The typical conservative leans back on his couch, meditatively stirs his Chivas and water with a pinkie and declares (with some considerable justification) "Well, it’s their own damned fault if they got in over their head. What the hell were they thinking?"
People are indeed responsible for their own actions. But when you take advantage of the ignorant and the dirt poor, it’s not only disingenuous to hold them to middle class standards, it’s very, very dangerous. A number of the ‘brightest and best’ in Congress went through a little experiment a couple years back, trying to live just one month on minimum wage.
Not many of them made it, but that didn’t blast loose the minimum wage laws. Like water-boarding Navy Seals to show how tough they are, the Congressmen knew they weren’t going to drown in debt.
Knowing you’re not going to drown changes the game. Who among us in legislative control of our neighbors’ financial destiny has ever been truly poor?
Take a walk on the have-not side sometime, it’s not all that dangerous. Price a used car (or a new one), a loaf of bread, a TV or an apartment over on the seedier side of whatever town you live in and see how much more costly it is to live there.
What’s the interest rate on your credit card, 10%? Try 28% and see how easy it is to pay off. 0% financing on a new car? Not on this side of the tracks. Try 24% and watch what happens to monthly payments, the years necessary to pay off a 6-year-old car and the total cost to buy a beater. Warrantee? Get Serioius.
Vincent Humphries needed a computer when his old one died? We’ve all had that happen. Vincent needs his because he does a little freelance programming to subsidize his $875 social security. A little background on Vince; he’s not a bad guy, but it’s been a hard life and he’s not all that well educated.
(Business Week; The Poverty Business) Raised in Detroit and now living in Atlanta, he never got past high school. He started work in the early 1960s at Ford Motor Co.'s hulking Rouge plant outside Detroit for a little over $2 an hour. Later he did construction, rarely earning more than $25,000 a year while supporting five children from two marriages. A masonry business he financed on credit cards collapsed. None of his children have attended college, and all hold what he calls "dead-end jobs."
Whether some lives are hard life is not the point. Whether they are unnecessarily expensive is very much the point. We don't expect that. Most of us don't even know it. Vince always worked hard and was never jobless, but it’s expensive raising five kids on $25 grand and somehow they all missed out on college, reinforcing the cycle of poverty.
The setup:
When his computer broke down in 2005, Humphries fretted that he would never be able to afford a new one. A solution appeared one night in a TV ad for a company with a catchy name. BlueHippo offered "top-of-the-line" PCs, no credit check necessary. He telephoned the next day.
The sting:
He remembers the woman on the other end describing the computer in vague terms, but she was emphatic about getting his checking account information. She said BlueHippo would debit the account for $124, and Humphries then would owe 17 payments of $71.98 every other week. At the time, $800 would have bought a faster computer at Circuit City Stores, (CC ) but he didn't have the cash.
It wasn't until a week after placing his order that he realized that BlueHippo's terms meant he would pay $1,347.66 over nine months, Humphries says. He called to cancel. The company told him that would take as many as 10 days, he says. When he called again, a week later, a customer-service representative said cancellation would take an additional 15 days. "I sensed then that I had my hand in the lion's mouth," Humphries says. During his next call, a phone rep told him BlueHippo had a no-refund policy. He would lose his $124, even though he had never received a computer.
Blue Hippo is run by a crook by the name of Joseph K. Rensin. If you live in the Baltimore area, Joe may be a member of your country club. It’s possible he has a trophy wife and a Mercedes, even probable, but he’s still a crook.
The attorneys general of New York and West Virginia are investigating the company, and the Illinois AG has filed a consumer-protection suit in that state. In response to a Freedom of Information Act request by BusinessWeek, the Federal Trade Commission says it has accumulated 8,000 pages of consumer complaints about BlueHippo. The FTC is investigating whether the company has engaged in deceptive practices.
Eight thousand pages of complaints. Way to go, Joe. Who goes to the bother of an FTC complaint? Ten percent? Two percent? What we have here is perhaps a world-record in the cheating-the-poor department.
BlueHippo sells well-known brands such as Apple Inc. (AAPL ) computers and Sony Corp. (SNE ) televisions. Gateway Inc. (GTW) became a major supplier in December, 2003. "We've clearly been aware of their business model from the get-go," says Gateway spokesman David Hallisey. More recently, Gateway became troubled by customer complaints and decided earlier this year to sever ties with BlueHippo. Given its knowledge all along about BlueHippo's methods, why did the separation occur only this year? Hallisey explains: "We're publicly traded and trying to make a profit, so that's a consideration."
Well now, with a spokesman like that, who needs PR?--publicly traded and trying to make a profit answers it all. That’s essentially the same thing the bums and thieves in the sub-prime fraud were doing, fishing in the same puddle of the poor, it seems.
Interestingly, where credit-cards are involved, a cloud three times as dark as the sub-prime fraud is rapidly forming on the horizon.
And for the same reason; everyone's publicly traded and trying to make a profit. There are all these poor and desperate and uneducated customers out there. We can preach the gospel of it being all right to join the consumer hallelujah chorus. In this newly invented consumer economy, you don't have to worry about whether the poor bastard can ever pay off--his debt has been sliced and diced and passed off to others.
A victimless crime.
A few months after his BlueHippo experience, Humphries did buy a new computer. He borrowed $400 from a friend and bought a General Quality PC from Fry's Electronics, a retail chain. The loan covered the purchase of a 17-inch flat-screen monitor, a DVD burner, and a desktop computer with a 40-gigabyte hard drive. Humphries tightened his belt and paid his friend back in $100 installments over four months, interest-free.
Micro-loans to each other. The way families and tribes and even kids trying to buy their first car used to get along. Life before the credit-card. Life before strangers took over and turned us all into statistics.
So, Vince got a better computer at less than one third of what Joe Rensin was going to lay off on him, but the key is that he had a friend to help out. The poor have lots of friends. That’s one thing about being poor is that you understand and appreciate the plight of your neighbors. But not many are able to help, at least not out of their own pocket.
When the poor form their own credit-unions, they’ll begin to get out of the crack they’re in. The local credit-union can explain about those flashy late-night BlueHippo ads and offer alternatives before the axe falls. Credit unions might actually keep the axe from falling, which is why so many banks hate them.
"Like water-boarding Navy Seals to show how tough they are, the Congressmen knew they weren’t going to drown in debt."
You make many excellent points, and this was the best. There's no comparison between those experiments and knowing that your real experience may be a life (or death) sentence.
It's also easy to say people should know better if one isn't in the position of having to stretch every paycheck in order to keep a roof over one's head and food on the table.
I see predatory lending and business practices as one of the worst five crimes against the poor in America. The others are the criminally low minimum wage, the lack of readily available health care, education, and housing. If we could solve those problems, and get every kid the individual attention he or she needs to become an imaginitive, self-empowered adult (along with their parents), poverty might become a thing of the past. Instead we seem to breed poverty, helplessness, apathy, and powerlessness.
Blaming the victims certainly doesn't help, and I hear a lot of that.
I also see the current $2 trillion war deficit as disgustingly similar to how funding was taken from the War Against Poverty in the 60s in order to fund the Vietnam War. Imagine what could be done here at home to help our own people with all that money. You don't see the government EVER willing to go into that kind of debt to help the poor, only to help the corporate war machine.
by
SpiritBlooms (0 articles, 0 quicklinks, 0 diaries, 55 comments)
on Saturday, February 16, 2008 at 1:56:30 PM
The government only notices when the middle class (those with incomes of over $100,000 a year), starts hurting. Meanwhile, the poor are saddled with things like Check Into Cash, Rent to Own, and the corner hock shop. Poor kids start college on their Pell Grants and soon find themselves deluged by "no interest for six months" credit card applications offering to "make their lives better". The easiest thing to get is a television set so that you can be barraged by all the commercials for all the stuff that you, too, can have "even if you have bad or no credit".
Further, most of the poor do not have the knowledge either to protect themselves or to fight back. They had finally learned the meaning of the word "bankruptcy" when the law was tightened to close off their only way out. Social Security will maintain your life only on the most basic level while disability checks pay even less. And forget affordable health care. The point of the whole exercise is to bleed your income from the necessities and encourage you to die off if you can't "compete"!
by
Mary Pitt (65 articles, 0 quicklinks, 2 diaries, 177 comments)
on Sunday, February 17, 2008 at 11:16:05 AM
Is that middle class cutoff amount? Then the ranks of families who count in politics decreased dramatically. Especially if accounting for inflation.
The explanation you give, Mary, is so real life! The fellow who could loan 400 is fast getting to be an endangered species, because he needs to realize that his friends will have more needs. My experience is that first family members drive their combined resources into the ground. Then friends are approached. I understand these relationships.
And here is how I have come to react. The poverty most apparent is knowledge neediness. No use to commiserate by declaring that a high percentage rank with the person in need. They don't understand negative networth. If they did, they would have been watching impulse buying. No use to preach about conspicuous consumption. It was arduous, and hopeless, to preach to a young girl that temptation to buy another DVD might leave her with only fumes in her tank. When her high school diploma got her entry level work in a bank ready to dissolve the department where she worked, reality did set in. The employer she sought said she didn't know enough about Accounts Payable, and she came to me and asked what that meant. Two terms, payables and receivables, are the lifeline of business--and also of anyone else who wants a positive networth. She enrolled in school and I paid for the books. Never felt so rewarded in my whole life! After a long hot summer without a paycheck, she is now employed at a rate above minimum wage. Why I take heart is that she also had to learn the difference between long and short-term debt. When a person meets accrual accounting, impulse buying becomes controllable. However, what really counts for me is that she has loving, working family members who spent their life in the position of paycheck to paycheck. They were leery she made the right call, and now they are very glad she stuck it out. There is a ripple effect.
Do I believe everyone should be taught basic bookkeeping in High School? I certainly do. It's personal information which puts the lure of debit cards and fancy cell phones, let alone expensive cars and vacations, into perspective.
by
Margaret Bassett (25 articles, 1685 quicklinks, 29 diaries, 1015 comments)
on Sunday, February 17, 2008 at 12:20:07 PM
called 'two nails on the wall,' one for what you got coming and one for what you owe.
The cost of things must be taught in school, else all other lessons become useless. The cost of having a place to live, the cost of a child, the cost of dropping out of school, the cost of credit.
No Child Left Behind merely dooms poor children to watching the bus pull away from where they live. You performed a great personal service. God bless you.
by
Jim Freeman (108 articles, 51 quicklinks, 222 diaries, 384 comments)
on Sunday, February 17, 2008 at 1:09:38 PM
"Do I believe everyone should be taught basic bookkeeping in High School? I certainly do."
I agree, but some form of it, as well as critical thinking, should be taught in every grade from kindergarten on up, just in case they don't get it in high school, or get as far as high school. Some kids are lost long before then.
I remember reading that back in the 60s one of the big cereal companies would offer to let kids take part in a study, and they made it seem like a boon for the kids so their parents readily agreed. Actually they were studying the kids' reaction to various advertising tactics. The Cap'n Crunch generation was indoctrinated based on that study.
But do we teach children at that age how to avoid being sucked in by advertising? No, instead parents and babysitters sit them in front of the TV to keep them out of "trouble". Their ability to think for themselves is stunted at an early age. We let kids be trained to be obedient credit and wage slaves.
by
SpiritBlooms (0 articles, 0 quicklinks, 0 diaries, 55 comments)
on Sunday, February 17, 2008 at 1:36:12 PM
and not because they have bought luxuries at exhorbitant prices. I have two disabled friends over 55 and they have no credit cards or long term debts. Neither have I. We pay cash for everything, although are incomes are inadequate. As a result, we couldn't get credit even if we wanted it. I do get enough to eat, but neither of my friends do. One lost her hair and her teeth due to poor nutrition. The cheapest one bedroom apartment costs over $600 and a studio over $500, just about everywhere, certainly they do here. On top of that the tenant pays heat and hot water. No disabled person under 62 can get into low cost housing anymore unless they are in a wheelchair. The average senior or disabled person gets about $900 per month for everything. No matter how many bookeeping courses you have taken you can't cover all basic needs with that when a trip to the dentist is $250 not covered by medicare and eyeglasses cost $400.
by
memary (0 articles, 0 quicklinks, 1 diaries, 70 comments)
on Sunday, February 17, 2008 at 8:14:59 PM
6 comments
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