The tragic reality of 21st-century democracy in the US
Let us open Pandora’s box
With the US presidential candidates beefing up their campaigns for the 2020 elections, the very fundamental question about democracy comes back into the spotlight. In theory, the candidate that act in the best interest of the majority of people should win. The question is, what is happening in reality and does the Government represent the interest of the people? Let us find out.
What you think does not matter at all
In 2014 Professors Martin Gilens (Princeton University) and Benjamin I. Page (Northwestern University) looked at more than 20 years’ worth of data to address precisely this question. Their study took data from nearly 2000 public opinion surveys and compared it to the policies that ended up becoming law. In other words, they compared what the public wanted to what the government did and compared that with what elite groups wanted and actual policies put in place.
What they found is not encouraging: While the opinions of the bottom 90% of income earners in America have a "statistically non-significant impact," economic elites, business interests, and people who can afford lobbyists still carry significant influence.
Who wins the election? 91% of the time the candidate with the most money raised will win. Where does the money come from? 66% of the money raised comes from just 0.2% of Americans. So how do politicians spend their time? 30-70% goes to fundraising for the next election. When they are not fundraising? They have no choice but to make sure the laws they pass keep their major contributors happy.
So to sum it up, policymaking is strongly correlated to funding. Full stop. Let us look at how this works in a little bit more detail.
Dark Money
The term dark money refers to funding from anonymous sources to influence elections. According to the Center of Responsive Politics Dark money funding in the 2016 elections was ten times more than it was in 2012. This is possible because of favorable supreme court ruling in 2007 and 2010 that have led to decreased election funding regulations. The primary source of dark money flows through tax-exempt 501(c) non-for-profits.
Wall Street
According to a report issued by Americans for Financial Reform the financial sector is by far the largest source of campaign contributions to federal candidates and parties and the third largest spender on lobbying. In the 2015-16 election cycle, Wall Street banks and financial interests reported spending over $2.0 billion to influence decision-making in Washington. The financial sector’s contributions were almost twice that of any other specific business sector identified in the Center for Responsive Politics data.
The Student Debt Crisis
The current student loan system is dysfunctional and broke. The federal loan programs are bureaucratic and confusing. The lending industry applies credit risk standards, which exclude many young people from refinancing. For the majority of borrowers, student debt is unbearable because it cripples them financially and emotionally. When they are just starting, they are being squeezed the most.
The consequence? Income & wealth disparities are widening with increasing costs for society. High opportunity costs and repayment defaults, is setting back the economy by the billions and is a ticking time bomb affecting everyone.
#theREADway – a case study
READ Enterprises is a privately-owned start-up that has studied at the US student loan industry independently and in detail and has have developed a holistic solution that offers millions an opportunity to achieve financial well-being.
READ’s mission is to change the status quo of consumer lending practices & create a healthier financial industry for millions of graduates & young professionals who start life with a crushing financial handicap.
READ is proposing a truly alternative financial model focusing on helping individuals to reach their potential. The generation of Millennials should have a right to prosper and lead the way in the next phase of economic growth; through productive work, not by growing debt balances.
In late 2018, READ has presented the READ concept to a statistically relevant focus group and achieved an overall approval rate of 76%. In absolute terms that is more than 6 million Millennial student loan borrowers.
So what?
To create awareness in the market, READ decided to launch a support campaign by setting up a Shopify marketplace that sells READ merchandise like t-shirts, sweaters or hoodies. READ has set up social media sites on Facebook, Instagram, and others and went ‘public' on April 8th. So far, so good.
What happened next, was surprising. First Facebook blocked READ advertisements for posts with the explanation that our page ‘runs ads related to politics or issues of national importance.' We were honored. Then without any announcements READ was blocked from posting at all and previous posts were removed, claiming our posts go against ‘Community Standards.' Next up was Instagram who removed our shop-URL https://thereadway.com to ‘protect our community.'
On April 11th, only 3 days after going ‘public’, out of the blue, Shopify’s Risk team sent an email “Upon review of your Shopify account, and the details that you have submitted, we will regrettably be unable to provide you with access to the Shopify Payments gateway for your site”. While Shopify has suggested alternative payment gateways that could be integrated, they failed to elaboration their reasoning and failed to provide further explanations.
For the records, READ is a US-registered company and has a US bank account.
Conclusion
By the looks of it, READ has stirred up a hornet’s nest. We lack evidence to make any claims who is behind these initiatives. All we know is that we experience headwinds. We always knew that our concept has the potential to profoundly change common consumer lending practices that generate billions of dollars in profits for a few institutions. It comes as no surprise that different stakeholders have misaligned interests and will try to protect their turf.
#theREADway stands for hope. Hope for the people. For change. Change to make consumer debt affordable, sustainable, and fair. For the future. Not the past. What do you want? You decide.
I want to close with a quote from Mahatma Gandi "First, they ignore you, then they laugh at you, then they fight you, and then you win."
Alberto
Co-Founder & CEO of READ Enterprises