Banks, Debt, and the "Problem" of Karma Kitchen

I listened to the third part of This American Life's series on the economy this morning. (If you haven't had a chance to listen to parts 1, 2, and 3 of TAL's economic-crisis reporting, drop what you're doing and load up the free content.)

There's a lot to wonder about in these programs: how credit default swaps managed to run unregulated beneath the surface of outward commerce, for example. One of the huge takeaways from this series is that a lot of people were actually predicting this would happen, sort of; hundreds of thousands of people and companies were betting--banking--on the idea that individuals wouldn't be able to pay back their loans. And then hundreds of other companies were betting that banks themselves wouldn't be able to pay back their loans.

So people knew. They literally knew this would happen. They invested in the promise of it happening.

But the other half--the idea that the same people who were selling individual debt to companies on the hope that those people wouldn't be able to pay back the loans, and the people who were playing the credit default swap game on the hope that institutions would go bankrupt didn't put together that an individual bankruptcy could lead to an institutional bankruptcy which could lead to an everything bankruptcy--amazes me.

Ira and his buddies were talking about this on the program. "Whose fault is it?" Ira asked. They hemmed and hawed for a minute, and then the guest (whose name I can't remember) said that in the end it was the fault of everyone, all of us, everyone who has borrowed money and hasn't yet paid it back. We've all borrowed, and now it's time to pay.

What does this have to do with Karma Kitchen?

Yesterday, when I was there, I was talking with some of the volunteers about their experiences working at the kitchen. They all said the hardest part was convincing the people who could afford to pay that they didn't have to pay.

"We get a lot of people," they said, "who ask how much their meal is worth, so they can donate the right amount."

So Karma Kitchen is giving free meals to people, both to those who cannot afford them and those who can, and those who can get a little nervous about the whole thing and start asking "well, what's the appropriate donation?" And then Karma Kitchen says "you don't have to donate to us; pay it forward!" and truth be told nearly everyone puts some money in the donation box anyway.

I think the uncomfortability of that moment, the uncomfortability that the staff at Karma Kitchen are trying to prevent by insisting that the meals are a gift and that any "repayment" should be paid forward outside of the kitchen, has to do with the majority of people understanding, on some basic level, the true mathematics of the thing.

Without donations, there is no Karma Kitchen. So a certain percentage of guests need to donate. The meal is a gift, but it also needs to be paid for by someone.

So here's the question: why is it that the people who sit in Karma Kitchen understand these mathematics (input and output must balance) and yet everyone who gambled on debt did so without really processing that every dollar borrowed had to be accounted for at some point?

With a wink towards the Karma crew: there is no such thing as a free lunch, after all. ;) Someone's got to pay, either forwards or backwards.