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The Moral Economy of an Anti-Poverty Foundation

Karl Kraus defined psychoanalysis as the disease of which it purports to be the cure. It would be too much to say the same about anti-poverty foundations, but they are surely a symptom of the disease they aim to treat.

Consider a very big anti-poverty foundation in New York City named after a famous redistributionist in green tights. The Robin Hood Foundation spent $138 million last year to “combat poverty” in New York (1). And please pardon the scare quotes I put around “combat poverty.” But if you see poverty, and wealth, as deeply inevitable results of an advanced capitalist economy, then the notion of “combating poverty” with grant-funded squadrons of social workers must be taken with much salt. Mind you, there is much good righteous hell that a smart, politicized social worker can raise. But there is something unwholesome about today’s financial titans solemnly pledging money to “combat poverty.”

And in this unwholesomeness there is something deeply revealing about the moral economy of the Wall Street-philanthropy nexus.

Sound ungrateful? Petty? Cynically glib? Then please take a gander at a couple of the big donors who sit on the board of the Robin Hood foundation, and in what manner they that giveth to the poor maketh their money.

Lloyd Blankfein, CEO and Chairman of Goldman Sachs.

As Eric Schlosser recently pointed out in a surgically trenchant Op-Ed, Goldman Sachs owns a major interest in Burger King, which is today pitted against Florida migrant tomato pickers who had successfully fought for a modest pay increase. And I mean modest: after a four-year struggle, the Coalition of Immokalee Workers negotiated with McDonalds and Taco Bell a pay hike of about one penny per pound of tomatoes picked–about 35 cents on the bucket. But under pressure from the tomato growers’ association, Burger King has rescinded the deal, endangering the pickers’ hard-won wage agreements (2).

As major investors, Goldman could of course push Burger King to change its appalling tightfistedness and work something out with the growers association. But apparently boardroom activism is not the way of Goldman Sachs, whose executives most likely “don’t see it as their role” to step in. Which is not to say that Goldman is completely lacking in largesse. In 2006, the firm awarded $200 million in bonuses to its top 12 executives. $200 million! To 12 people! CEO Blankfein himself got the biggest bonus in Wall Street history (3). By way of contrast, tomato pickers typically earn $200-250 a week, working 12-hour days that begin at 5am in a municipal parking lot where they wait to get trucked to the inland fields to start picking once the dew burns off the vines (4).

Jeff Immelt, CEO and Chairman of General Electric.

To readers of Counterpunch, GE is already famous for so many reasons: its defense contracts; the horrendous news coverage provided by its subsidiary NBC; the poison chemicals the company has poured into the Hudson and Housatonic Rivers; the company’s protracted legal efforts to get out of cleaning their toxic mess up.

But what you may not know about the world’s sixth largest corporation is that one of its most profitable areas in recent decades has been putting the squeeze on debt-ridden consumers. GE Money turned a higher profit ($3.5 billion) in 2006 than either NBC or GE’s industrial division, which makes all the toasters and exploding ovens. GE’s debt collection methods, even by industry norms, are rather rotten. In 1998, GE paid up to $100 million to settle lawsuits and consumer complaints that the company had illegally shaken down bankrupt credit-card holders (5). In 2003, a former senior manager at GE Consumer Finance UK (for GE’s reach is truly global) essentially accused his former employers of loan-sharking, alleging a long list of “ruthless and unethical” tactics used by managers and debt collection staff (6).

Today GE Money has spotted a major source of revenue growth in processing medical debt.

This process entails buying up medical debt from doctors and hospitals then wringing the debtors dry with annual interest rates that shoot up to 27% after a single missed payment. Medical debt is certainly a savvy thing to invest in: there are 35 million Americans with no health insurance, and many more whose insurance is minimal. In 2005, Americans paid $250 billion out of pocket in medical expenses, not counting insurance premiums. Last year, GE’s medical loan volume shot up 40% from the year before (7). Putting the squeeze on the underinsured and the elderly is sure to earn the company bigger and bigger profits.

Medical debt is also, if anyone needed reminding, the leading cause of personal bankruptcy in the US.

So it’s just super that GE’s chief ponies up some of his wealth to “combat poverty.” But it must be pointed out that many of GE’s everyday business practices help combat poverty about as much as crack cocaine.

Booker T. Washington once said the only problem with tainted money is that t’aint enough. Who in the 501(c)3 universe can disagree? This author knows of at least a few nonprofits which get heavy sacks of silver and gold each year from Robin Hood and do great work with it-work that goes beyond doling out services, work that builds solidarity and lays the groundwork for some working-class political power. Nevertheless, it’s grotesque that the people bankrolling this work made some of the money by shafting the very people who then become objects of charity.

The worldly-wise will say it’s naïve and pointless to lament this revolting moral economy-’twas ever thus, at least since the Neolithic, and without the tribute vice pays to virtue there’d be a whole lot less virtue in the world. No one over age 14 has any right to be shocked at the hypocrisy of the great and the good. But how can we not be disgusted when the CEOs of Goldman Sachs and GE make billions by systematically squeezing the working class-and then get all choked up with emotion when they “give something back” to the poor?

Jane Addams Rockefeller works at a nonprofit in New York. She can be reached at Jane.addams.rockefeller@gmail.com

 

(1) http://nymag.com/guides/money/2007/39959/

(2) http://www.nytimes.com/2007/11/29/opinion/29schlosser.html

(3) ibid.

(4) http://www.nytimes.com/

(5) http://query.nytimes.com/gst/fullpage.html

(6) http://www.guardian.co.uk/money/2003/dec/09/business.creditcards

(7) http://www.businessweek.com/bwdaily/dnflash/

 

 

 

 

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