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Why Do People Stay Poor? [pdf]

sticerd.lse.ac.uk

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Re: Why Do People Stay Poor? [pdf]

#171

Post by varjag »

DubiousPusher wrote: post #145
ip26 wrote: post #136

Earlier quoted context omitted.

you [...] can't afford maintaining them Not sure I can entirely agree, when I was broke I had a fair amount of free time and I spent a lot of it learning to repair motor vehicles. Parts are not free, but labor & markup is most of the cost anyway.

> when I was broke I had a fair amount of free time How did you manage this? I was working my ass off just to keep the bills paid and doing chores to avoid costly services like dining out and maintenance.

Broke and poor are different circumstances, usually amounting to coming from a family or social circle which ain't really poor.

A college student can be broke, but a poor person can not afford to be a college student.

Re: Why Do People Stay Poor? [pdf]

#172

Post by credit_guy »

arcticbull wrote: post #150
missedthecue wrote: post #146

Earlier quoted context omitted.

Why have the poor gotten richer over time then? We don't have the same percentage of rich and poor as we always have had.

I think what you've identified is that the poor have gotten better off due to technical innovations reducing the price of basic goods and enhancing their functionality -- while on average wages have tracked inflation. This is a systemic improvement. Meanwhile, the rich have gotten exponentially richer, as public policies have shifted ever more in their favor. For much the 1900s the top income tax bracket in the US wa…

> The poor have gotten slightly better off, the wealthy have gotten dramatically better off, and the gap between the two has widened.

That's a fairly common perception. Most often summarized in "the rich get richer, the poor poorer" (at least on a relative basis).

I was born in a Communist country, and I have another perception. Poverty has different levels. The most abject poverty is when you go hungry. My family didn't experience that, but we experienced the next step: severe food rationing. War-style rationing in peace times. 90% of the population in my city being subjected to that (the elite party members were not, obviously). My parents driving to a neighboring city to be able to buy potatoes and onions. My kids nowadays spend too much time on iPads and Xbox, I was spending too much time waiting in line to buy bread.

And I can only guess that there were hundreds of millions like me in all the Communist world (China included). For the most part this type of poverty has been eradicated.

I for one celebrate that.

Re: Why Do People Stay Poor? [pdf]

#173

Post by petra »

SilasX wrote: post #166
jfrunyon wrote: post #143

Easy answer: because expenses are higher for poor people. Instead of buying a home, the lower class rent their whole life. Instead of their daddy giving them a home, the middle class pay interest on a mortgage most of their life. Instead of buying a 20-pack of $necessary_product that costs $20 and will last for months, the lower class buy a 2-pack that costs $5 and lasts a couple weeks because they need the $15 to pa…

If so, turn it into a perpetually profitable self-funding charity that fronts the poor the money to get the cheaper option in return for a cut of the savings. It's probably not possible because there are factors other than what you described.

In Israel in the 60-80's the state created "rent to own" housing projects for poor people.

It worked pretty well.

Re: Why Do People Stay Poor? [pdf]

#174

Post by bmmayer1 »

Here's a better question: how do people become rich?

Being poor is table stakes for being a human animal. The miracle of modern society is that billions of people aren't poor (as high as 90% according to Hans Rosling[1]). How did we make that happen? How do we make it happen for everyone?

[1]https://ourworldindata.org/grapher/distribution-of-populatio...

Re: Why Do People Stay Poor? [pdf]

#175

Post by paulpauper »

marcosdumay wrote: post #110
paulpauper wrote: post #98

Why does every econ paper these days read like a high-energy physics paper? I feel like I am reading about field theory, not econ.

Hum... What exactly did you expect? It has a simple stochastic model and some statistics for verifying if the real world agrees with it. You are deluding yourself if you think one can study economics without advanced statistics.

so how does one account for early economics writing being light on math. Were economists Adam Smith, Hayek, and Ricardo deluded because they did not know advanced stats?

Re: Why Do People Stay Poor? [pdf]

#176

Post by wahern »

jcun4128 wrote: post #124
e40 wrote: post #117

Earlier quoted context omitted.

Ever read the Zine from the 90's called Dishwasher ? That is my favorite Zine of all time. I absolutely loved it.

I have not read that. There is something nice about dishwasher jobs because they're high turnover rate/low barrier to entry/can get hired pretty quickly. Granted in some cases I had to go through some application process eg. take a quiz on running over 2 people or 1 on train tracks, etc... but yeah. I'm hoping at least by now, I have enough "value" as a developer to be able to worst case freelance hourly or something…

Have you heard of Dishwasher Pete? Many people, myself included, seemed to have learned about his zine after listening to one of his memorable public radio appearances:

https://www.thisamericanlife.org/102/road-trip/act-one-0

https://www.thisamericanlife.org/115/first-day/act-one-0

https://www.npr.org/templates/story/story.php?storyId=109915...

https://en.wikipedia.org/wiki/Dishwasher_Pete

NOTE: This American Life audio didn't seem to work in Chrome, even after disabling uBlock Origin.

Re: Why Do People Stay Poor? [pdf]

#177

Post by ChrisLomont »

arcticbull wrote: post #150
missedthecue wrote: post #146

Earlier quoted context omitted.

Why have the poor gotten richer over time then? We don't have the same percentage of rich and poor as we always have had.

I think what you've identified is that the poor have gotten better off due to technical innovations reducing the price of basic goods and enhancing their functionality -- while on average wages have tracked inflation. This is a systemic improvement. Meanwhile, the rich have gotten exponentially richer, as public policies have shifted ever more in their favor. For much the 1900s the top income tax bracket in the US wa…

>For much the 1900s the top income tax bracket in the US was over 80%,

Top tax is not the same as effective tax rate. For example, when Reagan lowered the top brack from 50% to 37% while also closing taxable shelters,the amount the rich paid actually went up.

The CBO has all this type of data.

>This is a result of social policy.

It's more the result of changes in the world economy. Computers have made skilled jobs vastly more productive, while unskilled like making burgers or painting exteriors have not seen anywhere near the gains.

And as the rest of the world is catching up quickly to first world quality of life, the advantage the poor in the US had on the world labor supply is much less.

>while on average wages have tracked inflation

Only for white men in the US (and most first world countries). Poor women and minorities have seen vast gains in income over the past 40 years in the first world. The rest of the world has seen a massive gain for the poor.

Remember, the poverty line in the US is about the top 15% of incomes worldwide. Our poor are quite rich by world or historical standards. You used to be able to check this at globalrichlist.com, but it's now down. I suspect you can find this info elsewhere.

As some easy evidence to check, poverty line for a household of three in the US is $21k (and that pre-tax transfer. Post transfer is about 40k). Here's per country median incomes.

https://worldpopulationreview.com/country-rankings/median-in...

Re: Why Do People Stay Poor? [pdf]

#178

Post by refurb »

quickthrowman wrote: post #128
refurb wrote: post #102

Earlier quoted context omitted.

I'm not trying to generalize, because I know poor people who are poor through no fault of their own (and we should provide public support for them), but I also know a larger number of people who contributed to their own dire financial situation and it wasn't because they couldn't afford quality boots, it was because they over-extended themselves with new cars, a way too big house, the big screen TVs and expensive tri…

Poor people don’t go on airplane vacations or own houses. Poor people don’t have bank accounts. You don’t know poor people. You know people who live beyond their means. Poor people are in Section 8 housing or various other housing vouchers.

You know people who live beyond their means.

Right. People who lived beyond their means and ended up poor.

Or are you saying if you once had money for these things, it's impossible to ever be poor again?

Re: Why Do People Stay Poor? [pdf]

#179

Post by scruple »

ip26 wrote: post #134
imtringued wrote: post #103

Earlier quoted context omitted.

Would an electric bike close the gap? It's not as expensive as a car. It's also better for the environment and your body. A $3k car might sound like a better deal than a $3k bike but then you'd have to pay for fuel and maintenance.

If we're talking broke, we're talking $1k cars and $100-200 bicycles. My first car was $800 and I bought a few motorcycles over the years for around $400 each.

Yeah. My first car in 1996 was a Buick Century that I got for $1,000. My brother had this shitty mid-80s 2-door Pontiac Sunbird that he got for like $600 in 91 when he graduated from high school. I kept that Buick in service until 2001 when I enlisted, I don't know what happened to it after that. I got a 94 Ford Ranger, around 2003, when I needed a car again and was making some better money for around $4,000. I sold that truck to an old colleague in 2009 (he still has it today) and got a used Scion xB for $6,000, which I till have today.

It blew me away when I got that Scion. It was a steal of a deal. I was looking at used, late 90s model Civics at the time, because I needed a commuter that could do 50 miles one way with decent MPG and with something I knew that I could keep on the road, and those cars held their value so well into the late 2000s that it blew me away. People were asking $3,000-$4,000 for them with 150k-200k miles.

Today, I make something crazy like about 15x what I made in 1996, but I still have that Scion. I plan to keep it on the road for another 11 years. After all, it's a Toyota and it's given me no trouble at 150k miles. It goes to the shop for tires, everything else I handle in my garage. It's a commuter for my wife that goes about 5 miles one way these days.

My neighbors comment on it all of the time. They think it's an unsightly beater sitting in front of our ludicrously expensive homes. I thought about selling it for a while but their shitty attitudes have convinced me to keep it around.

Re: Why Do People Stay Poor? [pdf]

#180

Post by [deleted] »

ChrisLomont wrote: post #177
arcticbull wrote: post #150

Earlier quoted context omitted.

I think what you've identified is that the poor have gotten better off due to technical innovations reducing the price of basic goods and enhancing their functionality -- while on average wages have tracked inflation. This is a systemic improvement. Meanwhile, the rich have gotten exponentially richer, as public policies have shifted ever more in their favor. For much the 1900s the top income tax bracket in the US wa…

>For much the 1900s the top income tax bracket in the US was over 80%, Top tax is not the same as effective tax rate. For example, when Reagan lowered the top brack from 50% to 37% while also closing taxable shelters,the amount the rich paid actually went up. The CBO has all this type of data. >This is a result of social policy. It's more the result of changes in the world economy. Computers have made skilled jobs va…

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