“The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money.
Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.
But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.
This was the Captain Samuel Vimes 'Boots' theory of socioeconomic unfairness.”
The boots is just the beginning. Through financial products, the rich actually get paid simply for having money, while the banks charge fees to customers simply for being poor.
Banks charging customers simply for being pior is just the tip of the iceberg of how our society is designed to increase the stratification of rich and poor.
The more you already have, the more you can make money just by having more than other people. It’s exponential increases on returns the richer you get.
The poorer you get the harder it is to make even slight progress toward bettering your situation.
But we as “normal people” are to blame for this. We all agree to play by the rules of a few mentally ill sociopaths and that’s really on us.
I know it is easy to assume that people are tricked. Perhaps the obvious alternative is that they are evil. If you want to understand these people, consider that they instead have different values which do not derive from a fight against other poor people.
People will vote against government benefits for many reasons, even if at first glance it seems to hurt them.
One reason is self-respect. Many of these voters feel terrible if they are getting government help. They might feel a need to take it if offered, but also feel that it isn't right. It can feel like stealing and it can feel like being treated as a child. Some people value independence and do not want to be tempted with dependence.
Another reason is a concern for the economy. If a bit of welfare is good, then lots of welfare must be extra-good... but then nobody works (except under treat of arrest) and you have an economy like that of Venezuela. So if that is what we'd get, voting to go the other way is the safer choice.
> One reason is self-respect. Many of these voters feel terrible if they are getting government help. They might feel a need to take it if offered, but also feel that it isn't right. It can feel like stealing and it can feel like being treated as a child. Some people value independence and do not want to be tempted with dependence.
Which is a perfect example of what people have been tricked to believe and then it got repeated as often as possible to make sure it gets burned into peoples brain to make them believe "that's just the way I am"
"r > g" -- Thomas Piketty, Capital in the 21st centuary
If the rate of return on capital (r) is greater than the growth rate of the economy (g), then you almost inevitably get an increasing concentration of wealth. That being poor actually costs money is just icing on the cake.
And if I remember r is always greater than g, except for around WWI and WWII. The rich will always get richer, short of anything like destroying and rebuilding the entire country.
True. I have a pair of custom Limmer boots that I bought over forty years ago for $350. I take good care of them, and they look nearly as good as new. I expect they will easily last me the rest of my life.
I was thinking about just this today. There's an interesting corollary, though: just as it can be a vicious cycle downwards, it can also be a virtuous cycle upwards.
> just as it can be a vicious cycle downwards, it can also be a virtuous cycle upwards.
Hrm. I see how the two are _options_, but they aren't in equal proportion.
Did Wells Fargo take the fees earned from the millions of accounts they created during their sales-quota scandal and use it to subsidize other poor account holders? More likely than not, they simply used it to pay into their capital reserves and redistribute to shareholders.
I have the strong suspicion that there are mental blocks that prevent people from addressing their low balance (in addition to not being flush with cash). My father kept getting a very noticeable "overdraft fee" postcard in the mail. I offered to help him keep a floating balance just to keep him from paying the $25-50 per overdraft. He declined and continued to get a few per month. It was simply mentally taxing for him to move his money from one checking account to another in time for his checks and other payments to clear.
I hope all of the {Facebook, Twitter, *gram, etc.} A/B testing programmers retire from "growth hacking" social media websites and start putting those psychology-manipulating skills to non-profits that help people train themselves to lose less money. I suspect one of the reasons many people are poor is because they simply haven't learned to "life hack" the small things that prevent you from losing money (as opposed to making more).
Community banks are usually worse than regular banks. Credit unions are better, but large banks (Chase, Wells Fargo, BoA, etc) have (usually) more offerings (credit card + checking + car + mortgage + investing) and are usually a lot more accessible for normal people. Also: big banks advertise.
I haven't found this to be true. My credit union (for 10+ years) has never charged me any fees for checking and has had free online bill paying. They also gave me a great rate on my car loan. My previous credit union was very comparable. I had very bad experiences with BOA and Chase who hit me up with fees and made serious mistakes.
Once I tried to make two payments because i was late the previous month. They manually decided that I must of made a mistake and failed to make one of the payments (they assumed it was mistake and never notified me). As a result my insurance was cancelled and renewing my policy cost me around $1700. That was at BOA 20 years ago and I've used credit unions ever since. Since I was barley getting by at the time I had no recourse.
Not the OP but I read your statement as "community banks are bad, credit unions are okay but larger banks are the best". I believe GP is arguing that credit unions are the best and larger banks are just okay.
About two years ago, my credit union started taking lessons from national banks. Charged late fees on a two loan accounts that had never been late (auto-drafted payments from a direct deposit destination); charged me for a replacement debit card when I reported one stolen; can't figure out that "wiring money" is actually free and points me at a third-party service they've hired for transferring money between banks - there's a fee for that; converted my free checking account into a fee checking account without notice.
In all these cases, I could not get the fees reversed on the phone, but had to visit a branch in person, where the branch manager was indignant that I had the gall to rob the financial institution of their fees. I did get the fees refunded. And two weeks ago, I closed all my accounts with them.
I am fortunate to have a community bank that acts the way my credit union once did. The only quibble I've ever had with them is with the staff not knowing the rules on overdraft fees.
I think outgoing wires are almost never free, maybe you are thinking of ACH transfers? The rest of the things sound unfortunate though, and potentially illegal in the case of converting to a fee account without notice.
Customer friendliness can vary a lot even within a bank/credit union depending on the customer and personal banker, since a lot of fee waivers are discretionary. E.g. if a banker has a fee waiver limit per month then they can help you at the start but not later in the month.
Part of the issue is that since rates have been so low, the traditional net interest margin of banks has been squeezed so they turn to fees to compensate.
Agreed. Bank with a local credit union. It's a better deal in general, and, when you hit an issue, you can talk to a human who a) gives a shit, and b) can actually do something to help you.
I spent about 6 hours in a local credit union finalizing a loan for a new car I purchased early last year.
They had made some mistakes, specifically saying they could extend the initial certification beyond 30 days when they could not, and couldn't disperse the funds without having the loan re-certified by a loan officer. Unfortunately, it was a Saturday and there were no loan officers on-hand. Double unfortunately, they needed the original bill of sale (pink carbon paper) to certify the loan.
Every single bit of the process of getting this loan was like pulling teeth. That said, they pulled it off even on a Saturday. They realized they had made a mistake, they called in a loan officer who came to the branch on a Saturday and certified the loan. They even stayed open about two hours late so we could drive to the dealership and get the pink-slip and drive back.
While the whole process was kafkaesque compared to dealer financing, unlike dealer financing these people were friendly and genuinely seemed to want to help and they did genuinely everything in their power to actually help.
And, I got a crazy-low interest rate on my loan too.
If they just spent a bit more time on their process, say, a PDF with a list of information on what you need to provide for a loan and when and things like approval expiration timelines they could make the process so much more pleasurable.
But recently I realized that my primary credit union account, opened around 2007 or so, charges an ATM withdrawal fee ON TOP OF the ATM fee of the bank that owns the ATM.
I withdraw cash so rarely that I haven't noticed this when the policy changed (when I opened the account, the credit union was REFUNDING the ATM fee assessed by other banks).
Needless to say, I'm getting out of there. Probably to another credit union, though; I've had less-than-pleasant experiences with banks in the past (especially before the Obama administration outlawed opt-out "overdraft protection" scams that these banks were running).
Most community banks shut down or got bought up as a result of the past 30 years of lobbying from big banks. My town's bank had operated independently for almost 100 years before being bought up a few years ago. Now my choices are BoA, Wells Fargo, or stashing bills under my mattress. Thanks crony capitalism.
> Now my choices are BoA, Wells Fargo, or stashing bills under my mattress.
For many, many years, I used an online-only checking/savings account. Its pretty viable, unless you have frequent urgent needs (like getting paid, and needing cash from that check the same day).
Yup. I have been using my very small (10 branches) local bank for >20 years. Totally free checking account, no minimum and not even direct deposit required.
Quite a few community banks were purchased over the last few years in my region. Many communities around me don't have anything but a regional or national bank today.
The one in my hometown went from carries the bland name of "Commercial Bank" instead of "<Town Name> State Bank".
> Why does anyone have an account at Bank of America or Wells Fargo? There is a community bank in every town in the country.
I used a credit union for a short period as a means for managing my finances during a rough period. I had to walk three miles to open the account. Same when there was a delay between signing up for direct deposit and I needed to cash my paycheck. I was also doing side gigs in my free time, so more walks for personal checks.
I managed to get through it, but I was lucky. This was during a time of year when the weather was accommodating, but it easily could have happened during the winter.
There is a Wells Fargo less than a five minute walk from me, however. I can easily imagine that some people can’t take the time (kids) or don’t have good enough health to make the sacrifice involved in choosing a small institution over what is geographically accessible.
I don’t really see the problem, honestly. I don’t live in the US, but I also don’t own a car and I live on the outskirts of a town. The closest supermarket is only half a mile away, but I regularly walk into the town center (either to go to a wider range of shops or to get the train or bus) which is approx. 1.5 mile walk (so 3 miles round trip). If I go to the city (by bus/train), I often walk 6 or 7 miles in a day. A few months ago, I commuted to the city and did that walk most days (I did work from home some of the days though). Its not been a big deal at all, for me. It also rains a lot here.
Having said that, if there’s a Wells Fargo 5 minutes away, then I absolutely get why someone would choose to bank there than walk 3 miles to a credit union. Just because I don’t find walking to be a particularly big deal, doesn’t mean I wouldn’t minimise it if options exist to do so.
You probably didn't mean it, but it sounds like you're saying you don't understand why anyone could have trouble walking three miles? In case that's actually what you meant, then some of the reasons include disabilities (whether temporary like a broken leg, or permanent like arthritis), organizational constraints like having a small child with you, time constraints, or unsafe environments for the walk.
My credit union was charging me between $10-20 (cant remember) per day for a 30 cent overdraft ... for a month, and never contacted me or emailed or anything to let me know my account was being perpetually driven further into debt. Not too sure about all this credit union fanaticism I hear about since that incident.
There are presumably credit unions that suck (and yours sounds like it was one), but overall credit unions are generally superior in customer orientation to banks simply because they don't have a structural conflict between delivering customer value and serving shareholder interests.
While the common interest requirements for credit unions have been weakened, the best credit unions are probably ones that still are attached to a strong community of common interest.
> overall credit unions are generally superior in customer orientation to banks simply because they don't have a structural conflict between delivering customer value and serving shareholder interests
Can you elaborate on the difference? I.e. why credit union incentives are different than big banks.
I have an old account from when I worked for BofA. Then my mortgage just happened to get sold to them. Free account! Now their app on my phone allows me to deposit checks!
So for me, it's free and makes my life easier. If they ever charge me a monthly fee though, I am SO out of there. Closed my old Washington Mutual account when Chase bought them and introduced a fee. sad.
So, maybe one of the things that we here on HN can do, is to figure out a way to educate impoverished people on the benefits of credit unions (or community banks, I have no experience with those) over big banks.
Yep. I, and I'm sure a lot of others here, have been on both ends of this spectrum. I remember having to roll quarters to go to the city to pay the water bill (they wouldn't accept loose change and a money order from the corner store was $1.49 which was often 5% of my water bill at the time) and then wait under the clerk's wary gaze while the coin rolls were counted and a couple of random rolls were verified.
The worst was the electric bill. I've been in the exact situation described in the article, past due by under $100 and service remotely cut off. TXU Energy wanted a grand total of $793 to restart service, including the past due balance, a reconnection fee, and a deposit (plus a fee for taking such a large deposit). Fortunately, at least at the time, Texas' deregulated energy market rules didn't prohibit a subscriber from switching companies even when owing a balance to a previous one, so I was able to get my mother to co-sign on my having service with Texas-New Mexico Power.
These days, two jobs and many salary rises later? My water/sewer/garbage bill is direct debited from my checking account, same for the gas bill. Seattle City Light, CenturyLink, T-Mobile, and every other bill? Automatically charged to one of a handful of credit cards I have with >$20,000 limits. The house where I live ran into a medium-sized electrical problem that cost about $5,300 to fix. Instead of panicking, I charged the bill to a credit card and then used a 0% balance transfer on another one to make it be an interest free loan for 18 months.
I spent more in one year on overdraft fees ($1,550) back in the early 2000s than I spend on mobile phone service ($1,200) this year, to say nothing of all of the costs for payday loans and late fees and all of that. Being poor in America absolutely sucks ass and, the worst part is, I'm pretty sure virtually every one of our societal and financial systems is engineered to enforce that feeling of helplessness, not to make it better.
My understanding is that Walmart and Amex's bluebird program tried to make things a little bit better, but probably doesn't address all the fundamental structural issues in place
Is it a "structural" issue? Or is it just the fact that, statistically, poor people are really unlikely to pay back loans, so loaning to them profitably means charging really high interest? Or is that a "structural" issue?
Bluebird (mentioned by the parent) is a checking account alternative (read: not a real, FDIC-insured bank account). No one's loaning anything in this case. It's designed to appeal to people who, for one reason or another, cannot afford to open even a basic traditional checking account.
Edit: Before such ersatz-bank-account services proliferated, I believe it was common for poor people to cash their paychecks at a check cashing place (which costs time and money).
Overall, it is difficult to be even stay in business let alone profitable due to structure of how interests work at that income level due to most not paying back on their loans.
If I remember correctly it was set up in Bangladesh. You are correct people did pay back the loans but it required much higher interest rates e.g., 60%, due to small size of the loans and having to factor in those who wouldn't pay back.
I spent months repeatedly buying disposable dishes because I couldn’t afford real ones. Ironically, I couldn’t save the meager amount to purchase real dishware because of the perpetual cost of disposable dishes. My brother once told me that he had a similar situation with candles eating into his paycheck when his power had been shut off.
If your current paycheck doesn’t take you far enough to solve the problem, you have to pay for substandard stop-gap solutions in between. This serves to prolong the time it takes to accumulate the capital needed for a permanent solution.
This reminds me of how constantly rushing to fill the client tickets and accumulating technical debt eats into a development team's ability to ever address the core problems in their software.
Industryautomation here:
It always takes two. One to tackle customers complaining and keeping the system running, one two actually diagnose and fix the problem.
I've been so poor I had to sleep behind a dumpster and cover up with a cardboard box and I never found myself just buying paper plates over and over. The dollar tree will sell you a plate for 1 single George Washington. Or just eat out of the pot. Hell, I do that now just to save having to wash a dish. Something tells me this story doesn't add up.
It should have been easy to find very cheap dishes at garage sales, depending on your city, I suppose. Oftentimes, people are basically trying to give things away (especially in last hour or so...)
It's easy to say that when you're well provided for, but one of the recurring themes I've heard from people in poverty is that your thinking literally changes to survival mode. So, I'm with you, in that it seems like there's an easy solution to this particular problem, but when you're scrambling for shelter and food, I can totally see how I wouldn't be able to approach a problem like this from a higher level.
Another element, I suspect, is that washing dishes takes precious time and energy, that an impoverished person probably doesn't have. It's easier to just throw away the dish. I'm not judging. If I stood on my feet for 6-8 hours doing grueling menial labor, I'd be exhausted, too.
I think us here on HN can have a tremendous impact on different levels of poverty if we listen to the struggles of impoverished people, and then use our well-fed, psychologically-safe minds to help brainstorm higher-level solutions.
Regarding you feeling that this is engineered, the following could be a reason why if valid:
The dual economy didn’t happen overnight, says Temin. The story started just a couple of years after the ’67 Summer of Love. Around 1970, the productivity of workers began to get divided from their wages. Corporate attorney and later Supreme Court Justice Lewis Powell galvanized the business community to lobby vigorously for its interests. Johnson’s War on Poverty was replaced by Nixon’s War on Drugs, which sectioned off many members of the low-wage sector, disproportionately black, into prisons. Politicians increasingly influenced by the FTE sector turned from public-spirited universalism to free-market individualism. As money-driven politics accelerated (a phenomenon explained by the Investment Theory of Politics, as Temin explains), leaders of the FTE sector became increasingly emboldened to ignore the needs of members of the low-wage sector, or even to actively work against them.
America’s underlying racism has a continuing distorting impact. A majority of the low-wage sector is white, with blacks and Latinos making up the other part, but politicians learned to talk as if the low-wage sector is mostly black because it allowed them to appeal to racial prejudice, which is useful in maintaining support for the structure of the dual economy — and hurting everyone in the low-wage sector. Temin notes that “the desire to preserve the inferior status of blacks has motivated policies against all members of the low-wage sector.”
America is Regressing into a Developing Nation for Most People
>the desire to preserve the inferior status of blacks has motivated policies against all members of the low-wage sector.
So your belief is, the dominant economic-political movement in America regards "preserving the inferior status of blacks" as an end goal in and of itself? Or is this an instrumental goal that somehow serves some other purpose?
The sentence previous to the one you quoted suggests the political reasoning. Those in power see diversity as a threat to the status quo, and demonizing an enemy has long been a textbook way for demagogues to raise political capital.
For lots of people in the dominant economic-political elite, it's probably not exactly a goal but an enjoyment in itself. Besides if you're WASP, why you'd want to acknowledge the needs of blacks, or even more, have them as business competitors?
At best, you want their sales and votes -- but even that, not if they vote for their interests and/or more progressively.
Besides the blacks, if not predominantly now, for a lot of time, were also among the poor and working class, which is an even bigger enemy if you want to keep your privileges.
It's phrased funny, but the gist that I got from it (and which seems plausible to me) is that the issue has been framed as involving the "other", and therefore those in power don't care.
That article is not accurate, if you work for a salary you're in poverty. Before 2005 it was not that bad, we saw a major transformation with the downturn. Here in LA the cost of living has swallowed up all but the very highest paid salaries. High taxes in California combined with high rents and high cost of food, education and healthcare make for a brutal combination for working people of all stripes.
I'm not sure I understand what you're saying here. I work for a salary and am most assuredly not in poverty. Could you expand a bit on what you meant by that?
Speaking specifically to the urban scourge of check paying places, I wonder if there would be space for a paycheck cashing place that kept half of those 20%+and set it in a small interest bearng account, and they'd have a vesting schedule before they should remove their savings (and percent incentives for them to stay, since the bigger the pot, the more rewards all around).
I think this might be an industry that could help mitigate some social ills, not just prolong or exacerbate them.
Are there any good gaps in my view that I'm not seeing?
So, you're proposing a check deposit company that still takes a big chunk of the deposit, but sets aside half of that chunk in a savings account for the depositor?
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On the banking side, some of it is fairly straight forward - the estimates I’ve seen say it cost ~$100-$500 for a bank to administer a checking account annually. The current net interest margin banks earn on your money in the US is 3.15%.
Which means if a bank charges no fees - and it costs them $315 to administer your account - you need to maintain a $10,000 balance for them to break even.
Once you understand that dynamic - you understand that banks that want to offer low balance free checking - need to either make it up on fees or on cross selling opportunities...
I don’t know the breakdown, but it’s: banking software, mailed account statements, debit cards, phone support centers, websites, bank branches, compliance, ATM networks, check processing etc.
Obviously some of these costs scale very cheaply, but there is quite a bit that goes into a modern bank account+ some customers are costlier than others (lost of call center calls/lost debit cards for example)
Plenty of businesses operate off the principle of losing money on one product SKU while making it up on others. Think Dollar Shave Club, game console sales, etc. I imagine banks could take a hit on low-income accounts and make it up on high-income accounts. But apparently they just don't have the financial incentive in this situation to do so. I just wish the moral incentive was enough.
That’s exactly what I meant by cross selling - many bank accounts are actually priced at a loss with the hopes of also getting you to sign up for a credit card or car insurance
I'd be interested in what the breakdown in costs is. Searching a little, it looks like the higher estimates may be based on dividing the total costs keeping the lights on in the bank by the number of checking accounts: https://sandbox.bankrate.com/financing/banking/what-do-you-r...
I'd guess that the costs of administering accounts probably scales with account activity. I'd also assume that to some extent, increased account activity correlates with increased fees. Do you have any more details on the breakdown of costs? While they might not be able to target just customers they want to keep, I have trouble believing that they are continuing to offer services that lose them money.
How much money do you have to have to eliminate this?
-> How much money do you need to start a bank?
-> How much money do you need to start a school?
-> How much money do you need to start an organization such that regular people can join and said organization can provide health care benefits this country really needs?
-> What does it take to start an organization that can attract talent to be sustainable and simultaneously have a structure such that it can provide the above benefits?
Direct deposit frequently just means ACH transfer, which can even be from your own account at another bank. Need $250 in direct deposit? Transfer $125 in on the 1st, out the 7th, in the 15th, out the 22nd.
Oh? Chase was actually the bank I was thinking of, since they waived the fee on my account as a result of transfers from another account. Been a few years though.
Can't afford a car or taxi/Lyft/whatever? You're going to lose hours every single day trying to get around. Hard to work two jobs to make a decent income when you can't get to either one expediently.
Don't have a job? Good luck getting to interviews on time. Good luck when they ask whether you have reliable transportation. And heaven forbid you have a felony on your record. And whatever you do, don't twist your ankle walking to the grocery store, because miss too much time from work and you're fired.
Oh, you do have a car? Good luck paying for decent tires, or gas, or the tow bill when it inevitably breaks down, or to replace the glass when someone breaks into it, or the insurance, or...
I sympathize and agree with your general points. I do wonder about the general idea that there is nothing you can do. People can get bus fare for $1 [1]. They can scrounge money from people they know or total strangers to get more. They can move, even as a transient to a larger city. They can get housing in the new city with public support. They can live in shelters overnight until the support comes through. They can get jobs within walking distance in the city. They can do all of this on their own or with a little help from their fellow humans. Humanity has done this for thousands of years.
Would I want to do any of that? No. Would I if necessary. Yes.
In my city, you can use the bus system and still lose hours each day getting around. And try moving as a transient with young children. Or other family who needs you. Or as a rehabbing drug addict.
I also suspect that moving to a new location and throwing yourself at the mercy of the locals worked a lot better when there were fewer people.
(Warning: unsupported speculation follows.)
The more crowded our environment gets, the more we feel that helping someone in need is someone else’s problem, and the less likely it is that the random person who might be able to lend you a room, for example, feels confident the community will back them up if you turn out to be trouble.
The kind of charity you need as a transient is harder to come by at an individual level than it used to be. You’re more reliant on institutions, and that’s a thin safety net to rely on to throw yourself across the country.
> The more crowded our environment gets, the more we feel that helping someone in need is someone else’s problem
This reminded me of the Murder of Kitty Genovese, AKA the Bystander Effect. However, I just looked it up, and it sounds like recently researchers have questioned the validity of the original story, claiming that NYT exaggerated the number of witnesses.
I get the impression you are talking from an abstract understanding of all these options. Have you ever tried moving to a new city and accessing public housing? In most cities there's a closed waiting list. Or even buying a $1 bus fare? (A while back, for my own curiosity, I ran a webscraping tool that collected the current fare data on boltbus to track how often the advertised $1 fares actually showed up - I think it turned out to be approximately one trip every couple months. I don't know if megabus offers them more frequently.)
Aside from the dubious reality of the support you describe, for someone with no economic capital, it's a big risk to move away from whatever social capital you may have. Social capital gives you access to job referrals, loans, couch space, bartering favors, social recommendations as replacement for a nice reliable job as surety when looking for a roommate, a vastly improved safety net and, it is increasingly recognized, mental and emotional health benefits.
tldr: people have been freezing to death for lack of resources for thousands of years too.
Great summary. I spent a full New England winter hitchhicking to work and rode the edge of being fired for erratic late arrivals. Survived it, but just pure luck. I was often 2-3 minutes from being fired.
I can sympathize with some of the poor people who had accidental expenses that they could not have planned for. But I'm really having trouble understanding how this article makes it seem those fees are hard to avoid as poor person.
When I was living under $1000 budget, overdraft fee was unheard of, because when you have very little money, it's easy to manage, you only need a few hundred dollars in your account for daily spending. And bigger purchases (>$100) are planned so they can be actually paid for. I also never knew there were consequences for paying electricity late, because renting my own place is out of my budget.
Funnily, I only ran into those "poor people" issues like expensive credit card interest, overdraft fees, predator car loans after getting my first full-time developer job, because I stopped managing my expenses.
Yea, you could possibly keep everything under control troll. Until you get a single unexpected expense like a major car repair, and then you are stuck in a vicious cycle of trying to keep up.with overdraft payments and interest payments.
If you lived uner 1000 a month and had to problems, then all evidence points to your situation being the outlier
The problem is, the poor live at close to $0. If unexpected circumstances happen (and they will), they are at risk of going negative, at which point a bunch of fees and expenses kick in. If a "wealthy" person has unexpected expanses, they go to slightly less positive then they planned, but nothing actually happens as a result.
Not to mention all the normal ways being poor is expensive (eg. you cannot afford to buy the long-term cheap, bulk/durable items, so you buy the more long-term expansive items because they are cheaper upfront).
For what it is worth, my only experience with the issues you list also arose from having too much money. I had split money across multiple accounts, and tried to transfer money into account A in order to fund a large payment from account A. Overdraft, because I did not wait for the transfer to clear.
The greater point here is that if you are poor you are one unexpected expense away from financial and/or personal ruin. The kinds of compromises this entails are either basic necessities or simple luxuries (so perhaps a necessity for one's mental health). They are compromises that accrue material, physiological, or psychological debt and snowball into further compromises. It's the "poverty trap", and the best case for many people is just a constant state of maintenance as they don't have the surplus capital, time, or mental energy to invest in a better future. You were able to build on your limited resources and improve your life, but hopefully you can appreciate that there are many others who don't realistically have this opportunity.
It's the unexpected stuff. Parking tickets when you honestly didn't mean to do anything wrong, your car unexpectedly dying, roto rooter for the pipe that blew in your shitty mobile home, the surprise tax bill because you filled out your W2 wrong, the unexpected 2x bump for your bottom end heath insurance, your car's catalytic converter dies and it won't pass inspection, your Mom that suddenly has Alzheimer's, lease renewal comes up and your neighborhood has been gentrified and is suddenly 2x the original cost, right sizing and layoffs, etc. Maybe you can work out a paycheck to paycheck strategy, but chaos theory gets you eventually.
I lived this, and got past it, but luck was a big part of it. Right place, right time, and some hero[1] gave me a chance. Not everyone is this lucky.
Good to hear from a fellow "survivor". I'm stunned to have gone from living in my car to being a middle class dope. Lost touch with Gene, I hope he did well.
Thank you! Grew up pretty poor. My mom was a single mother with a nursing degree back in the 80s when nurses made just above minimum wage. I'm super happy that the baby boom aging process changed that over time (supply/demand). She's now retired, but has 3 pensions, and no worries. Sometimes, karma just pays off.
Had a similar experience with a relative that did some time in prison.
The conditions of parole required weekly visits to a far off parole officer visit that had no public transportation access.
So, no prospects to get a job because of (now almost universal) background checks. So, no income. And a defacto requirement to either have a car, or have money for a 15 mile Uber trip every week.
It basically means that if you are a parolee, you beg friends and family, or violate and return to prison for longer than your original sentence. The trip is a 3 hour commitment, so begging doesn't work well unless you have a really flexible friend or relative.
Oy. Guess what cycle that creates? People turning down parole just to not have that monkey on their back. Trading 5+ years of their lives because they can't satisfy an impossible ask. All for drug addict type issues... possession, shoplifting, public intox, loitering, driving with no insurance, etc. No violence, no real palpable victims other than themselves. US problem if you didn't guess already.
> possession, shoplifting, public intox, loitering, driving with no insurance, etc. No violence, no real palpable victims other than themselves
I'm with you on all but one of these -- driving with no insurance seems like a seriously bad idea, and should have consequences. Two tons of steel, even at moderate 35mph speed, is a lot of damn momentum and can do some real damage, and most certainly should be insured.
Fun fact: being poor means more than likely your credit score is low, which also means you pay more to insure a probably worse car. Because you know, your income dictates your likelihood to have an accident.
Insurance cost is not solely due to likelihood of having an accident. The thing that matters is likelihood of causing financial loss/gain for the insurance company. If low-income people are not more likely to cause financial loss, then competition for customers would make the insurance cost equal.
Some reasons why this is not so:
Bad credit and the likelihood of an accident are correlated because both are affected by risk-taking behavior.
People with high income are far less likely to make insurance claims for minor damage. They know that the deductible would prevent recovering most of the cost, and that the insurance cost would increase enough to offset what little was recovered. The claim payment is not worth the ongoing expense of higher premiums. People with low income are less likely to fund minor repairs without an insurance claim; they need the money to make repairs.
There is a fraud problem. I've seen this in person, getting advice from a heroin dealer who lived next door. I damaged my car. He said I should just report that I found it that way, parked on the street.
At first I was about to write why this is dumb and you should not be liable for not having an insurance. But while spelling it out I realized that it's perfectly reasonable for the owners of vehicles (and other licensable, high-possible-damage-dealing and really-accessible-to-almost-anyone things) to have a compulsory insurance. Just because there's reasonable probability to cause more damage than you can compensate on your own, which reasonable person should understand (that being a requirement for having a license). And if you don't then it's negligence.
Tangential, but this is the same reason mandatory health insurance makes sense. We go around living in our bodies, and they break down sometimes. It's the law in this country that emergency rooms can't turn people away without evaluating and stabilizing them, so you're always one accident away from creating huge costs for someone else if you don't plan for these costs with health insurance.
In the case of car insurance, the injured party is the driver you run into, or the property you damage. In the case of health insurance, the injured party is the hospital/doctors.
I always thought it was strange that so many states were totally on board with mandatory car insurance, but not mandatory health insurance.
Yes, but you can only choose to own a car (the logistics of this are hazy, but you still have the option of not buying one). You didn't choose to be an organism that gets sick.
It's my understanding that having a car in the US is effectively mandatory for the overwhelming majority of the working population, doesn't that effectively make it the same?
I'm not saying you don't need one, I'm saying the option technically exists. (I don't really agree with this line of logic but a lot of people seem to)
1) The Obamacare mandate is an income tax penalty. If you don't work there is no penalty. Working is a choice.
2) Of course, working isn't a _real_ choice if you value independence. Like you hinted at, unless you live in an urban environment with solid transit neither is owning a car.
3) Also, the limits of our society's moral and legal systems are already tested by the very idea of private property. If you don't own property there's no place in this entire country where you can reliably and _legally_ simply be physically present without paying for the privilege in some manner. And because of property taxes, that's the case even if you were gifted property.
All the griping about the healthcare mandate is simply a failure of people to accept the _reality_ of our modern system, and the privileges they take for granted but refuse to accept the burden of. In any event, we can't roll back the clock. At the end of the day, as long as you're free to leave the country the only thing that has changed is that freeloading becomes more difficult. Which reminds me of another point:
4) The reasons mandatory evacuations are legally enforceable is because society recognizes that people of good will--especially first responders--will always put themselves in harms way to help people in distress. And we don't want to have a system that, to disincentive abuse, discourages help by making it too risky to help others or by making it too costly to ask for help. This is a fundamental conflict between individual liberty and social welfare. Most of the time conflict between individual liberty and social welfare can be mediated by degrees; other times we're faced with a binary choice. Much like mandatory evacuations, Obamacare simply recognizes that in the 21st century, the conflict regarding healthcare has become a binary choice. When the conflict becomes a binary choice, for a civilization it's not really any choice at all.
Most people carry 10/20/10 insurance premiums. 10 grand for medical. 20 grand for all medical bills incurred. 10 grand for the vechicle.
That covers 10 grand for the medical expenses for one person.
It's really a drop in the bucket if one gets into a auto accident.
The level of coverage is so small, I wonder why we are even required to carry insurance some days.
Now--I understand self-insuring. You have a nice car, assets(you don't want them attaching your home, or business), and want the best health care; you buy the best insurance, along with uninsured motorist insurance. You have a $40 grand vechicle, and want it replaced in an accident. Hell--yes, buy the Cadillac plan. I would, if I had a fancy car, and was used to the best health care.
I pay $700/yr for 10/20/10 insurance. I haven't had a ticket, or accident in 25 years. I don't drive much, but can't prove it because I have an older analogue car.
My point is the Insurance Lobby is the biggest lobby in my state, by a large margin--I believe. When they burp, my representatives pucker up. That Lobby is very powerful.
If insurance is just so dam practical, and efficient; what's up with the huge, powerful Lobby? And the rediculiously low rates of minimum Insurance coverage? I couldn't imagine getting in a serious auto accident, and being reimbursed $10 grand. My hospital bill is going to bankrupt me, but I get 10 grand from the guy with no assets. Assets, I could sue. They say every penny helps, but come on, we all know just how hospitals/doctors bill.
Some days, I think, most insurance, especially mandatory, is just a gift to the Insurance industry.
I don't want yo get into a moral debate. You won. Yes--driving is a privilege. We should all be financially responsible citizens. It's the numbers that don't add up in my world.
(As to the way the poor are exploited/treated in America, it just makes me sick. There's literally nowhere people can live for free. California has one place in Imperial County that the homeless can kinda live, without the fear of getting recruited into the penal system for essentially sleeping. I don't like my country anymore. I had an opportunity to live in France years ago. I regret not going. This is not the country I saluted to as a kid.)
>Two tons of steel, even at moderate 35mph speed, is a lot of damn momentum and can do some real damage, and most certainly should be insured.
That would be fine and dandy, if being without a car was accommodated for (not just in the parole requirements, but also in other aspects of US life, having a job, city structure, etc).
Else the car+insurance is just an additional penalty for poor people.
You don't get how shoplifting works. One person doesn't shoplift enough to drive a shop out of business. 1000 people taking small crap they think doesn't matter drives the shop out of business. It is a cumulative thing where many small crimes build up to one crippling one.
Don't try to tell me I don't understand obvious shit.
If you're shoplifting from someone who's experiencing a shoplifting epidemic, you're doing more damage than you would by shoplifting from someone who wouldn't even notice. The severity of the crime is context-dependent. Not all shoplifting is equally bad. That's what I'm saying.
Feel free to engage in some black-and-white thinking and disagree. But don't tell me I don't "get how shoplifting works."
> If you're shoplifting from someone who's experiencing a shoplifting epidemic, you're doing more damage than you would by shoplifting from someone who wouldn't even notice.
Except when you're shoplifting, you don't know whether you're the only one who does that to this shop, or the hundredth thief this day. If you had enough knowledge to know the theft load of shops in the area, you'd pretty much by definition be orchestrating higher-level crimes, with better margins.
I didn't say shoplifting wasn't a crime. I said it is sometimes a victimless crime. It doesn't really matter if you're aware of that when you shoplift.
I also don't know why you think someone who's "smart enough to shoplift" would automatically be running some criminal syndicate if they can lookup shoplifting statistics in their area.
Ehh, I wouldn't say that. Obviously they're not checking the quarterly income reports, but I know shoplifters who steal from large chains but not from mom-and-pop stores.
I did it back in the day. Sleeping in my car, hungry, and I stole some candy bars from a grocery store.
Throwing me under the bus wouldn't have been terribly productive. I knew it was wrong, but hunger is a powerful motivator. I picked a big chain on purpose. Doesn't make it right, but I did try to consider to impact of my choices.
Going to jail wouldn't have made me somehow remorseful. It would have just made me bitter. I totally get the thought pattern, but living it is different than talking about it.
If you do not have it, the alternative is a low-end hotel where you can pay by the week, which lacks the upfront cost but costs much more over time — for the room itself but also increased food costs and life complexity.
This ignores hotel taxes which often run 15-20% with the revenue earmarked for attracting tourism/convention traffic. In some ways, hotel taxes may be the most regressive commonly imposed tax scheme in the US.
A friend of mine who was having a hard time was doing a mix of squatting, camping outside, crashing with friends and staying in a cheap hotel when she had the money.
The hotel itself charged refundable deposits that were 20% of nightly rent, and looked for ways not to refund them (checking out two minutes late, letting another guest come in your room). Meanwhile, prostitutes and drug dealers more or less only visit rooms in the high end hotels less than a mile away with nobody batting an eye.
It was only a few years ago that almost all of this article applied to me. I remember before the cfpb forced banks to make overdraft "protection" out-in and being charged $35 instead of the card being declined. I remember biking across town at 5in the morning to make $35/day at a day labor place then giving 2 of those dollars to a check cashing place. Unless you've been poor, you really have no idea how hard it is to get out of that position. And if you have anything on your record, you can forget about not being poor. A record is a lifetime sentence of poverty in America unless you have connections or family wealth.
Single serve items like shampoo, candy, soap are readily available in developing countries like Nepal, they cost much more than the normal sizes we receive in the developed world when you adjust for the quantities. Much worse for the environment over here as well, have seen so many plastic fires in the city with the single serve packaging being utilized as fuel.
Being poor always costs more. Rich people can shop around for better deals on pretty much everything, if they want to (eg lower interest rates, lower taxes, etc). Many options that are available to the rich are definitely not available to the poor, and that doesn’t even factor in the charges talked about in the article. It doesn’t surprise me one bit, sadly.
This is why I left the United States. I live in Germany, and while every place has its drawbacks, I feel safe, have affordable housing, and don't have to worry about healthcare and predatory things like this if things go south.
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[ 3.0 ms ] story [ 204 ms ] threadTake boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.
But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.
This was the Captain Samuel Vimes 'Boots' theory of socioeconomic unfairness.”
Banks charging customers simply for being pior is just the tip of the iceberg of how our society is designed to increase the stratification of rich and poor.
The more you already have, the more you can make money just by having more than other people. It’s exponential increases on returns the richer you get.
The poorer you get the harder it is to make even slight progress toward bettering your situation.
But we as “normal people” are to blame for this. We all agree to play by the rules of a few mentally ill sociopaths and that’s really on us.
That it's true.
But I've also seen in a lot of countries poor people voting for policies which will actually make them poorer.
Poor people arguing against universal health care. Arguing against taxes for the rich and regulation.
Typically because they are tricked to fight against other poor people (other religions, other ethnicities, other backgrounds)
"Let's repeal Obama-care and drive up health care costs!"
"Let's give tax breaks to the rich, at our expense!"
— America, 2017-2018
People will vote against government benefits for many reasons, even if at first glance it seems to hurt them.
One reason is self-respect. Many of these voters feel terrible if they are getting government help. They might feel a need to take it if offered, but also feel that it isn't right. It can feel like stealing and it can feel like being treated as a child. Some people value independence and do not want to be tempted with dependence.
Another reason is a concern for the economy. If a bit of welfare is good, then lots of welfare must be extra-good... but then nobody works (except under treat of arrest) and you have an economy like that of Venezuela. So if that is what we'd get, voting to go the other way is the safer choice.
Some people feel a religious opposition to taxing the wealthy: https://en.wikipedia.org/wiki/Prosperity_theology
Which is a perfect example of what people have been tricked to believe and then it got repeated as often as possible to make sure it gets burned into peoples brain to make them believe "that's just the way I am"
If the rate of return on capital (r) is greater than the growth rate of the economy (g), then you almost inevitably get an increasing concentration of wealth. That being poor actually costs money is just icing on the cake.
Concise explanation of the absurdity
Hrm. I see how the two are _options_, but they aren't in equal proportion.
Did Wells Fargo take the fees earned from the millions of accounts they created during their sales-quota scandal and use it to subsidize other poor account holders? More likely than not, they simply used it to pay into their capital reserves and redistribute to shareholders.
I have the strong suspicion that there are mental blocks that prevent people from addressing their low balance (in addition to not being flush with cash). My father kept getting a very noticeable "overdraft fee" postcard in the mail. I offered to help him keep a floating balance just to keep him from paying the $25-50 per overdraft. He declined and continued to get a few per month. It was simply mentally taxing for him to move his money from one checking account to another in time for his checks and other payments to clear.
I hope all of the {Facebook, Twitter, *gram, etc.} A/B testing programmers retire from "growth hacking" social media websites and start putting those psychology-manipulating skills to non-profits that help people train themselves to lose less money. I suspect one of the reasons many people are poor is because they simply haven't learned to "life hack" the small things that prevent you from losing money (as opposed to making more).
Once I tried to make two payments because i was late the previous month. They manually decided that I must of made a mistake and failed to make one of the payments (they assumed it was mistake and never notified me). As a result my insurance was cancelled and renewing my policy cost me around $1700. That was at BOA 20 years ago and I've used credit unions ever since. Since I was barley getting by at the time I had no recourse.
So, you have found it to be true.
In all these cases, I could not get the fees reversed on the phone, but had to visit a branch in person, where the branch manager was indignant that I had the gall to rob the financial institution of their fees. I did get the fees refunded. And two weeks ago, I closed all my accounts with them.
I am fortunate to have a community bank that acts the way my credit union once did. The only quibble I've ever had with them is with the staff not knowing the rules on overdraft fees.
Customer friendliness can vary a lot even within a bank/credit union depending on the customer and personal banker, since a lot of fee waivers are discretionary. E.g. if a banker has a fee waiver limit per month then they can help you at the start but not later in the month.
Part of the issue is that since rates have been so low, the traditional net interest margin of banks has been squeezed so they turn to fees to compensate.
They had made some mistakes, specifically saying they could extend the initial certification beyond 30 days when they could not, and couldn't disperse the funds without having the loan re-certified by a loan officer. Unfortunately, it was a Saturday and there were no loan officers on-hand. Double unfortunately, they needed the original bill of sale (pink carbon paper) to certify the loan.
Every single bit of the process of getting this loan was like pulling teeth. That said, they pulled it off even on a Saturday. They realized they had made a mistake, they called in a loan officer who came to the branch on a Saturday and certified the loan. They even stayed open about two hours late so we could drive to the dealership and get the pink-slip and drive back.
While the whole process was kafkaesque compared to dealer financing, unlike dealer financing these people were friendly and genuinely seemed to want to help and they did genuinely everything in their power to actually help.
And, I got a crazy-low interest rate on my loan too.
If they just spent a bit more time on their process, say, a PDF with a list of information on what you need to provide for a loan and when and things like approval expiration timelines they could make the process so much more pleasurable.
In any event, A+++ would credit union again.
But recently I realized that my primary credit union account, opened around 2007 or so, charges an ATM withdrawal fee ON TOP OF the ATM fee of the bank that owns the ATM.
I withdraw cash so rarely that I haven't noticed this when the policy changed (when I opened the account, the credit union was REFUNDING the ATM fee assessed by other banks).
Needless to say, I'm getting out of there. Probably to another credit union, though; I've had less-than-pleasant experiences with banks in the past (especially before the Obama administration outlawed opt-out "overdraft protection" scams that these banks were running).
For many, many years, I used an online-only checking/savings account. Its pretty viable, unless you have frequent urgent needs (like getting paid, and needing cash from that check the same day).
The one in my hometown went from carries the bland name of "Commercial Bank" instead of "<Town Name> State Bank".
I used a credit union for a short period as a means for managing my finances during a rough period. I had to walk three miles to open the account. Same when there was a delay between signing up for direct deposit and I needed to cash my paycheck. I was also doing side gigs in my free time, so more walks for personal checks.
I managed to get through it, but I was lucky. This was during a time of year when the weather was accommodating, but it easily could have happened during the winter.
There is a Wells Fargo less than a five minute walk from me, however. I can easily imagine that some people can’t take the time (kids) or don’t have good enough health to make the sacrifice involved in choosing a small institution over what is geographically accessible.
Having said that, if there’s a Wells Fargo 5 minutes away, then I absolutely get why someone would choose to bank there than walk 3 miles to a credit union. Just because I don’t find walking to be a particularly big deal, doesn’t mean I wouldn’t minimise it if options exist to do so.
While the common interest requirements for credit unions have been weakened, the best credit unions are probably ones that still are attached to a strong community of common interest.
Can you elaborate on the difference? I.e. why credit union incentives are different than big banks.
> A credit union is a member-owned financial cooperative, democratically controlled by its members[.]
These banks are national and (along with a few others) issue all credit cards, even the ones you get at your local community bank.
Its not like the Community Banks don't have fees...
The worst was the electric bill. I've been in the exact situation described in the article, past due by under $100 and service remotely cut off. TXU Energy wanted a grand total of $793 to restart service, including the past due balance, a reconnection fee, and a deposit (plus a fee for taking such a large deposit). Fortunately, at least at the time, Texas' deregulated energy market rules didn't prohibit a subscriber from switching companies even when owing a balance to a previous one, so I was able to get my mother to co-sign on my having service with Texas-New Mexico Power.
These days, two jobs and many salary rises later? My water/sewer/garbage bill is direct debited from my checking account, same for the gas bill. Seattle City Light, CenturyLink, T-Mobile, and every other bill? Automatically charged to one of a handful of credit cards I have with >$20,000 limits. The house where I live ran into a medium-sized electrical problem that cost about $5,300 to fix. Instead of panicking, I charged the bill to a credit card and then used a 0% balance transfer on another one to make it be an interest free loan for 18 months.
I spent more in one year on overdraft fees ($1,550) back in the early 2000s than I spend on mobile phone service ($1,200) this year, to say nothing of all of the costs for payday loans and late fees and all of that. Being poor in America absolutely sucks ass and, the worst part is, I'm pretty sure virtually every one of our societal and financial systems is engineered to enforce that feeling of helplessness, not to make it better.
While unlikely to be profitable. I'm sure you could get some donations to offer better financial services to the bottom percentages.
Edit: Before such ersatz-bank-account services proliferated, I believe it was common for poor people to cash their paychecks at a check cashing place (which costs time and money).
Overall, it is difficult to be even stay in business let alone profitable due to structure of how interests work at that income level due to most not paying back on their loans.
If your current paycheck doesn’t take you far enough to solve the problem, you have to pay for substandard stop-gap solutions in between. This serves to prolong the time it takes to accumulate the capital needed for a permanent solution.
Another element, I suspect, is that washing dishes takes precious time and energy, that an impoverished person probably doesn't have. It's easier to just throw away the dish. I'm not judging. If I stood on my feet for 6-8 hours doing grueling menial labor, I'd be exhausted, too.
I think us here on HN can have a tremendous impact on different levels of poverty if we listen to the struggles of impoverished people, and then use our well-fed, psychologically-safe minds to help brainstorm higher-level solutions.
The dual economy didn’t happen overnight, says Temin. The story started just a couple of years after the ’67 Summer of Love. Around 1970, the productivity of workers began to get divided from their wages. Corporate attorney and later Supreme Court Justice Lewis Powell galvanized the business community to lobby vigorously for its interests. Johnson’s War on Poverty was replaced by Nixon’s War on Drugs, which sectioned off many members of the low-wage sector, disproportionately black, into prisons. Politicians increasingly influenced by the FTE sector turned from public-spirited universalism to free-market individualism. As money-driven politics accelerated (a phenomenon explained by the Investment Theory of Politics, as Temin explains), leaders of the FTE sector became increasingly emboldened to ignore the needs of members of the low-wage sector, or even to actively work against them.
America’s underlying racism has a continuing distorting impact. A majority of the low-wage sector is white, with blacks and Latinos making up the other part, but politicians learned to talk as if the low-wage sector is mostly black because it allowed them to appeal to racial prejudice, which is useful in maintaining support for the structure of the dual economy — and hurting everyone in the low-wage sector. Temin notes that “the desire to preserve the inferior status of blacks has motivated policies against all members of the low-wage sector.”
America is Regressing into a Developing Nation for Most People
https://www.ineteconomics.org/perspectives/blog/america-is-r...
So your belief is, the dominant economic-political movement in America regards "preserving the inferior status of blacks" as an end goal in and of itself? Or is this an instrumental goal that somehow serves some other purpose?
At best, you want their sales and votes -- but even that, not if they vote for their interests and/or more progressively.
Besides the blacks, if not predominantly now, for a lot of time, were also among the poor and working class, which is an even bigger enemy if you want to keep your privileges.
I'm not sure I understand what you're saying here. I work for a salary and am most assuredly not in poverty. Could you expand a bit on what you meant by that?
I think this might be an industry that could help mitigate some social ills, not just prolong or exacerbate them.
Are there any good gaps in my view that I'm not seeing?
How much of these costs are appropriate economics (e.g. due to defaulting, management costs, etc) vs abuse of the relatively powerless.
Which means if a bank charges no fees - and it costs them $315 to administer your account - you need to maintain a $10,000 balance for them to break even.
Once you understand that dynamic - you understand that banks that want to offer low balance free checking - need to either make it up on fees or on cross selling opportunities...
Is that an average or an actual cost per account?
Obviously some of these costs scale very cheaply, but there is quite a bit that goes into a modern bank account+ some customers are costlier than others (lost of call center calls/lost debit cards for example)
I'd guess that the costs of administering accounts probably scales with account activity. I'd also assume that to some extent, increased account activity correlates with increased fees. Do you have any more details on the breakdown of costs? While they might not be able to target just customers they want to keep, I have trouble believing that they are continuing to offer services that lose them money.
-> How much money do you need to start a bank?
-> How much money do you need to start a school?
-> How much money do you need to start an organization such that regular people can join and said organization can provide health care benefits this country really needs?
-> What does it take to start an organization that can attract talent to be sustainable and simultaneously have a structure such that it can provide the above benefits?
Can't afford a car or taxi/Lyft/whatever? You're going to lose hours every single day trying to get around. Hard to work two jobs to make a decent income when you can't get to either one expediently.
Don't have a job? Good luck getting to interviews on time. Good luck when they ask whether you have reliable transportation. And heaven forbid you have a felony on your record. And whatever you do, don't twist your ankle walking to the grocery store, because miss too much time from work and you're fired.
Oh, you do have a car? Good luck paying for decent tires, or gas, or the tow bill when it inevitably breaks down, or to replace the glass when someone breaks into it, or the insurance, or...
Money begets money. Poverty begets poverty.
Would I want to do any of that? No. Would I if necessary. Yes.
1 - https://us.megabus.com/
(Warning: unsupported speculation follows.)
The more crowded our environment gets, the more we feel that helping someone in need is someone else’s problem, and the less likely it is that the random person who might be able to lend you a room, for example, feels confident the community will back them up if you turn out to be trouble.
The kind of charity you need as a transient is harder to come by at an individual level than it used to be. You’re more reliant on institutions, and that’s a thin safety net to rely on to throw yourself across the country.
This reminded me of the Murder of Kitty Genovese, AKA the Bystander Effect. However, I just looked it up, and it sounds like recently researchers have questioned the validity of the original story, claiming that NYT exaggerated the number of witnesses.
https://en.wikipedia.org/wiki/Murder_of_Kitty_Genovese
Aside from the dubious reality of the support you describe, for someone with no economic capital, it's a big risk to move away from whatever social capital you may have. Social capital gives you access to job referrals, loans, couch space, bartering favors, social recommendations as replacement for a nice reliable job as surety when looking for a roommate, a vastly improved safety net and, it is increasingly recognized, mental and emotional health benefits.
tldr: people have been freezing to death for lack of resources for thousands of years too.
In which fantasy world do people in poverty just regularly find jobs in the city within walking distance of their magical free house in the city?
When I was living under $1000 budget, overdraft fee was unheard of, because when you have very little money, it's easy to manage, you only need a few hundred dollars in your account for daily spending. And bigger purchases (>$100) are planned so they can be actually paid for. I also never knew there were consequences for paying electricity late, because renting my own place is out of my budget.
Funnily, I only ran into those "poor people" issues like expensive credit card interest, overdraft fees, predator car loans after getting my first full-time developer job, because I stopped managing my expenses.
Totally, like when you blow a tire on the freeway? Or get into medical trouble, without sufficient insurance?
It's easy to fall down the hole without even realizing it.
If you lived uner 1000 a month and had to problems, then all evidence points to your situation being the outlier
Not to mention all the normal ways being poor is expensive (eg. you cannot afford to buy the long-term cheap, bulk/durable items, so you buy the more long-term expansive items because they are cheaper upfront).
For what it is worth, my only experience with the issues you list also arose from having too much money. I had split money across multiple accounts, and tried to transfer money into account A in order to fund a large payment from account A. Overdraft, because I did not wait for the transfer to clear.
I lived this, and got past it, but luck was a big part of it. Right place, right time, and some hero[1] gave me a chance. Not everyone is this lucky.
[1] Big thanks Gene, if you're still out there.
The Genes out there are rightly heros.
The conditions of parole required weekly visits to a far off parole officer visit that had no public transportation access.
So, no prospects to get a job because of (now almost universal) background checks. So, no income. And a defacto requirement to either have a car, or have money for a 15 mile Uber trip every week.
It basically means that if you are a parolee, you beg friends and family, or violate and return to prison for longer than your original sentence. The trip is a 3 hour commitment, so begging doesn't work well unless you have a really flexible friend or relative.
Oy. Guess what cycle that creates? People turning down parole just to not have that monkey on their back. Trading 5+ years of their lives because they can't satisfy an impossible ask. All for drug addict type issues... possession, shoplifting, public intox, loitering, driving with no insurance, etc. No violence, no real palpable victims other than themselves. US problem if you didn't guess already.
I'm with you on all but one of these -- driving with no insurance seems like a seriously bad idea, and should have consequences. Two tons of steel, even at moderate 35mph speed, is a lot of damn momentum and can do some real damage, and most certainly should be insured.
Some reasons why this is not so:
Bad credit and the likelihood of an accident are correlated because both are affected by risk-taking behavior.
People with high income are far less likely to make insurance claims for minor damage. They know that the deductible would prevent recovering most of the cost, and that the insurance cost would increase enough to offset what little was recovered. The claim payment is not worth the ongoing expense of higher premiums. People with low income are less likely to fund minor repairs without an insurance claim; they need the money to make repairs.
There is a fraud problem. I've seen this in person, getting advice from a heroin dealer who lived next door. I damaged my car. He said I should just report that I found it that way, parked on the street.
In the case of car insurance, the injured party is the driver you run into, or the property you damage. In the case of health insurance, the injured party is the hospital/doctors.
I always thought it was strange that so many states were totally on board with mandatory car insurance, but not mandatory health insurance.
1) The Obamacare mandate is an income tax penalty. If you don't work there is no penalty. Working is a choice.
2) Of course, working isn't a _real_ choice if you value independence. Like you hinted at, unless you live in an urban environment with solid transit neither is owning a car.
3) Also, the limits of our society's moral and legal systems are already tested by the very idea of private property. If you don't own property there's no place in this entire country where you can reliably and _legally_ simply be physically present without paying for the privilege in some manner. And because of property taxes, that's the case even if you were gifted property.
All the griping about the healthcare mandate is simply a failure of people to accept the _reality_ of our modern system, and the privileges they take for granted but refuse to accept the burden of. In any event, we can't roll back the clock. At the end of the day, as long as you're free to leave the country the only thing that has changed is that freeloading becomes more difficult. Which reminds me of another point:
4) The reasons mandatory evacuations are legally enforceable is because society recognizes that people of good will--especially first responders--will always put themselves in harms way to help people in distress. And we don't want to have a system that, to disincentive abuse, discourages help by making it too risky to help others or by making it too costly to ask for help. This is a fundamental conflict between individual liberty and social welfare. Most of the time conflict between individual liberty and social welfare can be mediated by degrees; other times we're faced with a binary choice. Much like mandatory evacuations, Obamacare simply recognizes that in the 21st century, the conflict regarding healthcare has become a binary choice. When the conflict becomes a binary choice, for a civilization it's not really any choice at all.
That covers 10 grand for the medical expenses for one person.
It's really a drop in the bucket if one gets into a auto accident.
The level of coverage is so small, I wonder why we are even required to carry insurance some days.
Now--I understand self-insuring. You have a nice car, assets(you don't want them attaching your home, or business), and want the best health care; you buy the best insurance, along with uninsured motorist insurance. You have a $40 grand vechicle, and want it replaced in an accident. Hell--yes, buy the Cadillac plan. I would, if I had a fancy car, and was used to the best health care.
I pay $700/yr for 10/20/10 insurance. I haven't had a ticket, or accident in 25 years. I don't drive much, but can't prove it because I have an older analogue car.
My point is the Insurance Lobby is the biggest lobby in my state, by a large margin--I believe. When they burp, my representatives pucker up. That Lobby is very powerful.
If insurance is just so dam practical, and efficient; what's up with the huge, powerful Lobby? And the rediculiously low rates of minimum Insurance coverage? I couldn't imagine getting in a serious auto accident, and being reimbursed $10 grand. My hospital bill is going to bankrupt me, but I get 10 grand from the guy with no assets. Assets, I could sue. They say every penny helps, but come on, we all know just how hospitals/doctors bill.
Some days, I think, most insurance, especially mandatory, is just a gift to the Insurance industry.
I don't want yo get into a moral debate. You won. Yes--driving is a privilege. We should all be financially responsible citizens. It's the numbers that don't add up in my world.
(As to the way the poor are exploited/treated in America, it just makes me sick. There's literally nowhere people can live for free. California has one place in Imperial County that the homeless can kinda live, without the fear of getting recruited into the penal system for essentially sleeping. I don't like my country anymore. I had an opportunity to live in France years ago. I regret not going. This is not the country I saluted to as a kid.)
That would be fine and dandy, if being without a car was accommodated for (not just in the parole requirements, but also in other aspects of US life, having a job, city structure, etc).
Else the car+insurance is just an additional penalty for poor people.
Shoplifting is not a victimless crime. It can be a big enough cost to drive small shops out of business.
If you're shoplifting from someone who's experiencing a shoplifting epidemic, you're doing more damage than you would by shoplifting from someone who wouldn't even notice. The severity of the crime is context-dependent. Not all shoplifting is equally bad. That's what I'm saying.
Feel free to engage in some black-and-white thinking and disagree. But don't tell me I don't "get how shoplifting works."
Except when you're shoplifting, you don't know whether you're the only one who does that to this shop, or the hundredth thief this day. If you had enough knowledge to know the theft load of shops in the area, you'd pretty much by definition be orchestrating higher-level crimes, with better margins.
I also don't know why you think someone who's "smart enough to shoplift" would automatically be running some criminal syndicate if they can lookup shoplifting statistics in their area.
Throwing me under the bus wouldn't have been terribly productive. I knew it was wrong, but hunger is a powerful motivator. I picked a big chain on purpose. Doesn't make it right, but I did try to consider to impact of my choices.
Going to jail wouldn't have made me somehow remorseful. It would have just made me bitter. I totally get the thought pattern, but living it is different than talking about it.
This ignores hotel taxes which often run 15-20% with the revenue earmarked for attracting tourism/convention traffic. In some ways, hotel taxes may be the most regressive commonly imposed tax scheme in the US.
The hotel itself charged refundable deposits that were 20% of nightly rent, and looked for ways not to refund them (checking out two minutes late, letting another guest come in your room). Meanwhile, prostitutes and drug dealers more or less only visit rooms in the high end hotels less than a mile away with nobody batting an eye.
Being broke sucks, capitalism at its finest.