good news for me in this article? 100 percent. No one, no matter how rich or how protected, is safe from fish with mercury. No one can possibly eat fish from the United States that does not have at least a trace of mercury. I can only hope that this means that corporate owners, shareholders and the Congress people they support will look at their own children and want them to grow up healthy, smart and active, which is only really possible when water—a basic need—is pollution free.

Tuesday, August 18, 2009

is the commons expanded by the death of newspapers?

An article in The New York Review of Books takes an in depth look at the shift in power away from newspapers and towards blogs. It's a shift with very nuanced and complex connections to the Commons.

In some ways the idea of democratizing the process and opportunity for disseminating analysis, opinions, news, etc., seems right up the alley of proponents of the Commons. Knowledge has the potential to be less proprietary on the internet, to be shared more widely. Bloggers emphasize their independence from the corporate-controlled media and break or elevate news that the mainstream media missed or ignored. So there could be benefits to the Commons created by the rise of online reporting and blogging.

But it also seems that there could be costs to the Commons. Because the internet is designed to be tailored to individual tastes, online news is much more fractured. People now get very different news -- or slants on "the news" -- depending on which individual blogs and bloggers they choose to follow. So the democratized distribution of news online may not strengthen our democracy or sense of holding things in common. Instead the phenomenon of web-based news could reinforce divisions by falling into opposing camps of "polemical excesses."

As is often the case, life isn't either/or. So, the Commons is probably being strengthened and expanded while also being undermined and endangered by the demise of newspapers and traditional news media. The challenge for the ascendant online news-makers is considering how to serve the common good; not through a return to a milquetoast news media, but so that some commonalities are enhanced and cultivated not just animosities and misinformation.

Thursday, August 13, 2009

There goes the neighborhood...

My mother and a few of her neighbors spent about three years working with the Planning Board, the Historical Society and the City Council in her community to get their neighborhood declared “historic.” The homes in the neighborhood are old, most are relatively small on nice lots, and now the law says that nothing on the front of the house can be changed. This prevents what is common in other neighborhoods in this town: adding a second story or building out to the full footprint of the lot.

This effort was a huge fight. People opposed to historic designation called the group my mother spearheaded “the gang of eleven” (there were originally eleven of them), and accused them of being anti-individualist, anti-free speech, dictatorial, communist, socialist, conservative, NIMBYs, and various other self-cancelling insults. The people in favor of historic designation argued that they wanted to preserve character of the neighborhood, people were free to remodel inside their house or even add on to the back of their house, but that people pick neighborhoods to live in because the neighborhood as a whole has a personality of sorts, and that personality is apparent in the façade of the houses and needs to be preserved.

For me this struggle raised a lot of issues related to the commons. On the one hand, property that is owned by a person or a corporation is not part of the commons, and the owners do have a lot of freedom in the use of that property. Certainly the inside of any building can be decorated or maintained (within the boundaries of health and safety) any way the owner wants. Messy or neat, shag carpet or wood floors, lots of books or none—are completely the prerogative of the residents. But the minute other people can easily see someone else’s property, the lines become more blurry. In many communities, there are laws that mandate that people must maintain their yards to a minimum standard, not allowing weeds and trash to accumulate. Many towns don’t allow you to park your car on your front lawn. The lines become clearer where the private property meets public property, so for example you can’t paint the sidewalk to match your house.

But what is the obligation of current residents to honor the intent of the people who originally built the homes or to respect the residents who buy or rent in a neighborhood because they love the overall look of it? And what is the obligation of the neighbors to honor each other’s wishes to change their property to better suit their desires? These problems are best solved in the commons of conversation, with each side seeking to understand the other and perhaps offer compromises that make sure that everyone gets some of what they want.

The problem with most conversations about public and private – whether property, faith, health care, or whatever – is that there is no real conversation. There is slotting people into categories: conservative, old, young, transient, shallow, liberal, racist, patriotic and all the opposites and degrees of these. Then there is the search for appropriate insults to try to stifle dissent. To me this is most evident in the right wing media but even as I write that, I know I have fallen into the slotting trap, and perhaps people with more right wing views than mine find the liberal media intimidating or name calling.

I think the “gang of eleven” won their struggle for two reasons: 1) They did not give up. Many of the people that opposed them moved over the three years they fought for historic designation. 2) (and more important) They never responded to the name calling in kind. Privately they may have. But publicly they were always civil and cordial, and to this day remain friendly with neighbors that disagreed with them. They were also very clear that they wanted a conversation about the nature of their neighborhood and held many neighborhood gatherings to that end. I think they won a number of people over to their side by their willingness to look at all the gray areas that were involved in establishing the kind of historic designation they sought. I learned a lot watching this struggle, and I only hope I put into practice in my own public disagreements.

Tuesday, August 11, 2009

Wealth for the Common Good

Arul Menezes is a member of Wealth for the Common Good, a network of business leaders and high-net-worth individuals that advocate for shared prosperity. He wrote this op-ed for Progressive Media Project, a source of liberal commentary on domestic and international issues; it is affiliated with the Progressive magazine. (McClatchy-Tribune)

This op-ed that has appeared in 12 newspapers. The link above is from the Cleveland Plain Dealer. It shows that many wealthy people are aware of the role of the commons in their ability to succeed and want to so their share. Please sign on to this effort at if you are in this tax bracket ($200,000 and up) and pass this on if you know anyone who is.

Thanks--this is a critical part of changing tax policy.

Thursday, August 6, 2009

Race and Class in the Commons

This week we have a guest blogger. Frances Kunreuther is the Director of the Building Movement Project, which works to strengthen U.S. nonprofits as sites of democratic practice and advance ways the nonprofit sector can build movement for progressive social change.

This is the week of the Professor Gates / Sergeant Crowley beer with the President, and there has been lots of discussion in my circles about race and class. I might not have connected this to the commons, but then I went to Amtrak to get a ticket that required me to wait in line. So there I am waiting in this line that is snaking through Penn Station, when I and those around me notice that the Acela line, the one for those who are taking the really expensive and fast train, is only a few people long. Before I know it, several people – all of them white and well-dressed – just dunk under the bars that are keeping us neat and orderly and head for the short line.

Me, I am always the moralistic one that thinks that justice will prevail. So I am astounded that they are all served and none are sent back to wait with us or called cheaters. I am just seething, especially since the woman directly in front of me is older and clearly disabled, anxiously waiting her turn. Plus, like many other in our line, she is a person of color. She frequently looks at the short line but I assume she calculates the risk of losing her spot isn’t worth it.

After I made it to the window (and suffered my own Amtrak humiliations), I told the agent helping me that I was upset by the way the two lines worked and explained what happened. She nodded knowingly and told me I should go talk with the supervisor at Customer Service. “Make sure you talk to a supervisor because there is nothing we can do,” she warned me.

I followed her instructions and talked with the supervisor. Again, I told him how upset I was and how I thought it was racist that the white people who really looked pretty much like me could be served as if they had high class tickets and the in the other line were the “have nots” who, by the way, had also paid a pretty penny for their tickets. A tall African-American man, the supervisor looked at me and said, “No, it’s about class and really there is nothing we can do. If we don’t serve them we are reprimanded.” He then gave me a number to call to make a report.

On the way back from the station, I just kept thinking about the Commons. Maybe it’s talking with Kim and Caroline here at the Building Movement Project, but I wondered if Amtrak was in the Commons, I thought about the separation between those that paid more and those that didn’t. And I noted I could accept the indignities until I realized how it wasn’t about money – it’s embarrassing but I wasn’t actually wasn’t fighting that the high-priced ticket holders had better service. What got me was the unspoken way that once again some people will just always fare (no pun intended) better than others.

So I did call the number the supervisor had given me – 1-800-872-7245, which leads to the infamous automated Julie. I waited for a reservation agent, I waited to be transferred to Customer Relations and then I had a long discussion with the woman on the phone who said she completely agreed with me but that the ticket agents are not allowed to say anything when someone goes into the wrong line because it is considered bad customer service. “Some people would say it was racist,” she told me, “but anyone going into the Acela line would be served. It just works for the people who know how to game the system.”

But I wonder on these dog-day afternoons of summer in New York City how different it would feel if we all got a fair shake. Maybe Professor Gates and Sergeant Crowley are wondering the same thing.