The Good Money Issue
“The United States is one of the richest countries in the world. So why can’t we have X?” We hear this question all the time, where X is universal health care, affordable education, reliable infrastructure … take your pick.
It’s true. America is swimming in wealth. Problem is, too few people have access to it.
In this issue, we’ve asked what if that weren’t the case? What can be done about systemic inequality of wealth? To answer that, you’ll have to hang with us as we talk about capital, the big money needed to really change lives.
Consider the New Hampshire Community Loan Fund, which is showing what creative people can do to provide capital and credit to low- and moderate-income residents.
Research shows that access to capital and credit works best for them to improve their economic situations. Yet it’s precisely what has been in short supply for low-income Americans, who are often seen as high-risk by potential lenders. So the fund makes loans — to home-buyers, to nonprofit organizations, and the like. The fund’s money comes from upper- and middle-income New Hampshirites, who receive a fixed rate of return (for example, up to 5 percent for 10-year investments) that outstrips that of standard bank certificates of deposit.
Since it was founded in 1983, the fund has never failed to pay out for investors, and it maintains a pool of money to cover any potential losses on loans. It’s a virtuous circle, where members of a community all benefit.
There are other opportunities across the economy to solve the shortage of capital. There’s a lot of money out there, and it can be shared better. The first step is to accept the limitations of some traditional progressive solutions. For example:
• Cooperative and self-reliance enterprises can’t by themselves build equity to overcome the vast disparity in wealth between Black and White communities. It’ll take a massive injection of reparations money to compensate for centuries of slavery, racial discrimination, and disenfranchisement.
• Charitable foundations have been a force for good, true. But most endowments are invested in Wall Street markets, reinforcing the same capitalist system that creates the need for charities in the first place. The industry has been on a 20-year trajectory to shift directions. Maybe it’s time to shift faster, because the sector’s $827 billion in endowments could do a lot of good invested compassionately.
• The city of Seattle voted to divest $3 billion in municipal banking from Wells Fargo because of its funding of the Dakota Access pipeline. But Seattle couldn’t find another big bank and had to backtrack. This is giving new energy to the movement to create local public banks as a viable alternative to Wall Street giants.
Money does not have an inherent moral value. But when it gets to where it is needed, improving the lives of the many, that’s “good” money.