Again, what policies, regulations, laws are you proposing that would stop money from going out from the poor to Dollar General?
Let’s rewind the thread a bit:
-
someone posts about a boot index and some of the issues with being poor.
-
me: that’s an emotional plea. How do symptoms of poverty like the long-term reduced detrimental value of cheap goods have much to do with actually addressing poverty?
-
others: no, you’re not listening, it REALLY sucks to be poor because of X, Y, Z.
It sucks to be poor because you can’t afford the basic necessities of life without undue struggle. Ringing hands at the costs of Dollar General or how those in poverty can’t afford to save money by buying a whole cow (how many people buy a whole cow?!) or bulk chicken isn’t doing anything. There’s not even meaningful ways to address those symptoms in isolation, outside of actually lifting people out of poverty. But you’re not going to lift people out of poverty with high quality boots, bulk chicken, free Costco memberships, or free checking accounts. Rather, you need to provide education, meaningful jobs/wages, affordable housing and healthcare.
I love Terry Pratchett, but the rich aren’t rich because they have good boots and buy bulk chicken and the poor aren’t poor because they don’t. The rich are rich because they make a lot of money, have socio-economic advantages that keep compounding to help them make more money, while the poor don’t make enough money and don’t have the means to develop the tools necessary to make enough money.
The irony is the marginal cost to earn the next dollar decreases as you earn more dollars while the actual personal utility of the next dollar decreases as you earn more dollars.
I gotta say, “there’s nothing to be gained in the fight against poverty by looking at business models that prey on poor people and perpetuate their poverty” is a very strange take. I mean, you’re mocking the example, but there are enterprises (like Dollar General) that only exist and thrive because of the way they exploit poor people. “That’s unimportant and there is nothing we can do about it anyway” is a really bizarre response.
CraigM
4121
almost, but not quite there
Someone in the UK government proposed looking at changing how inflation is calculated in response to how poorer families may be impacted differently from pricing changes due to how buying habits are different. They cheekily refer to this as the Vimes Boot Index after the wonderfully concise quip from Sir Terry.
You want concrete policy on how understanding this can help poor people? Well there is just such a concrete policy proposal.
I read the article. It seems to be about calculating inflation across a wider range of spending distributions, based on different strata of households (I’m assuming this means percentages spent on food, fuel, heating, etc.). I certainly agree that inflation on certain sectors (e.g., fuel costs) disproportionately hit lower incomes. But that new policy has nothing to do with the durability of cheap goods, inability to leverage bulk buying, or checking account costs. Those are the things I’m saying are dramatic symptoms that are raised as emotional pleas.
CraigM
4123
Step one of actually fixing an issue is defining and quantifying it. Accurately measuring the issue comes before fixing it.
This is a proposal to better measure it, in an area where a lot of programs exist and use that number (inflation calculation) to create fixes.
KevinC
4124
When I was young and barely making it to the next paycheck, I had that pulled on me a couple times. Absolutely devastating as it leads to a cascade of fees and a spiral downward that can be hard to pull out of. $1-200 in bullshit fees is devastating when you’re grossing about $400 every two weeks and you need every penny of that to feed yourself and have enough gas to make it to your next shift.
Up until 2021, there was a limit of Federal Banking law that limited withdrawals per month from a saving. IIRC, before the law was changed that deregulated interest payments on saving account by banks and savings and loans it was 3/month.
Not something you probably ever ran into as a kid delivering newspapers, cause you didn’t have to pay bills back then. I ran into once right out of college. It was in the days when interest rates were 10% and saving accounts were paying like 5% so I was shifting funds between checking and saving pretty regularly. It started my transition to having Schwab handle all my financial needs.
If you have a savings account, there is a limit to how many withdrawals you can make. The savings account withdrawal limit is no more than six “convenient” withdrawals per month. Money transfers you make online, by phone, through bill pay, or by writing a check are considered convenient, but certain other withdrawal types don’t count toward the limit.1
This law was repealed in 2021.
You are fundamentally right, the reason people are poor is cause they don’t earn enough money.
It is also true that savings account, is a low cost way of getting checks cashed, but it is not something banks push. They much prefer pushing “free” checking accounts that turn out to be anything but free if you don’t maintain a high balance and bounce some checks.
That said, there are all kinds of ways society makes it really hard for poor people to get ahead.
Another example middle-class folks can get utilities (electricity, water etc.) service with no need for a deposit. But if have bad credit you need a deposit. So say you want to take a new job in an hour or two away. Not only do you have to come up with first and last month, for the new apartment but you need several hundred dollars as deposit to turn the lights on. Since you have bad credit the utility company won’t take a personal check, and often won’t take cash. So you need to a get a money order, then physically go to the utility company and give them a money order. What for most American involves spending a minute reading off your credit card information, turns into a of the day-long chore for poor people
The Netflix series, The Maid had lots of great examples of the barriers poor people face.
That’s good to hear! I’ve run into that limit a few times when I was living abroad and was moving money back and forth.
DoubleG
4127
The thread is called income inequality. Dollar General’s purpose is to generate value for shareholders (wealthy people) that it earns from overcharging people without access to private transportation (poor people).
This isn’t an “emotional plea” or a “symptom”, it’s a simple and clear engine of inequality. You can’t ignore stuff like this if you want to understand why the poor are staying poor while the rich have ever more wealth.
Matt_W
4128
I’m not sure it’s particularly strange. It’s probably possible to demonstrate that Dollar General’s policies don’t contribute substantially to people’s poverty compared to things like housing, healthcare, childcare, and transportation costs. That’s what @Stepsongrapes is saying. It’s a totally valid economic decision to choose cheap over durable goods. And for people in poverty, durable may not be an option. If it’s not, it seems like a good thing that cheap is an option. Hard to see how closing down all the Dollar Generals would help poor people. To put it in Vimes terms: if only the $38 pair of boots is available, Vimes has to patrol the cobblestone streets of Ankh-Morph in bare feet. Stepson seems to be saying the solution is to raise Vimes’s salary so he can afford better boots, and that it’s hard to see how to craft effective policy that would instead make the $38 boots cost $10.
But ‘cheap over durable’ isn’t Dollar General’s business model. Their business model is ‘smaller packages of the same stuff at prices apparently lower than the larger packages but actually higher on a unit cost basis.’ That isn’t offering their customers less durable products at a lower cost, it’s offering them less actual product at a higher cost.
In any event, they’re an example. High-cost credit is a business that preys on poor people. Check cashing businesses prey on poor people. Housing providers prey on poor people. I don’t think the solution is to throw up your hands because you can’t imagine how this sort of thing might be regulated.
Enidigm
4130
This has been an interesting discussion, thanks all. I never quite connected reduced portion size to price; the few times I’ve been to a Dollar General I did notice this but didn’t quite think it fundamental for the business model.
It’s interesting because it seems to be the same model but inversed to Walgreens or CVS, which is to sell the same amount of product for a much higher price (though to be fair their actually business models is a storefront for prescriptions, so their consumable goods are probably an afterthought to that).
It reminds me of thinking in terms of calories per dollar when measuring home delivery meal services like Hello Fresh. The portions were so small it worked out to something over $40 a day to eat 2000 calories. Places like Dollar General might well be like running an overdrawn account trying to catch up for income challenged people keeping up their dietary needs, since you’re going to find away to spend money on food one way or the other.
My mother can’t resist Dollar General (or the other variants). She isn’t poor, but her parents were, and her early life post-Great-Depression instilled in her some strange impulse to buy apparently cheap things. There’s one near where she lives, and she basically never lets a week go by without without stopping and buying something. I’ll point out that what she bought costs more there than at Publix or Target or Walmart, once you account for portion or size, but she’ll say something like “yeah I know but it was only a dollar! Only a dollar!”
Is Target predatory compared to Costco because their stuff, which comes in smaller packages, costs more on a per unit basis? Bulk sales have always been cheaper by unit, due to economies of scale. Their business model is driving that unit down lower than Target and also placing themselves in more locations (partially because of the reduced shelf space needed for smaller units) than their competitors. I haven’t seen any information that Dollar General’s profit margins are out of whack versus other retailers.
As Matt_W said, would snapping your fingers and making every dollar type store disappear alleviate any poverty?
Usurious loans and such are a different story—they fundamentally prey on the core cause of poverty: lack of income and the desperation that comes with that. Are we putting dollar stores in the same category—a need to regulate out choice from poorer consumers because we’ve decided they’re making a bad decision by going to the dollar store, since there is no rational reason to do so? Hell, I know I’ve fallen for the bulk buy bug and thrown away stuff that I bought in bulk because I couldn’t finish in time. That wasn’t very rational of me, but I’m sure I’m not the only one. I wouldn’t want Costco regulated out because of my poor decision making on that front.
I’m still waiting for a good example of how you regulate out the economy of buying in bulk or the long term cost vs. durability issue.
Looking at this chart, it’s precisely why my Bitcoin-true-believer-Third-Way-Libertarian friend keeps citing as evidence that it’s our switch away from the gold standard in 1972 that’s the cause. I keep saying correlation is not causation. What else happened in 1972 or close to it that I can point to, btw?
If your description you used of your friend is accurate then you’ve already identified the problem and there’s nothing you can tell them that’ll change their minds, probably about anything.
He’s a good guy, and I changed his mind on lots of things when we used to live in the same city. It’s harder to get through to someone over email or discord though. I just don’t want him to keep all his life savings into Bitcoin and end up holding the bag when it collapses.
Fair enough. I got to say though a Libertarian getting wrecked by bitcoin sounds to me like poetic justice.
After all it’s just the marketplace in action ultimately placing an accurate valuation. ;)
I wonder what his theory is of how switching from the gold standard caused truck driver wages to begin declining.
In any event, this is likely the biggest piece of what happened:
That set the stage, and then Reaganism did the rest of the heavy lifting, and here we are.
/GettyImages-183296243-a79f62baef094d728d7aee8539fb5778.jpg)
