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Barbara Ehrenreich: Looting the Lives of the Poor

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This article originally appeared at TomDispatch. To receive TomDispatch in your inbox three times a week, click here.

Gordon Gekko, the infamously cutthroat capitalist and lead character in Oliver Stone's Wall Street, captured the heady years of the 1980s with a single, indelible line: Greed is good. Today, it is Edward Conard, a friend and former colleague of Mitt Romney's at the private equity firm Bain Capital, who has offered a new mantra for the 1%, a cri de coeur for the Gekkos of the twenty-first century: Inequality is good.

In his new book Unintended Consequences: Why Everything You've Been Told About the Economy Is Wrong, Conard argues that gaping income inequality is an indication of a healthy economy, not a sick one. The more unequal we are, Conard told the New York Times Magazine, the better off we all will be. Why? Because economies grow and thrive when smart people devise solutions to our thorniest problems by inventing or perfecting goods and services. Conard singled out a group of twentysomethings sitting at a Manhattan coffee shop one afternoon, deriding them as lazy "art-history majors." Those people should be out creating businesses and taking risks, he insisted, because that's how societies prosper. And the way to encourage that risk-taking is the promise of obscene wealth for those who succeed (and, implicitly, dismal poverty for those who don't).

How obscene should that wealth be? In 2008, the top 1% commanded 21% of all income in America. Conard says our society would improve if only that figure were doubled.

Needless to say, there is no shortage of Conard critics. The more respectful ones ask: Teachers do not fit Conard's entrepreneurial ideal -- are they no use to society? What about judges? Government regulators? Others dismiss Conard as an out-of-touch millionaire living in a fantasy land. For instance, Conard claims that wages for American workers have climbed in recent decades; in fact, as liberal economist Dean Baker notes, wages have barely kept pace with inflation. "We'll leave it to his shrink," Baker quipped, "to determine whether the problem is that Conard is deluded or dishonest."

It's not hard to imagine how members of the working poor would react to Conard's message. Here he is urging them to take the leap and design more efficient soda cans or search engines, when, as TomDispatch regular Barbara Ehrenreich makes strikingly clear, the working poor who dare share food with the down-and-out or kick up their feet on a subway seat can land in a debtor's hell created for them by state and local governments and law enforcement agencies. Unlike Conard, Ehrenreich, the author of the bestselling Nickel and Dimed: On (Not) Getting By in America, had an actual urge to help those in trouble. She's just launching the Economic Hardship Reporting Project, which will "will pay laid-off and/or underemployed journalists who are themselves caught in the maw of economic hardship to produce compelling stories." (To catch Timothy MacBain's latest Tomcast audio interview in which Ehrenreich discusses how the poor get soaked and her latest project to fund investigative journalism on poverty, click here or download it to your iPod here.) Andy Kroll

Preying on the Poor
How Government and Corporations Use the Poor as Piggy Banks

By Barbara Ehrenreich

Individually the poor are not too tempting to thieves, for obvious reasons. Mug a banker and you might score a wallet containing a month's rent. Mug a janitor and you will be lucky to get away with bus fare to flee the crime scene. But as Business Week helpfully pointed out in 2007, the poor in aggregate provide a juicy target for anyone depraved enough to make a business of stealing from them.

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The trick is to rob them in ways that are systematic, impersonal, and almost impossible to trace to individual perpetrators. Employers, for example, can simply program their computers to shave a few dollars off each paycheck, or they can require workers to show up 30 minutes or more before the time clock starts ticking.

Lenders, including major credit companies as well as payday lenders, have taken over the traditional role of the street-corner loan shark, charging the poor insanely high rates of interest. When supplemented with late fees (themselves subject to interest), the resulting effective interest rate can be as high as 600% a year, which is perfectly legal in many states.

It's not just the private sector that's preying on the poor. Local governments are discovering that they can partially make up for declining tax revenues through fines, fees, and other costs imposed on indigent defendants, often for crimes no more dastardly than driving with a suspended license. And if that seems like an inefficient way to make money, given the high cost of locking people up, a growing number of jurisdictions have taken to charging defendants for their court costs and even the price of occupying a jail cell.

The poster case for government persecution of the down-and-out would have to be Edwina Nowlin, a homeless Michigan woman who was jailed in 2009 for failing to pay $104 a month to cover the room-and-board charges for her 16-year-old son's incarceration. When she received a back paycheck, she thought it would allow her to pay for her son's jail stay. Instead, it was confiscated and applied to the cost of her own incarceration.

Government Joins the Looters of the Poor

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You might think that policymakers would take a keen interest in the amounts that are stolen, coerced, or extorted from the poor, but there are no official efforts to track such figures. Instead, we have to turn to independent investigators, like Kim Bobo, author of Wage Theft in America, who estimates that wage theft nets employers at least $100 billion a year and possibly twice that. As for the profits extracted by the lending industry, Gary Rivlin, who wrote Broke USA: From Pawnshops to Poverty, Inc. -- How the Working Poor Became Big Business, says the poor pay an effective surcharge of about $30 billion a year for the financial products they consume and more than twice that if you include subprime credit cards, subprime auto loans, and subprime mortgages.

These are not, of course, trivial amounts. They are on the same order of magnitude as major public programs for the poor. The government distributes about $55 billion a year, for example, through the largest single cash-transfer program for the poor, the Earned Income Tax Credit; at the same time, employers are siphoning off twice that amount, if not more, through wage theft.

And while government generally turns a blind eye to the tens of billions of dollars in exorbitant interest that businesses charge the poor, it is notably chary with public benefits for the poor. Temporary Assistance to Needy Families, for example, our sole remaining nationwide welfare program, gets only $26 billion a year in state and federal funds. The impression is left of a public sector that's gone totally schizoid: on the one hand, offering safety-net programs for the poor; on the other, enabling large-scale private sector theft from the very people it is supposedly trying to help.

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Tom Engelhardt, who runs the Nation Institute's Tomdispatch.com ("a regular antidote to the mainstream media"), is the co-founder of the American Empire Project and, most recently, the author of Mission Unaccomplished: Tomdispatch (more...)
 

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