Reducing Income Inequality Through Shopping

Can shopping help us reduce income inequality?  Maybe - there is some research that says it can help - dramatically.

Here is the article: https://www.yesmagazine.org/issues/solidarity/shop-here-not-there-science-says-reducing-inequality-is-almost-that-simple-20171120

And here is a link to the research report - https://arxiv.org/abs/1604.08394

Here is the synopsis of the study

Socioeconomic inequalities in cities are embedded in space and result in neighborhood effects, whose harmful consequences have proved very hard to counterbalance efficiently by planning policies alone. Considering redistribution of money flows as a first step toward improved spatial equity, we study a bottom-up approach that would rely on a slight evolution of shopping mobility practices. Building on a database of anonymized credit card transactions in Madrid and Barcelona, we quantify the mobility effort required to reach a reference situation where commercial income is evenly shared among neighborhoods. The redirections of shopping trips preserve key properties of human mobility, including travel distances. Surprisingly, for both cities only a small fraction (∼5%) of trips need to be altered to reach equity situations, improving even other sustainability indicators. The method could be implemented in mobile applications that would assist individuals in reshaping their shopping practices, to promote the spatial redistribution of opportunities in the city.

The key point - if 5% of our shopping dollars were spent in poorer neighborhoods, income inequality can be drastically reduced.  In the cities studied - a 5% shift in the where geographically the money is spent reduced inequality up to 80 percent.

Why this works? "Rewiring shopping trips to cross those neighborhood boundaries can decrease the ghettoization that urban neighborhoods experience."

How can we use this information as individuals?  Well - this sort of solution is a bottom up solution, meaning, we the people need to cross the boundaries and make sure that none of the communities become ghettoized.  Meaning - we don't consider bad neighborhoods, bad neighborhoods and we cross and shift some of our shopping into places that we would otherwise neglect.  We intentionally take affirmative action to ensure that our shopping is diversified.

Part of this is transportation - making sure that people can get to place and feel safe in those spaces so they feel safe spending a portion of their money in those places.

It's an interesting idea and worth exploring I think.

Diversity is the Key to Effective Problem Solving

To me, humanistic management is about recognizing each individual - as an individual.  The good news is that doing this, is good for business and for society in general.

https://www.theatlantic.com/magazine/archive/2018/05/how-to-sway-a-baboon-despot/556892/ 

I was speaking with a friend the other day about science and humanism. Humanism encourages us to use science to better solve our problems and the science keeps validating taking a Humanist approach.

Diversity is a case in point. Problem solving is difficult. To do it well, we need diverse opinions. Because when we don't have the full range of options available, we end up choosing the best of bad options. 

The Atlantic Magazine had a short article about this - titled: How to Sway a Baboon Despot, which is about democratic decision making in the animal kingdom. And yes - lots of animals make democratic decisions, including ones ruled by despots - like baboons.  https://www.theatlantic.com/magazine/archive/2018/05/how-to-sway-a-baboon-despot/556892/

The 2 big take aways from the the article are this:

1) Lack of diverse options leads to bad decisions and bad outcomes for the group, and 

2) "Group decisions need not come easy—in fact, clashing perspectives may lead to superior outcomes. ...As long as animals share the same broader goal, a diversity of viewpoints does not tear their society apart but strengthens it, leading to better results for all."

When democratic decision making goes wrong, it's because there was a lack of diversity in proposed solutions. The article uses bees deciding where to make a nest as the main example, but it's clear - this is true in all species. 

The lesson? We need diversity and democratic decision making to get good results. And the key to making diversity work - is having shared goals and objectives.   Sounds A LOT like Humanism to me.

It isn't just animals who make better decisions with diverse democracy. It's Humans too. 

The same day I read the impact of democratic decision making and diversity on animal decision making outcomes. I also read an article about why democracies seem to be unable to deal effectively with income inequality.  

This is an opinion piece in the NY Times and it is well worth reading the entire thing because, it ultimately has to do with democratic decision making and the impact lack of diversity has on outcomes, which is what we are talking about here.  It is long - but worth the read. https://mobile.nytimes.com/2018/02/15/opinion/democracy-inequality-thomas-piketty.html

As a Humanist, I desire a society where everyone has the ability to thrive. This is not about equal outcomes, but about equal opportunity, which in turn requires a stable foundation on support. 

There has been a lot written about the negative impacts income inequality have on our society and on our economies. I'm not going to go back into that here and will instead, just provide a link to a couple of my articles on the subject. 

https://humanisthappiness.blogspot.com/search?q=income+inequality

The point is - we, as a society, need to be less unequal in order for our society, economy and individuals to thrive.  How we do that - is a problem that requires solving.  We have not only not solved it, our attempts to solve it - have made it worse. 

What are we doing wrong and how can we fix it? 

The article does a good job of discussing this from a variety of scientific and sociological perspectives. The consensus is though, that poor and marginalized people aren't having their voices heard. 

I want to point out that this is not a partisan problem. It's not one party vs the other party. There are a variety of reasons why this is happening and there is not one single fix to the problem. This is what is called a "wicked problem." There are a lot of dimensions to why diverse viewpoints are not being taken into account in our democratic deliberations. There is the fact that money amplifies voices.Racism and bigotry. Propaganda and false information. Partisan/tribal thinking and more. The point is - this lack of diversity is causing bad problem solving on a wide variety of topics on a societal level.

The solution, is to make sure we not only make space for more diverse viewpoints, but that we demand that diversity. Because the lack of diversity - is hurting everyone, which is why everyone is upset. 

Taking a Humanistic approach - is not only scientifically validated, it's also a moral and pragmatic necessity. Take diversity seriously.

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Because creating diverse work teams is difficult, we also need to take a scientific approach to dealing with the barriers to creating a diverse workforce - where everyone is respected. To that end - check out my training on how to use behavioral science to help with conflicts, harassment and more.

And yes - I do do group trainings.

https://humanistlearning.com/category/bullyingharassment/

The Impact of Income Inequality

Last week I wrote about verifiable outcomes. We should be making decisions based on the impact they have.  Well, it turns out that income inequality kills the economy. That isn’t a guess, or an idea, it’s a verifiable consequence. So … what are we going to do about it?

Joseph Stiglitz, a professor at Columbia University Business School, has written a great article about how income inequality kills the economy and what we can do about that. It’s worth reading, here is the link:   http://evonomics.com/joseph-stiglitz-inequality-unearned-income/

Here is the problem in a nutshell. Hoarding of wealth at the top means less wealth circulates in the economy. Wealth is the life blood of the economy. If the wealth stops moving, systems start dying.
There are several reasons why wealth gets hoarded and wealth inequality happens. But a lot of it has to do with laws and policies written by our government. To create more wealth equality, we have to change some of our laws.

For instance, minimum wages, help ensure that some of the wealth is shared and not hoarded. Places that raise their minimum wage see more vibrant economies. If you are in HR, you can encourage better salaries as a way to ensure that your company not only gets and retains good talent, but that you do your part to ensure that wealth isn’t hoarded. Keep reminding yourself wealth needs to be shared to be useful.

Stigilitz’s closing paragraph has a list of things we should be doing to correct course and end the wealth hoarding in America to get us back on track. He says,

“The economic policies required to change this are not difficult to identify. We need more investment in public goods; better corporate governance, antitrust and anti-discrimination laws; a better regulated financial system; stronger workers’ rights; and more progressive tax and transfer policies. By ‘rewriting the rules’ governing the market economy in these ways, it is possible to achieve greater equality in both the pre- and post-tax and transfer distribution of income, and thereby stronger economic performance.”

Interesting, one of the first things he suggests is more investment in the public good. In my course on Bridging the Generation Divide, it turns out that the level societal investment in our communities is one of the biggest differences in the generations and it directly impacts how much social trust a person has. More social investment in your youth equates to more social trust as you enter the workforce. Less social investment, means less social trust. Want to know why millennials don’t trust your company? It’s because society didn’t invest in them the way it did for boomers and gen x.

We are all in this together. We all benefit when our economies thrive. Our individual and collective decisions impact how much wealth is shared and how much is hoarded at the top. As I write this, congress is considering a bill that would give a tax break to the top 400 wealthy people in America. So that they can keep even more of their money. The trade off is less spending on public health. Less spending on the public good.  It is decisions like this that exacerbate income inequality and income inequality hurts us all. We as individuals and as a body politic need to start making decisions that are based on verifiable consequences and not on an ideology that has proven again and again to lead to bad outcomes and stagnating economies.

To learn more about how social investment impacts your employees – check out my Bridging the Generational Divide course

The Problem of Unearned Income

Humanistic Business Management as it applies to tax policy.

I subscribe to the Evonomics Blog. And if you don’t, you should.  Joseph E. Stiglitz, winner of the Nobel Memorial Prize in economics, has a great essay on how unearned incomes are killing the economy - http://evonomics.com/joseph-stiglitz-inequality-unearned-income/

The gist of it is this. Income inequality is bad for the economy. Capitalism is driven by demand. Demand comes from consumers and consumers are by and large workers otherwise known as people who make things.

The problem is that our tax policy rewards unearned income, meaning income that isn’t derived from making things, but income that is made just by pushing money around or receiving rents on things that other people have made. This rewarding of unearned income distorts the economy and takes money away from projects that actually make things and gives it to people who provide no real value.

Now I realize that people in banking will argue that they do create value. But they really don’t. All they are doing is facilitating the creation of things and sometimes, they aren’t even doing that.

There is an assumption that the people who are the most rewarded contribute the most. But that’s an assumption and it isn’t always true. This is the lie behind trickle down economics. And it is a lie. If you give more money to the people at the top, it does not create more jobs or better paying jobs. What creates more jobs is demand.

If you are interested in this as a policy issue area, read the article. It is dense but totally worth reading.

Inequality causes instability. 

The bottom of this essay contains a lot of policy proposals that are about how to reduce inequality and they range from investments in education, to changing the tax code by redefining what economic performance means.  If you are concerned about the health of the economy – this is an essay worth reading.