The Poor Will be Among Us, and Corporations Will be Selling Them Crap!

Unilever products in Indonesia

New Orleans    When I wrote Citizen Wealth: Winning the Campaign to Save Working Families, with my editor’s encouragement I labored pretty hard to make the case that major corporations understood the importance of citizen wealth or income security for lower income families and some had in fact fine tuned their business models to live and die on that recognition.  The examples are easy to find in Wal-Mart, H&R Block, and many other consumer products, but the heart of my argument was that companies needed to play a better role in helping maintain and advance citizen wealth for working families and on the other hand predatory corporate players needed to be singled out and punished.

Given that background, it was with mixed feelings that I read with interest an article recently in the Wall Street Journal entitled, Multinationals Market to the Poor:  In Nations Such as Indonesia, Companies Find People at Poverty Line Are Steady Customers for Inexpensive Basics by Eric Bellman.   Reading the article was in some ways a depressing experience though.

Essentially, companies like Unilever, the consumer goods company known for its soap, shampoo, and food products in Indonesia, the worlds 4th most populous country and one of the poorest, has averaged annual sales growth of “more than 22% over each of the last five years.”  Sancoyo Antarikso at PT Unilever Indonesia argues that even in the recession, “we continued coming up with innovations that increase relevance, made our products more affordable, and even money-saving.”  I can’t even describe how much I hope that is true.

But reading about Nestle’s strategy gives me pause, especially given long and troubled history and contemporary stories of Nestle’s role in pushing baby formula on poor mothers around the world and more recently its involvement with other chocolate makers in aiding and abetting child slavery in its contract plantations in the Ivory Coast.  Bellman’s description of their activity in Indonesia is chilling:

Nestle is rolling out a new chocolate snack in Indonesia that was developed by its global network of food engineers [this already sounds frightening!] with the less-affluent customer in mind.  The Crunch wafers are bite-size crispy chocolate-filled triangles that sell for 10 cents per palm-sized package.  Crunch wafers are inexpensive in part because they tap into the same process used to make breakfast cereals.  They also are easy to transport and don’t melt or crumble in their inflated plastic packaging.  It was a complicated engineering process to deliver something so rugged at a low price, but Nestle hopes if the snacks sell well in Indonesia, it can launch them in other developing markets.

Reading that paragraph, does anything sound good? Nutritious?  Even worth a dime?  OMG!!!

That’s not all.  Look at this:

Analysts have long argued that companies selling products and services to people earning less than $4 a day can outperform in tough times.  This is because consumers still must buy food, soap, and other basic goods when the economy is bad….Companies selling everything from cheese to diapers to frozen fish have discovered in Indonesia that they can turbocharge growth…by offering small package sizes that are more affordable to the poor who have limited spending money on any given day.

For the life of me a lot of that sounds like “regressive pricing.”  By that I mean like regressive taxation, charging the poor way more money by volume and weight for the same basic commodity that would be offered someone not strapped to the highs and lows of their daily income.

Too much of this sounds like it doesn’t build citizen wealth, but is plain predatory no matter what the claims.

Nestle products around the world


Breadlines: The Impact of Budget Cuts on Citizen Wealth

Growing Poverty in London, picture from Breadlines Series in the Guardian

Toronto   If anyone really wants to know what the impact of Congressman Paul Ryan’s budget proposals, Tea Party harangues, and Republic policy propositions would be for working people, it might be worth taking a look at the impact of the current austerity program in Britain under the conservative government there.  A friend in Toronto sent me a note about the “Breadlines” series currently running in the Guardian, which is a sad and tragic eye opener about what happens when politics of cutbacks is implemented.

Make no mistake, these measures are frontal attacks on the efforts of working families, albeit making lower wages, to build any citizen wealth or income security.  Statistics released last week in the USA indicate that family wealth has now fallen to a bit over $100,000 per white household, around $7500 for Hispanic households, and hardly $5000 for African-American households:  a 20-1 gap racially!  No small part of this has been the unaddressed loss of home value which is the key factor in citizen wealth for the majority of working families.  Given the ongoing housing crisis this should not be a surprise, but it still is a shock for those living there, and more pain is being proposed.

In the attack on working families, Britain has already “been there and done that.”  An article in The Guardian series lays out the problem:

The last year has been one of the most difficult in living memory for Britain’s households. The economy continues to falter, and few have enjoyed a pay rise – which, with the spike in the cost of living means millions of wages have fallen in real terms. Employers try to avoid sacking employees by cutting their hours instead – sometimes pushing workers below the requisite number of hours at which they can claim tax credits – and the government has introduced an £18bn programme of welfare cuts.

Living standards have plummeted for many but, say charities, the group that has been particularly hit are those in low-paid or insecure employment. Those on benefits see their income rise in line with inflation but last week, the Institute for Fiscal Studies revealed the sharpest one-year fall in middle incomes since 1981, reversing five years of growth in a single year.

Outnumbering the 5.5 million working-age adults already living in poverty in the UK – officially defined as households with incomes of less than 60% of the median average – those suffering in-work poverty include couples without children who have a gross annual household income of between £12,000 and £29,000, and couples with two children on £17,000 to £41,000.

18 billion pounds in welfare benefit cuts is a huge blow as well.  Amazingly, it is based on something called a “work capability assessment” to see who qualifies and who doesn’t.  For some reason the British contracted that task out to a French outfit, and the process is caught in constant appeals over denial of benefits in what is now a draconian system:

At the centre of the controversy is the work capability assessment (WSA), the test carried out in the UK by the French healthcare firm Atos that is designed to identify people on incapacity benefit who are “fit for work”. Critics say it fails to pick up complex and fluctuating conditions such as mental health. It is widely feared by vulnerable claimants – and for those who are found fit for work, it can trigger a long, stressful cycle of appeals.

What a nightmare!  Coming to a home near yours soon.

Job Centre in London


Toil Index and Tax Credits for Home Ownership

Robert Schiller from Yale gave props to Richard Green of USC for his recommendation that there be a targeted tax credit to encourage homeownership.  Green and Andrew Reschovsky of Wisconsin have studied the data closely are clear that the real benefit of existing tax policy allowing a standard deduction for interest on mortgages is for more wealthy homeowners who itemize their taxes.  They have concluded that this primarily encourages them to build bigger houses, rather than distributing the benefits as real incentives to home ownership.  The multi-billion dollar tax loss of interest deductions is the largest US investment in citizen wealth, and despite the fact that this investment has created homes as the single largest source of citizen wealth for many working families, the recent recession has now wiped out wealth for such families and destroyed confidence without offering an alternative for low-and-moderate income families to create wealth.  I’m not sure that these professors are right, but at least it is a way to go until we can right-size solutions to our current predicament and the emerging future.

Robert Frank of Cornell helped defined challenge to the middle class by creating what he called a “toil index” to puzzle out a problem he had recognized from Elizabeth Warren and her daughter’s book about the “two income trap.”  That problem was essentially that middle income families were being pushed into buying houses past their means in order to secure good schooling for their children.  He notes that, “The increase in the toil index has been spectacular.  From a postwar low of 41 hours a month in 1970, it rose to more than 100 hours in 2005.”

If a family is lucky, and it takes a lot of luck these days, to have two breadwinners working fulltime 100 hours of work would still be almost one-third of their income going to put a roof over their heads.  That doesn’t work under any calculation either for a family or for the entire economy which despite the failures of HAMP, Treasury, and the Obama Administration to address, is still very important to the US economy and the recovery from neighborhood to neighborhood around the country.


Near Poor: Trouble at the Dividing Line of Poverty

New Orleans                       Nothing like stumbling over the obvious, but then the whole point of being relatively poor or “near poor,” as the Times called it today, is being invisible, no matter what they or anyone else may want to call it.  In looking at the new numbers that try to define the terror and tragedy of poverty now being issued by the Census Bureau by examining how much money people really have to spent, as opposed to believing that anyone can “eat” something as gross as “gross income,” the razor edge between being dead ass broke and just barely scraping by is clearer.

It also has a number now thanks to a “freedom of information” request by the Times to the Census folks for the numbers of people that are only at 50% above the poverty line.  The numbers are huge:  51,000,000 people are “near poor” and bleeding at this sharp edge where any bad break can push them below the poverty line.  There are hundreds of reasons families are in this bind, including the housing crises, stagnant wages, undervalued work, medical bills, and whatever, but the point is they are there and it’s no picnic with no relief in sight.   According to the U.S. Census Bureau, the characteristics of the “near poor” include the fact that 50% include a married couple, 49% own their homes, 42% have health insurance, and 28% work fulltime.  On the “citizen wealth” index where I have argued that “maximum feasible participation” could spell the difference, 20% are barely above the poverty line solely because of benefits that they have successfully accessed.

Conservatives bickered over whether or not this means that 100 million people (counting the near poor and the rest of the poor) in the USA are “starving.”  This is hardly the point, because this is really an emerging definition of precariousness that would be the statistical point where any tremor or imbalance can push a family into deeper poverty and even hunger.

As an organizer of low-and-moderate income families, I was probably only asked to define that term a thousand times over the decades, but, like it or not, it now appears that we are getting closer and closer to a real definition, even though there seems to be no will or reason that any are arguing to do something about it.



Accelerate Bank Transfers and Create Citizen Wealth and Reinvestment

Nemove-to-credit-unionw Orleans Credit union and community banks report the number of new accounts opening in October rose to by 13 times the normal rate of increase with over 650,000 new accounts since September 29th when Bank of America announced its (now rescinded) larcenous run on their own customer’s  bank accounts through debit card fees.   The Credit Union National Association (CUNA) reported that new deposits resulting from these efforts had swelled deposits in credit unions by $4.5 Billion, which is certainly not small change.  ABC News yesterday announced a figure of over one million customers having switched.  Other commentators reminded readers and listeners that $4.5 Billion within the lending rule of thumb that for every dollar in assets, the institution can loan ten dollars, which means that credit unions may have just acquired an additional lending ability of $45 Billion if they are willing to step up to the plate.   Having called for a boycott of Bank of America and any other money sucker that wanted to add this charge and keep fleecing consumers, this all makes me very happy!

Reports from Seattle on blogs and websites indicate there were lines of people pulling out there money.  Once again ABC had footage of a modest sized business owner with $3 million in accounts pulling his money out in Seattle and putting it into credit union accounts.   I was less enthralled with the footage of an interview with Kristen Christian, who had announced a Bank Transfer Day, and has gotten a lot of ink with a Facebook page and this, that, and the other, with her ham-handed attempt at distancing herself from the Occupy movement, which has been more helpful in getting traction here than any other force.  I assume she got typically bad advice from someone that she needed to distance herself specifically from the tactics of the few, rather than showing the good judgment of just keeping her mouth shut on the Occupy movement and push forward on the bank transfer themes.  Watch any politician on TV, young sister, and they will teach the value of keep stepping rather than sewing dissension on irrelevant side issues.

Nonetheless, this is all good, and in fact needs to continue to be a major push by way more people.   Banks and all of the Homeland Security mess that attends the opening and closing of accounts do not make it easy to move money from place to place, so in fact the effort to continue to “green line” these big banks and consumer rip-off artists must continue to build to continue to divest their ridiculous coffers and subsidize their management bonuses and Wall Street level salaries.

This is part of what it means to build “citizen wealth” in our communities.  This is not simply a protest effort, but it is the way that lots of individuals and families can create their own “community reinvestment” initiatives to return money to work in their communities rather than simply piling up on the balance sheets of the huge, bailed out “ghost” banks with their inflated portfolios and their refusals to loan and extend real credit to help pull the country out of the great recession.

If 1 million means $4.5 billion out and $45 billion for our communities, then why not 10 millions to move $45 billion out and $450 billion into our communities to create livelihoods and better, more vibrant cities for all of our families?


The Assault on Citizen Wealth Entitlements

Newcut-spending Orleans No matter how jaded we have all become about the cynicism of political experience and the hijacking of popular government, regardless of the party and people in power, by the interests of the rich and the corporations, it is still shocking to see the mean-spirited erosion of consensus that in the richest country in the world there should be at least some semblance of care and concern for the less well off in our society.  The emerging multi-party détente on the need to cripple the last of the entitlements around Medicare, Medicaid, and Social Security goes is a concerted effort to flatly impoverish both communities and entire populations.

This wave of attack on citizen wealth or income security is not simply a matter of Texas governor Rick Perry being a flame throwing crazy man arguing that Social Security is a “Ponzi scheme.”  The fact that he could even hurl such a stink bomb calculating that it would move his base is undoubtedly a shrewd calculation that the last shred of “compassionate conservativism” is gone.  Exposing Perry as whack and a con artist, will not rebuild the consensus, given that the economic debate has now become stuck on the issue of debt period.

The debt attack is a scorched earth strategy by the right designed to obscure that is being burned in the name of saving some fancy houses in another block that are already getting all of the goods, services, and tax breaks.  The strategy is cynical because it focuses on the least organized constituencies politically and therefore the powerless.  Subsidies for the military, financial institutions, oil companies, and many others can still roar on, while poorer and older people will be impoverished and in some cases given the death sentence.

It is scary to think that millions will only be saved by the right’s overreaching and extremism.  Social Security may be cordoned off, while medical and feeding programs are eviscerated.  There may not be a bait-and-switch on emergency aid for communities as some of the Republicans were arguing, but that does not mean that there will not be pain and suffering for others.

The organizational and oppositional vacuum that exists at the street level rather than the internet assaults is devastating.  At what point do we come together with a new plan?   Before it’s too late!