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Re: This is truly scary.
Old 04-27-2007, 12:45 PM   #141
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Re: This is truly scary.

Librarians are not supposed to talk about "scoring" things. 8)
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Re: This is truly scary.
Old 04-27-2007, 12:50 PM   #142
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Re: This is truly scary.

Quote:
Originally Posted by LKH
You are twisting what I said, or at the very least misinterpreting. I have no problem with people getting rich. I just think that some folks are making it harder than it has to be for most folks to even get by.
Maybe I am misinterpreting - sorry, communication over a forum has its limits. I thought you did have a problem with people getting rich - you said they can be expected to use their wealth to the detriment of others.

Quote:
Look at the profits posted by Exxon and Chevron,...
This has been discussed in other threads. Exxon profit margin is lower than the average Fortune 500 company. Price is determined by world oil prices and supply/demand - I don't think there has been any evidence of price manipulation, just accusations. Oil is a world-wide commodity, and the Exxon share is not all that large.


Quote:
I don't think there's any evil conspiracy. But I think greed motivates companies, as in the above examples, to run prices up to where they're unnecessarily out of reach for the less fortunate.
This is tough to do in a free market. If I raise my prices to an unusually high profit margin, someone else will come in to take business away from me and still make a good profit. Only a conspiracy (illegal price fixing, etc) can alter that. Yes, greed motivates companies and people, and in a free market that is a good thing. It means we get great new products and services that require investments, risk, talent and hard work. We would not have many of those if there wasn't an attractive risk/reward ratio (the *chance* to get 'rich').

Quote:
I am not proposing a maximum standard of living. I think I've made that abundantly clear. I am proposing a MINIMUM standard of living
I thought you were through your statements of distrust of the rich. OK, so what minimum would you suggest? You mentioned $14K/year (~$7/hr) is too low for an adult full time worker. 1.5x that? 2x?

-ERD50
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Re: This is truly scary.
Old 04-27-2007, 01:01 PM   #143
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Re: This is truly scary.

If you had a minimum wage of $7.25 an hour, plus earned income credit, and health care coverage, I could live with that. Index it to inflation as well.


You folks should read the book Black Swan and tell me if it is worth reading. I am on a waiting list. http://www.amazon.com/Black-Swan-Imp.../dp/1400063515 It talks in part about how many things are really distributed on an L-shape curve (such as wealth) but people tend to think we are all sitting on a bell shape curve.
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Re: This is truly scary.
Old 04-27-2007, 01:19 PM   #144
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Re: This is truly scary.

Quote:
Originally Posted by LKH

Quote:
Originally Posted by lets-retire
Considering the top 20% only have a median net worth of about $190,000, including the value of their home,...
LKH: The NORMAL person, my friend, has an average IQ of about 100 and a high school diploma. The NORMAL person with that skillset and intellect, my friend, has almost ZERO chance of making that kind of money, no matter how determined or motivated he is.
Almost ZERO chance? The data does not agree with you. From that earlier ref: http://www.census.gov/prod/2003pubs/p70-88.pdf

Median Net Worth by Type of Household and Age of Householder: 2000

Married-couplehouseholds... 55 to 64 years... $172,425

So, the normal (median) person (as part of a married couple - which is probably also pretty normal) *is* actually getting into that $190K ballpark. Half in that group have a NW above $172K, pretty safe to say some significant number will be around $190K.

And, remember, that is what they are actually *doing*. As lets-retire points out, a little attention to LBYM, no credit card debt, and saving an extra $50 or $100 a month would go a long, long way towards increasing that number.

Quote:
You forget that "middle class" and "average" income figures are skewed a bit by that top 20%. MOST people aren't living as well as those numbers suggest.
That is why we use median figures - half are above half below. Bill Gates and Warren Buffet might skew an average, but probably would not move the median by a thousandth of a penny.

I'm not so sure the 'normal' person is as doomed as you make it sound.

-ERD50

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Re: This is truly scary.
Old 04-27-2007, 01:29 PM   #145
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Re: This is truly scary.

Quote:
Originally Posted by Martha

You folks should read the book Black Swan and tell me if it is worth reading. I am on a waiting list. http://www.amazon.com/Black-Swan-Imp.../dp/1400063515 It talks in part about how many things are really distributed on an L-shape curve (such as wealth) but people tend to think we are all sitting on a bell shape curve.
Martha, I read Taleb's earlier book 'Fooled by Randomness'. He talks about the black swan events. Written in a bit of a story-book fashion, he tells the tales of some traders and how their success was just a combination of aggressive trades and luck, until they get hit by a 'black swan' event. The 'good ones' are just the result of 'survivorship bias'. You don't hear about the ones that went broke along the way.

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Re: This is truly scary.
Old 04-27-2007, 04:33 PM   #146
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Re: This is truly scary.

Quote:
Originally Posted by LKH
Let me reiterate that NOBODY HERE is arguing for wealth redistribution. ....

Seriously, if only 1% of the people control 30+%, and the top 20% own 81% of the nation's wealth, then can it be argued that the "average" person controls the "average" amount of wealth? It can't. Basically, 80% of us have to share the last 20%.
LKH, I've been noodling on this, and I think I'm learning just why the wealth is distributed the way it is. Your seemingly attractive idea that the average person control the average wealth just won't work mathematically. Unless you really do want to limit the reward of the risk takers, or starve the bottom of the rank. I understand Martha's reference to the 'L' shaped distribution of wealth. It makes sense. Try this:

Picture a town with just 100 people. The average net worth is $100,000, so the total wealth of the town is 100 x $100,000 = $10M. Your approach means that person #50 has a NW of $100,000.

You agree that the most innovative(say 5%), the ones that will create businesses and jobs and create wealth deserve a bigger slice of the pie. But every extra $ we allocate to them, has to come from the bottom group, so that #50 can stay at $100K. I found that it is pretty hard to reward the risk takers, and give some incremental boost to say ranks 6 through 25 (maybe these represent 'professionals', or other people with special skills), and a boost to ranks 26 through 50 (above average productivity workers) without running out of money for the bottom half!

So an 'L' shape makes sense. Less than average for the average. That leaves some to allocate to the bottom so those people don't starve, and some to reward the top performers. And, I'd say the human 'talent pool' is 'L' shaped also - so it all fits. The few most talented in a group are generally far and away more talented than the average person. I think this applies to wealth creators. I know plenty of people that are competent workers, but very, very few that could go out and really create a successful new business model.

If we are not willing to reward the risk takers, that usually has dire consequences for the worker bees - no new jobs.

-ERD50
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Re: This is truly scary.
Old 04-27-2007, 10:12 PM   #147
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Re: This is truly scary.

Quote:
Originally Posted by LKH
I agree that not everyone has an equal shot at getting rich. But that does not negate the FACT that even the least of us should be able to live on what he earns, if he works hard, full time. If you don't agree with that, then, frankly, I think you're out of line to complain about people who choose to be on the dole because they can make more money that way - and WAY out of line to suggest that they should make LESS on the dole. People have to live. Would you rather we had huge numbers of people starving like children in Ethiopia in this country where we brag about our great standard of living?
Now you are changing what you are supporting... you seem to say that the minimum wage is what is keeping these peopld down.. and they should have a level playing field.... and I said that amount does not matter for them...

Your next post says that the average guy does not have a chance... but the average worker is in the $35 or $36K range IIRC... so their salary is much higher than the minimum..

I think the average wage earner can live well in this country... and looking at the percent of home ownership seems to support this statement (over 70%... maybe close to 80%)...

The total percent of people that GET the minimum wage that are NOT teenagers or young adults is VERY SMALL... the number that stay there are even less... I would bet that the number is less than 1% of the population of workers..
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Re: This is truly scary.
Old 04-27-2007, 10:25 PM   #148
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Re: This is truly scary.

Quote:
Originally Posted by kcowan
Not sure where you live but you are defining normal to include a car. In the big cities, many normal people do not own a car. Why? Because it is too expensive and they choose to spend their income on more important things.

So don't try to define minimum wages in those terms. You will not get much support.
Not everyone (or even a majority) lives on the east coast. The farther west you go, the harder you will find it to do without a car, even in the cities. In my city it would be next to hellish to try to get to and from the grocery store by bus. You NEED a car, or you're pretty well up a creek.
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Re: This is truly scary.
Old 04-27-2007, 10:43 PM   #149
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Re: This is truly scary.

Quote:
Originally Posted by lets-retire
Run the simple equation on a savings calculator. Save $100 per month with a measly return of 6% per year for 42 years. The end result is over $200,000. Even if the person is only able to save $50 per month the magic 190,000 figure is obtainable they just need to earn %8. While that is a little tougher, it is not out of the question.
OK, first, I apologize because I misread your post initially. I somehow missed that you were talking about "net worth including house," and thought you were talking "salary." That makes sense, if you're talking about the top 20%. I could see the median salary range for that top 20% being around that figure. It makes no sense at all for that figure to be net worth including house.

Here are figures I found:

Age: 20-29
Median Net Worth: $7,900
Top 25%: $36,000
Top 10%: $119,300

Age: 30-39
Median Net Worth: $44,200
Top 25%: $128,100
Top 10%: $317,800

Age: 40-49
Median Net Worth: $117,800
Top 25%: $338,100
Top 10%: $719,800

Age: 50-59
Median Net Worth: $182,300
Top 25%: $563,800
Top 10%: $1,187,600

Age: 60-69
Median Net Worth: $209,200
Top 25%: $647,200
Top 10%: $1,429,500

Source: Federal Reserve Board's 2004 Survey of Consumer Finances

So your median net worth figure works if you're talking total population, but if you want the median net worth of the top 25%, then you're looking at a whole HECK of a lot more.

Quote:
Even when I was living on only 10,000 per year is was able to save $50 per month.
I'm guessing you lived on that a long time ago. When I first got out of university, I found a job at $1k a month, and while I wasn't going out to buy any new cars, I got by on it. But back then, a gallon of gas cost $1.50, and you could get a nice one-bedroom apartment (fireplace and pool) for $350 a month. Health insurance was totally employer-paid, and I could get a week's groceries, plus cash back for gas and a lunch or two, for $60. These days, the poverty level is higher than that.

Quote:
As I've stated in many previous posts my wife has only a high school education (where she graduated a little lower than the middle), but with a little hard work has been able to earn a very nice salary. The only thing the system said she had going for her was her work ethic. You can't make me believe it cannot be done.
I know some people who've done it as well, including two siblings. But both have higher than average IQ's and a well-educated family (so that they have some level of education just by osmosis) and some other advantages that the "average joe" doesn't necessarily have.

I'll grant you that some folks on the dole spend money on "stuff" when saving would stand them better in the long term. Talk to some people in nonprofits that work with lower-income people on financial education, though, and you'll understand that an awful lot of people don't really grasp how finances work, or how quickly setting aside money can turn into something truly beneficial to them. If you'd never been in a family that handled money well, and your school didn't teach you how to balance a bank book or handle credit or why earning interest is a good thing, you wouldn't get the concept either until someone explained it.
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Re: This is truly scary.
Old 04-27-2007, 10:51 PM   #150
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Re: This is truly scary.

Quote:
Originally Posted by ERD50
Maybe I am misinterpreting - sorry, communication over a forum has its limits. I thought you did have a problem with people getting rich - you said they can be expected to use their wealth to the detriment of others.
No. I did not say that. I said that many wealthy people act out of self-interest and greed, to the detriment of others. That's a bit different, I think.

Quote:
This has been discussed in other threads. Exxon profit margin is lower than the average Fortune 500 company. Price is determined by world oil prices and supply/demand - I don't think there has been any evidence of price manipulation, just accusations. Oil is a world-wide commodity, and the Exxon share is not all that large.
It's a world-wide commodity, but gas costs 25 cents a gallon in some places, and it's $3 a gallon here. We can talk about overhead, but the process of getting gas to filling stations in the US during the "off" travel seasons is no different, so you'll be hard-pressed to explain to me how they justify jacking up the price by 25% every year just before the holidays and again before summer vacations when the kids get off school.

Quote:
I thought you were through your statements of distrust of the rich. OK, so what minimum would you suggest? You mentioned $14K/year (~$7/hr) is too low for an adult full time worker. 1.5x that? 2x?
I'm not sure what in my statement elicited your first comment. As for the question, the minimum would be a living wage. Enough, as I've said before, to afford health insurance, a decent place to live, healthy food, and transportation.
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Re: This is truly scary.
Old 04-27-2007, 10:56 PM   #151
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Re: This is truly scary.

Quote:
Originally Posted by ERD50
LKH, I've been noodling on this, and I think I'm learning just why the wealth is distributed the way it is. Your seemingly attractive idea that the average person control the average wealth just won't work mathematically. Unless you really do want to limit the reward of the risk takers, or starve the bottom of the rank. I understand Martha's reference to the 'L' shaped distribution of wealth. It makes sense. Try this:

Picture a town with just 100 people. The average net worth is $100,000, so the total wealth of the town is 100 x $100,000 = $10M. Your approach means that person #50 has a NW of $100,000.

You agree that the most innovative(say 5%), the ones that will create businesses and jobs and create wealth deserve a bigger slice of the pie. But every extra $ we allocate to them, has to come from the bottom group, so that #50 can stay at $100K. I found that it is pretty hard to reward the risk takers, and give some incremental boost to say ranks 6 through 25 (maybe these represent 'professionals', or other people with special skills), and a boost to ranks 26 through 50 (above average productivity workers) without running out of money for the bottom half!

So an 'L' shape makes sense. Less than average for the average. That leaves some to allocate to the bottom so those people don't starve, and some to reward the top performers. And, I'd say the human 'talent pool' is 'L' shaped also - so it all fits. The few most talented in a group are generally far and away more talented than the average person. I think this applies to wealth creators. I know plenty of people that are competent workers, but very, very few that could go out and really create a successful new business model.

If we are not willing to reward the risk takers, that usually has dire consequences for the worker bees - no new jobs.

-ERD50
You really don't get what I've been saying. I have not been arguing for a redistribution of wealth. I have no problem with people getting rich. I DO have a problem with the fact that we have a "working poor" class. I don't think that a person who works full time should have to go without dental or health care because he can't afford insurance, or should have to live on mac and cheese because he can't afford fresh meat and produce. If that means that the rich have to give up a little bit of that fat, I'm OK with that. I'm not saying that every person should have the same share of the pie. I never said that. I'm just saying that the fat cats shouldn't keep getting fatter when the people who help them get there are scraping by on Ramen noodles because they're too cheap to pay a living wage.
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Re: This is truly scary.
Old 04-27-2007, 11:08 PM   #152
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Re: This is truly scary.

Quote:
Originally Posted by Texas Proud
Now you are changing what you are supporting... you seem to say that the minimum wage is what is keeping these peopld down.. and they should have a level playing field.... and I said that amount does not matter for them...

Your next post says that the average guy does not have a chance... but the average worker is in the $35 or $36K range IIRC... so their salary is much higher than the minimum..

I think the average wage earner can live well in this country... and looking at the percent of home ownership seems to support this statement (over 70%... maybe close to 80%)...

The total percent of people that GET the minimum wage that are NOT teenagers or young adults is VERY SMALL... the number that stay there are even less... I would bet that the number is less than 1% of the population of workers..
I think your confusion may have to do with your somehow mingling two different issues. What I was saying about the average person is that I don't think the average guy has a shot at getting filthy rich, as some here assert. I think that there are RARE occasions when someone breaks through that glass ceiling, but I think those are remarkable people with remarkable ideas and opportunities - something that most average people will never have or be able to access.

On a slightly different subject, I am saying that minimum wage isn't enough to live on, so that there are people who work full-time, sometimes two jobs, who are living in poverty, and that's not right.

And by the by, the percentage of people who are living below poverty is 12.7%. Some interesting numbers at this site.
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Re: This is truly scary.
Old 04-27-2007, 11:23 PM   #153
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Re: This is truly scary.

Quote:
Originally Posted by Texas Proud

The total percent of people that GET the minimum wage that are NOT teenagers or young adults is VERY SMALL... the number that stay there are even less... I would bet that the number is less than 1% of the population of workers..
Texas, I was curious about this also. This is what I found - (yes, I know it is a 'conservative' site, but the source is BLS, and they do a pretty good job of making it readable) , condensed here:

http://www.heritage.org/Research/Economy/wm1186.cfm

If I got it right, about 1.5% of the population in at minimum wage, but only about 1.1% if you take out those that receive tips. Over half of those are less than 25 yo, and over half of those are part time workers. So, roughly 1/4 of one percent of full time 'adult' workers are at minimum wage.

-ERD50
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Re: This is truly scary.
Old 04-27-2007, 11:41 PM   #154
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Re: This is truly scary.

Assuming your stats are true, the fact is there is a HUGE amount of space between minimum wage and poverty level. So maybe only 1% make minimum wage. But minimum wage plus 50 cents is still poverty.

Here's an article about the working poor that might be interesting to some.

L

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Re: This is truly scary.
Old 04-27-2007, 11:44 PM   #155
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Re: This is truly scary.

Here's another article from a source some folks might like better (Business Week.)

L
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Re: This is truly scary.
Old 04-27-2007, 11:58 PM   #156
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Re: This is truly scary.

Quote:
Originally Posted by LKH
You really don't get what I've been saying. I have not been arguing for a redistribution of wealth. I have no problem with people getting rich. I DO have a problem with the fact that we have a "working poor" class. I don't think that a person who works full time should have to go without dental or health care because he can't afford insurance, or should have to live on mac and cheese because he can't afford fresh meat and produce. If that means that the rich have to give up a little bit of that fat, I'm OK with that. I'm not saying that every person should have the same share of the pie. I never said that. I'm just saying that the fat cats shouldn't keep getting fatter when the people who help them get there are scraping by on Ramen noodles because they're too cheap to pay a living wage.
Well, I think we agree that we would like to see the condition of the lower classes improved.

I guess where I *do* get confused is that you say :

A) "I have not been arguing for a redistribution of wealth", and then you say
B) "If that means that the rich have to give up a little bit of that fat, I'm OK with that."

That sounds like re-distribution to me. I don't see any way mathematically to get more wealth in the hands of one group, without taking it from another. Sure, you can grow the pie, but it is not clear to me that providing higher minimum wages will grow the pie. I suppose it is possible, but I don't think you can assume it. So that is redistribution.

Maybe, what I am hearing you say is that going forward, the lower class should have higher incomes. This should grow their share over time. So you are not taking away anything from the top group as a lump sum. The top group would just be getting something less going forward. Is that a better interpretation of what you are saying?

But it still comes down to slicing up that pie. Only so much 'pie' is produced each year. Getting back to my 100 people in town sample, I think you will have trouble slicing the pie up so that you assure a minimum 'comfortable living wage' to all, an average wage to the middle, and enough to compensate and motivate the brilliant people to take risks and create jobs.

Now, it occurred to me that that sounds pretty depressing - it sounds as if I am saying we cannot have a 'comfortable' lower class, and still have money to motivate risk takers. Bummer. But it is not that bad. What it takes is to increase the *productivity* of the lower classes, which *will* grow the pie, and allow them to earn a higher standard of living. I guess my concern is that saying things like 'provide a living wage' do not address productivity, and will end up as just a redistribution scheme. Don't forget the further impact of those now earning a 'living wage' by working harder/smarter than minimum wage workers. If you bump up the minimum into their range, they rightfully want more to differentiate their abilities. It is not a static model.

I will read your links, tomorrow - thanks.

-ERD50

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Re: This is truly scary.
Old 04-28-2007, 06:59 AM   #157
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Re: This is truly scary.

It looks like the big difference between the numbers you posted and the ones I linked, is that yours breaks net worth down to age groups. That can have a tendency to skew the numbers, because we a talking about the top of ALL of American society, not just the age group. It would be a very inaccurate to say the median net worth of the top 20% of those aged 60-69 is also the top 20% of American society. You can't take a the median of the numbers you provided and say it is the median net worth of the American populace, without taking into consideration the total percentage of that age group in the general population. Your graph does not provide that information so it is of little use to the discussion. The more math that is applied to numbers the more likely they have been skewed, intentionally or not, by the presenter.

The lower amount makes perfect sense when you consider even the "affluent" are not saving much money. Most people spend everything they have on material things, some save and a very few save a lot. The main point is the typical American does not put a lot of money into savings. Look at the reports that come out on a yearly basis. Many have been linked from this forum by posters.
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Re: This is truly scary.
Old 04-28-2007, 07:51 AM   #158
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Re: This is truly scary.

http://bullnotbull.com/archive/dow13k-1.html

Well lets take a read of this.

We are all gonna be in a world of hurt sooner than later.

A quite silent depression? Not so far from the truth.

How does 8 dollars an hour with no bennies sound? Read on..
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Re: This is truly scary.
Old 04-28-2007, 08:53 AM   #159
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Re: This is truly scary.

Quote:
Originally Posted by LKH

Age: 30-39
Median Net Worth: $44,200
Top 25%: $128,100
Top 10%: $317,800
This makes me feel better, especially since we *just* turned 30, and we had a couple of bad financial reverses in our twenties (thank you *so* much, worldcom/enron) that meant we were doing good just staying debt-free and keeping the emergency fund topped up for about 5 years. Essentially we started over from 0 (ok, about $20K) about a year and a half ago when DH was able to get back into the software game and I finished my masters and got the 30% raise/promotion that went with that. We're closer to the median than the other 2 numbers, but that makes me realize we're not really behind the curve.

Quote:
Originally Posted by LKH

I'll grant you that some folks on the dole spend money on "stuff" when saving would stand them better in the long term. Talk to some people in nonprofits that work with lower-income people on financial education, though, and you'll understand that an awful lot of people don't really grasp how finances work, or how quickly setting aside money can turn into something truly beneficial to them. If you'd never been in a family that handled money well, and your school didn't teach you how to balance a bank book or handle credit or why earning interest is a good thing, you wouldn't get the concept either until someone explained it.
As a former social services worker, this is 150% true. we are talking about multiple generations of learned helplessness and living in a larger environment of poverty that makes it very hard to even conceive of breaking out. when you add in the fact that you are priced out of welfare benefits long before you are earning enough to live without them, and that your TANF bennies are CUT OFF if you want to take more than 2 years of college, there is a powerful disencentive to rise too high. Plus, the middle class seems so far off it might as well be on Jupiter. With those circumstances, it takes a very strong and smart person to A:figure out how to manage money with few/no role models, B: do it, and C: avoid the peer and marketing pressure to say "f&*k it", and just eat, drink, and be merry, because an extra hundred bucks isn't going to change the situation anyway. *sigh*

A toxic combination of learned helplessness, poor education, pandemic undiagnosed mental health/substance abuse and government regulations means the poor will always be with us. And I'm not sure some redistribution of wealth will do the trick, unless we provide for better education, real job opportunities, and "welfare reform" that actually reforms welfare instead of reinforcing class barriers and penalizing folks with genuine dreams of self-improvement.

Thanks for reminding me why I went to library school. *sigh*
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Re: This is truly scary.
Old 04-28-2007, 09:10 AM   #160
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Re: This is truly scary.

Quote:
Originally Posted by LKH
I'll grant you that some folks on the dole spend money on "stuff" when saving would stand them better in the long term. Talk to some people in nonprofits that work with lower-income people on financial education, though, and you'll understand that an awful lot of people don't really grasp how finances work, or how quickly setting aside money can turn into something truly beneficial to them. If you'd never been in a family that handled money well, and your school didn't teach you how to balance a bank book or handle credit or why earning interest is a good thing, you wouldn't get the concept either until someone explained it.
Maybe this is where the problem is.... you talk about the people that are on the dole or people who visit charity as if they are 'average'... they are not.. they are the bottom percentages of our society. Raising the minimum wage might help SOME of them, but I doubt it would show up in the statistics.

Also, if you are on the dole, you can not save money... there was this lady who DID save and they found out that she had saved up some money and cut her off... the reasoning is that the money is for CURRENT NEEDS... if you can put some aside, then you don't NEED...

And, when I was in NY, they had a line of people who were waiting to get something 'free'... the reporter had gone down the line and asked a few questions to the whole group... something like 90 percent had cell phones.. about 70% had cable.. they ate out... being on the dole there meant you lived 'OK'... you were not hurting for stuff... This is not true for everyone, but the 'poor' here has it better than 'ordinary' folks do in many other countries...
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