One more perspective on poverty

[DeepEllumStache]

Something I learned from a non profit training session about the fancy acrylic nails, hairstyles, tattoos, fancy cars, and such...

In communities where poverty is high, there tends to be a strong barter economy.  If a woman's sister or friend has kids that need a sitter on a regular basis, the sister or friend would then do the woman's nails on the weekends in return.  Or the guy who owns a car and can give rides to the local tattoo artist may end up with intricate tattoos done at a discount.

Auto mechanics/body shop workers, tattoo artists, nail stylists, hair stylists, the guy on the block who owns a car, the lady who happens to have afternoons free to watch children, etc... they all have skills/abilities/opportunities that they can use in their spare time in a barter system.

Maybe the person with nice nails/fancy hair/fancy car upgrades/tattoos paid full price... but it's not always a good assumption that everyone did. 

[LalsConstant]

+1 to Ruby Payne's work on understanding the culture of poverty as a cause of continued poverty.

I got to see her lecture a few years ago and it was one of the most interesting talks I have ever attended.  Wthout blaming any one she laid out why socioeconomic groups behave as they do and made relational sense of much of it.

In my early twenties I really did believe we could just tax and redistribute poverty away.  But knowing more about the culture of poverty now I understand the best you can really do for people trapped in generational poverty is try to find ways to get them to challenge their own assumptions (just as I benefit from challenging mine!).

[Gin1984]

It's probably unreasonable to expect people from any uneducated area to make smart and wise decisions?  I mean sure, you get the exception but overall if it's a poor area with poor schools and nobody goes on to college, you can't expect a helluva lot of intellectual saavy.  ...Unless it's in the moment of immediate survival--I'm sure that's where the brain power is focused.  Sure there are wealthy people from affluent neighbourhoods who are just as horrible with money, but they've probably had enough math education that if they really wanted they could sit down with a calculator and create a proper budget.

Below $25,000 in income, it often does not make economic sense to earn an extra $5,000. In fact, a couple earning $25,000...

I have never understood this short-sighted logic.  Sure, you move from $25K to $30K.  Then you vie for $40K, don't you?  Onward and upward?  If you stall yourself permanently at $25K because you're afraid of making more because more will be taken in taxes, aren't you really stepping on your own dick?

It is not just taxes, though EITC makes a major difference' it is food stamps, health insurance (Which has somewhat been mitigated now), heating assistance (in colder areas), sometimes daycare assistance etc and those have a quick drop off.  If you were making $25,000 but your daycare was covered and you only paid $100/month vs $1000, plus you got your food covered so let's say $200/month, plus heating assistance in my area was $450 last year, you'd need over $1000 extra per month as a your raise to equal this.  If you got a $500 but that meant you lost all of the above, you are now losing $500/month.  This does not even get into taxes or health insurance.

[Gin1984]

I'm all for taking the kids away from incompetent or uncaring parents, fining said parents for being a pain in the ass to society, and then putting the children up for adoption to people who can afford to take care of them and want to.   Said adoption process would be simple, reasonably quick, and free of both cost and needless red tape.  (The current process is exactly opposite of that.)

And how would you fund that, given that many of the parents don't have income to take from? 

[johnhenry]

Something I learned from a non profit training session about the fancy acrylic nails, hairstyles, tattoos, fancy cars, and such...

In communities where poverty is high, there tends to be a strong barter economy.  If a woman's sister or friend has kids that need a sitter on a regular basis, the sister or friend would then do the woman's nails on the weekends in return.  Or the guy who owns a car and can give rides to the local tattoo artist may end up with intricate tattoos done at a discount.

Auto mechanics/body shop workers, tattoo artists, nail stylists, hair stylists, the guy on the block who owns a car, the lady who happens to have afternoons free to watch children, etc... they all have skills/abilities/opportunities that they can use in their spare time in a barter system.

Maybe the person with nice nails/fancy hair/fancy car upgrades/tattoos paid full price... but it's not always a good assumption that everyone did.

Very informative and thought provoking in so many ways. 

Are these folks resourceful?  Or tax frauds?  Are they participating in barter to avoid taxes/maintain benefits or because they don't have any money?  Surely the answer is some of both.

I do believe that widespread barter is more prevalent among the poor and it's easy to understand why.  Their limited supply of money in relation to their skills/abilities, combined with a regressive income tax system and motivation to keep benefits from social programs adds up to a stronger incentive for them to barter than those in the middle and upper classes.  Bartering for a $500 stereo is worth a lot more to someone making $22K a year vs someone making $75K, especially when the alternative is trying to earn (and report as income) $500 extra dollars (plus sales tax to buy the stereo), especially when you live and work in a community that doesn't have much money, but plenty of $500 stereos.

What about the construction company owner who puts a roof on his friend's 10000 sf house for a favor in return.  His company does a $30,000 job for free in exchange for a $30,000 price drop on the yacht he buys from his friend's yacht sales company.... after they go out on the yacht for the weekend and write off the expenses, since the event was for the purpose of selling the yacht.

The men with the $30000 roof or the $500K yacht don't always pay full price either.  Are these folks resourceful? Or tax frauds? 

I understand (and appreciate) your point about making assumptions that those in poverty pay full price for items.  And I guess that's important for someone to understand if their goal is to make a judgement call about whether that person is "pulling their own weight" or "spending on things they shouldn't".  That desire to judge others is just as much human nature as the desire to maximize our wealth, even if it means tax avoidance via bartering or other means. 

I'm not more perturbed by a single mom on food stamps with a nice car stereo or tattoo than I am by a man who paid $470K for a $500K yacht while his business claims all the expenses of a $30K roofing job, but no income.

At some point we have to remove the blinders and see that money is just a tax credit.  The (income and sales) taxes saved on the roofing-yacht swap is money that's just as real as the food stamps.

I'm not saying that the tax/benefit/money system we have now is fair.  I'm not trying to say this should be an issue of rich vs. poor.  I'm just saying that we need to recognize money for what it is so we can work politically towards a tax/benefit/money system that fairly sets and enforces the obligation of each of us to the group.

The sad part is not that we haven't yet achieved that fair system (which we certainly haven't), but that we aren't even working towards that goal.

[johnhenry]

I'm all for taking the kids away from incompetent or uncaring parents, fining said parents for being a pain in the ass to society, and then putting the children up for adoption to people who can afford to take care of them and want to.   Said adoption process would be simple, reasonably quick, and free of both cost and needless red tape.  (The current process is exactly opposite of that.)

And how would you fund that, given that many of the parents don't have income to take from?

My answer has nothing to do with taking kids away from parents, etc.  Only with the part about how to fund this or any government initiative.

We fund something by saying (collectively, democratically) that it needs done, then pay for it with dollars that we create.  The same way we fund building jets and aircraft carriers and paying social security to seniors.  The taxes we pay don't / can't fund any of it, because we make as many dollars as we need to pay for what we have agreed (collectively, democratically) to do.  Taxes are only tokens that measure what each of us owes to the group, just as dollars are tokens that measure the number of tax credits each of us has.  The government doesn't need our dollars, it creates those.  It needs us (collectively) to do the things that we (collectively, democratically) have decided to do.  It needs us to build jets and aircraft carriers and provide medical care for seniors and build roads and bridges.  Government doesn't tax us to pay for things.  It taxes us, and does so in dollars, to ensure that when it offers someone dollars to build a bridge or repair a highway, that it gets done.