What if the problem of poverty is that it’s profitable to other people?

http://www.theguardian.com/books/2016/apr/07/evicted-poverty-and-profit-in-the-american-city-matthew-desmond-review

by nkurz • 10 years ago

383 429 10 years ago

Poverty is profitable to other people. People who are in poverty often have to depend on services that are overpriced and predatory. From check cashing services, and payday lenders, to not being able to go to a grocery store where prices are better, but instead depending on smaller stores of convenience where the prices are often higher. The lottery depends on those in poverty. Sometimes I think even the police and city governments depend on people in poverty to pay a large portion of fines.

hotshothenry• 10 years ago

Of course they do. IMO towing (especially here in SF where the price for getting your car towed is astronomical relatively speaking), lottery, all those types of gov't fines are really just a tax on the poor. If you're well off you don't really give a damn about getting your car towed a fee here and there, besides the inconvenience, but for someone who depends on their rinky-dink car to get to and from work, getting towed and having to pay a fee that is in some cases equivalent to the value of the car itself basically just fucks their entire life up.

Overtonwindow2• 10 years ago

I agree completely on the towing. On the one hand I think the entire process of towing is rigged and corrupt, but on the other, I think it's enforcement is completely uneven and absolutely targets low income people.

FussyZeus4• 10 years ago

If you haven't seen it, look up the Last Week Tonight on municipal violations and prepare to get angry.

However there are a few things that are more explainable than others; check cashing places exist because banks are not designed for the poor at all. Thankfully this is, I think, going to change in the next few years what with all the startups cropping up to offer financial services to lower income people, since most of the shit the banks charge fees for is because they rely on antiquated processes and management that can be automated.

GFK_of_xmaspast• 10 years ago

In my experience banks don't charge fees for efficiency reasons, they charge fees because they can.

ams61102• 10 years ago

Sometimes I think even the police and city governments depend on people in poverty

You're right, but I don't think anyone has mentioned another big profiteer, the welfare bureaucracy itself. The government pays people to remain in poverty, and everyone employed in those programs is profiting from poverty and is incentivized for it to continue. So are the politicians who create these progams. It also contributes to the inflated the rents that the subject article complains about.

Retra• 10 years ago

Those people could just as easily be employed in other domains. This is all the more true when their income is conditional upon a centrally-managed stipend like all government employment is.

joe_the_user• 10 years ago

While plenty of money comes from businesses serving (or disserving) poor people, even more money comes from businesses serving wealthier people (with some portion of those services also qualifying as rip-offs).

The problem with the article is it makes the implication that the money made by vulture capitalists in poor areas is the biggest motivation for the existence of the poor.

But one can see a much larger beneficiary. If a company that automated a factory or moved a factory to a different region or country had to pay to support the wages of those workers it left behind, the costs of automation and mobility of capital would be much higher. Thus the ability of the poor to exist, the condition of each worker being on their own even if suddenly all the jobs in a given area dry up, is tremendously profitable to the largest industrial companies in the world.

coliveira2• 10 years ago

even more money comes from businesses serving wealthier people

Not really. It depends on the country. Some third-world countries have most of the population in poverty, so in that case capitalists can make a lot of money from poor people and have no incentive to do otherwise.

apozem• 10 years ago

People in city government absolutely depend on the poor and fine-based revenue. To use a recent example, the Department of Justice found the government of Ferguson colluded to give so many fines that they actually became a substantial and essential part of the city's budget.

"For years, Ferguson's police force has meted out brutality, violated civil rights, and helped Ferguson officials to leech off the black community as shamelessly as would mafia bosses...

"Ferguson officials repeatedly behaved as if their priority is not improving public safety or protecting the rights of residents, but maximizing the revenue that flows into city coffers, sometimes going so far as to anticipate decreasing sales tax revenues and urging the police force to make up for the shortfall by ticketing more people. Often, those tickets for minor offenses then turned into arrest warrants."

http://www.theatlantic.com/national/archive/2015/03/ferguson...

coldtea3• 10 years ago

What if? That's the whole idea of it. It's what keeps highly profitable (to the employee) jobs churning...

Nobody would work in the conditions needed for diamond extraction or sweatshop clothing making for example, if it wasn't for dire poverty.

Snargorf4• 10 years ago

Sure they would. People will do almost any job, if they're paid enough.

This is why military contractors in war zones, Arctic crab fishermen, and prostitutes make a lot of money.

This is econ 101; supply and demand. You know it too. You're (presumably) not impoverished, but you'd work in diamond extraction or a clothing sweatshop, if you were paid enough.

FussyZeus4• 10 years ago

The thing is though people are willing to pay a lot of money for crabs. No one is willing to spend crab money on, say, sweatshop clothing.

Going fishing on one of those boats is on my bucket list, once I'm not so flabby. I think it would be a hell of an experience.

coldtea3• 10 years ago

This is econ 101; supply and demand. You know it too. You're (presumably) not impoverished, but you'd work in diamond extraction or a clothing sweatshop, if you were paid enough.

When I say "nobody would do it" I don't mean "regardless of any condition whatsoever". Even if there wasn't poverty involved, slaves would obviously do it too (and they were ones doing such things, historically, right until the end of the colonies -- and in fact still in several places, using various conscription schemes).

Nor did I mean "regardless of working conditions". E.g. if they make it as easy as pressing a few buttons, many would have no issue doing it, even for a low wage.

The idea is that people wouldn't do the job under the current working conditions AND wages -- if it wasn't for dire poverty. "Supply and demand" is not some contradiction to that, rather it is the very mechanism required to take advantage of dire poverty to give those wages.

And of course "supply and demand" is rarely a "natural" and "neutral" thing -- you can skew it in a thousand ways. From passing special laws to keep people down and prevent development, to killing people's farmlands to make them come to the big industrial city to find some low paying factory job to survive.

pdkl95• 10 years ago

if you were paid enough

I've always liked the idea that you should never turn down an offer or request. Instead, you should name your price. Sometimes that price might be functionally equivalent to turning down the offer, but there's always a tiny chance that someone might agree to your (probably laughably unreasonable) terms.

(I should really watch The Magic Christian again)

coliveira2• 10 years ago

What you forget is that some jobs just cannot pay enough to make it worth for non-impoverished people. A very clear example is farm jobs in the US. If farmers had to pay real salaries, production costs would go dramatically up. So they depend on undocumented workers. This is similar for the fast food industry and so many other industries that are now operating in third world countries. For these industries, poverty is the natural resource that they depend on. If poverty ended all over the world, a lot of industries would disappear or have to change dramatically to continue existing.

xerophyte129322• 10 years ago

Minor nitpick: Prostitutes make a lot? I guess depends on which part of the world we are talking about. I hear you can get them in South Asia for as low as $5. Probably lower.

minikites• 10 years ago

The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money.

Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.

But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.

This was the Captain Samuel Vimes 'Boots' theory of socioeconomic unfairness.

gammarator• 10 years ago

Barbara Erenreich's book "Nickled and Dimed" [1] is a good illustration of how lack of cash forces the working poor to make economically sub-optimal choices.

An example will suffice: without the savings needed to put down a security deposit for an apartment, you are forced to leave in cheap motels (absent options like living with others or in a shelter), even though the monthly rate is higher. There's no kitchen in those motels and you may be working multiple jobs, which limits your ability to cook nutritious food and eat cheaply. And the cycle continues.

Some of the stories in George Packer's "The Unwinding" [2] emphasize how narrow the margin of error is. Everyone makes poor choices from time to time; those with resources (financial & social) can weather them.

[1] http://www.amazon.com/Nickel-Dimed-Not-Getting-America/dp/03... [2] http://www.amazon.com/Unwinding-Inner-History-New-America/dp...

yummyfajitas• 10 years ago

And Scratch Beginning by Adam Shepard is a good illustration of how a hard working person can work his way from homeless to middle class in under a year.

http://amzn.to/1RZZHhf

There are apparently good choices and bad - Erenreich illustrates how making the bad choices keeps you poor, while Shepard illustrates how making the good choices can you out of poverty.

FussyZeus4• 10 years ago

This is an excellent point. Another one in a similar vein is things like appliances or other big ticket purchases. The wealthy (or even middle class really, assuming any are left) is that they can buy a new washing machine for example when they're on sale. The poor essentially need to keep using the same washing machine until it dies, at which point either they need to go to the laundromat or buy a new one, and they have to get whatever one Home Depot has at the time at whatever price they're marked at.

kspaans2• 10 years ago

How much risk-adjusted-reward is there in loaning Vimes money for the boots? Or in loaning him money for an annual bus pass that saves him 10% over a monthly bus pass?

sokoloff13• 10 years ago

People in poverty use services and consume goods. Someone provides those goods and services. Would they be better off if every business closed their doors to the impoverished, so as to not "make a buck off the poor"? Of course not!

The trailer park owner in the article owns 131 units and "makes" (presumably grosses) $400K a year. Those units are about $250 per month, hardly the stuff of Viking-style pillaging, IMO. The other landlord has also built herself a business in real-estate and now can afford to take a vacation? Good for her, seriously. She's providing housing and her tenants/customers are providing her income. Building such a business (and I assume running a 131 unit mobile home park) is absolutely work, the value of which is evident by the paying tenants.

darpa_escapee3• 10 years ago

Predatory businesses are still exploitation.

Building such a business (and I assume running a 131 unit mobile home park) is absolutely work, the value of which is evident by the paying tenants.

Running a sweatshop is still work, the value of which is evident by its customers.

Just because someone needs to work or a place to live doesn't make it right or commendable.

sokoloff13• 10 years ago

Let's think in terms of solutions. Concretely, what would you propose to change to make it better?

Have you started to raise funds to start and run that business?

darawk8• 10 years ago

What is the alternative? These people aren't forced to live there. If there were a cheaper, better alternative available to them, they'd probably take it.

Nobody is 'profiting from poverty' here. These landlords would make much more money if these people were wealthier! I'm sure they'd love to make nicer places and charge higher rents with higher margins, but they can't, because that's all these people can pay.

ctdonath4• 10 years ago

OK, say those "exploitive" businesses didn't exist. That doesn't subsequently mean "non-exploitive" alternatives would exist, it just means those customers/employees would have no options (not even "exploitive" ones). Is having no option better than having a bad option, when good options aren't available?

dragontamer2• 10 years ago

Predatory businesses are still exploitation.

I don't think providing housing for an average of $250 / month is exploitation or predatory.

In fact, a number of mobile home communities are beginning to cater towards child molesters only, because child molesters need homes too. (also, the police tend to hang around sex-offenders and check up on them, so they also make good tenants).

Win/Win for everyone. Sex offenders get a home, and can start rebuilding their lives (although some sex offenses shouldn't be a permanent black-mark on a person's life, but that's a different story). The entrepreneur gets reliable tenants who are otherwise under-served, and the regular checkups from the Police ensure that the unsavory types stay away.

As long as it is profitable, people will build more homes. And as people build homes, the poor and exploited get a chance to rebuild their lives. Now a serious concern is the businesses who exploit their tenants... but if the supply is high enough then the tenants will be able to find new homes / mobile home communities.

--------------

The main problem are the towns who are making mobile homes ILLEGAL, because they find that poor people are unsavory and the town wants to forcibly gentrify themselves.

Elitists are scared of mobile home communities that explicitly cater to say, sex offenders, or poor people, or other "unsavory" types. Not in my community, hell, not even CLOSE to my community / backyard. Think of the children!

That's the problem. Not the people who are building mobile homes, but the fact that mobile homes are slowly becoming straight up illegal in huge portions of communities.

AlgorithmicTime• 10 years ago

$250 a month for rent, anywhere in the US, is an absolute song. No reasonable person would consider it exploitative.

zanny2• 10 years ago

And the people that provide goods and services now to the impoverished (especially the actual exploiters, like pay day loans and corner stores, and the manufacturers that supply the junk foods they eat and drink) have a financial incentive to keep people in poverty and grow their demographic. Combine that with an very easily corrupted government like the US has now, and you get corporations dictating policy to prevent economic upward mobility and create more poor to become dependent on their products.

sokoloff13• 10 years ago

I'm not so sure the corner bodega belongs in the same category with the payday loan assholes.

Yes, the corner bodega is more expensive than the full grocery store, but they also probably have way lower sales per hour of labor, lower sales per square foot, lower sales per other overhead (rent, insurance, security, utilities, taxes), higher credit card interchange fees, higher shrinkage and spoilage, and pay more for their inbound groceries than the large chain down the street. If my guesses are true, all of these are perfectly legitimate business expenses and the corner store owner needs a return on their investment, just like the large chain does. (Grocers operate on razor-thin overall margins. Average net margin for the supermarket industry was 1.3%, 1.9%, and "1-2%" in the first three references I could find online.) Anything that increases costs basically HAS to go to the price as there's nothing else left to flex.

Payday jackholes can DiaF for all I care, but even the prevalence of those is driving in part by the banking regulations meant to "punish the banks" which have the effect of making poor communities "money losing to serve". When the predictable bank pullouts happen and payday lenders move in, it's not that hard to see the connection. Let the banks make a profit and they'll serve the community; prohibit them from making a profit and they won't, leaving only the even less savory financial businesses.

ams61102• 10 years ago

I think you're letting off too easy the politicians in impoverished communities who are incentivized to keep their constituencies so they themselves keep their jobs.

Do you have any examples of where Frito-Lay, McDonalds, Burger King, etc. are lobbying the government to "keep people in poverty?"

Edit: and as mentioned elsewhere here, state lotteries are another huge government-authorized program that disproportionately takes from the poor.

SilasX• 10 years ago

I don't see that: they still have to compete with other providers, so they have no incentive to spend their own money to increase the general demand for their kind of service, since their competitors "free ride" off such efforts.

ctdonath4• 10 years ago

There's a similar trailer park near here. Near the front, by the main road, and where many would loiter hoping someone would pick them up for odd jobs, there was a tiny convenience store; I've driven by there many times and took note of it. One day I drove by: it had been burned down ... accident? arson? dunno. Soon a small travel trailer was parked next to the charred remains, attempting to continue at least some of the services. Drove by again: that too had been burned down ... probably not an accident. Now, years later and quite predictably, nothing has replaced that service though the many still loiter hoping for odd jobs.

Make of the anecdote what you will.

duaneb4• 10 years ago

Just because an act provides net value to a community does not mean it is ethical.

tbrownaw2• 10 years ago

So are you claiming that the tenants mentioned are somehow worse off than if those trailers weren't available for rent at all?

For something to be unethical, someone has to be harmed by it, yes?

bufordsharkley4• 10 years ago

I'd be inclined to agree, only on the condition that there's plenty of unused land around, available for next to nothing. If that's the case, this trailer park owner is getting a return on her investment.

However, if there isn't marginal land available nearby, a portion of her return is monopolistic-- the renters have no alternative than to pay rent on this land.

hblanks• 10 years ago

Macheath [Mac the Knife]: "If the poor are so powerful, then why do they need us?"

Peachum [The Beggar King]: "Because they don't know that we need them."

--Die Dreigroschenoper (1931 Film)

DanBC• 10 years ago

The problem isn't with companies that sell huge TVs to poor people, but with companies the sell huge TVs on credit to poor people with an interest rate of 65%.

There are many other safer cheaper ways to provide this service - "lay away" would be one.

johnchristopher• 10 years ago

the value of which is evident by the paying tenants.

That's something I have a very hard time to understand. I mainly see that position on HN. It seems like here the price is always justified and fair because it is sanctified by the free market ideology. Prices should always be maximized because it makes sense for the seller and to hell with global long term consequences.

myth_buster• 10 years ago

  Those units are about $250 per month,
  hardly the stuff of Viking-style pillaging, IMO.

$250 is hardly anything until one considers the monthly earnings of the tenant.

awqrre• 10 years ago

At first, when people are getting poorer, it is probably more profitable then in the long term (if nobody can spend money, how can it be profitable).

darpa_escapee3• 10 years ago

Who cares if you're rich by then?

zanny2• 10 years ago

That is macro vs microeconomics. A business today cannot function in the market behaving morally for the good of society when all its competition is maximizing exploitation even the end result is the destruction of the consumer base they rely on.

The point is to take as much of the cargo as you can and jump ship just before it catches fire and hope to make it out safe at this point, considering the predatory behavior of capitalists in almost every industry and market nowadays.

jonny_eh• 10 years ago

Shocking! Landlords are wealthier than their tenants. I would think this is true not just of trailer parks, but also downtown condos.

How dare these landlords take vacations… in Jamaica!

danharaj7• 10 years ago

What if Marx was right?

unclebucknasty15• 10 years ago

That's actually a thoughtful comment, irrespective of whether one "agrees with communism". Not sure why it's being downvoted.

turkishrevenge• 10 years ago

He was in many respects. However, that offends delicate sensibilities here and so down goes da the vote.

tim3333• 10 years ago

Presumably amongst the 50 volumes of Marx/Engels Collected Works he was right in some places and wrong in others.

Natsu3• 10 years ago

It's terribly vague and offers no insight as to which things Marx might have been right about. There's a child comment that's a bit better, but it dumps a lot of Wikipedia links out with little in the way of explanation.

In short, on HN it's better if you can explore ideas more thoroughly, rather than simply tossing out short quips and assuming everyone is on the same page.

It would be better to write something along the lines of 'When the article says __, this illustrates what Marx was talking about when he defined __ and that ties in with...' or such so there could be more discussion about ideas and less noise about voting or simple opinions.

megalodon• 10 years ago

Through his theories of alienation, value, commodity fetishism, and surplus value, Marx argued that capitalism facilitated social relations through commodification and the exploitation of labor.

This is remarkably close to the views expressed in the article, but I guess you're being downvoted because you hit a nerve.

Links for the interested:

https://en.wikipedia.org/wiki/Alienation_of_labor

https://en.wikipedia.org/wiki/Law_of_value

https://en.wikipedia.org/wiki/Commodity_fetishism

https://en.wikipedia.org/wiki/Surplus_value

https://en.wikipedia.org/wiki/Commodification

https://en.wikipedia.org/wiki/Exploitation_of_labor

pnevmatico• 10 years ago

What if your grandfather perished in a Marxist labor camp? What would you think then?

danharaj7• 10 years ago

There's no such thing as a Marxist labor camp and I'm well aware of the cluster fuck that every would-be dictator of the proletariat was starting with Lenin. I'mean not a Marxist, and especially not a Marxist-Leninist. That doesn't mean I can't take Marx's economic ideas seriously.

Also, you probably don't care about the fact that there are labor programs at US prisons where workers are paid cents for the hour to do labor. I think your moral challenge is in bad faith.

Tycho3• 10 years ago

Tobin Charney makes $400,000 a year out of his 131 trailers, some of which are little better than hovels.

That sounds about right to me... I doubt anyone would consider it worth the hassle leasing 131 trailers if the income was say 100k.

lifeisstillgood• 10 years ago

What shines through here is a lesson not only America has never learnt , but one we in the UK are fast forgetting - social policies work

The social safety net is pretty simple. Bob, A healthy worker is made unemployed, they can either take state assistance and find work 6 months later, leading to another 30 years of tax revenue, or let them default on mortgage, spiral into poverty and no tax. Now extend that so Bob needs six months rehab.

Housing built, owned and managed by the state (or so closely regulated it may as well be) has been a cornerstone of the social safety net. This article underlines that.

grecy3• 10 years ago

Of course it profitable, which is why we have things like minimum wage - if WalMart et. al. could, they would pay 3 cents an hour, or even better consume peoples living and eating and entire lives like factories in China.

At some point the governments in developed countries have stepped in to set some kind of limit on what's "reasonable".

IMHO, they're not doing enough in America right now, the enormous social divide is showing that to us clearly. Developed countries that have stronger laws have less people in severe poverty, because the government forces the wealthy to distribute their wealth.

brbsix2• 10 years ago

Don't you want to get the highest salary for a particular job? Don't you want to pay the lowest price for a particular product? Employers are just doing the same.

So what if WalMart wants to hire someone for 3 cents an hour? Maybe I'd like to pay my doctor $1/hr. Either way, it's probably not going to happen. People will not accept $0.03/hr for a job unless it is of benefit to them. Also I find it incredibly condescending to believe you (or the government) know the opportunities available to people in poverty better than they themselves do.

Lastly with regards to 'government forces the wealthy to distribute their wealth', wealthy people generally have quite a few options, to include the option to exempt themselves from paying what some would consider "their fair share".

cmdrfred2• 10 years ago

While not 3 cents an hour currently Walmart pays wages below the cost of living. How do they achieve this you ask? The government steps in and raises these wages with a number of social programs (food stamps, housing subsidies, tax credits, etc). Cut the social programs and those workers won't be able to afford coming into work. Pretty soon, up goes wages.

orangecat• 10 years ago

if WalMart et. al. could, they would pay 3 cents an hour

Sure. Of course they can't, because most of the time even poor people have other options. Also WalMart has in fact supported raising the minimum wage, which is either a virtuous act of corporate responsibility or an attempt to increase the burden on their competitors.

because the government forces the wealthy to distribute their wealth

I just finished my taxes. Quite a bit of my wealth is being "distributed", unfortunately mostly to well-off retired people and on bombs to drop on the Middle East.

grecy3• 10 years ago

Sure. Of course they can't, because most of the time even poor people have other options.

If there were no laws, every company would do this, and there wouldn't be other option.

You think people work in factories in China for $0.50/day even though they have an option to make a good wage?

Quite a bit of my wealth is being "distributed"

Not nearly as much as if you lived in another developed country, where your money would be paying for healthcare for all, higher education for all, etc. etc.

tamana14• 10 years ago

Walmart can "Support" raising the minimum wage but conveniently fail to achieve it.

no2empire• 10 years ago

The profitability of poverty is foundational to how capitalism works. Workers work, heirs do not. How do heirs manage to expropriate wealth workers create during their surplus labor time? The answer is the reserve army of labor - keep people unemployed or underemployed as a level to use against those who do work.

One sign of this is that unemployment did not even exist several centuries ago in any kind of manner - all those who were capable (except again, those on top expropriating wealth created during worker's surplus labor time) worked.

This is openly discussed in the business press, like this (http://www.businessweek.com/1999/99_44/b3653163.htm ) BusinessWeek article "When is the jobless rate too low?" It's not a secret that those who control production are working to create unemployment, poverty etc. It's a foundation of the current economic system.

lindenksv85• 10 years ago

There is definitely a set of people for whom reducing poverty is not profitable. Unfortunately in SF you see this coming from a number of non profit affordable housing developers as well as tenants rights advocates who are often the loudest voices opposing adding housing supply and even fighting legislation for density bonuses for developments that include a high percentage of affordable housing. It took me a really long time to understand that actually fixing the housing problem inSF would mean that they lose a ton of government grants and that the executives of these orgs who often make over 200k would all lose their jobs. So it's not just in the private market- it's definitely the non profit sector too.

baxter001• 10 years ago

What's the old joke? Poverty is a symptom of wealth.

yourapostasy4• 10 years ago

Iaian Banks' take on it: Money is a sign of poverty.

ps4fanboy• 10 years ago

Wealth isnt about money, its a measure of your ability to buy other peoples time. Until every person on this planet cant afford to buy more of other peoples time than they sell to others you will have lower class, middle class, upper class.

greglindahl• 10 years ago

When I was in high school, I wrote an inventory-control system for a rent-to-own business, which rented TVs and furniture to poor people. It was an extremely exploitative business, and 100% of their customers would have been better off doing without & saving up some money for 4-6 months to buy a used or new whatever. I'm now ashamed that I didn't walk out the minute I figured out how the business worked.

OJFord3• 10 years ago

Everything is profitable to other people.

    > makes $400k a year renting out 131 trailers

So, just over $3kpa each. Not a lot. It only sounds like he's profiting a lot because nobody would do that unless at scale - i.e. have 131 of them.

At those margins (I don't know what the costs are, but with that little annual profit per trailer it really doesn't matter) there would be no reason to not want the poverty-stricken to have more money, other than perhaps an unwillingness to change business model. The profit margin is just _so_ much greater on more expensive properties.

CydeWeys14• 10 years ago

With 131 properties she probably also has an employee or two to help her manage and repair them.

My main problem is I just don't see what the alternative is. Any rental housing needs to be minimally profitable or no one will bother providing it. That applies at all ends of the pricing spectrum. So if a profit can't even be made, what is the alternative? Millions of people homeless because there are no properties rentable at a price they can afford?

danharaj7• 10 years ago

You don't see any alternatives because you are not challenging the premise of private property enforced by a state. That is a very strong assumption that precludes most possibilities. And state property is just a degenerate form of private property where one entity owns everything.

educar• 10 years ago

So, I thought the question was obvious and answer is a resounding 'yes'. Many elections are won by keeping people poor and in many of those countries politicians hand out freebies. This is also the case for non-goverments. It is in the best interests of the middle class to have a working poor population because one can offload chores (like house work, car driver) to the poor at a cheap cost.

zw123456• 10 years ago

There is an old saying that "if you took all the money away from all the rich people, and spread it around evenly to everyone else, within 2 or 3 years, all the formerly rich would be rich again having taken advantage of the poor who don't know how to make and keep money". This adage, although heartless to be sure, has some degree of truth to it in my view. The problem is twofold, 1) a lot of people become rich not because they are so smart but because the lack compunction, that is, they feel no remorse for taking advantage of someone else 2) people who come out of poverty often lack the skills to know how to improve their situation, such as a lack of business skills, money management and etc., not having had good role models. In my view, the role of the government should be to check the first, that is to insure that some are not taking advantage too much, obviously this is a far to complex issue to even begin to cover here, but I am just touching on the gist, the second is to lend help to those in poverty through education and training assistance. The third component is of course, the well to do who are willing and able to help and do (e.g. the Gates and others). Thank you for the excellent thought provoking post and many good comments so far.

Retric4• 10 years ago

Depends, if you distribute resources aka stock land etc then you are going to end up with a different set of rich people. If you just redistribute money then it's like handing out money in monopoly after every property is bought, it might make the game take longer but the end game is not going to change.

branchless• 10 years ago

Yes, because just as in the game monopoly when you have land ownership from which you can derive rent you inexorably end up in this situation. All value added flows to the landlords.

This was the original point of the game, originally named "The landlords game" and later renamed "Monopoly".

http://www.theguardian.com/lifeandstyle/2015/apr/11/secret-h...

flashman2• 10 years ago

I wonder how Monopoly would play if you got assessed for Income Tax when you passed Go, or perhaps every fifth turn, instead of when you landed on a particular square.

herbetdangerbri• 10 years ago

they feel no remorse for taking advantage of someone else

I don't understand what it means 'to take advantage of someone else' in the context of this thread.

Is Starbucks taking advantage of me when I want a coffee by selling me a coffee?

Is Elton John taking advantage of my desire to see him play live at my party and the fact that there is only one of him by charging me a million dollars to appear?

Are the bus companies taking advantage of my need to get to work when they sell me a ticket?

I don't get where normal economic transactions and supply and demand becoming 'taking advantage' or 'exploitation'.

tamana14• 10 years ago

It's theoretically trivial: most transactions have a surplus. How is the surplus divided between the seller and buyer? More lopsided, more exploitative.

Some transactions leave one side even worse off, but they execute due to ignorance, stupidity, or force. Those are obviously exploitative.

gear54rus• 10 years ago

Well that's pretty easy.

The most obvious form comes from the good old (bs) saying that 'the real price is what the buyer is ready to pay' (feel free to correct me here as to actual form of that).

Hiking up price to a drug (the shkreli story) would be an exploitation and not a 'normal economic transaction'.

So would be buying time of some poor workers in China for a dime. And then selling what they make on a 10x margin and pocketing it. There's nothing economic about that, its plain old theft (or deceit, whatever you want to call it).

There are more subtle forms, like apple spreading bs about their products being 'the best' and them having a 'vision' and then some uninformed fella buying stuff they make when its sometimes twice the price for objectively comparative product. Like always the devil is in the details.

This is all highly endorsed by the 'greed is good' model and it won't stop until we denounce it. No amount of government regulations can change it, snakes will always find a way. It's all in people's heads.

mruniverse4• 10 years ago

I'm with you. I think it just means "They are bad people. Not like us. Do it this way and you will be good."

kdamken2• 10 years ago

This is a fantastic point. It's just another transaction, like the hundreds of other ones you do every month. You can almost always find somewhere cheaper to live. Can't find a house/apartment to rent in your price range? Get some roommates, or see about renting a room in a house, it'll be much cheaper.

People tend to get seriously up in arms about renting, when in reality it's not nearly as bad a deal as they make it out to be. A lot of times it can be a better financial choice than owning.

Some food for thought: http://jlcollinsnh.com/2012/02/23/rent-v-owning-your-home-op...

sound_of_basker• 10 years ago

Clinically, I can state that I am a live and let live person. Am not quoting that as a boon or bane. I suspect most people are. And this lot, while they can dig themselves out of poverty, cannot become rich. The reason is there is the small group that does not have the live and let live wired it. That that trait is good or bad is up for debate. It is this small group that ends up being rich given enough catalysts. They think only about themselves.

WalterBright2• 10 years ago

Lots of people know how to create value, i.e. combine A and B and wind up with A*B of value.

Take Edison, for example. He made himself a fortune by figuring out how to take a glass bottle and add a bamboo filament, and sell a light bulb.

tamana14• 10 years ago

Edison was a capitalist manager and salesman, not much of an inventor. How much value he created vs extracted is up for debate.

awt• 10 years ago

Read The Anabasis (the Greek version is best) and rethink your conception of exploitation and how the world works, etc.

notthegov• 10 years ago

I think the problem is most rich people aren't smart. This creates flawed systems, bad business models and poor public infrastructure.

I don't know many people in Silicon Valley but I know a lot of rich people. They definitely have a lack of compunction and some use confidence games to scam and exploit people.

I am not suggesting they are all bad but 90% act like my friends who live in trailers in the Midwest on welfare.

Human nature doesn't care about privilege. I believe education fails to teach critical thinking and tools to face adversity. And this creates situations where rich people lie, or honest investment bankers launder drug money. Or doctors overprescribe drugs, surgeons do unnecessary surgies and rich men exploit young girls. But they all self-rationalize their decisions and never think they are part of the problem. Arrogance, incompetence, greed, stupidity, etc.

There are a ton of successful incompetent people.

In general, I agree with you that it is the individual's job to transcend these challenges but it is ignorant politicians and lazy wealthy and influential people who sustain a system that has so much friction, so much chaos and so many challenges to overcome to get a fraction of what the alleged "elite" get.

My point is, for the most part there is nothing elite about the 1%. There is no secret group controlling the world. If we want to change things, we can.

skybrian• 10 years ago

If you took all their money away and dropped them in Africa I think they'd have a harder time.

Yes, knowledge of social class issues (who you know and how to act to get people with money to trust you) can itself be used to make money, in the right environment.

It doesn't mean that educating everyone to behave like the upper classes makes sense. Those skills may not actually work for people who don't look the part or don't have the connections. To the extent that they're adaptive rather than arbitrary class indicators, they might actually be dangerous for someone living in a different environment.

mruniverse4• 10 years ago

The saying is about how it believes the rich get rich. Can they get rich if it was all taken away? The saying says yes.

If you dropped them in Africa, yes they would have a harder time. But as a whole, probably get rich again.

nroach• 10 years ago

Presuming, of course, that the wealthy were in fact the ones who earned that wealth initially versus receiving it generationally. You might see a different distribution on earners versus maintainers.

pc862• 10 years ago

The vast majority of inherited wealth is gone in two generations.

ryandrake2• 10 years ago

There is an old saying that "if you took all the money away from all the rich people, and spread it around evenly to everyone else, within 2 or 3 years, all the formerly rich would be rich again having taken advantage of the poor who don't know how to make and keep money".

What a silly saying. Of course, if you redistribute all the MONEY to everyone, but leave all the means of production in the hands of a few, it's easy to predict that those few would be the ones rich again in 2 or 3 years.

mruniverse4• 10 years ago

I don't think the "means of production" is implied. I think it means that the rich deserve to be rich because they can get rich. That it's not just luck that they are rich, but that they know how to get rich. Take it away and they'll get it back. At least that's my take on the saying.

stegosaurus• 10 years ago

The headline here is a bit odd - it seems self-evident.

If we define the poor as a group which relies on regular labour to survive, and the wealthy as a group who does not, then many income sources of the wealthy dry up if the poor cease to exist.

One fairly obvious example is renting. The existence of a rental market is not undesirable. People will always want to live in a place temporarily, as a trial, as a holiday, as a stepping stone. But I'd imagine a huge majority of the rental market exists solely because the tenants either cannot afford, or have too little financial security to risk a mortgage.

More broadly, the cost of labour is reduced by the existence of poverty. The minimum wage is an attempt to alleviate this - in a world without poverty, a minimum wage would be unnecessary.

The question is whether we can do better. Axiomatically wealth inequality is good for those on top, at least in a direct sense.

ultramancool4• 10 years ago

Wealth inequality is good for all in a lot of ways, so I hate it when people talk about it like it's an inherently bad thing. If someone does something amazing and unique, they should be able to profit from it.

Think about a world with perfect wealth equality and you'd have the opposite sort of problems - like it or not, capitalism and yes, wealth inequality have brought more people out of poverty than any other system in the history of the planet. More of those poor people in 1st world countries are fighting to pay for high end smartphones than to pay for food these days. It's far from black and white, but China is an amazing recent example of this. Going from an agricultural nation of the dirt poor to a highly industrialized nation with a decent middle class in the span of a few decades.

http://ourworldindata.org/data/growth-and-distribution-of-pr...

aninhumer2• 10 years ago

Wealth inequality is good for all in a lot of ways, so I hate it when people talk about it like it's an inherently bad thing.

It's not the wealth inequality that's good for all, it's the capitalist incentive structures. The wealth inequality itself is a negative side effect of those incentives, because it represents an inefficient allocation of resources in terms of utility created.

The question is to what extent the efficiency benefits of capitalist incentives offset the inefficiencies of the resulting wealth inequality. Personally, I think the extent of inequality we permit is far far more than is necessary to incentivise wealth creation. People would still want to be rich even if the alternative didn't suck.

jpetso2• 10 years ago

I think the question we should ask ourselves is not how to eliminate inequality, but what baseline level of services and opportunities we want to give people at any stage in their life, regardless of their competitiveness and productivity, including when they're otherwise poor and a net drain on society.

In other words, is stable housing a basic right or is it a luxury? If it's a basic right (and/or a net positive if it gives people the chance to bootstrap themselves into higher earnings), then we should strive to increase the reach and quality of tax-funded government housing programs - together with other baseline programs, such as public education, social services, etc. Or if you're a small-government person, substitute "tax-funded" with "charitable" and make it dependent on individuals' goodwills.

If it's a luxury then the status quo seems acceptable - markets need to be able to pick their customers, and baseline services are losing products unless the "exploitative" pricing makes up for it.

Abolishing inequality isn't desirable at all, but the range of inequality doesn't have to go from 0 to billionaire. We can provide a baseline that still leaves enough incentive for people to work their way up but is decent enough to live with dignity, greater than 0. Soviety provides some of that today. Discuss where to draw that line and who, taxpayer or otherwise, can provide it. A functioning society is never completely equal or completely without minimum support, always somewhere in between.

jdietrich• 10 years ago

The thesis is transparently false. While the deprivations of poverty may be exacerbated by exploitative business practices, they are self-evidently caused by a lack of income. Software developers in San Francisco or lawyers in NYC may complain about high rents, but they are not impoverished by those rents. Someone living on $733/mo of SSI remains poor even if their rent is free.

The author mentions a significant root cause in the first paragraph - de-industrialisation. Like so many other American cities, Milwaukee was relatively prosperous before the collapse of the manufacturing industry.

Improved regulation of the rental market would be a minor improvement at best. It's wishful thinking to imagine that poverty could be fixed quickly and at negligible cost to the taxpayer. The problems of poverty are systemic and so are the solutions - better welfare provision, better education, better support for job creation. If we wish to see an end to poverty, we must be willing to pay for it.

nxzero• 10 years ago

Poverty has ultimately nothing to do with opportunity, but those less unfortunate; literally, those without luck. Buffett would be the first to acknowledge that he's been lucky, and I would claim that while it's completely true that poverty has many sources, I would not agree that luck cannot be removed from the process. As such, poverty will always be with us.

etherael• 10 years ago

I assume you actually mean that luck cannot be removed from the equation when you say "I would not agree that luck cannot be removed from the process."?

You may be onto something there, certainly resources assist with wealth creation, but there's very little that is a sure bet, and risk and reward in the financial sense are frequently correlated. If it is a given that one wishes to minimise the degree to which they are beholden to luck (reducing risk) they are simultaneously frequently taking the other side of that bargain too (reducing reward). And you end up with poor people working terribly bad reward jobs on wages that left to market forces might not even be enough to cover their cost of living at all, but are pushed up by minimum wage laws, and subsidised by state social welfare programs (put it this way, and it's actually the state that profits from the poverty of other people by trading subsistence living for political capital, a conclusion the guardian would likely be utterly horrified by)

People just trying to scrape by, keep a roof over their heads, clothes on their backs and food in their bodies are not prone to taking smart, calculated risks on their financial situation. In fact the example that springs to mind with the kinds of risks that these people take are actually really bad ones (lotteries, gambling in general, etc). They don't for example build a wealth portfolio, start a business, or even just invest in the skills necessary to get a better job that would yield a higher wage.

It seems that risk management education is a vanishingly rare thing in the group under discussion, and perhaps that's something that would go some way to addressing the role that you highlight when you refer to luck.

mychael• 10 years ago

This reads to me as "People have no money because they have no money", which is tautological.

lbebber• 10 years ago

Well, exactly: it's very hard to drag yourself out of poverty if you have little money.

superuser22• 10 years ago

It's a little more than that: focusing on the expense side is useless, nothing is going to help much besides increasing income.

flashman2• 10 years ago

Improved regulation of the rental market would be a minor improvement at best.

Taking Desmond as an example, even with no rent he would have to live on $20 a day. That would still be grinding poverty.

Spooky23• 10 years ago

Poverty is more than lack of money. Lots of people lack funds, but would violently disagree with you assessing them as poor.

Think about Maslow's hierarchy of needs -- people need a base to function properly. When your home can vanish in an instant, it changes your mental stance and influences your behavior negatively.

Government is supposed to represent the people, not slumlords. We've perverted the notion of democracy into some sort of weird embrace where "the economy" (where the economy is whatever special interests weild influence today) is a priority above the public welfare.

If a slumlord, or a corrupt contractor profiting off of others misery (operators of "nonprofit" social services orgs, private prisons, etc) is happy, democracy has failed.

bufordsharkley4• 10 years ago

"The beggar is the necessary supplement to the millionaire." - Henry George, as paraphrased by Tolstoy.

Ever since I first saw Henry George's ideas, I can't stop seeing it everywhere; there's a very real difference between the return to rent than for other capital or labor.

bufordsharkley4• 10 years ago

For more information, check out Geolibertarianism[1], though Henry George's writings are lucid, rigorous, and energetically written. Progress and Poverty is the best place to start.

[1] https://en.wikipedia.org/wiki/Geolibertarianism

edko• 10 years ago

Being from a country where we have suffered populist governments who "defend the poor" by increasing their numbers, I am convinced that this is very true. Instead of creating jobs and improving education, they give handouts to the poor, and their number has dramatically increased. These jobless people depend on the handouts, so their vote is guaranteed to go to the populist party. In my country, this technique has been used effectively since 1946.

Omniusaspirer• 10 years ago

This appears to be the trend in most countries, as enabling a population to vote themselves money puts incentives in all the wrong places.

tamana14• 10 years ago

If this system worked so effectively to its ends, why is bill gates so wealthy and not taxed away?

sickbeard• 10 years ago

Personal income tax isn't based on how wealthy you are. It's based on how much income you earned during the year.

dataker• 10 years ago

There's a single problem with Right vs Left debates: they can't understand the other's point.

1) The Right can't recognize there's a problem with contemporary elites ("They Deserved it"). Poverty is all about the government.

2) The Left can't recognize the government plays a role on this . Inequality is all about greedy rich people.

cylinder• 10 years ago

There's overall a huge problem of lack of nuance in the national conversation in America.

In response to the overwhelming vastness and complexity of this country, debate has degraded into simple truisms yelled at the TV.

Even in immigration - you're either "let everyone in and legalize all the aliens!!!" or "deport everyone and build a wall!"

Animats2• 10 years ago

US housing has become much more expensive as a fraction of income since WWII. As the article points out, the big problem in the Great Depression was food, not housing. In 1950, most people in apartments in NYC were paying about 10% of their income for rent. Now, 60% in NYC, about 30% nationally.

Why is this?

Some of it is tax policy. Tax policy is very favorable to property owners. Not only can landlords deduct mortgage interest and depreciate over 27.5 years, when someone buys an old building, they can depreciate it all over again.

Antitrust law doesn't seem to be applied to rental property. In some smaller cities, there are only a few big landlords.[1]

Given the current low cost of borrowing, rental housing prices should have dropped. But they haven't.

[1] http://people.oregonstate.edu/~emersonp/rentcontrol/rc2.pdf

sokoloff13• 10 years ago

Depreciation of rental buildings (the land is excluded) is just a tax timing issue and reduces the basis in the property, so it's eventually recovered via recapture.

The paper you cite takes as an assumption a monopoly of landlords. It does not prove that's the case. "It should be clarified that our model here is one where...landlords have monopolistic power. ... We do not claim that this case is in any way closer to the reality of the housing market than the perfect competition assumption."

wernerbrosna• 10 years ago

What do you mean by "what if"? It's like asking what if 1+1=2?

ageofwant2• 10 years ago

Is that for large values of 1 ?

draw_down• 10 years ago

Boy oh boy, that "what if" is really saying a mouthful.

force_reboot• 10 years ago

What if the dominant discourse on poverty is just wrong? What if the problem isn’t that poor people have bad morals – that they’re lazy and impulsive and irresponsible and have no family values – or that they lack the skills and smarts to fit in with our shiny 21st-century economy? What if the problem is that poverty is profitable?

Let me rephrase these biased questions with the opposite bias (well actually I think my version is fair...):

"What if the leftist discourse on poverty is just wrong? What if the problem isn't greedy capitalist profiteers tricking the downtrodden out of their hard earned money? What if the problem was a self-perpetuating cycle where short term lack of resources lead to the inability to make long term plans, or take advantage of opportunities? What if changes in the technology and the economy meant that skills and education are required that large sections of the population do not have?"

calinet6• 10 years ago

Ugh, this thread is disgusting.

The problem is complex and takes no sides. The poor are unskilled with money because of their environment, upbringing, relationships, and situation; and also because of inherent features. The rich are rich because of their luck, circumstances, upbringing, and situation; and also because of inherent features. The combinations of all of those factors and the interaction between them defines the problem, not any one aspect. This you must understand first.

So yes, absolutely, one of the problems of poverty is that it's profitable to other people; because the poor are powerless to stop it, and the rich are powerful and easily take advantage to the extent they can under their laws and morals. That is the reality, and arguing otherwise reveals our collective immaturity in terms of understanding systems and complexity—the true root cause of our unfair and unbalanced society. Instead of seeing reality, we are often limited by our human capacity and biases that don't help us understand the world—much less respond to in a constructive way.

So let's talk about the systems that influence us all—the article is about one of those systemic problems, and it's fascinating and evidential. It's a good discussion, and it's the right one to have, and I'm always sad that discussions of poverty or inequality devolve into talk of individuals and what they should or should not do. Let's keep our eye on the ball and talk about the whole, and the productive construction of a society that works better.

llamataboot• 10 years ago

I find that Americans are still woefully illiterate when it comes to understanding not only how systems and structures shape outcomes, but also shape selves/consciousness. The myth of the separate individual self is arguably pretty deeply embedded across the West, but when I go to Greece for example, there is no across the board denial of the effects of systems and structures, partially because they have become impossible to ignore for the majority of the populace, but also because the United States is still a deeply religious and irrational country (in very good and bad ways) and one of its religions (perhaps its greatest) is the religion of the "Free Individual".

There is also something about an empathic gap that exists primarily because of both the way poverty is racialized in the United States, but also in how it is /spatialized/. Poor people are seen as the other, because they are the other -- it is very rare that a city in the United States has places where people of all classes (and all races) mingle together. There is much less "public space" in the US as a whole (exception, a city like NYC where literally everyone rides the subway together, even if they are going to different stops) so it is much easier to rationalize systemic outcomes as some kind of inherent failure of the other.

bpchaps• 10 years ago

Agreed. I do some minor parking ticket civic work in Chicago and found that when talking about things like painfully misleading signs, the painfully overwhelming response is, "We shouldn't protect the dumb. It's not my fault they can't read a sign. They deserve that 100 dollar fine. it's too expensive to replace that sign." The last one's the most depressing of all, considering the particular sign I'm talking about racked up 800k in fines for half a block since 2009.

It's painfully demotivating and depressing that so many folk think this way. I'm at a complete loss of words when people talk like that. Where's the empathy for your fellow man?

personjerry2• 10 years ago

One thing I find interesting about the current state of affairs is that the top 1% own more than 50% of the world's wealth. Which means that on average if a person just up and decided to not recognize money and property in the current system, they would in theory come up ahead. Now, this might sound technical and perhaps unrealistic, but if this level of wealth inequality continues, then one day enough people (i.e. a significant majority of the people in the world) will realize that they gain a lot just by shrugging off the chains put on them through social conventions, such as the current implementations of money. They can refuse to work and demand changes, and it seems like there wouldn't be any way to pacify that many people except by catering to them and allowing some sort of income equality. Just an interesting, theoretical thought.

randyrand3• 10 years ago

Much of that wealth is held in things that inherently have value.

Homes will still have value. Cars. Gold. Ect. So you're saying to just steal it all from their owners? What a novel concept.

personjerry2• 10 years ago

I might argue that "inherent" isn't as inherent as it really seems to be, in terms of "monetary value". (But I agree that there is value in the utility of the vehicle, and that leads me to the second point.)

Indeed in this sort of anarchy I might go so far as to argue that property should also be redistributed. While this sounds like stealing, if we might be a little crazy and "open-minded", we might think in the sense that some people always unfairly make more money, redistributing their property isn't as much "stealing" as "making fair". Of course, this is all in a crazy theoretical situation. :)

NoGravitas3• 10 years ago

You are not the first person to [observe this][0][1] :)

Ultimately, it's (only?) a collective action problem.

[0] https://en.wikipedia.org/wiki/Workers_of_the_world,_unite!

[1] https://en.wikipedia.org/wiki/The_Masque_of_Anarchy

Animats2• 10 years ago

Another way poverty is profitable is that the existence of a hungry underclass helps to keep wages down in low-end jobs. Back when the US had welfare, some employers complained they had trouble filling low-paying jobs.

flubert• 10 years ago

What if more people read "Games People Play" by Eric Berne?

http://www.ericberne.com/games-people-play/

sjg007• 10 years ago

Of course it is. Walmart has employees who require food stamps.

jetskindo• 10 years ago

Here is a place that sucks the money out of the poor for no particular benefit: check cashings.

You cash your check for a good percentage of it. If they had a bank account they wouldn't need to spend that money. I don't know how it is in other states but the last time I opened a bank account in California it was a pain. The amount of information needed is certainly not possible for a huge chunk of people.

imaginenore2• 10 years ago

That's why bitcoin and alternatives are so important. Banking for everyone.

kefka2• 10 years ago

Oh please.

Unless you were in on the ground floor with CPU mining, you aren't getting many coins now. There was only 6 months where you could use GFX cards, and now the "room full of ASICs" take the cake.

Bitcoin is useful if you have goods, services, or currency to convert to it. It is not "free magical money".

Its main attribute is that it is stateless... and that's a big deal and also not a big deal to those whom are in poverty.

a_bonobo• 10 years ago

Australia has another business model that is predatory on the poor: home appliance renting.

The dole payment isn't large enough to afford the price of a washing machine - but it is enough to afford the rent for one. Of course in the end you'll wind up paying much more than the outright buy price, but you can't help it, you can't afford to buy the machine.

(Of course these places rent out much more than the "needed" appliances, you can also get fitness equipment, Playstations etc.)

brndn• 10 years ago

US has something similar called Rent-A-Center.

rebootthesystem• 10 years ago

Poverty is valuable to politicians. Extremely valuable. If you understand Spanish I urge you listen to what Gloria Alvarez has been saying now for many years:

https://www.youtube.com/watch?v=xkYEXS16dZA

Latin America has been waking up to the realities of Populism. This, to a large extent, due to Gloria quite literally risking her life to speak-up and educate the populous about such topics.

In the above lined speech she delivers a line that is right on point (translated):

"Populism loves the poor so much it multiplies them".

That, right there, is the root of much of the evil keeping the poor down.

In another passage she reads a definition of Populism penned by another activist:

"The shortcut through which politicians play with the passions, dreams and ideals of people by promising what is impossible, taking advantage of their misery while leaving out logic and reason. It plays with their needs to impose dictatorships."

You see, in the US, Democrats need poor disenfranchised blacks and hispanics. Guaranteed votes. And Republicans need poor disenfranchised bible-thumpers and low education folks. Again, guaranteed votes.

Writing that was disgusting. Yet, it is the truth.

And so, both sides, through Populism, have every incentive to NEVER fix the problems of the poor. If the poor are elevated it is likely that both sides would lose votes. Politicians don't want to work hard for votes. They'd rather promise the impossible and play to your needs and fears and just get you to vote. Once elected, they drop you on your head.

Want to point a finger at evil? Populism.

All four of the top contenders for the Presidency of the US today are populists: Clinton, Sanders, Cruz and Trump. They are all playing people like a finely tuned violin. All of them. Nothing good will come out of electing any of them. Regrettably, there doesn't seem to be a way out of this one. Not voting will only play into the hands of whoever promises more free shit and gets more people to support them.

Poverty isn't hard to fix. First you have to fix the fact that poor people are far more valuable politically while they stay down and remain poor. Imagine a political system where politicians are actually rewarded for fixing problems like poverty. Not sure what that looks like. You'd have to take Populism out of the equation.

pmarreck• 10 years ago

See if you can model the problem mathematically/computationally.

bsbechtel• 10 years ago

There is a line of thinking by many in this thread that if two parties enter into a transaction, and one party has significantly more wealth than the other party, the party with significantly more wealth is automatically guilty of exploiting the party with less wealth, regardless of how said wealth was accumulated. While this may be the case in a small number of transactions, it forgoes the assumption that one is innocent until proven guilty. It also isn't really a productive line of thought in trying to find a solution...assuming guilt/exploitation by those who are better off than us does not make us any better off.

lyqwyd• 10 years ago

This is a very poorly reasoned article. First it frames the options as either poor people are lazy, or rich people are exploiting them into poverty. There are many possible causes of poverty, other than either option.

The title is also ridiculous. Yes, in a market driven economy, some people are going to make a profit off of poor people, but that's true for every economic level. As far as I'm concerned that's only a problem when it's exploitative.

The premise is that landlords are keeping them down through rent, but that is BS as well. There are many voucher programs, and those that receive them don't miraculously escape from poverty.

I'm not opposed to providing housing subsidies for those in poverty conditions, but it is not the cause of poverty.

vorg• 10 years ago

The standard measure is that your rent should be no more than 30% of your income, but for poor people it can be 70% or more. [...] Money from government programmes intended to help the poor – welfare, disability benefits, the earned-income tax credit – go straight into the landlord’s pocket and, ironically, fuel rising housing costs.

In these types of economies (the US, Australia, etc), a Universal Basic Income would just make rents go up, just like easy 95% equity loans made house prices go up.

known• 10 years ago

Most politicians doesn't want you to prosper; They fear you'll vote for your CONSCIENCE in elections;

https://en.wikipedia.org/wiki/Vote_selling

Most https://en.wikipedia.org/wiki/Dominant_minority doesn't want you to prosper; They fear you'll dilute their HEGEMONY in the society;

If we dwell deep higher social class exhibits increased UNETHICAL behaviour

http://www.pnas.org/cgi/doi/10.1073/pnas.1118373109

CullingTheHerd• 10 years ago

Hmmmm, do I really want to put myself through the painful experience of reading HN comments about "the problem of poverty"?

Pass.

partycoder• 10 years ago

Academic journal publishers force academics to constantly go through paywalls, putting massive restrictions to scientific research.

Walmart and other companies pays employees the bare minimum, forcing them to go on welfare and boycott their right to form unions and defend themselves.

Pharmaceutical companies do fake studies as well as tricks to extend patents and prevent people from benefiting from affordable drugs.

Healthcare disproportionally overcharges people. 500 dollars for a bag of water with salt.

Food industry adds sugar to all foods knowing sugar poses health risks, because sugar is addictive and keeps people coming back to their products. They also lobby to prevent proper labeling of sugar in food.

Companies sell garbage food to kids in schools like pizzas and hotdogs, knowing it's ruining generations of people.

You get the idea...

jeffdavis• 10 years ago

I expected the article to detail a list of profiteers, but the examples cited just don't seem very compelling.

And the story isn't really complete unless it somehow connects to powerful people pulling the strings to keep the money rolling. A small time landlord is probably not friends with senator.

So who exactly is the villain here?

tomcam• 10 years ago

I believe they're looking in the wrong place for villains. The poverty industrial complex that starts right in the walls of the federal government is a great place to start. Why not just cut checks to the needy? The government burns up at least half of it in bureaucracy.

randyrand3• 10 years ago

This article conveniently forgets that US poverty is still incredibly rich by any other standard.

Nearly everyone in the US is just a different degree of rich - trailer park residents included.

ageofwant2• 10 years ago

ABC (Australian Broadcast Corporation) has a taxpayer funded show that explains consumers what their right are: http://www.abc.net.au/tv/thecheckout/

Its very entertaining and highly recommended. The first episode has a segment about people that rent appliances because they cannot afford them, and the companies that exploit them. Eye opening and infuriating.

jakobegger3• 10 years ago

Instead of giving money to poor people, who then have to spend it all on rent, why not provide affordable housing?

In Linz we have something called "housing cooperatives" (the German word is "Wohngenossenschaften"). These cooperatives build apartments, and to rent them you become a member of the cooperative. The goal of these cooperatives is not to make a profit, but to provide affordable housing.

And it's amazing how well that works! Rents are typically 50% lower than average, and the buildings are always well maintained. In general, they also have better amenities (playgrounds for children etc) compared to privately owned apartment buildings. The only problem is that there are very long waiting lists (more than 5 years in some cases).

It's amazing how cheap good housing can be when it's not necessary to make a profit for the owner.

LoSboccacc3• 10 years ago

We have those in Italy, as a counter point: it's amazing how fast those got occupied abusively and how local criminals use it to either hide their illegal workers or use it as bargaining chips to gain support and omerta from the population.

jahnu• 10 years ago

Sounds like a problem with law enforcement rather than anything else.

jacobush4• 10 years ago

Counter counter point - is there much of anything official done in Italy which is not perverted by criminals/mafia? Seriously, not trying to be a dick.

lazzlazzlazz• 10 years ago

Artificially decreasing housing prices always creates shortages - that's already well understood. The more people who can take advantage of artificially lowered prices, the more pressure there is in other parts of the housing market to absorb excess demand.

The cost of decreasing those housing prices are paid for somewhere else in the system.

yourapostasy4• 10 years ago

Hm, how is a cooperative / mutual-aid-like financial/organizational structure imposing artificially lower prices? The profit is absorbed by the members in-kind in the form of lower shelter costs in exchange for the responsibilities of shared ownership, and as the shareholding owners it is their right to take out profits in the form they mutually agree upon. Just because the profit is not capital and not in the norm of conventional land owners, I don't see these Wohngenossenschaften are artificially decreasing prices. The Wohngenossenschaften are smarter capitalism, squeezing out more inefficiencies.

anexprogrammer• 10 years ago

Meanwhile using housing as much as an investment vehicle as housing (see London, SF, and numerous other cities) promotes the creation of shortages to drive up rents and capital gain.

You can't seriously be saying that the housing market is working as intended in places where pushing 70-80% of the wages cannot rent a basic apartment there.

The cost of those artificially inflated housing prices are paid for someewhere else in the system. As increased stress and illness, as migrant workers in illegal occupation, as companies unable to fill lower pay roles, as a lack of nurses, teachers and firefighters, as lack of opportunity for their children.

You don't have to adopt a socialist perspective to see it's broken right now.

krzrak• 10 years ago

We have the same in Poland (they have long tradition since communism times) - they quickly turn into bureaucratic nightmares ruled by hegemons for whom rubber stamp and paperwork is more important, than the cooperative members and their well-being.

madaxe_again• 10 years ago

We used to have something like this in the UK, but then under "right to buy", the vast majority of the council funded housing was sold off to private landlords (council tenants usually did not have the funds to buy themselves, so were offered deals by large private landlords like "we'll give you £10k, you can keep living there for 10 years, we'll give you the money to buy it, you then sell it straight on to us"), and they're now doing a second round of the same to sell off what remains.

So - we now have large corporations like the Curo group who own what was once local authority housing and run it for profit - meaning that at any given time about 30% of their 13,000 properties are unoccupied, that their tenants never have any maintenance issues addressed, and the rents are high - and the waiting lists are worse than when it was publicly operated. Never mind the impact on the rest of the property market, with insanely inflated prices, as nobody wants to build anything new as it'll decrease the value of their portfolio.

So - housing cooperatives/local authority housing are great, but beware the state selling them to private profit-making entities. It hasn't ended well here, and it absolutely is the case that poverty is profitable.

The poorer and more trapped they are the more secure your investment is.

jakobegger3• 10 years ago

Yes, there was also a big scandal when a state owned cooperative was sold by our corrupt minister of finance several years ago, but that doesn't mean cooperatives are a bad idea; it probably just means that government-owned cooperatives should be avoided. Ideally the cooperative should be fully owned by the tenants, so nobody can go and sell it off (however, I am not sure how exactly that would work from a financial / legal perspective)

basch3• 10 years ago

Instead of giving money to poor people, who then have to spend it all on rent, why not provide affordable housing?

You could probably make the same argument for prescription drugs and patent fees, no?

pc862• 10 years ago

Are poor people spending an exorbitant percentage of their income on patent fees?

empath75• 10 years ago

We have housing projects in the us, but concentrating poor people in one place has its own problems. The projects are synonymous with gun violence in the US.

athenot• 10 years ago

To my knowledge, the housing projects in the US don't involve the tenants in shared ownership / membership, which is different than what I understand of the parent post.

The Netflix culture deck references Autonomy, Mastery, and Purpose. I submit that there is a similar level of empowerment at play regarding housing. That's one reason why many who can afford to buy a house do so even in situations where it's cheaper to rent (when factoring in maintenance). So as a recipient of government housing, feeling like you're in a giant bureaucratic housing solution where you have no control is demoralizing. Of course, there's always the argument "that's better than nothing; these people should not complain".

But I think we can do better. What if every tenant was in some way responsible for some part of the maintenance of the building? Some can garden, others can plumb or be apprentices under an electrical engineer, etc… Then there can be some pride associated with maintaining a dwelling that may be modest by worldy standards but that makes others smile and generates thankfulness.

In a larger sense, we must include the human dimension in what is fundamentally a human problem, instead of only being focused on the technicalities.

JoeAltmaier• 10 years ago

Both are necessary. But it turns out people are (statistically) better at spending money for themselves, than having a nanny state spend it for them. And the cost of the 'planned economy' of the welfare state is in addition to that. E.g. US Welfare spends 60% of their budget on administration. How much better to spend 100% on benefits, and have the people figure out for themselves what they need?

Retric4• 10 years ago

Your numbers are way off: http://mediamatters.org/research/2005/09/21/limbaugh-dramati...

•Special Supplemental Nutrition Program for Women, Infants, and Children (WIC): 9.0 percent

•Housing Choice Voucher (Section 8): 5.2 percent

•The Department of Housing and Urban Development's public housing program: 22.5 percent

•Low-Income Home Energy Assistance Program (LIHEAP): 9.1 percent

Finally, the report estimated that the federal administrative costs amounted to $12,452,000,000 for the 11 programs studied -- 6.4 percent of total federal expenditures on these programs.

PS: For comparison Social Security spends even less on administration but is vastly more expensive, which is arguably a net loss.

Retric4• 10 years ago

This just becomes another subsidy. IMO, we need to build a large supply of tiny but high quality apartments (good sound insulation etc.) in good locations so the market will lower their value yet there still expensive enough to attract young workers instead of the poor. (~350sf)

The other reasonable approach is simply to build lot's of housing in good locations. If the supply is large enough prices end up falling. Unfortunately, larger apartments mean taller buildings which pushes up prices.

Instead of the current approach where all apartments are basically the same thing and the only thing that drives down prices is poor location, maintenance, and older buildings.

pakled_engineer• 10 years ago

They built thousands of tiny self contained units in my city and they're all on AirBnB for $125+/night. The problem is foreign buyers speculating on all new housing and either keeping them vacant to park money or renting for short term only.

rahimnathwani• 10 years ago

"The only problem is that there are very long waiting lists (more than 5 years in some cases)."

So some proportion of poorer people are getting cheap housing, and others are priced out. This sounds like the same outcome that results from rent controls in San Francisco and New York.

"It's amazing how cheap good housing can be when it's not necessary to make a profit for the owner."

What would need to change in order for these housing cooperatives to expand enough to reduce waiting lists to <1 year?

jakobegger3• 10 years ago

What would need to change in order for these housing cooperatives to expand enough to reduce waiting lists to <1 year?

Waiting times are less than a year if you have an urgent need (eg growing family) and are willing to accept unpopular locations (eg next to a highway exit). But in general the waiting times are too long.

The biggest problem is that the regional government is conservative/nationalist and strongly influenced by a large bank that does a lot of property development. So there are a lot of political obstacles to new developments by cooperatives. I feel that the cooperatives are a remnant of the times when the social-democrats had more influence.

INTPenis• 10 years ago

The trick is to not just leave them poor, but leave them poor and employed. Then you have cheap labor.

erikb2• 10 years ago

It's really hard for me to start reading. Yes, there are other reasons for poverty, and yes people make money out of poor people. But that doesn't really mean that this reasoning replaces the reason that many poor people don't know how to handle money, family, friends well enough to keep their head above the water. And most of the examples they use seem to underline that as far as I can see.

Poverty has a lot of facettes. Here's one that wasn't even mentioned: Because you can recognize poor people by their dressing preferences, richer people give them less opportunity. And there are quite a few opportunities that come with being at the right party, having the right friend, having the right hobby (like playing Golf). Poor people aren't at that party. And they don't feel comfortable in a suit.

fucking_tragedy4• 10 years ago

But that doesn't really mean that this reasoning replaces the reason that many poor people don't know how to handle money, family, friends well enough to keep their head above the water.

Do you have a citation for this opinion?

Seems you're shifting focus from the concrete cause of poverty, lack of money/resources, to one of character. The article points out that others profit from this lack of resources and contribute to that cause of poverty.

Why is it harder to read that than an article that speculates that the poor are poor because they are shifty and can't balance a checkbook?

pc2g4d• 10 years ago

Maybe it's not character so much as a particular skill set called money management?

I'm not sure I'm convinced of this, but I think that's the idea.

erikb2• 10 years ago

What I meant to say, sorry for my poor English, was that there isn't one single reason. Lack of resources is one reason, lack of Guanxi is another, lack of money management skills is another, lack of a mindest to improve oneself is one as well, etc. There are also indirect causes, like not going to the gym, therefore having poorer health, therefore perform worse and spend more money/time on medical treatments.

Not having a single dimensional problem means you can't resolve one dimension of the problem and expect the problem to go away. E.g. you give money to a poor guy, he will still be poor 5 years later, you give education to a poor guy, he will still be poor 5 years later (if he even accepts it in the first place).

Hard to read was the article because it assumes this multidimensional problem to be one dimensional and then argues that the source is not single-dimension A but single-dimension B. Both is based on an assumption I disagree on, despite all the details possibly being correct.

facepalm2• 10 years ago

Already the first paragraph annoys me to no end because it claims "What if the problem isn’t that poor people have bad morals – that they’re lazy and impulsive and irresponsible and have no family values – or that they lack the skills and smarts to fit in with our shiny 21st-century economy?", implicitly claiming that is the common way to think about the poor. That is just nonsense (yes you can surely find people who think that way, but not serious economists, journalists or policy makers). Didn't read on...

tim3333• 10 years ago

The arguments in the article seem a bit of a muddle. Fair enough landlords make money from renting to poor people but they also make money renting to rich people and are probably not the main cause of the poverty.

Most laws and government policies that affect poverty have trade offs - subsidise education and someone has to pay for it and so on. And tennant's rights come into that - laws that favour renters at the expense of landlords will probably be lobbied against by landlords though that's a bit removed from the arguments in the article and affects wealthy renters as well as poor ones.

timedoctor• 10 years ago

I have over 15 houses that I rent to low income people. It's very difficult. Not at all a method of getting rich as claimed in the article. Constant problems with collections, problems with repairs and maintenance (given that the properties are old and were not well maintained).

I bought these 15 houses after the crash in 2008 as I thought it was the best investment possible with fantastic returns. IN fact I would have been WAY better off buying ONE house in the bay area and renting it to one well off person. I would have made a whole lot more in net rent and in capital gain.

So I think the premise of this article is completely wrong in the majority of cases. Renting to poor people is extremely difficult and a very easy way to lose money. Many states in the US are very favorable to tenants and not favorable to landlords. You also have to pay taxes, insurance.

Seriously if it was that easy everyone would do it. I thought it was an easy way to make money and I was wrong. Not horribly wrong as I did buy the properties very cheap, but still, not an easy way to make money.

zaro• 10 years ago

"What if"? It definitely is profitable for some people ... Without poverty yhe modern slavery won't even exist ...

megan42• 10 years ago

I think this problem is much bigger than people realize in the US because homeless women and children are rarely visible. Couch surfing, going from shelter to shelter. When I was three my mom lost her job (she was assaulted at work and pushed the man back). We lived in a tent in friends' yards, then in a park with a space heater running in out tent. We weren't tripping on the street but transitioning back to employment was harder and harder the longer my mom had no address. That was in the 80s. The 20th Century was about capitalism vs. Communism. How can we feed and protect people in our society? I think the 21st century question, with increasing productivity and abundance, is how can we NOT? I don't think small business owners are the problem, in real estate or elsewhere. We need a living wage, welfare. We have to be smart enough to make it work.

sksixk• 10 years ago

this is a cultural/ethical/social issue. not an economic one. you can't have the rich without the poor.

alanwatts• 10 years ago

And I'm simply saying that more and more, we've got to begin to ask questions about the whole society. We are called upon to help the discouraged beggars in life's marketplace. (Yes) But one day we must come to see that an edifice which produces beggars needs restructuring...Now, when I say questioning the whole society, it means ultimately coming to see that the problem of racism, the problem of economic exploitation, and the problem of war are all tied together. (All right) These are the triple evils that are interrelated.

-MLK, Where Do We Go From Here? 1967

fucking_tragedy4• 10 years ago

It's too bad that MLK was assassinated before he demonstrated and spoke prolifically from this platform.

His previous successes would have given the credence and momentum to actually get somewhere.

kdamken2• 10 years ago

Let's do some basic math - she makes $400,000 a year, on 131 units. 400,000 / 131 / 12 = $254 a month per unit. That's really not a ton of money for each one. $254 for your own place to live isn't a bad deal.

Additionally, when they say she makes $400k a year - is this her take home, or her business's gross profit? Are they considering the money she has to spend on mortgages, insurance, repairs, business administration, rent collection, legal fees, etc?

A holiday in Jamaica is something most middle class people can and often do afford, even lower middle class. You can get a trip to an all inclusive for a week with airfare for $1000, maybe even less.

undersuit6• 10 years ago

I like how you first do the math to show how cheap these units are. "It's a bargain!"

Then you wonder it the $400k is gross profit or revenue. Wouldn't it be useful to know if the units were being rented for $254 a month or if the owner was renting them at rates that would generate in excess of $254 a month in revenue?

veeragoni• 10 years ago

Then they will try to create more poverty to solve it. its "in Human". So, if someone might not be part of poverty, now be part of it!

clavalle• 10 years ago

The main condition holding them back, Desmond argues, is rent.

This is a symptom. The main condition is that they have to bargain with their life (or physical suffering) on the balance for nearly everything including rent.

When the choice is pay rent you can't afford or live on the street (a severe risk to one's life) then you will pay whatever you are able.

The same goes for selling their time for less than it is worth for decades at a time. It is either that or die or be in pain. This is also very profitable for the parties on the other side of the equation.

This seems like the defining feature of poverty and why it is worth fighting. When people are not bargaining with their life on the line, they will make decisions to improve their lot rather than to merely lose less.

iofj• 10 years ago

These discussions always end up the same way. We don't know a solution to the problem of poverty, so people advocate just using the government to force a solution to the problem.

This won't work. Now don't get me wrong : that doesn't mean you can't make it work through investment for a while, potentially even a long while. But you can't make it work over long periods of time.

The only way to solve poverty is to find something for huge numbers of unskilled labour to do that's economically positive (ie. makes a profit for whoever is the boss). That can last. And yes, we'll have to do it again, and again, and again.

Now should we use the government to bridge people over between jobs ? To help them out in periods where their economic utility is low ? In my opinion absolutely. But we should NOT make the mistake to assume that this can be anything but a very temporary measure.

What if the problem of poverty is that it’s profitable to other people?

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