Newsflash: The Poor are People

"I’ve learned a lot since I started talking with them. I’m embarrassed now at the assumptions I used to make about them. Without realizing it, I assumed poor people weren’t smart. Or that they weren’t interesting. And that they didn’t know anything about my world. Turns out, it’s not my world. It’s ours. And yes, some of them are obnoxious or weird or mean. But no more so than anyone else. It turns out, poor people are—get this—just people. People who happen to be poor."-Patrick Smith, Losing the Big Coin Toss, The Good Man Project

Deserving of Careful Study

"The connection between deteriorating economic and social conditions and high corporate profitability deserves careful study as does the question of whether this is a stable relationship. Regardless, these charts provide important insight into our national policy-making nexus. As long as our large corporations are prospering we should not expect our political process to produce meaningful change. The problem isnt a lack of good ideas for how to strengthen our economy and generate jobs, it is the lack of interest on the part of our elected leaders — on both sides of the aisle – to seriously consider them. It appears that meaningful economic change will have to await either a further unraveling of our economic and social infrastructure or the rise of a powerful social movement with a new economic vision."-The conclusion of Martin Hart-Landsberg writing in Sociological Images after examining an International Monetary Fund report on the U.S. economy.

History of Debt

There is a fascinating interview with David Graeber author of Debt: The First 5,000 Years on the blog Naked Capitalism which turns a lot of our conceptions about the origin of money on its head and which examines the role and consequences of indebtedness on all aspects of society.  I highly recommend the article.  Here are some highlights:

Money evolving out of barter is a myth.  Rather a sense of indebtedness and mutual responsibility came long before an exact accounting of goods for trade.  

Think about what they’re saying here – basically: that a bunch of Neolithic farmers in a village somewhere, or Native Americans or whatever, will be engaging in transactions only through the spot trade. So, if your neighbor doesn’t have what you want right now, no big deal. Obviously what would really happen, and this is what anthropologists observe when neighbors do engage in something like exchange with each other, if you want your neighbor’s cow, you’d say, “wow, nice cow” and he’d say “you like it? Take it!” – and now you owe him one. Quite often people don’t even engage in exchange at all – if they were real Iroquois or other Native Americans, for example, all such things would probably be allocated by women’s councils.
So the real question is not how does barter generate some sort of medium of exchange, that then becomes money, but rather, how does that broad sense of ‘I owe you one’ turn into a precise system of measurement – that is: money as a unit of account?

The first word for "freedom" in any language was related to freedom from debt.

This was the great social evil of antiquity – families would have to start pawning off their flocks, fields and before long, their wives and children would be taken off into debt peonage. Often people would start abandoning the cities entirely, joining semi-nomadic bands, threatening to come back in force and overturn the existing order entirely. Rulers would regularly conclude the only way to prevent complete social breakdown was to declare a clean slate or ‘washing of the tablets,’ they’d cancel all consumer debt and just start over.

 In Sanskrit, Hebrew, Aramaic, ‘debt,’ ‘guilt,’ and ‘sin’ are actually the same word.

Graeber also concludes that our economic system is at tremendous risk because it does not offer enough protection to debtors.

In the past, periods dominated by virtual credit money have also been periods where there have been social protections for debtors. Once you recognize that money is just a social construct, a credit, an IOU, then first of all what is to stop people from generating it endlessly? And how do you prevent the poor from falling into debt traps and becoming effectively enslaved to the rich? That’s why you had Mesopotamian clean slates, Biblical Jubilees, Medieval laws against usury in both Christianity and Islam and so on and so forth.

Since antiquity the worst-case scenario that everyone felt would lead to total social breakdown was a major debt crisis; ordinary people would become so indebted to the top one or two percent of the population that they would start selling family members into slavery, or eventually, even themselves.

Well, what happened this time around? Instead of creating some sort of overarching institution to protect debtors, they create these grandiose, world-scale institutions like the IMF or S&P to protect creditors. They essentially declare (in defiance of all traditional economic logic) that no debtor should ever be allowed to default. Needless to say the result is catastrophic. We are experiencing something that to me, at least, looks exactly like what the ancients were most afraid of: a population of debtors skating at the edge of disaster.

Although governments and banks are behaving differently at the moment, if we recognize debt as a social agreement, we can change and negotiate the terms.

The UK takes the even weirder position that this is true even of debts the government owes to banks that have been nationalized – that is, technically, that they owe to themselves! If that means that disabled pensioners are no longer able to use public transit or youth centers have to be closed down, well that’s simply the ‘reality of the situation,’ as they put it.


These ‘realities’ are being increasingly revealed to simply be ones of power. Clearly any pretence that markets maintain themselves, that debts always have to be honored, went by the boards in 2008...

When thousands of people begin assembling in squares in Greece and Spain calling for real democracy what they are effectively saying is: “Look, in 2008 you let the cat out of the bag. If money really is just a social construct now, a promise, a set of IOUs and even trillions of debts can be made to vanish if sufficiently powerful players demand it then, if democracy is to mean anything, it means that everyone gets to weigh in on the process of how these promises are made and renegotiated.” I find this extraordinarily hopeful.

A truly interesting read worth checking out in full via the link above. I've also added Debt: The First 5,000 Years to my (overly long) to read list.

Soul-Less Use

I was taken with Leo Babauta's column on Zen Habits today.  It is exactly how I feel about the constant mantra of marketing in our culture and in our social media in particular.  Incidentally, I had to click through a message asking if I wanted to monetize my blog with ads before I could post this.

Converting visitors into buyers is a soul-less use of your creative energy. Reject it, out of hand....

Imagine owning a muffin shop. If the muffins are commonplace, you’ll have to advertise and do some “guerilla marketing” to get customers. But if your muffins make people roll their eyes in ecstasy, they will tell the world of your deliciousness, and the world will pound on your muffin-scented door.

Become quiet, find contentedness, become valuable. These trump marketing every time, and as you learn to listen to your inner music, you can now ignore the marketers hawking their oils of snakedness.

Public Morality: Sex and Violence

You really can't help but click on an article with a title like The Ethics of Lust: Your Dildo May Be Illegal.  The article notes that sex toys are illegal in certain states.  And that in 2009, the Supreme Court of Alabama upheld such a law stating that “public morality can still serve as a legitimate rational basis for regulating commercial activity, which is not a private activity.”

I immediately thought of the Supreme Court decision striking down a California law banning the sale of violent video games to minors without parental consent because it is a violation of the manfacturer's free speech rights.

If public morality can serve as a rational basis for regulating commercial activity, aren't the people of a state as entitled to enact laws that represent their morals regarding violence or are "morals" only related to sex?  I realize that these are two different courts, but the two cases together reveal what a strange culture we have in America.

At Least I'm Not That Guy

During these hard days and hard weeks, everybody always has it bad once in a while. You know, you have a bad time of it, and you always have a friend who says "Hey man, you ain't got it that bad. Look at that guy." And you look at that guy, and he's got it worse than you. And it makes you feel better that there's somebody that's got it worse than you.  But think of the last guy. For one minute, think of the last guy. Nobody's got it worse than that guy. Nobody in the whole world. That guy...he's so alone in the world that he doesn't even have a street to lay in for a truck to run him over.-Arlo Guthrie, The Pause of Mr. Claus


The Economists reports on a new study that suggests that the reason the nearly-poor are less likely to support systems that would raise taxes on the wealthy and favor the less well-off is that they are afraid that greater equality might erode their tenuous advantage over the really poor:

Paradoxically, as the share of the population that receives benefits in a given area rises, support for welfare in the area falls. A new NBER paper finds evidence for an even more intriguing and provocative hypothesis. Its authors note that those near but not at the bottom of the income distribution are often deeply ambivalent about greater redistribution. 

Economists have usually explained poor people’s counter-intuitive disdain for something that might make them better off by invoking income mobility. Joe the Plumber might not be making enough to be affected by proposed hikes in tax rates on those making more than $250,000 a year, they argue, but he hopes some day to be one of them. This theory explains some cross-country differences, but it would also predict increased support for redistribution as income inequality widens. Yet the opposite has happened in America, Britain and other rich countries where inequality has risen over the past 30 years.


Instead of opposing redistribution because people expect to make it to the top of the economic ladder, the authors of the new paper argue that people don’t like to be at the bottom. One paradoxical consequence of this “last-place aversion” is that some poor people may be vociferously opposed to the kinds of policies that would actually raise their own income a bit but that might also push those who are poorer than them into comparable or higher positions. The authors ran a series of experiments where students were randomly allotted sums of money, separated by $1, and informed about the “income distribution” that resulted. They were then given another $2, which they could give either to the person directly above or below them in the distribution.

In keeping with the notion of “last-place aversion”, the people who were a spot away from the bottom were the most likely to give the money to the person above them: rewarding the “rich” but ensuring that someone remained poorer than themselves. Those not at risk of becoming the poorest did not seem to mind falling a notch in the distribution of income nearly as much. This idea is backed up by survey data from America collected by Pew, a polling company: those who earned just a bit more than the minimum wage were the most resistant to increasing it.
Poverty may be miserable. But being able to feel a bit better-off than someone else makes it a bit more bearable.