Rich people do have trouble understanding what it's like to be poor | Hacker News Reader

Rich people do have trouble understanding what it's like to be poor

salon.com

269 pointspseudolus408 comments

Wealth is a stock measure, income is flow.

You accumulate wealth out of what you can set aside out of the flow.

Some of us immigrants do not come to this country with an existing stock of wealth either back home or here. We are also not in the favored group of immigrants. We have human capital which we are trying to convert to financial capital for the next generation.

Then, when we sort of "make it" here, people who have family homes worth close to million and up (you can draw on that home equity, you know), people who know people (either family or others) who can "help" them with down-payments etc label us rich based on the flow we are receiving right now. These people tend to themselves make in the $150K range, in my experience and do not realize that the wealth they have was already accumulated in the less punitive environment of the 80s and the 90s.

I do not begrudge anyone for what they have. But I do find people who got a "hand-me down" apartment in Manhattan after growing up in a nice house in Westchester lecturing me about "the rich" and "the poor".

Except that my ability to make it in today's corporate environment depends on their political sensibilities.

I think this is an excellent comment. What makes me very sad is that during the past 14 months the divide between those who own assets and those who don't has reached gargantuan proportions.

I mean, in my raging inferno of a housing market, over the past couple of years home prices have easily doubled. So a 400k house from 2018 now sells for 800k. Yes, if I want to move to another house in my area I'll pay similarly astronomical prices, but that just means it's about a wash for me, and of course I have many more options like moving to a cheaper locale or a cash out refi.

But if I (or my parents) don't already own a home, it means my chances of ever owning a home in my area just went to about zero. People made vastly more money just sitting around in their houses in the past couple years than I made in my job as an "essential" worker over the past decade.

I just don't see how this ends well.

Taxes even that out a bit. The person with an 800k house pays twice as much in property taxes. In many states, the amount that the state can raise taxes on someone whose house may have "increased" in value is limited.

They don't because houses don't produce income (unless you rent them). So if you had your house when you could afford it but cannot anymore you get made even less wealthy with the property taxes. Taxes should be proportional to income. There should be a more fair way to do that: to not tax main house when in use, tax only at the time of sale on benefit only (corrected by inflation).

Only if renters are allowed to pay rent out of pre-tax income.

Good point. If it is for the main living place.

You have a lot of reading to do about property taxes in California.

That's rarely true. Property taxes are typically set by dividing the budget by the total value of all real estate to set the mill rate and then allocating it by the specific value of your property, so if the entire market increases the tax impact based on assessed value doesn't change much. You only see dramatic changes when certain areas in a taxed area increase or decrease significantly relative to others.

Not in California. Prop 13 keeps property taxes at the value when you purchased your home.

IMO this is a massive contributor to inflated property values, now leaking into other state economies.

What is your theorized mechanism for the freezing of property tax rates at the purchase price causing inflated property values?

I could see it making an upward or downward trend worse. In an upward trend buying before increase would be tax advantaged. In a downward trend buying after anticipated decreases would have the advantage. All in all, more people would be advantaged by just staying in place. Maybe that reduces total inventory, making the remaining properties on the market cost more?

Its way more simple than you think. Lower taxes just lower the yearly cost of a house. That means you can get a bigger loan instead.

It's really simple. California has a housing supply problem. If taxes are never raised, housing supply is even more suppressed. Owners have zero incentive to sell.

Here's an example. My mother inherited a beach house in Carpinteria. My grandparents purchased it for $14k in 1924. It's worth north of $10M. Annual taxes are under $5k. She can rent this out during summer months for over $50k/mo. Why on earth would she ever sell? She has an asset that appreciates at or above index funds and pays amazing dividends. This is an extreme example but it works the same at every level.

Prop 13 encourages people to accumulate housing / property and removes basic market economics. Artificially low housing supply leads to artificially inflated housing prices.

I remember Prop 13 from a case study in a government class. I had totally forgotten about it until you mentioned it.

Prop 13 was pushed by rental property owners---primarily apartment complexes, because they don't change hands very often. It's one thing to enjoy the value increase on a house you own for 5-10 years and another the increase on an apartment complex that you own for 20-30.

> Prop 13 keeps property taxes at the value when you purchased your home.

That's a myth. Prop 13 limits assessed value from increasing by more than inflation rate and is limited to 2%/year overall. So yes, property taxes stay artificially low, especially over long times, but they do go up every year.

The fact that Prop 13 applies to everyone by default is the mistake. It should be something you can apply for when your tax burden increases unreasonably quickly and even then the freeze would only last 10 years so that you can plan to leave if the tax rate becomes unaffordable.

I would love to see a parallel universe where in 2008 no one is bailed out and bankers are either on the hook for the risks they took or actually are sent to prison.

Taking it further back, what if the tech bubble of the 90s is allowed to collapse, interests aren't set at almost 0, and a housing bubble isn't blown by exploiting minorities.

And last year airlines, and other corporations who didn't account for black swan events, go bankrupt, and new management take them over (or employees), or they disappear altogether and new startups can fill the void.

I am convinced the USA is in the place it is because since about 99, no rich person has been allowed to fail or lose money, not really.

I'm not a leftie, but it really is capitalism for the poor, socialism for the rich right now. But I have to say, the problem is collusion between the rich who are close to politics, and the problem is the GOVERNMENT enabled all this.

The problem is NOT all rich people. Only the ones who are part of this system. And this distinction needs to be made, otherwise the US is headed for a communist disaster of hating the rich. But the problem is the corrupt rich, not all rich.

I agree with your sentiment, injustice-outrage, but suspect that had things gone that way we'd be in Japan's real estate quagmire still, unemployment at 50%.

Why is Japans' real estate a "quagmire" and why would unemployment be 50% when Japan post 1990 averaged 3.5% (with a few short-lived peaks up to 5.5%)?

Trickle down economics. The only problem was that it was and still is a lie. Corporate welfare doesn’t translate to the general public. Cutting corporate taxes didn’t massively increase jobs. During the Trump Administration several companies made public statements that the tax cuts proposed and the enacted would allow them to keep their manufacturing in the US. Then after they were made law what did they do? Harley Davidson decided that actually they were going to offshore anyways and close their factory.

Not all rich people are bad. There are very wealthy people advocating for increased taxes on themselves. But many have a vested interest in maintaining and accumulating more wealth. The government allowed these things to happen, specifically because people with wealth and in power colluded to change and create policy. This is the point of lobbying, not to mention literal regulatory capture (FCC, Ajit Pai).

Republicans/conservatives howl and scream about social welfare programs but are all too happy and eager to provide corporate welfare. The result is plain to see.

I understand the sentiment, but even with the bailouts 2.5 million people lost their jobs and we continue to see second order effects of the crisis, like deferred home purchases, declining birth rates, low or nonexistent retirement savings, and political instability.

Imagine how bad it would be if there was a total collapse of the financial system. That's what the situation was before the bail outs.

> I would love to see a parallel universe where in 2008 no one is bailed out and bankers are either on the hook for the risks they took or actually are sent to prison.

That wouldn't solve anything. 2008 was 9/11 for banking. Lending is now more restrictive than before. Without a bailout people's deposits would be on the line.

>Taking it further back, what if the tech bubble of the 90s is allowed to collapse, interests aren't set at almost 0, and a housing bubble isn't blown by exploiting minorities.

Interest rates should be negative but that's impossible in practice so instead we are stuck with 0% interest rates and hope that inflation reduces real interest rates enough to convince people to invest their money again and by investing I mean growing their businesses by hiring people.

>I am convinced the USA is in the place it is because since about 99, no rich person has been allowed to fail or lose money, not really.

Well, that is close but it is not a perfect explanation. Structurally it is very easy to be rich. Inflation was low, anything you did, no matter how stupid or unproductive, was enough to get past inflation.

>I'm not a leftie, but it really is capitalism for the poor, socialism for the rich right now. But I have to say, the problem is collusion between the rich who are close to politics, and the problem is the GOVERNMENT enabled all this.

From a hardcore capitalist productivity growth maximalist mindset the USA is doing extremely poorly. Instead, rich people get to enjoy an exploited labor force. Over the long term things can only go wrong, especially since the labor pool is shrinking through aging.

When half the population consists of retirees they want to live in a world where infrastructure investments have already been made back when the labor pool was plentiful. The truth is that the only way you can save for retirement is by building something today that will keep existing by the time you retire. Housing is a good option because it can last a long time. Roads are good because they can be built in your 50s and not require maintenance until you are dead. Power generation is good because wind turbines and solar panels can last 20-30 years and preventing climate change lasts forever (hopefully).

What I am seeing instead is that we are at a time where the population is still reasonably young and labor is plentiful and we waste it on doing nothing useful with it and then 30 years later the population is old and there is no way you can ever catch up on all the lost potential.

The government definitively plays a big role but it is primarily the local government, the federal government mostly has complacent politicians that support the status quo (the motto of the republicans) but none of them are really trying to make things actively worse, they just hope that the problem goes away on its own. (it won't)

>The problem is NOT all rich people. Only the ones who are part of this system.

Yes, exactly. The problem isn't all rich people because there have been times where an effort has been made to keep things in balance. That effort is gone and there are not many counter balancing forces left. Specifically, it is rich people who do not use their wealth to grow productive companies. A lot of them just want to protect inefficient business models that are unsustainable over the long run.

> And this distinction needs to be made, otherwise the US is headed for a communist disaster of hating the rich.

That's true. If you can restore the balance there is no need for the guillotine, ultimately all of this is for the benefit of everyone, the poor and the rich. If they follow up on their social responsibility (invest their savings) they can keep everything they have.

The problems start with the fact that they can growth their wealth without following up on their social responsibility and the first step toward a solution is raising inflation because inflation hurts those who do not invest their savings.

Here is an interesting "specimen" of a self declared rich person: https://i.imgur.com/ky5uLpF.png He claims that he has enough money but "oddly" enough he is scared of inflation and considers low prices thanks to exploitative wages a good thing, as if the free market (the status quo) he so praises could hurt him. It's the choice mindset mentioned in the article in action.

I made this imgur album for absolutely no reason: https://imgur.com/a/Oaxrt33

> what if the tech bubble of the 90s is allowed to collapse

It collapsed in the dot.com crash (remember pets.com).

> I am convinced the USA is in the place it is because since about 99, no rich person has been allowed to fail or lose money, not really.

Well, I was a tech bubble paper millionaire in '99, and had nothing by 2002. It all evaporated.

Then the smaller bubble of the 2000s crashed in 2008.

The huge bubble of the 2010s.. hasn't crashed. I sure can't predict when, but cycles suggest it'll crash at some point.

The solution is to move to an area with cheaper housing.

Moving to opportunity is the American way

Hmmm.... I've been looking at real estate in the midwest — Kansas City, Omaha — and surprised by how much it has skyrocketed there as well.

At the same time (as seen on HN recently) they're "giving away" land in small-town Kansas and Nebraska.

No jobs. You are responsibly for building the house. Lots of other caveats.

I think a real-estate collapse or a sustained wave of affordable housing starts is more likely.

The government will not allow real estate to stay collapsed. Look what happened after 2008: https://fred.stlouisfed.org/graph/?g=EcTD

That worked for early movers at beginning of Covid. In Canada, 12 months later, previously "cheap" provinces have doubled in prices too.

Still cheaper than Vancouver or Toronto of course; but given lower income in those areas, and the growing pains they're about to have in catching up their infrastructure etc, it's no longer a straightforward gain anymore.

Cheaper housing => longer and more expensive commute.

Or worse job opportunities. Then people tell you to move where the jobs are. Which has really expensive housing.

The free market tends to flatten this stuff out

The free market caused this situation in the first place.

We had a free market in the past, but I would say that today it is a rigged market.

> We had a free market in the past…

This is so sweet. Only Mogadishu has a truly free market. Not many takers.

Free market would mean no zoning regulations. Housing is not a free market whatsoever (for a good reason, in some cases).

I don't see how that follows. Free market must have rules to be free - market with no rules undergoes self-destruction quite efficiently, just like free speech doesn't mean you can say whatever you want without consequences. Just mention zoning regulations explicitly.

Tight downzoning took all the unfairness of the existing market for real estate and amplified it hugely. Today, housing market is driven by rentierism, which is pretty much the opposite of "free". I agree 100% that regulations create and drive markets, but the regulations have been put in place to ensure a steady transfer of wealth from those with less to those with land.

The downzoning trend that started in the 1970s, driven by the twin forces of 1) racism (not wanting to allow non-whites into white neighborhoods after the civil rights movement tried to allow integration), and 2) Malthusian thinking (keep the population down by letting fewer people live near me), led to a transformation of real estate, making it even worse.

They aren't making any more land, as they say. Which is what drives the value of it up so much in certain locations, the locations where people want to be. But by downzoning so that no more people can use the same bits of land, the structures themselves acquire the really insidious property of land that makes it a really bad for for markets.

Not in tech. Opportunities are abound. My parents had no assets and were rather poor. Tech has allowed me to live in a cheap area and make an extraordinary income and build up wealth for the first time in my family remotely. I work from home and have never had to commute.

Some people pretend the Midwest doesn't exist.

Plenty of jobs and cheap housing. You don't get FAANG salaries, but if you're setting FAANG to be the standard, you are on of the "rich people who have trouble understanding what it's like to be poor".

Before the pandemic, someone on a typical engineer salary in the Midwest would afford a 2000 sqft home with a nonworking spouse and a few kids. 2000 sq ft is not big over there.

For the record there are FAANGs paying their salaries in the Midwest. I could transfer to Detroit or Madison fairly easily.

Those would still be the exception rather than the rule. Not the ‘standard.’

I’d argue it’s pretty close to the baseline now. I’m considered a below average engineer (by compensation), but being L5 at even the least impressive FANG can provide quite a bit of mobility internally.

I think what he meant was that getting a FAANG job is the exception.

My original comment was with a standard, lower paying non-FAANG job in the Midwest. You don't need to work at a FAANG to afford a 2000+ sq ft house, have 2 cars, and have a bunch of kids and pay for their college.

>Or worse job opportunities. Then people tell you to move where the jobs are. Which has really expensive housing.

This is not entirely true. I live in Baltimore City and there's cheap housing + access to the great tech market between baltimore and dc

I understand Baltimore has insanely cheap housing for its size, but I’ve always imagined it as a Detroit like situation, where yeah the housing is often cheap, but not areas you want to live. It may not actually be as bad as I think though.

It's very block by block but there are some ok areas with housing near/under 200k (at least pre-pandemic).

Last time I was in Baltimore was probably 15 years ago, but from the terrible street/traffic design to my general feelings of personal safety it was, holistically, the worst city I have ever visited.

what about the street design?

>general feelings of personal safety

ymmv depending on your level of comfort around lower income black people

It's been a while so my memories may be incomplete, but I recall coming on instances where traffic would use the same lanes of a stretch of road in both directions controlled by a light (so running a red light would result in a head on collision) which made me feel uncomfortable. I remember other Kafkaesque scenarios also, like encountering a 5 way intersection with 4 one-way roads going into it and a single two way potential exit which was under construction and lead to a truly bizarre detour back out a one-way street. Just in general I got the sense that whoever was in charge of street design was asleep at the wheel.

I have no discomfort around black people and have been lower income for most of my life. Most of my safety concerns were around aggressive traffic and sketchy-looking public infrastructure.

House prices have gone up everywhere, your suggestion is uh, silly.

People made vastly more money just sitting around in their houses in the past couple years than I made in my job as an "essential" worker over the past decade.

This is not an accident. It’s a result of deliberate policy choices. The incumbent homeowners voted themselves massive returns. And they felt self righteous while they were doing it to boot.

What are you talking about?

Presumably restrictive zoning policies that make it incredibly difficult to build the amount of additional housing that is needed in many areas.

That, but also the entire GSEs edifice, the Fed’s MBS purchases, and lots more.

Overpriced houses make construction arbitrage easier. It's easier to build a new house than to buy an existing one.

The places I’ve lived all my life have few or no empty lots. To build a new house you need to buy and tear down an existing one.

There are a lot of 'deliberate' policy decisions which both depress low-skilled workers' wages, and lead to higher property prices. On the wage side, good examples are that:

1) the minimum wage doesn't get increased with inflation

2) many jobs require a higher degree (which takes capital to pay for), or effectively require working for free via internships (which requires capital or someone else subsidizing you)

3) many higher paying jobs preclude you from working there if you have a criminal history (which is very disproportionately likely to be true for some demographics than others, in many cases just due to disparate enforcement), which effectively suppresses wages for many millions of people.

On the housing side, any policy that restricts the building of new housing in order to limit supply (and there are a lot of them) will drive up housing prices. This includes things like minimum lot sizes, enforced parking requirements, etc. It's pretty much universally accepted in the US for local politicians to talk about 'protecting home values', which usually has a subtext of [by keeping poor people out of our town]. This is probably the _most_ common policy topic in my well-off suburban community - every proposal for multi-family housing gets fought tooth and nail, it's virtually impossible to build more than 1-bedroom apartments 'lest our schools become overcrowded [by poor people]', etc.

It’s not only a supply issue these days. Even areas that have basically unlimited land and building in Texas have prices going up massively. How do you explain that?

Building supplies have grown at an insane rate. A lot of builders went out of business because of 2008. It is still a supply issue, just not a land supply issue.

Single family homes cannot meet demand, period.

That's a short term problem, it may last 5 years for all I know but it will get solved eventually. Zoning on the other hand is something that will stay for decades and it gets worse over time.

Lumbar as a whole has minimally doubled during the last year[1]. A lot of people are moving to Texas, which raises demand, which raises prices. There is also a current lumbar shortage, which makes house building unpredictable when you have to plan 1+ years out.

You don't just go from 0 to a house. There is usually about a year of designing/planning which have to be approved and meet national and local code, numerous inspections, approvals and permits before ground is broken. Most people who move buy an existing house because they want to move "now." Out of all of the places you've lived, how many did you have custom built vs moving into an existing structure?

Prices are rising pretty quick in Arizona and Idaho as well. Idaho was the quickest growing state in 2020[2]. Those are also hotbeds of people moving to them. Most are trying to escape California, Chicago and NY. CA and NY lost population and even recently had their US House seats reduced as a result[3].

[1] https://fortune.com/2021/04/27/lumber-prices-are-up-232-and-...

[2] https://www.kxly.com/idaho-leads-country-with-amount-of-peop...

[3] https://www.usatoday.com/in-depth/news/politics/elections/20...

For future reference, “lumber” is wood and “lumbar” has to do with your lower back (e.g. “lumbar pain”)

I'm actually sort-of familiar with this, as I have family that lives all around there.

1) Prices have gone up, but not nearly as much as places where supply is much more constrained (i.e. the bay area or NYC metro area).

2) Even if there is 'unlimited land', the land closest to the city centers where most of the employment is located is still limited. A cheaper house 3 hours away from your job doesn't help someone all that much.

3) Texas absolutely has lots of policies that do things like limit housing density. Many of the huge suburban tracts being developed have home owner's associations that enforce a variety of policies like the ones discussed earlier (enforce uniformity in terms of lot size, minimum house size, parking, etc), as well as limiting your ability to do things like rent or subdivide your property

4) You just need the population to be increasing faster than the housing supply to have a 'supply issue'. This last year has both seen a lot of raw material supply issues (and labor issues) due to the pandemic, and a lot of people also trying to relocate (also due to the pandemic). Sometimes temporary housing prices increases are unavoidable while supply and demand adjust, but long term policy decisions can definitely limit supply and force prices higher.

Another commenter also pointed out that low federal interest rates generally promote asset price inflation (as buyers are frequently bidding based on their ability to carry a 30-year monthly mortgage payment, so lower interest rates can almost directly increase home values when people are bidding against each other).

> 1) the minimum wage doesn't get increased with inflation

Sure it does. It's pretty much unchanged since 1980 (in a sawtooth, they build up some pressure due to inflation and then it jumps up due to legislation).

1960-1980 looks to average around 20% higher.

It's funny how these charts differ.

https://www.pewresearch.org/fact-tank/2017/01/04/5-facts-abo...

https://image.cnbcfm.com/api/v1/image/103807392-min-wage-inf...

A strong argument can be made that minimum wage should track GDP, not inflation.

The important thing here is that it’s not indexed to inflation, it’s occasionally increased by legislation, so for most of the ~decade between bills, wages are decreasing in purchasing power for those people. I think you can make a much stronger case that it should track productivity than that it should track GDP, as the latter increases just by virtue of a growing population.

Minimum wage is indexed to inflation some places, such as the most populous state, California. (Minimum wage is actually currently increasing by $1/year, which is substantially more than inflation, and will start being indexed to inflation in 2024 when the minimum hits $15/hr)

> which usually has a subtext of [by keeping poor people out of our town]

It took me a long time to grasp this because I simply refused to believe that people think this way. Just think about what "character of the neighborhood" really means.

It may sound like it is about architecture and preserving history but the character of a neighborhood isn't made up by that alone, the biggest factor in the character of the neighborhood are the people living in it and therefore preserving it requires keeping certain people out. It really is a code word for classism.

The Federal Reserve's overt mission is to dump new money into the economy to create inflation. But since they only pump it into the overgrown financial sector, we get asset inflation rather than general price inflation.

Every time interest rates are lowered, land prices go up, because the monthly (financial) rent remains the same. Similarly with down payments (20% -> 5%). The next step will be lengthening mortgage terms past 30 years. Each of these steps is aimed at making it more affordable to buy a house, but economic feedback makes sure that is only temporary. Meanwhile as asset valuations go up, one's ability to ever pay off that mortgage goes down.

Their dual mandate is to maximize employment and manage inflation. Their mission is exactly not to create inflation (or at least, too much of it).

"Manage" inflation means to create it. An economy naturally tends towards price deflation, through optimization and technological progress. Business looking for ways to cut costs to compete is intrinsic to a market.

Maybe a competitive economy tends towards deflation. In economies dominated by monopolies/oligopolies, price deflation is not a given.

Each step is aimed at increasing the wealth of incumbent homeowners, not making housing more affordable. The economists at the Fed and GSEs are not stupid.

The Fed mostly wants to decrease unemployment via 2% inflation. The conventional wisdom is that supply side stimulus will create companies that hire workers. So handing out loans should do the trick. Yeah, except building housing which is one of the easiest ways to employ people is illegal.

Why buy specifically mortgage linked instruments? There are lots of other ways to drop money from helicopters. I don’t think that choice was an accident.

The problem with relying on interest rates is that cash provides a lower bound of 0%. It's simply impossible to go negative on deposits without at least abolishing cash. Relying on the federal government doesn't work because the republicans are uncooperative. So the only measure left is to just bypass everything and hand out money directly. I'm actually hoping that the pandemic raises the inflation rate to 2% over the long term and that no intervention becomes necessary in the future.

Given enough inflation, interest rates will go up and then we can start getting rid of zombie companies, increase productivity growth and have growing wages again.

I see where you're coming from and it would be great if it happened that way. But the deflationary pull is getting ever stronger with technology - the more productive we are, the cheaper things should become. So the Fed's actions are the result of having a mandate that is directly incompatible with the technological goal of working less. If we switched to embracing deflation, then people could retire earlier knowing their savings would definitively appreciate in value, rather than having to hope on faux bubble "investments" that are mainly whims of more centralized government policy.

But that seems to be politically impossible. So another way to approach it would be to drastically reduce the legal definition of full time work. It should be under 20 hours already, considering that women entering the workforce nearly doubled overall hours worked. But instead, all of that overproduction got dumped into the hedonic treadmill and bullshit jobs.

> The incumbent homeowners voted themselves massive returns. And they felt self righteous while they were doing it to boot.

We'll see. They're millionaires on paper. If there's one thing about unsophisticated people and investments, they always cash out when it's too late.

> If there's one thing about unsophisticated people and investments, they always cash out when it's too late.

There is no such thing as "too late" in urban housing. Rural areas are so far "left behind" that it will take about ten times the investment that Biden wants to put up to bring it to civilized level, and he's already getting massive resistance... no way that the rural flight trend will be reversed.

> no such thing as too late

Go ahead and buy some homes for investment! Go buy some Dogecoin! Some GME! What a low information take, to say something about rural homes and Biden or whatever.

In the service of curiosity: maybe if you sold your $185,000 home from 1986 for $1.5m today, you’ll walk away a millionaire. A lot of people are looking at that arithmetic in San Francisco. And yet they do not sell! The index for months on market is at record lows. What’s going to really happen? They will watch the market fall, and then say to themselves “guess I should just wait until it goes back up in 10 years.”

> They will watch the market fall

The market won't fall, that is the entire point. It reasonably cannot fall, since the only politics that could make it fall (buildout of rural infrastructure, overriding NIMBY shit) won't ever pass. Inertia is massive.

The debt in the current world economy is unheard of, and the cost of housing is getting out of reach of first home buyers. Something has to give at some point.

If interest rates rise in the next 10 years then I suspect many will be left with mortgage payments they can't afford.

> If interest rates rise in the next 10 years then I suspect many will be left with mortgage payments they can't afford.

Sure, but there will always be a bigger (Chinese) fish to eat you(r investment). If there is one thing this world does not lack, it's a bunch of individuals and investment funds looking to make money on rent.

Oof a Chinese land grab after a mortgage crash. That's a bad future. I really hope that doesn't happen.

Surely though, it isn't a given rents will stay high in places where they're currently high? No one's trying to make money on rent in, say, Detroit.

> > They will watch the market fall

> The market won't fall, that is the entire point. It reasonably cannot fall, since the only politics that could make it fall (buildout of rural infrastructure, overriding NIMBY shit) won't ever pass. Inertia is massive.

That's probably overoptimistic. There are political circumstances that could cause metropolitan property values to fall on annual or even decadal timescales.

Consider, for example, the possibility of policies that have the effect of curtailing real estate investment by those exfiltrating funds from various regimes.

Or policies that made every school a good school, ending the (sometimes huge) price premium homes in 'good' school districts get.

Suppose house prices fall by twenty percent. People will be furious that their can’t lose investment is losing. People in this case being an outright majority of all adult citizens and disproportionately likely to be voters. Politicians will do everything in their power to reverse the trend and keep the good times going. Someday they may find it impossible, but I find it hard to believe we are close to that.

That 'outright majority' though is being eroded as more people are priced out of the market.

If the percentage of renters continues to grow (and property ownership keeps concentrating), you could see that math get flipped on its head (though there is an intermediate stage where 'likely to donate' outweighs 'likely to vote' to keep things as they are).

There are other possible policy scenarios, though. Sane densification of suburbia for example seems more likely than massive rural infra buildout.

House prices are largely as insane as they are due to the domination of monetary policy. Inflation is eventually going to bite and the slow and painful walk back will begin.

As interest rates begin to climb, house prices shall fall. If inflation forces banks to rapidly increase interest rates, house prices will crash.

Chiming in as someone who has a few million in liquidity and a few more in real estate: some people buy a house to...you know, actually live in it and stuff.

If you sell your primary home out of greed, assuming you otherwise like living there, you are attempting to time the market.

That never ends well.

Another thing that never works is trying to talk sense on the internet.

> Chiming in as someone who has a few million in liquidity and a few more in real estate: some people buy a house to...you know, actually live in it and stuff.

> If you sell your primary home out of greed, assuming you otherwise like living there, you are attempting to time the market.

Very well said. A home is not a stock to trade, trying to time the market. The point of a home is to live in it. Maybe sell in retirement to downsize. The estimated value fluctuations in the middle decades are not relevant to the homeowner.

That’s the theory but in practice it’s been a rigged casino for 40 years. Of course people have changed their behaviors in response to that longstanding a trend.

> And yet they do not sell! The index for months on market is at record lows. What’s going to really happen? They will watch the market fall, and then say to themselves “guess I should just wait until it goes back up in 10 years.”

That's because a home is a place to live. Except for house flippers, nobody is watching the prices as if it were a stock symbol looking for an exit point.

It's a home, purpose is to live there.

> The incumbent homeowners voted themselves massive returns.

This is a popular meme in these threads, but could you be more specific to back that up?

In >20 years owning a home, it has never come up that I've been asked to vote on anything related to giving me any returns. Where are these votes happening?

house owners vote in large numbers against up zoning, against densificatjon and against public transportation funding. (2 sides of the same coin)

Also they’ve been supportive of the GSEs. Even the Republicans only pay lip service to dismantling government domination of the residential lending non-market.

Except you have to pay capital gains tax when you move after 250k or 500k for married. So it's not a wash. Especially if you're talking about more expensive markets.

Only if you don't buy a new house within the year.

Yes that’s true but the $500k goes pretty far. You add all previous home improvements to your cost basis and then deduct real estate agent fees. You can have a million of paper appreciation and not pay very much cap gains tax on it.

>Yes, if I want to move to another house in my area I'll pay similarly astronomical prices, but that just means it's about a wash for me,

In California you may well have doubled your annual property tax bill.

Yes, and prop 13 makes all kinds of ridiculous impacts whereby one person living in a 2 million dollar home pays a tenth of the property taxes of their neighbor also living in a 2 million dollar home.

fellow Canadian here ?

Tech stocks are a similar story.

> People made vastly more money just sitting around in their houses

To be fair, that's not exactly making money. Value on paper, based on comparative sales nearby, has gone up in many places. But that's not money one can use to pay bills or buy food.

It can also evaporate same way it showed up, just like the gains from early 2000s evaporated in 2008. Unless one gets lucky timing the market and buys low and cashes out at the peak, it's not real money.

> But that's not money one can use to pay bills or buy food.

I know several people who have refinanced (a good idea in my opinion) and taken cash out (a bad idea in my opinion) to do things like remodel kitchens or and pay other bills.

I'm genuinely curious why you chose the USA to migrate to. Would you have been better off in the EU or Asia?

In EU, highly unlikely unless you go to Switzerland (which is not really EU but surrounded by EU).

Switzerland, funny enough, is quite capitalistic and very big on generational wealth you will never participate in as an immigrant.

I understand what you mean; my parents, my sister & I came to Canada in late 90's. We went through normal "new immigrant" jobs - newspaper delivery, cleaning, etc; but eventually my dad got an IT job again.

5-7 years after arriving, our income was nominal. But having arrived to Canada with literally a suitcase of clothes each, the prospects, in particularly retirement, were substantially different.

It works both ways sometimes though - not only is it difficult for those born here to understand the difference, we too have to mentally remind ourselves - just because I make as much money as my best friends, I should not indulge in quite the same lifestyle; when it comes to "wealth", they are WAY ahead (some got an apartment as gift from parents, others had their university education paid for, trusts and RESP/RRSPs, etc etc).

The effect of multi-generational wealth cannot be overstated really. I live in the UK and earn a very good salary (£60k), but I'm far from being "rich". I do feel rich, which is great, but I can walk ten minutes down the road and see multi-million pound houses that, barring some extremely fortuitous event, someone like me will never, ever be able to own.

It doesn't get my down, though. Those people with those houses rarely know what they have. It doesn't make them any happier. I'm happy knowing that everything I have has been earnt by me. I'm not sure I would be so happy if I didn't earn a very good salary, though.

Rich in the UK is rich indeed.

If you somehow have a high income which is guaranteed never to go away, you don't need to accumulate anything, yet live a wealthy lifestyle.

In an electronic circuit, if you have an unlimited supply of current, you don't need to hoard electrons in big capacitors.

All things bwing equal, if you're wealthy, your income is guaranteed by the state and the law - it will take the collapse of civilization to wipe you out. Whereas if you have a salary, your income is a matter of your luck holding - not being in a major accident, or your employer/industry/ economy imploding for 18+ months

Owning a reliable income stream is an asset, which is wealth.

Either you’re working to get that income (in which case you’re probably saving for retirement) or you need to buy it.

> Some of us immigrants do not come to this country with an existing stock of wealth either back home or here. We are also not in the favored group of immigrants. We have human capital which we are trying to convert to financial capital for the next generation.

And this is where the idea (now myth?) of the American Dream came from.

When America was young, no one really had much capital. Also true for periods of large scale immigration: most folks were 'equal' in the sense of not having much of anything.

Over time wealth got concentrated, but with the Great Depression and the WW2 war economy, capital was generally became more equalized in the early- and mid-20th century.

Of course in the last 50+ years there have been no 'equalization events', and so the concentration of wealth has managed to run for a while without interruption with the obvious results.

Piketty has a lot of historical data that shows this process for number of countries:

* https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...

See my comment above, but there could have been equalization events.

The governments had three financial crises, in 99, 2008, and 2020 where it could have chosen not to intervene and save the rich. Yes it would have been hard on everyone, but it would have equalized wealth. A lot of companies would have gone bankrupt, but they could have been bought by new manaments, or employees, or could have been replaced by new startups.

But the government, and society really, chose to keep the status quo and not create a true crises. The result of this is the world we live in now, where basically it’s normal to rescue any large business and not let it go bankrupt.

This so much. Pretty much why I can never ever mingle peacefully with most of my US born friends. They are too woke for me.

There are a couple things to understand about being poor.

It's not about lack of money (though obviously having lots of money means you're not poor). It's about insecurity. I grew up in farm country in the 1980s. Nobody had money, but I didn't feel poor. When I moved to other parts of the country, that's when I encountered poor people. They had to worry about crime, schools for their kids, and being homeless.

When you skip meals because you have to put two gallons of gas in the car so you can get to work the rest of the week, that's when you're poor. Or when you're under constant stress because you're worried about what's going to go wrong next, and when you spend all your time on stuff like where you'll spend your last $12 because that's all you've got. It's hard to understand what it's like to be poor because you don't even realize that's part of the deal.

The other thing is that there's a saying along the lines of getting wealthy being mostly the same for everyone, but every poor person is poor for different reasons. One example is a guy I knew in the 1990s that worked hard at a low-wage job. He got hit by a car while walking across the street. The driver got away and left him laying there. He couldn't work for months. The non-poor person's solution is to move in with their parents or to have their parents send them money. Maybe put things on the credit card. Maybe take money out of savings. He didn't have those options. How do you financially recover from something like this if once you go back to work, you're making the same low wage?

> The other thing is that there's a saying along the lines of getting wealthy being mostly the same for everyone

What does this mean?

My understanding is that it's a reference to being easy to give advice on building wealth since it's all the same story about saving and getting a return on your savings. This is in contrast to being poor, which can involve lots of things, like bad decisions, bad luck, bad birth...

https://en.m.wikipedia.org/wiki/Anna_Karenina_principle

Yep, I completely forgot about that. The one I cited is just a variant.

Growing up poor affects your brain for life and you will be less resilient to stress, you'll make worse financial decisions. This has been studied and it's proven. I guess it's an effect of living under constant stress, worrying about basic needs while your brain is very receptive and malleable.

Poverty is relative but those who are not poor tend to view it as absolute. So anyone who has any apparent trappings of being well-off, such as a car, mobile phone or a big TV, obviously isn't poor and is a scammer or criminal. Never mind that, in this day and age, a car and a cellphone are pretty much essential for getting work and a TV (big, small or in between) is the cheapest form of entertainment for filling your non-work time.

Furthermore, not every poor person was born poor. They may have earned the trappings of wealth in the before times.

Seems like the solution to this problem is to figure out ways to have stronger networks of friends and family.

It’s like trying to build a robot to love me when the simplest thing is just to form relationships.

Stronger community bonds seem like the only long term solution to the problem of being taken care of when a hit and run driver knocks me out for a bit.

Of course short term disability insurance is effective for this specific instance, but loving parents, sibs, kids, cousins, etc is probably more robust.

Oh man this resonates in a weird way... I don't know jack shit about being poor. I grew up extremely well-off in the late 80s and 90s. My college education was paid 100% by my parents without a loan. We had nice cars and belonged to country clubs. Even in my first job where I was only making 35K/yr my parents gave me quite a bit of help so it was easy.

I have a few friends that are poor... I feel for their issues, I always try and help out when asked, but I also know to keep my mouth shut about problems the poor face or how I think they should solve the problem because my solutions are usually so detached from the reality of their grinding life that it comes off as patronizing and unempathetic.

My dad gets it, he grew up as a poor kid in an Italian immigrant household. First kid to college and then he did really well after that in business. He understands it in ways I'll never know. He mostly keeps his opinions to himself on the matter but I've never heard him rattle off any easy solutions or tropes like "they just need to work harder" because he knows his mother and father busted their butts and never stopped being poor. It was only when he became an adult and started making money that he could help them live comfortably.

My mother (love her) she grew up middle class during the American Dream years of the 50's and 60's and has never known poverty either, but she has strong opinions on it... always of the variety of they are "lazy" or need to "work harder", or the solutions are impractical or grounded in a reality that hasn't existed since the early 70s. I think my Dad has given up at this point changing her mind as they're both well into their 70s, but yea I never want to be like my mother.

Volunteer & serve on the board of a non-profit that focuses on meeting a community need. Did you know that diapers are not covered in the United States by government assistance? So the current setup is that we have a lot of diaper banks across the United States that provide diapers to those in need.

Diapers are sold as single items in corner stores in low income areas at extreme markups, and sometimes parents can only afford one a day. If the baby poops or pees right after the change… Well. Yeah.

I serve on the board of one [1], and we’ve had events that have given out 100k diapers to those in need in a day. The frustrating thing is that there is no sustainable model here - the diaper banks get donations from companies and and we can buy them using donated money / grants for a discount, but we obviously don’t charge those who need them for the diapers (and I do not believe we can sell them as a bank).

I think there are two main pain points for people who do not have a lot of money:

1) There are economies of scale as you “level up” in income - cost per diaper gets much cheaper when you can buy from Sam’s club vs. paying $1 per at the corner store. Even shopping at Sam’s is out the window because it assumes you have a car to get there…

2) the “fixed costs” of life are fairly standard. It takes a salary of $85K for the happiness to have marginal returns, and I think this is because you hit the point where your basic needs are met for an American lifestyle and everything else is gravy. It covers medical (within reason), insurance, transportation, some fun thing, housing, food, etc. and gets you to the level where you can finally get ahead.

[1] https://www.wpadiaperbank.org/

[2] https://www.businessinsider.com/personal-finance/money-buys-...

Im sad this a real problem (and its a good example of a problem I would never have thought existed).

Ill take a look at the links, thank you.

Yeah I didn’t realize it existed either and that’s why I’m spending my time on the organization. I think most people just assume that people can use government benefits to buy diapers.

Here is another way to look at it: Take your salary (or income from investments) divided by the poverty line to get a multiplying factor. The poverty line for a one person household is $12,880 [1]. For simplicity, let’s say you make $128,880 a year. That’s 10x the poverty line and a 10x multiplier. The simple approach is to just multiply everything by that multiplying factor - in our example, filling up a gas tank would be $500 instead of $50. I know that would make me consider getting half a tank instead of just filling up…

For a more complex thing - take an expense category for the month, like food. Multiply every dollar you spend on food for the month by 10 (the factor above). So say you spend $500 a month on food - set aside an additional $4500. $100 on alcohol, set aside $900. You will quickly see how fast money goes.

I recently had a child, so I am going to do this with diapers one month and donate the difference to the diaper bank. You could do the same with a cause you care about.

The thing that surprised me about the non-profit scene is how cut throat it is. There is a lack of funding, people compete on grants, and everyone is extremely passionate about their cause. So some people view it as a zero sum game and have the attitude of “I don’t care if a few babies have a wet diaper, my non-profit fixing cause X has a bigger impact” and they will use their altruistic end to justify some pretty crappy behavior. I’m of the mindset that we need to work together, and fortunately most others in the space are too. But a dollar is a dollar, and there are people that are very passionate with strong beliefs about how the next dollar given to the non-profit space should be spent to optimize the societal benefit.

[1] https://aspe.hhs.gov/2021-poverty-guidelines

* one can argue there are a lot of government benefits available to those near the poverty line, but the point of the exercise is to get in the same ballpark. Plus accessing those services isn’t easy - Millions of people spend hundreds to hire an accountant to interface with the IRS once a year so that they can pay the government. Getting things from the government is more difficult...

If you don’t mind me asking, what’s your perspective on your purpose in life? I always wondered if the outlook is different for someone starting from Boardwalk instead of Baltic Avenue, so to speak.

I gotta be honest, I don’t really feel like I have a purpose. I just kinda exist and try to be happy by surrounding myself with activities and people I enjoy spending time with. Im not saying its all roses all the time, I get depressed (badly so sometimes) but I get through it and return to a happy stable existence.

I have a brother, I think we both disappoint our parents a great deal because we are both kidless (by choice in my case, I do not speak for my brother). They would love grand kids and I think they would be wonderful grandparents.

I dont have a partner but I would love to find someone with the same easy-living philosophy. I like working on interesting things, I like playing golf, and I like traveling. Its honestly hard to find someone like that and that causes me the most sadness sometimes... so maybe my life goal is to find my other?

My biggest fear in life is not having enough health or money to maintain my baseline standard of living (admittedly I am more frugal than this post hints at). I actually do not give a damn if I die tomorrow but I would be immensely unhappy with a life altering injury or loss of wealth.

I dunno if I would say I grew up on Boardwalk, but whats the green ones just before Boardwalk? That always felt more fitting.

I had a co-worker who thought he had a typical american childhood because he didn't consider his family wealthy, even though they had millions of dollars of networth over 30 years ago. Him and his 3 bothers went to a very exclusive private school that was 50k a year per child, but since his classmates were mostly "old money" that were from family worth 10s to 100s of millions of dollars, he was picked on for being the "poor" kid, so still thinks of himself as having a middle class family.

He was also the only person I've seen who made me consider that "afluenza" might be a real thing. He would get super bad stomach aches and diarrhea any time he ate fast food because he was mentally conditioned to believe it was disgusting. He even went to the doctor about it, and was told it's all in his head, it's just the thought of eating poor people food made him ill.

No, fast food is actually just disgusting lab-made pseudo-food, if you’re accustomed to fresh, whole, real food.

I loved fast food growing up, but after a couple year stint eating only fresh foods, I went back and literally couldn’t stomach it anymore. It tastes good going down. (At the time) I had no conditioning or preconceived beliefs that it was disgusting, but within an hour my stomach felt queasy and I threw it up. After half a dozen times experiencing that, I gave up on fast food entirely.

Be that as it may, he wouldn't get sick when he didn't think he was eating fast food. We'd go to a diner for breakfast sometimes, and since he perceived it as a nice family-run place, he wouldn't get sick, even though their food was still processed garbage that showed up frozen in a truck every morning.

There's a stark difference between frozen food off of the Sysco truck and McDonalds.

Is there? I used to have a prejudice against McDonalds never having tried it, but if you get the same things you would be getting from a diner, there's not much difference.

Right. The McDonald's food is generally higher quality.

Fast food gives me the runs too and I don’t have that association. McDonalds, Taco Bell, Chic Fil A. I can eat at Super Duper just fine, though.

Doctors aren’t infallible.

Why are you getting downvoted? I love Taco Bell and every time I survey the crowd about favorite fast food, I'd say 80% of people say Taco Bell gives them stomach problems.

Hehe I’m poor and I’m no stranger to Taco Hell runs.

A former coworker whose parents are rich told me once she didn't understand why young people in our country are not so eager to have kids anymore. I replied that most young people are unemployed and skint including most of my friends, which makes it difficult for obvious reasons. She replied that she did not even have €50000 (about $61000) in her bank account when she had her first kid.

I agree that there are rich people who know little about what it's like to be poor or even middle class. But not all rich people were always rich.

I grew up poor, and was poor as a young adult. After working 2 jobs, going to school and trying to keep my family together on next to nothing, I was able to climb my way up and get to "middle class".

Despite being poor for a while, my kids were happy and they didn't know anything different. When we were able to finally afford cable, my oldest daughter couldn't believe she could watch cartoon network. It was the best feeling knowing that I was able to provide some level of comfort to my family without struggling every month to know how we were going to afford basic utilities and food.

We moved to an apartment near an affluent area where my kids would be able to go to a good school. There we met some very wealthy people. Casual conversations with these people regularly included topics such as going on vacation to Hawaii for a month, going to a ritzy steakhouse for dinner regularly, etc. I was surprised at how these people just expected others to be able to afford the same luxuries.

At the same time, I also met some wealthy people who didn't talk like that. After getting to know some of them, I learned that some actually earned their way there. They grew up poor, worked hard, went to school, worked harder, had some luck by being in the right place at the right time with the right set of skills, and eventually became wealthy.

What I learned during this time is that rich people are not always rich because someone handed it all to them. Some are very much in that category though. You can always tell by their conversations. Rich people who have never been poor or even middle class will converse about things casually that poor people can only dream about, while those who did not grow up rich reserve those conversation topics and are sensitive to other financial situations. This is why I think the 1% is a sliding scale to some extent. It's not a static group of people so we have to stop demonizing all rich people.

> I also met some wealthy people who didn't talk like that...I learned that some actually earned their way there. They grew up poor, worked hard, went to school, worked harder, had some luck by being in the right place at the right time with the right set of skills, and eventually became wealthy.

I have to ask, but how many of these people have had the mindset that "X is poor because they're not working hard enough" or "I worked hard which is why I'm not poor, why can't Y be that way?"

If I had to guess, a good number of them have had those thoughts in the past, but whether or not they still think like that or they've moved on (and have admitted---to themselves or to others---that it's a negative viewpoint) is hard to say.

You may be right. I never asked what they thought about poor people or the reasons they were poor. It would be a good conversation to have. Knowing what I know about some of those people, I would guess their response would be something along the lines of "It's possible for many people to earn and work their way up IF they make wise choices along the way and don't give up. It's not easy by any means."

The rich who had it handed to them likely wouldn't even have a thought like that cross their minds. It's more like "Oh... huh, poor people? Yeah, I don't know. What's poor?"

Just as a counterpoint, the stereotype is the opposite — nouveau riche are gaudy, make vulgar displays of wealth, while old money has “class” and is more discreet.

Personally I think it’s all bullshit and you have people of all types on both ends. It’s orthogonal.

The thing is, it's all luck.

Policies are made with the idea that someone like you must have somehow "earned" it, and you may believe it yourself, but no one chooses to be poor. You were lucky enough to get a good job, lucky enough to be able to work so much without burning out, lucky to be born smart, or a man, or white. It all adds up and it's all luck. You always made the most optimal choice you thought possible, as anyone would.

Yet the pervasive idea that one can "earn it" and become rich through sheer willpower has the unfortunate implication that those who are "still" poor must somehow deserve it. If some can grit their teeth through their misfortune and achieve upward social mobility, why can't they all? This is of course absurd of the face of it because your gain was someone else's loss, we can't all be "rich" as it is inherently relative. But also because any given poor person generally has the goal if not the priority of becoming less poor. Having grown up poor, no one wants to believe it's a permanent state of affairs.

Generally speaking, everyone works hard and no one wants to be poor. Yet modern capitalism (even our Canadian version) is largely engineered to punish the poor for being so, even though in the end, it's all luck.

Edit: Here's an interesting paper on the topic of misattribution of success: https://advances.sciencemag.org/content/5/7/eaau1156.full

I have both my father and my uncle who became dirt poor just by making terribly poor life choices so I've got a very different take on this. They had good jobs but couldn't help screwing it up by: gambling, buying sportcars, overall trying to bite more than they could swallow (houses too big, with monthly mortgage too expensive), etc.

In both cases it ended up with foreclosures / lawyers etc. My brother and I are now sending monthly money to our father because of his bad lifechoices.

And by poor I mean: living in a rusty, broken, RV hidden behind trees, illegally hooked up to electricity (not paying for it) and dumpster diving to find food for his dogs (because of course he was dirt poor but he had to have dogs and rabbits).

I've got friends who have serious issues meeting month's ends yet they buy 5x what I buy online. Every single time I arrive at their home they've got new pointless gadgets bought on Amazon.

There are people spending a fortune, compared to what they make, on packs of cigarettes and daily booze.

When you don't have enough money you don't have a ghetto dog, you don't buy cheap gadgets on Amazon, you don't drink your daily bottle of vodka/whiskey/packs of beer, you don't smoke a pack a day. You don't take a mortgage on a car from a category you can't afford just to keep up with the Joneses when a smaller car would do.

Well, you can... But there are choices and I refuse to accept that there are zero choices. You'll simply never convince me because I've seen it firsthand.

Now I don't tell those around me how they should handle their personal finances but I cannot but think about the many poor decisions I see being made.

And I'm not saying everybody has lots of room: but there are many poor people out there who are poor simply because of their dumb life choices (like my father).

Totally agree with all of this. If you actually have the opportunity to make good money and you still wreck your finances through excessive spending, well, that is on you (barring something like a legit mental illness). Big difference between that and starting off with few skills or opportunities.

> barring something like a legit mental illness

What would be an example of a 'non-legit mental illness'?

Most addictions are seen as "poor choices" at face value, but you have to understand that unhappiness is the trigger.

They found temporary solace with those poor choices.

This is not rational, but the instinctive part of our brain is taking control when we're under threat (unhappiness is a signal)

Food addiction is very common in the US, people are not obese because of a lack of exercise or knowledge about the consequences of eating too much, and yet you'll find that happier (usually strongly related to wealth and status) people are less prone to addictions...

> When you don't have enough money you don't have a ghetto dog, you don't buy cheap gadgets on Amazon, you don't drink your daily bottle of vodka/whiskey/packs of beer, you don't smoke a pack a day. You don't take a mortgage on a car from a category you can't afford just to keep up with the Joneses when a smaller car would do.

Not saying you're wrong, but I think the article is talking about you.

> found that people from higher income backgrounds tend to struggle more at certain types of empathy. In particular, it found that people with more money found it increasingly difficult to identify with the emotional or visual point of view of other people.

For the record, I mostly agree with you except for the ghetto dog and a pack a day.

Edit: I should add that, of course, this isn't a random person but your father and you likely have a lot more information than I have.

I don't think anything you actually said is actually wrong, but it's adjacent to what many rich people do say - that the poor shouldn't have or do anything that just makes them happier until they're not poor. No treats, no recreation, just work at the best-paying job available as many hours as possible and save every penny. And I do have a problem with that. It's a deeply punitive and judgmental attitude, as though being poor is a moral failing that any decent person would seek to resolve as soon as possible. As I said, you didn't quite get there but you kind of brushed against it.

These negative attitudes about "bad decisions" are particularly problematic when children are involved. I grew up poor, in large part because my (single) mother made some of those choices. On two separate occasions, a friend begged her to be the managing editor of a very profitable publication, with stock that would have made us actually rich. Both times, and in other cases as well, she declined in favor of running her own "boutique" business which barely paid the rent. As a result, I do know what it's like to be hungry and scared. But if she had made other choices, my brother and I might have grown up to be very different people. Less "street smart" certainly. Also less exposed to true diversity, less empathetic, less appreciative of what we do have, etc. It's entirely likely that we are better off both financially and emotionally because she made those choices instead of rushing to join the middle class as soon as possible.

I've met enough other "once poor now rich" people to believe this is not an uncommon pattern. The ones whose parents did make the more socially-acceptable choice don't seem better off materially or emotionally than the ones who had to pull themselves up later. In fact, I see some seriously troublesome patterns there. I've seen people who were insulated from hardship and striving all their lives make their own bad decisions that sent them (and their families if they'd gotten that far) right back down the ladder. I've seen people who grew up in "no fun allowed" homes do worse. Those are bad patterns to encourage.

Even as I write my own checks to support my "foolish" parent, I find it's better for my own mental health (and therefore that of my family) to focus on forgiveness and gratitude for what was rather than resentment over what might have been. One lesson that being poor did teach me is that everyone makes some bad choices, and some people are broken by them. Making the world even harsher doesn't seem like the solution.

This sounds like sour grapes to me. If side effects like being exposed to true diversity, being empathetic, etc. are so good for you that they're better than escaping poverty, that means that poverty is something to be applauded. Nobody believes that.

Poverty is bad. If you have a chance to escape poverty, and it doesn't have serious, straightforward, downsides like working 12 hours a day, or leaving your family, or killing people, you should take it. If you don't, you've made a poor life choice.

>The ones whose parents did make the more socially-acceptable choice don't seem better off materially or emotionally than the ones who had to pull themselves up later.

Wouldn't the same reasoning apply to you? If it was good for your mother to stay in poverty so you are more empathetic, shouldn't it be good for you to stay in poverty and not pull yourself up at all, so these great benefits of poverty accrue to your children as well?

> that means that poverty is something to be applauded

If you get to accuse me of sour grapes, I get to point out a strawman. Not only does nobody believe that, but nobody claimed or even implied it either. Bear in mind that there are many levels of poverty, and even at the same level many experiences. I think it's possible that it worked out for me and my brother, but that's neither certain nor generalizable. We were poor but not destitute, and we were poor for reasons that included our mother's commitment to being present for our childhoods. Not everyone has that.

Also, being rich doesn't mean being happy or sane either. In my experience the relationship between later-life happiness and early-life circumstance is barely above statistical noise among those who are rich as adults. But that's not the same as recommending that people be poor, because so many (too many) people remain poor and are thus not part of the sample. I think overlooking that is either bad faith or proving the article's (and my) point. Sometimes poor people have priorities other than becoming un-poor as soon as humanly possible, and those priorities remain valid even if rich sophists don't understand or approve.

I think wealthy people should marry poor people more often so kids can grow up with the benefits of both types of influence.

In practice, a lot of bad choices aren't truly volitional; they are mainly the result of conditioning. Repeated bad choices reflect a reduced capacity to learn, which is a kind of disability.

It's annoying and costly that so many people make these bad choices, but I think we still have the obligation to care for each other. I expect to make at least some bad choices and I may need help.

But usually, nobody can help you as much as you can help yourself, so it's a good idea to arrange things so that people can increase their own resourcefulness and help themselves.

Be grateful for how lucky you are.

> In practice, a lot of bad choices aren't truly volitional; they are mainly the result of conditioning.

Is more of a "do we really have free will?" debate

I know a woman with no teeth who lives in a shed in a friendly neighbor's garden. After her husband skipped the country in the 90's and left her with a sizable pile of terrible credit, highly leveraged "assets", and fraudulent tax returns she was left homeless for a period but eventually managed to find a new fulfilling career as a social worker and worked diligently for almost 20 years before giving up her apartment and "retiring" to the shed in her 60s with debilitating health issues.

How can we build a system that punishes people like your father but not people like my neighbor and should we even try? Does our current system try?

A more distant but very wealthy family member once said that people wouldn't be so poor if they just saved up money. That perfectly illustrated the difficulty rich people have understanding poor people to me.

I was really young, but that really stuck with me.

I remember a politician complaining about having difficulties with a salary of 6000€/mo.

Some people live in a bubble so far from the real world that almost seems fantasy.

It depends on your liabilities and other aspects like age.

6,000 EUR per month is $7,300 USD per month is tough if you’re a new pharmacist in the US and need to repay $300k of student loans and make up for 4 to 6 years of lost income and catch up retirement savings, as an example.

Even this shows a basic lack of understanding of what "tough" means for someone who is actually poor.

As soon as you put "saving for retirement" as something that's even possible, you're no longer in the realm of what's genuinely "tough".

"Oh, those people making three times what I do a month have it so tough! After paying way more than the minimum on their student loans and putting aside a large chunk of money for retirement, they might only have a thousand dollars or so of truly disposable income!"

"Tough" is when "disposable income" is a fantasy, and you're regularly having to choose between whether to pay your heating bill or buy enough food for the rest of the week.

And a poor person in Sudan will say poor person in US will not know what tough is.

The comment I responded to was about a politician complaining about a certain payrate. To which I wanted to show that it is possible to have to have to be stretched thin (mentally), and the politician is not thinking about having to cancel their third overseas vacation. Yes, they’re not on the very last rung of the ladder, but slipping off your rung also causes worry.

But you continue to prove the article's point: that the feeling of "slipping off your rung" and having to downsize from 3 yachts to 2 or (shock!) 1, however frustrating, upsetting, and stressful it may be to the person losing both money and status, does not remotely compare to the feeling of not knowing whether you will still have a home or even be alive next year, next quarter, or next month because you don't have enough money to pay for heat, food, and rent.

I'll grant you the loan repayment, but the other things aren't expenses. "Lost income" is a psychological artefact, not anything concrete. It's a result of comparing against some hypothetical ideal financial situation. The same for "catching up" on retirement savings.

The concrete part is that people with that level of income (large, but not so large as to make all problems disappear) know that to be comfortable in the future they need to save a big chunk of their income. The people living with much lower incomes just don't have that luxury at all. Which is kind of the point - it's totally different worlds.

When currency is being devalued year after year, lost income (up to a certain amount) most certainly is an expense. The longer you sit out of the asset inflation game, the more you fall behind. So whatever the cause for you falling behind has to make up for it. Maybe I’m wrong, but that model has served me well.

I agree that currency devaluation and so on means that saving money earlier in life has a larger impact on your lifetime comfort than saving money later. I don't really follow how it's classed as an expense though. And I don't know how you determine how much income you have "lost".

I think we probably agree on the situation but disagree on what terms make sense to describe it.

Assuming you need $x by some age due to being unable to earn more money (illness, old age, not wanting to work), then not earning income in your possible working years pushes up the amount of income needed in other working years to reach the same $x.

For example, if you get your bachelors in 3 years instead of 4 and spend $30k on tuition and earn $90k by working, then that would result in an extra $120k in compared to spending 4 years in college.

I class it as an expense, because everything has an opportunity cost, which is defined as your 2nd best option. It is not always useful, for example thinking about spending time with your kids rather earning $15 driving for uber or something. But it could be, if you need that $15 to feed your kids.

Yes, the problems of those with lower income are more immediate and I think it is grossly unfair to blame their predicament on their character or inherent talents.

I disagree that lost income is purely psychological. There are biological realities to deal with, especially in the US without the social safety net of other countries, that make lost income important. The first two that come to mind are the significant cost of raising children and retirement. Those are ticking clock issues to many people.

I agree they are two different worlds for low and middle income people. But we could play this game with even lower income people elsewhere in the world and reduce the issues of the developed countries poor.

It's in euros though, much less likely that someone on that salary in Europe would be truly struggling, compared to someone living in the USA.

I had a coworker at my first programming job complaining how hard it was to make it on a $175,000 a year salary in the Midwest.

It was nearly three times what I was making and I thought "I can manage with so much less, wtf is this person’s problem?"

If they were struggling to make it on $175000, maybe they had a $200000 a year in medical bills! This is America we’re talking about after all.

I get that it's a tongue-in-cheek comment, but most coding positions i've ran into in the United States offer pretty comprehensive health and dental plans.

If someone years ago making 175k a year coding doesn't have healthcare insurance then it's likely of their own doing either through contract renegotiation or taking a pretty damn bad benefits package for the sake of a fairly high salary for such a position.

> I get that it's a tongue-in-cheek comment, but most coding positions i've ran into in the United States offer pretty comprehensive health and dental plans.

It's not that simple, given the health care mess in the US. I have a friend with top-shelf insurance and salary at bay area FAANG company who still has >$50K out of pocket medical costs every year.

Their out of pocket maximum was likely no more than $10k, if that.

> Their out of pocket maximum was likely no more than $10k, if that.

In the US, medical insurance out of pocket maximums don't mean it's the most you can pay.

I've had years where according to the insurance company accounting my out of pocket has been less than $1000, but according to bills I actually had to pay my out of pocket was close to $10K.

Same thing I was on a job at $30k (for a familly of two, in a big city) and one of the bosses came and started to complain to a few of us with the same salary (some with kids) how hard it is to live with only his salary of $180k and his wife salary of $100k. Many wealthy people have absolutely no clue. Another person in that same job was complaining he was not able to make it with a $70k salary. Turns out after talking, he was taking Uber to go to work (1mile away directly on a line of public transport), always ordered food on stuff like grubhub amd was maxing out credit card all the time... I kept seeing people with >$70k salaries that were absolutely unable to save. Another one worked there for 20 years, with his $180k salary (started above $100k) he told me that he had 0 saving, no health expenses besides tiny stuff and no home ownership. Some people are just really bad at managing their money. Or maybe they are good at managing their immediate comfort and don't plan ahead... not sure.

The problem is that people (in general) always want more than they can afford. Which is why some people making (say) $1million a year struggle because they take on too much debt and have trouble paying down the interest. Millionaires go bankrupt all the time.

a national politician needs two homes - one in the capital and one in the location they represent. That alone would eat up 6000€ especially if either place is expensive.

why do they need to own the place in the capital, if they only travel there to work? Can't they rent for the duration of the time they spend there?

AOC doesn't need to buy it. Simply paying rent in NYC and DC is too much for a bartender with < $30k in family wealth

Often politicians in that situation get extra cost of living payments for travel and accommodation (at least in the EU)

I remember when US Reps worth millions were mocking AOC for not being able to simultaneously afford an apartment in DC and NYC prior to receiving her congressional paycheck.

It shows you how competent these people are at taking care of the American people...

Congress reps make $170k. It’s not super wealthy, but certainly possible to afford two rents outright. Not to mention if you sublet/etc since I wouldn’t need to literally stay in two places at once.

I think no matter how much you make, higher salaries always seem so much easier.

People can either budget or can’t, I don’t think it matters the actual amount. I’ve met people who were budgeted and running a family on $30k and people paycheck to paycheck on $300k.

"Prior to receiving her congressional paycheck"

This was right after she was first elected, before she took office.

One summer in high school I got a factory job. It was Michigan, so I was running an injection molding press making the rims for side mirrors. (Decades later I still remember that the press took 67 seconds per cycle, and that 1600 rims was the shift target.) I was on second shift, so my crew didn't see the executives much. But one day the CEO held an all-hands, so we shut all the machinery down and went to an area big enough for him to talk with us all.

I no longer remember what the meeting was about, but I think it must have been related to why the company couldn't afford a raise people were expecting. Somebody asked him a question that I couldn't hear; he looked a little flush and responded quickly, off the cuff. This guy who was wearing a nice suit, this guy who had clean hands and no burns from the presses, this guy who was easily clearing 10x what his workers made: this guy said, "I live paycheck to paycheck just like you all do!" And implied that he was just helpless in the face of his wife spending to much. Everybody in the room scoffed at him. I'm still scoffing.

O/T - How many side mirror rims were in each cycle? If it were just one, then your shifts must have been over a day long, which doesn't make much sense.

Good question! It was 4. While waiting for the press I'd deflash [1] the set that were cool enough to put to the grinder and stack them for transport to the next station. Those doing the math will note that in theory 67 seconds would allow for 1716 rims per 8-hour shift. But it took time to open it, get them out, and close it again. The machine never stopped; breaks were handled by somebody coming along and taking over for a bit.

[1] https://en.wikipedia.org/wiki/Flash_(manufacturing)

Crikey! Thanks. That's still a heck of a lot of work in those hours, with very little downtime.

I do a lot of 'proceduralised' jobs, but I'm 'lucky' in that I get to define and hone the procedure and then it tends only to be necessary for a few hours or a day or three, before I move onto something else entirely. I get a wee quick out of making things more efficient, then get to move on before my brain calcifies.

The thought of acting a mere part of a machine for 8 hours a day, weeks, months and years on end is ... well, it makes me appreciate my job, even at its worst!

Totally. I only did factory work as summer jobs and loved it because it was fun to learn a new domain and try to optimize things. But yeah, I would have been deathly bored eventually.

Interestingly, Toyota's factory culture is very different. It's part of company philosophy to seek continuous improvement. They're also big on cross-training and investing in staff. Basically, they respect that hands come with brains, and that it's worth engaging both. I suspect I would have enjoyed that much more. If you're curious, the This American Life show on NUMMI gets at the contrast between the two approaches.

Kaizen culture was a big meme back in the 80s and 90s in the North of England as Japanese car manufacturers set up shop and the differences to then-declining local manufacturing culture became evident.

> I remember a politician complaining about having difficulties with a salary of 6000€/mo.

It depends on where you live.

I lived in New York City for years. If you had a family, it would be hard to live there as on 6000€/mo, unless you had been living in the same apartment for decades. The median cost of a 2-bedroom apartment there is 3000€ a month, taxation is high (federal, city and state taxes), food is wildly expensive, etc.

I hear London and Tokyo are even worse.

It’s reasonable to assume the politician earning 6000 euro a month was not living in NYC, London or Tokyo

There are people living with much less according to salaries distributions how do they do it?

Hard to live on 3000EUR/month after housing?

US salaries are pre-tax, so it wouldn't be 3000 left over.

The hedonic treadmill, also known as hedonic adaptation, is the observed tendency of humans to quickly return to a relatively stable level of happiness despite major positive or negative events or life changes.

https://en.wikipedia.org/wiki/Hedonic_treadmill

This only shows that it goes both ways. Everyone does only know little about the live of others. I could easiely see a politican needing to spend more money to build and maintain their career. Similar it could be bullocks and the guy is just greedy. It's hard to understand from the outside.

I thought this for the longest time. An embarrassingly long time. Then I volunteered with a program that helps people who qualify for EITC to prepare their taxes and budget how they’ll use their tax return to “get them out of their situation”.

Person after person came in, we did their taxes, and then we went over their expenses and each case was a frustrating puzzle that was impossible to solve. There just wasn’t enough money for all of the basic necessities let alone even a bit of savings. And these are folks who worked full time. I was a student at the time and I remember being annoyed that not once had this situation come up in the personal finance classes I’d taken.

It really changed my whole perspective. It was honestly the first time I’d ever even considered the possibility that someone could do everything “right” and still be poor. There’s a myth that you can financial-plan your way out of economic hardship but it’s simply not true.

The ability to save money relies on the ability to "reduce your lifestyle costs" by cutting certain expenses (raising income is oftentimes not realistic. Poor People in general are not lazy)

Below a certain limit there is no way to do that without loosing more money like getting rid of your car.

And it's not only the obvious things. An acquaintance of mine was a single mother (ex-husband in prison) and had to decide whether she could afford to allow her children to take a bath in the bathtub.

People underestimate how much such forced decisions can damage mental health and the ability to work.

Many wealthy-but-broke people still have assets (like significant equity in a house) that give them runway (sometimes years) to sort things out and make life impacting decisions (such as moving far away to reduce expenses or contacting a friend from before to find you job).

> Poor People in general are not lazy

Exactly. I grew up poor and my teen employment was bust-your-ass jobs like factory and restaurant work. I was once on a contract for a large company, and throughout the day I'd watch the office employees enjoy quiet, pleasant days with plenty of chatting with coworkers. The most strenuous thing they'd do was occasionally rush from one meeting to another.

They'd all be gone by 5 and I'd stay working. Then I'd see the cleaning contractors come in and zoom through the office, working hard and never taking breaks. It always made me a little mad that most people there never even saw the hardest workers in the building, let alone appreciated them.

> hardest workers in the building

It took me a while to understand that work is not paid based on difficulty, but on labor supply and demand.

The reason why many very hard jobs pay so low is because there’s lots of people who will do them.

There’s an axiom about smart work > hard work but I think that oversimplifies too much.

I did manual labor for a few summers and it didn’t pay very well. I just didn’t understand why my work was so hard and paid so little and it frustrated me.

But understanding how wages work at the macro level gave me some mental peace.

"The reason why many very hard jobs pay so low is because there’s lots of people who will do them."

There's a hell of a lot more to it than that. From hiring bias, to school bias, to class bias, to name bias, to area bias - from sheer propaganda to straight up coercion. From lobbying, to perverse subsidies, to externalization of costs, etc, etc, ad nauseaum.

"Understanding how wages work at the macro level gave me some mental peace."

Are you quite sure that said mental peace isn't blissful ignorance... Because ignorance is only blisfful to the ignorant. America's wages at the macro level are deeply, catastrophically, even systematically unjust, in horrifically short-sighted ways.

Macro factors in all those things you mentioned.

Of course there are micro instances with particulars to a situation, but the main driver for wages is supply and demand.

The reason the janitorial service only gets $12/hour is not a result of all the biases you mentioned, even though it’s hard work- unpleasant, time constrained, shift work hours. The wage is low because many, many people are capable of doing the job.

I’m not sure why you would think America’s wages are unjust. But that can exist at the same time as supply and demand issues. Perhaps it is unjust that people make too little, but the reason isn’t that the universe is an asshole. The reason is that lots of people are capable of doing jobs that are hard, so it’s easy to pay less.

So the injustice is because people need more skills and are only capable of taking jobs that lots of other people can do, and few demand.

But again, wages aren’t set based on difficulty, or value, or the intrinsic need for human dignity of the people performing them. Wages are set by supply and demand.

There’s also the fact that people making decisions about whether their kids can afford baths are spending energy and time on that decision, and not using that energy for recreation or other work.

Tons of these decisions are non-factors for those who have enough to just have their kid take a bath without worrying about it.

Another example are those who can fill up a gas tank when they stop, because they’d rather minimize the number of stops at gas stations and don’t need to worry about whether they will over draw or be able to eat if they fill up their tank).

> There’s a myth that you can financial-plan your way out of economic hardship but it’s simply not true.

And if the situation was some people cannot escape this hardship, and there aren't spare resources allocated to other people, then we could say OK, our basic premise must be wrong, it's just inevitable that some people will suffer this hardship.

I think it's plausible this was sometimes true in a middle ages farming community during famine. If we re-allocate food from the "wealthy" with plenty to eat to those with none, some might starve anyway, there just isn't enough food.

But in our society that's not the case, we have tremendously wealthy people and these people in hardship, therefore I argue the fact you discovered is a failure of policy and it is worthwhile to contemplate whether politicians you consider supporting are addressing this failure, or whether they instead believe (or pretend to believe) the myth or perhaps in fact they consider hardship for others a desirable outcome, ie they are despicable people.

Okay...but on /r/personalfinance, people show up all the time with a litany of complaints and a litany of awful, awful budget mistakes they have no interest in fixing. 120/month cellphone, 400/month doordash, Dodge Charger with a 600/month note. And so on.

each case was a frustrating puzzle

What puzzled you? The necessities should never be a puzzle. If the rent, the food, the utilities, the insurance, and the day care add up to less than the income, then everything else could be saved if you dispense with luxuries. If the necessities are more than the income, you either have to cut back on something important or work a second job. That's not fun, but it's also no puzzle.

I'd argue that the people posting anonymously on the internet are not the same people who mustered up the courage to seek help in person and talk face to face, sometimes (often?) with children in tow.

Have you looked at the psychology of decision making when poor and struggling? It might open your eyes as to why people don't make the optimal choices (financially or others).

And a lot of people literally do not know any better. They've never had someone teach them how to manage money and potentially had bad role models growing up. So its easy for you to say, with the knowledge it seems like you have, this is what you need to do. It's much harder to put into practice.

Especially when you consider there are many folks that do manage their money well, don't splurge on non-essentials, work multiple jobs and still cannot make ends meet.

> Have you looked at the psychology of decision making when poor and struggling? It might open your eyes as to why people don't make the optimal choices (financially or others).

Where does "psychology of decision making when poor and struggling" stop and personal responsibility begin? Can every suboptimal decision be excused because of "psychology of decision making when poor and struggling"?

You’ve got some reading up to do on behavioral economics. Humans (real ones, not model economic actors) can’t and don’t make optimal decisions except in very special circumstances.

That doesn't answer my question at all.

Of course. Never meant to, just pointed to a direction that you seem to be unaware of.

>Never meant to, just pointed to a direction that you seem to be unaware of.

What gave you that impression? In my initial comment I acknowledged the concept of excusing suboptimal decision making due to "psychology of decision making when poor and struggling". How is that different than what you're saying?

You call it 'excusing'.

That seems like the right characterization to me? Definition from wiktionary:

>3. (transitive) To provide an excuse for; to explain, with the aim of alleviating guilt or negative judgement.

Earlier in the thread there was definitely a tone of negative judgement. ie. "people show up all the time with a litany of complaints and a litany of awful, awful budget mistakes they have no interest in fixing"

Negative judgment is exactly what is off mark. Real humans make mistakes. No whys or buts or excepts. They just do and they shouldn't be blamed for what is essentially being human. IOW people can't be reasonably expected to make rational, self-interested choices.

(It's actually amazing this is almost a Nobel-prize worthy observation in economics. This is psychology 101.)

If you ask why or what kinds of mistakes they make, now that is where the books go deep. Suffice to say those mistakes are not unpredictable and people can be nudged to make a better (dare I say correct) choice.

>Negative judgment is exactly what is off mark.

Right, but I'm not the person giving the negative judgement. I specifically recognize the possibility of "excusing" them (ie. not negatively judging them) in some cases, and ask whether they should be excused in some cases or all cases. After this long conversation it appears you believe in the latter. Is this correct?

If you were put in that position and stripped of all of your privileges, you would also be likely to make similar decisions (not exactly, but we can observe given medians).

That's why we need a UBI - to give the poor people leverage. We saw it a bit with the unemployment bonuses - companies are having to raise their wages finally and are complaining about it, and we might finally see inflation. Every keeps treating it like a bad thing, but in reality, the late 70s with high inflation were the most "equal" times historically, since inflation with wage indexation is actually more akin to a wealth tax on the rich, which I totally support.

There is a difference between "explaining" and "excusing". There is a level of personal responsibility that needs to happen. But we also, as a society, need to understand the reasons that people make sub-optimal decisions and work to provide valid ways people can learn to make better ones. I'm not excusing individuals making poor decisions, but rather trying to find the explanation for it in a non-judgement fashion.

I'm not accusing you of this, but in my experience, the people who preach "personal responsibility" often do not take the time to understand the issues preventing people from making good decisions, and so aren't even working on the right problem in many cases. And in saying that, please be aware that I do feel there is a place for personal responsibility and it's an important factor in anyone improving their situation. Just not the only factor needed.

> They've never had someone teach them how to manage money

This. If you don't know how money works, most people who offer advice are just trying to scam you. But not taking any advice is also not helpful.

If I knew how to invest in index funds 20 years ago, who knows, I might have already been halfway to retirement. Before I had kids, I was able to save a large part of my salary. But everything I did with the money -- following the advice of people pretending to be experts -- only made the money disappear.

If someone has a friendly person who spends a day or two helping them set up the system, so that all they need to do later is send extra money to a specific account once in a while, it can change their future dramatically. But many people do not have such friend.

And what if they already have a second and third job, have already started cutting back necessities.

What do they do then? Starve?

Yes.

Pretty much.

https://www.cnbc.com/2020/11/19/walmart-and-mcdonalds-among-...

About 70% of those receiving federal aid were already working full time.

My cell phone bill (for my family of 4) would be around $120/month, but it's discounted down to around $80 because of my employer. There's no note on our car cause we could afford to just buy it with cash. We never spend money on doordash because we have plenty of time to go shopping and make our own meals.

For the most part we have rent (mortgage), food, utilities, insurance, and day care (have you looked into the cost of this?) all locked up and well-budgeted, but sometimes someone leaves the door open or the hose on too long and we have an unexpectedly high utility bill. One time my wife left an entire bag of groceries behind the car and accidentally backed over it. When COVID hit and my dad was simultaneously suffering from a suppressed immune system we had to stop leaving the kids with my parents and up our daycare expenditures quite a bit. These sorts of problems aren't really problems for us, we can just cover the added expense out of our "emergency savings" bucket, but if two emergencies happen back-to-back sometimes that bucket gets depleted and we have to draw from "vacation savings" instead. Fortunately we're able to fill these buckets with hundreds of excess dollars a month, so they are usually adequate. I could see it being problematic if the buckets filled at a much slower rate.

Here's another way to look at it, we're grossing around $100k a year and only managing to save about $25k of it. I don't understand how a family that makes $60k a year (about 3 full time minimum wage jobs) manages at all. Our lifestyle is not opulent.

In this country you are either rich or some flavor of poor. Simplistic as it sounds, I won’t be able to “exhale” until I am grossing at least $400k annually. I am far from it, and I feel it. I can hardly save at the moment. Health care is a big bite as well. Even w an employer plan. Still have to come up w a $3500 deductible before costs are shared. Not whining. Just saying that even though I have a decent monthly check, I am poor.

That is entirely dependent on where you live. Plenty of people live quite well on 60k (which is the median household income in the U.S.). Obviously not in San Francisco or New York.

This is absolutely true. I live in Seattle and housing is a huge part of this equation. It's worth noting, though, that even here we still see a large need for low-paying jobs (many have in fact been recently deemed essential). I know we would likely not be able to gross as much in another region either.

Is it fair to say that low income earners in New York and San Francisco should move somewhere else to have kids? Will we only have McDonald's in Ohio?

This person did the hard work of sitting down face-to-face with people in financial distress and discovered that helping them is not as easy as it seems when looking down from an upper middle class perch.

Then you come in and argue that their experience can’t be true because you read something on Reddit. What an absurd and rude display of privilege.

> If the necessities are more than the income, you either have to cut back on something important or work a second job.

If it is a necessity, by definition it cannot be cut back, unless you want to starve to death or live under a bridge.

https://www.cnbc.com/2020/11/19/walmart-and-mcdonalds-among-...

>McDonald’s was among the top five employers of Medicaid enrollees in five of six states and SNAP recipients in eight of nine states.

>Other notable companies with a large number of employees on federal aid include Amazon, Kroger, Dollar General, and other food service and retail giants.

>About 70% of the 21 million federal aid beneficiaries worked full time, the report found.

" It seems to me to be equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country." - FDR

TLDR: Minimum wage was never intended to be less than a living wage. If you're working full time and can't afford food, why should the company get away with forcing taxpayers to make up the difference?

Your oversimplification of the issue glosses (intentionally?) over the real issue.

https://www.cnbc.com/2020/07/14/minimum-wage-workers-cannot-...

>Full-time minimum wage workers cannot afford a two-bedroom rental anywhere in the U.S. and cannot afford a one-bedroom rental in 95% of U.S. counties, according to the National Low Income Housing Coalition’s annual “Out of Reach” report.

>In fact, the average minimum wage worker in the U.S. would need to work almost 97 hours per week to afford a fair market rate two-bedroom and 79 hours per week to afford a one-bedroom, NLIHC calculates. That’s well over two full-time jobs just to be able to afford a two-bedroom rental.

But yes, go on about how thse people need to 'dispense with luxuries' and 'work a second job.'

I found out when my mom kicked me out at 18 that there's a Catch-22 in the U.S. — a car costs money, you need a car to have a job.

Actually you don't, of course. I had a 10-speed bike (remember those?) and a minimum wage job at a restaurant. I rented a room for $100/mo. from a young woman (maybe I was helping cover her rent?). I was able to swing tuition at a local community college.

Man, I still remember riding the 10-speed in the midwest snow to the community college in the morning as cars threw up sleet speeding past.

It was a delicate balancing act to "bootstrap". And this was in the 80's. I don't think today's rent or college costs would make it repeatable today.

If you are injured or get sick in that situation you can fall into a hole that you never get out of.

The worst part is that your wealthy family member is right.

It is well illustrated by a quote from Terry Pratchett

> The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money.

> Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.

> But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.

> This was the Captain Samuel Vimes 'Boots' theory of socioeconomic unfairness.

This is very naive and short-sighted, what percentage of your income go to boots? 1%? Your own example is talking about a ROI of 50USD in years, yeah sure ... that's wealth right there.

People spend 90% of their wage on: rent, food and basic services. Can you be very smart and hack your way into halving your monthly rent? Can you be very smart and buy a really good potato that will last you for years? Can you be very smart and negotiate a better rate for the utilities you pay? Come on, man.

Of course, planning and spending carefully go a long way, but that metaphor is a joke.

Of course it is a joke, it is Terry Pratchett after all.

But there is a serious problem behind it.

For example, with food, if you have enough money you can afford to buy large quantities and take advantage of discounts.

For rent, it you have money, deposits won't be a problem, and landlord may be more willing to give you interesting offers. Poor people are at risk of not being able to pay the rent, and landlords have to account for it. You may even buy and not pay the rent.

For utilities, if you have money, you can buy more efficient heaters and appliances, better isolation, maybe even solar panels and stuff like that which may be profitable after a few years.

I mentioned higher up in the thread, but this is exactly why we need UBI. UBI gives the poor some leverage to avoid being exploited due to circumstance(s). Yes, we will get some inflation - but I don't see that as bad. A lot of the reason we have very low inflation right now is because the balance is skewed too far in favor of capital over labor (and that is due to being able to offshore - which should be penalized appropriately, imho).

I used to think UBI was the solution, but it has a severe risk of creating a permanent underclass. Then I learned about a Federal Job Guarantee where if the private sector chooses not to provide jobs then the Federal govt will step in and become the job provider of last resort with salaries going for a living wage. This is a stronger guarantee than merely a minimum wage, because companies will just cut jobs in a small town; the Job guarantee will ensure that labour won't just be laid off permanently. It also has some nice properties economists like such as being an automatic stabilizer during recessions when companies are loathe to invest in the economy, while during the good times, fewer people will be on the Federal job program.

UBI has the advantage of people being able to re-skill to take advantage of market opportunities (people going back to school for engineering, say), as well as accounting for situations like stay-at-home parents, so I think it has certain advantages over a Federal Jobs guarantee.

That said, I don't see why we can't have both (A base level of UBI + a federal jobs guarantee)

Can you be very smart and hack your way into halving your monthly rent?

Yes, by splitting with someone else, or worst case moving.

Can you be very smart and buy a really good potato that will last you for years?

Yes again, by cutting and planting it, or at least part of it.

Can you be very smart and negotiate a better rate for the utilities you pay?

Sometimes, by moving to a lower cost area, or by shedding unnecessary usage and getting cheaper options. Get slow Internet instead of cable TV. Use an older phone on a cheap cell plan instead of the latest flagship on a subsidized plan. Take shorter, colder showers. Turn the lights off.

The concept that money is required for investments that save money generalizes to nearly everything. Buying groceries in bulk is cheaper, but requires more money at once. Preventative maintenance on your car can be much cheaper than only repairing things once they break. If you own a home in a place that sees snow, insulation and oil/gas heating (as opposed to electrical heating) can save lots amounts of money, but are expensive to get.

If you don't have any money right now you are often forced to make decisions that cost you more money later, which sets up a vicious circle.

No, but if you're not poor, you can not live in an expensive urban area within walking distance of your minimum wage jobs. If you are not poor, you can buy 10lbs of potatos and store the excess in a cool, dark cabinet until you eat them rather than buying today's potato at the convenience store on your way home for a 100% markup. If you are not poor, you can renovate and install insulation so that you are not paying to heat or cool the neighborhood.

Metaphors can be tricky.

You really can do all of these things and you don’t have to be very smart.

AirBnB exists, for example. There have been people who sleep in trains and rent out their apartment in their absence - it’s not fun, but it does reduce rent.

Potatoes can be grown, for example.

You can shop around for a place where utilities are included, for example - and many utility companies will give you rebates to do things that lower your bill.

None of these are really a path out of poverty though.

Being able to repair things as needed also comes into this category.

If I can't immediately afford to send something for repair, then I keep using it until it completely wears out, have an ongoing worse experience, and ultimately a larger expense later on.

I see this everyday at a local bodega. I watched a poor family essentially grocery shop at the corner store. Toilet paper, chips, soda, canned food, etc. Their bill was over $100. I could get 3x the items, at higher quality with a trip to Costco for the same amount of money.

But that first trip to Costco would cost them $160 and they can't go without $60 worth of food for a week in order to save up. Being poor is incredibly expensive.

Yes, that is the point I was making in reference to the OP.

Yup - and it makes the fact that there are a lot of wealthy liberals that lionize bodegas for their “authenticity” even more gross.

“We can’t afford cheap things”

Or, in other words, it’s expensive to be poor.

Right? For instance, you have this scale of value:

   $800 car < "a damn" << $800 cash

An $800 car isn't worth a damn, and a damn is worth a lot less than a wad of cash totaling $800.

Yet, being poor is expensive, so the poor person forks out $800 for a car that isn't worth a damn.

(Reference to "Being Poor": https://whatever.scalzi.com/2005/09/03/being-poor/)

To put it another way: low-end goods are consumables, high-end goods are assets.

Houses and land have, traditionally, been great equalisers because even the lowest-end house/land is still an asset. Now the poor are unable to buy houses/land again they are forced to be pretty much 100% consumers. That's how you stay poor.

The poor is more likely to have their boots stolen. Curious omission on (defacto police) Cpt.Vimes' part.

The same applies for increasing your income - if you can't afford to be without a job for some time, then you'll earn less money since you can't credibly negotiate a pay increase, your situation shows and you'll have to take a lesser offer.

We had a babysitter recently charge us $21 for 3 hours. It blew my mind. I insisted that we paid her $40, which still seemed insane.

Someone earning $7/hr makes $280/week. I can’t imagine trying to get by on that even with no dependents.

Isn't the thinking that these jobs are supposed to be for teenagers, which has their income supplemented by their parents?

Why should a working persons age or living arrangement cause a devaluation of the work they are doing?

Yes the instinct is to pay teenagers less because we generally cannot fathom them capable or experienced enough to do “real” work. But does this set the stage for the devaluation of entire classes of work because they’re seen as “for teens?”

> Why should a working persons age or living arrangement cause a devaluation of the work they are doing?

No, but their living arrangement does affect whether it's possible to live on that wage, which is what GP was talking about.

They are not. But some low paid jobs exist only because they are interesting to certain demographics and some people are willing to pay for it; think about the paper boys or lawn mowing adolescents - it is the kind of thing I can do myself (I find it relaxing), but I pay for it only because it gives someone else the opportunity to have some extra pocket money easily. It is a good arrangement with your kids or some neighborhood kids and in rural areas in my country (Europe) it is sometimes an arrangement also for a nanny. In many cases the money I pay is more than the value I receive, but I still choose to pay. If someone feels the need to pay $40 for 3 hours for a nanny that is fine, but that does not make it automatically worth $40.

Is the job worth less if done by a teenager?

For a babysitter, that seems fair. For most minimum wage jobs, though, no. They are not just filled by teenagers until they can get a "real job." If you look at charts 1 & 7, you'll see most people working at or below minimum wage are 25+.

https://www.bls.gov/opub/reports/minimum-wage/2017/home.htm

I know some people that do low paid work as an extra, not to live on it. $280/week is over 10 times my salary at my first full time job and I was supposed to live on it. It's all relative, without enough context it is meaningless.

There's some truth in it though, which is that there's a common pattern where formerly poor people, upon achieving higher income, keep their habit of spending every last cent that's coming in, just now also on nice things in additon to necessities, never accumulating any reserves. Their buying decisions seem to be locked in an algorithm "do I have the money, yes or no?" where someone with saving ability would ask themselves "do I want to spend that amount of money?"

But I suspect that this might be more common amongst those that rose from low but not very low income, I could imagine that the group of people who rose from extreme poverty contains a considerable number of people very much able to save. It's certainly not the only reason for poverty to exist. But if the poorest person you know is the high(ish) income/spend it all kind, I can easily see how you'd come to the wrong conclusions.

> […] wouldn't be so poor if they just saved up money.

See Nick Maggiulli's "The Biggest Lie in Personal Finance":

> All the expense tracking and goal setting in the world cannot make up for an insufficient balance.

* https://ofdollarsanddata.com/the-biggest-lie-in-personal-fin...

In the US, per BLS, the bottom 20% of earners spend more than they earn on basic necessities: housing, feed, healthcare, transportation. The next 20% barely managed to cover them, without much left over.

This is why I liked Thomas Piketty's definition of the "middle class" being income earners in the 50th to 90th percentiles: enough to pay for life's necessities, with some left over for niceties (but not so much as get into the situation of having piles of money earning interest on interest).

* https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...

It's not entirely wrong though. Coming from a poor family, and still not being wealthy, I learned that there are two types of poor people. The first ones are genuine poor, because they simple don't earn enough money to get a stable ground to act on.

The other ones are getting enough money to live from it comfortable enough, but are stupid in managing it, and make themself poor by they own inability. Knowing how to handle your money is an important skill for not being poor. But it's something that in the wasteful societys is not educated at all. Similar being a bit frugal and investing your money longterm is something especially the older generations seems to lack understanding for.

So for the second group of people your relatives comment makes sense.

I grew up poor. We were on food stamps. Most of my adult life I have been making an upper-middle class salary. I have forgotten what it is like to be poor other than some unpleasant memories.

Even though I just wrote in another comment about how growing up poor has shaped me, I feel this too. I try to remember, and to pass on what I remember because I think those lessons are important, but I'm also keenly aware that it was a long time ago in a different place. In a way, the most important thing I know and that many around me don't is that there's something to be learned about what it's like to be poor in this time and place. Knowing that a particular piece of knowledge exists at all is the first step to learning it.

I remember anxiet of all situations were unexpected costs might come up. Car driving- better not get stopped by a cop.Car better not fail. Car better not run out of gas before end of week. Turning all things around, going bulk cheap over "I-want-this".

A couple of weeks ago, I found myself on a ladder in a basement, doing a bit of plumbing. And I thought, “Isn’t this odd? Here I am, rather well-off, cleaning out the drain for an elderly black gentleman.” And it was more satisfying than most of what I’ve done at a keyboard.

To elaborate, for quite a few years I’ve owned rental property in poor-to-working class parts of town, first houses and then apartments. If you’re a hands-on landlord, you will learn more than you ever wanted to know about money in America. Sure, some tenants are total flakes who would be late on rent after a PowerBall win. Most of my tenants have worked hard, gotten by with little, and struggled to make ends meet. Many of them hesitate to tell me when something needs to be fixed in their home. Often they’re concerned that I am too busy. I tell them they have every right to expect stuff to work, that it’s a part of what they’re paying for. And it makes me wonder how bad things are with other landlords.

Going back to the plumbing story, I think every wealthy hedge-fund manager, etc, ought to get their hands dirty this way. It’ll either teach some humility, or let us see who the real jerks are. The latter can be first up against the wall…

That's an example of seen versus unseen bias. The drain was directly in front of you, and you talked to the person who owned it, so it's easy to understand that someone benefits from it. If you do a job that indirectly makes things 1% better for ten million people, it's hard to have an example you can look at. You may be improving the world more, yet feel like you're improving it less, because humans don't really understand indirect effects except intellectually, and that isn't very satisfying.

> [I]t makes me wonder how bad things are with other landlords.

Pretty darn bad. One landlord I had was constantly playing musical chairs with appliances (stoves, refrigerators, air-conditioners) that were replaced with ones that never stayed working for very long before having to be swapped out and repaired (shoddily) again.

Another got rid of tenants at the end of their lease (never longer than a year) no matter what in order to raise rents to whatever (they thought) the market would bear. They preferred having half of their units empty over not raising rates.

Another considered anyone complaining about another tenant or being complained about to be a 'problem' necessitating removal ASAP, and forget about your security deposit.

Fantastic substack post on being poor: https://residentcontrarian.substack.com/p/on-the-experience-...

This is essentially talking about the same findings from The Monopoly experiment (https://www.businessinsider.com/ted-talk-monopoly-makes-peop...)

In that experiment, one of the players would get more initial money and two dice rolls per turn (instead of one). Then, even though it was clear that the game was rigged in their favor, they would act as if it was their own superior game skills that allowed them to win, mocking the other players at the same time.

I think that this is true. This is also true that you can't understand what it is of being powerful or rich when you're not.

In a general way, it is very difficult to imagine living in other people's shoes, we live on the same planet, breathing the same air, we have 99.9% the same DNA, but our experience of life and our environment can be widely different.

I agree what you say, although I might add that the harm potential by a "not-understanding rich of the poor" is much greater than a "not-understanding poor of the rich"

People who are in a position of power always have more opportunities to hurt others.

But sometimes, in rare occasions, during revolutions, the rich might not be in a position of power.

A lot of the opportunities to escape poverty involve the kind of mindset the wealthy have - calculated risk taking, the entitled confidence to turn up to an interview for a job you suspect you can't do, looking on money as an abstract and rational thing, post-scarcity thinking, the knowledge that it could be possible and socially acceptable to ask wealth people for business loans, and so on.

This is in no way blaming those in poverty for not magically knowing how to ace job interviews or detect which risks are worth it, but pointing out that in both cases, X not understanding Y hurts the poor more than the rich.

> the harm potential by a "not-understanding rich of the poor" is much greater than a "not-understanding poor of the rich"

This seems superficially true, conjuring up a group of callous rich people using their power to make decisions that disproportionally harm poorer people. Obviously this does actually happen.

However, it’s equally true that not understand the nature of wealth causes the poor to make less than optimal decisions, both on a micro scale, and a macro scale.

I don’t mean there is some simple path out of being poor by making better decisions, but I do mean that not understanding wealth means that poor people often can’t tell the difference between a good opportunity and a bad one or how much work it takes to find one.

It also means that poor people end up supporting political ideas that don’t make lasting a difference.

I say this as someone who grew up poor, is no longer poor, and can see now that I have had access to more people with money how much better I’d have done if I had known more about how wealth works earlier in life.

As a parent, it seems teaching empathy without direct experience, is difficult, if not impossible.

One solution that can work if forcing a person into direct contact with someone experiencing the problem. I see this class politics, and I see this in my job as a Product Designer.

Poor people in the U.S. are not really poor. This is the irony in the article and a lot of comments I see. You are acting out the same headline, but in perspective of real poverty.

Did you grow up in a town with dirt roads? Did your neighbors live in cardboard and aluminum self-made housing? Did your family struggle to eat and everyone around you is so skinny that fat people are a rare sight? These are some markers of being poor, and most "poor" people in the U.S. cannot imagine this life. People talking how they are poor because of their stock wealth... poor people won't even have this on their horizon.

Also, yes, my family was very poor in Latin America, and that is why I had no childhood and worked literally all my life, having little friends and romantic life. There are just not enough resources to even do what "poor" people in America take for granted.

There are actually many, many communities in the United States where people live on dirt roads. That's super common. I grew up on a dirt road, and my parents still live on one. Much of the rural US lives off of paved roads.

With food and stuff, the thing is that in the US, you can very quickly go from having not much to having nothing. Many people do suffer from hunger and live on the edge because the cost of living in the United States relative to incomes can be very high. It's much more difficult to set up a small stall selling goods or food or something, and if you don't have proper permitting the police will shut you down. Therefore, once you get to a certain point you are really trapped. There's much less of an informal economy in the US than in Latin America, so people's ability to earn money is much more restricted and regulated.

The correlate to the people you are describing in the United States are referred to as the 'homeless.' They live in small structures made of cardboard and wood and tarps. Some have tents. The police will occasionally come by and throw all of their possessions in a garbage truck. Homelessness is pretty widespread, and the degree to which it exists here is often shocking to people from other countries.

Here's a photo essay that gives you some idea of what is going on in the United States in terms of the homeless. These living conditions are pretty darn comparable to international poverty. I assure you none of these people have stocks.

https://www.latimes.com/california/story/2021-03-08/homeless...

Obviously the scale of the whole thing is different between the US and Latin America, but there's lots of pretty shocking poverty in the US.

> The correlate to the people you are describing in the United States are referred to as the 'homeless.'

It really isn't, and I'm assuming you have never been to Brasil, Bolivia, Peru (Venezuela is out of the question for travelers, but also another example), not to mention Central America and parts of Mexico, I'm sure.

We're talking about inter-generational poverty. People having absolutely no knowledge of what it's like to live a normal life. Poverty that takes you back in time. Some of these places don't have running water or electricity (in fact, no electricity isn't even a big deal in these areas, people are used to it).

Also the dirt roads I mention isn't some rural countryside. I'm talking about poor towns and cities, that have no resources to pave the roads. I still remember TV ads with politicians constantly promising to pave those heavily used roads, but of course it's rampant with corruption.

I think anyone who has not travelled outside of a developed nation, like the US or the UK, probably cannot imagine what people in poor countries consider their every day reality. The contrast is stark, and I'll repeat as many times as necessary, poor people in the US are not really poor. I guess some of them just take their developed nation for granted.

I was just responding to your assertion that poverty doesn't really exist in the United States. It's not as widespread as in Latin America, and tends to be more sporadic, but there are hundreds of thousands of people living in tents and improvised shelters with no access to running water or electricity and no hope for the future here. The United States is no more a homogeneous bloc of wealth and prosperity than Latin America is a continuous favela of poverty.

I read your core argument in this post to be that the form of poverty you describe is much more widespread in Latin America than in the United States. I'd be a fool to disagree with you on that. Yes, you're right.

I'm certainly not trying to win a pity contest and say that the United States is a horrible place where everything sucks. That would be absurd. But for many people, the United States is a much shittier place than you make it out to be.

As for the challenges of these places, they are daunting indeed. The United States is about as toxic a neighbor as one could ask for. Sending money and guns South, and bringing drugs North. Mounting coups. Stealing the best and the brightest from countries that desperately need that human capital. Putting children fleeing violence and poverty in cages. None of it should sit right with someone who has a modicum of conscience. But, as you have seen from our recent political battles, we barely know what to do to fix ourselves, let-alone help our neighbors. Our country is grappling with it's own reckoning as the rich get richer and the poor get poorer. Our Gini is 0.48 and growing. Mexico's is 0.5. With every passing year the homeless encampments get larger.

Perhaps the time will come when the fortunes are reversed?

It wasn't my intention to be lecturing, sorry. My point was around the perception of what poor is, given the article. Rich people can't understand poor people in the US, and I'm pointing out this happens on every level at the global scale. It's easy to lose perspective and think that because you're in a tent in SF or Seattle, that means you know the extent of what it means to be poor, when in fact they have some resources, help, and opportunities.

This is visible when you compare and contrast those immigrants that cross the border with the homeless population. Of course not all homeless people are the same, but I believe the contrast is clear, immigrants have a hard time getting here but when they do they still work as hard as they can, and from my experience they are more than happy doing so. Their previous situation was so bad, they are happy to be cleaning, farming, gardening etc., because it's so much better than where they came from in Latin America. This attitude difference is directly coming from their perspective of poverty.

It's all good food for thought.

There are plenty of people around Seattle that are living in cardboard and aluminum self made housing.

And were they born into it? Maybe now Seattle will catch up to Latin America, but I was talking about poverty that spans across generations. People who don't even know it's possible to have a different life, and therefore when you meet them they're not in a bad mood, they accept their reality and live their life as if that's all there is, except so many places still lack basic needs like running water and electricity.

I'm not saying it doesn't exist at all in the U.S., but there's no comparison. Even the worse parts of the developed world still have access to many resources that some people in poor countries will never have access to in their lifetimes.

You don't even have to be rich to have trouble understanding the poor. I am middle to upper-middle class, and I once found myself in a delicate situation: my desktop's PSU had given up the ghost and I urgently needed a new one. My savings were illiquid at the moment and I had to pay a building contractor a few days before, almost emptying out my checking account, so I had to literally calculate how much I could spend on a PSU to afford groceries until my next paycheck without dipping into any form of credit.

That was a completely alien feeling, and I still can't imagine how taxing it must be to budget everything, to juggle expenses and loans, to knowingly miss due payments, to be one speeding ticket away from literally not having enough money to feed your family and to be in that state not just for one week or one month, but for years and years.

I grew up working poor, then struck it rich in the software biz and became a millionaire, then got sick and became homeless. My take on it is the rich and poor both struggle with money anxieties. A significant difference between being rich and being poor is the way other people treat you. When I was rich everyone wanted to be my friend and help me out. When I was poor I suffered judgements of all types from people; scorn, contempt, pity, avoidance and generally being considered a person no one wanted to associate with. I thought it was interesting and said more about my fellow Americans than myself, but it did hurt all the same.

Edit: Scrapper Blackwell - Nobody Knows You When You're Down and Out https://www.youtube.com/watch?v=626pNZB8xXE

This is so true. Even if you're not rich, many people treat you differently just based on whether they think you might become rich. The minute they think you're no longer in the running, they stop answering texts and emails as if you never existed. It's scary what percentage of people are like this. You never know who is who until you actually lose your money or position. These people are ridiculously good actors.

In the higher ranks of society, it seems like 99.999% of people are like this; it seems to be basically impossible to meet someone who is not a psychopathic opportunist. TBH I wonder why billionaires bother to get married at all. They're probably as likely to meet a good (genuine) person as I am to meet a billionaire...

Out of probably hundreds of thousands of people I met in my life, I only met 1 billionaire and that was before they were a billionaire. Aside from that, I only ever saw 1 billionaire (which I recognized) in real life but I didn't meet them (only saw them).

Humans seem to be incapable to comprehend how many other people there are in the world and how good humans are are deceiving themselves and others to get access to resources.

>> When I was rich everyone wanted to be my friend and help me out

When you were rich, everyone wanted your money.

I was poor, my friends are from that time. Until you've been my friend when I'm down and out, you're just an acquaintance. If you want to know who your friends are, see who comes to get you out of jail at 3 AM.

Another common misunderstanding that I found quite irritating lately is the fallacious idea that wealth has a natural tendency to "trickle-down".

By all means, the opposite is true, and I bet this can be theoretically proven.

Wealth (and power) naturally trickles up. (not down!)

I definitely attribute people's actions to their own willful choices. But I think a corollary is that the more intelligent you are, the more you see how objectively bad people's choices really are, regardless of their class. Taking everyone's bad decisions as serious character flaws would be untenable, so I have to give up and just be tolerant.

As such, it's easier for me to sympathize with a poor person who makes bad decisions due to inescapable financial stress (even though I've never been there myself), than someone upper middle class who has mortgaged their entire life to keep up with the Joneses. The latter seems to have much more opportunity to slow down and choose differently.

there is a much more general thing here of 'simple theory of mind' where you assume too much similarity between self and others.

we even do this to ourselves when remembering our pasts.

Also known as "generalizing from a single datapoint". And if not from literally a single datapoint, then from the datapoints implicitly cherry-picked from around you, aka your social bubble.

The actual studied results are straightforward and intuitive: whether you are rich or poor, humans are excellent at rationalizing their own merit. So for a rich person of course they want to believe that their wealth comes from their own agency, and for a poor person of course they want to believe that wealth is completely random.

That's all fine and good, but attaching the editorial that the rich don't understand the poor kind of bothers me. Sure it's true in aggregate, and I agree with the implication that more privileged groups could stand to have more empathy for less privileged groups, but going a layer deeper I think it does individuals a real disservice to tie "choice mindset" to a moral failing.

The reason it bothers me is because taking responsibility of your own choices is just a better way to live; whether or not it makes you rich it will certainly improve your relationships and mental health. And of course I understand some folks have more choice than others, but in practice I've seen plenty of rich people exhibiting victim mentality just as I've seen many poor people make hard choices and own them.

In fact I'd be curious to see a longitudinal study that tested the hypotheses that poor people with a "choice mindset" are more upwardly mobile, and rich people with a "privilege mindset" are more downwardly mobile.

We focus way too much on money. There are a multitude of ways to be "rich" or "poor", money is simply one of them.

You can also be health poor, or health rich. Most rich people who are truly health poor would trade their wealth to be health rich in a heartbeat.

You can be time poor, no free time available. Sometimes people choose to be time poor by stuffing their schedule, other times it is an overload of responsibility via employment, school, family, and/or some other duty or expectation.

Love rich and love poor. Good friends and people who care about you in your life? No family support, no friends about? Actively despised or abused by family/friends?

There is the age spectrum, old/young. Though we all get that with coupled effects on a fairly equal footing, assuming we don't die young.

We all have long lists of needs, we also have varying pools of finite resources. When ANY of them are severely lacking or overdrawn in our lives it is a hard experience.

I don't think its about trouble understanding but rather that most rich people don't care about poor people. Is that a bold statement? Not so sure, because it seems to me that also a majority of poor people don't care about other poor people. We live in rather unempathetic society were unemployed are never considered to be depressed or having an alternative take on the merit of work but instead are seen as lazy or dumb. Where fat or ugly people are considered a cosmetic liability rather than a natural part of the community. We are a bunch of egotistic, self-obsessed maniacs. And yes, there are excpetions among rich as well as among the poor. But they are few and most think of them as weak or suffering from helper syndrome rather than being blessed with altruistic and empathetic abilities.

a lot of immigrants have both the experience of starting their life poor in their home country. starting poor in america and then ending their life rich.

so we do understand what it’s like to be poor. and in a way i think sometimes we have less sympathy because we can see how good decisions can lead to wealth.

there’s countless stories of jewish or asian immigrants in new york working insane hours for little pay as textile workers and all of their children become doctors or lawyers.

Is that actually common? Is it just anecdotal evidence or is there actually some data on this showing that it is common?

yes look at income statistics and career demographics, college admissions etc…

asian women have a higher average income than white men who are supposedly the pinnacle of privilege

Obviously, you can't undestant what you do not experience yourself ( at least a bit). And saddly this lack of insight could justify hunter/prey dynamics and win/loose approaches as social games. However,because most society members are inevitably loosers in such games then these games are unstable and backfire periodically ( but could take even hundres of years until a culture fails and resets the evil games)

> Obviously, you can't undestant what you do not experience yourself

Sure you can. That's what imagination and empathy are for.

I've never been truly poor myself (though I did grow up what I would term lower-middle-class), but I can understand it, because I've read about it, I know the basic concepts of what the differences are between my situation and that situation, and I'm good at putting myself in someone else's shoes and seeing things from their perspective.

No, you can try to understand, but you have no way of knowing how it really is. As a male, I can try to understand pregnancy. There is no amount of learning that would beat the experience of a mother.

I grew up poverty myself. While I do not entirely disagree with you, poverty is an experience available to all of us.

Women have pregnancy to themselves.

That does blunt your point some.

I also believe people can come to understand well enough to matter when they seek that understanding.

The raw nature of it may remain elusive, the part of your point I consider strong, but what it means is a different, shareable thing.

And I have shared it to great effect. Many have.

In my view, one of the most important things struggling people can do is share their stories. That does add up. Others can feel something of it and can reason better about it.

A national dialog of this kind is missing and too many of us need what a dialog like that can mean.

> our research suggests that powerholders overgeneralize their greater sense of choice to others.

This research is about power. The author may be taking great liberty in turning it into a flame-bait article about wealth inequality.

And I’m not certain that the connection between financial wealth and physical power is tautological, despite any observations of that in a particular legal context.

> If power tends to shape the perceptions of those who have it, the implications for public policy — especially around issues like poverty, crime, education and health care — are significant. Gee like politicians who get paid a good wage with benefits who are not interested in health care and the minimum wage? Who setup themselves as exceptions for many laws?

This reminds me of a story, true or not, of a king who's jester would constantly whisper in his hear "you are human and will die some day." I think that people in power need constant bias training towards this kind of thing, especially public servants.

They think that you can just get out of it if you're smart and hard working. This is completely false. Intelligence is almost worthless nowadays. Stupidity is more valuable. Just look at Dogecoin millionaires. The only necessary ingredient to escape poverty these days is luck.

I'm certain that if Elon Musk or Jeff Bezos started their careers 10 years ago, today they would be moderately poor engineers/developers struggling to pay their rents.

When you start out as as poor or middle-class, the number of bad things which can happen to you on any given day is unfathomable. There are glass ceilings everywhere and monopolistic forces to suppress your voice and to spread misinformation which harms you in many different ways; all of it done to maintain the status quo.

On the other hand, good luck compounds.

The biggest problem in the USA is that we do not have big problems.

Water is wet, man lands on moon.

It's kind of the "American dream" that if you're responsible and work hard, then anybody can achieve a reasonable level of success. There's an appeal to believing being wealthy is a choice, then you can believe the people at the "top tiers" of society earned their positions and deserve all that power and influence.

If that's not true, then it implies that live in a class-based system. Wealthy people are the ones making the decisions at the national level, they own the media by just about any objective measurement, and even though the billionaires "earned" their billions, they were still born into wealthy, well-connected families who have direct control over the systems in which they "earned" their billions.

99.9% of the population has no chance of every achieving the level of success that a small portion of the population was born into. We live in an aristocracy, and yet both the wealthy and the poor are in denial. You can believe the system is moral though the "choice mindset", then it's not a class-based society. Then there's still freedom, equality, a representative government and a healthy American dream. Especially with the conservatives, it's blasphemous and "un-American" to suggest otherwise, to say that we're ruled by aristocrats who were born into their positions and don't represent us.

It odd, because I feel like I'm the one who's being the most American, the most patriotic, and yet I hate to brag about it because I think Nationalism is a kind of poison. I believe in American ideals though, let me remind you of them. You're entitled to a respect, dignity and success regardless of your social status, race, sex, the nationality you were born into, and your profession, chosen and otherwise. You're entitled to a government that represents you, and if it doesn't then it damn well better. It's up to "the people" to enforce a representative government (the opposite of an aristocracy) by any means necessary, including violent overthrow*. These are American ideals, ideals the country was founded upon. These are the beautiful American dreams, and we Americans call them dreams because we're still working towards them. They hide some truly ugly nightmares of things like slavery and how we got the land we live upon.

*Disclaimer: I seemingly called for violence, but violence is an evil thing and a last resort, something I don't encourage. When "the people" truly reject their government, even the police and military are on the side of "the people" because they're people too. Easy way to distinguish terrorism for a truly populist movement.

> If that's not true, then it implies that live in a class-based system.

It really doesn’t. It does absolutely imply that the system is broken, but it most certainly doesn’t imply that it is ‘class based’ in some essential way.

It's odd, because when I suggest that money and power stays within a handful of wealthy families, nobody seems to disagree. When I call that a "class-based system" or use words like aristocracy, then people disagree...

There's a ruling class that people are born into, same as how the old Indian caste system works, at best it's a "democratic aristocracy" because you get your choice of elite. Of course, that's just semantics...

It’s not just semantics. Yes, wealth tends to remain with the wealthy. That is a consequence of economic processes, and to the extent that it limits what is possible, it would be good to alter those processes.

Analyzing society into ‘classes’ of people has nothing to do with it. They aren’t real things. That analysis is a political tool whose value is to divide society and leverage ignorance for political gain.

The animals you can see in cloud formations are not responsible for the drought.

So economic processes and analysis create the illusion of a wealthy elite who run everything, but there's not really a ruling class...

I disagree, and the fact that "wealth tends to remain with the wealthy" combined with some nepotism doesn't just create the illusion, it creates a system functionally the same.

Your implication of some nefarious plot to convince the ignorant that there is a ruling class sounds a bit delusional to me. A little ironic in the context of you accusing me of seeing things that aren't there...

> So economic processes and analysis create the illusion of a wealthy elite who run everything, but there's not really a ruling class...

Right. Steve Jobs, Tim Cook, Jeff Bezos, Mark Zuckerberg, they are not rich and powerful because they were anointed by an elite who runs everything.

Nepotism is irrelevant and nothing to do with wealth. It is ubiquitous.

You can apply a label to them post hoc as a ‘ruling class’, but that is like I suggest, like thinking of cloud formations as animals. You are bringing a pre-conceived image and seeing it where you look.

> I disagree, and the fact that "wealth tends to remain with the wealthy" combined with some nepotism doesn't just create the illusion, it creates a system functionally the same.

This is just affirming the consequent. There is no class system established. The fact that wealth pools in a few places is a problem in itself. You can easily see the economic mechanisms which cause it.

There is literally no need to appeal to a labeling of different kinds of people. The groups don’t exist. The processes do.

> Your implication of some nefarious plot

You are imagining that. Why do you think I’m implying something nefarious?

> to convince the ignorant

By definition, if someone is convinced of the existence of something that doesn’t exist, they must be ignorant.

> that there is a ruling class

Weasel words. There are rulers, and there are wealthy people, but they are not there because of a ‘class system’. Thinking about it this way perpetuates ignorance. They are there for reasons. Not necessarily good ones.

Those are what matters, not a conspiracy theory about elites and ruling classes.

Conspiracy theories are what we turn to when we want to stop thinking and just have a bad guy to blame, or when we want to manipulate others into doing so.

To suggest that class analysis is not used as a political tool, is clearly absurd.

> Why do you think I’m implying something nefarious?

Maybe because you literally just said:

> a political tool whose value is to divide society and leverage ignorance for political gain

No offense, but I can't take your arguments seriously.

I'm not saying the elite are there because our politics are some kind of official "class system", I'm saying the elite have become entrenched, which functionally creates a separate class.

> Conspiracy theories are what we turn to when we want to stop thinking and just have a bad guy to blame, or when we want to manipulate others into doing so.

Says the person who just accused me of spreading a nefarious conspiracy "to divide society and leverage ignorance for political gain"... This is getting silly!

What I'm saying isn't a conspiracy, it's not even hidden...

> a political tool whose value is to divide society and leverage ignorance for political gain

Where is there mention of a conspiracy or anything nefarious?

Examples abound of class ideology being used in exactly this way. It’s not some kind of secret.

> No offense,

It’s generally not a good sign of honesty when people say this.

> but I can't take your arguments seriously.

Obviously not true, since you then go on to do so.

>> I'm not saying the elite are there because our politics are some kind of official "class system",

>I'm saying the elite have become entrenched, which functionally creates a separate class.

Obviously not true. The examples I gave are not there because of some kind of ‘entrenchment’. You simply chose to ignore that.

Yes, statistical social mobility is low and varies depending on conditions. Yes, it seems like low social mobility limits what’s possible. That doesn’t magic ‘classes’ into reality.

>> Conspiracy theories are what we turn to when we want to stop thinking and just have a bad guy to blame, or when we want to manipulate others into doing so.

> Says the person who just accused me of spreading a nefarious conspiracy "to divide society and leverage ignorance for political gain"...

Continuing to repeat this doesn’t make it true. See above. That’s exactly how class ideology has been used historically.

>> This is getting silly!

>What I'm saying isn't a conspiracy, it's not even hidden...

It’s a conspiracy if you blame a small group of people for the outcome, as opposed to understanding the processes.

Obviously it’s not hidden. You can’t hide what doesn’t exist.

>> if you're responsible and work hard, then anybody can achieve a reasonable level of success.

I believe this is true.

I’d like to see the unpaywalled article. Unfortunately the abstract linked doesn’t go into any details about the methods.

Here you go: https://wormhole.app/wMor1#0qgFKqfKPovugqgwh0CxEg

2 things on this:

1. Terrance Malik did a pretty good job of capturing the boolean of this article in knight of cups. the rich, despite this study, still have the same existential crises as us plebs. also, there's something inherent about trying to find purpose in life that even escapes the niceties of privilege.

2. those 'niceties' are currently being accounted for through policies made over 25 years ago [0]. they have been, essentially, mistaken as our prime purpose for life. when in reality, it's more that they are a sort of short cut for being 'allowed' to pursue what you perceive as your purpose [one day, collectively, we will realize that we can only provide this to x number of people for y quality of access to that pursuit]. essentially what i'm saying is that the policies were created to allow the entire system to inflate and eventually crash, while letting the rich create a nice puffy cushion for themselves to land on when it does crash. rather than say, the same thing happening but without the cushion.

this is rather just typical human behaviour at scale. ray dalio has been talking about it. we're reaching the end of a 300 year cycle. no one alive has experienced it before, but it happens regularly in human history. i think it is a natural phenomenon. inheritance is more to blame than any other element. we die and our bodies go to the same place, but our capital does not. we do know that capital allows us more opportunity to pursue more 'life', and i imagine that even people who only get that chance through inheritance sometimes believe they worked for it/deserve it whatever... but we shouldn't mistake the idea that wealth is the end game. it is, in many senses, just the beginning. but it is not the only. an example of this would be having kids. or finding love etc. wealth is just tylenol. temporary alleviation of symptoms. sometimes it allows us to do more art, or have more kids, or find more lovers, but its no guarantee. what we're all seeking is a common understanding that money is a tool; for each of us to pursue life as we see it. not the perverted way we've used it [and we live in a democracy so must take responsibility for its misuse]. the attitude in this article, to me, is less about wealth, and more about ego. it's egotistical people who can't understand the poor. and we get seduced by their confidence. ayn rand is a good example of this. the preacher who ended up on welfare.

when the bandaid comes off, just remember that it's not your fault, it's not society's fault, but it's our fault. fix the bugs, account for fault tolerance, and act accordingly. all that said, burning down the buildings, destroying the statues, raiding the halls of congress, is not the answer. but tampering the egos just may be. i think the only way we can do that is to not allow power or wealth to concentrate. that's the lesson to be learned. to an extent we must let it, but that's the thing. finding that sweet spot. understanding that is how the rich can understand the poor, how we can understand each other, and how we will eventually understand the greatness of that sweet spot.

[0] https://www.youtube.com/watch?v=UKe38mVpHgk

Poor Americans often don't understand what it's like to be poor. Spending extended time in a severely damaged third world country absent all security opens all kinds of perspectives.

And how would you suggest poor Americans afford the plane ticket necessary to achieve those perspectives? Just because there are people in the world who have it worse doesn’t mean poor Americans should just deal with it.

If poverty were an easily solved problem then it wouldn't be a problem at all and we wouldn't be having this discussion. That is the gap between sympathy versus empathy and differences in economic opportunity versus disadvantages of social pressures/reinforcement.

Poverty is a choice. Its not unsolvable. In Australia we had economic support that was pretty generous during COVID. Poverty pretty much vanished. Then it got expensive, the support ended and it's back. Poverty is a choice.

But maybe it ended because Australia couldn't just keep paying forever, thus again proving that poverty isn't just solved. The entire reason why Australia was able to do it in the first place was because it was understood it would be a temporary measure caused by an emergency.

Yes, society has chosen not to deal with poverty like an emergency. It chose. And Australia can afford it. Money is just a construct! but seriously it is and feeding people is cheaper than building useless submarines for the navy and we're not stopping that.

And just on your point, the government has discretion over it's own spending, it didn't need to vote to give people money like in the states. The Australian government can turn on and off the tap when it likes it's not restricted as heavily as you'd think.

Money is just a construct, but you cannot feed people with money and cannot shelter them in money. If money is just a construct and you have a money printer who will sell you food and build houses for your Monopoly money?

Sometime during the last decade, I centered on all this being a priority problem.

It is indeed a choice, and the current poverty and struggle that goes with it is unnecessary.

You're not wrong.

But, poor Americans often don't understand what it's like to be poor, because of the abundance of credit and debt.

And resources.

I was sobered in Afghanistan about a decade back by the number of economic problems that must be managed in parallel to go from "tough 'hood" to successful country.

On the other hand, we seem to flirt with going the other direction. May we sober up.

Obviously there are worse places than the US (for example, straight up dying of starvation is pretty rare), but the poor in the US are materially worse off than those pretty much anywhere else in the rich world.

https://confrontingpoverty.org/poverty-facts-and-myths/ameri...

Having lived in the third world, I would say that the American poors are probably the closest you're going to get to "third world poor" anywhere in the developed world. Life expectancy, crime rates, housing quality and disease in poor American communities are on level incomparable to any other developed country I can think of.

This is a pretty ridiculous statement as someone that has lived in multiple countries including the US.

I would put forth the First Nations in Canada where many reservations yet have a source of clean drinking water despite gov’ts promises for the last couple of decades to help them with it.

And to compare being poor in the US with the Third World is also shows a lack of knowledge. When you’ve lived in places where the govt will do nothing for you and the only source of relief is the charity of neighbors or NGOs you’d learn to appreciate what America offers.

There are plenty of First-Nations people in the United States without access to clean drinking water.

In your time in the US, did you get a chance to visit the Navajo reservation?

"Tribes without clean water demand an end to decades of US government neglect

US has broken promises as Indigenous Americans lack access to safe water, a crisis worsened by Covid-19"

"An estimated one in 10 Indigenous Americans lack access to safe tap water or basic sanitation..."

https://www.theguardian.com/us-news/2021/apr/28/indigenous-a....

Please check out this photo-essay on the homeless in Los Angeles.

https://www.latimes.com/california/story/2021-03-08/homeless...

What do these folks have that the poor in other countries don't? Food insecurity, outbreaks of disease, living in improvised structures, threat of violence, lack of access to health care are all present in the United States.

Did you get a chance to visit anywhere like the Imperial Valley?

"Two weeks ago, federal prosecutors filed a lawsuit intended to clean up or shut down Duroville, which they said was lacking in necessary permits but plentiful in horrid conditions: defective construction, faulty electrical wiring, unhealthful distribution of drinking water and a deeply flawed septic system. Those ponds of gray.

“The system itself leaks sewage under and around trailers and in common areas,” the government charged in court papers, leading to raw sewage being “tracked into trailers and elsewhere on the feet of residents and their pets.”

But everything about Duroville is hard, just as its name suggests.

It sits on the Torres Martinez Desert Cahuilla Indian Reservation, where Mr. Duro is a prominent member. Weary of the news media, he has hired a spokesman, Alan Singer, who stops short of equating Duroville with nirvana, but calls the tales of squalor overblown and racist.

Mr. Singer asks one question, though, that pricks like a cactus: If Duroville is shut down, where will these thousands live?

So far, no answer."

https://www.nytimes.com/2007/10/21/us/21land.html

The order of magnitude in numbers may differ, but there is plenty of grinding poverty in the United States.

The more you travel in the United States, the more you realize that it isn't the magical shining city on the hill people think it is.

Claim was “the US is the worst of developed countries”.

Clearly not.

I guess it depends on what you're comparing.

I mean, compare the US Gini coefficient with other developed countries.

Gini is a relative, not absolute measure.

You could have a higher Gini coefficient but your poor are better off.

Ok, so what is your counter-metric (or reasoning) for why the United States is a better place to be poor in than other developed countries?

Whoa. Who said better? I just said the poverty in the US isn’t unique among developed countries.

You provided the example of the First Nations in Canada, which would be taken by any reasonable person as an implication that the United States is a better country to be impoverished in.

When combined with your refutation of the earlier poster's comments regarding the similarity of the poor in the United States to those in the developing world and your statement that the poor in the United States aren't worse off than the poor in other developed countries, it paints an argument that the poor in the United States are somehow in a better position than in other developed countries.

The totality of your statements would be interpreted by a reasonable person as implying that the poor in the United States are better off than in other developed countries.

If your point is simply that the poor in all developed countries are in the same position, and that the poor in the United States are in the same position as the poor in Denmark, that's an interesting take. I mean, you could have just dropped "poverty in the US isn’t unique among developed countries" in the first post where you brought up the First Nations.

I'm just out here trying to have a productive debate with strangers on the internet.

You certainly inferred a lot of things that I never said.

OP said “the poor is the US are the most destitute of any developed country”. I provided an example of similarly destitute poor in Canada, hence disproving his statement.

That’s all.

Opens perspectives, okay. Solves any of their problems? No.

We aren’t talking about people in a wealth/income bracket who have to tighten things up and go from shopping at Whole Foods to Safeway. We’re talking about people who have no economic security. Every financial decision is a trade off about necessities. Living with the very real possibility of losing housing at any time.

So the Dalio quotes in your profile about harsh truths are fine but not helpful here except in that I hope you aren’t too sensitive to hear this truth.

agreed, although its not a helpful perspective i'd rather be homeless here in the UK where its nearly impossible to die without making much effort than pretty much anywhere else in the world.

the opportunities available for things like water and food are enormous compared to where i started

It's fairly hilarious to me when this sentiment comes up.

Gun violence, police brutality, lack of access to food, pest-infested ramshackle housing, lack of access to utilities of every sort (water, power), and poor or little access to education are all things I regularly witnessed or experienced when I was growing up poor in America.

I find generally the people who express what you have simply don't realize how terribly wrong they are.

You know, your comment doesn't really have much to do with the article anyhow. I guarantee you no matter how much "better off" American poors are than some elsewhere, they definitely do not as a rule think those who do have it worse are in their predicament due to their own choices. That is, there's a high degree of overlap, as compared to the relationship between America's poor and its rich/powerful.

What I find the more useful comparison, is to compare the poor of a country, to the median income of other countries. That puts the US bottom decile household at $10800 slightly below the median Malaysian, Russian, Ukrainian or Mexican household.

The bottom percent household income is at $1400 in the US, which puts them slightly below the median in Zambia, Burkina Faso and Benin.

Note, these other countries also have poor! And this is a comparison in dollars, not in standard of living. But it gives a broad idea of the level of poverty some people are dealing with.

I think that's probably quite misleading to just look at nominal value. Purchasing power parity might be a better metric, but I still don't think that captures the difference in people's lives in different countries.

Being poor in America is means perhaps having some comforts that are rare even for middle class people in other countries. For example, the home square footage, number of appliances, size of wardrobe, number of cars, etc. But on the other hand, middle class people in a less materially rich country may have government safety nets, accessable health care, higher education, in-demand skills, ability to save and access credit, manageable work hours, and enjoy the social respect that comes with professional careers.

As someone who left paycheck to paycheck life, I do struggle to emphasize with the paycheck to paycheck class.

I didn't buy luxuries like alcohol or fast food, I didn't even have enough money for that.

But this class would find a way to go on vacation, buy juice, and get takeout.

I'm long gone from that problem but I'm still frugal.

Until that class stops buying needless luxuries, I do struggle to emphasize.

The financial planning bit is meant to come before one has a list of expenses to "figure out" (like home+leased car+children).

"Just don't have kids" is, IMO, one of the most incredibly insensitive approaches to this problem. It reminds me of all the people telling gay people to "just don't have a relationship". Having an entire class of people who work hard but are too poor to raise children is a failure of society - not a failure of financial planning.

No. Not raising kids in poverty is a matter of social responsibility. I would also argue that most people don’t want kids until they have a certain level of financial security.. That’s why family planning was so successful in decreasing birth rates.

So what do you recommend to people who are in a poverty cycle but want to feel they’re free humans, not economic slaves?

You mean they're poor and they think they're real human beings!? /s

I know people to whom the /s doesn't apply...

Sad but true.

Run, don't walk, to a farm community, and away from expensive fancy cities.

That’s a loaded question if I’ve ever heard one.

Having a companion animal is also something a free human does. Should we tell people to get pets they can’t take care of?

You premise that people are owed the opportunity to have children is a silly one. It’s not the parent that is the priority but the child.

I don't see why it is silly. I believe an opportunity to have children is an opportunity to have a purpose (not the purpose, note). I'm not saying that people who can't support children should have them - I'm saying that the society (i.e. other people) should help individuals to find their purpose. If making money and being rich is it for some, fine, no issue with that.

My purpose in life is fighting for 2nd amendment rights. Should the government pay me to that too?

don't confuse opportunities with money and if you feel people should have help to get the opportunity, isn't that what having a government is for?

Sorry — everyone unfortunately does not have the human right to have a family of 5 in Manhattan.

Everyone does (IMO) have the human right to live off of the land without destroying it permanently for the next family.

Children are not a luxury product like a sports car or yacht. They are a basic function of human life.

All the kid free couples out there beg to differ.

It may be optional for individuals, but as a society, if a significant portion of people cannot afford to have children, that society will go "extinct" very quickly.

Yes, humans being too sparse is headline news weekly.

With regards to developed countries? It actually makes the news occasionally.

There are 8 billion people on the planet, but if we stop having kids the situation is unlikely to sustain itself for more than 100 years or so (just stopping for 40 or 50 years is long enough to pass the point no return).

Wrong. There are people who chose to not have kids and don’t deny that. They chose to give up this part of humanity on their own. Other people probably rationalize this differently because they can’t admit to themselves they’ve given up anything.

This is a relative statement. I never wanted kids they are annoying and I’d probably end up a terrible parent and get divorced and then be paying child support. In fact this would have been what happened if I stayed with my last gf.

Much better to be able to FIRE by 35 instead haha.

I agree that it's relative, it was the point. The parent asserted that not having children is somehow a better or smarter thing to do. It isn't, in the long run we're all dead, but children make grownups feel human and not just like a cog in some pointless machine.

And it's wonderful that you can make that choice.

Now imagine you couldn't. Imagine someone wanted children but was forced not to? How would that be different than forcing you to have (and pay for) children?

The government already forces me to pay for other people's children though our child welfare system that I mostly support. WIC/CHIP/Preschool yield enormous economic benefits.

Having Aircraft carriers and military bases all over the world doesn't. Raising the personal income tax exemption to 100k would.

Where are you supposed to live meanwhile?

Please don't start flamewars on HN.

https://news.ycombinator.com/newsguidelines.html

We detached this subthread from https://news.ycombinator.com/item?id=27246064.

I miss the part where they show that the rich people's "choice mindset" is wrong? Are we just going to accept at face value that poor people have no choices whatsoever and are simply victims of society (and of course capitalism, I guess)? To me, that sounds a lot like religion.

Of course you can not assume that everybody could be equally rich, and only their choices are to blame if they are not. But the other extreme, that people are just born to be poor no matter what choices they make, is equally silly.

What if the "I have no choice" mindest of poor people is partly to blame for their predicament?

The article doesn't say they have no choices it says they have less/limited choices. And this is simply a common sense fact. The more resources/power you have the more options you have.

I can buy so many more things and combinations of things with $100 vs $1, for example.

Sure, but I don't think most rich people think poor people have just the same choices. That's not implied when they think choices make people poor.

> The article doesn't say they have no choices it says they have less/limited choices.

When you are poor, sometimes all of the choices available to you are bad ones.

And when you are constrained to making an endless series of 'least bad' choices, is it any wonder that at some point you inevitably go for some instant gratification to ameliorate your intolerable circumstance, at least for a while?

School is being paid for, even in the US, I think? Just keep your head down, do your homework, don't do drugs, don't get in trouble, and your odds for escaping poverty are probably quite good.

I think this suffers from a causation direction bias. Maybe people with the choice mindset wind up in positions of wealth and power because of this mindset. I can only speak anecdotally, but the hand full of millionaires I know all grew up lower middle class, and they all have choice mindset.

I think the worst kinds of people create a false dichotomy here where either everything is choice or everything is a product of externalities.

It does seem to me that choice mindset leads to better outcomes within whatever context the person is in. It’s extremely unlikely to result in a poor person from a third world country running a Fortune 500. But within their context they are likely to have better outcomes than people who externalize credit/blame.

Isn’t this exactly what we are talking about? You’re assuming the same “choices” exist for everyone.

I explicitly stated the opposite when I talked about people living in different contexts.

there is going to be some of that for sure.

i expect people reading this comment will not understand your point to mean "some" and will probably read it as "all". despite the length of your comment to the contrary, they won't parse and extract the meaning but, probably without even noticing it, rely on biases and shortcuts to interpret the meaning more rapidly (and wrongly).

i'm pretty confident you are not suggesting it is responsible for 100% of the signal here, just some <100% of it.

as a counterpoint i'd offer up those people who have been traumatised by their living conditions. they often adopt a choice mindset and it is harmful to them. so no, actually a choice mindset and taking responsibility in a horrible environment doesn't actually help.

i say this with some bias as someone who has adopted that kind of mindset and watched those not taking responsibility for themselves perform better in many areas precisely because they excessively (from my perspective) seek help from others and ignore responsiblities.

i have a number of experiences where i've ended up supporting someone extensively, because they come to me "in a difficult situation" only to realise i'm less capable of supporting them then they are of me in terms of resources and opportunities. its quite mind blowing at the time, but i try to understand how it happens - my suspicion is that their bar for 'failure' is so damned high that they will actually not use their piles of resources for psychological reasons alone.

The Marxist mindset has been drilled into them since kindergarten. They can only see the world in terms of class and identity. That’s why you see them propagating the false dichotomy in responses. They trivialize choice as having only nominal impact on outcomes. There’s no point in encouraging self determination, only focus on the externalities, no one can ever be responsible for their outcomes in any more than a trivial sense.

The reality is that choice and context are symbiotic in outcomes and while it’s obviously true that not all options are available to everyone, individual choice has massive influence on individual and group outcomes.

I think this is a weasily way to put an argument. Yes, we can agree that just sitting around doing nothing is unlikely to help someone’s outcome. But when you have a growing population throwing their backs on 2 jobs and still struggling to make ends meet, you might want to consider that this people do have the choice mindset, and the choice mindset is failing spectacularly. So with this in mind, and with agreement on the point that you need to try, could we focus on the externalities instead of congratulating ourselves about our choice mindset?

> think the worst kinds of people create a false dichotomy here where either everything is choice or everything is a product of externalities.

> But within their context they are likely to have better outcomes than people who externalize credit/blame.

I think you're interpreting "choice mindset" in the context of this article differently from how it's meant.

Poor people understand very well what it means to have to make choices. They know quite well that their choices impact their lives, and how. That's part of the psychological violence the poor experience, in fact: their choices are often of the form "which harm do I visit on my family this week?" Your comment about the false dichotomy captures it, partially: the wealthy imposing/projecting their view that every condition is the result of a choice made by the individual. Poor people generally don't believe their entire lives are a product of externalities, but the rich certainly do believe it's all about choices.

Yes, that's a pretty obvious confounding possibility. It's foolish to draw any causal conclusions from a correlation between 'wealth' and 'choice mindset' when the causality could clearly go either way.

Reply on news.ycombinator.com