A while ago I read about a study that surveyed people with inherited wealth. IIRC they ranged from having inherited tens to hundreds of millions. No matter how much they had inherited, when asked how much they would need to have inherited to feel financially secure and not have to worry about money, they said they would need something like half again to double.
I may be misremembering the details, but that was the gist of it but I couldn't find the article again. I suppose expectations scale up with means.
On the other hand discovering people they know are actually very wealthy seems to have a massive negative effect on people's levels of empathy. Wealthy people who have suffered bereavement or personal tragedy report people who are less wealthy than themselves rarely offer sympathy and they often get comments along the lines of 'knowing what it's like for the rest of us now', or 'what it's like to have a problem you can't buy your way out of'.
As someone from a former socialist country, I can confirm.
Situation has got a lot better in the last ~30 years, people have alot more, but since a few people got even more than that, some complain a lot. Average worker family has gone from bicicyles and maybe one yugo (or a "fico" - even smaller/cheaper) to two, maybe three european-mid-range cars + all the modern extras, but are not happy, because their neighbor has as 100k€ mercedes.
it makes some evolutionary sense tho - because objective wellbeing is only part of the competition. Relative wellbeing is what "counts" for real, esp. when competing for scarce resources.
Here it's "let my cow die, just if two of neighbours' die"
But yeah... we earn relatively little (compared to you), and have better cars than most of the northern europe... most of them on long year loans... It's not rare to see an (eg.) BMW X7 owner at a gas station pump 9.85eur of gas, than slowly fondle the pump handle, because he only has 10eur for gas. The neighbors see the car, not the amount of gas inside :)
Yes, according to one of my old economics teachers, above the subsistence level, happiness is approximately how much better off you are than your neighbors.
If you choose to play that game. In my experience focusing on what you need to be happy and ignoring your neighbors is a better recipe for happiness and a whole lot cheaper.
I wonder how much of that is innate rather than being driven by consumerist propaganda though. Do I really want a new car because the Jones's next door have one, or because advertising makes me feel somehow inadequate because I don't have one?
I think advertising has a role but it’s amplifying an existing cultural value rather than creating one. A culture which conceives of itself as capitalist naturally encourages thinking of wealth as your score and at least in the U.S. we lack much counter pressure pushing other values as equally important. Even things like religions which discourage this have been distorted to fit, as anyone who’s ever seen a prosperity gospel believer try to talk their way around the clear meaning of the needle’s eye parable can attest.
I think this comes back to basic primate social dynamics. We evolved tracking our social standing relative to others and wealth is pretty easy to compare. Advertising exacerbates that tendency but I don’t think there’s any way to get rid of it with standard issue humans.
I remember reading it initially some time ago - and visiting it anew I'm surprised how high the multiple is. In my head it was "10% - 25% higher".
My personal hunch is too many of us "shoot just too high" in terms of what we can afford, be it housing, cars, whatever.
Granted there are plenty of disciplined individuals and families out there and it's certainly not impossible to live within one's means.
But human nature is what it is - why "settle" for a $400,000 home when the bank will give you a mortgage for $500,000? Why settle for a Ford, VW or Toyota when the car finance payment for a BMW or Merc are just a little bit higher each month?
Maybe it’s because I grew up in a frugal household, but I have basically never felt like I needed more money since properly starting my career.
I mean it helps that I have tended to live in lower COL cities, but I have always saved a sufficient portion of my income, and I have never had the feeling that I want to buy something or travel somewhere and I can’t because I can’t afford it.
I don’t fly first class, and I rarely stay in luxury accommodation, but those things just don’t matter to me, especially compared to the freedom of always having extra money.
I feel like this is such a relaxing way to live, and I have never understood the lifestyle treadmill or conspicuous consumption.
Yeah, I pretty much ignore my bank balance and autopay my bills and mortgage and never have to think much about money. By the apparent standards of SV techs I'm well below the poverty line. I find it difficult to empathize with them.
Hi! I'll give it a try, though I didn't downvote you. My reading is that your comment is trying to argue with the one above it, even though you're both coming from the same direction.
GP says that "SV techs" are unrelatable because they always want more $, and mentions that they're satisfied with what they make. They don't try to say that they're not in a privileged position, just that they don't see the need to always be wanting more.
Your comment, then, is a bit of a non-sequitur - even though it's correct, you don't really have an argument to have with GP. Maybe it's just your phrasing that's throwing people off.
Thanks, I read it all a few times more and I think I can see what you mean, though it’s quite hard.
No matter how, I keep coming away with GP sounding like they’re humblebragging :) I don’t have issues with the literal content, just with the meaning I read into it.
Either way, thanks. This is the first time I’ve seen a comment on HN flip flop around so much on score.
I've observed that brushes with mortality or ill-health can also quickly alter one's perspective. Once one gets the perception that there's a threat of being physically unable to work for much longer, I think the drive to have an increasingly large "safety net" can become very strong.
Death is one thing; a long life of fragility is another. The latter costs more, and I think can cause some people to suddenly look much differently at their wealth.
Or you realize you may not die at any moment and find yourself too old or infirm to earn enough support yourself and you need to not enjoy the money now so you might be able to scrape by later.
depends on your goals. I don't worry for myself. I save about half of my take-home (and I don't make an SV salary). unless the bottom falls out of the software market completely, I'll be fine. I do worry for my friends and my young cousins who haven't yet found their path in life. it's not my responsibility to do so, but I won't have "enough" until I can protect them too.
For me the feeling of needing more money does not come from wanting to spend more now, but rather a foreboding feeling that any moment jobs could dry up and I'll need to support myself and others via savings in an extended recession.
Interesting. I'm solidly upper-middle-class (typical income for this forum, I imagine). I don't think doubling my net worth would make me much happier or financially more secure. It would allow a new Tesla instead of a used BMW. And flying business class for vacation. With the state of health care/insurance in the US, despite being a ridiculous amount of money by most measures, it wouldn't allow me to retire in the 50s or remove the concern that I'm one bad car accident or cancer scare away from financial ruin.
Yep, the US healthcare system basically means you have to be a multimillionaire when you've retired if you want to have any semblance of a comfortable retirement, because any serious injury or health issue (which will happen at some point) will do a damn good job of sucking up most or all of that money away super fast.
If you're younger at least you might get lucky with GoFundMe "insurance", but that requires your story being sad or unusual enough to go viral, or you have a large family and friends network (starting a donation campaign on GoFundMe.com, what just about every American has to rely on for serious health expenses nowadays). If you're old you're probably not going to be pulling at enough heart strings to rely on this, though.
They get free national health insurance, but it doesn't cover everything and dealing with the bureaucracy is a non trivial amount of effort. And there are still out of pocket deductibles to pay even with this national coverage. As a result people often purchase supplementary insurance.
It's the US, so of course "free healthcare" still leaves you with lots of large bills if you actually use any healthcare. Usually one pays for "gap coverage" insurance, running low-hundreds of dollars per person (consider: married couples) to cover things that aren't covered, or are poorly-covered, by Medicare[0] and those still don't mean you aren't going to have a substantial hospital bill if anything goes wrong (as they usually don't cover 100% of a bill, just like normal US health insurance)
[0] Medicare is our insurance program for old people, and I think also kicks in for those who are disabled at younger ages. Medicaid is the name for our HC program for the very poor. People get these mixed up because the names are so similar. Then of course there's our coverage for the active military and their families (Tricare) and VA healthcare coverage for retired military. And programs for other government employees, and their families. By the time you add it all up, a huge percentage of the US population is already covered by government healthcare schemes, actually, which is reflected in our spending enough on publicly-funded healthcare that we should be able to cover everyone with just that money, if our costs were similar to the rest of the OECD. Instead we still have the costs of private insurance and bills to individuals even when covered by healthcare (these can run into the five figures per year, easily, on top of insurance costs) and, for some of the above, huge expenses in addition to the costs of the government portion of the HC program.
[EDIT] Medicare gap coverage tends to run low-hundreds of dollars per person per month, in case that wasn't clear.
Medicare is reasonably cheap (assuming you paid Medicare taxes for at least 7.5 years; if you did not, it's at least $471/month). To be clear, "relatively cheap" is "at least $148.50/month; more if you have more income during retirement".
But past the premiums, there are deductibles, coinsurance (e.g. for hospital stays longer than 60 days), you still have to pay for medicines (how much varies), etc. See https://www.medicare.gov/your-medicare-costs/medicare-costs-... and the links from it for details.
> Yep, the US healthcare system basically means you have to be a multimillionaire when you've retired
That's just not true. Everyone qualifies for Medicare when they are 65 years old. An extra $150/month gets you supplemental insurance, with a lower deductable than many work plans.
Also, and this is significant, medical bills can't collect against retirement accounts. The law is that they can't touch it. Same with your house and car. You can have $10k, $100k, or a million dollars in a 401k, an ira, or a roth, and withdraw it as you need it, to supplement your social security income.
Retirees qualify for nationalized health insurance. In theory, those 65+ would be mostly immune for health-related bankruptcy (although co-pays/deductibles can still be problematic).
Anybody younger has to pay for health care out of pocket or buy insurance. The cost of paying OOP is exorbitant. Even buying insurance on the open market is outrageously expensive. In either case, major medical issues can easily escalate to be financially disastrous.
Edit - in my original post, I stated doubling my net worth (or income or whatever) wouldn't allow me to retire in my 50s due to potential medical costs. This is what I mean - even with a few million in the bank, retirement isn't feasible due to the cost of buying healthcare in the US.
I had this conversation with an uncle who lives in Scotland. He didn't understand why my dad was still working (at age 60). Medical insurance was the only reason. As soon as he got Medicare, he retired.
For the benefit of others who may be reading I'll mention a couple of other programs...
There's Medicaid, the federally funded healthcare program for the poor. It is free. As a single person there are really low limits on how much assets and income you can have and qualify. Kids are more easily qualified, even if there parents may not be. Doctor choice is limited, there are lines, etc.
There's also the VA, available for veterans. I'm not sure of the rules around this. But those qualified get free care.
Throughout the country hospitals are supposed to patch up anyone who shows up with an emergency. The patient will get a bill after, but they won't be left to bleed to death. This doesn't help with slowly developing problems, though.
Beyond these free programs, (and Medicare for retired folks, talked about earlier), there's also Obamacare, which subsidizes medical coverage for those making too much to qualify for Medicaid. Someone working full time for minimum wage and making $14k per year (which is enough to rent a room and have a junk car), might end up with a subsidized plan having a $6k+ deductable (which they don't have!), someone making double that (enough for an inexpensive apartment and a used car) would pay $175 a month for the same plan. Obamacare details vary by state.
People with jobs making more than the above often have health care offered through work, and no longer qualify for Obamacare plans. At the low end these plans may not be as good as the Obamacare plans. Typically these plans might cost the employee $100-$200/month and up if there are multiple plans to choose from (the employer may be contributing 2-5x that, depending on the job), and have a deductable of several thousand dollars, with yearly exams and routine screening included for free. The problem becomes that you have to pay for everything else up to your deductable, then costs are shared up to a max limit perhaps $15k, then the plan covers all costs for all covered care. The deductable and maximum double for family plans.
One big problem with all the plans with deductables is that it is near impossible to find out what anything non-trivial will cost, which is discouraging when you have to pay some of these costs.
Government employees typically have the best plans, similar to what the average white collar worker had 20-30 years ago. Small copayments instead of large deductables. These plans were phased out by most private employers because they were too expensive, for both employers and most employees.
I would guess the typical example of this might be a working age person who lived paycheck to paycheck then had a non-trivial medical issue to deal with. They may have already had other house/car/student/credit-card debt. The medical problem may have interfered with their ability to work. They may qualify for other free-care programs after they burn through all their savings.
(That's where putting those savings in retirement accounts would have helped, but with few exceptions you can't access that money before the age of about 60, and also remember that it's a borrow and spend culture here, not saving for a rainy day.)
The best one could say is that bankruptcy is a way to get a clean slate, wiping out prior debts, and to be sure that the homeless statistic you are looking at doesn't count those who moved back in with family as homeless (some do).
The worst one can say is that the system is optimized to extract as much money as possible form as many people as possible...
After doing the math, it's looking like my rough estimate was a little high, but I suspect the numbers I'm about to share is higher than you're thinking.
Sure, they qualify for Medicare, but that doesn't mean they won't be still be spending serious money on healthcare. According to CNBC, if you were retiring in 2019, as a couple in good health you'll need on average of $390,000[1]. That assumes you're on Medicare as well. I'm guessing most people here are about 35 years old or younger, so not eligible for Medicare for at least another 30 years.
If I assume 2.5% inflation over the next 30 years (the default given in the following link[2]), that $390k in 2019 becomes $860k in 2051.
Granted that seems to be the average, and there will be people with less expenses. But that's just healthcare. While you'll probably own your home outright by then, there's the eventual assisted living that might be in your future as well, which already can cost up to $1500-4000 a month today (with monthly expenses another $2k+)[3], let alone 40-50 years from now. Although I suspect some people help pay for that by selling their homes at that point.
So okay, maybe you don't need to be a multi-millionaire when you retire to be comfortable, but you probably should try to be a millionaire, at least you and your spouse together (assuming you're going to have one).
One thing I didn't take into account was Social Security, which assuming it's still around in 2050 that will offset some of this. I do have a bad habit of assuming Social Security is going to be either severely nerfed or fall apart by the time I retire, so I tend not to account for it in my retirement planning. Maybe you could knock off $300k thanks to Social Security checks, I don't know and don't have time to dig further.
But retirement funding is so dependent on an individual's expenses, ability to generate income, expectations, risk tolerance, and available resources such as assets and family. These are all different for different people. Life expectancy and related health expenses are a huge unknown. Rich or poor we are all going to die, but we don't know when or how.
I think it's reasonable to retire as a healthy 50 year old with a million dollars. I know that may be unconventional around here. The existing (subsidized) obamacare and (supplemented) medicare options are a pretty good deal, in combination with savings to cover deductables, out of pocket maximums, and dental. Medicaid would be the backup for the
worst-case scenarios, typically long term nursing home care. But that'll bankrupt most people, in most countries [0]. Is it reasonable to expect otherwise?
I was curious about the $390k figure you quoted, there wasn't any detail provided. I wonder if these are expenses over and above what medicare covers, like elective surgeries, or if this figure includes money for private nursing home care, etc. It was for two people.
Back to your original post, it is easy to keep retirement savings in a qualified 401k/ira/roth account that, along with a primary residence up to a generous maximum, is protected from medical debt with the exception of long term care. A retired millionaire should have around half of their money protected in such accounts. Do other countries give someone in similar financial circumstances a better deal?
This is patently false and what mikem170 says is true. My mother has little-to-no savings and had a serious issue happen where she was in the ICU for a couple weeks and then in a rehabilitation facility for a month and a half, and paid nothing.
The thing is, humans can't sense a constant velocity, we can only sense change. People always want more. Some people get addicted to the feeling of more and then a constant velocity actually feels like they are losing something. It's even possible to get addicted to the second derivative, ie. your upgrades getting bigger and more frequent. It's impossible to talk to people objectively about how good their life is because you just don't know what they are used to.
In all cases people struggle because they've absorbed things into their life that they now consider essential. The things you own end up owning you.
Isn't that social pressure? No matter how much you start with, if you end up with less than that, people see you as a failure. A person who inherits 10 million dollars and is afraid of going down to 1 million isn't as much afraid of selling his yacht as he's afraid of what his peers would think of him.
I know it doesn’t matter much but just to ground these numbers a bit - anyone owning or trying to own a yacht with “only” $10M is indeed heading towards $1M very quick.
Upper middle class know-it-alls sneer at the bad financial decisions of the guy living in the double wide with a brand new corvette in the driveway while the lower middle class looks up to his efficiency and prioritization.
A yacht is the same thing with the decimal moved a couple places. If your income is fat enough to give you 10m in the bank then you can definitely own a yacht so long as you don't mind living in the kind of neighborhood where your neighbors are plumbers instead of surgeons.
yes, but only in a rough sense. the ratio of maintenance cost to purchase price is much higher for a yacht (or really any boat) than for a mass produced car like a corvette. if you can afford to buy/finance a corvette, you can usually afford to drive it too. the same is not true for any boat larger than a canoe. there is a reason for the old joke about a boat being merely "a hole in the water that you throw money into".
One thing I learned as a parent is that kids always compare up the wealth scale, never down. I'm sure my parents noticed that, too.
I've never heard about the negative effect on levels of empathy. I suspect that it is unusual for people to have friends far poorer or richer, and it is easy to be dismissive of the problems of those one does not know.
> they would need to have inherited to feel financially secure
It seems ridiculous to most of us, but I can see how it happens. I grew up pretty poor - my father was a police officer and my mother didn't work because she had to watch the four of us. But I graduated with a degree in CS in '95 (if you're thinking about graduating with a degree in CS, try to do it in '95 because that may be the best possible year to do it) and am much better off financially now than my family was when I was growing up. Still, I keep worrying about my kids: I can pay to send them to college, but I can't afford, say Harvard or MIT. I have to keep reminding myself that they're far better off than I was at that age and I managed to turn out OK - I think part of it is that I end up comparing my situation with the people around me, many of whom are far better off than I am.
The average software engineer makes around 100k. If you have been working for 20+ years, has it been difficult for you to save up enough money for college?
Depends on the college. MIT says to expect to spend ~ $70K/year. $100K * 20 years = 2 million. Two kids * 4 years = $560K. That's a little over 1/4 (before taxes). So yes, it would have been difficult to save up that much money. I have enough to send them both to a public in-state school debt-free, but not an elite private school.
Professors don't make much these days, but check out the salary for university administrators in the US. The top of the food chain has quite nice compensation, and the amount of administrators is probably too high.
Universities also compete on who has the best food and nicest dorms. Prospective student often tour campuses, so having a pretty one with lots of rose bushes, ivy, and brick is good for recruiting. That all costs money.
Another thing is that elite private universities often have strong need-based financial assistance (discounts). MIT, for example, claims that the average need-based scholarship is about $47k (on tuition of 53k). They also claim 31% attend tuition-free.
Making a small inference: Those who actually pay the full $53k in tuition are helping those who pay nothing.
My kids are getting to college age and its worth considering that MIT has 11376 students whereas google claims there are 19.6 million college students in the USA at this time. So if distributed purely randomly, in the "everyone MUST go to college" USA, something like 99.942% of kids will not be paying MIT tuition.
Another thing to consider is if you're investing $280K in the MIT brand, do they offer any bachelors degrees worth $280K other than maybe CS and pre-med?
I get your point, but the bursars for those other colleges didn't seem to get the memo that they aren't MIT.
The thing is, MIT's tuition is fairly typical for a private university. If anything, MIT (and other elite private universities) offer better discounts than lower-ranked schools.
I would argue that it's hard to save enough for college at any income, due to need-based financial aid (aka perfect price discrimination by ogopolists). Most need-based systems take into account parents' income and college savings, and children of software engineers in particular are going to be near the part of the curve where that starts to bite.
I randomly chose Princeton's financial aid calculator because it was close to the top of Google. For a family with two working parents, two kids (one entering college), and $250k in home equity in Illinois (the middle of the USA):
* For a $100k/year SWE + a $25k/year something else and no college savings the expected family contribution is $30k/year
* The same family with $250k saved in a 529 college savings plan is $45k/year
* For a $125k/year SWE + a $50k/year something else and no college savings the expected contribution is $50k/year
* The same family with $250k saved in a 529 college savings plan is $66k/year
* The same family with $450k in home equity is expected to pay $75k/year (I guess you're expected to take out a home equity loan to pay for college).
* Make the family renters with $50k/year income (30k+20k), and their contribution drops to $4.4k/year.
The point is: The more you save, the more you need to save. And the more you make, the more you need to make.
That's not to say need-based tuition is bad policy. But, it does mean that "surely it's easy to pay for college with your level of income" doesn't really come into play until you reach the top 1-2% of income.
Everyone below that is going to have their tuition adjusted to make the out of pocket cost painful but bearable, and the average SWE isn't a 1%-er.
As I become more wealthy, I have started to tackle problems that I never really thought about when I wasn't as well off, things that cropped up when I thought I'd finally have peace of mind. In retrospect, the insecurity was always there, but I had the luxury of ignoring it when I was poorer.
Once I started making enough not to worry about rent, the problem was then saving enough for things like retirement, setting up tuition funds for the family, etc. Now the problem is managing my mix of investments and having a big enough pad to insulate myself from the occasional recession. But, I think even if my net worth were to triple there isn't really anything I can do to avoid a great depression-level economic catastrophe. Beyond that, I know not what money problems people with eight or nine figure net worths are scared of but I would assume if I ever made it that far the anxiety won't go away.
Just remember that your anxieties are child's play compared to the anxieties of people worrying every day about paying for their place to live, food or health care. These worries are tally different.
People out there having bigger problems does not diminish your own. To me, getting my children into a good public school is a current problem which is giving me anxiety. Someone saying "that's not really a problem, at least you can afford to feed your kids" doesn't come off as helpful or ease my concerns.
Similarly, billions of poor people in developing countries would kill to swap places with the poorest American, but that doesn't mean the latter has a good life.
I once read something that resonated with me (though I can't remember where), in essence that everyone has a default level of stress and anxiety that they feel (a "stress bubble" if you will), and it does not matter so much what your particular life situation is, you tend to fill up the "bubble" with whatever is going on in your life at the time. The idea is that you feel the same amount of stress as a teenager with your social issues as you do as a successful adult with more than enough money to live comfortably.
This really impacted me because I definitely came from a poor-ish background where I lived month to month and only thought about paying rent and whatnot. I then went to community college at 29 to give myself a chance at something else and then ended up making well into 6 figures having worked up to a director of a software company (unheard of in my social circle growing up).
At the time that I read this I remember feeling just as stressed about work things and family issues as I was when I didn't have health care and could barely pay my rent. Looking back, I remembered that I would feel just the same way about friend issues as a teenager when that was my whole world - something I would now scoff at as unimportant and incidental. It helped me realize that a lot of my stress levels were "baked in" to me - but that also meant I could affect my stress levels by being aware of my bubble.
Now when I am feeling stress about my financial portfolio or my kids getting proper education during the pandemic, I make a conscious effort to compare it to the helpless feeling I had when I made no money and felt powerless and that allows me to shrink my stress bubble. I also empathize much more with my kids and when they are stressing about something that my adult self realizes is not consequential. I remember that this is just them "filling their bubble" and to them it is just as important as the things I am dealing with. It also makes me appreciate those people who have a naturally small bubble and realize that that is also often a factor in their success (e.g., though I don't know Elon Musk, I can imagine that he has a naturally small stress bubble that allows him to drive so hard for success).
This is not to criticize you in any way, on the contrary, I agree with you 100%. But it is an empowering way of looking at your life.
This kind of dismissive attitude toward peoples' problems is unhelpful. Following your line of reasoning, there are people with crippling diseases in the world. People worrying about a place to live etc should remember that their problems are child's play compared to theirs. And those people should remember their problems are child's play compared to someone being targeted by genocide.
There are nearly 8 billion people in the world. You can always find someone worse off, that doesn't mean people are undeserving of empathy if they aren't the one single worse off human being. This sort of worst-off competition is dehumanizing.
That is really a terrible argument. I am sorry but I am not going to feel sorry about you just because you are stressed about which crazy expensive private school your kids should go to. It is not really a worst-off competition it is just that at absolute level of suffering your issues are ignorable.
> it is just that at absolute level of suffering your issues are ignorable.
I'm curious, how do you go about establishing that level? Do you think it's really absolute, rather than relative to the stressors the observer feels? In reality, I think that's how most people actually operate. Something (extremely roughly) along the lines of: T >= O, where T is suffering of the target and O is suffering of the observer, results in empathy.
That gets caught up in the fact that suffering is more about perception, and is itself relative. So maybe we have to say both are level of suffering as perceived by the observer.
Something along the lines of "if I perceive you as suffering more than I do, I can have empathy for you". For what it's worth, I think this gets at the heart of the difference between sympathy (largely pity) and empathy more generally.
They're really not child's play. At least not for me.
I've been poor. Not homeless poor, but paycheque-to-paycheque, zero dollars in the bank, $1500 on some maxed out credit cards, just budgeted out the non-negotiable bills (rent, heat, credit card minimum payment) for this month and I need to find $8.47 in the sofa to break even and guess I'll hit up the food bank to feed myself again sorta poor.
I make... decent money now.
Is my life objectively better? Yes.
Does the stress of figuring out where my next meal comes from and the stress of figuring out where my meals 30 years from now and how to finance my child's education feel different? No.
Anxiety is anxiety. Just because in a global context it's not as bad doesn't mean it's not as bad to the individual.
If you have a reasonable level of wealth invested in a diverse range of products you really don't have much to fear from a great depression.
A brutal and unfair characteristic of recessions is that the pain is very unevenly distributed. I've lived through several severe recessions here in the Uk and myself and my family were fine because we had comfortable jobs and incomes. Our house prices didn't appreciate as much and our wages were stagnant for a while, but we were fine. The pain falls on people who lose their incomes, lose their investments and come out of college with no jobs to chase.
I'm in no way diminishing the real hardship that these events cause, it sucks.
I've been thinking about this a lot lately. There seem to be two "problems" to solve for.
1. A permanent loss of wealth.
When you've got more cash, you've got more to lose. People have more to gain from robbing/suing/hacking you. Being sued when you only have a year of savings is much different than being sued the day before retirement. The various life/house/health/car/umbrella insurances should hopefully put these worries at ease. Or at least that's what I've been telling myself. Being in the earlier part of my career, I've been looking more at life and disability insurance if fate messes me up before I've built up a nest egg.
2. A temporary loss of wealth (Plan for a rainy day. Then solve for an even rainier day).
This one gets me good, since there's always another increasingly more obscure edge case I didn't plan for. Like you said, these always existed before, but there were just larger problems eclipsing them. I think it's important to remember that there can always be a rainier day to plan for, and that it becomes a slippery slope into the prepper lifestyle (not a bad thing if that's your jam!). I think what's been giving me a break from this anxiety is a flexibility of lifestyle. If there's some sort of crash, I don't need to diversify to the magical ratio that happens to survive that crash - I need to keep from drawing a significant amount of money until the markets recover. Maybe this means dropping cost of living (where a more lavish lifestyle will have more fat that can be trimmed in difficult times). Or, if I'm still lucky enough to be employable at that time, I can work to ease the burden. This doesn't blanket over "world has devolved into chaos" scenario, but having stock in oil or a collection of gold bars probably wouldn't help much in those cases either. You'd have to go full prepper :)
This study maybe true. But there are levels of poverty where people don't just have a subjective desire to have more money but have real hard worries about paying for food, health care or a place to live. That's totally different from people wanting a nicer car or nicer house and way more psychologically stressful.
The lack of empathy for the wealthy goes both ways. The wealthy traditionally haven't had much empathy for people with less money so it's not too surprising that people with less money don't have much empathy for them. It makes me really angry when I see multimillionaires in the news warning about the risks raising the minimum wage. It's actually pretty sad.
As another ex-poor person: some of this is OK and some of it doesn't really ring true.
E.g.
> That’s the drop-off you experience at the lower price levels - there’s nothing between “This is a tiny but acceptable apartment” and “Slum apartments in stab-ville”.
I don't think this is true, and why would it be? Unless you're in an area where the housing market is cliffed for some legislative or regulatory reason. But most places, no, I've not seen this. You might have to put effort in to find nicer places on a budget, research areas, etc. but isn't that true of any purchase?
It's true that when you're poor you never get close to those naive 'this is how much of your income to spend on rent' suggestions, but there are places that cover the whole spectrum.
> Whichever you choose, a person of less-than-intermediate income has to be prepared to stick with the rental long-term, should things not go well. This is because apartments at both of these levels quite accurately assume that you can’t afford a lawyer - while it’s normal to put down a month or two worth of rent as a security deposit, it’s much less normal to get it back; the apartment complex has no reason to give back thousands of dollars they can simply keep. This means every time you move, you pay something like a third to a month’s wages for the privilege. Since breaking a lease often means you lose your privilege to live anywhere non-hellish, this means if you don’t have cash reserves (more on these later*) at the exact right time of year, you might end up in the same place for another full year whether you like it or not.
You stick with a rental longer term because of overheads, yeah, but I wouldn't go into a rental contract expecting with certainty to lose 100% of my deposit.
Rather what happens is you get good at doing minor legal research and writing terse emails about it. Maybe many are scummy by default, but most roll when they see you've got even a little knowledge about what you're entitled to. That's a valuable skill for life in general, so it's something you should be learning to do regardless.
> a person’s pay is determined by how rare their skills are and how much demand there is for those skills. The value of their work doesn’t factor in as much
What's the value of a person's work that isn't just determined by the first part? What does the author think drives demand, if not the prospective value you provide to the various companies in the labor market?
> > a person’s pay is determined by how rare their skills are and how much demand there is for those skills. The value of their work doesn’t factor in as much
> What's the value of a person's work that isn't just determined by the first part? What does the author think drives demand, if not the prospective value you provide to the various companies in the labor market?
The value of your work is "how much money would the company lose if no one did the exact job I am doing". This generally has 0 correlation to your wage, because in general a company will think in terms of "how much money would the company lose if anyone else did the job this employee is doing", which is a very different question. This is how it happens that many absolutely essential jobs, without which society would simply stop functioning, are also among the lowest payed. Probably one of the best examples is nurses, but also warehouse workers, transport people, construction workers, farm hands.
I assume that when he talks about 'rarity' of skills he's talking about supply. Almost anyone can be a farm hand; supply is huge and individual workers are fungible. So wages are low.
"how much money would the company lose if no one did the exact job I am doing" seems a bit of a moot point when it's not even close to being the case that no-one would do the job in question. _Expected_ value then approaches price paid as you weight in the probability involved.
Well, this is exactly what he explains as the reality, and I agree that this is how the job market works.
However, that's not to say that it is a good state of affairs, or that it is the only way things could work. In fact, the purpose of workers' unions is exactly to stop this kind of thinking, and it seems like this may once again start spreading a bit, given the recent movements in Amazon and other places.
The problem with this is that the company is using its leverage over workers to treat them as a commodity. If workers had more leverage, they could refuse the job unless they were paid a fair wage (the value of their work as I defined it above), but as it is, they are forced to compete with other workers since not working would see them and their families homeless and maybe even dying of hunger.
With the current state of affairs, the company owners end up extracting much more value from their workers as profit, often by deliberately fixing the wage market (as we saw with the illegal SV "no poaching" deal for tech workers), or at least by seeking to attain geographical monopoly status in it.
I'm not sure it's ever going to be the case at the very bottom of the skill continuum that workers won't be seen as a commodity given just how replaceable they are to the company. For some jobs you could have your whole workforce strike, fire them, and replace them the next day with a minor blip in productivity. The only thing that stops that is regulation or wider organization than just that particular worker segment, neither of which seem forthcoming in the US, at least.
Well, showing up to work for someplace that did this used to be called "scabbing" and carried quite a bit of social stigma. But yes, this requires wider organization and some regulation. This type of organization and regulation do exist in many places in the world, and can work decently well.
Value, not demand. A nurse who helps stop 50 people from dying each week is doing very valuable work, but a talented lawyer helping to defeat valid class-action lawsuits (negative value work) is probably paid more.
Healthcare is kind of a special case though, in that it's not really a free market (whether you think it should be or not).
So the value of what medical professionals do isn't really signalled through. The lawyer has high value to the company that pays them, so they probably meet the first part exactly: rare skills in high demand.
Okay, but now consider other monopsonies. There are plenty. What most people get paid is almost entirely decoupled from the net value they create, and oftentimes it's only tangentially related to the value they give to their employer.
The labor market isn't fully efficient but I don't believe it's "almost entirely decoupled" from the value employees provide. If you provide with certainty $100k/y of value and your employer pays you $30k/y, there'd be no shortage of entities willing to bid up that price. Who wouldn't take profit within their risk tolerance? What mechanism do you think would prevent this from happening?
• Job security – some people are just too poor to go on the job market for a few weeks or months, meaning they don't have much leverage to get their employer to increase their pay…
• Perverse incentives – some jobs are all about destroying value, e.g. loan sharks, most of the advertising industry… http://news.bbc.co.uk/1/hi/8410489.stm (2009) has a short list.
• Monopsony – what if your employer is the only one currently in a position to make that much from you (or all the competitors have already filled their positions)?
I could go on, but I'm only scratching the surface of my surface-level knowledge.
If these reduce the value you provide then that's as designed. How can you provide value without skills? How can you provide value by _not_ doing things you find unethical? These aren't inefficiencies of the market for labor, they're facets of it working exactly as desired.
> • Job security – some people are just too poor to go on the job market for a few weeks or months, meaning they don't have much leverage to get their employer to increase their pay…
Do you... quit your job before you look for a new one? Increase in pay levels for lower skilled jobs is not really about individual cases, but the aggregate. If Profession X generates more value than the current pay level, that increases general demand for Profession X, and reduces the time needed to match up with a new employer. Sure there's some thresholding involved, but not enough to 'entirely decouple' price and value.
> • Perverse incentives – some jobs are all about destroying value, e.g. loan sharks, most of the advertising industry… http://news.bbc.co.uk/1/hi/8410489.stm (2009) has a short list.
Eh this is pretty hand-wavey stuff. Loan sharks don't _destroy_ value from an economic perspective. Nor does advertising. Nor does banking. Societal problems though they might have.
This means that you can't model it as a liquid market.
> Do you... quit your job before you look for a new one?
I don't, because I don't work such long hours that I don't have the capacity to do anything after work. Some people have multiple jobs just to cover rent and food; adding a third (looking for new jobs) isn't always possible.
> Loan sharks don't _destroy_ value from an economic perspective. Nor does advertising.
Then economics is wrong. Wasting people's lives and attention is destroying value. Keeping people in debt, causing suffering… you're not extracting as much value out of people as they're losing. They're net negative.
I vigorously agree that some jobs destroy value on net, but the report described in the BBC's article is pretty unconvincing. I have the impression that the people who wrote it knew what conclusion they wanted before they began.
As an example, they claim that the UK's top bankers and fund managers destroy about £7.40 in value for every £1 they get in salary. How do they get that figure? They assign to those people ...
* 100% of the predicted reduction in UK GDP from 2008 to 2014 as a result of the 2008 crisis (as measured by the difference between IMF forecasts immediately before and immediately after)
* an "adjustment to reflect a loss of 5% of UK economic capacity between the onset of the crisis and 2020" (that sounds like double-counting to me, but I can't tell because they don't give any details)
* 100% of an estimate of increased debt as a result of the crisis, obtained as the difference between an IMF forecast immediately after the crisis and the UK government's forecast immediately before it (sounds like more double-counting to me, and I bet the government's predictions are systematically more optimistic than the IMF's)
* an "allowance for debt servicing costs on the additional debt incurred"
* 50% of 1/6 of the tax revenue from the UK financial sector (treated as a pure positive to weigh against the pure negative of value destroyed by the 2008 crisis). The 1/6 is because they guess 5/6 of the UK financial sector is retail rather than wholesale finance and consider the gains attributable to top bankers to be only in the wholesale part. The 50% is because not all of the tax paid by the wholesale financial industry is paid by, or otherwise attributable to, its top bankers.
* 50% of 2.5% of the UK's GVA or "gross value added" as estimated by the ONS. The 2.5% is the ONS's estimate of how much London financial services contributed to GVA. The 50% is because not all of that is attributable to the top bankers. I don't know why they're using GVA here but GDP when estimating value destroyed by the 2008 crisis.
* 50% of 50% of an estimate of post-tax earnings of finance workers in the City of London. Post-tax because they already counted tax revenue. 50% because not all the credit for those people having those jobs belongs to the top bankers. 50% because if they didn't have those jobs then they'd presumably have other jobs.
The costs of the 2008 crisis are considered as a one-off. For the benefits, which are a recurring thing, they assumed a 20-year career for those bankers.
Soooo many things about this look highly dubious to me. There isn't a 2008-scale crisis every 20 years. The 2008 crisis was a global thing and we have no idea what fraction of it was the fault of people in the UK, versus what fraction of its effects were suffered by the UK. It's not at all clear that it's entirely attributable to "top bankers". Their measures of value destroyed by the crisis look very susceptible to double-counting and other errors. If there's a good reason for using GDP to reckon the loss and GVA to reckon the gain, it eludes me. So far as I can tell, the ONS's reckoning of the financial industry's contribution to GVA is looking only at things like how much revenue the financial industry gets for the services it provides, whereas the claimed benefits of the financial industry to the economy are all about things like providing liquidity, more efficient allocation of capital, etc., which they don't consider at all. Almost all the key numbers in their calculation are low-effort guesses: look at all those "50%"s.
I would be 100% unsurprised if it turned out that top bankers' net contribution to the world is negative. But I don't think this report really tells me anything of value about whether that's so.
That was the first profession in the report. I haven't looked at the others. I strongly suspect they are just as terrible as this ...
Value is relative to the labor pool. If you hired me to inject vaccines instead of a nurse, after some light training I might be able to stop 40 people from dying every week rather than 50. That doesn't mean I would be 80% valuable as a nurse. I'd be providing negative value because there are plenty of nurses who are also willing to do the same job.
Also, if you consider class action lawsuits as overall positive value, then necessarily both sides of the lawsuit are producing positive value.
By “negative value“ I mean “the world would be better off if nobody did that”, not “negative relative to the counterfactual where you didn't do it”. The latter is good for individual decision-making, but it isn't very good for accurately compensating value contributed… unless we have some variety of UBI, but regardless, that's no longer capitalism; it's an inverse job auction.
> Also, if you consider class action lawsuits as overall positive value
I don't. But the vast majority of class action lawsuits I've seen have been valid, and the vast majority of class action lawsuits have paid out nowhere near enough to even discourage the behaviour, let alone compensate the victims. With a good class-action lawyer, class-action lawsuits just reduce your profit margin slightly, as a cost of “doing business”.
I can't imagine how you could think that I think that, unless we're working off drastically different models of how the world works.
>The latter is good for individual decision-making, but it isn't very good for accurately compensating value contributed
Why not? How could an economy function if it were based on real value as opposed to relative value? Farmers and water treatment engineers would all be billionaires and everyone would waste a lot of resources trying to become farmers and learning about water treatment. If you drive a truck of medical supplies, you'd make millions, but if you drive a truck of consumer goods, you'd make very little, despite doing the same work.
> and everyone would waste a lot of resources trying to become farmers
• There's only so much arable land, so people couldn't do this.
⋄ Thus, people who wanted to become farmers but didn't have land would either give up, or innovate things like hydroponics.
• There's only so much food people need to eat. Producing more than that isn't contributing value; in this case, markets approximate that reasonably well (though with other problems, so many governments subsidise food production in some way).
• People already waste a lot of resources trying to become tax-reduction lawyers or middle managers¹ or gain other high-paid, useless jobs.
> If you drive a truck of medical supplies, you'd make millions, but if you drive a truck of consumer goods, you'd make very little, despite doing the same work.
Good point! This hypothetical system that hasn't had hundreds of years to work out the kinks has some potential issues. I wouldn't say it's worth dismissing it out of hand because of that, though; they don't seem like fundamental problems. For instance, the current system already distinguishes between rapid medical transportation networks (e.g. organ motorcyclists) and regular ol' freight.
Before trying to solve these problems, we should work out how the (magical, instant, “everyone just decides to start doing it”) introduction of such a system would change society. It's entirely possible that it would change enough to eliminate this problem, and introduce others in its place.
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¹: Middle management isn't inherently useless – there can be useful hierarchies involving middle management, I'm sure. In my personal experience, I haven't encountered any, and popular culture agrees with me so it's decent shorthand, but if your job title is “middle management” and you have a genuinely useful job, this isn't a dig at you. (Tax lawyers, though… offence intended.)
I'm not entirely sure what you're suggesting. There isn't a middle ground between a market economy and planned economy. In a market economy, a corporation's tax-reduction lawyer is always going to make more money than a nurse. You can reduce this disparity by reforming the tax system. However, the problem is that it's not politically advantageous to do so, so nobody does it.
> There's only so much arable land, so people couldn't do this.
Rather than invest in stocks, people would buy a small patch of land to grow their own food. This would not be an efficient allocation of capital.
> There's only so much food people need to eat. Producing more than that isn't contributing value; in this case, markets approximate that reasonably well
What makes nursing any different in this regard? There certainly is a healthcare distribution problem in the US, but it's not because nurses are being paid too little. Nurses in America make the same, if not more, than nurses in the rest of the world.
You don't even need a nurse - a farmer is preventing multiple people from starving and a cleaner is preventing multiple deaths from parasites and infectious diseases.
>What's the value of a person's work that isn't just determined by the first part?
The value of the work done, either in a physical sense (because it produces something of value) or in a societal sense (because it involves doing something of value).
If you're the best hole-digger in the world, and people are constantly trying to hire you to dig holes so that they can fill them in, then you would be highly paid - but would your work be "valuable"?
Probably very few people are true free-market believers when it comes to the idea of fair pay.
yes, if somebody else would be willing to swap their hard earned "value" for it.
The problem is when people making decisions to swap is not swapping their own personal "value" they accumulated themselves, but someone else's (usually the tax payers').
IMHO the problem is deeper than that. Economists often wrongly and silently presume that free market equilibria lead to desirable states of society but there is nothing in their theories that would warrant this. It works for simple trades (bargaining) but once you're at the level of institutions there is no need for a match between institutional needs and the preferences and desires of individuals in a society. For instance, to build a certain product a company needs a certain distribution of different types of work. These needs of the larger institution need not match individuals' life choices at all. Some jobs can even be so desirable that workers are willing to lose money in the long run (that's e.g. how Amazon benefits from selling the works of self-publishers who often overall lose money). Consequently, since people need to make a living, even in a fully functioning free job market there can be a substantially large number of people who are pressed into choices that make their lives miserable.
> If you're the best hole-digger in the world, and people are constantly trying to hire you to dig holes so that they can fill them in, then you would be highly paid - but would your work be "valuable"?
If people get transcendent joy out of filling in holes, or the filling-in of holes otherwise matters to them, then this is valuable. In a real-world scenario, it's a bullshit job: https://www.strike.coop/bullshit-jobs/
I don't think this is true, and why would it be? Unless you're in an area where the housing market is cliffed for some legislative or regulatory reason.
I have a friend who works in real estate and he tells me people in difficult circumstances pay a premium because of the risk of default and damage. The landlord needs more margin to cover those extra risks.
He also told me you could never make money at the bottom end of the market if you have middle class sensibilities. It's pretty ruthless at the bottom.
Right, but there are presumably people at all levels of risk, not just risky people who pay a premium vs non-risky people who don't. Reduced variance is good for landlords too, so there's definitely an incentive to accurately predict and make granular the risk profile/credit check/etc.
I've seen this effect a few times with housing. When viewing either apartments or shared rooms, not being discerning enough at the advert stage has resulted in viewing some absolutely terrible places - damp, poorly heated, unmaintained, and the sense from interacting with the landlord that their MO is firmly "slumlord". The really surprising thing is that the rent demanded for these places is often not much less than the rent for a much nicer space in the same area of the city - maybe £50-£100/month.
I think when supply and demand meets minimum wage you get an incredibly non-linear effect in bang for buck. I'm sure there are exceptions (the property market definitely has a negative survivorship bias where the nice cheap properties are never on the market for very long while the terrible ones are).
There is definitely non-linear pricing in the London housing market as one example.
When I was last looking -
Studio apartments and one bed room apartments rented for similar amounts, and so did two beds and three beds.
But the price jump from one bed to two bed was much larger than any of the other jumps.
You can speculate on many reasons why this might be the case (smallest size apartment for a family in the city, smallest size you can split with a friend, smallest size with space for an office).
There are exceptions and I'm sure that more research time could help you find them.
But one of the points made convincingly in the artle is that if you are poor you don't have a lot of energy, time or gas-money to do that kind of research.
I mean, we can talk about price jumps between bedroom counts if you want but I'm not sure it's very relevant to the article, which is saying there's only "stabbyville" and "safe" places given other fixed requirements. If you need a studio in London, they exist all through the price spectrum, area spectrum, and other dimensions. I suspect the 'jump' you see from one bed to two is that, on average, two beds are in nicer areas, or they are houses rather than flats, freehold rather than lease, etc. Bedroom count is correlated with other features that also increase the average price. But that doesn't mean there aren't two beds in cheaper areas too.
The typical tradeoff in London is price vs proximity to work/transport. For most people. Safety comes in at the very bottom end, but still you can live far out and commute. I'm not saying that's a pleasant experience, or that being poor is a pleasant experience in general, but the tradeoff and choice exists. If you have a job in central London that you'd commute to though, fact is you are already probably well off compared to most of the country. It's a bit like how student debt mostly affects the middle class. Same with expensive season tickets for the train.
> But the price jump from one bed to two bed was much larger than any of the other jumps.
That price jump isn't particularly surprising given London's one bed flats are competing against a vast number of individual rooms in shared properties rented out (which is regarded as a normal living arrangement in London, including for professionals, somewhat older people and to an extent couples). Obviously people who need an extra bedroom aren't really in that market, and the second bedroom is also easily [sub]let out separately.
> But the price jump from one bed to two bed was much larger than any of the other jumps.
The jump between sharing and a one-bed flat is certainly larger. A two-bed on two incomes is a pretty decent arrangement in London (if you're a couple for example); a one-bed on a single income is much much steeper.
It's a maximum of two unrelated households (a household can consist of couple or single person) in a property unless the landlord has an HMO (Housing of Multiple Occupation license).
So a 3+ bedroom property still houses a maximum of 2 couples.
>> That’s the drop-off you experience at the lower price levels - there’s nothing between “This is a tiny but acceptable apartment” and “Slum apartments in stab-ville”.
>I don't think this is true, and why would it be? Unless you're in an area where the housing market is cliffed for some legislative or regulatory reason. But most places, no, I've not seen this. You might have to put effort in to find nicer places on a budget, research areas, etc. but isn't that true of any purchase?
The thing that I've noticed is that yes the sweet spot exists but the supply is always more limited. You have higher availability on living because it is so expensive that not everyone can afford it(or think it is worth it). And the cheap in not so good areas (not necessarily dangerous but gives e.g. longer commutes and has less services and so on) have a higher supply because of that. The sweet spot in good location and a good price is going to have all houses and/or apartments taken. Then the surprise happens, since supply is limited at this sweet spot the prices tend to rise so you get that cliff mentioned in the article.
I’ve lived in small towns in Illinois and Texas, mid-sized in North Carolina, and big cities in Texas and California. That’s enough to know that housing markets are wildly divergent across the US, and really can’t be generalized.
The author seems to be describing how things are in metro Phoenix. Having not lived there, I’d assume it’s as described.
I will say that my experience has been that there’s a paradox: it should be much easier to get by as a poor person in small towns as everything costs a lot less, but paradoxically there’s even less work to do so it’s hard to even come up with the low local costs. In the end, poverty is always relative to the local market.
I'm surprised he doesn't know not to pay rent for the last month and make them use the deposit for it. That's what I always did when I was poor. No way they're gonna evict you in 30 days, especially if they know you're leaving anyway.
That came to my mind as well. If I don't expect the deposit back and cannot afford to claim it, let's just turn the tables and make them claim something from me.
Here in the UK that would destroy any chances of renting anything decent in the future. Any agency/landlord will always ask for references from your current landlord, if you dick them over like this you can forget ever renting something that isn't a slum where people don't care about references.
Also deposits are always(by law) held by a third party in escrow, and it's actually a bit of a pain to claim any money from that as a landlord, so it's really rare that people lose their deposits unless the place is absolutely wrecked.
In reality (in the UK), those references precede your current landlord getting to check your apartment's condition out. By the time the landlord has ascertained the state of the property, the reference has usually been given.
In the US you can sue for anything. Smart landlords only confirm that someone lived there, and other easily verifiable information, since if they sometimes give a good reference and sometimes neutral that means neutral references are bad and they can be sued for that. If you get a anything more as reference from a landlord it is because you were bad enough that the landlord sued and won (it is safe to assume this never happens, though there are exceptions)
Don't confuse suing with winning. You can sue someone and lose, but the lawyers will still cost both sides a lot of money.
You can't even get a lease with bad credit. And with poor credit you're not getting these "$200/month" offers for leases. Those assume pretty good credit scores, which you almost certainly won't have if you're poor enough you have to let utilities get shut off.
Maybe in the old days not paying your last month's rent would be an option but not today.
Nobody who is truly poor would skip out on the last month rent unless they were desperate, because the landlord will find things wrong with the apartment and will charge you the most or all of the security deposit. Then they will file an unpaid dept claim, turn it over to a debt collection agency and it will hit your credit score. Which means in the future you have to rent in the really scary parts of the city, and if you don't want to rent in the really scary part of the city you'll pay your last month's rent. Also a lot of jobs check credit scores, a bad report could keep the author from getting hired.
In regard to the car, the author doesn't have the credit score or income level to even qualify for the lease let alone, "the cheapest lease deals", not to mention the author certainly doesn't have the $3K down payment. If you are thinking that they can just roll the down payment into the lease, well they only let you do that if you have the best credit score.
upstanding citizen who briefly rented from a slumlord (NYC) here. When it became obvious my landlord wasn't gonna give me my deposit back I just didn't pay the last month's rent. never heard another word about it. I left the place spotless, as I would've regardless of anything related to the deposit.
>while it’s normal to put down a month or two worth of rent as a security deposit, it’s much less normal to get it back
This looks insane to an Australian. I have moved house 4 times in the past 5 years and I have never not got all of my bond back. Some states here have a rule that the bond money is held by the state so that the landowner doesn't just take that money for themselves. How can the poor ever break the cycle if no one is willing to help protect them from shitty rent-seekers?
I don’t know the statistics, but I live in the US, and had rented for 10+ years with 5 of 6 different landlords in 3 cities, and I always got my deposit back, and I don’t know anyone who was stiffed either. But I wasn’t staying in the worst places, but not the best either. One was an informal cash transaction rental from a Craigslist ad and it worked out.
Stay in a slum and you'll find those who are more than happy to break the rules if they know they can.
You probably have the mental fortitude to figure out how to fight back on your own. To read the docs, know your position, agreements, and how to take a landlord to court to win.
In low income, people don't know their rights nor do they ever believe that the system could ever be on their side. And, they're not unjustified in that thinking.
Through 3 landlords I only got a security deposit back once. Both times it was claimed they needed the money to repaint the apartment (I didn't damage the walls or even put anything up on them).
A lot depends on state and local laws. In San Francisco, for example, I get interest on the security deposit my landlord is holding credited to my rent every year. They cannot charge for reasonable wear and tear. So even though the deposit is large, I expect ~100% of it back when I leave. If not, there is a strong tenants union that will support my case.
In the US, there are sharp race and class disparities here: if you’re white and pass for at least lower middle class, you are much less likely to have an issue because even unethical landlords know the police and courts will listen to complaints. Go outside of those communities and complaints become more common, often with accounts of a rental company caving immediately after someone demonstrated knowledge of their legal rights and lack of fear to contact the justice system.
> caving immediately after someone demonstrated knowledge of their legal rights and lack of fear to contact the justice system.
Sounds like the solution. When I was younger, people would try to take advantage of me, but all it takes is a bit of standing up for yourself and they concede.
Yes, but note that your standing to do so varies considerably — I've never had problems doing that as a white man but I know people who declined to involve the city / law enforcement because they had had past bad experiences due to being black, gay, etc. If the landlord threatens to call the cops and you know a history of people like you having been mistreated or simply blown off, you might give up and accept it as another example of the world being unfair to add to many others.
If you believe that nobody has tried to cheat me, steal from me, take advantage of my ignorance and inexperience, steamroll me, threaten me, con me, etc., you're very mistaken.
The post explained the problem with getting deposits back very clearly:
> This is because apartments at both of these levels quite accurately assume that you can’t afford a lawyer - while it’s normal to put down a month or two worth of rent as a security deposit, it’s much less normal to get it back; the apartment complex has no reason to give back thousands of dollars they can simply keep.
When you were younger, were you (or your parents) able to afford a lawyer? Even if you couldn't, did you at least look or sound like you could? You seem to assume that this person has the same tools available to them that you do, and maybe that's the assumption the post is trying to get you to revisit.
The "tool" is to stand up for yourself. Actually having to get a lawyer is very rare. You can also simply take them to small claims court, no lawyer required.
The thing is, nearly all these people trying to take advantage are bluffing. Call the bluff, and they fold immediately. They're just testing to see if you're a sucker.
But if you did leave the apartment damaged, they're not going to cave and you're going to forfeit the security deposit.
Yeah, a bunch of things in this article strike me as very American (I'm British). No-one in the UK worries about not being able to afford healthcare if they're poor, nor do they need a car to get to the grocery store in under an hour (unless they live in an isolated home out in the countryside, which probably means they're rich, not poor.) There are many, many places you can live in the UK without needing a car to get to work.
The deposit thing looks insane to me too. My rental deposit is held in escrow by some third party; I've never heard of anyone not getting their deposit back when they move (unless they did something to deserve it e.g. trashing the place). The only issue around deposits is that you usually have to pay a deposit for the new place before you've received the deposit back for the old place, which can cause cashflow issues.
I've always thought of the U.S. as a great place to be rich, but a terrible place to be poor.
On the other hand, I find it laughable that this author describes a 900sqft apartment as "very small". 900sqft would be considered a decent-sized, mid-range apartment in London, and if you're poor you'll live somewhere MUCH smaller. Americans have such ginormous houses, even the poor ones.
>>On the other hand, I find it laughable that this author describes a 900sqft apartment as "very small". 900sqft would be considered a decent-sized, mid-range apartment in London,
Yep, we actually bought a 3-bed house(not apartment) in UK, and the total space is 950sqft(about 90square metres). And that's not a small house around here by any measure. American houses are like their cars - absurdly large.
American here that grew up in a 3 bedroom house with around 900sqft of space and 4 people, and now live in a 2500sqft house with just my wife and 1 dog..I don't know how we did it. Thinking back it was so insanely cramped, my parents bedroom was the 'big' bedroom and it was just large enough to fit a queen sized bed, a chest of drawers, a gun case, and then a night stand on one side of the bed. The kids bedrooms barely fit a twin sized bed and a small desk with room to stand. Tiny bathroom, living room just big enough for 4-5 people. Very tiny kitchen, not large enough for a dishwasher.
Haha I'm now quite disappointed the estate agent didn't try to advertise it as a safety feature.
I did once see a house listed as having "conveniant access to the motorway for commuting". It was actually directly underneath a bridge of the motorway :|
I mean, it isn't some weird flex with me going yeah it's cramped BUT WE LOVE IT THIS WAY. Like, yeah, this house would be too small for 4 people. But right now, with just me, wife, and a baby on the way - no problem.
>>my parents bedroom was the 'big' bedroom and it was just large enough to fit a queen sized bed, a chest of drawers, a gun case, and then a night stand on one side of the bed
That's exactly what ours is, minus the gun case ;-)
Rural poverty is a real thing, and often overlooked by politics / media / society. Rural villages no longer tend to have a shop or post office, the bus services can be erratic and infrequent, it's a real problem.
The student rental market 12 or so years ago was definitely full of horror stories about getting deposits returned, knowing which letting agents to go with useful insider knowledge. The Scottish deposit security scheme is only a few years old and has definitely helped improve the situation. The rental market is one in which there can be significant power/information imbalances and where some protections make absolute sense.
Student and tourism rentals are worse than the regular rental market because 9x/10 the people getting screwed out of their deposit can afford it so there's less latent "it might actually be worth someone's time to sue you" to keep the landlords in check.
In central London just 600sqft can easily cost you a million pounds... The place I rented when I lived there was a bit smaller and was for sale at 950k asking price.
>My rental deposit is held in escrow by some third party; I've never heard of anyone not getting their deposit back when they move (unless they did something to deserve it e.g. trashing the place).
This is only a relatively recent thing in the UK, introduced about 10 years ago, to tackle the problem described in the original post of landlords running off with tenants deposits.
When I was a student ~10 years ago, just before compulsory deposit protection was introduced, it was very common for landlords to invent or wildly exaggerate damages to keep the £1000+ deposit, especially because they thought that students would be a push-over.
On paper many states in the US actually have pretty strong protections for tenants for their security deposits. It's not uncommon for states to have fairly strict standards as to the valid reasons a landlord can take money out of a security deposit. If a landlord withholds money for frivolous reasons the tenant can be entitled to double or treble damages. (So if they withhold $1000 for no reason, you can get back that $1000 and an additional $2000 or $3000.)
The main issue is enforcement. If your landlord withholds the deposit, often your only recourse is to sue them (usually in small claims court). This is going to require paying some court fees, maybe on the order of $100 (which you may get back if you win, but you still need to pay them up front). Plus you're going to have to show up in court, which likely means missing work. And obviously you're not going to have a lawyer for this, whereas most landlords will.
When I moved out of my last apartment my landlord withheld $100 because he claimed there was dust on the blinds. (There was not, we specifically dusted the blinds before moving out.) But the only way I could get that money back was to sue them, and it just wasn't worth it for me.
I don't know about most states, but in Maryland, the tenent is automatically entitled to attorney's fees when the landlord improperly withholds a deposit.
Granted, if you are poor, this likely means that you need to find a lawyer willing to work on contingency.
For what it is worth, just threatening to sue along with citing the relevent law and possible damages is probably enough. Landlords don't like going to court either, so if you make even a halfway credible threat they will probably pay.
The US is a large and very diverse place, and very frequently you will find that there are very clear laws about what a landlord is and isn't allowed to charge for, as well as what proof they need to take a deposit. For example, Seattle has its own set of rules which are quite clear and don't allow contracts that would override them, in other places there are no rules, and what is in the contract is what you must abide by.
The problem, that the author alluded to, is that there is no one that will solve or mediate a dispute short of taking a claim to court in the US. This is generally pretty cheap and easy for small claims, if you know what you are doing. Most people don't know what they are doing, or have no idea that small claims is even an option.
As an American who now lives in a place with socialized healthcare, I can safely say that I'm not moving back until the US sorts out the healthcare crisis. I'm in Canada now, which is used as a punching bag by conservative Americans for how bad socialized healthcare can be. Anyone who has lived in both places knows how laughable that claim is. Canadians certainly have their complaints about this system, but I have never heard a Canadian ask for US style healthcare.
This comment was an aside about right wing news stories that pop up in the US about how Canadians are flocking to the US to get healthcare. It normally revolves around how some person was on a waiting list or couldn't get the procedure they wanted in Canada and had to come to the US. The truth is that there is normally an extenuating circumstance that isn't mentioned (e.g. the treatment is experimental or not approved in Canada. The patient is stuck on a wait list because it is a need-based system, so they might not 'need' that procedure more than the people ahead of them.)
>>The deposit thing looks insane to me too. My rental deposit is held in escrow by some third party; I've never heard of anyone not getting their deposit back when they move (unless they did something to deserve it e.g. trashing the place). The only issue around deposits is that you usually have to pay a deposit for the new place before you've received the deposit back for the old place, which can cause cashflow issues.
Anecdotal but myself (multiple moves) and most friends in London had to battle for a few hundred quid being attempted to stolen from the deposit before returning for various BS reasons. The dispute scheme was great as a tenant, but did mean months without the funds back.
Same in UK. I have moved 8 times in the past 11 years and I always got my full deposit back.
Also yes, the entire article just screams "the experience of being poor....in America". From the lack of social net, to the absurd costs of insurance and healthcare. I don't mean to say that life elsewhere is all rosy and there are no problems at all, but I can't even imagine worrying about costs of health treatments - it's just a given you will get them and you won't pay anything. I guess it's part of the author's point - that some people don't realize how good they have it.
The last place I rented from took my deposit for damage they knew existed before I started renting. (They literally painted over mold in the kitchen closet.) Then they tried to send me a $1000+ bill over a year later for “damages”.
This varies on a state-by-state basis. In Chicago, rental protections allow for the rentee to sue for beyond the deposit, as well as their lawyer's wages, in the case of a security deposit being wrongly taken. I know because I won back a lot of money from bogus 'damage' claims. Other states have laws that lean towards favoring the renter.
Since we're throwing anecdotes out there, I've had my landlords attempt to wrongly and knowingly take money from my security deposit about 30% of the time. The lower-class the apartment is, the more likely the owner is a slumlord, and will try to scam you.
Yeah some. Landlord pocketing the interest on it can happen, and if they're nasty they might argue re you can't get it all back cause of a scratch on the floor over there but just straight up refusal is insane
Then you're lucky - I've had enough friends in QLD and WA who have had their bond partially kept back because the landlord company thought they could get a few hundred or thousand for free. Usually the trick is to say that pre-existing damage was caused by my friends. It's impossible to defend from if you don't claim the damage when you move in!
I've personally only had one huge battle with the company as they thought our place was dirty when we moved out, despite spending two full days cleaning it (townhouse). I now always pay a cleaning company to avoid the hassle, but that's $100-200 not everyone can afford.
I always take photos when I start a tenancy. More often than not, the property manager/landlord tries that I caused pre-existing damage and the photos always help.
I'm American and my experience matches yours. I've always got my deposit back. However, if there is a country that embodies "your mileage may vary" it is the USA.
Although bond is held by the RTBA (or whatever it's called outside Vic), it's pretty common for landlords/property managers to try and strong arm tenants into giving up part of their bond for "damages", most of which are either resonable wear and tear, pre-existing, or not the responsibility of the tenant. For poorer people, who need the money sooner than later, it's often easier to agree to get half your bond back than to apply to VCAT (not to mention a lot of tenants fear they'll get blacklisted if they do) and possibly get all your bond back several months later.
I'm currently in the process of trying to claw my bond back from my previous landlord, it's been over 3 months now. Luckily I can afford it, but I know a lot of people who can't.
American here. I've always gotten my deposit back, but more often then not it involves work and knowledge on my part. Most tenets (even my wealthy peers) don't really know there rights and just write off the deposits as a cost of moving, so most landlords assume they can get away with stealing them.
I have always gotten payed after sending a letter to the effect of "I moved on XXX date. With interest (as required by the lease and state law) you owe me my security deposit of $YYY within 45 days or I am entitled to sue for 3x that amount and attorneys fees."
There are also some procedural rules around how to deduct from security deposits (among other things, you must send an itemized list by certified mail to the last known address of the former tenet within 45 days of the end of the lease). I'm pretty sure most landlords don't even follow that for otherwise valid deductions
Living in a country where there is a better social net in place, but coming from a refugee background, i regularly notice a disconnect with my peers.
I do understand their financial worries and sympathize, but only because i am aware of my perspective. Oftentimes i have to remind myself that for others it is actually stressful to think about not being able to comfortably buy a house vs renting it.
Meanwhile i worry about my mothers retirement, how i can get her out of this shady living situation and how i can pay back everything she has done to bring me up despite circumstances.
Actually i wish for others that were better off their whole life to have my perspective for some time, since i think that it would really make them less stressed about their future.
What's jarring to me is the author's characterization of car repair as "poor-people skills". Knowing how to use tools can be part of being poor, or it can be part of being an engineer who designs things that can actually be manufactured and assembled.
Either that or I'm a lot poorer than I think I am!
> What's jarring to me is the author's characterization of car repair as "poor-people skills".
Car repair is a skill of economic importance of you are poor or employed in auto repair. Otherwise, it's obviously a skill someone might have, but far less critical.
I recall feeling it when I was younger and we were in a worse place. Now I feel it every time someone tells me the price for pruning a tree, fixing my house wiring, or making my pet more comfortable. There's a moment after they say the number where they are bracing for an argument. When I just say 'Okay', some of them seem a little startled.
Another aspect may be that I have in fact worked with my hands before. It's possible I might have done it anyway, but needing money is powerful motivation for getting dirt under your nails. So I understand the cost of parts and labor, whereas some of my newer peers may not. Yes, that repair really is $800, and yes I'm fine with paying it.
Parts of america have really really high housing costs... like really high... and a bunch of people want to live there, and a lot of people there are poor (atleast compared to housing prices).
Why the hell do you still build single family houses, or one/two floor buildings in areas where you need to fit a bunch of people (eg. both photos in the article)? I'm from a former socialist country, and housing for working families back then looked (still does) like this:
I understand single or two floor buildings if you're building something in rural alabama... there's a lot of space there, and the land is cheap.... But places like san francisco? That, I don't get.
Short answer. The people who already live there don't want to be neighbors with those sorts of buildings and any politician that suggests it will be voted out of office.
> A counterpoint - You then get jerry built high rises built to minimum standards and smaller rooms which leads to tragedy's like Grenfell tower.
The old socialist buildings are made form reinforced (rebar) concrete... even the inside walls... and outside walls.. and sometimes even balcony ledges. Even occasional gas explosions usually just blow out some windows.
> Why the hell do you still build single family houses, or one/two floor buildings in areas where you need to fit a bunch of people (eg. both photos in the article)?
Mostly bad regulations like rent control and zoning.
It's not the market; obviously there's demand for higher density housing, and were it allowed, people would make more of it. It's almost always local regulations that make producing such housing difficult, or more commonly, flat out impossible.
Most American residential land is zoned for exclusively large single family homes in big lots. This is true even in most major metro areas. You can read a little bit about this here in this article that compared American zoning with Japanese zoning: https://marketurbanism.com/2019/03/19/why-is-japanese-zoning...
The gist of how it got this way is: racism and classism. The racism used to be more relevant, these days the classism is. You see, if you require that to live in a neighborhood, you must be able to own or rent a property with a minimum amount of land, it's easy to keep out people of lesser economic resources. A poorer family that might be willing to live an apartment in a nicer area will find that no such housing exists there, and being unable to afford a full house, they are excluded, hence the term 'exclusionary zoning'. This also has the effect of keeping those poor kids out of local schools.
So yeah, it's economic segregation that America pretends doesn't count as segregation somehow, even though the effects are plain as day.
In your first phot, In my country those sort of buildings would be viewed very negatively, many would expect the people in them to be poor, lower-class, living off benefits etc. There are lots of stereotypes about the sort of people that live in those type of buildings.
People would NOT want that sort of building near their home worried it would lead to more crime, lower property prices etc.
Now, your last modern building. People would pay a small fortune to live in something like that in a trendy area in a city...
They would probably be classed as luxury apartments, come with a large rents or buying costs.
But the idea is still the same... just the outside look has changed.
Build a 5, 10 story apartment building, underground parking, and fit hundreds of people in a space, that would otherwise be used by 5-10 houses (20, 30 people).
First photos are from belgrade, when that design was "modern" from 1960-1980s, and the last, modern one is from ljubljana, built recently.
I'm a British immigrant to Bucharest, nearly 4 years, and I live in a slightly smaller version of the housing in your images, a 4-floor 1986 block in the south of the city, adjacent to Vacaresti park.
In London, this type of housing might be depressing, but here it is normal -- and when you take away 'neighbor envy', it's hard to express the difference it makes to one's own sense that you've reached some equilibrium in your environment and your life.
The TV ads here might be full of people in detached houses, but that kind of residence is very rare in this country - at least in cities like Bucharest and Cluj.
In short, Bucharest folk are used to it, and practically no-one in the US is. For them, it's 'the projects'.
Lots of people want to live there. But do the people who live there (and own property there) want lots more people to live there? Not really no.
And in some cases definitely not anywhere near them.
Cities work well at a certain size and population, but the services and infrastructure never get upgraded to match big increases in population like tower blocks.
Not to mention the view from people's houses across the bay will be gone as soon as high rises are built.
If I'm happy with the status quo & I have lots of money, why would I ever stop doing everything possible to maintain it?
I grew up poor (first gen immigrant family, the poor kind), so I empathize with the points raised. At the same time I don't really understand how some / a family can be (outside of some circumstances like health issues, disabilities etc) repeatedly behind on water bills or other necessities.
For the first few years my family had an income of ~$1000 / month (back in the 90s). My mother wasn't legally allowed to work and my father was on a stipend. The whole family lived in a studio apartment, that 900 sq ft place in the article would've been huge for us. Our car was a $1200 tiny little rust bucket, but it ran.
Sometimes I see documentaries about people living in poverty and going pay check to pay check, yet the kids are wearing Nikes and playing on iphones. Being poor was definitely stressful though, and I'm definitely grateful that stress isn't part of my life anymore.
I think it's also about trade offs that are made. For example, TV dinners (from an article in another thread here) for us was not a staple, it was a luxury. They kept for a long time, but they were also high cost to calorie ratio. We got the cheapest cut of meat we can in bulk and frozen it.
While I'm not suggesting your method isn't more economically efficient, it also requires time and money investment. When I was "poor", my parents would often both work late and it wasn't uncommon to not see them until later in the night if at all before bed. Many nights my brother and I would make our own dinners. Dealing with large cuts of frozen meat takes planning and skill that microwaveable dinners do not.
Also equipment: one thing working with our local mural aid group has really underscores is how many people have, say, a microwave or hot plate but not a working stove or enough capacity to store bulk food purchases. That’s definitely not true of everyone, of course, but it’s a real barrier for some people- especially, say, a newly-single mother who can’t feed an infant rice and beans.
> the kids are wearing Nikes and playing on iphones.
This is investment. If your kids are socially rejected at school and can't get on the internet, are they going to be better off in the long term or worse off?
If you are poor, looking poor is not going to help you up, it's going to drive you farther into poverty. It's the same impulse that makes lower-middle class parents go into debt to put braces on their kids' perfectly functional teeth (in the US.) Your kids are going to have to impress fellow students, charm their teachers, get into colleges, and interview for jobs. A bunch of people who don't see class are going to see your crooked teeth.
Not to mention: an iphone (or any smartphone really) is a really efficient investment. I'm not sure, but for a few hundred dollars you have a very good device already.
Compare that to my own growing up, and we had separate costs for a TV, a radio, we would save up for a walkman or CD player, internet started off as dial-up at the library, then a PC. We'd buy CD's with games and things like Encarta, we'd record or rent films on a video recorder, etc etc etc. And all of those things had to be shared.
Now, with a smartphone, you have all of the above and then some - at a one time investment. Each of those individual devices back then cost the same as a single decent smartphone does nowadays.
I really don't see the issue. I mean I kinda get the objections, because for some reason smartphones are still considered luxury items (but only if you're poor), but it's such an empowering tool (and a source of distraction, which is something everyone needs).
But then you can't even browse the web properly with these, though. Not with all those fat Javascript-heavy pages and the whole "RAM is cheap" prevailing development mentality nowadays.
the 80/20 rule still applies. $50 is probably too low of a price point, but the example works if you compare a $250-400 android phone to a $1000 apple/samsung flagship. I could buy those phones if I wanted to, but I'm getting by just fine with my pixel 4a. hell, my pixel 2 was still perfectly serviceable but for the lack of security updates.
kinda, but kinda not. $1000 is still a lot more than $400. I consider $600 to be a meaningful amount of money. it's definitely not a good move to spend that much on a phone if $600 matters to you. in any case, this conversation is drifting off the rails (or was derailed from the start). the iphone SE exists and sells for $400. with apple's track record for updates, that might be the best value on the entire market right now. I wouldn't consider it irresponsible for anyone to purchase that phone. I'm also not sure I believe that large amounts of poor people are buying brand new $1000 iphones anyway. most poor people I know are using whatever cheap phone happens to be supported by a local MVNO.
perhaps. now that i think about it i was buying my kids $50 androids when they came of age, but with the last two that didn't seem to cut it. i spent more like $100 with an extra $20 for an extra SD card.
for myself i paid under $250 for my android and i'm a professional full stack developer with android as part of that stack. (essential ph-1 phone on clearance sale on ebay).
I understand there is social pressure, but then pretty much anything can be bucketed under investment by this standard. Is a nice car and nice house also investment so the kids don't get rejected at school? At certain level of income, sacrifices need to be made, and I would argue Nikes and iPhones are luxuries, not necessities. e.g. you can get a pair of good quality shoes that costs less than Nikes, and a functional smart phone for less than an iphone.
All that you needed to break down was the car failing, or someone falling sick.
Minimum wage in the US hasn't kept pace with inflation for decades, and rents, school fees and the costs of medication have kept rising even faster. Banks charge even higher overdraft fees, so the small joys of a pair of branded shoes or a fancy phone are affordable, but the longer term gains aren't likely to be in reach.
> True the minimum wage hasn’t kept up. That’s mainly due to exporting manufacturing offshore.
That’s partially true but this trend has been widespread well outside of manufacturing, too. There’s no shortage of companies engaged in wage theft, converting full time positions to contract, changing benefits plans to shift more cost to the workers, etc. in every sector. Programmers are in high demand but even in tech, consider how many companies contract out core competencies or, especially, have things like helpdesk jobs which pay considerably less than they used to and no longer have a promotion path.
There’s been a well-funded push to roll back the New Deal since around the end of WWII. This has included funding libertarian think tanks, religious denominations which encourage self-reliance and distrust of the government, etc. One big factor feeding into demand for cheaper goods is that people are acting rationally in a world where their income lags behind their parents or grandparents at the same age.
Kevin Kruse wrote a book about this a while back which is good for understanding some trends in the 20th century:
If your parents immigrated like mine (wife legally not allowed to work, dad on stipend) then your father (and possibly mother) was very well educated in your home country, then immigrated to the US, finished his studies or did a temporary training and then took a well paying job.
When having a $1000 a month income is known to everyone to be temporary and you know a well paying job is on the other side, that's not the kind of poor the author is talking about. When you know you will have money soon you can make all sorts of wise choices to handle a period of low liquidity. When you don't know that, you can't make any of those choices.
We definitely weren't at the very bottom of the ladder. We had some stable income, a roof over our heads and food on the table.
Looking back the financial position we were in was clearly temporary. But at the time it wasn't so clear. It wasn't obvious that once graduated, my father would be able to find a well paying job (they were also pretty ignorant on the job market at the time). We definitely had financial stress in the family, which bled out to me all through childhood.
I consider myself fortunate and I had a legs up in multiple dimensions. Educated parents, stable home life etc. But like I said, very grateful that type of stress is not a part of my life now.
Some poor families handle it better than others. A lot has to do with the parents and how they manage the situation psychologically.
There is peer pressure on the kids (and even parents), so they upend Maslow’s pyramid to their detriment.
Some of it may be educational —home ec is not taught in many schools. Some of it is cultural (advertising) and some of it is propaganda (we’re Americans, we must have a TV and consume brand names!)
I recall in Japan if you went on the dole you first had to sell your ‘luxury’ items before getting government support. It indicated you had to be in need and not supplementing or aiding poor economic decisions.
> in Japan if you went on the dole you first had to sell your ‘luxury’ items before getting government support. It indicated you had to be in need and not supplementing or aiding poor economic decisions.
I agree with the theory, but what is a luxury? Cheap shoes are penny wise and pound foolish as i've discovered. (though some expensive brands last no longer than the cheap ones). You can't really do anything today without an internet connection - school or apply for a job, and you are expected to answer your cell phone when called, so some form of smart phone is required and if you have an iphone it isn't worth enough used to be worth selling to buy a cheaper phone...
This is the kind of statement you hear from conservatives that blame poor people for their poverty.
There’s a number of reasons. Because when you churn through a dozen pairs of cheap no-name shoes, it ends up being more than just buying a better set of shoes. Maybe a relative gave you some Christmas money. Or maybe you got overtime for working an extra 20 hours.
Being poor, you are constantly judged on your appearance, and it has a huge effect on how you are treated by retailers, government (police, social services, etc), teachers/school admins, and friends.
When you’re poor, everything you own is half broken, purchased used, worn thin. You most likely live in an area that has a high crime rate, is loud, has a long commute to your job, is dirty. You have access to terrible, low quality food. You skip doctors appointments (can’t afford the time off or co-pays) and dental work. (American) society constantly blames you for your situation.
Whatever the reason, poverty is a daily assault on your human dignity. It’s incredibly difficult to escape. Sometimes, you have to say, “Screw it” and buy your kid the expensive shoes. That money won’t get you out of poverty, but it may make you and your child happy for a bit.
This article should have been titled "On being Poor-ish in Phoenix" ... I don't think many of these issues apply to being poor in, say, a small town/a smaller city/a city with transit or in a country with a better social net.
There's definitely an American perspective there, where few cities have decent transit, let alone good transit. But you're not gonna escape the car problems in the states by moving to a smaller town. If anything, that usually makes things worse.
Sorry we missed you does a superb job of showing the cycle of poverty and how it affects families. The accuracy of the film stems from interviews while director Ken Loach was filming I, Daniel Blake in Newcastle.
I can wholeheartedly recommend that film (and Ken Loach's filmns in general). The following review excerpt [1] is telling and heartbreaking:
The stakes of the film are simultaneously huge and small. The Turners don’t need much. Some stability; a steady income, of course; more time would be a dream. Really, though, the most precious thing they have is each other. But there’s no time for that because then there’d be no money.
There were a couple of years where I saw my wife for approximately 3 minutes a day. She worked nights and I worked days (plus school) and we saw each other as we handed off the kid as I walked in the door and she walked out. I was asleep when she got home and she was asleep when I left in tue morning.
That sounds terrible. Although I agree that life is complex enough to require sacrifices at times - it's simply unavoidable sometimes, I find it hard to swallow that people are required to go through this. Because you shouldn't have to go through this if we would've done a better job and organising society and economy.
I was poor for some time after deciding to quit my computer science phd for a career in art. I guess I still am compared to others, but it does not feel that way any more. When I was really poor, worrying about money and how to pay the next rent was a regular source of stress for me, which took quite a lot of emotional energy.
Now I still have much lower income than people, who have regular well-paying jobs, but I do not feel poor. I have no savings and there are some things, which feel totally out of reach like owning a car or house, but I do not have to worry about money and I can afford a lot of luxuries like visiting theatres very often and eating out.
Regarding housing: I remember living in a tiny room in a shared flat in the worst part of town, above a brothel, a shady car dealer and a Hookah lounge (which was often very loud, very late into the night). Sometimes I had problems paying rent, but there just was no cheaper less-quality alternative.
Regarding transportation: I am so glad, that I live in a place, where you can live very comfortably without a car.
Similarly with health care. I think the US is just an especially bad place to be poor in compared to Europe.
Financially switching from computer science to art has been a very bad decision, but overall it was the best decision in my life. It really helped me deal with my tendencies for depressions, because it allows me to feel more meaning in my life and suits me better. I do not think that I would have dared this switch in the US. I don’t know what would have happened if I had lived in the states, if I would have found other ways to cope with depression or if I would have slipped into deeper and deeper depressive episodes without a way out, but I am glad that I did not have to find out.
Thank you for sharing. Your comment highlights something important I believe when talking about poverty. One common argument against any type of government help is that poor people should just work harder and pull themselves by the bootstrap.
However the situation you describe above shows the many side-effects of being poor which impede life in general: lack of proper sleep (because you live in a noisy area with no other choice), constant stress (paying rent, maybe dangerous neighborhood, etc.), probably not affording good quality food, etc. etc.
Add these side-effects up and one quickly understand that getting out of poverty is an herculean task and I personally couldn't blame someone for not making it.
I’d go further—-why do all narratives around poverty have to revolve around the middle class? Either someone used to be middle class and is now poor, grew up poor and is now middle class or at very least is moving towards that end.
Where are the stories about people born into poverty, still in poverty, and not likely to be anything but poor for the rest of their lives? There are lots of people like this and cutting out their stories distorts our perceptions.
> Where are the stories about people born into poverty, still in poverty, and not likely to be anything but poor for the rest of their lives?
Thomas Sowell says that it's actually a pretty small percentage of people like that. Most poor people are young and most rich people are old. Young people become older and the vast majority work their way up the pay scale to some extent.
Seems like the thing to put some numbers on. If that perpetually poor narrative is only true for 1% of Americans, that's a population bigger than my hometown being forever mischaracterized and unrepresented. Ignoring the realities of others' lives is how we got rising fascism.
I doubt many are comforted in knowing they're a statistical minority.
Ever slept in a bus station? I have, in the US. I went for 3 years without any healthcare, and then it took another 7 years and a lawyer (who took $16k USD) to get more permanent help.
One thing is for certain: with 99.99% of people, their friendliness (or meanness) is proportional to the size of your bank account.
If you want to know how people truly are, become actually poor, filthy, and seem depressed, then you will know their nature.
> If you want to know how people truly are, become actually poor, filthy, and seem depressed, then you will know their nature.
You don’t need to be homeless to discover that some people lack sympathy. I lack sympathy. It doesn’t mean I’m an asshole. Sympathy isn’t empathy (huge distinction). Some people can’t tell the difference and everyone is just bad (cue the big tears).
This is especially true if you’re a freeloader. I imagine most people are just as honest about freeloaders regardless if they are homeless or supremely wealthy. This problem isn’t mean people, but rather poor self-analysis and playing a victim. Most people don’t want anything to do with that nonsense, which is extremely unsympathetic.
In my city the majourity of panhandlers you see have homes, and choose not to work and beg on the street. You can tell who's homeless because they don't bother you, they sit in silence, or in front of a shelter. Or they ask for food rather than money.
People harassing you for money? Panhandlers.
I'm sure it's different in cities that have higher costs of living s.t. a min wage earner can't afford rent anywhere.
in one specific case I will willingly describe where that is precisely the reality that needs to be faced. (hardly gladly will I recount my experiences, I am barely past the stages of pure shock, I became homeless as the result of extensive almost decade long criminal harassment following when I accidentally uncovered a systematic fraud in government. ironically - actually I am pretty sure intentionally - the fraud is in housing and crosses the institutional walls between central and local government and into the world of QUANGOS and charities ostensibly helping the homeless but inextricably involved.
the systematic enfranchisement of fraud in east London public housing authority and agencies intertwined and inseparable from hard drug dealing, is maintaining a permanent and pernicious status quo where under housing in consequence is denied by individuals who are officially homeless and who collectively by reason of being sufficiently well financially provided for by exceptional and exclusive permissive authority, exist en masse as a block preventing both the most needy to get housed from the street and the eligible and worthy to move on into permanent housing that they can sustain.
the situation is naturally more complicated than this, but essentially these are the conditions that have such a deleterious effect on the public : the mode of cash money available for spending to the majority cohort is greater than the average free for spending cash income in London as a whole ; the percentage of technically "homeless" people who are housed ostensibly only temporarily but effective permanently on the doorstep of the City's financial center who are habitual beggars is greatly in excess of 50% and I can attest closer to 90 percent in my own experience ; income from begging frequently exceeds USD 1000 per week. ; organised crime is permeated throughout every corner of the entire environment these people - indeed any homeless person - encounters.
I'll simply respond to any questions rather than drown you in the details straight away. of course, into this vipers' nest fell lil'ol'me who was raised by a Great Depression banker and brought up learning accounting from my pay dissecting the over valuation applied to the pension fund of his newly commercialized thrift which was paying their former board manager and one time gm responsible for their greatest historic growth, just 82 British pounds a week supposedly index linked... this ain't over quite yet due to the pandemic messing with case progression, so you might hear more yet.. I can rout out plentiful public sources meantime if you're particularly interested although if you are please forgive me in advance for being rather circumspect about who is who and the whys and wherefores, because this is long ago passed into the physical danger territory for not merely me but including anyone who has helped..
edited by necessity of brevity, excerpted text in profile
Your comment is very difficult to read and understand. The sentences are too long and borders on purple prose. There are too many strands of thought packed into a single sentence.
I understand you are saying that you discovered some potential government fraud, and that homeless Londoners are being recruited by organised criminals, but not how the two are related.
It's nowhere near the majority case, but I have definitely met freeloader panhandlers when they were off duty. One was an older couple who made their grandkids put on ratty clothes and hold signs in the city, so they could continue living on the road in their very nice RV. I met them at a campground when I was a kid, and the grandkids accidentally let slip that "the bank" was code for panhandling.
The other was clearly a bit mentally unhinged. He pulled up in a very nice Mercedes with a bunch of weird slogans silkscreened on the back window that would put Qanon to shame, but this was in 2004. If I remember right he showed us his fine suits in the trunk of the car. Told us about his private compound where he lived. Then proceeded to dance and sing in the middle of the street in his bum clothes.
Most of the people I have known that I would label as "freeloaders" seem to have some combination of developmental emotional abuse and mental health issues that are either not diagnosed or not properly medicated. They tend to become homeless of their own accord and tend to blame people for the relationships they destroy.
At first it comes off as entitlement when they assume free access to other people's property, time, and resources when those other people are trying to help. But after a long enough period of direct social involvement it becomes frustratingly clear the behavior is something like a passive non-violent anti-social behavior. It can be sad to watch. Its worse if they have children.
You may have missed the point, so I'll state it explicitly: almost all people lack empathy, it's just more than some have the self-control not to stab homeless people to death.
Sympathy, gratuity, and freeloading are somewhere off in the distance.
I hope you're not trying to slip in some duplicitous language to accuse me of being freeloader. What does it have to do with anything?
There isn't any empirical assessment that agrees with that. A lack of empathy is narcissism, which only applies to a small percentage of any population according to most of the research on this subject.
> If you want to know how people truly are, become actually poor, filthy, and seem depressed, then you will know their nature.
I guess it’s just that so many poor, dirty people act mentally unhinged and (potentially) dangerous that you start to assume that about all of them.
I find that I try to avoid them right up until they force me to interact with them and I find out they’re one of the (relatively) normal ones. Then I’m perfectly happy to buy them a sandwich (or two, if I’m going to buy you breakfast might as well have a decent one).
It works this way because people are, rationally, more interested in their own physical safety than they are in the feelings of strangers.
Anecdote: I was in San Francisco a few years back. There were homeless folks everywhere. Some were nice, even chatty. We felt at ease even when walking through areas that were full of homeless folks. But a couple of days into our trip, a homeless dude accosted a coworker on the sidewalk. He shouted violent threats, shoved my coworker, and told him not to come back. When I asked my coworker what set the guy off, he said that he had absolutely no idea.
That experience changed how I interacted with homeless folks for the remainder of the trip. I made no eye contact. I avoided areas with groups of homeless folks. I did not respond when spoken to. Is that fair to the average homeless person, who is perfectly normal, just down on their luck? To be perfectly honest, I do not care. My physical safety comes before your feelings. Full stop.
"Rationally"? You mentioned you had all sorts of nice experiences with homeless people and then one bad actor caused you to choose out of all of the attributes of this person, their lack of a home, to be the one for you to blanket-label all people like this as dangerous enough to place them outside of your treat-like-a-human-being sphere.
Nah, there is not a rational way to blanket label groups like this from a sample size of 1. That's your trauma talking.
All it takes is one to seriously physically hurt you. You wouldn’t leave your doors unlocked while away just because 99% of passerbys won’t check whether it is.
Yeah, it's the trauma. That's the point. The potential cost of a single violent interaction is extremely high. There is relatively no reward for being pleasant to the 99% who just happen to look an awful lot like the one who tried to stab you.
It is the same rationale behind profiling. Which is to say, it is rational, just ineffective and with a number of bad side effects.
You can't deny that in terms of Bayesian probability, the odds are higher for a homeless person to be mentally unhinged than for the average person. Simply because mental illness is often the cause for homelessness.
It matters quite a bit. The view that "it only takes one unhinged person" tells you to treat homeless people the same way you treat everyone else. The view that homeless people are much more likely to assault you than normal people tells you to be more cautious around them than you are around normal people.
Please don't overlook the people who are not dirty or mentally unhinged.
The guy sat on the same bench you walk past everyday, the guy you see sat in the library everyday, etc. Not every homeless person acts like a homeless person and you see them everywhere once you start looking.
This resonates with me as someone who has been homeless for a, thankfully, short period of time. I was given a chance to get back on my feet by someone who was almost as poor as I was, he did have a house and a couch I could sleep on though. Ten years later I have no money worries, and because we remain good friends, neither does he.
I have, I’ve also lived in a car, showered in gyms/public bathrooms and it sucks. Especially, if you’re trying to keep up an image at work and don’t want them to know you’re homeless.
> Financially switching from computer science to art has been a very bad decision, but overall it was the best decision in my life.
This reminded me of a friend who graduated with a BA in "design" (I'm not sure), got a high-paying job as a web designer, and quit that to become a teacher at some type of extracurricular enrichment place for very young children.
The new place didn't pay well -- or even reliably -- but she liked it more.
The more over_head you have, then it's harder to get out of it.
You're unlikely to put your free time into math / computer science when you're after exhausting 8 / 12h shift in warehouse
Also your "environment" may not help you too.
Before I worked at gov't-ish job and my parents tried hard to convince me that "this is the greatest thing because gov't jobs offer ""safety"" and "decent salary"". Thanks god that I had access to the internet and knew the reality.
They don't know the meaning of poor. And, who cares about some absolutely privileged, greedy, manipulative idiots who "can't live" on $200k/yr and take from people who make way less than them. Shame on them!
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If you can count your money, you're poor.
If you can count your money and it fits in your pockets, you're very poor.
If you can count your money and it fits in your left pocket with room to spare, you're extremely poor.
If you're wondering whether to buy food or gas with the money you have left, you're broke.
If you wish you could buy food or gas, you're absolutely destitute.
I always thought of “broke” as the transitory status of not having money, while “poor” is a socioeconomic status.
I.e. a university student could be too broke to buy beer before their next stipend comes in, but that doesn’t make them poor if they can still go home and drive mom & dad’s Tesla on the weekend.
I think of those words interchangeably. "Poor" is also ambiguous, i.e., "the poor" (economic class status) and "are poor" (having little money, orthogonal to any time period). Examples: "My grandparents grew-up poor, but became middle-class." and "Alms for the poor."
And, there are only so many relative modifiers, so one has to use synonyms to make a point. ;)
I still think the meanings are distinct. For instance, you could say: "I can't get a home loan because I'm poor", "I qualify for food stamps because I am poor", but attributing these things to being broke sounds a bit funny. By the same token, you wouldn't say "My grandparents grew up broke, but became middle-class"
I think the definition still holds up fine. The main difference between being a broke adult vs a broke college student is that being broke as an adult is almost always because you're poor.
Do you sincerely believe those situations are similar?
Exercise - you could pick Broke College Student, Broke Adult, Broke doctor/engineer/lawyer pulling 500k/yr.
Which one do you choose, repeatedly?
To me, there is almost no scenario where 500k/yr makes you actually broke where you do not have a level of control to rapidly change that situation. Cut your spending, if you have huge debts - get them refinanced, sell something. Aside from being in a debt to a person with a literal gun to your head, you have incredible amounts of flexibility to get out from having your water shut off like person who is truly broke.
My estimate, based on the approximate dimensions of my jeans front pocket and the size and thickness of a $100 bill, would be around 5~8 thousand dollars... Multiple times that if you REALLY stuff it in there...
My wife is a case worker for the county welfare office. She deals with "those" people for a living and sees first-hand every day all the real and imagined shit spouted by righteous ideologues. She tells me that amongst those living in poverty, wealth is measured in terms of friends and family. Any money you come into is spent immediately, often on gifts to build status within your social network.
It's only when you move into the middle classes that wealth starts to be measured in terms of money. Budgeting, saving, trying to get more and planning for a future when you have none is not something someone in poverty does: it's something someone not in poverty does when they have no money. Trying to climb the social ladder by accumulating more money marks you as middle class.
The third layer has enough money (but of course always try to get more because that's the game). Their concept of wealth tends to be oriented towards legacy: collecting artworks, donating to cultural or research endeavours, political involvement. Wealth is measured by what you leave behind, and money is wasted if it just goes to trust funds or taxes.
When I was a student, and for many years after, I had no money. I had enough to keep a squalid roof over my head and three square meals a week. I had no money and no savings but I did not live in poverty because I had a plan to earn and save and move up in the world. I had no money but I did not live in poverty.
I think it's important for people who are trying to leave their legacy by getting politically involved in eliminating poverty to understand that their world is not the world. They need to understand how the definition of wealth for those in poverty is not the same as their definition of wealth, and without understanding that difference they are bound for failure from the start.
The reason you spend money as soon as you get it when you're poor is 1) because when you're poor you accumulate debts, both formal and informal, and 2) when you're poor you know other people who are poor and who need things.
Thinking poor people like being poor because they value what's really important - friends and family - is like poverty version of the "magical negro" trope. Poor people value friends and family because they need each other to survive. People with no money problems don't need anyone.
edit: I honestly believe in a harsher version of this, in that for me the difference between friend and acquaintance is that a friend has sacrificed their comfort or safety for yours when they didn't have to. A friend is an acquaintance that has been tested by your bad circumstances and passed. If you're wealthy, you are rarely in truly bad circumstances, so when they happen, you might find yourself surrounded by acquaintances. Poor people know who to trust because they've had to trust them before.
I think you’re arguing a bit of a strawman and you and the person you replied to probably agree with each other.
The accumulated debts, and helping out each other makes sense given the needs of the community and dependence on each other for survival. It’s interesting that could translate into a gift culture for social status hierarchy, and it kind of makes sense. Even if in the perverse case it can make it harder for any individual to get out of poverty - it makes it easier for them to survive while they’re in it.
Basically poor people have to have room mates and they have to interact with the people around them, so they tend to form quicker bonds of friendship. Middle class people can afford to go it alone.
> Thinking poor people like being poor because they value what's really important - friends and family - is ...
I didn’t read that poor people like being poor - I read they have a different value system (and reading into it, the different value system being rooted in being poor). You are injecting something else into the narrative.
> People with no money problems don't need anyone.
> Poor people know who to trust because they've had to trust them before.
I feel like this is what's been contributing to collapsing communities in the US more than political tensions or whatever other specter one could point to. The lack of real, repeated need of others. A relative abundance on wealth leads to using money-based services to fix issues instead of relationships (which have cumbersome overheads). That leads to the creation of more services and until we've generally forgotten how to have a community, only services and consumers.
If the movers and shakers are motivated by building a legacy of good works then they need to be seen to be building such a legacy. Bricks and mortar can be seen. Funding foundations can be seen ("brought to you by the Ford Foundation"). Someone no longer living on the dole can not be seen. Rich people have no motivation to get people out of poverty because there is no credit in it.
The middle class sees everything in terms of money spent. If someone is lifted out of poverty, no more money can be spent on them. The middle class has no motivation to get people out of poverty.
The poor have no motivation to get out of poverty because they're already wealthy.
This is what is termed a 'structural' problem. If someone were really interested in making change, they would try to alter the fundamental structure that shapes the system. I have some interesting anecdotes about such efforts but they're outside the scope if this discussion.
> Any money you come into is spent immediately, often on gifts to build status within your social network.
Rather, for immediate survival and whatever bill is the most urgent to make even a tiny partial payment to avoid cut-off and the occasional comfort food as a treat if you can afford it somehow.
Source: had a rough patch in my life a couple years ago (thankfully over now).
Every time you get into it, hoping that it will start. And not just when it's been sat outside your house for a while. When you stop for petrol (gas), or in the car park after buying food, sitting behind the wheel and hoping it starts again. The restrictions that get placed on you when you just can't rely on the car always starting.
For your life, a mostly-starts car is in theory better than no car, but for mental health it's corrosive. Every plan you make carries the rider "unless the car doesn't start" and you end up restricting where you drive to places that, if you were suddenly carless, you could still get home from. Any time you're outside the safety zone, there is the constant fear "what if it doesn't start?" Being afraid, having that stress, all the time is just mentally corrosive.
If a better job comes up and it's not near public transport, every day is a gamble on being able to get to work, and get home again. Spending your evening worrying about whether you'll be able to get to work in the morning is a horrible way to live; perpetually unable to relax. At least once I simply sold it for scrap and gave up entirely on doing anything that needed a car. Such a relief, but I was in the privileged position of being able to live and work without one.
This ties into covid too. Low paid jobs are more likely...scratch that. Low paid jobs always require physical presence, most often at strange hours not served by public transportation. There are no work-from-home days for tradespeople, for cleaners, for food workers.
This has been my problem for years now. I'm in the middle of nowhere and I can't count on the thing. I don't know how many times I've been stuck and also almost towed because I couldn't move it. I've luckily managed to avoid it so far but I'd not be able to do much about it if it happened.
I once was interviewing at a company for a graphic designer position. My previous job was paying me just below $30,000 and I desperately needed to increase my income to keep up with my bills (college loans, rent, food, electric, etc.). My vehicle (1987 Chevy Blazer) was not very reliable (in ~2010) and wouldn't you know it - I broke down immediately after parking in a lot directly in front of a sign that said "2 Hour Parking, Vehicle Will Be Towed At Owners Expense".
I'll never forget the embarrassment I felt after a pretty underwhelming interview explaining that my car was broken down outside in their lot and asked they notify their security so that I was not hit with more expensive fees. I've had some pretty significant financial hardships - some much worse than this, but this moment in particular really had a lasting effect on me.
That moment when you come out of the grocery store and the car doesn't start on the first try...
I'm not in that situation anymore but I can still remember the absolute sinking feeling. And then the overwhelming sense of relief when it started on the second try. I've had my water turned off. I've had my heat turned off. I've scavenged wooden pallets on the side of the road to burn in a wood stove for heat. I've broken the seal on the gas meter so I could turn it on at my most desparate. I escaped those circumstances thanks to family, and church friends. But this article is spot on as to what it's like to poor or poor-ish.
Dude this is so true, in the US reliable transportation is so important. Particularly given the abysmal, non existent public transportation in the majority of the country. Having an unreliable car is a major source of stress for a lot of people.
For the wealthy, a car is expensive but mostly a convenient way to get around. For the poor, car maintenance costs can be ruinous. However, our society (excluding a few large cities) all but requires a car for day-to-day activities. Everyone drivers, but the poor bear the brunt of the cost, since they are more likely to live near noisy, polluted roads. Meanwhile, the wealthy can afford to live on quiet suburbs and cul-de-sacs. Cities and infrastructure designed for cars ("car dependency") disproportionately hurts the poor.
I'm really curious to see how electric cars work for the poor (maybe 25 years from now, not presently).
One of the big selling points of electric cars is simplicity - with far fewer moving parts, less can go wrong and you can hopefully expect a car to last longer.
That's the hope anyways, but the big maintenance item in an electric car is the battery, and of course that's an expensive thing to replace. Will folks be able to do DIY repairs like cobble together battery packs from various sources? Will a decades-old battery that is 50% depleted or more still allow that car to function properly, just with less range? Or will it refuse to "start"?
As is, electrical car means new car and new car means an inane amount of software components that break all the time. Just pick any specific model, say, the Tesla S: You can find people being confused how to turn it off, the car not starting due to software updates, the car being hacked, the being bricked by broken software or lacking connectivity, erroneous warnings, the car only driving backwards due to low battery.
The simplest car is something like a 1998 Corolla and given the current trends in automotive, that will stay that way for a long time.
That's the main reason I'm so excited for EVs with useful amounts of solar panels on top. Adding 5-10 miles of range per day is enough to cover a lot of people's commutes, especially those who live apartments that're more likely to be closer to the city. (Folks in sprawling suburbia likely have longer commutes, but also have a place to plug in and charge.)
Looking at the current trend, it's highly unlikely e.g. single casting, structural battery packs. Car companies are for profit, so they have every incentive not to make it repairable. What is more, they are some good arguments to be made against DIY when you have autopilot in the car.
Self-driving cars may help tough, probably 15+ years after it's legal.
As much as I think the solution is "get rid of cars" (or get rid of personal vehicle ownership), I do think reliable cars would make a huge difference for people struggling financially. Not having to worry about the most important tool in your life — the thing that allows you to get to work, to the store, and to appointments — would be a massive stress-reduction for so many people, and stabilize their finances. No more "I can't make it to work, so I lost my job" and no more unexpected $2000 repairs?
Honestly, more reliable transportation might do more to reduce poverty even more than food stamps. (Also, allows you to make your food stamp appointments.)
There’s also a difference in the way people handle money once they improve their financial situation. They tend to be cautious, and save money instead of spending it. There are exceptions, of course.
I've heard just as many people express the opposite. That because they were used to "having extra money to spend" being a fleeting thing, they threw caution to the wind and overspent after attaining a substantially higher income. That they had never learned about saving before (because they didn't consistently have extra to save), so it never became a habit.
It'd be interesting to see real data on which outcome is actually more common.
Anecdotally it seems to depend a lot on how they got the money. Based purely on people I've known; people who become rich after working long hours for 20+ years building up company or similar tended to be very frugal for the rest of their lives despite retiring millionaires. People who 'lucked' into a lot of money tended to wildly overspend and never achieve financial stability.
The car talk resonated with me. I'm always irked to hear someone bragging about their Volvo that's lasted them 20 years or whatever. To me, there's nothing to be proud of, you bought a luxury car and likely had it maintained by a trained mechanic regularly.
As a former used-car flipper I call it the "4Runner vs Grand Caravan" effect. And I mostly call it that because it gets under the skin of certain people.
The 4Runner starts its life in the hands of someone who can afford whatever maintenance is needs, whenever it needs it.
The Grand Caravan starts its life in the hands of someone who needs the cheapest minivan and can barely afford it let alone afford following the maintenance schedule in the manual.
The 4Runner will haul two kids and occasionally a youth soccer team.
The Grand Caravan will haul five kids and occasionally 1800lb of paver bricks.
The whole car section brings back memories of when I used to drive a car with one flat tire, but I would pump it up with a foot pump on the way out every morning and it would stay inflated just long enough to get to work, then the same on the way back. I used to get stressed out waiting at red lights, thinking, that air is leaking out..
I remember my first car having an oil leak as well as a bunch of other problems. During the winter I used to commute, 30 mins each way without any oil. It was just about cold enough that it could make it.
I didn't get it fixed because I was putting money together to buy a newer car that didn't leak. Worked out in the end.
The benefits cliff of health insurance is so real, and those cliffs exist all over the place (an example is in the SUNY system for tuition). Universal programs without means testing seem like such a better way to run things. If you have a somewhat right wing philosophy: it allows the truly exceptional individuals of every cohort to reach their potential. For left wingers: it is giving equally to everyone's shared needs from society as a whole.
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[ 4.3 ms ] story [ 364 ms ] threadI may be misremembering the details, but that was the gist of it but I couldn't find the article again. I suppose expectations scale up with means.
On the other hand discovering people they know are actually very wealthy seems to have a massive negative effect on people's levels of empathy. Wealthy people who have suffered bereavement or personal tragedy report people who are less wealthy than themselves rarely offer sympathy and they often get comments along the lines of 'knowing what it's like for the rest of us now', or 'what it's like to have a problem you can't buy your way out of'.
As someone from a former socialist country, I can confirm.
Situation has got a lot better in the last ~30 years, people have alot more, but since a few people got even more than that, some complain a lot. Average worker family has gone from bicicyles and maybe one yugo (or a "fico" - even smaller/cheaper) to two, maybe three european-mid-range cars + all the modern extras, but are not happy, because their neighbor has as 100k€ mercedes.
Theodore Roosevelt
One of the effect of comparison is that it diminishes one thing over another.
I often find new the thing when I just experience one thing for itself without comparing against a pre-existing experience and thing.
...out here, people want their neighbours to have less.
But yeah... we earn relatively little (compared to you), and have better cars than most of the northern europe... most of them on long year loans... It's not rare to see an (eg.) BMW X7 owner at a gas station pump 9.85eur of gas, than slowly fondle the pump handle, because he only has 10eur for gas. The neighbors see the car, not the amount of gas inside :)
Also a lot of "not in my back yard" behaviour.
I think this comes back to basic primate social dynamics. We evolved tracking our social standing relative to others and wealth is pretty easy to compare. Advertising exacerbates that tendency but I don’t think there’s any way to get rid of it with standard issue humans.
“All the way up the income-wealth spectrum,” Norton told me, “basically everyone says [they’d need] two or three times as much” to be perfectly happy.
It references this study: https://www.hbs.edu/faculty/Pages/item.aspx?num=53540
My personal hunch is too many of us "shoot just too high" in terms of what we can afford, be it housing, cars, whatever.
Granted there are plenty of disciplined individuals and families out there and it's certainly not impossible to live within one's means.
But human nature is what it is - why "settle" for a $400,000 home when the bank will give you a mortgage for $500,000? Why settle for a Ford, VW or Toyota when the car finance payment for a BMW or Merc are just a little bit higher each month?
There's definitely a status thing goes on too...
I mean it helps that I have tended to live in lower COL cities, but I have always saved a sufficient portion of my income, and I have never had the feeling that I want to buy something or travel somewhere and I can’t because I can’t afford it.
I don’t fly first class, and I rarely stay in luxury accommodation, but those things just don’t matter to me, especially compared to the freedom of always having extra money.
I feel like this is such a relaxing way to live, and I have never understood the lifestyle treadmill or conspicuous consumption.
GP says that "SV techs" are unrelatable because they always want more $, and mentions that they're satisfied with what they make. They don't try to say that they're not in a privileged position, just that they don't see the need to always be wanting more.
Your comment, then, is a bit of a non-sequitur - even though it's correct, you don't really have an argument to have with GP. Maybe it's just your phrasing that's throwing people off.
No matter how, I keep coming away with GP sounding like they’re humblebragging :) I don’t have issues with the literal content, just with the meaning I read into it.
Either way, thanks. This is the first time I’ve seen a comment on HN flip flop around so much on score.
Indeed, I recognize my position is privileged, especially on a global scale.
If you're younger at least you might get lucky with GoFundMe "insurance", but that requires your story being sad or unusual enough to go viral, or you have a large family and friends network (starting a donation campaign on GoFundMe.com, what just about every American has to rely on for serious health expenses nowadays). If you're old you're probably not going to be pulling at enough heart strings to rely on this, though.
[0] Medicare is our insurance program for old people, and I think also kicks in for those who are disabled at younger ages. Medicaid is the name for our HC program for the very poor. People get these mixed up because the names are so similar. Then of course there's our coverage for the active military and their families (Tricare) and VA healthcare coverage for retired military. And programs for other government employees, and their families. By the time you add it all up, a huge percentage of the US population is already covered by government healthcare schemes, actually, which is reflected in our spending enough on publicly-funded healthcare that we should be able to cover everyone with just that money, if our costs were similar to the rest of the OECD. Instead we still have the costs of private insurance and bills to individuals even when covered by healthcare (these can run into the five figures per year, easily, on top of insurance costs) and, for some of the above, huge expenses in addition to the costs of the government portion of the HC program.
[EDIT] Medicare gap coverage tends to run low-hundreds of dollars per person per month, in case that wasn't clear.
But past the premiums, there are deductibles, coinsurance (e.g. for hospital stays longer than 60 days), you still have to pay for medicines (how much varies), etc. See https://www.medicare.gov/your-medicare-costs/medicare-costs-... and the links from it for details.
That's just not true. Everyone qualifies for Medicare when they are 65 years old. An extra $150/month gets you supplemental insurance, with a lower deductable than many work plans.
Also, and this is significant, medical bills can't collect against retirement accounts. The law is that they can't touch it. Same with your house and car. You can have $10k, $100k, or a million dollars in a 401k, an ira, or a roth, and withdraw it as you need it, to supplement your social security income.
Anybody younger has to pay for health care out of pocket or buy insurance. The cost of paying OOP is exorbitant. Even buying insurance on the open market is outrageously expensive. In either case, major medical issues can easily escalate to be financially disastrous.
Edit - in my original post, I stated doubling my net worth (or income or whatever) wouldn't allow me to retire in my 50s due to potential medical costs. This is what I mean - even with a few million in the bank, retirement isn't feasible due to the cost of buying healthcare in the US.
I had this conversation with an uncle who lives in Scotland. He didn't understand why my dad was still working (at age 60). Medical insurance was the only reason. As soon as he got Medicare, he retired.
There's Medicaid, the federally funded healthcare program for the poor. It is free. As a single person there are really low limits on how much assets and income you can have and qualify. Kids are more easily qualified, even if there parents may not be. Doctor choice is limited, there are lines, etc.
There's also the VA, available for veterans. I'm not sure of the rules around this. But those qualified get free care.
Throughout the country hospitals are supposed to patch up anyone who shows up with an emergency. The patient will get a bill after, but they won't be left to bleed to death. This doesn't help with slowly developing problems, though.
Beyond these free programs, (and Medicare for retired folks, talked about earlier), there's also Obamacare, which subsidizes medical coverage for those making too much to qualify for Medicaid. Someone working full time for minimum wage and making $14k per year (which is enough to rent a room and have a junk car), might end up with a subsidized plan having a $6k+ deductable (which they don't have!), someone making double that (enough for an inexpensive apartment and a used car) would pay $175 a month for the same plan. Obamacare details vary by state.
People with jobs making more than the above often have health care offered through work, and no longer qualify for Obamacare plans. At the low end these plans may not be as good as the Obamacare plans. Typically these plans might cost the employee $100-$200/month and up if there are multiple plans to choose from (the employer may be contributing 2-5x that, depending on the job), and have a deductable of several thousand dollars, with yearly exams and routine screening included for free. The problem becomes that you have to pay for everything else up to your deductable, then costs are shared up to a max limit perhaps $15k, then the plan covers all costs for all covered care. The deductable and maximum double for family plans.
One big problem with all the plans with deductables is that it is near impossible to find out what anything non-trivial will cost, which is discouraging when you have to pay some of these costs.
Government employees typically have the best plans, similar to what the average white collar worker had 20-30 years ago. Small copayments instead of large deductables. These plans were phased out by most private employers because they were too expensive, for both employers and most employees.
(That's where putting those savings in retirement accounts would have helped, but with few exceptions you can't access that money before the age of about 60, and also remember that it's a borrow and spend culture here, not saving for a rainy day.)
The best one could say is that bankruptcy is a way to get a clean slate, wiping out prior debts, and to be sure that the homeless statistic you are looking at doesn't count those who moved back in with family as homeless (some do).
The worst one can say is that the system is optimized to extract as much money as possible form as many people as possible...
Sure, they qualify for Medicare, but that doesn't mean they won't be still be spending serious money on healthcare. According to CNBC, if you were retiring in 2019, as a couple in good health you'll need on average of $390,000[1]. That assumes you're on Medicare as well. I'm guessing most people here are about 35 years old or younger, so not eligible for Medicare for at least another 30 years.
If I assume 2.5% inflation over the next 30 years (the default given in the following link[2]), that $390k in 2019 becomes $860k in 2051.
Granted that seems to be the average, and there will be people with less expenses. But that's just healthcare. While you'll probably own your home outright by then, there's the eventual assisted living that might be in your future as well, which already can cost up to $1500-4000 a month today (with monthly expenses another $2k+)[3], let alone 40-50 years from now. Although I suspect some people help pay for that by selling their homes at that point.
So okay, maybe you don't need to be a multi-millionaire when you retire to be comfortable, but you probably should try to be a millionaire, at least you and your spouse together (assuming you're going to have one).
One thing I didn't take into account was Social Security, which assuming it's still around in 2050 that will offset some of this. I do have a bad habit of assuming Social Security is going to be either severely nerfed or fall apart by the time I retire, so I tend not to account for it in my retirement planning. Maybe you could knock off $300k thanks to Social Security checks, I don't know and don't have time to dig further.
[1] https://www.cnbc.com/2019/07/18/retiring-this-year-how-much-...
[2] https://smartasset.com/investing/inflation-calculator
[3] https://www.assistedliving.org/the-average-cost-of-senior-li...
But retirement funding is so dependent on an individual's expenses, ability to generate income, expectations, risk tolerance, and available resources such as assets and family. These are all different for different people. Life expectancy and related health expenses are a huge unknown. Rich or poor we are all going to die, but we don't know when or how.
I think it's reasonable to retire as a healthy 50 year old with a million dollars. I know that may be unconventional around here. The existing (subsidized) obamacare and (supplemented) medicare options are a pretty good deal, in combination with savings to cover deductables, out of pocket maximums, and dental. Medicaid would be the backup for the worst-case scenarios, typically long term nursing home care. But that'll bankrupt most people, in most countries [0]. Is it reasonable to expect otherwise?
I was curious about the $390k figure you quoted, there wasn't any detail provided. I wonder if these are expenses over and above what medicare covers, like elective surgeries, or if this figure includes money for private nursing home care, etc. It was for two people.
Back to your original post, it is easy to keep retirement savings in a qualified 401k/ira/roth account that, along with a primary residence up to a generous maximum, is protected from medical debt with the exception of long term care. A retired millionaire should have around half of their money protected in such accounts. Do other countries give someone in similar financial circumstances a better deal?
[0] https://www.thinkadvisor.com/2014/11/24/12-countries-who-in-...
In all cases people struggle because they've absorbed things into their life that they now consider essential. The things you own end up owning you.
Isn't that social pressure? No matter how much you start with, if you end up with less than that, people see you as a failure. A person who inherits 10 million dollars and is afraid of going down to 1 million isn't as much afraid of selling his yacht as he's afraid of what his peers would think of him.
A yacht is the same thing with the decimal moved a couple places. If your income is fat enough to give you 10m in the bank then you can definitely own a yacht so long as you don't mind living in the kind of neighborhood where your neighbors are plumbers instead of surgeons.
https://www.tessllc.us/whats-the-difference-between-a-yacht-...
I've never heard about the negative effect on levels of empathy. I suspect that it is unusual for people to have friends far poorer or richer, and it is easy to be dismissive of the problems of those one does not know.
It seems ridiculous to most of us, but I can see how it happens. I grew up pretty poor - my father was a police officer and my mother didn't work because she had to watch the four of us. But I graduated with a degree in CS in '95 (if you're thinking about graduating with a degree in CS, try to do it in '95 because that may be the best possible year to do it) and am much better off financially now than my family was when I was growing up. Still, I keep worrying about my kids: I can pay to send them to college, but I can't afford, say Harvard or MIT. I have to keep reminding myself that they're far better off than I was at that age and I managed to turn out OK - I think part of it is that I end up comparing my situation with the people around me, many of whom are far better off than I am.
Depends on the college. MIT says to expect to spend ~ $70K/year. $100K * 20 years = 2 million. Two kids * 4 years = $560K. That's a little over 1/4 (before taxes). So yes, it would have been difficult to save up that much money. I have enough to send them both to a public in-state school debt-free, but not an elite private school.
$50k a year in tuition is still not a bargain, of course.
I really cannot imagine what they’d do with that kind of money. Besides build super fancy buildings of course.
Universities also compete on who has the best food and nicest dorms. Prospective student often tour campuses, so having a pretty one with lots of rose bushes, ivy, and brick is good for recruiting. That all costs money.
Another thing is that elite private universities often have strong need-based financial assistance (discounts). MIT, for example, claims that the average need-based scholarship is about $47k (on tuition of 53k). They also claim 31% attend tuition-free.
Making a small inference: Those who actually pay the full $53k in tuition are helping those who pay nothing.
Possibly, though it's also possible that those who have paid into the University's endowment in the past are helping those who pay nothing.
Another thing to consider is if you're investing $280K in the MIT brand, do they offer any bachelors degrees worth $280K other than maybe CS and pre-med?
The thing is, MIT's tuition is fairly typical for a private university. If anything, MIT (and other elite private universities) offer better discounts than lower-ranked schools.
I randomly chose Princeton's financial aid calculator because it was close to the top of Google. For a family with two working parents, two kids (one entering college), and $250k in home equity in Illinois (the middle of the USA):
* For a $100k/year SWE + a $25k/year something else and no college savings the expected family contribution is $30k/year
* The same family with $250k saved in a 529 college savings plan is $45k/year
* For a $125k/year SWE + a $50k/year something else and no college savings the expected contribution is $50k/year
* The same family with $250k saved in a 529 college savings plan is $66k/year
* The same family with $450k in home equity is expected to pay $75k/year (I guess you're expected to take out a home equity loan to pay for college).
* Make the family renters with $50k/year income (30k+20k), and their contribution drops to $4.4k/year.
The point is: The more you save, the more you need to save. And the more you make, the more you need to make.
That's not to say need-based tuition is bad policy. But, it does mean that "surely it's easy to pay for college with your level of income" doesn't really come into play until you reach the top 1-2% of income.
Everyone below that is going to have their tuition adjusted to make the out of pocket cost painful but bearable, and the average SWE isn't a 1%-er.
Once I started making enough not to worry about rent, the problem was then saving enough for things like retirement, setting up tuition funds for the family, etc. Now the problem is managing my mix of investments and having a big enough pad to insulate myself from the occasional recession. But, I think even if my net worth were to triple there isn't really anything I can do to avoid a great depression-level economic catastrophe. Beyond that, I know not what money problems people with eight or nine figure net worths are scared of but I would assume if I ever made it that far the anxiety won't go away.
Similarly, billions of poor people in developing countries would kill to swap places with the poorest American, but that doesn't mean the latter has a good life.
This really impacted me because I definitely came from a poor-ish background where I lived month to month and only thought about paying rent and whatnot. I then went to community college at 29 to give myself a chance at something else and then ended up making well into 6 figures having worked up to a director of a software company (unheard of in my social circle growing up).
At the time that I read this I remember feeling just as stressed about work things and family issues as I was when I didn't have health care and could barely pay my rent. Looking back, I remembered that I would feel just the same way about friend issues as a teenager when that was my whole world - something I would now scoff at as unimportant and incidental. It helped me realize that a lot of my stress levels were "baked in" to me - but that also meant I could affect my stress levels by being aware of my bubble.
Now when I am feeling stress about my financial portfolio or my kids getting proper education during the pandemic, I make a conscious effort to compare it to the helpless feeling I had when I made no money and felt powerless and that allows me to shrink my stress bubble. I also empathize much more with my kids and when they are stressing about something that my adult self realizes is not consequential. I remember that this is just them "filling their bubble" and to them it is just as important as the things I am dealing with. It also makes me appreciate those people who have a naturally small bubble and realize that that is also often a factor in their success (e.g., though I don't know Elon Musk, I can imagine that he has a naturally small stress bubble that allows him to drive so hard for success).
This is not to criticize you in any way, on the contrary, I agree with you 100%. But it is an empowering way of looking at your life.
There are nearly 8 billion people in the world. You can always find someone worse off, that doesn't mean people are undeserving of empathy if they aren't the one single worse off human being. This sort of worst-off competition is dehumanizing.
I'm curious, how do you go about establishing that level? Do you think it's really absolute, rather than relative to the stressors the observer feels? In reality, I think that's how most people actually operate. Something (extremely roughly) along the lines of: T >= O, where T is suffering of the target and O is suffering of the observer, results in empathy.
That gets caught up in the fact that suffering is more about perception, and is itself relative. So maybe we have to say both are level of suffering as perceived by the observer.
Something along the lines of "if I perceive you as suffering more than I do, I can have empathy for you". For what it's worth, I think this gets at the heart of the difference between sympathy (largely pity) and empathy more generally.
I've been poor. Not homeless poor, but paycheque-to-paycheque, zero dollars in the bank, $1500 on some maxed out credit cards, just budgeted out the non-negotiable bills (rent, heat, credit card minimum payment) for this month and I need to find $8.47 in the sofa to break even and guess I'll hit up the food bank to feed myself again sorta poor.
I make... decent money now.
Is my life objectively better? Yes.
Does the stress of figuring out where my next meal comes from and the stress of figuring out where my meals 30 years from now and how to finance my child's education feel different? No.
Anxiety is anxiety. Just because in a global context it's not as bad doesn't mean it's not as bad to the individual.
A brutal and unfair characteristic of recessions is that the pain is very unevenly distributed. I've lived through several severe recessions here in the Uk and myself and my family were fine because we had comfortable jobs and incomes. Our house prices didn't appreciate as much and our wages were stagnant for a while, but we were fine. The pain falls on people who lose their incomes, lose their investments and come out of college with no jobs to chase.
I'm in no way diminishing the real hardship that these events cause, it sucks.
1. A permanent loss of wealth. When you've got more cash, you've got more to lose. People have more to gain from robbing/suing/hacking you. Being sued when you only have a year of savings is much different than being sued the day before retirement. The various life/house/health/car/umbrella insurances should hopefully put these worries at ease. Or at least that's what I've been telling myself. Being in the earlier part of my career, I've been looking more at life and disability insurance if fate messes me up before I've built up a nest egg.
2. A temporary loss of wealth (Plan for a rainy day. Then solve for an even rainier day). This one gets me good, since there's always another increasingly more obscure edge case I didn't plan for. Like you said, these always existed before, but there were just larger problems eclipsing them. I think it's important to remember that there can always be a rainier day to plan for, and that it becomes a slippery slope into the prepper lifestyle (not a bad thing if that's your jam!). I think what's been giving me a break from this anxiety is a flexibility of lifestyle. If there's some sort of crash, I don't need to diversify to the magical ratio that happens to survive that crash - I need to keep from drawing a significant amount of money until the markets recover. Maybe this means dropping cost of living (where a more lavish lifestyle will have more fat that can be trimmed in difficult times). Or, if I'm still lucky enough to be employable at that time, I can work to ease the burden. This doesn't blanket over "world has devolved into chaos" scenario, but having stock in oil or a collection of gold bars probably wouldn't help much in those cases either. You'd have to go full prepper :)
The lack of empathy for the wealthy goes both ways. The wealthy traditionally haven't had much empathy for people with less money so it's not too surprising that people with less money don't have much empathy for them. It makes me really angry when I see multimillionaires in the news warning about the risks raising the minimum wage. It's actually pretty sad.
E.g.
> That’s the drop-off you experience at the lower price levels - there’s nothing between “This is a tiny but acceptable apartment” and “Slum apartments in stab-ville”.
I don't think this is true, and why would it be? Unless you're in an area where the housing market is cliffed for some legislative or regulatory reason. But most places, no, I've not seen this. You might have to put effort in to find nicer places on a budget, research areas, etc. but isn't that true of any purchase?
It's true that when you're poor you never get close to those naive 'this is how much of your income to spend on rent' suggestions, but there are places that cover the whole spectrum.
> Whichever you choose, a person of less-than-intermediate income has to be prepared to stick with the rental long-term, should things not go well. This is because apartments at both of these levels quite accurately assume that you can’t afford a lawyer - while it’s normal to put down a month or two worth of rent as a security deposit, it’s much less normal to get it back; the apartment complex has no reason to give back thousands of dollars they can simply keep. This means every time you move, you pay something like a third to a month’s wages for the privilege. Since breaking a lease often means you lose your privilege to live anywhere non-hellish, this means if you don’t have cash reserves (more on these later*) at the exact right time of year, you might end up in the same place for another full year whether you like it or not.
You stick with a rental longer term because of overheads, yeah, but I wouldn't go into a rental contract expecting with certainty to lose 100% of my deposit.
Rather what happens is you get good at doing minor legal research and writing terse emails about it. Maybe many are scummy by default, but most roll when they see you've got even a little knowledge about what you're entitled to. That's a valuable skill for life in general, so it's something you should be learning to do regardless.
> a person’s pay is determined by how rare their skills are and how much demand there is for those skills. The value of their work doesn’t factor in as much
What's the value of a person's work that isn't just determined by the first part? What does the author think drives demand, if not the prospective value you provide to the various companies in the labor market?
> What's the value of a person's work that isn't just determined by the first part? What does the author think drives demand, if not the prospective value you provide to the various companies in the labor market?
The value of your work is "how much money would the company lose if no one did the exact job I am doing". This generally has 0 correlation to your wage, because in general a company will think in terms of "how much money would the company lose if anyone else did the job this employee is doing", which is a very different question. This is how it happens that many absolutely essential jobs, without which society would simply stop functioning, are also among the lowest payed. Probably one of the best examples is nurses, but also warehouse workers, transport people, construction workers, farm hands.
"how much money would the company lose if no one did the exact job I am doing" seems a bit of a moot point when it's not even close to being the case that no-one would do the job in question. _Expected_ value then approaches price paid as you weight in the probability involved.
However, that's not to say that it is a good state of affairs, or that it is the only way things could work. In fact, the purpose of workers' unions is exactly to stop this kind of thinking, and it seems like this may once again start spreading a bit, given the recent movements in Amazon and other places.
The problem with this is that the company is using its leverage over workers to treat them as a commodity. If workers had more leverage, they could refuse the job unless they were paid a fair wage (the value of their work as I defined it above), but as it is, they are forced to compete with other workers since not working would see them and their families homeless and maybe even dying of hunger.
With the current state of affairs, the company owners end up extracting much more value from their workers as profit, often by deliberately fixing the wage market (as we saw with the illegal SV "no poaching" deal for tech workers), or at least by seeking to attain geographical monopoly status in it.
• Job security – some people are just too poor to go on the job market for a few weeks or months, meaning they don't have much leverage to get their employer to increase their pay…
• Perverse incentives – some jobs are all about destroying value, e.g. loan sharks, most of the advertising industry… http://news.bbc.co.uk/1/hi/8410489.stm (2009) has a short list.
• Monopsony – what if your employer is the only one currently in a position to make that much from you (or all the competitors have already filled their positions)?
I could go on, but I'm only scratching the surface of my surface-level knowledge.
If these reduce the value you provide then that's as designed. How can you provide value without skills? How can you provide value by _not_ doing things you find unethical? These aren't inefficiencies of the market for labor, they're facets of it working exactly as desired.
> • Job security – some people are just too poor to go on the job market for a few weeks or months, meaning they don't have much leverage to get their employer to increase their pay…
Do you... quit your job before you look for a new one? Increase in pay levels for lower skilled jobs is not really about individual cases, but the aggregate. If Profession X generates more value than the current pay level, that increases general demand for Profession X, and reduces the time needed to match up with a new employer. Sure there's some thresholding involved, but not enough to 'entirely decouple' price and value.
> • Perverse incentives – some jobs are all about destroying value, e.g. loan sharks, most of the advertising industry… http://news.bbc.co.uk/1/hi/8410489.stm (2009) has a short list.
Eh this is pretty hand-wavey stuff. Loan sharks don't _destroy_ value from an economic perspective. Nor does advertising. Nor does banking. Societal problems though they might have.
This means that you can't model it as a liquid market.
> Do you... quit your job before you look for a new one?
I don't, because I don't work such long hours that I don't have the capacity to do anything after work. Some people have multiple jobs just to cover rent and food; adding a third (looking for new jobs) isn't always possible.
> Loan sharks don't _destroy_ value from an economic perspective. Nor does advertising.
Then economics is wrong. Wasting people's lives and attention is destroying value. Keeping people in debt, causing suffering… you're not extracting as much value out of people as they're losing. They're net negative.
As an example, they claim that the UK's top bankers and fund managers destroy about £7.40 in value for every £1 they get in salary. How do they get that figure? They assign to those people ...
* 100% of the predicted reduction in UK GDP from 2008 to 2014 as a result of the 2008 crisis (as measured by the difference between IMF forecasts immediately before and immediately after) * an "adjustment to reflect a loss of 5% of UK economic capacity between the onset of the crisis and 2020" (that sounds like double-counting to me, but I can't tell because they don't give any details) * 100% of an estimate of increased debt as a result of the crisis, obtained as the difference between an IMF forecast immediately after the crisis and the UK government's forecast immediately before it (sounds like more double-counting to me, and I bet the government's predictions are systematically more optimistic than the IMF's) * an "allowance for debt servicing costs on the additional debt incurred" * 50% of 1/6 of the tax revenue from the UK financial sector (treated as a pure positive to weigh against the pure negative of value destroyed by the 2008 crisis). The 1/6 is because they guess 5/6 of the UK financial sector is retail rather than wholesale finance and consider the gains attributable to top bankers to be only in the wholesale part. The 50% is because not all of the tax paid by the wholesale financial industry is paid by, or otherwise attributable to, its top bankers. * 50% of 2.5% of the UK's GVA or "gross value added" as estimated by the ONS. The 2.5% is the ONS's estimate of how much London financial services contributed to GVA. The 50% is because not all of that is attributable to the top bankers. I don't know why they're using GVA here but GDP when estimating value destroyed by the 2008 crisis. * 50% of 50% of an estimate of post-tax earnings of finance workers in the City of London. Post-tax because they already counted tax revenue. 50% because not all the credit for those people having those jobs belongs to the top bankers. 50% because if they didn't have those jobs then they'd presumably have other jobs.
The costs of the 2008 crisis are considered as a one-off. For the benefits, which are a recurring thing, they assumed a 20-year career for those bankers.
Soooo many things about this look highly dubious to me. There isn't a 2008-scale crisis every 20 years. The 2008 crisis was a global thing and we have no idea what fraction of it was the fault of people in the UK, versus what fraction of its effects were suffered by the UK. It's not at all clear that it's entirely attributable to "top bankers". Their measures of value destroyed by the crisis look very susceptible to double-counting and other errors. If there's a good reason for using GDP to reckon the loss and GVA to reckon the gain, it eludes me. So far as I can tell, the ONS's reckoning of the financial industry's contribution to GVA is looking only at things like how much revenue the financial industry gets for the services it provides, whereas the claimed benefits of the financial industry to the economy are all about things like providing liquidity, more efficient allocation of capital, etc., which they don't consider at all. Almost all the key numbers in their calculation are low-effort guesses: look at all those "50%"s.
I would be 100% unsurprised if it turned out that top bankers' net contribution to the world is negative. But I don't think this report really tells me anything of value about whether that's so.
That was the first profession in the report. I haven't looked at the others. I strongly suspect they are just as terrible as this ...
Also, if you consider class action lawsuits as overall positive value, then necessarily both sides of the lawsuit are producing positive value.
> Also, if you consider class action lawsuits as overall positive value
I don't. But the vast majority of class action lawsuits I've seen have been valid, and the vast majority of class action lawsuits have paid out nowhere near enough to even discourage the behaviour, let alone compensate the victims. With a good class-action lawyer, class-action lawsuits just reduce your profit margin slightly, as a cost of “doing business”.
I can't imagine how you could think that I think that, unless we're working off drastically different models of how the world works.
Why not? How could an economy function if it were based on real value as opposed to relative value? Farmers and water treatment engineers would all be billionaires and everyone would waste a lot of resources trying to become farmers and learning about water treatment. If you drive a truck of medical supplies, you'd make millions, but if you drive a truck of consumer goods, you'd make very little, despite doing the same work.
• There's only so much arable land, so people couldn't do this.
⋄ Thus, people who wanted to become farmers but didn't have land would either give up, or innovate things like hydroponics.
• There's only so much food people need to eat. Producing more than that isn't contributing value; in this case, markets approximate that reasonably well (though with other problems, so many governments subsidise food production in some way).
• People already waste a lot of resources trying to become tax-reduction lawyers or middle managers¹ or gain other high-paid, useless jobs.
> If you drive a truck of medical supplies, you'd make millions, but if you drive a truck of consumer goods, you'd make very little, despite doing the same work.
Good point! This hypothetical system that hasn't had hundreds of years to work out the kinks has some potential issues. I wouldn't say it's worth dismissing it out of hand because of that, though; they don't seem like fundamental problems. For instance, the current system already distinguishes between rapid medical transportation networks (e.g. organ motorcyclists) and regular ol' freight.
Before trying to solve these problems, we should work out how the (magical, instant, “everyone just decides to start doing it”) introduction of such a system would change society. It's entirely possible that it would change enough to eliminate this problem, and introduce others in its place.
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¹: Middle management isn't inherently useless – there can be useful hierarchies involving middle management, I'm sure. In my personal experience, I haven't encountered any, and popular culture agrees with me so it's decent shorthand, but if your job title is “middle management” and you have a genuinely useful job, this isn't a dig at you. (Tax lawyers, though… offence intended.)
> There's only so much arable land, so people couldn't do this.
Rather than invest in stocks, people would buy a small patch of land to grow their own food. This would not be an efficient allocation of capital.
> There's only so much food people need to eat. Producing more than that isn't contributing value; in this case, markets approximate that reasonably well
What makes nursing any different in this regard? There certainly is a healthcare distribution problem in the US, but it's not because nurses are being paid too little. Nurses in America make the same, if not more, than nurses in the rest of the world.
The value of the work done, either in a physical sense (because it produces something of value) or in a societal sense (because it involves doing something of value).
If you're the best hole-digger in the world, and people are constantly trying to hire you to dig holes so that they can fill them in, then you would be highly paid - but would your work be "valuable"?
Probably very few people are true free-market believers when it comes to the idea of fair pay.
yes, if somebody else would be willing to swap their hard earned "value" for it.
The problem is when people making decisions to swap is not swapping their own personal "value" they accumulated themselves, but someone else's (usually the tax payers').
If people get transcendent joy out of filling in holes, or the filling-in of holes otherwise matters to them, then this is valuable. In a real-world scenario, it's a bullshit job: https://www.strike.coop/bullshit-jobs/
I have a friend who works in real estate and he tells me people in difficult circumstances pay a premium because of the risk of default and damage. The landlord needs more margin to cover those extra risks.
He also told me you could never make money at the bottom end of the market if you have middle class sensibilities. It's pretty ruthless at the bottom.
I think when supply and demand meets minimum wage you get an incredibly non-linear effect in bang for buck. I'm sure there are exceptions (the property market definitely has a negative survivorship bias where the nice cheap properties are never on the market for very long while the terrible ones are).
When I was last looking -
Studio apartments and one bed room apartments rented for similar amounts, and so did two beds and three beds.
But the price jump from one bed to two bed was much larger than any of the other jumps.
You can speculate on many reasons why this might be the case (smallest size apartment for a family in the city, smallest size you can split with a friend, smallest size with space for an office).
There are exceptions and I'm sure that more research time could help you find them.
But one of the points made convincingly in the artle is that if you are poor you don't have a lot of energy, time or gas-money to do that kind of research.
The typical tradeoff in London is price vs proximity to work/transport. For most people. Safety comes in at the very bottom end, but still you can live far out and commute. I'm not saying that's a pleasant experience, or that being poor is a pleasant experience in general, but the tradeoff and choice exists. If you have a job in central London that you'd commute to though, fact is you are already probably well off compared to most of the country. It's a bit like how student debt mostly affects the middle class. Same with expensive season tickets for the train.
That price jump isn't particularly surprising given London's one bed flats are competing against a vast number of individual rooms in shared properties rented out (which is regarded as a normal living arrangement in London, including for professionals, somewhat older people and to an extent couples). Obviously people who need an extra bedroom aren't really in that market, and the second bedroom is also easily [sub]let out separately.
The jump between sharing and a one-bed flat is certainly larger. A two-bed on two incomes is a pretty decent arrangement in London (if you're a couple for example); a one-bed on a single income is much much steeper.
So a 3+ bedroom property still houses a maximum of 2 couples.
>I don't think this is true, and why would it be? Unless you're in an area where the housing market is cliffed for some legislative or regulatory reason. But most places, no, I've not seen this. You might have to put effort in to find nicer places on a budget, research areas, etc. but isn't that true of any purchase?
The thing that I've noticed is that yes the sweet spot exists but the supply is always more limited. You have higher availability on living because it is so expensive that not everyone can afford it(or think it is worth it). And the cheap in not so good areas (not necessarily dangerous but gives e.g. longer commutes and has less services and so on) have a higher supply because of that. The sweet spot in good location and a good price is going to have all houses and/or apartments taken. Then the surprise happens, since supply is limited at this sweet spot the prices tend to rise so you get that cliff mentioned in the article.
The author seems to be describing how things are in metro Phoenix. Having not lived there, I’d assume it’s as described.
I will say that my experience has been that there’s a paradox: it should be much easier to get by as a poor person in small towns as everything costs a lot less, but paradoxically there’s even less work to do so it’s hard to even come up with the low local costs. In the end, poverty is always relative to the local market.
Also his car cost is way off: https://cars.usnews.com/cars-trucks/cheapest-lease-deals
Also deposits are always(by law) held by a third party in escrow, and it's actually a bit of a pain to claim any money from that as a landlord, so it's really rare that people lose their deposits unless the place is absolutely wrecked.
Don't confuse suing with winning. You can sue someone and lose, but the lawyers will still cost both sides a lot of money.
Give them your buddies contact information.
Nobody who is truly poor would skip out on the last month rent unless they were desperate, because the landlord will find things wrong with the apartment and will charge you the most or all of the security deposit. Then they will file an unpaid dept claim, turn it over to a debt collection agency and it will hit your credit score. Which means in the future you have to rent in the really scary parts of the city, and if you don't want to rent in the really scary part of the city you'll pay your last month's rent. Also a lot of jobs check credit scores, a bad report could keep the author from getting hired.
In regard to the car, the author doesn't have the credit score or income level to even qualify for the lease let alone, "the cheapest lease deals", not to mention the author certainly doesn't have the $3K down payment. If you are thinking that they can just roll the down payment into the lease, well they only let you do that if you have the best credit score.
Someone who can write that well can probably find ways to make more money if he needs it - what else is he trying to deceive us about?
This looks insane to an Australian. I have moved house 4 times in the past 5 years and I have never not got all of my bond back. Some states here have a rule that the bond money is held by the state so that the landowner doesn't just take that money for themselves. How can the poor ever break the cycle if no one is willing to help protect them from shitty rent-seekers?
You probably have the mental fortitude to figure out how to fight back on your own. To read the docs, know your position, agreements, and how to take a landlord to court to win.
In low income, people don't know their rights nor do they ever believe that the system could ever be on their side. And, they're not unjustified in that thinking.
Sounds like the solution. When I was younger, people would try to take advantage of me, but all it takes is a bit of standing up for yourself and they concede.
> This is because apartments at both of these levels quite accurately assume that you can’t afford a lawyer - while it’s normal to put down a month or two worth of rent as a security deposit, it’s much less normal to get it back; the apartment complex has no reason to give back thousands of dollars they can simply keep.
When you were younger, were you (or your parents) able to afford a lawyer? Even if you couldn't, did you at least look or sound like you could? You seem to assume that this person has the same tools available to them that you do, and maybe that's the assumption the post is trying to get you to revisit.
The thing is, nearly all these people trying to take advantage are bluffing. Call the bluff, and they fold immediately. They're just testing to see if you're a sucker.
But if you did leave the apartment damaged, they're not going to cave and you're going to forfeit the security deposit.
The deposit thing looks insane to me too. My rental deposit is held in escrow by some third party; I've never heard of anyone not getting their deposit back when they move (unless they did something to deserve it e.g. trashing the place). The only issue around deposits is that you usually have to pay a deposit for the new place before you've received the deposit back for the old place, which can cause cashflow issues.
I've always thought of the U.S. as a great place to be rich, but a terrible place to be poor.
On the other hand, I find it laughable that this author describes a 900sqft apartment as "very small". 900sqft would be considered a decent-sized, mid-range apartment in London, and if you're poor you'll live somewhere MUCH smaller. Americans have such ginormous houses, even the poor ones.
Yep, we actually bought a 3-bed house(not apartment) in UK, and the total space is 950sqft(about 90square metres). And that's not a small house around here by any measure. American houses are like their cars - absurdly large.
I did once see a house listed as having "conveniant access to the motorway for commuting". It was actually directly underneath a bridge of the motorway :|
>>my parents bedroom was the 'big' bedroom and it was just large enough to fit a queen sized bed, a chest of drawers, a gun case, and then a night stand on one side of the bed
That's exactly what ours is, minus the gun case ;-)
The student rental market 12 or so years ago was definitely full of horror stories about getting deposits returned, knowing which letting agents to go with useful insider knowledge. The Scottish deposit security scheme is only a few years old and has definitely helped improve the situation. The rental market is one in which there can be significant power/information imbalances and where some protections make absolute sense.
This is only a relatively recent thing in the UK, introduced about 10 years ago, to tackle the problem described in the original post of landlords running off with tenants deposits.
When I was a student ~10 years ago, just before compulsory deposit protection was introduced, it was very common for landlords to invent or wildly exaggerate damages to keep the £1000+ deposit, especially because they thought that students would be a push-over.
The main issue is enforcement. If your landlord withholds the deposit, often your only recourse is to sue them (usually in small claims court). This is going to require paying some court fees, maybe on the order of $100 (which you may get back if you win, but you still need to pay them up front). Plus you're going to have to show up in court, which likely means missing work. And obviously you're not going to have a lawyer for this, whereas most landlords will.
When I moved out of my last apartment my landlord withheld $100 because he claimed there was dust on the blinds. (There was not, we specifically dusted the blinds before moving out.) But the only way I could get that money back was to sue them, and it just wasn't worth it for me.
Granted, if you are poor, this likely means that you need to find a lawyer willing to work on contingency.
For what it is worth, just threatening to sue along with citing the relevent law and possible damages is probably enough. Landlords don't like going to court either, so if you make even a halfway credible threat they will probably pay.
The problem, that the author alluded to, is that there is no one that will solve or mediate a dispute short of taking a claim to court in the US. This is generally pretty cheap and easy for small claims, if you know what you are doing. Most people don't know what they are doing, or have no idea that small claims is even an option.
As an American who now lives in a place with socialized healthcare, I can safely say that I'm not moving back until the US sorts out the healthcare crisis. I'm in Canada now, which is used as a punching bag by conservative Americans for how bad socialized healthcare can be. Anyone who has lived in both places knows how laughable that claim is. Canadians certainly have their complaints about this system, but I have never heard a Canadian ask for US style healthcare.
I've never heard anyone of any nationality say they wish their country had US-style healthcare.
This comment was an aside about right wing news stories that pop up in the US about how Canadians are flocking to the US to get healthcare. It normally revolves around how some person was on a waiting list or couldn't get the procedure they wanted in Canada and had to come to the US. The truth is that there is normally an extenuating circumstance that isn't mentioned (e.g. the treatment is experimental or not approved in Canada. The patient is stuck on a wait list because it is a need-based system, so they might not 'need' that procedure more than the people ahead of them.)
Anecdotal but myself (multiple moves) and most friends in London had to battle for a few hundred quid being attempted to stolen from the deposit before returning for various BS reasons. The dispute scheme was great as a tenant, but did mean months without the funds back.
Also yes, the entire article just screams "the experience of being poor....in America". From the lack of social net, to the absurd costs of insurance and healthcare. I don't mean to say that life elsewhere is all rosy and there are no problems at all, but I can't even imagine worrying about costs of health treatments - it's just a given you will get them and you won't pay anything. I guess it's part of the author's point - that some people don't realize how good they have it.
Since we're throwing anecdotes out there, I've had my landlords attempt to wrongly and knowingly take money from my security deposit about 30% of the time. The lower-class the apartment is, the more likely the owner is a slumlord, and will try to scam you.
Then you're lucky - I've had enough friends in QLD and WA who have had their bond partially kept back because the landlord company thought they could get a few hundred or thousand for free. Usually the trick is to say that pre-existing damage was caused by my friends. It's impossible to defend from if you don't claim the damage when you move in!
I've personally only had one huge battle with the company as they thought our place was dirty when we moved out, despite spending two full days cleaning it (townhouse). I now always pay a cleaning company to avoid the hassle, but that's $100-200 not everyone can afford.
I found these 2018 numbers that say that 30% of bonds are not returned in Australia; https://www.finder.com.au/30-of-aussie-tenants-dont-get-thei...
I'm currently in the process of trying to claw my bond back from my previous landlord, it's been over 3 months now. Luckily I can afford it, but I know a lot of people who can't.
I have always gotten payed after sending a letter to the effect of "I moved on XXX date. With interest (as required by the lease and state law) you owe me my security deposit of $YYY within 45 days or I am entitled to sue for 3x that amount and attorneys fees."
There are also some procedural rules around how to deduct from security deposits (among other things, you must send an itemized list by certified mail to the last known address of the former tenet within 45 days of the end of the lease). I'm pretty sure most landlords don't even follow that for otherwise valid deductions
I do understand their financial worries and sympathize, but only because i am aware of my perspective. Oftentimes i have to remind myself that for others it is actually stressful to think about not being able to comfortably buy a house vs renting it.
Meanwhile i worry about my mothers retirement, how i can get her out of this shady living situation and how i can pay back everything she has done to bring me up despite circumstances.
Actually i wish for others that were better off their whole life to have my perspective for some time, since i think that it would really make them less stressed about their future.
Either that or I'm a lot poorer than I think I am!
Car repair is a skill of economic importance of you are poor or employed in auto repair. Otherwise, it's obviously a skill someone might have, but far less critical.
I recall feeling it when I was younger and we were in a worse place. Now I feel it every time someone tells me the price for pruning a tree, fixing my house wiring, or making my pet more comfortable. There's a moment after they say the number where they are bracing for an argument. When I just say 'Okay', some of them seem a little startled.
Another aspect may be that I have in fact worked with my hands before. It's possible I might have done it anyway, but needing money is powerful motivation for getting dirt under your nails. So I understand the cost of parts and labor, whereas some of my newer peers may not. Yes, that repair really is $800, and yes I'm fine with paying it.
5 Things Nobody Tells You About Being Poor, May 27, 2011: (https://www.cracked.com/blog/5-things-nobody-tells-you-about...)
The 5 Stupidest Habits You Develop Growing Up Poor, January 19, 2012: (https://www.cracked.com/blog/the-5-stupidest-habits-you-deve...)
4 Things Politicians Will Never Understand About Poor People, February 21, 2013: (https://www.cracked.com/blog/4-things-politicians-will-never...)
https://whatever.scalzi.com/2005/09/03/being-poor/
https://whatever.scalzi.com/2015/09/03/being-poor-ten-years-...
Parts of america have really really high housing costs... like really high... and a bunch of people want to live there, and a lot of people there are poor (atleast compared to housing prices).
Why the hell do you still build single family houses, or one/two floor buildings in areas where you need to fit a bunch of people (eg. both photos in the article)? I'm from a former socialist country, and housing for working families back then looked (still does) like this:
https://i.imgur.com/pmpcaOL.png https://i.imgur.com/YowiKVe.png
Modern buildings look a bit better, with ground floors for commercial use, and underground parking, but still:
https://i.imgur.com/AFpUiuX.jpg
I understand single or two floor buildings if you're building something in rural alabama... there's a lot of space there, and the land is cheap.... But places like san francisco? That, I don't get.
Short answer. The people who already live there don't want to be neighbors with those sorts of buildings and any politician that suggests it will be voted out of office.
Also with covid and the rise of home working you know what people realy realy want? a second room for an office and a Garden (Yard).
The old socialist buildings are made form reinforced (rebar) concrete... even the inside walls... and outside walls.. and sometimes even balcony ledges. Even occasional gas explosions usually just blow out some windows.
Mostly bad regulations like rent control and zoning.
It's not the market; obviously there's demand for higher density housing, and were it allowed, people would make more of it. It's almost always local regulations that make producing such housing difficult, or more commonly, flat out impossible.
Most American residential land is zoned for exclusively large single family homes in big lots. This is true even in most major metro areas. You can read a little bit about this here in this article that compared American zoning with Japanese zoning: https://marketurbanism.com/2019/03/19/why-is-japanese-zoning...
The gist of how it got this way is: racism and classism. The racism used to be more relevant, these days the classism is. You see, if you require that to live in a neighborhood, you must be able to own or rent a property with a minimum amount of land, it's easy to keep out people of lesser economic resources. A poorer family that might be willing to live an apartment in a nicer area will find that no such housing exists there, and being unable to afford a full house, they are excluded, hence the term 'exclusionary zoning'. This also has the effect of keeping those poor kids out of local schools.
So yeah, it's economic segregation that America pretends doesn't count as segregation somehow, even though the effects are plain as day.
People would NOT want that sort of building near their home worried it would lead to more crime, lower property prices etc.
Now, your last modern building. People would pay a small fortune to live in something like that in a trendy area in a city...
They would probably be classed as luxury apartments, come with a large rents or buying costs.
Build a 5, 10 story apartment building, underground parking, and fit hundreds of people in a space, that would otherwise be used by 5-10 houses (20, 30 people).
First photos are from belgrade, when that design was "modern" from 1960-1980s, and the last, modern one is from ljubljana, built recently.
In London, this type of housing might be depressing, but here it is normal -- and when you take away 'neighbor envy', it's hard to express the difference it makes to one's own sense that you've reached some equilibrium in your environment and your life.
The TV ads here might be full of people in detached houses, but that kind of residence is very rare in this country - at least in cities like Bucharest and Cluj.
In short, Bucharest folk are used to it, and practically no-one in the US is. For them, it's 'the projects'.
It could change that to help make housing more affordable, and chooses not to.
And in some cases definitely not anywhere near them.
Cities work well at a certain size and population, but the services and infrastructure never get upgraded to match big increases in population like tower blocks.
Not to mention the view from people's houses across the bay will be gone as soon as high rises are built. If I'm happy with the status quo & I have lots of money, why would I ever stop doing everything possible to maintain it?
For the first few years my family had an income of ~$1000 / month (back in the 90s). My mother wasn't legally allowed to work and my father was on a stipend. The whole family lived in a studio apartment, that 900 sq ft place in the article would've been huge for us. Our car was a $1200 tiny little rust bucket, but it ran.
Sometimes I see documentaries about people living in poverty and going pay check to pay check, yet the kids are wearing Nikes and playing on iphones. Being poor was definitely stressful though, and I'm definitely grateful that stress isn't part of my life anymore.
This is investment. If your kids are socially rejected at school and can't get on the internet, are they going to be better off in the long term or worse off?
If you are poor, looking poor is not going to help you up, it's going to drive you farther into poverty. It's the same impulse that makes lower-middle class parents go into debt to put braces on their kids' perfectly functional teeth (in the US.) Your kids are going to have to impress fellow students, charm their teachers, get into colleges, and interview for jobs. A bunch of people who don't see class are going to see your crooked teeth.
Compare that to my own growing up, and we had separate costs for a TV, a radio, we would save up for a walkman or CD player, internet started off as dial-up at the library, then a PC. We'd buy CD's with games and things like Encarta, we'd record or rent films on a video recorder, etc etc etc. And all of those things had to be shared.
Now, with a smartphone, you have all of the above and then some - at a one time investment. Each of those individual devices back then cost the same as a single decent smartphone does nowadays.
I really don't see the issue. I mean I kinda get the objections, because for some reason smartphones are still considered luxury items (but only if you're poor), but it's such an empowering tool (and a source of distraction, which is something everyone needs).
for myself i paid under $250 for my android and i'm a professional full stack developer with android as part of that stack. (essential ph-1 phone on clearance sale on ebay).
Minimum wage in the US hasn't kept pace with inflation for decades, and rents, school fees and the costs of medication have kept rising even faster. Banks charge even higher overdraft fees, so the small joys of a pair of branded shoes or a fancy phone are affordable, but the longer term gains aren't likely to be in reach.
Escaping poverty needs 20 years of everything going right. https://www.theatlantic.com/business/archive/2017/04/economi...
People want cheap crap but they also want to keep wages high. Bernie understood this which is why he was against trade agreements and cheap labor.
Now people are used to paying $5 for a Tshirt. They want to get paid $15 an hour but also balk at a $20 Tshirt. You can’t have it both ways.
That’s partially true but this trend has been widespread well outside of manufacturing, too. There’s no shortage of companies engaged in wage theft, converting full time positions to contract, changing benefits plans to shift more cost to the workers, etc. in every sector. Programmers are in high demand but even in tech, consider how many companies contract out core competencies or, especially, have things like helpdesk jobs which pay considerably less than they used to and no longer have a promotion path.
There’s been a well-funded push to roll back the New Deal since around the end of WWII. This has included funding libertarian think tanks, religious denominations which encourage self-reliance and distrust of the government, etc. One big factor feeding into demand for cheaper goods is that people are acting rationally in a world where their income lags behind their parents or grandparents at the same age.
Kevin Kruse wrote a book about this a while back which is good for understanding some trends in the 20th century:
http://kevinmkruse.com/book/one-nation-under-god/
If your parents immigrated like mine (wife legally not allowed to work, dad on stipend) then your father (and possibly mother) was very well educated in your home country, then immigrated to the US, finished his studies or did a temporary training and then took a well paying job.
When having a $1000 a month income is known to everyone to be temporary and you know a well paying job is on the other side, that's not the kind of poor the author is talking about. When you know you will have money soon you can make all sorts of wise choices to handle a period of low liquidity. When you don't know that, you can't make any of those choices.
Looking back the financial position we were in was clearly temporary. But at the time it wasn't so clear. It wasn't obvious that once graduated, my father would be able to find a well paying job (they were also pretty ignorant on the job market at the time). We definitely had financial stress in the family, which bled out to me all through childhood.
I consider myself fortunate and I had a legs up in multiple dimensions. Educated parents, stable home life etc. But like I said, very grateful that type of stress is not a part of my life now.
There is peer pressure on the kids (and even parents), so they upend Maslow’s pyramid to their detriment.
Some of it may be educational —home ec is not taught in many schools. Some of it is cultural (advertising) and some of it is propaganda (we’re Americans, we must have a TV and consume brand names!)
I recall in Japan if you went on the dole you first had to sell your ‘luxury’ items before getting government support. It indicated you had to be in need and not supplementing or aiding poor economic decisions.
I agree with the theory, but what is a luxury? Cheap shoes are penny wise and pound foolish as i've discovered. (though some expensive brands last no longer than the cheap ones). You can't really do anything today without an internet connection - school or apply for a job, and you are expected to answer your cell phone when called, so some form of smart phone is required and if you have an iphone it isn't worth enough used to be worth selling to buy a cheaper phone...
This is the kind of statement you hear from conservatives that blame poor people for their poverty.
There’s a number of reasons. Because when you churn through a dozen pairs of cheap no-name shoes, it ends up being more than just buying a better set of shoes. Maybe a relative gave you some Christmas money. Or maybe you got overtime for working an extra 20 hours.
Being poor, you are constantly judged on your appearance, and it has a huge effect on how you are treated by retailers, government (police, social services, etc), teachers/school admins, and friends.
When you’re poor, everything you own is half broken, purchased used, worn thin. You most likely live in an area that has a high crime rate, is loud, has a long commute to your job, is dirty. You have access to terrible, low quality food. You skip doctors appointments (can’t afford the time off or co-pays) and dental work. (American) society constantly blames you for your situation.
Whatever the reason, poverty is a daily assault on your human dignity. It’s incredibly difficult to escape. Sometimes, you have to say, “Screw it” and buy your kid the expensive shoes. That money won’t get you out of poverty, but it may make you and your child happy for a bit.
The stakes of the film are simultaneously huge and small. The Turners don’t need much. Some stability; a steady income, of course; more time would be a dream. Really, though, the most precious thing they have is each other. But there’s no time for that because then there’d be no money.
[1] https://www.nytimes.com/2020/03/04/movies/sorry-we-missed-yo...
Now I still have much lower income than people, who have regular well-paying jobs, but I do not feel poor. I have no savings and there are some things, which feel totally out of reach like owning a car or house, but I do not have to worry about money and I can afford a lot of luxuries like visiting theatres very often and eating out.
Regarding housing: I remember living in a tiny room in a shared flat in the worst part of town, above a brothel, a shady car dealer and a Hookah lounge (which was often very loud, very late into the night). Sometimes I had problems paying rent, but there just was no cheaper less-quality alternative.
Regarding transportation: I am so glad, that I live in a place, where you can live very comfortably without a car.
Similarly with health care. I think the US is just an especially bad place to be poor in compared to Europe.
Financially switching from computer science to art has been a very bad decision, but overall it was the best decision in my life. It really helped me deal with my tendencies for depressions, because it allows me to feel more meaning in my life and suits me better. I do not think that I would have dared this switch in the US. I don’t know what would have happened if I had lived in the states, if I would have found other ways to cope with depression or if I would have slipped into deeper and deeper depressive episodes without a way out, but I am glad that I did not have to find out.
However the situation you describe above shows the many side-effects of being poor which impede life in general: lack of proper sleep (because you live in a noisy area with no other choice), constant stress (paying rent, maybe dangerous neighborhood, etc.), probably not affording good quality food, etc. etc.
Add these side-effects up and one quickly understand that getting out of poverty is an herculean task and I personally couldn't blame someone for not making it.
Where are the stories about people born into poverty, still in poverty, and not likely to be anything but poor for the rest of their lives? There are lots of people like this and cutting out their stories distorts our perceptions.
Thomas Sowell says that it's actually a pretty small percentage of people like that. Most poor people are young and most rich people are old. Young people become older and the vast majority work their way up the pay scale to some extent.
I doubt many are comforted in knowing they're a statistical minority.
>Ignoring the realities of others' lives is how we got rising fascism.
Not sure where that comes from.
Even in a fully emotionally detached view a government should do what it takes to upgrade citizens to healthy productive members of society.
One thing is for certain: with 99.99% of people, their friendliness (or meanness) is proportional to the size of your bank account.
If you want to know how people truly are, become actually poor, filthy, and seem depressed, then you will know their nature.
You don’t need to be homeless to discover that some people lack sympathy. I lack sympathy. It doesn’t mean I’m an asshole. Sympathy isn’t empathy (huge distinction). Some people can’t tell the difference and everyone is just bad (cue the big tears).
This is especially true if you’re a freeloader. I imagine most people are just as honest about freeloaders regardless if they are homeless or supremely wealthy. This problem isn’t mean people, but rather poor self-analysis and playing a victim. Most people don’t want anything to do with that nonsense, which is extremely unsympathetic.
In my city the majourity of panhandlers you see have homes, and choose not to work and beg on the street. You can tell who's homeless because they don't bother you, they sit in silence, or in front of a shelter. Or they ask for food rather than money.
People harassing you for money? Panhandlers.
I'm sure it's different in cities that have higher costs of living s.t. a min wage earner can't afford rent anywhere.
the systematic enfranchisement of fraud in east London public housing authority and agencies intertwined and inseparable from hard drug dealing, is maintaining a permanent and pernicious status quo where under housing in consequence is denied by individuals who are officially homeless and who collectively by reason of being sufficiently well financially provided for by exceptional and exclusive permissive authority, exist en masse as a block preventing both the most needy to get housed from the street and the eligible and worthy to move on into permanent housing that they can sustain.
the situation is naturally more complicated than this, but essentially these are the conditions that have such a deleterious effect on the public : the mode of cash money available for spending to the majority cohort is greater than the average free for spending cash income in London as a whole ; the percentage of technically "homeless" people who are housed ostensibly only temporarily but effective permanently on the doorstep of the City's financial center who are habitual beggars is greatly in excess of 50% and I can attest closer to 90 percent in my own experience ; income from begging frequently exceeds USD 1000 per week. ; organised crime is permeated throughout every corner of the entire environment these people - indeed any homeless person - encounters.
I'll simply respond to any questions rather than drown you in the details straight away. of course, into this vipers' nest fell lil'ol'me who was raised by a Great Depression banker and brought up learning accounting from my pay dissecting the over valuation applied to the pension fund of his newly commercialized thrift which was paying their former board manager and one time gm responsible for their greatest historic growth, just 82 British pounds a week supposedly index linked... this ain't over quite yet due to the pandemic messing with case progression, so you might hear more yet.. I can rout out plentiful public sources meantime if you're particularly interested although if you are please forgive me in advance for being rather circumspect about who is who and the whys and wherefores, because this is long ago passed into the physical danger territory for not merely me but including anyone who has helped..
edited by necessity of brevity, excerpted text in profile
I understand you are saying that you discovered some potential government fraud, and that homeless Londoners are being recruited by organised criminals, but not how the two are related.
The other was clearly a bit mentally unhinged. He pulled up in a very nice Mercedes with a bunch of weird slogans silkscreened on the back window that would put Qanon to shame, but this was in 2004. If I remember right he showed us his fine suits in the trunk of the car. Told us about his private compound where he lived. Then proceeded to dance and sing in the middle of the street in his bum clothes.
At first it comes off as entitlement when they assume free access to other people's property, time, and resources when those other people are trying to help. But after a long enough period of direct social involvement it becomes frustratingly clear the behavior is something like a passive non-violent anti-social behavior. It can be sad to watch. Its worse if they have children.
Sympathy, gratuity, and freeloading are somewhere off in the distance.
I hope you're not trying to slip in some duplicitous language to accuse me of being freeloader. What does it have to do with anything?
There isn't any empirical assessment that agrees with that. A lack of empathy is narcissism, which only applies to a small percentage of any population according to most of the research on this subject.
says the guy that was a pog for 24 years...
I guess it’s just that so many poor, dirty people act mentally unhinged and (potentially) dangerous that you start to assume that about all of them.
I find that I try to avoid them right up until they force me to interact with them and I find out they’re one of the (relatively) normal ones. Then I’m perfectly happy to buy them a sandwich (or two, if I’m going to buy you breakfast might as well have a decent one).
I’m not quite sure why it works this way.
It works this way because people are, rationally, more interested in their own physical safety than they are in the feelings of strangers.
Anecdote: I was in San Francisco a few years back. There were homeless folks everywhere. Some were nice, even chatty. We felt at ease even when walking through areas that were full of homeless folks. But a couple of days into our trip, a homeless dude accosted a coworker on the sidewalk. He shouted violent threats, shoved my coworker, and told him not to come back. When I asked my coworker what set the guy off, he said that he had absolutely no idea.
That experience changed how I interacted with homeless folks for the remainder of the trip. I made no eye contact. I avoided areas with groups of homeless folks. I did not respond when spoken to. Is that fair to the average homeless person, who is perfectly normal, just down on their luck? To be perfectly honest, I do not care. My physical safety comes before your feelings. Full stop.
Nah, there is not a rational way to blanket label groups like this from a sample size of 1. That's your trauma talking.
It is the same rationale behind profiling. Which is to say, it is rational, just ineffective and with a number of bad side effects.
This is not an accurate description of the average homeless person.
The guy sat on the same bench you walk past everyday, the guy you see sat in the library everyday, etc. Not every homeless person acts like a homeless person and you see them everywhere once you start looking.
This is worth repeating. Sadly we’re talking 99.99% of all people world wide, not just in country X.
This reminded me of a friend who graduated with a BA in "design" (I'm not sure), got a high-paying job as a web designer, and quit that to become a teacher at some type of extracurricular enrichment place for very young children.
The new place didn't pay well -- or even reliably -- but she liked it more.
The more over_head you have, then it's harder to get out of it.
You're unlikely to put your free time into math / computer science when you're after exhausting 8 / 12h shift in warehouse
Also your "environment" may not help you too.
Before I worked at gov't-ish job and my parents tried hard to convince me that "this is the greatest thing because gov't jobs offer ""safety"" and "decent salary"". Thanks god that I had access to the internet and knew the reality.
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If you can count your money, you're poor.
If you can count your money and it fits in your pockets, you're very poor.
If you can count your money and it fits in your left pocket with room to spare, you're extremely poor.
If you're wondering whether to buy food or gas with the money you have left, you're broke.
If you wish you could buy food or gas, you're absolutely destitute.
I.e. a university student could be too broke to buy beer before their next stipend comes in, but that doesn’t make them poor if they can still go home and drive mom & dad’s Tesla on the weekend.
And, there are only so many relative modifiers, so one has to use synonyms to make a point. ;)
Being a broke college student and being a broke adult are wildly different in almost every respect.
Exercise - you could pick Broke College Student, Broke Adult, Broke doctor/engineer/lawyer pulling 500k/yr.
Which one do you choose, repeatedly?
To me, there is almost no scenario where 500k/yr makes you actually broke where you do not have a level of control to rapidly change that situation. Cut your spending, if you have huge debts - get them refinanced, sell something. Aside from being in a debt to a person with a literal gun to your head, you have incredible amounts of flexibility to get out from having your water shut off like person who is truly broke.
Broke = no money at the moment.
Poor = chronically broke.
The first level is not a car, but shoes. Then comes a bicycle. Then comes a motorized bicycle. Then comes a car.
Not having gas for your car is just the beginning of the abyss.
Everyone who lives in London, NYC, or many other large cities, will at that this point laugh loudly and stop taking the article seriously.
My wife is a case worker for the county welfare office. She deals with "those" people for a living and sees first-hand every day all the real and imagined shit spouted by righteous ideologues. She tells me that amongst those living in poverty, wealth is measured in terms of friends and family. Any money you come into is spent immediately, often on gifts to build status within your social network.
It's only when you move into the middle classes that wealth starts to be measured in terms of money. Budgeting, saving, trying to get more and planning for a future when you have none is not something someone in poverty does: it's something someone not in poverty does when they have no money. Trying to climb the social ladder by accumulating more money marks you as middle class.
The third layer has enough money (but of course always try to get more because that's the game). Their concept of wealth tends to be oriented towards legacy: collecting artworks, donating to cultural or research endeavours, political involvement. Wealth is measured by what you leave behind, and money is wasted if it just goes to trust funds or taxes.
When I was a student, and for many years after, I had no money. I had enough to keep a squalid roof over my head and three square meals a week. I had no money and no savings but I did not live in poverty because I had a plan to earn and save and move up in the world. I had no money but I did not live in poverty.
I think it's important for people who are trying to leave their legacy by getting politically involved in eliminating poverty to understand that their world is not the world. They need to understand how the definition of wealth for those in poverty is not the same as their definition of wealth, and without understanding that difference they are bound for failure from the start.
Thinking poor people like being poor because they value what's really important - friends and family - is like poverty version of the "magical negro" trope. Poor people value friends and family because they need each other to survive. People with no money problems don't need anyone.
edit: I honestly believe in a harsher version of this, in that for me the difference between friend and acquaintance is that a friend has sacrificed their comfort or safety for yours when they didn't have to. A friend is an acquaintance that has been tested by your bad circumstances and passed. If you're wealthy, you are rarely in truly bad circumstances, so when they happen, you might find yourself surrounded by acquaintances. Poor people know who to trust because they've had to trust them before.
The accumulated debts, and helping out each other makes sense given the needs of the community and dependence on each other for survival. It’s interesting that could translate into a gift culture for social status hierarchy, and it kind of makes sense. Even if in the perverse case it can make it harder for any individual to get out of poverty - it makes it easier for them to survive while they’re in it.
Basically poor people have to have room mates and they have to interact with the people around them, so they tend to form quicker bonds of friendship. Middle class people can afford to go it alone.
I didn’t read that poor people like being poor - I read they have a different value system (and reading into it, the different value system being rooted in being poor). You are injecting something else into the narrative.
> Poor people know who to trust because they've had to trust them before.
I feel like this is what's been contributing to collapsing communities in the US more than political tensions or whatever other specter one could point to. The lack of real, repeated need of others. A relative abundance on wealth leads to using money-based services to fix issues instead of relationships (which have cumbersome overheads). That leads to the creation of more services and until we've generally forgotten how to have a community, only services and consumers.
If the movers and shakers are motivated by building a legacy of good works then they need to be seen to be building such a legacy. Bricks and mortar can be seen. Funding foundations can be seen ("brought to you by the Ford Foundation"). Someone no longer living on the dole can not be seen. Rich people have no motivation to get people out of poverty because there is no credit in it.
The middle class sees everything in terms of money spent. If someone is lifted out of poverty, no more money can be spent on them. The middle class has no motivation to get people out of poverty.
The poor have no motivation to get out of poverty because they're already wealthy.
This is what is termed a 'structural' problem. If someone were really interested in making change, they would try to alter the fundamental structure that shapes the system. I have some interesting anecdotes about such efforts but they're outside the scope if this discussion.
Three meals a week sound pretty miserable. I assume that's a typo :)
Rather, for immediate survival and whatever bill is the most urgent to make even a tiny partial payment to avoid cut-off and the occasional comfort food as a treat if you can afford it somehow.
Source: had a rough patch in my life a couple years ago (thankfully over now).
Every time you get into it, hoping that it will start. And not just when it's been sat outside your house for a while. When you stop for petrol (gas), or in the car park after buying food, sitting behind the wheel and hoping it starts again. The restrictions that get placed on you when you just can't rely on the car always starting.
For your life, a mostly-starts car is in theory better than no car, but for mental health it's corrosive. Every plan you make carries the rider "unless the car doesn't start" and you end up restricting where you drive to places that, if you were suddenly carless, you could still get home from. Any time you're outside the safety zone, there is the constant fear "what if it doesn't start?" Being afraid, having that stress, all the time is just mentally corrosive.
If a better job comes up and it's not near public transport, every day is a gamble on being able to get to work, and get home again. Spending your evening worrying about whether you'll be able to get to work in the morning is a horrible way to live; perpetually unable to relax. At least once I simply sold it for scrap and gave up entirely on doing anything that needed a car. Such a relief, but I was in the privileged position of being able to live and work without one.
I'll never forget the embarrassment I felt after a pretty underwhelming interview explaining that my car was broken down outside in their lot and asked they notify their security so that I was not hit with more expensive fees. I've had some pretty significant financial hardships - some much worse than this, but this moment in particular really had a lasting effect on me.
I'm not in that situation anymore but I can still remember the absolute sinking feeling. And then the overwhelming sense of relief when it started on the second try. I've had my water turned off. I've had my heat turned off. I've scavenged wooden pallets on the side of the road to burn in a wood stove for heat. I've broken the seal on the gas meter so I could turn it on at my most desparate. I escaped those circumstances thanks to family, and church friends. But this article is spot on as to what it's like to poor or poor-ish.
A cynical view would be that this was always the intent.
One of the big selling points of electric cars is simplicity - with far fewer moving parts, less can go wrong and you can hopefully expect a car to last longer.
That's the hope anyways, but the big maintenance item in an electric car is the battery, and of course that's an expensive thing to replace. Will folks be able to do DIY repairs like cobble together battery packs from various sources? Will a decades-old battery that is 50% depleted or more still allow that car to function properly, just with less range? Or will it refuse to "start"?
As is, electrical car means new car and new car means an inane amount of software components that break all the time. Just pick any specific model, say, the Tesla S: You can find people being confused how to turn it off, the car not starting due to software updates, the car being hacked, the being bricked by broken software or lacking connectivity, erroneous warnings, the car only driving backwards due to low battery.
The simplest car is something like a 1998 Corolla and given the current trends in automotive, that will stay that way for a long time.
They'll have to go somewhere else to charge up, that will charge a premium.
Self-driving cars may help tough, probably 15+ years after it's legal.
Honestly, more reliable transportation might do more to reduce poverty even more than food stamps. (Also, allows you to make your food stamp appointments.)
It'd be interesting to see real data on which outcome is actually more common.
Facebook marketplace is where it's at.
A really enjoyable article, though. Thanks to the author.
The 4Runner starts its life in the hands of someone who can afford whatever maintenance is needs, whenever it needs it.
The Grand Caravan starts its life in the hands of someone who needs the cheapest minivan and can barely afford it let alone afford following the maintenance schedule in the manual.
The 4Runner will haul two kids and occasionally a youth soccer team.
The Grand Caravan will haul five kids and occasionally 1800lb of paver bricks.
The 4Runner will be towed behind a motorhome.
The Grand Caravan will try and tow a motorhome.
I didn't get it fixed because I was putting money together to buy a newer car that didn't leak. Worked out in the end.