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Why the poor pay more for toilet paper and just about everything else

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Re: Why the poor pay more for toilet paper and just about everything else

#151

Post by dnautics »

aidenn0 wrote: post #97
dnautics wrote: post #78

Earlier quoted context omitted.

I always thought credit was created by merchants to screw the nobility. If there's anything that screws the poor, it's inflation .

Inflation screws people with savings, which excludes the poorest.

it benefits people with debt, but only if the interest rate is lower than the inflation rate. Who gets loans at low interest rates? The ultra-wealthy (more collateral), and banks. Moreover, wealthy investors can take advantage of instruments (margin trading, leveraged funds, forex, shorts, options) that are debt-based instruments that exist because of low interest rates. The wealthy are more indebted than you think, but in most cases it's very rapidly able to be liquidated.

Do a simple math experiment: Imagine being poor and spending 90% of your income on day to day, inflation-sensitive expenses, versus being rich and spending 20% of income on these expenses. A 10% inflation for you means that now you are spending 99% of your income, resulting in a 90% loss in living margin. For the rich person there is only a 2.5% loss in living margin. (I picked 10% because that is an easy calculation, the effect is true at any inflation level).

Now the common retort is that wages will catch up with inflation. But is that true? If that were, why would periodically increase the mininum wage? In fact, not having wages catch up with inflation is part of liberal economic policy (it's good for employment![1]):

http://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hig...

[1] I guess one good way of keeping employment metrics high is keeping your population enchained to a moving economic treadmill that brutally nudges them toward finding employment.

Re: Why the poor pay more for toilet paper and just about everything else

#152

Post by Naritai »

tostitos1979 wrote: post #21
Naritai wrote: post #5

Earlier quoted context omitted.

To continue your point: Having the credit score to get a good mortgage. Living in a good zip code, and so your car/home insurance is cheaper. Living in a good zip code, so you can send your kids to public school. Living in a good zip code, so you don't need an expensive security system. Working for a company that provides high-quality health care plans with low deductibles. Owning a newish car, that is much less like…

I generally agree with what has been said. Except for the car part. I thought it was best to drive a car to the ground. I buy reasonably priced sedans for around 20K (but brand new). Full coverage car warranties seem to end after 3 years. I sold my last car at that point (it had started to give me headaches). I got about half the money back .. so 10K loss or 3333 per year. Our current car is also at 3 years and start…

How much are you driving in those 3 years? I am also referring to vehicles that cost 20-30k (the truly poor, after all, are spending 2-5k then pouring money into parts, maintenance, and towing charges) and using them for 100-200 thousand miles. Mileage is a more useful indicator of car age than model year, though, so I can't directly comment on your situation. A 3 year old Honda civic with typical mileage would have maybe 60k miles on it after 3 years, and would still maintain a lot of its original value (my guess would be ~75% of its original value).

Re: Why the poor pay more for toilet paper and just about everything else

#153

Post by redblacktree »

zo1 wrote: post #121
tostitos1979 wrote: post #21

Earlier quoted context omitted.

I generally agree with what has been said. Except for the car part. I thought it was best to drive a car to the ground. I buy reasonably priced sedans for around 20K (but brand new). Full coverage car warranties seem to end after 3 years. I sold my last car at that point (it had started to give me headaches). I got about half the money back .. so 10K loss or 3333 per year. Our current car is also at 3 years and start…

Go second-hand for one of the luxury brands that provide warranty/motor-plan for 5 years. Most of that "loss" is in buying new, instead of second-hand. If you don't mind it, and sell it while it's still in the plan, your 'cost-of-ownership" per year is actually quite good. Might even be better than if you were to get a "low-end" sedan new.

> Most of that "loss" is in buying new

You know, people say that, but I found it really hard in practice to buy a nearly-new car. When they are available, the discount from new isn't that much.

Note that I'm speaking only about Toyota and Honda minivans, because that is what I was buying, but I was surprised just how little "driven off the lot" discount I could find. We ended up buying new instead.

Re: Why the poor pay more for toilet paper and just about everything else

#154

Post by redblacktree »

Lawtonfogle wrote: post #141
stvswn wrote: post #46

This analysis ignores inventory costs. Those who can afford to buy in bulk accrue a cost to holding inventory in their dwelling. This can manifest in two ways: 1) the storage space physically necessary to hold the TP and 2) the capital tied up in owning this before you need it. To put it another way, maybe poorer people can afford to buy in bulk, but in their apartments they have no place to put a gigantic package of…

The space issue seems to be a non-issue until you scale up to multiple bulk products. Unless you are talking about people living in either a shelter or the housing units that are basically a bed and everything else is communal.

It's nonsense even with multiple products. At scale, yes, inventory costs make a huge difference. Practically, for most Americans anyway, there is storage room in your place for bulk products.

We have what I like to call a "general store" in our basement that takes up two shelves full of several bulk products. (perhaps 10-15 different products, some small, some not) We're talking about a space that might be 2.5 ft on a side, 1 ft deep. Hardly a ton of space that will require additional capital "tied up in owning this before you need it."

In Tokyo? Sure. In the US? Not so much.

Re: Why the poor pay more for toilet paper and just about everything else

#155

Post by aidenn0 »

dnautics wrote: post #151
aidenn0 wrote: post #97

Earlier quoted context omitted.

Inflation screws people with savings, which excludes the poorest.

it benefits people with debt, but only if the interest rate is lower than the inflation rate. Who gets loans at low interest rates? The ultra-wealthy (more collateral), and banks. Moreover, wealthy investors can take advantage of instruments (margin trading, leveraged funds, forex, shorts, options) that are debt-based instruments that exist because of low interest rates. The wealthy are more indebted than you think,…

Let's play a game: you loan me money at 10% interest.

Now, am I better off with 9% inflation or 1% inflation? Clearly the former, despite it being lower than the interest rate.

Similarly, I deposit funds in a CD with 3% interest; am I better off with 4% inflation or 9% inflation? Clearly the former despite it being higher than the interest rate.

Re: Why the poor pay more for toilet paper and just about everything else

#156

Post by [deleted] »

setra wrote: post #8
ars wrote: post #6

"One possible solution is that retailers could consider pushing their deals to the beginning of the month." I wonder is she realized what she was saying/implying by writing that. She's basically saying "the poor can't be trusted to save their money, so help them spend it well, before they waste it [later in the month]".

They basically can't. Time preference is linked in many many studies with all kinds of properties we deem good.

[deleted]

Re: Why the poor pay more for toilet paper and just about everything else

#157

Post by stvswn »

redblacktree wrote: post #154
Lawtonfogle wrote: post #141

Earlier quoted context omitted.

The space issue seems to be a non-issue until you scale up to multiple bulk products. Unless you are talking about people living in either a shelter or the housing units that are basically a bed and everything else is communal.

It's nonsense even with multiple products. At scale, yes, inventory costs make a huge difference. Practically, for most Americans anyway, there is storage room in your place for bulk products. We have what I like to call a "general store" in our basement that takes up two shelves full of several bulk products. (perhaps 10-15 different products, some small, some not) We're talking about a space that might be 2.5 ft on…

There's not room in my two-bedroom house in Silicon Valley for bulk versions of normal staples. I do not have a basement or attic. I have two closets; one has my clothes in it, the other is full of my daughter's baby stuff. Toilet paper gets stored under the sink in the bathroom. Does it seem insane to you that I don't have space for bulk toilet paper buys? That I'd actually consider storage space during these types of purchases?

Congrats on your basement, do you think apartment dwellers have basements?

Re: Why the poor pay more for toilet paper and just about everything else

#158

Post by redblacktree »

stvswn wrote: post #157
redblacktree wrote: post #154

Earlier quoted context omitted.

It's nonsense even with multiple products. At scale, yes, inventory costs make a huge difference. Practically, for most Americans anyway, there is storage room in your place for bulk products. We have what I like to call a "general store" in our basement that takes up two shelves full of several bulk products. (perhaps 10-15 different products, some small, some not) We're talking about a space that might be 2.5 ft on…

There's not room in my two-bedroom house in Silicon Valley for bulk versions of normal staples. I do not have a basement or attic. I have two closets; one has my clothes in it, the other is full of my daughter's baby stuff. Toilet paper gets stored under the sink in the bathroom. Does it seem insane to you that I don't have space for bulk toilet paper buys? That I'd actually consider storage space during these types…

I'll bet that you could find the space if you were creative. Also, I'm not saying that storage space isn't considered, only that it isn't a "capital investment" when we're talking about a relatively small amount of space. How many square feet? I bet there is a corner where you could put a shelf.

Re: Why the poor pay more for toilet paper and just about everything else

#159

Post by Lawtonfogle »

stvswn wrote: post #157
redblacktree wrote: post #154

Earlier quoted context omitted.

It's nonsense even with multiple products. At scale, yes, inventory costs make a huge difference. Practically, for most Americans anyway, there is storage room in your place for bulk products. We have what I like to call a "general store" in our basement that takes up two shelves full of several bulk products. (perhaps 10-15 different products, some small, some not) We're talking about a space that might be 2.5 ft on…

There's not room in my two-bedroom house in Silicon Valley for bulk versions of normal staples. I do not have a basement or attic. I have two closets; one has my clothes in it, the other is full of my daughter's baby stuff. Toilet paper gets stored under the sink in the bathroom. Does it seem insane to you that I don't have space for bulk toilet paper buys? That I'd actually consider storage space during these types…

I have an apartment. I keep the toilet paper at the bottom of my closet. I keep a bulk supply of paper towels in the corner of the kitchen area. I have plenty of places where I can put bulk items. It would look cluttered, messy even, and it would put things where they wouldn't normally belong, but I could do it. But even if I had less space, I could still have space for the most common bulk items. (Now if I had a pet I had to keep the items away from, that would be another issue.)

Re: Why the poor pay more for toilet paper and just about everything else

#160

Post by JoeAltmaier »

stvswn wrote: post #46

This analysis ignores inventory costs. Those who can afford to buy in bulk accrue a cost to holding inventory in their dwelling. This can manifest in two ways: 1) the storage space physically necessary to hold the TP and 2) the capital tied up in owning this before you need it. To put it another way, maybe poorer people can afford to buy in bulk, but in their apartments they have no place to put a gigantic package of…

Also, if you don't have a car, bringing home that 48-pack of toilet paper on the bus may be a problem.
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