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Comment by SilasX | Hacker News Reader

If so, turn it into a perpetually profitable self-funding charity that fronts the poor the money to get the cheaper option in return for a cut of the savings.

It's probably not possible because there are factors other than what you described.

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Just because you created a way for someone to pay bulk rate in smaller amounts doesn't make the savings magically appear in a bank account.

At best, you just invented credit cards. But poor people often either can't get credit cards, or the interest rates are astronomical, or they require a cash deposit (that they can't afford) to secure them.

I didn’t invent credit cards. I pointed out that being able to borrow isn’t the limiting factor. It’s well over 100% rate of return for the bulk savings you can get for some of the examples often cited. That’s a tad more than the interest a credit card charges (or what the charity I suggested could charge).

The point of my comment was to suggest that you be the lender and get these easy returns, if you’re so confident in the theory. Why did you think it would be relevant whether current credit cards would lend to them?

Are there specific issues that you have with the comment and deeper insights than those described? If so, what are they, and what data do you have to support them?

Yes, the insight that the comment implies there's an easy source of free money that also lifts everyone out of poverty with little effort. Do you not count that as an insight? Were you aware of that implication before seeing my comment? Is there a reason you need copious data to back up my comment but not the original one?

The OP implies no such thing.

That was OP being sarcastic and stating no further point other than they don't have one.

Are we reading the same comment?

>Instead of buying a 20-pack of $necessary_product that costs $20 and will last for months, the lower class buy a 2-pack that costs $5 and lasts a couple weeks because they need the $15 to pay rent.

That directly implies that if they could be lent the $15, they could get the long term cheaper option and save money, even if they had to pay it back plus a high APR.

Apparently we're not reading the same comment. In this example, the rich person pays cash for the 20-pack and probably earns interest on the savings. They have no need to pay interest on a loan. The poor person pays cash for the 2-pack and then pays again next month, and maybe takes out a payday loan to afford the rent after they have to call in sick, and there's your high APR. This is not a benefit. What am I misunderstanding?

The entire premise, where I suggested this was an easy mutually beneficial profit opportunity, for the rich person to lend to the poor person to make the bulk purchases? I'm not sure you're keeping up with the exchange here.

Buying a car.

If you don’t own a car in the US and don’t live in a place like NyC you will be destitute. You will have no way to get food and no way to get to work (and therefore pay rent.) Most people in the US could afford to actually save money if they didn’t have to pay (including interest!) on the loans they have to take out to buy a (crappy and used often!) car.

In Israel in the 60-80's the state created "rent to own" housing projects for poor people.

It worked pretty well.

Meanwhile, in the USA, the only "rent to own" that we have are places like Rent-A-Center where you pay $20/week for a year for something that has a retail value of $300.

Paying a mortgage isn't much different than a rent to own scheme.

Israel at that time was a poor country, and home for many Jews who came from around the world with nothing .

Under those conditions, getting a down payment on a mortage was huge problem.

Qualifying for a mortgage is much different than qualifying for a lease, however.

That's really not true.

Have you tried applying for a mortgage and renting?

Sounds like the same thing as a mortgage.

Once a business or service is built around it, yes. But This likely can be solved via something that doesn't have to be profitable, just successful. Universal basic income could cover the gap. Stronger unions and enforcement of stronger regulations like curbing interest rates, providing personal finance resources for free like a financial adviser or community college course, or shoring up meals programs for poor kids are all options. It doesn't have to be a business to work.

> Universal basic income could cover the gap.

UBI does not solve the problem outlined by jfrunyon that

> expenses are higher for poor people.

No, but that isn't the only tool or lever to pull. It's an idea around a rising tide lifts all boats where an extra $1k a month or baseline income could bridge gaps so instead of choosing between food, car, and insurance this month the household can cover all 3 and maybe get out for some ice cream and have a human experience.

There are fair criticisms of UBI but it would not be acting in a vacuum. There could be policy and actions to support the goals of UBI. Everything is more complicated than it seems.

> It's an idea around a rising tide lifts all boats where an extra $1k a month or baseline income could bridge gaps

Prices increase in this case - that is how markets work.

Isn't this essentially the whole premise behind microfinance (microloans), which are a form of charity?

Micro finance works in the third world, for existing successful entrepreneurs; I’m addressing its application to blue collar first world poor.

Not always...

Its been found that what most have called charity is actually predatory lending by another name. I’m sure there are some legit players but like most things in life you may need to read the fine print and get a lawyer.

Source: https://mathbabe.org/2015/10/13/microfinance-is-mostly-a-sca...

Microfinance is called microfinance, because $1000 can get you a herd of goats in poor countries.

Try doing that in US....

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