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Comment by ghufran_syed | Hacker News Reader

I love Terry Pratchett, but is there any evidence that this is true in our modern economy? As opposed to just being a cute story that reinforces our existing biases that "the rich get richer, the poor get poorer" which is demonstrably false over the past few hundred years?

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!

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The Cost of Being Poor is a well known comparative study of the urban poor in Indiana, United States that addresses this directly. There have been numerous others.

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.

Not to mention the fees that you typically face when poor, like bounced checks and exorbitant payday loan interest charges.

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).

> 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.

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.

"I love Terry Pratchett, but is there any evidence that this is true in our modern economy?"

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.

> 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.

Some brands offer products at dollar stores that are identical to traditional store products except by volume; a hair or so less weight/volume per buck. It adds up.

It's even true of shoes.

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.

This seems like something that is obviously not linear. There are prices that are about quality, then there are prices that are about style, and other objectives.

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.

Of course it is.

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.

And this is where credit is useful - if you can't afford the $120 lump sum, but you _could_ afford the $165 spread out, then it should be possible for somebody to profit off this arbitrage.

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).

Lender only makes money when the loan is repaid.

yes, i think that's pretty obvious.

For taking on the risk of an unsecured lender, they get a very high interest rate - ~20% a month! That's almost illegal!

So credit in this case would just be a way for a third party to benefit from the disparity without altering the situation much. That doesn't sound very useful to me.

That’s the tricky part with interest rates. They have to make sense in gross dollar terms as well as percentages.

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.

Except there are closer to 20 working days per month for month for most people, and it's kind of a wash at that point.

What you do get though is freedom from thinking about the cost of rides, which is pretty great.

Not for people who can't get better than part-time hours at either of their jobs.

Work adds an artificial limit to the number of times the subway is used. The point is, if you go out once a day using the subway, it’s costs you more if you can’t bare the upfront cost.

The claim is not that it's a linear relationship, it's a step function. There's a threshold where you spend enough to get a high enough quality that it lasts longer and saves money. Beyond that you reach diminishing returns and you're paying for minor luxuries or status symbols.

I agree in principal but

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.

I think this is true of some items, but not most items. Most spending is on food, shelter transportation, healthcare, and entertainment.

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.

food nutritional quality i can afford the 1$ greaseslab but not the carrots

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.

....

>As opposed to just being a cute story that reinforces our existing biases that "the rich get richer, the poor get poorer" which is demonstrably false over the past few hundred years?

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.

You bought the good boots! It's like the rich guy in the story complaining that he can't spend one hundred dollars for boots that last 40 years...

yes. if you have money you invest and get richer. poor might not get poorer, but for them it is problematic to save any significant amount. One example: buying a house vs renting it. (where I live amount for rent is approx the same as interest amount for mortgage). one who bought a house has a cushion (house is an asset) for retirement, one who always rented has to continue to rent.

You get well into the point of diminishing returns fairly quickly with cars. A poor person might not even be able to scrape one or two thousand together for a car, let alone the cost of maintenance, fuel etc.

On minimum wage it can take years to save up $8k. Better paying jobs are available but you need a car to get to them.

A lot of people can't get a car in the first place and thereby miss out on employment opportunities.

If you can deny the rise in inequality that is at this point obvious, the decimation and precarity of the lives of service workers and former manufacturing workers, the unhealthiness of what should be the most univerally gleaming and glittering society in the history of humanity, I don't know what to tell you.

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