LetUStream

Proposal

Conservative economic theory, in which I have the utmost conviction, is built on the idea that incentives drive people’s behavior. The underpinning of laissez-faire principles is that in a free market, the natural incentives will lead to the optimal and appropriate allocation of capital. This allocation of capital (i.e. purchasing power) is the purpose of any economic system, and is a driving force behind social dynamics. Despite the merits of free market economics in its pure form, the current gaping wealth disparity in the U.S. is evidence of some shortcomings. Rather than place unyielding faith in the “power of the invisible hand,” I would rather take matters into our own to “outsmart the system.” Figure 1 below is an illustration of how the current marketplace allocates capital, and Figure 2 shows how U.Stream would outer-act with the mechanism. (For the sake of the illustration, I will give broad strokes and attribute efficient or inefficient labels to the various elements.)

As Figure 2 demonstrates, LetUStream is not meant to fit comfortably within the current clumsy framework. Instead, it provides an entirely new capital allocation tool that circumvents traditional routes. The benefits of such a program are extraordinary in scope and reach. To a family struggling under financial strain, their options are severely limited by their circumstances, and the lack of hope can lead to a sense of defeat. The situation could involve a single parent who is forced to devote all of their time to work so that they can provide for their family. This unavoidable commitment can lead to consequences, such as parental absence, that may contribute to delinquency and perpetuate a cycle. An income boost from a LetUStream donor, contingent upon the positive use of the funds, would drastically improve the ability of the parent to nurture their children, and ensure that they don’t face similar circumstances in the future. This is just one example.

As I mentioned elsewhere, I wrote my senior thesis on the trade-off that urban youths face between gang life and legitimate professions, and their unique circumstances that make the former option more economically rational. To explain how LetUStream relates to this topic, I’ll provide another case study. For an urban adolescent who faces a choice between gang life and an education, the prospect of receiving cash transfers for pursuing a legitimate career changes the economic dynamics of the decision. Whereas gang life may have previously been more profitable, LetUStream makes the alternative, legal option not only attractive, but viable.

Again, these are just a couple of examples of the potential impacts of LetUStream for recipients. The point, though, is not to pigeonhole the benefits of LetUStream to certain cases or causes. LetUStream is for anyone who comes seeking aid for any problem, whether that be bare necessities, healthcare needs, student debt, and etc. If there is a situation that could be improved through the direct injection of capital, LetUStream makes that possible.

While the advantages of LetUStream for beneficiaries are clear, the lingering questions are who would give, and why? The individuals and families who control the vast majority of wealth in the U.S. acquired capital through some combination of hard work and “luck.” As a result, they value their possessions highly, but understand their social responsibility to help others. Warren Buffett, Bill Gates and Paul Tudor embody these principles, and have pledged to donate a large proportion of their wealth to worthy causes. Unfortunately, though, there is a shortage of meritorious charities that they could intelligently aid. That's not to say all charities are incompetent or corrupt, but philanthropic organizations face challenges due to their business model that make it difficult for them to be effective. One of the few organizations in existence that is similar to LetUStream was started by Paul Tudor, and is called Robin Hood.

Robin Hood provides an intelligent giving destination for the wealthy. One aspect that the affluent appreciate is the vetting process that precedes donations to charities. Charities must be approved by the board of directors, and are monitored on an ongoing basis for their effectiveness. Donors also esteem the fact that Robin Hood’s board covers all administrative, fundraising and evaluation costs, so 100% of donations arrive at the designated organizations. While I came up with the idea for U.Stream before learning of Robin Hood’s admirable cause, the two entities have similar missions. Still, LetUStream addresses the shortcomings of Robin Hood by implementing the idea on a deeper level than its predecessor.

Robin Hood operates outside of the capital allocation framework to gather assets and evaluate non-profits, but then injects the funds into the “Charity” vertical. According to their website, Robin Hood works with grantees under four tranches: Education, Jobs & Economic Security, Early Childhood & Youth, and Survival. Programs that address these categories are necessary and commendable. Inefficiencies remain, however, in that they do not directly attack the definition of “poor” – having little or no money, goods, or other means of support. Because they do not immediately alter the purchasing power of the family/individual, their positive impact is either temporary or gradual.

All four of the categories funded by Robin Hood seek to “empower” the less-fortunate. In other words, to improve their health, or education. Or, to keep them out of trouble. Or, to help them find work. If successful, these benefits ideally achieve a singular outcome: to provide the poor with the tools they need to scale the socioeconomic ladder through gainful employment. In other words, the target demographic will progress from the bottom of the “Charity” vertical to the bottom of the “Corporations” pillar. As the capital allocation framework demonstrates, though, the latter column is inefficient since the desire to placate shareholders motivates executives to minimize wages. As a result, while the Robin Hood foundation improves the lives of its beneficiaries, the fundamental flaws of the system persist, unabated. These shortcomings disrupt the ability of people to further their socioeconomic status, and true “empowerment” is thwarted.

LetUStream distinguishes itself by acknowledging and attacking the inefficiencies of the free-market mechanism. Transferring capital directly to the wallets and purses of those in need alleviates the burden of financial strain and enables recipients to focus on improving their status. Folks who previously had to struggle to replenish the fridge or make a mortgage payment could instead devote their intellect to intriguing outlets that may develop into a career. Or, could simply spend more time, or quality time, with their kids to make sure they receive parental guidance and encouragement. Should LetUStream beneficiaries choose to use the funds for any purpose other than empowerment, as defined by the vetting/monitoring process, then they would relinquish their aid privileges.

I use a handful of examples, and I hope they don’t unintentionally attach a stigma to the idea of LetUStream or associate it with specific familial circumstances. I include the cases to convey a few ways I think LetUStream could benefit people’s lives. The possibilities for a program like LetUStream are endless, and are limited only by the imagination of the evaluator. The LetUStream team would have a set process for vetting potential recipients and monitoring current members, and would provide oversight to proceedings. Aside from executing those responsibilities, I would prefer to remain on the sidelines and let goodwill and human conscience do the rest of the work. Why? The answer is simple. I choose to believe in the existence and power of those qualities. I could be wrong, but there’s only one way to find out. LetUStream.