Why is it so Hard for Policy Makers to Separate Access from Affordability?

981207_10156731174555570_8112977795619686083_oNew Orleans    Life, work, and the world are full of mysteries, but after years of hitting my head against various walls, I’m finally connecting the dots in trying to understand the peculiar responses we sometimes get in trying to change public policies and private pricing strategies.

Remittances are a prime example. Talking last week to a professor who teaches a course at a local university on personal finances, she was excited when I told her about ACORN’s Remittance Justice Campaign, because she wanted her students to understand the complicated world of money transfer systems. When she understood the topline demand of our campaign was to cap the pricing at 5% to stop remittance costs from being so predatory, her face almost deflated. Of course she supported our position, don’t get me wrong, but affordability had not occurred to her as an issue in the way that it is of course paramount to immigrant families and migrant workers trying to send money home to relatives and communities in their home countries.

ACORN Canada members are testifying this week before the CRTC (Canadian Radio & Television Commission) about the high price of internet in Canada. Quoting from an early copy of their prepared testimony:

…the organization released a report summarizing 400 testimonials from low-income Canadians about how vital yet unaffordable home internet is.

A recent CRTC survey suggests that many Canadians think home internet is essential, but too pricey. Half of the survey’s 29,000 respondents are dissatisfied with the price of their internet service. ACORN Canada members view affordable access to the internet as essential to improving low-income Canadians’ ability to succeed in the digital economy.

“How can low-income families get out of poverty if they can’t apply for jobs, or access government services? Our kids can’t even do their homework,” says ACORN Canada President Marva Burnett. “Access to the internet is a right, and going to the library or coffee shops are not practical solutions.”

The same dilemma was faced by the FCC in the United States and, as we recently discussed, and the FCC duck walked around the issue by subsidizing the cost of internet ostensibly for lower income families by around $10 per month, rather than tackling head on the fact that affordability is the barrier to access, rather than availability of the internet.

This is an old saw. In the housing collapse from 2007, the supposed “reform” was trying to force lenders, many of whom were overtly predatory in the subprime mortgage field, to have to assure the loan was affordable to the family before issuing the money. When they were just churning loans, there was more than enough access to mortgage lending capital, but whether it was affordable within an honest reckoning of family income was a diminished factor in pumping air into the bubble.

Why do policy makers refuse to routinely address the issue of affordability when dealing with the question of access of services and implementation of programs? This is where the divide of experience between the one-percenters and big whoops from the rest of us and especially from low-and-middle income families becomes so pronounced and creates such tragic results. They just don’t get it, and too often these days, seem unwilling to do the “homework” and listening to understand the issues from any other point of view, especially from the perspective of our people.

Simple suggestion: consider affordability first, and access later down the list. Make stuff work by understanding that pricing pushes people as a primary concern.

Duh!

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Magical Realism at the Border of Techies and the Poor

App for Louisiana food stamps

New Orleans    Don’t get me wrong, I am 1000% in favor of techies of all stripes and sizes trying to figure out a way to impact on the lives and fortunes of low and moderate income families. Nonetheless, when I read an article about JPMorgan Chase putting up $30 million through its foundation to create a Financial Solutions Lab to supposedly “build affordable financial services” within their financial industry, all my antennae immediately go up because for the life of me that sounds like a way for Chase to divert money into a tax exempt arm to do research and development for its core business, rather than anything to do with philanthropy. How jaded have I become?!?

The New York Times published a puff piece about the effort in a special section on something they called “fintech,” which I would recommend against ordering at a restaurant no matter how much you like seafood. They highlighted a company called Propel that seemed amazingly well intentioned and dedicated. They had thought of developing an application for a smartphone that would help lower income families apply for food stamps. They were sent with the other Chase lab rats to walk the “mean streets” of San Francisco to get a better sense of the needs of the poor. Did I really say San Francisco, one of the richest cities in the United States? Maybe they were looking to see how many lower income families had managed to stay in San Francisco…but I don’t want to get off my subject here. Anyway, Chase gave Propel a quarter of a million bucks, and they ended up switching over to develop an app to allow a low income family to be able to determine the balance they have left on their food stamp card.

I guess that’s a good thing, though in my experience most food stamp recipients can tell almost anyone within a penny how much they have on their card at any time day or night during any month you might want to ask. Or they walk to the corner store and find out, but, let’s stay positive here.

You will need a smartphone though for this app to help you. We have this nagging problem of the widening gap in internet access but according to various Pew Research surveys 74% of families making less than $30000 per year now have sometime access to the internet. 13% of families with internet access making less than $30000 can only do so with a smartphone, so for the subset of those who are also eligible for food stamps of that 13%, the app might have some value.

Of course smartphones cost money, and if a family making under $30000 can afford a smartphone, that doesn’t mean they can afford unlimited access to data of course. 48% in fact report on Pew surveys that they pretty regularly get cutoff from their smartphones because they don’t have the money to pay the bill. 30% also report that they regularly exhaust the minutes on their data plan so essentially have to cut themselves off from using their phones to access the internet.

Don’t get me wrong. I’m not saying this is a solution looking for a problem. I’m just saying that this “fintech” pretense of supposedly helping low income families who are unbanked and victimized by their lack of affordable access to the financial system is way ahead of its time until there is equal access to the internet, the cost of devices are lowered, and the FCC forces the predatory telecoms to produce affordable plans for lower income families. In fact if Chase had been willing to really be charitable and invest $30 million in a campaign to make that happen PDQ in the US, then we would be talking about a real step forward where we could let a thousand apps bloom. Until then other than providing R&D for big banks, it seems the cart has once again jumped ahead of the horse.

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