Friday, May 23, 2008

More On Global Problems

After lamenting yesterday about the paucity of wealth to go around on a global scale, I ran across a BBC report about a pilot Basic Income Grant project in Namibia. The program, organized by a civil society coalition, gives US$13 per month to every member of the community under pension age. Now, $13 certainly doesn't sound like much ($20 PPP, ICP 2005, though I wonder exactly what kind of market basket they used)---and it isn't, in absolute terms; but in relative terms, $13 can be quite a lot. After all, that comes to more than a quarter of monthly income for half of the country's population (HDR 2007/2008, Table 3); and even if it isn't "living large," a 25% bump in income surely can do a fair amount to propel one toward improving quality of life.

And anecdotally (according to the BBC article), many program participants are using the grant for little things that can do just that. For example, some have used the money to buy clothes for their children and pay school fees. The former helps children focus on their studies without worrying about their appearance, and the latter gives parents the confidence to engage school officials on the quality of their children's education. Others have used the funds to supplement their food budget, and the local clinic has seen a drastic reduction in cases of seriously malnourished children. The grants have also provided capitol to allow the establishment of a new grocery store, a hairdresser, a barber, and an ice-cream vendor. Of course, none of these things means poverty has been solved in this village by only $13/person, but each of them has the potential to contribute to a virtuous cycle in the gradual ascent toward a more equitable society.

Thursday, May 22, 2008

On Global Problems

Sometimes I get overwhelmed thinking about global-scale problems. There are so many people in the world and utter poverty is so rampant that it can seem insurmountable, and every once in a while I wonder if it's worth even trying (usually I convince myself that it is).

Take food, for example. The world food-cost crisis has been in the news a lot recently, and there are millions of people throughout the world who suffer from hunger and malnutrition. This makes me wonder: Is there even enough food in the world for all these people? Fortunately, there is: According to the UN Food and Agriculture Organization, global average food consumption is 2800 kcal/person/day, which is greater than the USDA recommend caloric intake for all but the most active young adult males. So, there seems to be enough food out there---it's just a matter of getting it to the right people, which feels like a much more tractable problem than increasing global food output (though I'm not quite sure why, given the resistance too many people have to sharing).

Generalizing from food to wealth in general, the picture isn't quite so rosy (if millions of hungry people could be called rosy): If we were to take the roughly $1.6 trillion of the richest 100 people in the world and divide it equally, everyone would receive only $270---not even a nucleus, much less a "nest egg." According to the CIA World Factbook, the gross world product (GWP) per capita is only $10,000 (PPP). In other words, unlike food, poverty in terms of lack of financial wealth isn't merely a distribution problem. Now, unfortunately, I'm not an economist, so I'm not quite sure where to look for possible solutions to this little (or not so little, rather) quandary. But, I imagine that increasing human capacity (through education) will play some vital role.

In order not to get too depressed when I think about how big the world's problems are, I usually have to scale down my perspective to think about where I am currently and what I can do on my own in the present. If you're looking for a way to help in the redistribution of food resources, may I recommend Food for the Poor. They "provide food, housing, health care, education, water projects, micro-enterprise development assistance and emergency relief to the poorest of the poor," and their budget is composed of 96% program expenses, placing them among the most efficient of charities.

Thursday, May 15, 2008

Retirement Investment Planning

CNN Money has some helpful advice on where to hold your investments. Ideally, all savings would be in a tax-advantaged account (401k, IRA, etc.); but when the amount you have to invest exceeds the limits for these accounts, give bonds priority to tax-advantaged accounts (starting with a 401k, if you have one), then add stocks. Bonds give off more dividend income, which is directly taxable, so these should be as tax-protected as possible.

This leaves the question: What, exactly, should one buy? They suggest a seven-fund portfolio of stocks, bonds, and money markets (with recommendations for funds in each of the seven categories). While this may be a good goal to work toward, such a diversified portfolio could be difficult to achieve straight off the bat (the cumulative minimum investment is something like $15,000). When I opened my IRA, I took a tip from Adam Bold and started with the Selected American Shares (SLASX). Since then, I've come across suggestions that he may not be the most trusted of advisors, but I think Selected was a good choice, nevertheless: Although it's not likely to impress anyone with record returns, the fund rather consistently beats the S&P 500 and has achieved an annual rate of return over the last 10 years of 8%. As such, the Selected funds seem to me to provide a nice stable base from which to develop a fuller portfolio in the future.

The CNN Money article also included three simple plans for asset allocation between the seven different types. My father once shared a rough rule of thumb for retirement-savings asset allocation: He said that the percentage of stocks in your portfolio should be about 100 minus your age. I was pleased to see that the CNN Money's plans were pretty close: In early career (20s), they allocated 80% stock; in late career (say 40s), they allocated 60% stock; and in retirement (60s), they allocated 40% stock. Of course, it's certainly nice to have the more-detailed suggestion of how much of what kind of stocks and bonds to purchase, which the article provides.

Wednesday, May 07, 2008

Why I Give

From a psychosocial-developmental perspective, one might say that I give my "time, talent, and treasure" because of the consistency of certain childhood experiences: Not only did my parents model active participation in a variety of church activities (singing in choir, leading Sunday School, helping with children's ministries, going on missions trips) as well as faithful financial giving, they also trained me in the same path by enrolling me in a wide variety of church activities and teaching me to put part of my allowance in the church offering. As a result, even today, these practices feel completely natural, and I think I would feel a little something missing if I gave them up.

From a theological perspective, one can say that I give because God has entrusted me with good things---life and abilities and means. Insofar as He has entrusted me with each of these, I have a responsibility to use them for His glory, which includes making a joyful noise unto the Lord, bringing offerings of all kinds into His courts, studying and teaching His goodness, rejoicing with the joyful, encouraging the afflicted, and aiding the needy in His name. Just as Paul describes the Church as a body with many interdependent parts, I am beginning to believe that God may have designed the world with disparities in income, as well as diversity in talent, so that we would be forced to give to and receive from each other for our mutual well-being, and that in doing so, we would be reminded that we are dependent not only on each other, but ultimately on God for all we have.

But, while each of these reasons is true and operative when I give, there is a deeper reason still, a "heart" reason: I give because giving gives me joy. Whether cooking a meal, participating in a church work day, or sorting food at the Food Bank, I enjoy serving, and if the truth be told, I sometimes get a little buzz placing my offering into the basket on Sunday morning---not out of some self-righteous desire to be seen for my "great works," but with the same kind of excitement a little child has when his mother gives him a coin to drop in the plate as it passes. After all, if "God loves a cheerful giver," then we should all take a certain pleasure in sharing our time, talent, and treasure with others in His name.