Thursday, January 19, 2017

It is "Elitist" to Say People Make Bad Choices in Life?

Does poverty force you to make bad choices or do bad choices force you into poverty?

One argument I get a lot in this blog is that, "Well, it's all very well and fine for your to denigrate the poor, but they have no choices in their lives!   You are being an elitist!"

Elitist is the catch-all phrase du jour for people who don't really have an argument to make, so they attack their opponent.    And in debates, that is the oldest and cheapest game in the book.   I can't counter your logical argument, so instead I will imply that your Mother is a prostitute.  I win.

And in the crazy Post-Trump Twitter world, these sort of "arguments" are winning, sadly.   People can no longer hold coherent thoughts.  No one reads.  Everyone just reads a headline and then goes off. 

But I digress...

The reason I am not being elitist is that I am not sitting in some ivory tower or in some mini-mansion on a golf course, opining about what "the little people" are like, having never met any of them, other than my housekeeper and gardener.  Yes, if I did that, that might be elitist.   But even then, folks with money are entitled to their opinions, and if they can perceive that their gardener is making a shitty choice by paying $25 to cash his paycheck, then maybe they are right, even if elitist.

My perspective about all of this comes not from witnessing this behavior from some far-off platform, but from examining my own behaviors when I was on the ground living in poor neighborhoods as a poor person.

Once I flunked out of college and went to work at a minimum-wage job ($4.75 an hour back then) I was poor, by definition.   I came from an upper-middle-class family (which was one generation removed from poverty) and I witnessed there how the middle-class and upper-middle-class squander huge amounts of money chasing status.   And later in life, when I became wealthier, I would make those same mistakes.   The rich don't take our money away from us, we willingly give it to them.

But what about the poor?  Certainly they don't chase status, do they?  They can't afford it, right?  Well, here's where the irony sets in.   A lot of people who may accuse you for being Elitist for saying things that are common-sense, really have no idea what it is like to be poor.   Many are academics studying poverty through a microscope in the lab.  Others are the "Limousine Liberals" who have an idea of what poverty is like, but no real clue.

The latter are convinced that people are starving to death in America, and thus will do silly things like volunteer at food banks or homeless kitchens.   They think of poverty in terms of starvation, when in reality, in America, the number one health problem among the poor is obesity.   And friends of mine who volunteered at these organizations will tell you that while there are a few "needy" people, a lot of folks will drive to the food bank in a spanking new SUV, or that the neighbors of the soup kitchen will stop by for lunch, simply because it is free - not that they need a free meal.

And people who volunteer with the homeless will tell you they are not all sainted poor (with magical powers, of course!) but rather sad people who have mental health and drug addiction issues who should be helped in an institution or shelter that can help them manage their lives.  Giving them $20 on a street corner, on the other hand, is akin to giving them a loaded handgun to kill themselves with.   Again, the real elitists in the world - limousine liberals who think they know what poverty is - think otherwise.   I was stuck at a traffic light just yesterday while a man in a $100,000 Porsche gave a homeless man $10.   He would have been far kinder giving $10 to a homeless shelter (which would have been tax deductible) and four more cars would have gone through that light (and a homeless man would have one less reason to live on the street and one more reason to seek help from an agency).

What prevents us from having a rational discussion about this, is the charges of elitism and the associated shaming that many on the Left like to use.  "How dare you criticize the homeless!" they say, "Don't you know they have magical powers?  Didn't you read that quote by Gandhi about how a country should be judged by how it treats its homeless?   You heartless bastard!  You Elitist!  I simply refuse to talk with you!"

We don't get much done that way.

A reader tells me of a recent article in The Atlantic that discusses check cashing stores and payday loans.  The fellow is trying to sell a book, and in that book, he makes the point that the poor are not stupid, but making the best choice in a bad situation by using payday loans and check cashing stores.   It is an interesting argument, but by and large, I don't buy it.

The argument the author makes is that it is "logical" for a poor person to use a check-cashing store to cash his paycheck, as he needs the cash right away to pay illegal laborers.   A bank would hold his check for several days before releasing the funds, and thus a check-cashing store is his only option.   There are, however, holes in this story:
"a construction worker who stopped by RightCheck frequently to have his checks cashed, handed over a check for $5,000 for cashing, which required a 1.95 percent fee—$97.50. Servon questions why Carlos would willingly pay such a large fee—plus the $10 tip he leaves Servon"
First, I might note they understate the check cashing charges.  My cleaning lady paid $15 to cash her paycheck, until I put a stop to it (and simply cashed the check for her myself).   That a $5000  check would incur only a $97.50 fee seems kind of low.   That someone would tip their banker is just ludicrous.   If you tried that at a regular bank, you would likely be shown the door.  Tipping a teller is probably illegal.

Second of all, if he is employing people and cashing $5000 checks, he certainly isn't "poor" by any means.   I think what he is doing here is trying not to leave a paper trail by depositing checks into a checking account.   He is living under-the-table and not reporting income, and of course, hiring illegal immigrants and not paying their withholding.   Pretty sweet deal, and the cost of doing business for him is the check cashing store.   And maybe the $10 tip is intended to keep the teller silent on the transaction, should the IRS come snooping.

So, yes, if you are running an illegal business than maybe a check-cashing store makes sense, and maybe that is why so many are in poor neighborhoods where people are operating off-the-books.   But others, like my cleaning lady are not necessarily doing anything illegal (although I strongly believe she under-reported income by not declaring cash payments) but simply do not have a bank account, either out of fear of banks or because they have horrific financial records.   In her case, it was unpaid credit card bills.

For me, as a young man, it was bounced checks, which I wrote to buy beer and get cash for pot, at the local convenience store.  I was making poor choices and a lot of these were due to ignorance, inability to control my own impulses, and of course drug and alcohol use.   The latter we don't talk about much when discussing the poor and homeless, but it factors in, big time.

There is also the matter of normative cues.   At the corner of "Community" and MLK boulevards in our town are a plethora of check-cashing stores, pawn shops, and title pawn loans.   People living in the area might be lead to believe that these are normal places to do banking, rather than the outrageously overpriced deals they are.

I wised up, at least a bit, when a friend suggested I use the local credit union instead.  I signed up, had automatic deposit for my paycheck, and could access my funds through an ATM or by writing a check - provided I did so responsibly.   It took a few years to figure this out - some never do.  

At the Patent Office Credit Union, you never wanted to go there on payday, as there would be a line out the door of people "cashing" their paychecks and then getting money orders.  A person working there explained to me that these GS-2 workers didn't trust automatic deposit, so they got their paychecks in paper form.   They were not allowed to have checking accounts, because in the past, they got them and just wrote checks until they ran out of checks.   So they had to stand in line and get money orders to pay the landlord, the utility bill, the phone bill, and so forth - paying a few dollars for each money order.

This is better than the check-cashing store, of course, but not by much.   What it comes down to is not that they have no other choices, but that they tried the other choices and screwed them up.   Banks want your business, if you have self-control.  They don't want the guy with $17 in his savings account who is overdrawing it all the time.

Yes, these institutions are their only choice only because they made poor choices in the past forcing them into these bad choices today.

The other argument made in the article, with regard to payday loans, was that these "borrowers" could use a lower-interest rate credit card they had (with 20% being lower than a payday loan!) but made the wise choice not to as they knew that a default on a payday loan would not be reported on their credit.

This is an odd and ridiculous argument on a number of levels.   First of all, borrowing money is never the answer to money problems - it just makes you poorer.  And the higher the interest rate you take out, the poorer you get.   And payday loans are a one-way trip to oblivion, or at least bankruptcy.

Second, intentionally taking out a loan knowing you will end up delinquent on it makes no sense at all.  This is simply a poor choice that makes you poor.

But getting back to elitism, the author really doesn't address why these poor people (cashing $5000 checks!) are so poor.  And again, it is not because they are starving to death.  They are not getting a payday loan to buy bread for starving babies.   They are borrowing money in many cases for status.

You see, on the same corner as the check cashing stores and whatnot, is the rent to own bling rim shop  and the rent to own furniture store and the buy-here-pay-here used car dealer.  Don't forget the tattoo parlor and piercing shop!  And no, they don't "need" a clapped-out monster SUV to "commute to work in" - they are merely making bad choices to obtain status among their peers.  They could choose to make different choices.  But they choose not to.

For me, after living a decade or so in marginal living quarters, just "getting by" on my income (but having a hobby car, nevertheless, and spending a lot on weed, beer, and junk!) I decided I wanted more.   I went back to school, sometimes working three jobs at the same time, and eventually moved away to a better place with better opportunities (not to mention lower taxes).   I made different choices and pulled myself out of poverty.   Others stay down.   But it is a choice, in most circumstances.

This does not mean it is an easy choice.   And as usual, there is a Science Fiction story which helps one to understand how people can get trapped in situations like this.

Robert A. Heinlein's Logic of Empire illustrates the problems facing the very poor.   In the story, two wealthy Earthmen argue as to whether laborers on Venus are indeed slave-laborers.  One argues that their condition is akin to slavery - they have no choice in the matter and cannot buy their way out of their onerous contracts.  The other argues that harsh contract terms are necessary to prevent them from quitting on a moment's notice.

They get drunk and place a bet, that they can go to Venus and find out for themselves what the deal is.  They sign on as contract laborers, and.... well, find out that in theory you can work your way out of poverty, but in reality, it is damn difficult to do.  The fact they all get addicted to narcotics within a week of landing there is part of the problem.

And that story reflects the reality of poverty in the United States.  Yes we all have choices in these matters, but actually making these choices is damn hard to do.   Having the wherewithal to give up on smoking pot and drinking beer - and walking away from friends and family members who did - was not an easy task.  For many, this emotional decision is hard to make.  When you are immersed in a culture where poverty is the norm, it is hard to visualize a situation so unlike your own.   So you assume that people who are rich are "nothing like you" and somehow lucked out by inheriting money or whatever.

Read that story (the link is to a free online copy of it).  It sort of illustrates the problems involved.

And the author of the Atlantic piece is partially right - we should offer better deals to the poor, so they are not exploited.   The problem with that argument is, who pays for these deals?  Banks did not walk away from serving the poor out of racism, spite, or fear.  They walked away because they lost money on poor customers - lots of money.

The upshot, however, is this - pining for a change in society's rules is fine and all, but not likely to happen overnight - if it happens at all.   If we paint ourselves as helpless victims, nothing ever changes.   If enough people stopped patronizing check cashing stores and payday loans, they would go away.

On an individual basis, you have to decide what your choices are in life.   It isn't easy, but walking that extra block to a real bank, and then managing your funds down to the penny will result in a far better outcome in your life.

It ain't easy, but rewards are there for people willing to do hard things.  And do we want to reward those who don't?