I think one of the biggest impacts we could make is to teach financial literacy in school, to everyone. Form and reinforce good habits early on. Demonstrate the danger of credit card interest. Demonstrate the power of compounding all throughout 1st to 12th grade. Taken seriously, it could have a huge effect on outcomes. It'd also make something like the Freedom Dividend (UBI) more effective when/if it happens.
People will say what they will about the man, and his kin, that he's a peddler and just another business man out for himself. I'm sure much of that is true, and personally I can't reconcile the fact that he is personal friends with DJT...
However his strongest point throughout that book is that it is essential that people who want to 'make money' rather than taking it, need to be educated on the subject. He juxtaposes this with his view of the situation present: that people are only educated to become good workers, and to depend on one institution or another for their income.
I am still trying to internalise a lot of the sentiment from that book and my financial self-education will continue (I hope) for many more years.
“”” The Five Big Ideas
The poor and the middle-class work for money. The rich have money work for them.
It’s not how much money you make that matters. It’s how much money you keep.
Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets.
Financial aptitude is what you do with money once you make it, how you keep people from taking it from you, how to keep it longer, and how you make money work hard for you.
The single most powerful asset we all have is our mind. “””
Some of the book might be “garbage”, but some of the central concepts most certainly are not, and popularising the above is worthwhile IMHO. Not saying you are wrong, but I do believe it is wrong to so strongly denounce the book without recalling its virtues.
The summary above is from the 1st link I looked at: https://www.samuelthomasdavies.com/book-summaries/business/r...
- they know they are financially safe (everyone is taking about money disasters, I wanted to lower their stress)
- they realize that money comes from somewhere (salary) and goes to many places (tax, food, internet,...).
This made them think about spending and fortunately we live in a place where there is no peer pressure on fashionable items.
I think that getting our of poverty requires either a zillion generations (you made the case of teaching the right things at school), or having a determined parent to explain how to get money (education, employment) and keep it (having a lifestyle adapted to what you have).
Unfortunately this is much much easier when you are wealthy.
Sure, there is a minority of cases where people squander a windfall, like in GP's example. It is such a small minority that it's barely worth mentioning.
I'd also note that people who have been toiling away for years on minimum wage may be forgiven and understood if they decide to use a small windfall on buying a small luxury like a pretty dress or trip to Disneyland for their children, instead of investing it in some stock or whatever would be the 'rational' thing to do. Humans beings are not robots, and we need more than food and a roof to live even a half-way acceptable life.
It's still a pretty bad idea if they have literally zero precautionary savings and are one unexpected expense away from disaster. Keeping that windfall in the piggy bank would make them a lot happier and less stressed out in the long term than reminiscing about that crazy trip to Disneyland. But I can see where being severely socially marginalized all the time might make it really hard to think properly about these things. That's often a way bigger issue than the actual money problems, really.
Whenever my parents tried to save up money, it was quickly drained that same month for medical issues, food, bills and more. I think when you're thinking of poverty you're thinking of someone in the middle class spending above their means.
When I think of poverty, I think of the time spent wondering if we could afford to pay for trash this month, eating one meal a day because that's all we could afford and hoping we don't get sick or injured.
Attacking the character of suboptimal decision makers isn’t fair. They have lives and they have every right to decide how they live it. At the same time, they’re beholden to the economic forces that govern everyday life.
Thinking back at my childhood, my parents gave me a computer, a $300 baseball glove, an N64...etc despite not being able to afford it and I’m grateful for that. It allowed me to not be seen as the poor kid, ostracized by my peers, and provided me with countless hours of entertainment. When my friends went to summer camps, I played counter strike and Mario Kart at my house with the other kids who couldn’t afford camps while my parents worked. Sure, summer camp and a nanny could’ve provided me with a more meaningful experience, but let’s be real.
Without friends, and families of friends, I wouldn’t be where I am today. They’ve fed me countless dinners, driven me to school, and even took me on vacations. The parents most definitely knew my economic situation, but my peers didn’t. Don’t judge the kid. Don’t even try to understand. Just be there if you want. If not, then that’s fine too, just don’t be so patronizing about how his mom should optimize her life.
I’m thankful for it all.
It is fair when a family routinely buys big ticket electronic items or vacations every month, but still runs out of food every month, despite being on food stamps.
To be clear, I absolutely agree with your point, just not the method of attempting to achieve it.
There are many ways of tackling poverty. Education and mentorship are certainly very valid ways. And so too is expanding the social safety net. I don't know about you, but I would love to live in a society where everyone is smarter, less violent, and less prone to acting out.
The OP gives strong analysis for why giving this family money directly doesn't solve any other structural problems
Sure. Just like all the studies on climate change don't refute my anecdote of "it was really really cold last weekend in my hometown".
If OP is simply giving an anecdote with no strings attached, that's great. Unfortunately, OP's anecdote carries the implication that giving families money, in general, does not solve any problems. Despite robust studies showing otherwise.
>No. Poverty is a lack of education and, more importantly, mentorship. This is because [insert story about "neighbor"]
To put it very bluntly: I don't give two shits about your neighbour. This is the kind of thinking that justifies racism and other types of discrimination. I have a gypsy neighbour who collects welfare and does not work while he sells drugs in his neighbour |= therefore gypsies are leeches and criminals. You see the problem? For every story of yours I can tell you a story about a guy who had caring and hardworking parents, a nurturing environment, was he himself very hardworking, but simply had not enough money to make it in this world (not enough money to attend good schools, do extracurricular activities, had to care for his siblings or work after school himself, etc.). What does that tell me about this problem?
I don't care for anecdotes about your neighbour (because everybody has "a neighbour", or his cousin's wife has a friend from work who knows a guy who...), I don't care for "common sense opinions". I care for research, data, in short: meaningful facts about large-scale trends rather than individual cases, of which you can find every sort.
Mentorship is absolutely true. Kids need someone to invest and grow them.
In the specific example you gave: on average kids that grow up in two parent households excel in every metric: graduation rates from high school / college, employment, total lifetime earnings, and incarceration rates.
For kids that grow up in single parent homes, their success on the same metric comes down to mentorship; having involvement from a successful person in their life and repeating their steps to success.
Whatever happens with your neighbor, keep at it as long as you're invited, and keep asking the tough questions. You will undoubtedly are a turning point in his life even if you don't see immediate results.
As I understand, this is pretty much exactly the goal of such programs, to surround poor families stuck in the cycle with middle class knowledge/experience/wisdom.
However, it wasn't something we knew about when we moved in, and living in close proximity to them has put other strains on us that make us want to move (for example, since we share a wall, our house stinks like marijuana every weekend due to them hot boxing; also they've completely trashed their unit and you can tell from the outside - the blinds are all mangled and one of the windows is missing which I imagine might make it harder to sell our own home).
I agree it's a probably a net gain overall though.
I disagree with this. I’ve never felt "inadequate" because of an ad.
A father, perhaps?
So, yes, having a not-poor father (or mother) as a role model would be great, but that's often not a practical solution.
I'm not sure we'll ever get to a point where people don't make mistakes with important decisions.
If history has showed us something, is that great people come from all sorts of backgrounds and situations, and that includes all sorts of families of course!
Even if a person made that decision, "nature uh uh finds a way".
The following may seem coldhearted, evil, or misguided, but it's the truth. After high school I wasn't making a ton of money, so moved back to near where I grew up, which was a very cheap place to live. After 2 years, I'd had it. I told my wife "I...I just hate poor people, I can't take it anymore." Maybe hate is too strong a word, but it was a feeling of constant frustration. People constantly fighting, littering, driving drunk into mailboxes, etc. When I first moved in, I felt sorry for a few of the folks, including my neighbors. But for the squalor they lived in, they made sure to sit outside blasting shitty music off their new model iphones. By the time I moved out, I had a very different view of the world, and a 'you reap what you sow' attitude.
> No. Poverty is a lack of education and, more importantly, mentorship.
No, poverty is a lack of material wealth.
A lack of education (of which mentorship is a component) may contribute to the durability of poverty, but it is far from the only factor which does so; active class discrimination in distribution of opportunity by the non-poor, both personally and through institutional, including public, policy, is also a factor.
[1] https://gizmodo.com/im-buying-an-iphone-because-im-ashamed-o...
edit: Ok this obviously isn't black and white, but I'm saying this should be considered among other things.
For the most part class signaling on the easier end (looks, mostly) has more to do with choices than outright spending. It's why a relatively poor college professor on the East coast can still look "upper middle". Their clothes may be a bit worn, some hand-me-downs, some thrifted, but they're the right clothes. Swapping the legible t-shirt & hoodie for a cotton button-up and wool cardigan or a blazer and the $100-150 sneakers for $100-150 (clearance, seconds, or used) leather loafers will do a lot more to signal higher class than an iPhone, and none of those clothes need look new—making the mistake of spending money on stuff like electronics or boldly-branded expensive clothes while getting other things very wrong is a class marker, but not one most would intentionally choose to display if they understood it.
[EDIT] in short, always having new phones and video game consoles and such only signals wealth & higher status to poor people—absent other markers of higher class they'll actual read as low class to everyone else.
Teachers in my children's schools make a point to widen their verbal culture in addition to what they teach. Also (if not mostly) so that they send the right signals (which in France is among others your general culture)
The risk is buying into status symbols of a class beyond your reach. You may signal a certain amount of wealth by buying the latest iPhone, but the "rich and educated" won't be fooled. They will quickly notice where you are living, the car you are driving, the clothes you are wearing and how you spend your vacations, etc... And if it doesn't match, you will get ridiculed. You will be better off living within your means. The rich usually have good finances, that's why they are rich, and they will be more likely to accept you if you have it too.
But getting shunned is not the worst that can happen. If you try to follow them, you are going to get burned very quickly. If they can afford a $100 dinner on a whim, they are going to do it, why wouldn't they. And if you want to stay in their group, you will be tempted to follow, except that you can't afford it.
What's so interesting in the rich (and supposedly educated, I'll take your word for it...) groups that you have to buy into them with expensive junk?
Do you have any idea how many uneducated rich fools there are nowadays and how they spend their wealth in just as stupid ways as the poor, the only difference being that their capital income often actually sustains that foolishness? LVMH's success is a good hint.
The fact that opportunity is driven largely by networks, and that networks are typically class-gated (not exactly wealth-gated; most people recognize that class and temporary circumstances aren't the same thing.)
Unfortunately, social seeking by the poor who aren't mentored on social signalling by someone already in or experienced with higher classes is likely to reflect lower-class misconceptions of higher-class signals, and fail as class signalling.
This is true, but what kind of opportunities are of vital importance for someone who is wealthy already and which of those can't they just buy into without networking? Or, to put it more plainly, you've got a nice house, your kids go to the best schools, your capital income provides you with a comfortable lifestyle, what "opportunities" are you lacking exactly?
The pseudo rich with all the status symbols are generally more in debt than the poor person who needs to use a car title loan to get food at the end of the month!
Of course there are also the "filthy rich" with a ton of money with all the toys just like the pseudo rich. They are a minority of those living that lifestyle though.
iPhones and video games are very cheap compared to good schools and safe and mentally stimulating childcare.
A poor person's children having an iPhone and PlayStation is no more an indication of their having money than my kids not having those things is an indication that I'm poor.
If anything the correlation is slightly on the opposite direction: I can afford better (expensive) activities for my kids (i.e. horseback riding camp, after school enrichment classes), which cost me tens of thousands per year.
Poor people routinely occupy their children with an iPhone with Candy Crush, which is cheap by comparison. Those things create the temporary illusion of prosperity, both for those in poverty, and for observers like you.
> Just recently he boasted that his mom is going to buy him a brand new $1500 gaming rig. I remarked that seemed quite expensive and wondered where the money would come from. "tax return" he replied non-chalantly. He also said once they got their tax return they would be going to Disneyland.
You shouldn't necessarily believe everything that a child in need says about what their family is purchasing. People (children and adults) do a lot of wishful thinking out loud. Some of it is to assuage themselves, and to feel normalized among their more privileged peers.
> These kids need mentors more than they need cash.
Families need cash to reduce financial stress levels. Being a single mother on govt benefits isn't the cakewalk you make it out to be. And absolutely, kids need mentors, but good mentors also don't come cheap, and they usually aren't willing to work with kids who has behavioral issues originating in financial stress and cheap entertainment distractions.
Volunteer mentors want to work with the "diamonds in the rough" kids, because the reward for mentorship is feeling like a super hero who "made a difference in one child's life".
That approach doesn't scale. The mentorship program that scales is the one right on front of us: financially stable parents and community, who have an inherent interest in the child's development.
I'm not against the poor having nice toys, but the priority is not toys. Yet I see the poor spending a lot of toys that are often discarded in a short time.
But they aren't toys. They are very cheap, and very bad childcare.
I don't know your neighbours situation, but in general you can learn to be a good parent without having had one yourself.
I also want to say, having an iPad or two, a PS4 and cable TV, that's not really a good indicator of wealth. People's top expenses are generally housing, transportation, utilities and food, possibly healthcare if you need it. In your example, rent is subsidized, that means the top expense is minimized and a lot of savings comes from that. That said, I don't think its logical to say that the savings from holding off from buying two iPhones, an iPad and a PS4 can match that. Rent average price for a 2-bedroom is 1200$. That means in 2 or 3 months of rent, you've already purchased 2 iPhones, an iPad and a PS4. So no one can pay their rent by simply not buying these things. So I'm challenging your quote saying: "My neighbors have money". Do they really?
Obviously I can only see my tiny slice in the form of an 11 year old coming over to my house asking for snacks bringing along his toys. I don't know how much income the mom has.
But what I do know, is that they seem to run out of food near the end of each month, despite SNAP subsidizing food.
So while abstaining from buying iPhones, iPads, and cable TV and other toys will not pay the rent, buying mid/low-tier Android instead of premium Apple, cutting cable, scratch offs, cigarettes, and other toys from the annual budget could easily relieve other stressors of poverty, for example by stocking shelves with nutritious food that lasts through the whole month.
Poverty is a vicious cycle, and it has different causative factors and outcomes for different people. Inner city poverty and rural poverty share many common things, but are very different situations. I've seen both. I have been broke, but I've never been poor, and the difference largely had to do with my upbringing and my own personal character. To a large degree, my very belief that I could overcome being broke and didn't need to become poor is a component of that very upbringing.
People in poverty feel defeated, that there is nothing that they can do which will resolve their situation. They exist in a concentric sphere of negative feedback loops, where the only dopamine hit they can find to make them feel "okay" even for a little bit is found in illicit substances, meaningless sex, or conspicuous consumption that earns them the adoration of their peers. These are the high points of their life, and yet none of them help to break the cycle, they just reinforce it.
It's not enough to throw money at the problem. Poverty must be arrested, like the putting on of brakes. At a certain point in life... people are basically unsavable themselves and too set in their ways, but they can be convinced to save their children. The only effective program I've ever seen to actually combat the cycle of poverty was based on providing pre-teens and young adults in poverty with funds, education, and resources that their parents could not take advantage of or interfere with. Something as simple as providing thorough financial literacy education and a place where pre-teens could bank and their parents couldn't steal from them was very effective, especially when combined with no-cost after school programs which kept them off the streets and out of abusive and dangerous home situations for further education and mentorship. Unfortunately programs like this are contentious and very very expensive to operate and hard to scale. The program I observed had 40 kids in one neighborhood and took nearly 200 volunteers to pull off and 10 paid staff, plus facilities.
When I look at the situation as a whole, it's obvious to me that one of the single biggest factors in why this has become such a serious issue in the Western world is due to the breakdown of the nuclear family. Single-parent homes aren't in the financial position to spend time focused on their children's mentorship and education in the way that a two working parent home is, simply put. And educational outcomes, life outcomes really, are heavily tied to having parents which value education and good financial literacy and ensure that their children value those things as well, regardless of how many dollars are in their bank account or stuffed in the mattress.
EDIT:
To a large degree, how you think about the poverty problem comes back down to the classical philosophical question of nature vs nurture. The reality has always been that life is a little bit of both. But when it comes to poverty, enough time in those circumstances can effectively destroy someone's mental health and make them incapable of escaping. They become effectively addicted to escapist dopamine rushes and impulses, without any ability to plan for the long term. It has real, serious, negative mental consequences for adults and children both. But children can be saved, adults are often a lost cause. The best thing we can do is focus on breaking the cycle so the next generation of adults is better off than the current generation.
This is beyond insulting, at least in the way it is worded. Your example of the single mom who squanders charity money on expensive toys sounds exactly like right-wing propaganda, even if I am absolutely certain it does happen.
The reality is that the vast majority of poor people just don't have the money to squander. Sure, some of them may squander the money even if they had them, but the reality is that only a minuscule percentage do. Financial education would help these people, and can't hurt. But minimum income of some kind (I'm not necessarily convinced UBI is a good idea) will help all poor people.
A much more common story of poverty is families who can't afford to get their children through school, who live paycheck to paycheck and get forced into predatory lending when they hit financial difficulties (e.g. plumbing problems).
Privilege is invisible, or so they say. This is an extremely short-sighted approach to trying to find an explanation to poverty. It is also a lazy excuse to avoid thinking more, because it leads to a conclusion like "... hence why they're poor. That's it."
I hope one day you have the (mis?)fortune of living under precarious conditions, then you could judge by yourself if your preconceived notions are actually in agreement with what you will experience. And then we will see how long it takes you to "stop being poor", it shouldn't be long right?, as you, presumably, already know how to avoid making the kind of "poor decisions" that makes people stay in that situation.
Edit: Check out this comic and see if it opens up your mind a bit. https://www.rnz.co.nz/news/the-wireless/373065/the-pencilswo...
No. Poverty is a lack of education and, more importantly, mentorship.
I am battling this right now with my next door neighbors, who use HOC, a Maryland social service that basically puts poor people in middle class neighborhoods by subsidizing rent.
My neighbors have money. They spend it extremely poorly. It's a single mom with 2 kids. Both kids have iPhones, iPads, PS4s, cable TV, you name it. I'm constantly cleaning up scratch-offs and cigarette butts from the shared sidewalk. Yet they are also on food stamps (SNAP) and near the end of the month the 11 year old boy inevitably starts coming over to our house for snacks because they are out of food. Just recently he boasted that his mom is going to buy him a brand new $1500 gaming rig. I remarked that seemed quite expensive and wondered where the money would come from. "tax return" he replied non-chalantly. He also said once they got their tax return they would be going to Disneyland.
I see this 11 year old boy on a trajectory for poverty. I've tried to help him with his math homework and with reading, but he is at a level far below his grade and seems to be constantly skipping school. He hates reading because his reading comprehension is low which means it will never improve because there are no adults in his life (other than me) trying to get him to read books. It's a viscious cycle. He has virtually no adult supervision or guidance (other than what I can offer when he occasionally comes over) because his single mom is always absent or in the hospital or sleeping or working or with boyfriend.
It would require an insane amount of cash to make it so the single mom didn't have to work, and even then, she is uneducated, can't help her kids with their homework, doesn't see the value in school having not used it herself, doesn't know how to be a good parent, not having had them herself, etc.
These kids need mentors more than they need cash. They need adults they can emulate who can help them break free from the viscious cycle.