NPI's Cascadia Advocate

Offering commentary and analysis from Washington, Oregon, and Idaho, The Cascadia Advocate is the Northwest Progressive Institute's unconventional perspective on world, national, and local politics.

Sunday, December 31st, 2017

Book Review: Morgan Simon’s “Real Impact” is a guide to socially responsible investing

“Per­fect” may be the ene­my of “good”, but “bet­ter” ain’t always its friend.

Fun­da­men­tal­ly, that is the most damn­ing praise for impact investor Mor­gan Simon’s Real Impact: The New Eco­nom­ics of Social Change.

Real Impact: The New Eco­nom­ics of Social Change by Mor­gan Simon (Hard­cov­er, Nation­Books)

Simon’s book is a guide to bet­ter divest from harm­ful indus­tries and busi­ness­es while invest­ing in and found­ing endeav­ors that align with social­ly respon­si­ble val­ues. It’s also a cri­tique of phil­an­thropy as it exists today, in the form of char­i­ta­ble non­prof­its and eth­i­cal-as-brand­ing for-prof­it enter­pris­es.

While in Sier­ra Leone in 2003, Mor­gan noticed that aid, in gen­er­al, makes mon­ey for lots of mid­dle income folk deliv­er­ing it with­out fix­ing the under­ly­ing sit­u­a­tion and usu­al­ly keeps the recip­i­ents depen­dent on out­side funds. Some­times, well-mean­ing gifts make the local pop­u­la­tion more depen­dent when they can’t start busi­ness­es to com­pete with the free food and cloth­ing del­ug­ing their com­mu­ni­ties.

Non­prof­its can do harm, and invest­ments that do good can also do well.

Green ener­gy can be more prof­itable than fos­sil fuels with no oth­er con­sid­er­a­tions giv­en, and still give a return to investors while work­ing with­in com­mu­ni­ties to, for exam­ple, install wind tur­bines in Oax­a­ca, and share the pro­jec­t’s prof­its fair­ly.

So, Simon argues, we as a soci­ety should invest in self-sus­tain­ing busi­ness­es that make the world a bet­ter place and insist on bet­ter met­rics for mea­sur­ing that, which Simon then lays out in some detail as well as rules of thumb for how peo­ple inter­est­ed in such work ought to go about it.

All of this con­vinc­ing as an improve­ment over the cur­rent sit­u­a­tion.

But is it enough of an improve­ment to mat­ter?

We’re going to come back around to that, but as deep a prob­lem is the ques­tion of who this book is even for. It’s writ­ten in tone for a wide audi­ence, but rel­e­vant to only a nar­row slice and mean­ing­ful to much less.

When half of all Amer­i­cans own no stocks at all and would have trou­ble com­ing up with $400 in an emer­gency. There’d be more of a mass appeal for the idea of social­ly respon­si­ble invest­ing if wealth inequal­i­ty was­n’t such a prob­lem in this coun­try. Ten per­cent of fam­i­lies own 92 per­cent of stocks, and the top 1 per­cent of Amer­i­cans own more wealth than the bot­tom 90 per­cent.

In terms of gen­er­al advice, mov­ing from your sav­ings accounts in banks with ques­tion­able prac­tices into cred­it unions and pri­vate debt funds is a good one.

But you don’t have to be in “There Is No Eth­i­cal Con­sump­tion Under Cap­i­tal­ism” camp to feel like Simon’s incre­men­tal­ism is most­ly about peo­ple who were dealt a Roy­al Flush at birth feel­ing less guilty than it is embark­ing upon the rounds of prac­ti­cal prob­lem-solv­ing that she calls for in her book.

Put anoth­er way, even the best and most effi­cient phil­an­thropy can only plug a leak­ing dike. Pub­lic pol­i­cy is what builds or blows up the dams. The Koch Broth­ers, Robert Mer­cer, and oth­er con­ser­v­a­tive plu­to­crats fig­ured this out and have been blow­ing up dams for years, with an enor­mous return on their invest­ments.

Ear­ly on, Simon quotes James Carville’s Clin­ton cam­paign mantra: “It’s the econ­o­my, stu­pid.” What she seems blind to is that his slo­gan was about win­ning an elec­tion and the notion of Amer­i­cans pool­ing their resources to get things done.

Even more fatal­ly dam­ag­ing to Simon’s book is her own men­tion of the prove­nance of Amer­i­can impact invest­ing: Quak­ers refus­ing to invest in slav­ery in 1758. Yet, a hun­dred years lat­er, there were more peo­ple enslaved, slave cot­ton was cen­tral to the glob­al econ­o­my, and slav­ery was more prof­itable than it had ever been.

Two years after that, Abra­ham Lin­coln won the pres­i­den­cy, and more was done to end slav­ery in the sub­se­quent five years than all the five score pri­or.

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