“They Get You Coming And Going”: In America, Being Poor Can Be An Expensive Proposition
Today I came across this very interesting, albeit depressing, bit of data. It’s an analysis by a travel site called Hopper that shows that it costs more to fly in states that have the lowest median incomes.
For example, the study found that in Mississippi, the poorest state, a “good deal” round-trip flight costs about $400, while in Maryland, the state with the highest income, an equivalent ticket costs around $300. The researchers also found that “typical round-trip airfare declines by $2.30 for every additional $1000 in median household income.” The reasons for the increased prices in the poorer states include “average distance traveled, demand density, and airline competition.” Presumably, there’s less demand and less airline competition in poor areas of the country because people there have less money for leisure travel, and also because those locales have less economic development and thus less business travel.
The higher price of air travel for low-income folks is yet another data point that paints a bigger picture: in America, being poor can be an expensive proposition. There are countless, painful examples of this. Food and other basic items tend to cost more in poor neighborhoods. The poor lack access to credit and so are easy prey for payday lenders charging exorbitant interest rates. Poor people are more apt to bounce checks; hello, fees for insufficient funds! There are also late fees for credit card payments — you know, the kind of thing listed in print so fine you need a magnifying glass to be capable of reading about it. But my personal favorites are those extra charges they tack on for restoring utilities they shut off because you couldn’t pay your bill on time in the first place. “They get you coming and going,” as my old man used to say.
In her classic book, Nickel and Dimed, Barbara Ehrenreich described a host of other expensive indignities that plague the working poor. For example, many of her low-wage co-workers were living in hotel rooms, which actually were far costlier, on a monthly basis, than local apartments. But the workers couldn’t move into the apartments because they lacked the month’s rent plus security deposit the landlord required. Many low-wage jobs also require uniforms, the cost of which comes out of the worker’s paycheck, or cars, which the workers are expected to maintain themselves.
There are even darker examples. I wonder how many Americans have put off going to the doctor because they lacked health insurance, sought treatment only when their symptoms were advanced, and ended up being bankrupted by medical bills as a result.
Many of the examples I’ve cited in this post could be greatly improved by some well-targeted regulatory fixes. The rights of workers and consumers against employers, the banks, and the credit card companies need to be vigorously championed, and in some cases, re-invented for our new digital era. There’s no earthly justification other than greed for the $35 bank overdraft ripoff, or the cell phone company gouging you to restore your service because your payment is late. It’s also long past time we bring re-regulation to the airlines. A more regulated airline industry might help bring down fares in certain overpriced markets. Our 30-year old experiment with airline deregulation has hardly been a rousing success — read the excellent 2012 Washington Monthly magazine article by Phillip Longman and Lina Khan for more information on this score.
In addition to more consumer regulation, we also need a much higher minimum wage and a far more generous safety net for poor people in this country. If poor people had more economic resources to begin with — if they simply had enough money to pay their bills on time, and to save a little money for a rainy day — they would never be forced to pay such an outrageously high price for being poor.
By: Kathleen Geier, Washington Monthly Political Animal, May 3, 2014
“Now We Know”: Economic Inequality Is A Malady — Not A Cure
It has been a long, long time since Americans accepted the advice of a French intellectual about anything important, let alone the future of democracy and the economy. But the furor over Thomas Piketty’s stunning bestseller, Capital in the 21st Century – and especially the outraged reaction from the Republican right – suggests that this fresh import from la belle France has struck an exposed nerve.
What Monsieur Piketty proves, with his massive data set and complex analytical tools, is something that many of us – including Pope Francis — have understood both intuitively and intellectually: namely that human society, both here and globally, has long been grossly inequitable and is steadily becoming more so, to our moral detriment.
What Piketty strongly suggests is that the structures of capitalism not only regenerate worsening inequality, but now drive us toward a system of economic peonage and political autocracy.
The underlying equation he derives is simple enough: r > g, meaning the return on capital (property, stock, and other forms of ownership) is consistently higher than economic growth. How much higher? Since the early 1800s, financiers and landowners have enjoyed returns of roughly five percent annually, while economic growth benefiting everyone has lagged, averaging closer to 1 or 2 percent. This formula has held fairly steady across time and space. While other respectable economists may dispute his methodology and even his conclusions, they cannot dismiss his conclusions.
As a work of history and social science, Capital in the 21st Century outlines a fundamental issue while providing little in policy terms. Piketty mildly suggests that nations might someday cooperate in a progressive and global taxation of capital gains, with shared proceeds. There isn’t much reason to hope for any such happy solution. But then it isn’t up to Piketty to solve the problem.
He has already done America and the world a profound service by demolishing the enormous shibboleth that has long stood as an obstacle to almost every attempt at economic reform, from raising the minimum wage to restoring progressive taxation: Only if we coddle the very wealthy – and protect them from taxation and regulation — can we hope to restore growth, employment, and prosperity. Only if we meekly accept the revolting displays of power and consumption by the very fortunate few can we expect them to bestow any blessing, however small, on the toiling many.
If you read Piketty – whose translation into English by Arthur Goldhammer makes macro-economics a literary pleasure – you will quickly realize that we’ve been told a big lie about this most basic social bargain. The stratospheric accumulation of rewards accruing to the top 0.01 percent of owners, at the expense of society and everyone else, is not only unnecessary to promote growth; in fact, that unfair dispensation retards growth.
Rather than argue honestly with Piketty’s findings, right-wing responses have varied from old-fashioned redbaiting, although he is plainly no communist, to juvenile misrepresentation of a book that at least one critic admits she didn’t bother to read! The boneheaded Tea Party reaction is to accuse him of demanding that sanitation workers earn the same salary as surgeons – although he explicitly agrees that a degree of inequality is important to encourage innovation, enterprise, and industry.
“I have no interest in denouncing inequality or capitalism per se,” he notes early in the book. But then the wing-nuts and trolls attacking him have no interest in debate, let alone knowledge. They hate social science just as much as they hate plain old science.
For the rest of us, Piketty’s opus poses an epochal challenge. Confronted with the truth about exacerbating inequality and the costs imposed on democratic society, what are we going to do about it? History provides a few clues if not a blueprint. The highest level of economic equality and social strength in the West arrived during the postwar era – back when unions were strong, taxes restrained the rich, minimum wages were higher, and redistribution was not a dirty word.
It will be the task of the next generation to restore decency and democracy – and save the planet — against the ferocious political resistance of the super-rich. They can now begin by discarding the ideological illusions that Piketty has so neatly dispatched.
By: Joe Conason, Editor in Chief of NationalMemo.com; Cross-Posted in TruthDig, The National Memo, April 25, 2014
“It’s Time For The Right Wing To Stop Lying”: Six Studies That Show Everything Republicans Believe Is Wrong
The great 20th-century economist John Maynard Keynes has been widely quoted as saying, “When the facts change, I change my mind. What do you do, sir?” Sadly, in their quest to concentrate economic and political power in the hands of the wealthiest members of society, today’s Republicans have held the opposite position – as the evidence has piled up against them, they continue spreading the same myths. Here are six simple facts about the economy that Republicans just can’t seem to accept:
1. The Minimum Wage Doesn’t Kill Jobs.
The Republican story on the minimum wage takes the inordinately complex interactions of the market and makes them absurdly simple. Raise the price of labor through a minimum wage, they claim, and employers will hire fewer workers. But that’s not how it works. In the early Nineties, David Card and Alan Krueger found “no evidence that the rise in New Jersey’s minimum wage reduced employment at fast-food restaurants in the state.” Since then, international, national and state-level studies have replicated these findings – most recently in a study by three Berkeley economists. Catherine Ruetschlin, a policy analyst at Demos, has argued that a higher minimum wage would actually “boost the national economy” by giving workers more money to spend on goods and services. The most comprehensive meta-study of the minimum wage examined 64 studies and found “little or no evidence” that a higher minimum wage reduces employment. There is however, evidence that a higher minimum wage lifts people out of poverty. Raise away!
2. The Stimulus Created Millions of Jobs.
In the aftermath of the 2007 recession, President Obama invested in a massive stimulus. The Republican belief that markets are always good and government is always bad led them to argue that diverting resources to the public sector this way would have disastrous results. They were wrong: The stimulus worked, with the most reliable studies finding that it created millions of jobs. The fact that government stimulus works – long denied by Republicans (at least, when Democrats are in office) – is a consensus among economists, with only 4 percent arguing that unemployment would have been lower without the stimulus and only 12 percent arguing that the costs outweigh the benefits.
3. Taxing The Rich Doesn’t Hurt Economic Growth.
Republicans believe that the wealthy are the vehicles of economic growth. Starting with Ronald Reagan in the 1980s, they tried cutting taxes on the rich in order to unleash latent economic potential. But even the relatively conservative Martin Feldstein has acknowledged that investment is driven by demand, not supply; if there are viable investments to be made, they will be made regardless of tax rates, and if there are no investments to be made, cutting taxes is merely pushing on a string. Thomas Piketty and Emmanuel Saez, two of the eminent economists of inequality, find no correlation between marginal tax rates and economic growth.
In fact, what hurts economic growth most isn’t high taxes – it’s inequality. Two recent IMF papers confirm what Keynesian economists like Joseph Stiglitz have long argued: Inequality reduces the incomes of the middle class, and therefore demand, which in turn stunts growth. To understand why, imagine running a car dealership. Would you prefer if 1 person in your time owned 99% of the wealth and the rest of the population had nothing, or if wealth was distributed more equally, so that more people could purchase your cars?
Every other country in the Organization for Economic Cooperation and Development has far lower levels of inequality than the United States. Since there are no economic benefits of inequality, why hasn’t the right conceded the argument? Because it’s based on class interest, not empirical evidence.
4. Global Warming is Caused by Humans.
Even as global warming is linked to more and more extreme weather events, more than 56 percent of Republicans in the current congress deny man-made global warming. In fact, the infamous Lutz memo shows that Republicans have actually created a concerted campaign to undermine the science of global warming. In the leaked memo, Frank Lutz, a Republican consultant, argues that, “The scientific debate is closing [against us] but not yet closed. There is still a window of opportunity to challenge the science.”
In truth, the science of global warming is not up for debate. James Powell finds that over a one year period, 2,258 articles on global warming were published by 9,136 authors. Of those, only one, from the Herald of the Russian Academy of Sciences, rejected man-made global warming. That one article was likely motivated by the Russian government’s interest in exploiting arctic shale. Another, even more comprehensive study, examining 11,944 studies over a 10-year period, finds that 97 percent of scientists accepted the scientific consensus that man-made global warming is occurring.
This is not an abstract academic debate. The effects of climate change will be devastating, and poor countries will be hurt the worst. We’ve already seen the results. Studies have linked global warming to Hurricane Sandy, droughts and other extreme weather events. More importantly, doing nothing will end up being far more expensive than acting now. One study suggests it could wipe out 3.2% of global GDP annually.
5. The Affordable Care Act is Working
President Obama’s centrist healthcare bill was informed by federalism (delegating power to the states) and proven technocratic reforms (like a board to help doctors discern which treatments would be most cost-effective). Republicans, undeterred, decried it as Soviet-style communism based on “death panels” – never mind the fact that the old system, which rationed care based on income, is the one that left tens of thousands of uninsured people to die.
From the beginning, Republicans have predicted disastrous consequences or Obamacare, none of which came true. They predicted that the ACA would add to the deficit; in fact, it will reduce the deficit. They claimed the exchanges would fail to attract the uninsured; they met their targets. They said only old people would sign up; the young came out in the same rates as in Massachusetts. They predicted the ACA would drive up healthcare costs; in fact it is likely holding cost inflation down, although it’s still hard to discern how much of the slowdown was due to the recession. In total, the ACA will ensure that 26 million people have insurance in 2024 who would have been uninsured otherwise.
It’s worth noting that every time the CBO estimates how much Obamacare will cost, the number gets lower. Odd how we’ve never heard Republicans say that.
6. Rich people are no better than the rest of us.
Politicians on the right like to pretend that having money is a sign of hard work and morality – and that not having money is a sign of laziness. This story is contradicted by human experience and many religious traditions (Jesus tells a graphic story about a rich man who refused to help the poor burning in hell). But it’s also contradicted by the facts – more and more rich people are getting their money through inheritances, and science shows that they are no more benevolent than others.
More and more, the wealthy in America are second or third generation. For instance, the Walton family, heirs to the Walmart fortune, own more wealth than the poorest 40 million Americans. Thomas Philippon and Ariell Reshef have found that 30 to 50 percent of the wage difference between the financial sector and the rest of the private sector was due to unearned “rent,” or money they gained through manipulating markets. Josh Bivens and Larry Mishel found the same thing for CEOs – their increased pay hasn’t been correlated to performance.
If rich people haven’t really earned their money, are they at least doing any good with it? Studies find that the wealthy actually give less to charity as a proportion of their income than middle-class Americans, even though they can afford more. Worse, they use their supposed philanthropy to avoid taxes and finance pet projects. Research by Paul Piff finds that the wealthy are far more likely to exhibit narcissistic tendencies. “The rich are way more likely to prioritize their own self-interests above the interests of other people,” Piff recently told New York magazine. “It makes them more likely to exhibit characteristics that we would stereotypically associate with, say, assholes.”
By: Sean McElwee, Rolling Stone, April 23, 2014
“It Makes No Sense”: Why Do People Vote Against Their Own Best Interests?
This question has stymied political strategists and pundits for a long time. As an expert in the women’s market, I too am baffled by the way people, especially women, vote against those who share their ideals and values in lieu of voting for those who don’t.
I have frequently been asked and often pondered the question: “Why would a woman vote Republican when they clearly have a war on women?” I wish I had a great answer for this. Perhaps they have always voted Republican, and thus continue down this path. Perhaps they are wealthy and the tax breaks the Republicans fight for, that primarily benefit the rich, is the most important reason. Perhaps they believe the falsehoods and phony rhetoric of the Republican Party. Whatever the reason, I find it truly disturbing.
Both women and men should vote for elected officials whose actions show that they have the best interests of the citizens and country in mind, but for some reason, they don’t.
While I acknowledge that many Republican women are pro-life, offering choice, rather than a one-size-fits-all approach, just makes good sense. I’m not advocating abortion; I am saying that I should have the choice to decide what is best for me and my family.
Equally troubling is why Republican women support a party who barely passed the Violence Against Women Act, who don’t support legislation to guarantee that a women receives equal pay for equal work, and who think women’s bosses should have the right to determine her health care and reproductive decisions.
As Republican governors refuse to accept billions of dollars in free federal money to expand Medicaid, hundreds of thousands of people are going without medical care and are dying needlessly. As the GOP continues to cut billions from food stamps, many women and children are going hungry.
Men are also hurt by the policies of the Republican Party. Many men support the party because they are pro-gun, but Republicans also vote to keep the minimum wage at poverty levels and are against extending unemployment benefits. These policies hurt the working class.
Republicans want to reduce government spending and control, but I wonder if the populace realizes that many solidly red states that they live in receive a huge percentage of their income from the federal government? In actuality, the amount many red states pay in federal taxes is small compared to the amount they receive back from the government.
Do they think about how the government spends this money building the roads they drive on daily, or providing funds for the fire department that comes to their home if there is an emergency? When a natural disaster strikes them, do they accept F.E.M.A’s help? These and many more necessities are government-funded programs.
To cut spending on these and other projects as the Republicans suggest, would greatly impact both the men and women in these states in a very destructive way. It reminds me of the old saying, “cutting off your nose to spite your face.” It makes no sense.
In reality, the Republicans don’t want to cut spending, just redistribute it from the poor and middle class to the wealthy. The Republican budget once again gives massive tax breaks to the wealthiest Americans, while it cuts programs and safety nets that help many of the people who vote Republican. I don’t understand why people vote against their own best interests, especially when it hurts their family, the economy and the principles on which America was founded.
I respect the two-party system and believe it is healthy for a democracy to have differences that exist in many areas of fiscal and social governance. But the right-wing fringe has hijacked the sanity of the Republican Party, and the GOP needs to get back on track. Gerrymandering, suppressing the vote, allowing unrestricted funds and unlimited terms have led to undemocratic practices which will destroy America if voters don’t stand up and fight for what is right.
Citizens, whether Republicans, Democrats or Independents, all have much to gain by voting for politicians who are interested in the good of the country: working together, listening to each other, and compromising. If they continue to choose representatives who do not support our fragile Democratic Process, citizens will soon have more reasons to fear Washington D.C. than foreign terrorists.
By: Gerry Meyers, CEO, President and Co-founder of Advisory Link;The Huffington Post Blog, April 21, 2014
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