Episode 043: Emily Rosenman
Dr. Emily Rosenman, Assistant Professor of Geography at Penn State University, is an urban and economic geographer. Her research examines the connections between finance, urbanization, and inequality, and the relationships and structures that produce wealth and poverty simultaneously. Her work on financial crises looks at the politics of knowledge production, how solutions to these crises are narrated and experienced, and the roles of financial industry actors, governments, communities, and the intermediaries that connect them.
Transcript
Cameron: My guest today is Dr. Emily Rosenman, Assistant Professor of Geography at Penn State University. I have the privilege to be working with Emily on a research grant on the effects of monetary policy during the pandemic. Emily's work lies at the intersection of geography, finance, and politics. It's a heady combination of perspectives that sheds light on how financial mechanisms are politically constructed and how unevenly they affect different groups of people in society. Like me, Emily is interested in how the very mechanisms that produce wealth in our society also produce poverty. Today we'll talk about social finance, the idea that rich people can make the world a better place by investing their money morally. It's what she calls the financialization of good intentions. I hope you enjoy our conversation.
Emily, welcome to the podcast.
Emily: Thanks for having me, Cam.
Cameron: It's been a long time getting us together with illness in your family and in mine, and that seems to be something that is affecting just about everybody in our world, particularly as academics. It's hard to schedule anything, even classes sometimes.
Emily: So true.
Cameron: Your work is fairly new to me. The relationship we've got on this research project is from my perspective stretching me because I'm into working collaboratively in a new field. So maybe you can help me find my feet in it by defining what geography is all about.
Emily: Sure. Geography is a field that I like many people didn't find until later in my academic career. And I really like the definition or understanding of geography. That comes from Dorian Massey, who was a pretty well known economic geographer, and she writes about geography as literally how social processes take place. And the meaning of that is that everything that's going on with, human activity is happening somewhere. And happens unevenly across the earth. Now there are also physical geographers who take a perspective of physical processes, but I'm a human geographer, so I look at human interactions with social systems and environments.
Cameron: My first exposure to geography that I can remember going back would've been when our family was completing puzzles that had maps of the world on them. And, we had one of the continent of Africa and one of them of I think it was South America or something like that. And it was a way of learning about all these countries in these far flung regions of the world from our little house in Northern Alberta.
And, you know, even in that notion of a map of a continent, you have so many different layers of meaning there. You know, the physical continent, the idea that something can be called a continent, and the definition of that, all these different countries that you hadn't heard about before, and the way that the names of them would change from time to time.
And all of this is layered into my meaning of geography, and you're pushing beyond that continent-wide scope to look into urban areas and the lives of people and your perspective on it is quite a bit different from the kind of descriptive approach that I would've had in grade school.
Geography was about describing Africa, describing a country, the population and the area, and so forth. And you've got what, what you're calling a critical geography perspective. What's the critical part of your work?
Emily: Yeah, that's a great question. I think, your history with looking at maps, there's something about maps that really attracts us. I have placemat maps for my children. They're always like, well, where are we? And where is, where are all these things happening and what happens there and who lives there?
So I think we're all naturally curious about this stuff. But a critical geography or a critical approach to really any social science is trying to look beyond those lines that, we have drawn on maps. Like, oh, well there's Africa, there's Canada, and think about, who drew the lines and why what happens if you live on either side of the line?
And really I think it's about a critique of inherited universals, and trying to look at the politics behind them and the hidden mechanisms that produce the kinds of outcomes that we see. So we might think about, well, there's Africa, but a critical approach would be like, well, what produced that thing that we think of as Africa and how is it related to us over here?
And it would get into processes of colonialism or imperialism.
Cameron: Yeah. And how did Egypt become part of the Middle East instead of Africa?
Emily: Exactly.
Cameron: It's tremendously wrapped up in empire and colonialism and as a result it's wrapped up in the production of wealth.
And so you have this overlap in your work between geography and finance.
Can you describe what you understand as the role that finance plays in your research into the world?
Emily: Yeah. I first became interested in finance when I was a graduate student. One of my supervisors was doing research on the uneven, racialized outcomes of the financial crisis. I went to grad school a couple years after the 2008 financial crisis and looking at his research and getting to be an RA on it made me think about the power of the financial system to affect people's futures in a really unique way.
And really from a geographic perspective of looking at how mortgage brokers have specifically targeted racialized neighborhoods or certain cities or certain regions for predatory loans. And after that experience I started to see the power of finance in everything we do. And I think the other thing that I find really interesting about it is how it's kind of cloaked in mystique.
Like this idea that you have to go to business school or get an advanced degree to understand it. And it's this very opaque industry with specialized language I haven't gone to business school and I have a very kind of DIY approach to understanding finance. But I'm really interested in how more and more of our lives in and pretty much everywhere in the world are linked with financial markets, from our retirements, our housing especially where I am in the US, how we finance our education. And there's a whole subfield of geography that's looking at geographies of finance and also the way that finance impacts humans. And so those two things pushed me in this direction. The other thing that I find really fascinating that relates to your work as well is this kind of newish cultural shift towards looking at financial markets as something that's going to solve really big problems, one of them being the climate crisis, and then in, in my work and your work, all these social crises. So looking at finance, not just as, efficient allocation of dollars and investments, but also something that's supposed to have these progressive social impacts.
Cameron: The way that you talk about finance having these impacts on the world it's partly about constructing entities, right? Like the entity of Africa the entity of a country. But you're also looking at less precise boundaries around the construction of classes in society. The difference between the poor and the wealthy is a very broad boundary, and not quite so precise, maybe as a line on a map. But there's also this notion that finance is creating the thing that is trying to measure, right? So I wonder if you can tell me a little bit about the way that you went about studying this in the Bay Area? The title of your paper, if I can just read it out for completeness here, it's "Capital and Conscience Poverty Management, and the Financialization of Good Intentions in the San Francisco Bay Area." And that was published in 2019. So tell me about your approach to this and what the paper was about.
Emily: The subtitle, "the Financialization of Good Intentions," is a bit tongue in cheek because one thing that continuously happens to me in this research is people want to know, "Well, are the people making investments, are they well-intentioned? Like, why do they want to do this?" And for me, that's always been a really distracting question because I don't think, like, I'm not a psychologist and also I can't homogenize what I think are a lot of different reasons that investors are involved in this.
And so trying to get beyond that and look at, what is producing the conditions of possibility for this industry is the more important question for me.
And looking in the San Francisco Bay area specifically, I think is interesting as a kind of, almost a most extreme case.
Cameron: Why extreme? What's extreme about the Bay?
Emily: Yeah. Huh! So in the Bay Area we have this rapidly growing technology industry and extreme wealth inequality, and also an industry that is inhabited by a lot of people that would probably consider themselves to be politically progressive, even though they are really wealthy and have, been accused of gentrifying and displacing a lot of neighborhoods in this city. And so I think it's a really interesting place to look, for that reason. There's a lot of philanthropy, there's a lot of interest in giving back to the community in this really high-inequality place, and that for me made a really compelling case study.
Cameron: The case study in question here is a study of a particular building. Can you tell me about that building?
Emily: Yeah. Just to contextualize this in the broader project, I was looking, throughout the dissertation where this comes from, at different pieces of what produces the impact investing or the social finance industry. So in other chapters, I was looking at the ideological production of it and then at the financial intermediary production of it.
But I felt it was really important to look, like, what happens when it actually happens, in an actual city, in a neighborhood with people? So that's what this paper came from. And so I looked at one building which I call here the Rochelle, which I was able to gain access to through my work with some of these financial intermediaries in the wider project. It's a building that used to be an SRO, a single room occupancy hotel, which in a lot of cities is an older way of housing people who are extremely low income and maybe were formerly homeless. The Rochelle had been converted into more of a studio-apartment style building, and in order to do that they needed a lot of new investment and part of that investment came from these impact investors who are really interested in doing good with their capital, but also still making a good profit.
Cameron: So the approach that's being taken here is different from the kind of pure philanthropy model we might have of someone making a donation to a hospital foundation or to a charity and basically giving their money away. This is a financial investment approach that's got philanthropical aspirations. So can you tell me about this notion of investing in the problem of poverty.
Emily: Sure. So, yeah, it's definitely a pivot away from charitable donations. There's a, I think, a big shift in the, I would call it ,the "philanthropic industry" or sector that's occurred in recent decades away from, "Oh, well I made a bunch of money and then I gave some away back to the community," more towards seeing those charitable or philanthropic gestures as investments in their own right as something that, you know, maybe you're not getting a return on your investment monetarily, but you need some kind of evidence of effectiveness. And oftentimes actually you are looking for some kind of return.
Also in the US there are regulations that make it so banks have to invest in certain areas that are considered to be financially underserved. This is called the Community Reinvestment Act, and so banks are looking for investments like this where they can check their Community Reinvestment Act box, but also again, still get a return on their investment.
And this sort of framing of poverty management as an investment rather than a charitable act, I'm really interested in for what it means about where these kinds of charitably earmarked dollars go and what they're trying to do.
Cameron: You're less concerned about the intention itself which is some sort of an urge to do something nice with your money, and you're looking at the actual mechanisms that are at play there.
Emily: Yes.
Cameron: What makes what happened at the Rochelle different from a typical donation to the poor?
Emily: That's a good question. When I went into the financial structures of the Rochelle, one thing that really jumped out to me was how reliant it is on these already existing government programs that are in place to try to subsidize housing for impoverished people. And one aspect of these programs is that there is much more demand than there are dollars coming from states and governments to support these things.
And that seems to be very attractive to the private investment side of things. Because it meant that the tenants who actually make it through the screenings and get to live in this building are very well vetted in some ways, very well vetted for things like, "Will they get evicted?" No. They're going to be stable residents. They're going to do what, the social services people are telling them to do. And if they don't, there are a lot of other people who need housing who can pay the rents for this building. Because one, part of this building is that the tenants do pay a level of rent. So some of their rent. They have to make their own money, and then some of it comes from government subsidies.
Cameron: One of the problems with the social finance approach in general that has always puzzled me is the initial attempts as social finance tend to address... um, the accusation has been made that they cherry pick the kinds of things that are amenable to a small investment, a modest investment.
And, if you talk about for instance the idea of Housing First, right, that if you just give people a home then they will be better off. From a social perspective that's undeniably true, but from a social finance perspective, it's problematic because obviously the first thing you're going to do is buy the cheapest available houses on the market in order to do this.
And if it's successful, then the way markets work is the next house that you buy is going to be more expensive, and the next one after that is going to be more expensive because of supply and demand. So it's almost like a self-defeating approach because it will inevitably become less attractive financially to do this once you get past the supply of available housing.
And yet the moral reason for doing it doesn't change. So if your only reason for doing this, if your justification for doing this, is that this is the best way to do it financially, you soon run out of, you're run out of runway, right? To get the plane off the ground. So I don't know whether you've noticed that in the work that you've been looking at, the projects you've been looking at.
Emily: Yeah, I mean, I think one very remarkable, I would say, aspect of a project like this is how incredibly difficult it is to get it going, to get all the financing right, and especially to compete in a private market in a city like this. So this, in the Bay Area, is competing with real estate investment in this rapidly gentrifying area and doing that is very challenging.
And so I remember...
Cameron: By challenging, do you just mean expensive or is it organizationally taxing to get everybody aligned?
Emily: I think everything. In the paper, I have a figure where I've mapped out all of the different levels of government and private sector and social services and intermediaries that have to come together in order to make this investment happen. And I remember I made this and one of my dissertation supervisors looked at it and kind of quipped, "We used to just have the government do this!"
And it seems like there were a fewer people involved. Like, this is a lot, just to market this as a moral private investment. So, so many different actors have to come together to make this one building, that houses a couple of hundred people, function in an area with thousands of people who lack affordable housing.
Cameron: Mm-hmm. Yeah, I'm looking at that diagram right now and it's kind of colorful but it's organized -- and I can put the diagram up on the website for people who want to look at it -- the left hand side has relationships on the regulatory and financial side, and on the right hand side it's centered around the tenants themselves and the way that they are supported.
Figure from Emily’s paper in Urban Geography, Vol 40 (8)
So it's already got a very clear role or a relationship between the tenants and this developer/operator who is responsible for the project. To me that... the first question I've got is the relationship of power between the developer and the tenants. Can you tell me what you found there?
Emily: Yeah. I talked to the developer about how they find the tenants. and I got a lot of interesting, I guess, discourse from them about what they think is the right kind of tenant for this building. One thing that they mentioned that they're all about preventing vacancy, and one thing that they don't even have to do themselves is screen the tenants.
So the local housing authority is looking at all these different pieces of government financing, like subsidies for rent, that come in and already cherry pick, as you said, the different tenants. And then there are all these social services people who are in there running programs and making sure people are going out to work and cleaning their rooms and all this stuff.
The developer seemed to have a pretty conservative understanding of what makes people poor and what people who are housing-insecure and low-income should be doing in order to deserve housing. One of them quipped, "Well, if they have to pick up cans for their rent, like, that's fine. Like as long as they're doing some kind of work."
And they were also very aware that there was much more demand for living in this building than supply. And so they would talk about the number of applications they would get every time a spot came available. And for them that was really great because it meant that there would never be vacancies in this building and they would continue getting their profits.
Cameron: The idea that, as long as they're picking up cans, they can stay, getting straight at that very problematic notion of the deserving poor.
Emily: Absolutely. I think the other thing that's interesting is that the model of this kind of building is that the tenants are supposed to get stable and increase their incomes and then they will no longer be eligible for the building cause their income is high enough. And I think part of that has... you know, they're trying to make this building not that attractive to live in. It's studio apartments. There aren't real kitchens because they want people to move on. What's really interesting for me when I talked to the tenants in this building was they loved living in the building and for them it was a really stable community that they didn't want to leave at all. So, sure, they groused about not having real kitchens. That was a very common complaint, like, why can't we cook? But they found, this community to be so, so important and they didn't want to leave and they tried not to leave. And so it's almost like a perverse incentive. Like you, you would keep picking up cans because you don't want your income to get high enough to have to leave the building.
Cameron: Mm-hmm. Mm-hmm. Well, these sorts of notions, like community, often get left out of financial models.
Emily: Absolutely. Absolutely. That wasn't really part of anything having to do with the financial model or the way it was evaluated socially. So the way this building and lots of other ones are evaluated, the investors who are putting their money into this building are really interested in, "Well, what are the social results?" because this is a social impact investment. And part of the work that I did was look at what kind of information is given back to the investors. And it's very focused around (a) really basic statistics, like this many people live here, this is their income, these are their demographics, which isn't very, really a community oriented understanding.
And then (b), individual stories. Like, this is Teresa. This was her situation before, this is what she's gotten from the building and now she's going to move on and go to college, or whatever it is.
And that social community aspect is not part of the way these buildings tended to be evaluated when I was looking at them.
Cameron: What kinds of incentives were built into the financial model for people to put up their money to be involved in this?
Emily: For the investors?
Cameron: Yeah.
Emily: Yeah. So for me, I've looked at a lot of different social interventions and, you were mentioning earlier there's maybe a bias towards ones that we're pretty sure we can get a profit out of. And subsidized housing is one of those, especially in the US because in the seventies, when the government was basically getting out of direct building public housing, they're like, "Okay, we want the market to do it." They created all these systems to incentivize private development. For example, tax credits for developers who created buildings like this. And those kinds of programs, I found in the research, are a huge part of why impact investors are interested in this kind of building.
And so it's like all of these systems have been in place for a while, but the branding of the investment is one thing that has shifted, which has attracted new and more kinds of investors. So before it was the straight, Community Reinvestment Act banks. That's it. But, the ideas of what is philanthropic and what should finance be doing to give back has broadened, a broader range of investors have become interested in this kind of building, which is really great for the people who are trying to get the financing together because then there's more interest and they can get more money.
And so, it's just like any other kind of investment, there's due diligence, there's this whole statement about like, how do we know it's going to be profitable, which was really dependent on this sort of ever present supply of impoverished people who can't afford housing. Like I mentioned, there's never going to be a vacancy problem here. It's in an area with rapidly gentrifying conditions where there's always going to be demand for low rent. And it's talked about in these pretty real-estate-centric terms with the sort of added like, "Oh, but also you're benefiting these people over here," who will always be getting subsidies from the government, which will also make sure that the rents keep flowing.
Cameron: Any financial investment is basically a price being put on a series of future cash flows, whether it's interest payments on a bond or what have you. In this case the cash flows coming into the investors are coming largely, if I'm reading this right, largely from government sources.
So some is coming from the tenants themselves, but the tenants themselves also have rent vouchers that are coming from the municipal government. So a lot of this is cash flows from the public sector to the private sector.
Emily: Absolutely. And I think that's interesting because it's not part of the narrative, right? The narrative is look at private finance, doing this great stuff, being efficient, solving poverty, but when you look behind the curtain it's very subsidized by government, by taxpayers as well.
Cameron: Yeah. Yeah. So it's basically putting a price tag on these cash flows and the price of any set of cash flows depends not just on the size of the cash flows, but how reliable they are. If they're very uncertain and sporadic, the price goes down. If they're very steady and reliable, the price goes up. So, the fact that all these cash flows are coming from government suggests that they're fairly stable, barring a complete change in political policy towards funding housing.
Emily: Yeah. And I think that was something that investors paid a lot of attention to. You know, in California there had been some changes and a withdrawal of a lot of state funding, several years before this building was built, which created complications in getting the financing together. They had to find new sources, but they were always able to rely on these sort of tried and true government programs and also on tax credits.
And that was the basis for a large part of the financing.
Cameron: . Well, these cash flows don't happen in a vacuum. They're also encouraged by the private sector, right? That the particular model of addressing poverty gets arranged in a way that facilitates it being monetized and investments happening. So I'm just curious about this particular case. What are the cash flows anchored to? Are they anchored to the unit of housing or are they anchored to the individual person who's living there?
Emily: it's a mix. So, and that, makes it even better for the investors because there's both. There are tax credits that are tied to the developer. And basically that means they have to have a certain mix of units aimed at people of different income levels and the models can differ, but often there's a 15-year window on the tax credit.
And that's another kind of great thing about this building for the investors, is after 15 years, often they'll get the tax credits renewed, which means they can continue offering this as subsidized housing, but if not, they could just put it right back to the private market and be like, oh...
Cameron: Just flip it.
Emily: Exactly. And that's pretty common. There's a lot of effort in affordable housing, trying to make that not happen, making sure that these buildings don't sunset, as they call it.
So there's that. But then there's also a lot of tenants who are eligible for individual vouchers. And again, this is a shift that began in the seventies when the government got out of public housing.
They're like, oh, instead we're going to give out vouchers that tenants can just use anywhere on the private market. Uh, but that doesn't really happen because a lot of landlords are biased against these, what they call, Section 8 tenants. And so for tenants, actually finding a landlord or a building that will accept their voucher can be challenging.
And so buildings like the Rochelle that accept them are very attractive.
Cameron: Yeah. And so now we're into the stigmatization of poverty.
Emily: Absolutely. And for me, looking at this building also gets us to a discussion of what investors expect that people who live in poverty deserve. Things like you don't need a kitchen. Or you can live in this building, in this gentrifying area where there's no grocery store that you can walk to.
So the place of this building I think is significant because one of the things that the tenants talked a lot about was how few resources were nearby. If they wanted to go to different, low cost or no cost medical appointments, they had to take the bus. They only got one free bus voucher a month. That wasn't enough.
There were not libraries and parks and actual grocery stores nearby that they could walk to. And those things are not part of a calculation of look, this building that used to be an SRO is financially available for us to convert to this new kind of building. It's right there. Great. We don't think about its surroundings.
Cameron: Mmm. The paper and the study are filled with paradoxes that you've identified. And one of them is around the difference between the eradication and the management of poverty. It's actually not in anybody's best interests on the finance side to have poverty solved because the model, you know, is repeatable.
Emily: Yeah, that's one big takeaway I have from this, especially when we think about how few buildings like this there are in the wider city, or in the wider demand for affordable housing. Like most tenants are just left to the mercies of the private market. Add landlords. And then there's a few buildings like this where all the financing and stuff comes together to create them.
But again, looking at the financial structure, which is so heavily based on the fact that a lot of poor people in this area basically de-risk the investment, for me really says something. That the ability to invest ethically depends on a continued supply of people who will need this kind of building.
Cameron: There's a bunch of different issues in there. If we're really believing, as social finance proponents often state, that markets are the solution -- government is not the solution, markets are the solution -- there's clearly a demand for this kind of housing amongst the poor, but there isn't a supply. So you've got a market failure built into this thing that is supposedly a market solution.
Emily: I think that's a very succinct way of putting it. And then again, if you look behind the curtain, it all depends on government programs and oftentimes on philanthropy kind of backstopping these private investments and making sure that investors get paid even if the project doesn't work.
Cameron: So it is, it's philanthr...? Sorry. What's the role of philanthropy in guaranteeing ...
Emily: So that's not in this specific building. This building is, I think, stable enough with all the government programs that the investors are satisfied.
Cameron: Right. Yeah.
Emily: But with I think some more experimental impact investments, you also often will see philanthropy stepping in to basically incentivize the private sector.
I know a few years ago, Bloomberg was stepping in to basically ensure the risk of private investors in social impact bonds that were focused on education or recidivism. Which is interesting to think about: philanthropic dollars just being the ones that are there to bail out the private capital if it doesn't get its profit. They're not even doing anything directly.
Cameron: They're just helping to manage risk.
Emily: They're managing risk and incentivizing this supposed panacea of the private financial market.
Cameron: Well, that's one of the other paradoxes is the distribution of risk, because in this conceptual model that you're looking at, for the Rochelle, the notion of risk bearing is purely financial, right? The investors are the ones who are taking a risk and the risks to the people who are housed there are ignored.
Right? And you talked about the fact that, if it all goes I'm trying to find a kind expression or polite expression for it. But if it all goes sour the investors can always just sell the building to the private market. And it just becomes a, a condo, a set of condos. At that point in time, the people who live there, the poor people who've been living in this arrangement, lose their housing.
They're the ones who bear the most risk in this, and yet we talk about the investors as being the bearers of risk.
Emily: Yeah. This idea of risk as financial is really interesting to me. And in some of my work after this, I've been trying to think about that balance of financial risk and maybe what I'm conceptualizing as social risk, and looking at other kinds of impact investments and exactly the question that you're asking: how is risk talked about and who is bearing the risk of the project failing? What would the outcomes be for different actors, beneficiaries versus investors, if that were to happen.
Cameron: Yeah. Well, I mean, to look back to the start of our conversation, risk here is being reified in the same way that Africa is reified on the colonial maps, right? It's this thing that we call risk, and everybody kind of knows what we mean by it in the same way we think everybody knows what we mean by Africa. But as soon as you start looking closer, you find that, in Africa, there is so much complexity between and within countries that just gets eradicated by this colonial notion of Africa. And in this case, risk is this thing that everybody thinks they know what they're talking about, and it ignores so much complexity underneath the surface.
Emily: Absolutely. I mean, if you look at all of the financial arrangements of this building and the way they talk about risk, it's all, "What happens if there's vacancy?" They don't care what happens to the people who lose housing. It's just like, how do we get our bottom line met if there's too much vacancy? And how do we basically prove that the chances of that happening are very minimal?
Cameron: Mm-hmm. . Mm-hmm. . Yeah. It's very strange. Tell me what happens next after you do a study like this. Like, how does this, what you've learned, move out into the, to the rest of the public policy makers, potentially social finance investors. Like, what happens after your academic research?
Emily: Yeah, that's a question I think about a lot. One thing with this paper, Is that I went to a research event at the Stanford Center for Civil Society and... I think it's Philanthropy. And it was a very interdisciplinary crew of largely sociologists and political scientists. And I was the only geographer.
And one thing that was remarkable to me when I presented the paper, was how they were all so impressed by how much context I had put into it. "Oh, there's so much context, more than our fields." And this is, a major research center in the Bay Area funded by Bay Area philanthropy people. And they're surprise at the amount of context that was part of the analysis kind of stood out to me, and makes me think about how narrowly we often look at problems like this. Like, "Oh, well let's just look at that one building and see what's happening. There are the people benefiting" --without thinking about the wider conditions.
And so, a lot of the way I've tried to get these results out there have been through, that kind of venue. Is really, adjacent, but more of a direct idea generating venue for the impact investing industry. Like they publish, more trade math publications that impact investors read.
I do sometimes write more public facing blog posts. And then the other thing that's less, I don't know, it's less quantifiable. But I go to a lot of conferences. as part of my research. So conferences where social finance industry people are and talking to those people is really interesting because they, it's more a relaxed atmosphere and they are, I think, more open to critique than if I were to send them an email and tell them that their model is terrible.
Cameron: That's what I was going to ask, is how open the world of social finance is to a deep critique of what they're doing.
Emily: Yeah, and I think it really depends on what part of this world, which is a increasingly growing and complex world. Every kind of respectable bank now has impact investing options. There are also more kind of boutiquey firms that will help you get your capital into more certain causes. And I think, the mainstream players are not super open to critique because they've found their profit models.
But one, I think really interesting part of this sector that I just started hanging out with, shall we say, is people who work in the financial industry who are interested in racial justice and interested in having a pretty hard look at historically how the financial system has benefited from racism and, of course, reinforced racism. And those people are very open to critique. And I think they're, they're a small part of it, but they're a pretty lively voice.
And so again, it depends on who the audience is within this industry, which is honestly, I think, kind of a mainstream industry at this point, when you look at what we're doing for sustainable investing and green investing and all that kind of thing.
Cameron: Yeah. And again, hearkening back to the idea that geography and finance are all linked to this production of wealth, as soon as you start talking about the role of race in all of this, it just builds on the whole history of slavery in, not just in the United States, but globally. And I can understand how that becomes a very complicated field very quickly.
Emily: Absolutely. One interesting, I think, moment that I have a paper that I'm almost done writing about, is the kind of post-George-Floyd moment and the way that corporate America responded to that with a lot of, claims of "Black Lives Matter!" and "We're making a donation!" But there's been some interesting kind of journalistic tabulations of all these pledges that were made.
And by far the biggest ones are pledges to invest in things that are linked to an understanding of increasing "opportunities" -- they always use that word for people of color and black people -- from things like JP Morgan Chase, Bank of America, making these... like, "We're going to do this many dollars in mortgages for underserved communities!" -- which again, are very profitable for JP Morgan Chase and Bank of America.
Cameron: So how is your work shifting since 2019 when you finished this paper?
Emily: Yeah. The two ways I just mentioned are big ones for me. I mean in the, I would say, almost 10 years I've been looking at this industry, it's changed a lot. I remember very early in my dissertation research being at a conference and talking to some guy from Goldman Sachs and he's like, "What are you doing here?"
And I was like, "I'm interested in the end user of impact investing."
And he was like, "I have literally never thought about that. Like the end user or the beneficiary. Like I'm over here looking at what are the kind of narratives we can create about this new sector trying to get people into it."
But I think that has really started to change. And like I mentioned, these people interested in racial justice have come to the fore. There's a lot more attention to community buy-in. There's been a lot of really high profile negative stories of supposedly green investments or supposedly social investments that actually are actively bad for the people they are trying to benefit. And so that is really interesting to me. If people are accepting the premise that we can solve poverty with these markets or solve the climate crisis with these markets, what is the sort of variety within that in different places and different actors?
So I've been looking both at these racial justice investors and also at the decarbonization movement. And that's, again, really interesting to look under the hood of, because you can call anything , decarbonization and greening, and just to try to ask the questions of, again "Well, what is actually happening and who is benefiting?" seems to be really important at this moment.
Cameron: Mm-hmm. Well, these are very interesting questions from a technical point of view because you get into all kinds of nuts and bolts of finance and social policy and such. They're also incredibly interesting from the point of view of social policy and the way that the world works. And I wish you nothing but the best as your work continues, particularly as my success is now linked to yours [laughs], as we work on this project. We'll have to, I think what we need to do is get the group together to talk about the the project that we're all doing. There's several other people involved and I think it would be make for an interesting podcast episode.
Emily: I agree. I think that would be great.
Cameron: All right. Well, thanks for talking to me this morning, Emily. It's great to see you and I'm glad to hear that your family is well again.
Emily: Thanks Cam. This was really fun. Thanks for having me.
Cameron: All right, bye-bye.
Emily: Bye.
Links
Emily Rosenman’s faculty web page
Emily’s research profile on Google Scholar
Credits
Host and producer: Cameron Graham
Photos: Emily Rosenman
Music: Musicbed
Tools: Squadcast, Descript, Audacity
Recorded: February 6, 2023
Location: Toronto and Penn State
