One of the surprising things about poverty, to those who've never experienced it, is how damn expensive it is. One of the advantages of being fairly prosperous and credit-worthy is that corporations compete to be able to sell you things, driving down prices and driving up quality, while the poor make do with whatever they can find.
Neal Pierce does a fine job of laying out this dilemma in The High Cost Of Being Poor: Fighting The "Land Sharks'':
"Poverty is not just miserable, it's actually expensive, the Annie E. Casey Foundation asserts in its "KidsCount" report. The foundation documents how every outlay -- from food to rent to loans to health coverage to check-cashing or a car for commuting -- is likely to cost you an arm and a leg more if you're a low-income American.
"Some of the conditions can't be fixed quickly -- food prices up to double suburban rates in some inner cities that have been deserted by supermarkets, for example. Or rents so high that more than 5 million families are now obliged to spend over half their entire incomes for shelter.
"But there's a depressingly long list of predatory fiscal devices that have ballooned in number since 1990. Collectively, they're ripping off low-income America, trapping millions of poor Americans in permanent, high-cost indebtedness."
Pierce then goes on to talk about subprime mortgage-lenders, check-cashing outlets, payday loan shops and other businesses that prey on the poor. One solution he discusses is Centers for Working Families, a foundation-led effort to create one-stop shopping for services for the poor:
"CWFs build on past and existing models of neighborhood service delivery by combining the benefits of co-location, universality and service integration found in one-stop employment and social services centers, with the sense of membership and community involvement fostered by union halls and settlement houses, with the trusted one-to-one relationships nurtured by staff of family resource centers. CWFs will incorporate the various strengths of these models, but will also integrate new functions that support families."
"Every 'First World' city has in it a Third World city of infant mortality,
malnutrition, unemployment, communicable diseases and homelessness.
Similarly, every 'Third World' city has in it a First World city with high finance,
fashion, and technology."
one wonders if there aren't more innovative models which could be used to redistribute the future, to provide greater leverage to people in the developed world who face problems not all that dissimilar to those faced by people in the developing world? If the financial and infrastructural systems in which the North's poor find themselves don't serve their needs, is not their situation in some fundamantal way not totally unlike that of the South's poor, who have no access to those systems to begin with? Might not there be some interesting lessons to pass back and forth, especially as communities in the South begin to leapfrog?
In other words, there's a lot of debate out there about how new technologies and new models are changing the game for many in developing world -- but is any of what's being learned applicable to poor people here?
I'm sure somebody much smarter than me thought of this long ago. Ideas for further research? Suggestions for models or noteworthy efforts? Anyone got the killer link?
I always feel a little angry and a little depressed whenever I pass a check-cashing clip joint or paycheck loan place.
The ultimate solution is for wages on the low end to rise to the point where working people don't need those places.
I haven't yet read up on CWFs but I don't really see a huge advantage to consolidating services to the poor (maybe it saves them a few minutes of walking from shark shack to shark shack). Furthermore, to claim that service integration will help to foster a sense of membership and community involvement sounds like a leap of faith to me.
I don't mean to sound negative or suggest I would oppose CWFs - I just don't understand them completely, so I don't see how they are advantageous to the poor.
It seems to me that poverty in these areas can be solved by traditional means: More taxes on the rich, fight tax evasion, raise minimum wages, build public infrastructure. Plain ol' redistribution.
No one is forced to use a pay day loan place or a check cashing place. They exist for convenience and for people who spend their money before they've earned it. There's no reason at all why these places would thrive unless many people chose not to manage their money properly. I have been dirt poor, have gone without food regularly, and have worked myself out of it. Was I lucky? Of course. Did I rush to the pay day loan place so I could buy new rims for my car? No. Did I go to a check-cashing ripoff place? Sometimes, when I felt I could afford the convenience. However I never used the excuse that I had no choice, because I certainly did. The question is, can and should we try to force people into making better decisions?
Chris, I ended up out of work for a lot of last year. I ended up having to stay with friends (and out of work for 10 months of 2003).
My previous bank would not let me close my account because there were still EFTs that had not been stopped. Some of the companies I had mistakenly allowed to set up EFTs refused to let me stop them (one was an internet service provider, the other was a gym). I tried to open a new account, but my previous bank has me listed in some database as "account closed due to NSF" so I cannot open a new bank account until I pay them about $600 (I tried and was told to pay off the old bank or get lost). My current job uses a small bank that is not open on Saturday and is about 30 miles away from work/home and the route between (I leave the house at 6:30am to get to work on time and get home about 7pm, taking a long lunch is not allowed). As a result, I am stuck using those check cashing stores until I can pay that bank for the charges I would never have had to pay, had I been allowed to close my account. Convenience? Nope. Ripoff? Yes. Will I ever let EFTs go on, should I ever get to open a new bank account? Never.