Archive for March, 2010

Money making for activists (or…capital formation)

March 13, 2010

Who wants to hear anyone talk about capital formation?  That’s what I thought.

My father owned his own business.  He was a meat packer.  He’ d get up at an ungodly hour every morning to open up his business because he claimed he couldn’t trust anyone to be there on time that early—  to open for the truckers.     I knew that all businesses weren’t like that, but I saw how responsible he was.

In 8th grade, as part of a social studies class, we had to do a  business project.  We had to come up with a balance sheet, and  keep track of costs against profits, and sell a product or service.  I sold cotton candy.   I made a little money.  It was just an exercise.

Anyone who has baby sat, or delivered papers, or shoveled snow has done this simple exercise.

When I started working for dog groomers,  I got to see day-to-day operations, and learned about overhead, and how  to decide what to charge for service.

About 20 years ago, one of my friends suggested that we (a bunch of us) form a socially responsible investment club.  We  decided to call ourselves PIG: Progressive Investment Group.  We had negative & positive screens.  We were investing in businesses listed on the  stock exchanges.

Now, I know what you might be thinking—:  how can investing in ‘big business’—in CAPITALISM–be socially responsible? You have to understand basic economics.    All economics takes into consideration  all the inputs you need to create value added products or services.    Communisim, capitalism, socialism—it doesn’t matter.  Really.  It’s the profit part that most people have an issue with. Who gets the profit.  Under socialism, the workers are supposed to split it.  Under capitalism, only the boss & his investors get it.  We supported  businesses  where the workers got profit sharing, or owned the business cooperatively, or, like Hershey Foods–funded social goods (Hershey funds the Hershey Foundation—which funded a school for orphans). We didn’t invest in producers of weapons, tobacco, alcohol, or those that did animal testing. We tried to invest in solar, green technologies,  companies that  put a significant amount of net into social goods.  We would have  continued, but ultimately, our accountant was doing most of the work, and  people who asked to join us—although they were told to  make this work, they had to invest long-term—-always wanted to cash out—& that means we had to sell good stock at the wrong times.

We were not  big spenders. You could invest as little as $250 a year, or as much as $2000 a year. You’d own shares of the club, but  the fact of the matter is that some people live beyond their means, & would ask for that $250 back—which isn’t even 1/2 a month’s rent in this area.

We  decided to present at the Midwest Radical Scholars & Activists Conference to see if we could attract new members.  When I couldn’t find us on the program, the coordinator pointed out:  Capital Formation, and said, “This is you.”

Huh? Who wants to hear about capital formation?  That’s about as exciting as hearing about life insurance!  Nevertheless, we got about a dozen people to attend, & they were bored stiff—& argumentative.  I guess they didn’t understand who manufactured their clothes—or any other product they used.

I still try to work with fledgling entrepreneurs. Knowing microbusiness  and recycling got me a graduate assistantship when I got my master’s degree.  It’s not very complex mathematics.  But you do have to budget.  You also have to understand the  inputs that go into  either profiting a service or selling a product.  How much do your raw materials cost? How much time does it take to produce your ‘value added’ product or service.?  How much does energy cost to  produce what you are selling? If you have to borrow money, how much is debt service?  Can you sell your product or service and make enough to pay for all that &  have enough left over to support yourself?  What if it takes a long time to sell your product?  How can you price your product to sell  (elasticity of price demand)?

At one time, I worked as an Enterprise Agent (community organizer), for Women’s Self-Employment Project, in Chicago., This was based on the Grameen Bank model, to provide very low income women with microloans (under $15,000—& in most cases, just $1500) to start businesses. One of my coworkers did the math, & told me it cost WSEP $15,000 per loan—just to loan the moneyy (staff salaries, our offices, bookkeeping).  The executive director, Connie Evans, claimed an over 90% repayment rate. Since she wrote off bad loans & wouldn’t open the loan fund to an audit, we knew the repayment rate was much less. The  main problems?  Unrealistic business plans, and a reluctance to  pay debt service.  Many of the women were on public aid, and used to entitlements—so that was the excuse they used to not pay back their loans.

Yes, some  great ideas can be implemented for $1500 or less, but they are few & far between—and noteworthy when they DO succeed.  I wish our schools did a better job of teaching applied—business—math.  I wish  more parents would turn off the televsions and hide the video games and cell phones & work with their kids on income generating projects.  I go out in the alleys  every day with my dogs and pick up cans. Sure, it’s only $10 a month, but it’s free money.

So, while I am  a socialist—actually—an anarcho-syndicalist at heart, I can’t make you creative or ambitious.  This is another  example of ther being no magic.

Low Expectations

March 6, 2010

I still want to  write about  capital formation, but an exchange with my roommate this week made me decide this was…well…at least funnier.

My roommate, Kunihiro, is a Japanese National—our stereotypical idea of how the Japanese are:  slender, quiet, brainy (he has 2 Ph.D.s–in engineering and computer science), and not prone to complaining.

When he came to live with me about 7 years ago,  he spoke limited English, ans what he did speak was unintelligible.  He is an excellent mimic, however, , and can now swear and talk business in 2 languages.

His palate is still Japanese, and he prefers pasta, rice, and whatever you can mix with them, for dinner.  Since I am not Asian, and could never understand the subtle differences in rice, if I ask him what he’d like for dinner, the answer is always pasta.  I prefer more variety in my diet, but at least once a week I cook pasta.

One evening last week, I made meat sauce for the pasta, which I thought turned out quite tasty.  I mixed hamburger with zucchini and shalots, some cilantro, a few tomatoes, garlic, and marjoram, with a pinch of salt and red pepper.

Kunihiro doesn’t  want the sauce mixed in with his spaghetti. He wants the sauce served in a pool on top, like they show in the T.V. commercials.  He often arrives home  late, however, and I am always afraid the pasta will dry out (no extra olive oil for us!).  But it was pasta, and that’s all that maters to Kunihiro, who would have pitched a fit if I had overcooked rice.

“How do you like it?”  I asked him.

“Actually, it was quite tasty, and to be truthful, it would be hard to screw up pasta.”  You see, his Engrish is quite idiomatic at this point.

I burst out laughing and almost choked . Then he started mimicking my laugh ans  said, “What’s so funny?What are you talking about?”

My sisters and I were born without a cooking gene.  In fact, shortly after Kunihiro came to live with me, an in-law asked him how he liked my cooking, & he answered, “It’s good.”  And she raised her eyebrows and responded, slowly, “Really?”

The way my sister Randi cooks pasta—I am not making this up—she doesn’t wait for the water to boil. When she thinks it’s about to boil, she throws the pasta in the pot.  She doesn’t measure or keep track of time. After it starts boiling, if she thinks it doesn’t look like enough for all the people she has to serve, she throws more past  in the pot.  No angel hair for her, obviously.  So, you get mush with uncooked pasta.

The first time I saw her do this, I started telling my brother-in-law, and he cut me off, saying, “I’m used to it. Why do you think we eat out so often?”

He recently had his gall bladder removed.  It couldn’t have been Randi’s cooking, could it?

I would never brag about my cooking,  and the worst thing I ever did was confuse anchovies with sardines (which I was going to use in place of tuna), and it turned out so badly, even the dogs wouldn’t eat it.