These are people who definitely could not get together the $8,000 for a 7 year old car in good condition, or get a loan at all besides a Payday one. They live paycheck to paycheck.
The question is not just a quantitative one of the car cost, depreciation, years of use. It’s a qualitative one, as in quality of life. A poor person who can only afford to take the bus loses time sitting on a bus instead of grocery shopping, taking care of their kids, etc. and needs to exert mental energy to plan their day around bus rides and schedules. They generally “pay” in numerous ways besides the pure value of the vehicle vs. some other more expensive vehicle. Above all, they pay in mental bandwidth. They spend most of their mental energy worrying, planning, and stressing about being poor. That distinction can help clarify this argument a lot, and that old boot example doesn’t capture that.
Or medical costs because your low-paying job offers minimal health insurance.
Or extra costs because the government system designed to help those with low income is crushed under the weight of COVID, so your benefits take months longer to arrange and arrive (something a friend of mine is battling right now).
I also thought it was a bit funny that the parent poster cited an $8k purchase in a discussion about poverty. But either you're being a bit disingenuous yourself here or else you are similarly out of touch. Since you should know one can get a well-functioning used car for a lot less than that.
Also in many countries, people take public transit at all income brackets. I've done it in the US for long periods myself. Personally I find it less stressful than driving in traffic.
Certainly. It is well-documented that the supermarket chains that pop up in economically disadvantaged parts of the USA while established supermarkets pull out, are actually more expensive. While the package on the shelf might seem the same price as in a more mainstream supermarket, it in fact holds less contents.
They are often just the same packages at higher prices, the more “upscale” supermarkets can make up for the lower margin on goods both stores sell with higher margin goods that wealthier clientele will buy alongside core goods (things like in-store cut deli meats and cheeses, high-end alcoholic beverages, gourmet cheeses, in-store kitchen prepared ready-to-eat food, etc. When both kinds of stores exist within a radius where they compete with customers—the wealthier being more mobile—they use this fact in marketing, too, because this also let's them win same-good price comparisons.
My Mephistos are excellent shoes, which I wore constantly around the world. Not so much as a stitch is out of place. When the soles wear out, they can be repaired.
Going on four years now, my father had a pair for two decades. If I were wearing sneakers from Payless, I'd be a few pairs in by now, no question about it.
That particular brand is a bit on the luxury side of the tradeoff spectrum, but it remains the case that you can spend a couple hundred on lifetime shoes, or fifty bucks on shoes for a season.
A lot of things are like this. Cars aren't one of them.
A $20 shovel is going to be more durable than a $1 shovel. A $15000 solid gold shovel is not going to be, as you arent paying for durability anymore.
It doesn’t have to be a durable good, it can be a service.
I live in NYC. A monthly unlimited subway pass is 120 dollars. If you can’t afford that lump sum all at one, you can 2.75 pay per trip. If you use the subway 2 times a day (to and from work) for 30 days, that’s 165 dollars... more than the upfront of an unlimited pass.
They lend you $120, and ask for slightly less than $165 back - let's say $145. So you save up the money you normally would have spent on tickets daily and at the end of the month, you pay back the $145, and you have saved yourself $20, while the lender made a return on investment of about 20% (a very respectable amount, given it's unsecured).
For taking on the risk of an unsecured lender, they get a very high interest rate - ~20% a month! That's almost illegal!
That’s why merchant credit card fees are painful for small shops. Ie 3% + 35 cents isn’t so much until your average ticket size is $5 and all of the sudden 10% of your revenue is going to intermediary.
There’s fixed cost associated with moving cash around so that 20% return is likely negative under current infrastructure.
What you do get though is freedom from thinking about the cost of rides, which is pretty great.
But that step is a hell of a lot lower down the price ladder than your "stereotypical average yuppie" with their 4Runner full of Whole Foods groceries they're gonna mix in their Kitchenaid says it is.
It's not true of food.
It's not really true of shelter except maybe rent vs buy.
It's not true of cars, health insurance, or entertainment.
with shelter think about having to live farther from the business district spending more money on a longer bus to get to work.
cars i buy a junker cause that's all i can afford it breaks, i spend more money to fix it all because i couldn't afford the extra 1000 to buy a slightly more reliable car.
....
The point of this story is to let the upper middle class feel smug about driving 4Runner instead of SantaFes and wearing Levis instead of Walmart jeans. It's saying that consuming "nice" things is right and justified by the numbers. The "the rich get richer, the poor get poorer" theme is just a sideshow for plausible deniability. The upper middle class love the quote because it's telling them they're doing it right. The fact that it may confirm their biases is tangential.
I bought a 7 yr old $8000 dollar car, that's still going strong 12 years later, if I'd bought a $40000 car, could I expect it to last 512= 60 years? And that's being generous and assuming a linear relationship. If we use the example from the book, spending 5 times as much should give me a car that lasts up to 10 times* as long, so 120 years!