Friday, April 12, 2019

Waiting for Social Change to Solve Your Personal Problems

While social changes may or may not be a good idea, waiting for them to occur, rather than take action in your life is a poor life choice.

Elizabeth Warren is a good person, despite her obvious flaws.  While claiming a spurious Native American heritage is a bad thing, it is hardly on the level of things our President has done.  Regardless of that, I think she would be a great asset in the Senate, where she is needed, rather than losing to Trump in a Presidential race in 2020.

Warren has pushed for a consumer protection agency, which the Republicans have systematically gutted since Trump took office.  What we are seeing is the collision of two social philosophies.  Republicans believe that people should be free to make shitty choices in life.   They believe this because many of their supporters own odious businesses that are predicated on customers making shitty choices - leasing cars, payday loans, check-cashing stores, rent-to-own furniture, buy-here-pay-here used cars and so forth.   While many today laud Mitt Romney as a voice of moderation, we should not forget that he made his fortune buying ailing companies, stripping them of their assets, gutting pension plans, and leaving the pensioners destitute while he raked in millions in fees.

The other half of Republican support is so-called "Libertarians" which suffer from a form of mental illness in believing that civilization itself is a really bad idea.   These are people who spend a lot of time in their basements, on their computers and polishing their guns, pining for the day when they will be in charge.   Of course, what they don't realize is they would likely be the first to be gunned down in their libertarian paradise.   An armed society is a polite society, and libertarians are rarely polite.  Libertarians believe that everyone should be allowed to do what they want - including signing their life away into financial slavery, if they are dumb enough not to read the fine print.

Oddly enough, there are many liberals who support some of these odious deals as well.   You do read articles occasionally in the "liberal media" about how the poor are "forced" to use payday lenders to "tide them over" until their next paycheck.  These articles imply that without these odious deals, the poor would have no other choices, and thus starve to death.   Maybe I am out of line here, but somehow I think they would be better off not borrowing money at 300% interest.   But then again, I studied math, even though it was "hard".

When I was a kid, of course, none of this stuff was legal.  No lotteries, no casinos, no payday lenders, no check cashing stores, no buy-here-pay-here used cars, no rent-to-own furniture, nothing.  Even car leases were very rare, and usually limited to businesses who wanted to write off the cost of a lease rather than amortize the purchase of a vehicle.   So my Dad's company car was leased by the company.  And sometimes the fleet of delivery trucks might be leased as well.   But leasing as a  personal choice?   It simply didn't exist.

It took the better part of 50 years for society to change from that to what we have today.   The high interest rates of the 1970's forced States to abandon usury laws that limited interest rates.   When rates came down - to their historic lows today - these limitations were not reinstated.   And that is the irony of it - in an era of super-low interest rates, many people are paying super-high rates.   You can get a mortgage today for about 4%, but your credit card may be at 22% or more.   And the poor, getting caught up in really raw deals, end up paying effective rates of over 100%.   It makes no freaking sense whatsoever.

Like I said, it took 50 years to get here, it may take 50 more to get back - if ever.   In order to change back to the way things were, we'd have to have liberal Democrats (not just regular ones) take both houses of Congress and have Elizabeth Warren elected President.   I think the odds of this are long, less than 1 in 5, perhaps far less.   The problem is, while Warren and other Democrats might run on a platform of financial reform, the GOP would run on a platform of abolishing abortion and gay marriage.

Guess which party the person with the payday loans is going to vote for?   Yup, those same poor blacks in the ghetto getting payday loans are also attending fundamentalist Baptist churches, whose preachers tell the parishioners the reason for their misfortune isn't the payday lender taking all their money, but God's wrath upon them for allowing abortion and gay marriage.   Oh, by the way, please put 10% of your income in the collection plate as a tithe.  My Mercedes lease is almost up!

Lest you think I am being racist, the same effect plays out in more rural areas.  The poor white trash in the trailer park - who is also victimized by predatory lenders - attends a conservative, Bible-thumping, (wait for it) Baptist church.   Same shit, different race.   And they are selling the same line of bullshit - that social issues (not economic ones) are the most important thing on the ballot every November, and pay-no-attention-to-the-man-behind-the-curtain.

So long as the poor vote against their own self-interest, they will remain poor.   An interview with a barber in a black barbershop in Milwaukee is a case in point.   The man postulated he wasn't going to bother to vote at all in the 2016 election.  "We had 8 years of Obama, and he never got me a 401(k)!" the man opined, apparently forgetting what a self-funded retirement account is all about (as a proprietor, a Simple-IRA might have been a better choice, but again, this isn't something given to you, but something you have to set up yourself.   You do get a tax deduction, though).

You can't fix stupid, and so long as people make stupid choices, they will remain poor.   As I noted in many earlier postings, often the loudest voices defending payday loan places are their own victims.  They would howl the loudest if you shut down their abusers, just as a beaten wife will stab the cop who puts her abusive husband in handcuffs - which is why a "domestic" call is often more dangerous to answer than an armed robbery.

It seems an anathema, but there is a bit of perverted logic to it, as I noted before.   The poor feel intimidated by going to a bank or conventional lending institution.  At the bank, all of your past transgressions will be dredged up and examined, and you will be called into account for it.   Your meager pay will be ridiculed, and likely you will be turned down for a loan, as banks don't (or they didn't used to, anyway) take on high-risk borrowers at high rates.   At the payday loan place, however, they are treated nicely and no one is turned down for a loan!   They are kings there - they own the place, so they think.   It is all psychology, and poor psychology at that.

But getting back to social change, waiting for it to change your personal life is idiotic.   Sure, you should advocate for social economic change, and you should vote for it as well.   But many people use lack of social change as an excuse for failure and an excuse to not even try in life.  And I know this as I had friends who engaged in this, family members who engaged in this (and still do so) and even I did this when I was young and stoned all the time.   You sit around smoking pot and grousing with your like-minded friends that the system is stacked against you, so why bother trying and pass the bong, please?

There is another aspect to this as well, and perhaps one where the libertarians are just a teeny-weeny bit right.   People do make choices in life, and in order for these odious consumer finance deals to exist, people have to willingly seek them out and accept them.  They have to sign on the dotted line instead of leaving their pen at home.  It is a supply-based business, and if the supply of borrowers evaporated overnight, every payday loan joint in the country would go bankrupt the next day.

But they don't, because people are idiots, or more precisely they are uneducated, can't do math (because it is "hard") and are impulsive and want shiny trinkets now and don't think about paying later.  The rent-to-own bling rim store is a classic example of this - people mortgaging their future to put $1000 worth of shitty Chinese-made rims (that bend the first pothole you hit) onto a car worth $750 on a good day.  And again, lest you think I am being racist, the white-trash trailer-park Baptists go to the same store and put the same crappy rims on their pickup trucks.

And lest you think I am just bashing blacks and whites, the Hispanics are in on this as well, taking a functioning pickup truck and relieving it of its function by putting rims that stick out a foot past the wheel wells, shod with "gumball" tires with no tread or useful carrying load.   And yes, they also go to the Baptist churches, which have been recruiting like mad in that demographic (a friend of mine works for the Catholic church is in an outreach program to bring them back into the fold - they are alarmed at the success of these protestant fundamentalist "Inglesias" in recent years).   Again, same shit, different day - poor people making poor choices, and one of those poor choices is to vote for politicians who are against their financial interests, but promise social changes in terms of abortion and gay rights.  Kind of hard to feel sorry for them, eh?

The common denominator, of course, is lack of financial education.   Many have raised the alarm (as I have as well) that we simply are not educating young people about finances anymore in this country - again, something that did happen when I was a kid, and over 50 years, has been eroded by design.  Yes, those same Republicans have labored hard to strip school funding and limit education to "Readin', Ritin', and 'Rithmatic" - but apparently not spelling or punctuation.  And in terms of 'Rithmatic, they don't want people doing financial analysis of a payday loan, but mere rote memorization of multiplication tables (Jethro's "ciphering") and not much else.  They want people to be afraid of math as something that is "hard" and has no real application in life.  Because if all they understand about math is that it is to be feared and amounts to little more than memorization of useless formulas or tables, they won't be able to think critically about things like loan terms.

Of course, Republicans want more than just the "Three R's" taught in school.  They also want the "Big B" - the Bible - taught, preferably from a conservative protestant perspective.  Yes, the fucking Baptists rear their ugly heads once again - doing more than just closing the liquor stores (and chicken sandwich outlets) on Sunday.  But I digress.

So, teaching financial literacy in school would be a good thing, but good luck with that.  Because to do that, you'd have to elect liberals to every school board in the country - starting with Texas.   Yes, Texas.   You see, in order to sell textbooks in America, you have to be able to sell them in the largest State in America, and the Texas Board of Education sets the standards for school books in Texas, and by extension, in all of America.   Is it any coincidence that Kennedy was shot from the Texas School Book Depository?   Seems too coincidental to me!   I am just kidding.  We don't truck in conspiracy theories here.

So what does that leave?  Maybe a series of public service announcements to try to teach people that payday loans and check-cashing stores are a rip-off? How about some investigative reporting showing these things are scams (and not some weepy piece from the Times or the Post arguing that the poor have no other choice and the only alternative is massive welfare infusions)?   There is a problem there as well.

You see, these are very wealthy and entrenched businesses.  They advertise on television, online, and in the papers.   You can't do a piece about how shitty the payday loan company is, when it is one of your major advertisers.  As a reporter, you'd be shown the door.   You can't even do a piece on how shitty lease deals are - when General Motors, Ford, Chrysler, Toyota, et al, are you largest advertisers in every form of  media.

So there is really no way to educate or "warn" people away from these shitty deals. The whole deck is stacked against them, and society provides poor normative cues that getting shitty deals is "normal".  At the corner of Martin Luther King and "Community" Boulevards in my small down is a huge billboard, high in the air, with the image of a smiling young black girl waving a fan of $20 bills, exhorting people to visit the Payday Lending Shop.   You could be her - happy and with all that money!   No mention is made of the payback.

Well, one is.  A block away is another billboard (billboards is one thing they do well in Georgia - well do a lot of, anyway) that proclaims, "Ripped off by a Payday Lender?   Go to our Payday Lender and get a new loan to pay off your old Payday loan!"   Yes, there is a lot of money to be made taking a second bite at the apple.  Just as a plethora of MLM schemes advertise to those ripped off by other MLM schemes ("Ripped off by an MLM scheme?  Try ours, it's legit!"). You see how hard it is to educate people.

Oh, right, MLM schemes.  Something else aimed at the poor that the poor will defend vehemently as a good deal, that is, until they are bankrupt.  At that point, they whine, "why didn't anyone warn me?" and then get depressed and sign on to the next odious deal to come down the pike.

So what does that leave?   Well, we can sit in the corner weeping profusely at the futility of life and how unfair things are.  That won't accomplish much.  We can vote for Bernie Sanders or Olivia O'Malley-O'Cortez, who both promise to convert our country into a socialist paradise.   That won't accomplish much, either.   Replacing one set of radicals with another isn't the answer.   And we know this because we saw how rightests and leftists not only screwed everything up, but slaughtered millions of people.  Hitler or Stalin, the net effect was the same.

There are other options, however.

Rather than pining for social change, we can change our own lives and change society from within.  We can refuse to accept shitty deals and refuse to be cowed by them.   We can take action in our own lives and get ahead, rather than settle for depression, debt, and a string of shiny trinkets (often parked in our driveway).  We can shout down these shitty deals instead of nodding our heads when a friend or neighbor recounts what a great deal they got on a lease, home equity loan, rewards card, or reverse mortgage.   Maybe we can't change the world, but we can change our little corner of it.

And that, in simple, is why I started this blog.  I didn't expect anyone to read it.  I wasn't trying to become the next "Sooze" Orman and line my pockets with sponsorship money, or be the next "Mr. Money Beard" or "Financial Kung Fu" and establish an online brand and become an "influencer."  Oh, by the way, if you "follow" a paid "influencer" you are a fucking moron.  Just saying.  Of course, it often is hard to tell if they are paid or not - but most times, not that hard.

No, rather, I was just trying to get my own head in the right place.  And over the years, I realized I was being lied to, by the television (which I turned off) and the media and society as a whole.  I was taught from birth that debt was great because it was deductible and how "everyone does it."   And I was encouraged to wallow in depression and not try to get ahead.   And almost too late, I finally figured it out - or mostly.   I still fall down the ladder sometimes, making mistakes, buying foolish things, not saving my money, not watching out for myself, and getting taken in by the marketers.   But I've made progress.

And in the process, I have tried to shout down these raw deals in this blog, but met with much resistance.  Resistance not from the payday lenders or the car dealers, but from their customers.  Back when I had comments enabled, I would receive flames from folks who defended co-signing loans or leasing new cars every three years.   And yes, they just co-signed a loan or leased a car, and didn't like the nagging idea that maybe they just made a huge financial mistake that they cannot possibly extricate themselves from.

That was an educational experience for me - and made me realize that I too, was defending bad financial habits over the years, because I didn't want to hear hard truths.   I spent a lot of money on cars, making arguments (to myself) that if I maintained them well, I could beat the depreciation curve and come out ahead - getting 300,000 miles out of a car and beating the system!   What I learned was, a car kept in pristine condition, after 15 years, is worth only a pittance more than one in average condition, which in turn, wasn't worth much more than one in poor condition.

I still spend too much on cars - like most Americans do.   We have two, but probably only need one.   It is a nice luxury, but really an unnecessary expense.   Even with "low miles" they depreciate every day.  In fact, I am probably spending $17 a day in depreciation on two vehicles right now (it declines every day, of course) which would be easily cut in half by having only one.   I kid myself that I can afford it.

But that is a personal choice I am free to make.  And I can change my situation by making different choices.   It would be nice if society would change to suit my tastes and to improve my financial situation - but it ain't likely to happen anytime soon.  And the changes offered by the current administration - tax cuts, rate cuts, regulatory cuts - are only "goosing" the economy a few more years to delay the next recession, which will be made worse by the staggering national debt and rampant inflation.   And yes, I can't change that.  I can vote, and I can make personal financial decisions to ameliorate risk over time.  But Bernie Sanders isn't going to bail me out - nor will any politician for that matter.

Pining for social change to solve personal problems is just... idiotic.