Follow the money

For those who follow the blog you know that I’ve been harping on the distinction between public and private, club and common goods, here, here and here. In my view goods are not sorted in this manner. A hammer is a hammer. If it is used to fix my deck it is in service to me privately, if it is used build a Habitat for Humanity house it is providing a public service to house the unsheltered.

The reason it is necessary to resort this understanding is because it is how we can see corruption. Corruption is not just up to politicians. A system can be corrupt and individuals, small groups and so on. When a set of rules are put into play, but then through cloaking and shading people (or groups of people) pursue other objectives, there is corruption.

Take the case of Embrace, a domestic violence shelter, that’s been in the news. The local police in Barron’s County Wisconsin objected to the posting of BLM posters around their building. And felt this posting calling out police violence, discredited their service. As a result public funding for the shelter was revoked. Here are the Huffington Post, Wisconsin Public Radio and the Washington Post articles.

Embrace states their core mission

To end violence, inspire hope and provide unwavering support to all people affected by domestic and sexual violence by engaging our community in safety, equality and partnership.

Now remember domestic violence persists when the normal social catches fail. When there are no close family members to that pull their daughter, son or elderly parent out of an abusive situation. When there are no neighbors who notice excessive bruising and quietly offer the victim a way out. Domestic violence requires a formal force intervention because no other means of social exchange has worked or been available. And from what I understand, these types of calls are frequent and precarious for the police.

Given the necessity of the police to intervene in order to get the abused to their doorstep, you would think the shelter would consider this public agency as a core part of their workplan. As to why the shelter declined to remove their signs, Katie Bement the shelter’s executive director told Huff Post:

“We were approaching it from an accessibility standpoint,” she told HuffPost over Zoom on Thursday. “We needed to show that we’re safe for those communities of color.”

Yet Barron county’s black population is .14% of all residents. I’m not sure how many of those 62 people would be drive by the shelter first before making a call for help or finding them on-line. I don’t have the statistics from police response rates or the shelter’s service records, but I suspect the demographics of those receiving aid lines up with the 97%.

As much as the shelter would like to merge the work they do in Barron County with the objectives of BLM the demographics seems to deny them this reality. The group they provide services to are overwhelmingly, if not completely unaffected by the concerns of BLM. In fact the two missions are at odds with one another as the later has diminished the abilities of police to provide security nationwide. Which is undoubtedly why the county pulled funding.

Now back to corruption.

Within a day of the Huffington post article being run, a GoFundMe page was set up for the shelter. Before dinnertime they had surpassed their $25K goal. As of this morning (screen shot included) the page is reporting a kitty of over $69K. Would the shelter have been able to raise this funding without the BLM story behind it? By accepting these donations has the shelter’s mission changed?

If you publish one set of objectives yet acquire funding for another, it seems that you are at odds with your group. It’s not that groups can’t change their rules or objectives, its just that you have to be clear about them so people know what they how their resources are being invested.

Are you picking up what I’m putting down?

Fireworks

In a recent post, which challenged whether national defense is a public good, I suggested that sunlight was a public resource. Then I got to thinking about height restrictions in new construction, and in particular about a luxury high-rise development that was squashed by neighboring residents. A few years ago plans were underway for two residential towers on the west side of Southdale Center which is in an up-scale suburb of the Twin Cities. When over 200 folks filed into the city council chambers, there were more opposed than in favor.

But dozens of residents spoke against the towers, listing issues with everything from its height to the shadows it would cast.

So you see sunlight can be privatized. The owners of the 50’s built one-level homes to the west argued that the new apartments would steal their sunlight. The two towers would privately claim the warm beams, leaving them in the shadows. In economic terms, the new high rise would externalize shade.

There is a cost to shade. If you sell condos you know that southern exposures are more desirable than northern (though thankfully some feel a south view is a tad too warm). Being that there is more demand for this exposure these condo garner a higher price than those pointed north.

Here’s my original post challenging the breakdown of goods into public, private, club and common. Today I’m challenging the idea that fireworks are a public good. One would think that no-one could be excluded from seeing the fireworks. At least, once you already assume that you really mean no-one who is already close enough in the first place, can’t be excluded. An assumption which in itself, makes it a private good when you live one county over.

Realizing it has this private good, say the city lures people to move to their downtown by advertising an amazing fireworks display on the Fourth of July, shot from a bridge over the Mississippi River. By fall the new residents have moved into a beautiful condo overlooking the stone arch bridge which spans the Mississippi. By the following summer, however, a new condo building has been built which blocks their view.

Mr. and Mrs. NewRes show up at City Hall hotter than a hornets nest and demand compensation for being denied their access to a public good. After all it was the city that approved the permit that allowed the building to steal their view of the fireworks.

Here’s where I say be careful to identify your public, be careful to know your groups. The fireworks are public to those who show-up in a public space within sight of them. And you say I am splitting hairs. But am I?

When we tell families their children have access to a uniform public education for grades K-12, are we offering fireworks that can’t be seen by everyone? We all know that there are different levels of school performance all across the districts. At least a portion of that performance can be attributed to work done in the neighborhoods which support the learners and the educators in ways that are not supported elsewhere. So when the state says all learners will be provided ‘the same’ public good, is the state committing to make-up for the difference in the neighborhood support? Because that would tally quite a hefty tab.

Internalize and Trade

Health care providers incorporate a variety of incentive methods to encourage healthy behavior.  Many HMO’s will pay $25/mo toward a gym membership fee if their member goes to workout twelve times in a month. In effect they are internalizing the externalities of poor future health by inducing members to live a healthier lifestyle. The numbers must indicate that $25 is both enough to change behavior and in doing so avoid future medical procedures.

This transaction all occurs within the same group, those covered by an HMO’s policy. The trade of cash towards a gym fee benefits the same people who will then incur fewer medical costs in the future.  But what about a hybrid trade that included beneficiaries outside the group?

Obesity in the US has been on the rise for a number of years. It is becoming a leading public health crisis as rates of obesity among Americans are running above 40% in all age groups. The CDC outlines a number of health effects that stem from carrying around excessive weight.

One remedy is weight-loss (bariatric) surgery.  There are several procedures that help you lose weight which lowers your risk of medical problems associated with obesity. The cost of weight loss surgeries can range from $14,000 to $23,000 and are being covered more frequently by health insurance.

Since there are also downsides to surgery in general, what if the HMO tried an incentive program to get the member to a healthy weight? Say the cost was determined to be $20,000 for the surgery, and the member was considered to be 80 pounds overweight. Say the sum of the surgery could be divided up over a five year time span where the member received a portion for every 20 pounds lost, the HMO retained a portion and, a single mom in a third world country received food subsidies for a year.

A recent contest found that the most compelling argument that resulted in the highest philanthropic donations was a scenario structured in a similar fashion. I describe this structure in the post Philosophy and Philanthropy. Perhaps a late middle aged mom has served her family diligently, and in the process lost site of her own needs. Perhaps she has gained a bunch of weight that she can’t seem to shake, at least not for herself. But if you gave her the option to feed a single mom with five kids, maybe she would see her way to bringing her own weight in line.

Here’s the deal 101

Our local NBC news outlet recently ran a story about an elderly couple receiving help from neighbors after being criticized for not keeping up the exterior paint on their home. It totaled $67,000 worth of help. There is no name given to this transfer of money. When a private party helps themselves to $67,000 from their employer it is called embezzlement. When a politician helps themselves to $67,000 from their campaign fund it is called corruption.

The old school explanation for this activity is to denote it as a form of charity. But is it really a gift? Neighborliness is a term that shows up on surveys. But what does that mean? I see this exchange between the neighbors of Gloucester is the most basic transaction in a economy of groups. Let’s pull it apart.

It all started with an anonymous note left for the couple which read, “Please Paint Me! 😦 Eye sore – Your Neighbors. Thanks.” Although clearly written by one individual, the message is presented as a community concern. Signed, your neighbors. You’ve probably heard this type of chatter before. A house on a main road is dilapidated, or decorated with eccentric siding. Comments like, ‘I really wish someone would do something about that place.’ Or, ‘Some people are bringing down the neighborhood!’ So although one neighbor wrote the note, thoughts of this nature were undoubtedly mulled over by many a passerby.

A personal residence is deemed the bastion of private property, and property rights are a keystone feature of our economic system. But the note indicates that there is a hazy area not reflected in the legal deed, filed in the county records, which spells out the owners names. The area residents feel they have a right to demand that the exterior meet their expectations. This is not a novel idea. In fact cities even have ordinances which address the exteriors of properties regarding thresholds for debris removal and grass mowing.

The couples’ daughter took to social media to voice her response to the note. She points out that her parents had lived in community for the past 50 years. And that during this long history they had maintained their home, and hence contributed many years of service towards an acceptable streetscape. “My family for many years took care and maintained this house as best they could…” 

The reason for the disrepair could happen to anyone, it was an act of nature. The article reports that “Marilyn, 72, developed multiple sclerosis about 30 years ago and is mostly confined to her bed, and Jimmy, 71, recently recovered from a quadruple bypass…” Health concerns take time and resources away from the couples ability to comply with the norms of the neighborhood.

Once the word got out about the need, once demand for goods and services was established, a voluntary response from the community resulted in a $67,000 balance in a GoFundMe account. Currency is very liquid, yet these funds are not fungible. As the report confirms the money is “to be used for new siding on their home, new windows, roof and stairs.”

There is no reporting of free riding or extortion, even though funds are seemingly extracted from a greater group to a private party. Nor is this activity portrayed in a religious or moral sense. The voluntary transfer of resources to improve the exterior of the home is held together by a communal objective, one that the recipients contributed to over. This transparent and voluntary activity is the most basic transaction in economy of groups.

“People look out for each other in Gloucester,” he said. “If somebody needs some help, we just get together and do it. It’s all just very heartwarming.” What I hear him saying is that Gloucester is a town with a free an open economy. And yes, that is heartwarming.