Joe Sanberg: Seeking Financial Security for All
“It's not just about those who live below the so-called poverty line. When we have eight out of 10 Americans who are living paycheck to paycheck, which means they're one surprise expense away from financial ruin, they're not living any life that's middle-class. Maybe they're earning an income that's above the so-called poverty line, but that poverty line is arbitrary. We need to re-understand poverty as the lived experiences of everyday Americans.” - Joe Sanberg
Joe Sanberg, progressive entrepreneur and investor in Los Angeles, talks about his work to end poverty, his personal connection to the cause, and about the role of both politics and faith in how Americans think about economics.
Joe is the founder of Working Hero PAC, which supports elected officials and candidates who champion policies that will help end poverty. He is also the co-founder of Aspiration.com, a socially conscious online financial company. Learn more about Joe on his website, joesanberg.com, and follow him on Twitter at @JosephNSanberg.
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Joe Sanberg: It's not just about those who live below the so-called poverty line. And when we have eight out of 10 Americans who are living paycheck to paycheck, which means they're one surprise expense away from financial ruin, they're not living any life that's middle-class. Maybe they're earning an income that's above the so-called poverty line, but that poverty line is arbitrary. We need to re-understand poverty as the lived experiences of everyday Americans.
KH: I’m Ken Harbaugh, and this is Burn the Boats, a podcast about big decisions. On Burn the Boats, I interview political leaders and other history makers about choices they confront when failure is not an option.
Today I talked to Joe Sanberg, progressive entrepreneur and investor in Los Angeles, about his work to end poverty through the private and public sectors. We talked about Joe’s personal connection to the cause and about the role of both politics and faith in how Americans think about economics.
Joe Sanberg, welcome to Burn the Boats. You're the founder of the Working Hero PAC, which supports candidates and elected leaders who are championing policies to end poverty. You're also the founder of Aspiration Bank and in 2019 briefly considered a run for president on a platform to eliminate poverty in America. Tell me why that became such an animating principle in your life.
JS: Well, poverty's personal to me. I grew up with a lot of financial turmoil. My mom raised me by herself. We lost our home to foreclosure when I was a teenager. And from the outside in our family didn't meet the typical assumptions that Americans have about those who are struggling with poverty. That's motivated me to try and help people understand the true nature of America's poverty crisis. It's not just about those who live below the so-called poverty line. It's about every American who lives paycheck to paycheck. When we have eight out of 10 Americans who are living paycheck to paycheck, which means they're one surprise expense away from financial ruin, they're not living any life that's middle-class. When they're waking up in the middle of the night wondering whether they're going to be able to take their kids to the doctor if their kids are sick, that's not middle-class. Now maybe they're earning an income that's above the so-called poverty line. But that poverty line is arbitrary. We need to re-understand poverty as the lived experiences of everyday Americans. So my mission is first to help Americans understand the true nature of poverty, which is those who are living paycheck to paycheck. And then understanding the breadth of that crisis, focus on ending poverty is the governing agenda of our nation.
KH: So why do you think it is important to wrest the definition of poverty, the understanding of poverty away from the statisticians and the economists who describe it in just stark economic terms. You reference the poverty line. They define it based on whether you fall above or below an arbitrary line. That sounds to me like it doesn't satisfy your larger understanding of the implications of poverty in real people's lives.
JS: Well, that's right because we aren't created to live in service of the academic field of economics. We're created to help others and live to our full human potential. Therefore we have to judge how we're doing as a society and how our individuals and families are doing by their lived experience. So you can call it poverty, working class, whatever you want to call it, here's the bottom line. If eight out of 10 people are living paycheck to paycheck, they're living on a knife's edge. They're burdened with student debt. They know that if they do have a medical problem, they may face bankruptcy. You can call it whatever you want, but it's definitely not the kind of society that we aspire to create and it's also the reality of the society we have.
Nothing that I think we've thought of as middle-class, which I think suggests this idea of some basic financial security. Being able to send your kids to get school. Having some confidence about medical care and even retirement. None of those things are associated with living paycheck to paycheck. So if it's not poverty, and it's not middle-class, what is it? And of course we can devolve into just the debate about definitions, but we know what's for sure is that's not the America that we were told would occur when everyone would play by the rules and work hard. We have Americans who are working hard and playing by the rules and are getting screwed.
KH: So that's the social contract that you believe has been violated. If you work hard, if you play by the rules, you'll have enough economic security to not have to worry about that busted pipe or that broken axle hitting a pothole on your way to work. You feel like that has fallen apart.
JS: That's absolutely right. We have a country where there are the super rich, there are the somewhat rich, and then there's everyone else, and then there's the extremely poor.
KH: Which tends to dominate at least the academic conversations about poverty. When we think of poverty, those who aren't paying attention to what you're trying to do, think of the abject poverty, not the family that's working but just getting by paycheck to paycheck. That's who we're missing in the conversation.
JS: That's right. And obviously we need to address the crises of homelessness and extreme poverty that we face. I think we can do multiple things at the same time. This is a nation that has trailblazed throughout its history. Yet when it comes to questions of basic human dignity and quality of life, we've accepted really, really low standards.
KH: Why do you think that is? In the richest country on earth, why do you think it is not a dominant theme in our political discourse that eight in 10 Americans, or nearly eight in 10 Americans, cannot survive what should be considered a relatively minor economic shock, a $500 bill?
JS: Well, I think that there isn't more attention to it because greater attention would call into question the accountability. This didn't happen by accident. It's not the result of forces that came from outer space. Sometimes when you listen to politics and you hear people talk about these forces like globalization and automation, they refer to them as there are these forces beyond human control, when in truth all of these forces have been the results of human choices over the last 40 years. The reason we have eight out of 10 people living paycheck to paycheck is that our political leaders of both political parties have abdicated their responsibility to create an economy that works for everyone over a series of choices, after choices, after choices since the early 1980s. The more attention we bring to the fact that eight out of 10 people are living paycheck to paycheck, the more light will be cast on the political establishment that's responsible for this.
KH: Could one of the explanations also be that it is just harder to cast economic issues as moral issues? And I submit that in the context of living through what is perhaps the most fraught political season in the modern era when the themes that dominate the political conversation have just this overt moral element, like abortion, like guns in schools, and immigration. Trying to package an economic argument with the same emotional intensity as a conversation about women's rights is more challenging. Do you think that's part of the difficulty in elevating this conversation into the same orbit as those obviously moral conversations?
JS: Well, I think it's become challenging because the progressive part of the political spectrum in the United States over the last bunch of decades has abandoned engaging the language and experience of faith. I think that leaves on the sidelines one of the most powerful arguments about financial dignity. I'm a Jew and the reasons that I'm passionate about helping others all emanate from my faith in God. I have a ton of respect and familiarity with Christianity and Islam and Buddhism and Hinduism. When you study any of those practices and faiths, there's a common conviction that one of our fundamental purposes here in our lives is to help others. So over the last bunch of decades we've left these questions of faith to the right wing and have abandoned one of the powerful arguments for economic dignity.
You look through the New Testament and it's largely about helping those who are in need. You look through the Torah, it's about helping those who are inneed. You look through the Koran, it's about helping those who are in need. It's interesting to reflect on all of these wisdom traditions and faiths that have been around for thousands of years, and they all have this common denominator of we're supposed to care for and help those who are in trouble and in need. Yet we don't draw upon those traditions and those faiths when we're arguing for economic dignity. I think that's one of the reasons why we haven't been as successful in argumentation over the last couple of decades.
KH: You beat me to it. I was hoping to press you on this idea of identifying when an economic issue becomes a moral issue, and that intersection of faith and economics I think helps to explain that dilemma. I'm sure you could quote directly, but scripture, all forms of it, addresses this in varying ways. Economic issues are moral issues when you consider the impact of economics on the daily lives of our neighbors.
JS: Yes, absolutely.
KH: How do you, or do you, spend much time thinking about the political right's wholesale abandonment of a rational economic principle? I mean it used to be that fiscal conservatism was a defining feature of the political right and it had a moral element to it. But I guess it has all been superseded by these cultural moral arguments around guns, and abortion, and immigration, which is really just code for white identity. You see fiscal conservatism and the economic rationality of the right just almost an afterthought. Is that something you encounter in advocating for economic justice on the left? Or do your worlds just not collide enough to observe what I'm observing?
JS: No, I think they are very intersecting, and I think what you're observing is just addiction to power. You know, power corrupts, absolute power corrupts absolutely. I think what you've observed is the corrupting influence of addiction to power. And it actually goes back to faith. One of the most important commandments is that you shall have no God before God. And that doesn't just mean worshiping, you can't worship little statues. It also means you can't put the pursuit of money and power ahead of God. I think that in a lot of parts of American life, there is a modern form of idolatry, which is the worship of power and money ahead of all else. And that's a synonym for the corrupting power of power.
KH: There's two sides to this though. On one hand, you place an enormous amount of faith in the ability of good economic policy to address systemic moral issues in our country, poverty chief among them. On the other hand, you see the political right turn to economic solutions as a panacea when they really don't have the power to affect the kinds of changes that need other applications of policy and power. I'm thinking of the administration's current attempt to battle the outbreak of Covid 19, the Coronavirus, with tax breaks alone. I mean there are things economics can't do.
JS: Of course. There's no doubt, and there's things that that faith alone can't do, that requires science. I think sincere faith exists at the intersection of logic and belief. You know, there's great wisdom traditions in all faiths about the compatibility of science and belief. That's been abandoned by the right. I hope and fear though, that can be problematic in dealing with health crises. Public health crises require science.
KH: Do you think that abandonment of science, of empirical evidence, is of a piece of that hunger for power? Or is there something else going on?
JS: I think it of course it is. Because recognizing that all faith traditions and belief systems that come from a place of acceptance are welcome and should be honored in our country. Thinking about the monotheistic traditions, how is science not compatible with faith? If you believe that God created humankind, and humankind discovers science, pursues science to uncover truths about the world, which God created, it's never made any sense to me how science and faith are incompatible.
KH: Well put. You have certainly put your faith in economics into practice through your leadership, your founding of the Working Hero PAC, your advocacy on behalf of the earned income tax credit. But I want to talk to you about your latest commercial initiative, Aspiration Bank, which is I guess almost insurrectionist in its approach to banking. It does make money though, right?
JS: Absolutely. In fact, it's a more sustainable business model because it's built on serving customers instead of screwing customers. When you're in a customer business, if you serve customers well and make them happy, then they stay with you. It doesn't cost as much to acquire new customers. Really, it's no original insight. If you treat customers really well, your customers will treat you really well in return. And if you treat your customers poorly, then not only won't they want to stay with you, but it'll create all kinds of second order costs. The current banking model is basically built on “the bank does better when the customer does worse”. So the lower the balances, the more fees your charge. So much of bank profitability these days is about overdraft fees or ATM fees. These are things that you don't get any value for. So what Aspiration's done is re-imagined that model into a structure where we're delivering you services that you value, in particular that help align your monies with your values.
For example, Aspiration has a service called Planet Protection where for a modest membership price, Aspiration calculates the carbon footprint of your gasoline purchases and buys carbon credits to make your gasoline spending carbon neutral. Aspiration also has a program called Plant Your Change where every time you use your Aspiration debit card, Aspiration plants a tree on your behalf. So you know by choosing your Aspiration card you're fighting the climate crisis. So these are kind of new value added services that people have never imagined could exist with their banking account. Once they realize that it can be real, they love it and are willing to participate in Aspiration's pay what's fair structure, which is a voluntary fee structure. We make clear that Aspiration customers aren't charged any account fees. Aspiration asks people to pay voluntarily and most people do. Because again, if you treat people well and deliver value to people, most people will honor that by paying what's fair.
KH: For the record, this is not a product placement episode. We're not hawking Aspiration Bank, but I'm really taken by the approach to banking, the idea of optional fees, which just runs so antithetical to the entire model. How has your bank been received by the larger industry?
JS: You know, actually well. They want to find ways to work with us. And here's why. It's convenient for political rhetoric to cast companies, or politics, or anything into some category of good or bad, or right or wrong. But the reality about business and about financial institutions, and really any organization in my experience, is that they're amoral. They're structures that respond to incentives. And when you show them ways to make money in a more sustainable, better, frankly more conscientious way, people trend toward that. There's nothing inherently good nor inherently bad about financial institutions. They're just operating within a set of incentives and if we change the incentives, then we can change their behaviors. My mission with Aspiration isn't to destroy the banks. It's to get the banks to change their behavior so that everyone acts like Aspiration. There's more than enough market share to go around. So with that in mind, I think that the banks view us as a potential partner.
KH: You've clearly got a long and successful track record as an entrepreneur in the market. I feel like your political advocacy brings that to bear as well. I don't know if the term political entrepreneur is a thing, but is that a fair description of Joe Sanberg?
JS: Sure. I think the biggest lesson that I bring from business entrepreneurship to political entrepreneurship is that you have to lead from a place of clarity, not compromise. One of the things I found most curious about observing politics is that so many, especially in the Democratic party, have trended towards policy making from a place of compromise instead of clarity. When the right negotiates from a place of clarity and the left negotiates from a place of compromise, we shouldn't be surprised when the synthesis is an outcome that's right of center.
KH: I hear you. In most negotiating situations, you certainly start with the more extreme position than you want to wind up with. But I would suggest that the difference in a political negotiation is that you have to imagine total failure. In other words, if you start from an extreme position in most negotiations, you're going to wind up somewhere. Except in politics where quite often, especially with the Senate we have, where 400 bills are just sitting in Mitch McConnell's legislative graveyard, you might get nothing. Does that force you to reconsider the value of your opening gambit as being perhaps a compromised one?
JS: It doesn't, because we've ended up in this place through decades of negotiating from a place of compromise and what you're describing, with respect, is negotiating for a place of fear. In life whenever you negotiate or act or think or decide from a place of fear, you end up in suboptimal outcomes. Leadership inherently is about the courage to think clearly and decide rationally, not from a place of fear.
KH: What do you think is possible in 2020? Let's set the presidential contest aside for just a minute in your answer because enough ink has been spilled about that to fill oceans. What do you think we might be able to achieve all the way up and down the ballot? Is a shift in the Senate possible?
JS: Oh definitely. These elections usually break one way or another. I don't think we'll know the circumstances for the election until at least September. As we've seen external events influence political elections, and external events are constantly evolving. So I think anyone who tells you what the external events are going to be like in September is kidding themselves and kidding you.
KH: Well thanks Joe. We always end every podcast with the same question. What is the bravest decision, a Burn-the-Boats style decision, that you've ever been a part of?
JS: I would say leaving Wall Street when I was 29. I'm 40 now. When I was 29, my brother sat me down for lunch and said that my 18-year-old self wouldn't like my 29-year-old self. It really shook me to the core. He was right. I left behind that first part of my career on Wall Street. I've always wanted my compass to be living in a way that my 18-year-old self would be proud of.
KH: Well, I'm glad you did. You've been a tireless advocate for causes that I care about. Probably a good thing you didn't jump in the presidential fray, it was a bit of a cat fight. But glad you're out there fighting for what you're fighting for. Thanks again for coming on the show, Joe.
JS: Thanks for having me.
KH: Thanks again to Joe for joining me. You can find him on Twitter at @JosephNSanberg.
Today Joe talked about his vision of financial security for all Americans. Especially in this time of economic turmoil, we wanted to hear your thoughts. We asked if you could change the economic system in America, what would you do?
Isabel Robertson: Hi, I’m Isabel, the producer of Burn the Boats, here to read some of the thoughts you all sent us about changing the economic system in our country.
We got a wide selection of ideas from you, including establishing a universal basic income, ceasing all trade with other countries, and electing a new president.
Ben on Facebook said that he would tie the maximum wage of corporate leadership to the lowest wage worker they’re willing to employ. Ben says, if you want to make more money, pay your employees properly!
Ginina on Twitter had a similar thought - she would require all billionaires and millionaires to donate to the working class that just can’t seem to get ahead.
Thank you all so much for your thoughts this week! You can join in our conversation yourself by finding Ken Harbaugh on Facebook or following him on Twitter at @Team_Harbaugh.
KH: Next episode, I’ll be talking to Amy McGrath, the Marine fighter pilot running against Mitch McConnell for Kentucky’s Senate seat. Amy talks to me about the state of the US Senate under McConnell, her experiences campaigning in such a high-profile race, and how her days as a fighter pilot informed her approach to leadership and patriotism.
And we want you to join our discussion. Amy talks about how her label as a Democrat dissuades some Kentucky voters from considering her. What about you, do you vote along party lines? Would you vote for or against someone just because of their political party affiliation? Send a comment on social media, leave a message at 216-245-5421 or send a voice memo to [email protected].
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I’m Ken Harbaugh and this is Burn the Boats, a podcasts about big decisions.