Observations from the Edge

September 10, 2009
Tonight our exercise was to argue whether or not a huge corporation would be allowed to build its campus near a small rural town. The issues in debate were environmental pollution, noise and traffic near an elementary school, and the myriad social problems that would result from a large influx of wealthy city folk flooding the small town to work at the campus. My team argues the part of a neighboring town who will also be affected by the move. "Give us passes to your corporate gym" my classmates offer in negotiation. I am amazed at how callously they take gentrification and human suffering in stride. Tonight, I am no longer Stringer Bell, but instead McNulty, seeing with my own eyes that the world is not just. "Give us money. 25 mill," they press in negotiations. "What will you do with that money?" I ask. Give it to people who have been forced out of their homes by rising house prices, I wonder? Or use it to treat the once swimmable, now polluted local rivers and streams? "Just let them build," one student suggests, "and we'll see what happens."


October 8, 2009
My classmates are growing on me. Tonight I grilled them about different professors and classes to take, and for the first time felt a sense of comradery with them for going through this MBA program together. They still seem to speak a different language. One girl admitted to wanting to work with volunteers. Stunned, I asked her "as in, working for a nonprofit?" She replied "most companies that have volunteers are nonprofits." I am fascinated by their corporate speak, and wonder who they are miming--their parents, their coworkers, or other students. I am beginning to wonder if I misread them in earlier class discussions, mistaking irony for evil. Tonight I have to argue the part of a corrupt dictator, and I hear myself saying "Who cares about the people, they didn't elect us anyway." The class chuckles and I realize, "Right, this is a game." Not everything that people say in here is what they actually believe. Suddenly I see how, in my sense of displacement and alienation--I lost my sense of humor.


November 5, 2009
After returning from a conference on business and sustainability, I excitedly report to my classmates about all the wonderful new happenings in the green movement, especially about the emergence of a new corporate form: the For-Benefit Corporation. I explain how this new "B-Corp" will lie somewhere between the helplessly ineffective do-gooder nonprofits and the evil mongering for-profits as corporations that receive some tax incentives for operating ethically and sustainably. My classmates' eyes glaze over expressionless faces and I wonder, what am I doing wrong in my attempts to engage these people? By this point, I am sure that at least some of them have souls, yet why are they so unmoved by this exciting possibility? Am I too far off the deep end for them to rally with me? Would associating with me be social and political suicide for them? Sometimes out of class and on breaks students shyly come up to me and commiserate on that our stats exam, or ask me a question about accounting class. But in class they are a bloc. Perhaps they are not really listening at all.


November 19, 2009
Tonight our topic was equal opportunity employment practices, and specifically affirmative action. To demonstrate the historical landscape, my professor shows a silent film about the civil rights movement and then a video clip of Martin Luther King Junior's "I have a dream" speech. Though I commend my professor's noble intentions, I worry that the connection is lost on many of my peers. What does the racism of the 1960s have to do with paying a fair wage today? What do sit-ins at lunch counters have to do with Walmart? Through the haze of my criticism I realize that I have never watched this momentous speech before. In a shaking voice Martin Luther King Jr. quotes the United States Declaration of Independence: "We hold these truths to be self evident, that all men are created equal." How far we have come, I muse. Last week when we discussed corporate pay and this week when we discussed affirmative action, everyone's main concern was that the most qualified person get the job. Not that everyone should have an equal chance, or that there be a fair playing field or even that we promote ethical employment practices that prioritize staff training and benefits--no, their top concern was that the most qualified person, regardless of whether they got to that place of qualification by climbing on the back of less fortunate races and genders and classes for decades--that these folks are able to get the job that they deserve. And what about the rest of us, I want to ask them, those created a little less equal, what do we deserve?

Banking and the New Economy

The economic recession and near collapse of Wall Street are things that have been on most Americans’ minds as of late. Consuming a smaller, though steadily growing proportion of people are creative constructions aimed at fixing some of these massive problems. One such notion, gradually coming to be known in progressive circles as the “New Economy,” encompasses many connected trends. Though the term is new and still loosely defined, it ranges from referring to a new financial system to focusing on local—for food, farms, and business, to intentional living, the new “slow” movements—in short, perhaps, a big progressive pie in the sky. In this paper I will look at the financial component of the new economy, specifically at the emergence of new and sustainable banking institutions, as the glory days of the big banks and investment institutions seem to be numbered.

The economic collapse in this country has been attributed to many causes—from the exotic financial instruments being traded on Wall Street, to the egregious executive salaries and bonuses, to predatory lending and the subsequent writing of bad loans. Though these are most likely all important pieces of the problem, a fundamental component underlying these issues is the chasm disconnecting the financial industries from the productive labor force that once fueled this country and its people. One element of this is illustrated by the incredible sprawl of the banking industry today. Far from capitalism’s forefather, Adam Smith’s vision of “a world of local market economies populated by small entrepreneurs, artisans, and family farmers with strong community roots engaged in producing and exchanging goods and services to meet the needs of themselves and their neighbors,” (Korten 13) today’s banks and investors have no real “investment” in the businesses and individuals that they invest in.

Due to the geographic distance, the trend of day trading, and the bundling of assets into marketable securities, the people who own the rights to businesses and loans may have no idea who holds the other side of the title. In his piece on small banks, Zach Carter explains, “the short-term interests of [Wall Street] shareholders are rarely attuned to the well-being of the communities where banks operate”(35). Furthermore, money is stripped out of communities, from local workers and businesses through these financial arrangements, and funneled, through Wall Street, into the pockets of a very small wealthy elite (Schwartz 30).

In the midst of these shifts, the focus of these banking institutions has been no longer to provide a service to local members of their communities, but instead to operate as any other corporation, prioritizing the return to shareholders. While capitalists will endlessly exhort the principles of turning a profit, as well as growing and morphing to keep up with the demands of a shifting market economy, the average working citizen is left, no longer able to get a reasonable loan, or protect and grow a meager retirement fund. Like many other corporations, banks are guilty of a dire mistake. Charles Handy explains, “to turn shareholders’ needs into a purpose is to be guilty of a logical confusion…The purpose of a business is not to make a profit. Full stop. It is to make a profit so that the business can do something more or better” (Handy 48).

A solution to this problem with banks is emerging in the form of new, smaller financial institutions, specifically credit unions and community development banks. Though credit unions have been around since 1934 (originally chartered by FDR to “make credit available to ‘people of small means’”) they now provide a safe haven to conscious consumers, wanting to put their money where their hearts are (Hofheimer). Limited by legislation regulating membership as well as nonprofit status regulating profits, credit unions have often gone under the radar of the mainstream banking citizen (Carter 35). Though viewable as the constant underdog, credit unions solve a longstanding business problem, that of the tension between serving the needs of the consumer versus the demands of the shareholder. It accomplishes this, like many worker collectives and cooperative organizations, by making its member-consumers into its owners. This has the dual effect of both lessening the chasm between the financial services industry and the productive efforts of a community, while also keeping funds in a community by returning them to its member-owners in the form of dividends and discounts.

Another promising banking institution is what is sometimes known as a “community development bank.” These banks differ from credit unions in that they are not non-profit and so are enabled to turn a greater profit. What also distinguishes these banks from the big box banks now crumbling on Wall Street is that they are chartered with the intention of building and serving their local communities. An example of this is Portland’s own Albina Community Bank, which explains in its 2008 Annual Report that along with 57 other banks, it is certified by the U.S. Treasury as a Community Development Financial Institution and that “this certification enables [them] to offer a wide range of competitive banking solutions, while also promoting community development through products, services, and deposit accounts that build the local neighborhoods” (Albina 1). Similarly, in his design of “Common Good Banks,” William Spademan sees turning a profit as an important way that banks can give back to their communities in the form of charitable contributions (Carter 35).

If these sustainable and innovative forms of banking already exist, why then, is the United States teetering on the edge of economic collapse? One reason for this is that small banking institutions such as credit unions and community development banks are not accessible and marketable to the mainstream for the very reasons that make them the important institutions that they are. They are small. They are community based. They spend what profits they generate giving back to their communities instead of prioritizing sophisticated marketing campaigns or new product development. In fact, were these institutions to take on qualities of the big banks, spreading across the nation and turning customers into numbers on balance sheets, what would set them apart? Without the sustained focus on local community development, how could community development banks justify their existence? What would credit unions be without their unions?

It is with these questions that banks, along with all other participants in the forging of the new economy must grapple. Even with a focus on serving the members their communities, banks are businesses, and whether incorporated as for-profit or non-profit, they will always have to prioritize effective management, sound fiscal health, and returns to their investors. Institutionalizing local communities or member owners as the beneficiaries of their profits is one important step in the direction of a new economy.

Works Cited

Albina Community Bancorp. Annual Report. Portland: Albina Community Bancorp, 2008.

Carter, Zach. “Small Banks, Radical Vision.” Yes: Building a Just and Sustainable World 50 Summer 2009: 34-35. Print.

Handy, Charles. “What’s a Business For?” Harvard Business Review Dec. 2002: 46-51. Print.

Hofheimer, George. “Capitalism Needs Cooperation.” Washington Credit Union News. waleague.org, 15 July 2009. Web. 17 Nov. 2009.

Korten, David. “Beyond Bailouts, Let’s Put Life Ahead of Money.” Yes: Building a Just and Sustainable World 48 Winter 2009: 12-15. Print.

Schwartz, Judith D. “Dollars with Good Sense.” Yes: Building a Just and Sustainable World 50 Summer 2009: 30-32. Print.

And the Rest are Communists

After spending the weekend with an old friend who had recently left Portland to pursue her masters in New York City, I came down with a bad case of grad school jealousy. As she told me about her inspiring peers and professors, her fabulous classes, and her campus job offering tuition remission, my resolve to suffer my way through business school for the next two years started to ebb away. What if, in my compulsion to martyr myself on behalf of the nonprofit industry, I had sold myself incredibly short? What if there was a program out there with people who were passionate about the same things as I am who I could learn from and study alongside? Panicked, I desperately began searching the internet for news of a program that was well ranked and offered courses in nonprofit finance and management.

One of the first schools to pop up was Brandeis. I had thought about attending Brandeis for a brief time when I was considering undergraduate colleges, but had been turned off by its dismal location and seemingly East Coast attitude. Now here I was, looking at its MBA in Nonprofit Management, reading its claim to "create agents of social change" and trying to imagine driving across the country with two screaming cats in tow. Some part of me reminds myself not to base my entire future on the fear of moving my cats, while another part of me begs not to have to leave Portland myself.

My scheming is cut short by the fact that I have to go to class. When I arrive at my social responsibility class, I look around, noticing that my peers' faces are finally beginning to crystallize and I am able to put names to 4 or 5 of them. I scrutinize them, thinking, "Who would be in my classes at Brandeis? At Yale? Would there be people like you?" I reflect on the little I know of these people so far. At least one of them works for a nonprofit. The girl who seemed so callous on the first night, asking why people didn't move out of nursing homes if the care was so bad, asks tonight "What is the U.S. Chamber of Commerce?' A small part of me sneers at her naivety, though after our professor explains, I realize I didn't really know either.

Another student who I had written off the first night begins to talk about her experience on a basketball team, quitting because of the negative team energy and because she was getting shoved into lockers. My heart softens towards her. Another student brings up the Madoff scandal and says that the reason it made her so mad was because he ripped off so many non profits. My professor admits that it made him mad because it ripped off Sandy Koufax, his childhood hero. I share a smile with a boy wearing a Dodgers sweatshirt, as I remember my own brother and father idolizing Sandy Koufax as well.

In class tonight, we are discussing the "Parable of the Sadhu," an ethics case so elementary that I hardly want to engage in the discussion. We have read about how a team of privileged American mountaineers found a dying holy man atop a mountain they are climbing in Nepal, and we are supposed to discuss what we would have done in their place. Would we have stopped climbing to rescue the man, in effect losing a climbing opportunity of a lifetime? Or would we have forged ahead, doing the bare minimum of caring for him before returning to our quest, as did the men in the story.

Identifying as an ethical person, for me the answer is clear. I roll my eyes as my peers iterate various obvious perspectives, and it is some time before I finally ask myself if the answer is so obvious. The issue really in question is about "diffusion of responsibility." Who will act when there is no clear leader appointed? Who will take responsibility when others could just as easily step up? What if the example was not about rock climbing, but about something I cared about and had worked hard for? Would I stop in my tracks, undoing months of hard work, to help with something that wasn't my problem? When put that way, I realize the answer is less clear.

I remember when I first started working at In Other Words we had just received a grant from a prominent local foundation and all the people who had worked hard for months outlining the project and drafting the proposal had just left. The work of carrying out the project and measuring its success fell to no one. As a new manager, I knew that something had to be done about it, but already overwhelmed with a huge amount of work and knowing little about grants, I did nothing. No one else did anything about it. The grant period ended and we had no project, no evaluation, and no report. We had effectively destroyed our relationship with the local foundation. My inaction had hurt the organization I cared so much about, and even though it was not "my responsibility," I could have taken care of it.

"What fixes the problem of diffusion of responsibility?" my professor prompts us. "Clearly outlining roles and responsibilities," one student offers. Communication. Training. Education. Business school, I wonder? Isn't that why I am here? After all of the situations I could have handled better, but lacked the skills or knowledge needed, I finally checked myself into graduate school with the intention of learning what I could to become a better leader. I reflect on my crisis of only a few hours ago, and think that maybe where I'm at right now is exactly where I need to be. I have already learned from the students who I so quickly rejected and in the class that I deigned to be a part of. Earlier in the week, to demonstrate a probability problem, my statistics professor had used the proportion of democrats to other political parties in Portland. "All the rest are communists anyway," he quipped. That's right, I realize, even in business school, this is still Portland and under it all, we at least share that.

I am Stringer Bell

As of tonight, I am officially in business school. Though my accounting and statistics classes from earlier in the week will be equally challenging and thought-provoking, at those meetings I still felt relatively normal. Tonight, I am Stringer Bell. For those not familiar with The Wire’s infamous character, this high end drug lord attends college economics classes by night, and by day explains the principle of elasticity in the marketplace to youth who sell his drugs. Like Stringer, I am a mole—gleaning knowledge from a foreign world to translate into a language spoken by my community. Oh, the distance.

The class I am in tonight is “Social Responsibility of Corporations,” and is one of a required two course series that teach “values management.” To start off the class, my teacher prompts us, “What is the purpose of a corporation?” After scribbling quietly in our notebooks for a few minutes, we watch a televised interview with a prominent businessman, and then our discussion begins. We return repeatedly to a few themes: serving stakeholders, producing profits, and corporate accountability. In light of the current economy, one student remarks, “Who wants to be accountable now, anyway?”

We talk about accountability. Is the corporation accountable, or its leaders? Why should the corporation be responsible for fixing social problems? What if it created those problems? My professor quips, “People who do the right thing are saints. The rest of us… are more or less human.” Our chat continues. In our discussion of poor management practices of a string of for-profit nursing homes, one student queries, ‘If the service is so bad, why don’t they just move?”

The insensitivity and ignorance in the room make my head spin. Did my professor actually just refer to every person in his examples with male pronouns? Does that really still happen? I lazily try to imagine the best intervention. Do I innocently ask him if all people participating in business are men? Do I make all of my remarks about women? Talk to him after class? Email him my complaints? What about all the students who don’t seem to mind the damage wreaked on our society and planet by reckless corporations? What do I do about that? I decide to wait. Survey my surroundings, assess the stakes, and identify any potential allies.

When class is over I check my phone and see that I have been invited to a concert. I weigh the pros and cons of going out after such a late class, though something propels me to go. Within twenty minutes I am at the Alberta Street Pub, seated between friends, surrounded by my community, and watching, listening, and singing along to the songs of Coyote Grace, a beloved queer band. Not knowing exactly what had driven me here tonight, I breath in the smells and sounds of this familiar place, and realize that this is what will keep me sane.