How far did society have to fail for us to have to encourage the use of loan sharks so our children can take a shit, seriously?
Edit: in an attempt to lighten the conversation which has suddenly became a class dividing conversation on economics and privilege.
My most highly rated comment on Hacker News is now about shit. Brilliant.
2nd edit: Two people didn't approve and have either removed an upvote, or I've been downvoted.
More drama than a soap box here today.
'Let Them Eat Xultation' - Marie Antoinette, probably.
If I pay $5 every other day for 10 diapers, then I'm paying ~$75/month for 150 diapers. $0.50/diaper, $2.50/day.
If I take a pay day loan of $30 for a 200 pack of diapers, then I've just brought a 40 day supply of diapers. $0.15/diaper, $0.75/day.
After 16 days I've recouped my original investment of a $30 loan + $10 fee. By the time day 40 rolls around and I run out of diapers, I've saved $60. I can now afford to buy bulk diapers in perpetuity. For every subsequent month, I'll be spending $52.5 less on diapers.
I can only speak from the fees here in Australia but here, for a small loan. You're looking at a minimum fee of 200-300% and that's assuming you pay on time.
This is why legal loan sharks exist, and if this method actually did work as you intended it, why do legal loan sharks still exist? Couldn't you apply your macroeconomics to everything?
Food? Nappies? Water? Bulk buy all of your items on legal loan sharks just once and you're ahead.
1) Get a small loan
2) Buy all the small disposable/consumables you require in bulk and reap the savings
3) Pay off the loan with 200-300% in fees on top, assuming you pay it off in time
4) ...
5) Profit!
As somebody who grew up in abject poverty, and who lived in poverty for the first portion of their adult life, better planning will absolutely make situations like this instantaneouly better. When I was poor as hell I put a huge amount of effort into buying in bulk and doing various other things to avoid all of the blindingly obvious poverty traps that exist. It took some hardship to get everything established properly, but my whole life was hardship, so big deal...
Most people in the west could get away with living a sustainable (although shitty) lifestyle in poverty. It’s only proper planning and effort that will pull them out of it.
I'm from a poor working background too. You can look through my comment history, topics of poverty, drug abuse and macroeconomics are some of the many topics that typically interest me enough to contribute to the conversation here on Hacker News.
Your logic is absolutely sound, but in the event or period where you've taken the loan and have to pay it off in 1-2 weeks. What happens when said parents child gets sick and requires more nappies that day?
Perhaps they need medication.
Maybe they lost some cash walking to the grocery store.
They lost a days work.
There's no room for error and when or if that occurs. The entire benefit goes backwards and you end up losing so much more than you hoped to gain.
There's a whole myriad of reasons that could contribute to this loan going backwards when you have 0 disposable income.
But if you're borrowing $30 for nappies, it would not take much to then push you outside of that fortnightly budget so you are not able to meet your legal loan sharks contractual payments and that, by definition, is a financial slippery slope.
The financial industry relies on people like this, I would assume for every credit card owner that has 55 interest days free or a 0% balance transfer. There's another 9 who don't pay off in time and will incur interest charges and fees and make the entire business venture profitable.
Legal Loan sharks are profit driven, they are not providers of care, and they are not their to help you get ahead so you do not need to use their services again. Their business model is the exact opposite. They assume you will need to go back, and go back repeatedly.
You'd do well to watch Episode 2 of Dirty Money on Netflix - Payday. The entire episode is essentially a business case for why Loan Sharks should be avoided at all costs.
But the thing is, your maths is _correct_. So instead why can't we loan this person who lives in poverty from non-profits and similar who want to _help_ if it's so logically sound that allowing those in poverty to buy in bulk, will allow them to get ahead?
It’s harder to break out of a poverty trap than it is to live with one, but it’s much easier to stay out of one than it is to live with it. My point is that with the correct effort, people can generally break free of most of the poverty traps they find themselves in.
To speak to your last point, there generally are non-profits around who help with these sort of things, and I used some of them myself in the past. The thing that non-profits can provide so simply is the motivation and discipline required to maintain a well planned budget. Each small thing that you improve, like buying diapers in bulk, is a step towards escaping poverty, and everybody has the capacity to do those things.
I find 'correct effort' to rather deceptive term, because part of the problem is defining what that would be (and your example failed as a 'correct' one).
Furthermore, I'd say a cursory glance at history shows that what you're saying is not true. Slaves did not just free themselves, the working class did not just obtain the many rights all enjoy by themselves, women did not just gain voting rights and all that jazz by themselves, and all this applies to gays and the mentally disabled too.
I'm not arguing against 'correct effort', clearly many poor, slaves, women and gays fought hard. The crucial bit here is that they did so collectively, that they needed a lot of help from those who were not in their situation, and that a big part of this involved effecting political change.
I've never heard a convincing argument that somehow we're now in a completely different situation, and that somehow now the steps one can take as an individual are 'correct action', even if of course they can't hurt.
It strikes me that this focus on the individual is somehow a problem on both ends of the political spectrum. The one side devolves into perhaps too much identity politics, and the other too much into the "we'd all be fine if we just worked harder on ourselves".
Both sides, meanwhile, seem to prefer to paint the other side as being will-fully <insert shitty ism>, when I think we're all really mostly equally shitty and good, probably partly right, and really we should just be mad at the immense inequality that has left us mis-directing our anger at each other.
Broadly speaking, anyways.
The correct effort is simply whatever a person can do to make incremental improvements to their lives. It’s going to be different for everybody. Psychologically, part of the reason that poverty traps are so easy to fall into is because people in poverty don’t have the luxury of indulging in much long term decision making. However some opportunity always exists, and finding an exploiting those opportunities is the only way out.
The reason there is any focus on the individual is because you can’t simply subsidize out of poverty. If you want people to get out of poverty and to stay out of poverty, then those people need to take responsibility for their own destiny. Arguably society could do a better job of giving people the tools to do that, but that doesn’t change the dynamics of the problem. The truth is that if I was in that persons shoes, I’d be living a better life than they are. Because I was, and I managed to, and those skills eventually got me completely out of poverty all together.
Reality is that minorities get charged more harshly for the same crime than Whites and once you have a criminal record, it's harder to get a job.
Studies have also shown that all other things being equal, when a person has a resume that signals "blackness", they get fewer calls back.
Not to mention that because of overzealous prosecutions, poorly funded public defenders offices, and the prominence of plea deals, poor people don't get the same breaks as someone who can afford their own lawyer.
Then let's not even mention the poor state of some school districts since schools are funded by property taxes leading to a cycle of poor schools.
As far as just because you were able to come out of poverty means anyone can is just like saying that because I won the lottery, why can't anyone? Statistically, income mobility is rare.
It doesn't take much time to put together a budget and if you lack the knowledge i am sure you can find free community classes to get basic budgeting skills. I signed up to volunteer at one but they had too many volunteers.
People need to get out this learned helplessness and make effort to improve their lives.
Surely you see the problem here?
Items like chest freezers that cost more electricity to run, but allow me to buy more food and freeze it. At the cost of larger electricity bills.
It's having enough money for fuel so I can drive 80km to Costco.
It's having /time/ so I can just do the baths of all the above because I'm not working 60 hour weeks to feed the family.