How Scarcity Affects the Poor

17286670New Orleans   As Congress gets ready to come back to work, there are top-of-the-list items involving lower income families, including extension of unemployment benefits, protecting food stamp appropriations, and of course the ongoing fight for enrollment in Obamacare.  Once again the nasty subtext in the debate will continue to be the ongoing theme that the poor don’t work, are unworthy and immoral, and need more pressure and push to find non-existent jobs and so forth. 

            It’s worth reading a recent book called Scarcity:  Why Having Too Little Means so Much, by Sendhil Mullainathan, a Harvard economist, and Eldar Shafir, a Princeton physiologist, which looks analytically and behaviorally at how people, especially the poor, respond to the real life problems of not having enough money, enough food, and so forth.  The bottom line isn’t surprising though they come at the conclusion in novel and important ways, but essentially, the biggest problem about being poor is being poor, and scarcity exacerbates poverty for poor people.

            And, if you’re not going to read it, which is likely, you’ll just have to take my word for it since I’ve been going through the book over the last week and can recommend it, so here’s some quick takeaways from the professors’ work and studies in both the USA and India, which I also appreciated.

            They argue that the poor – and the rich – react similarly to scarcity, whether when confronting starvation or dieting, despite how different those problems are in the real world.  The fight to endure with insufficient resources, whether time in the day, food on the table, or money in your pocket, concentrates the mind both for better and for worse.  Better in that the poor and others facing scarcity are laser sharp on short term problems, compared to others, but in the words of the authors, their “bandwidth,” or ability to deal with multiple areas, especially long term impacts and consequences is much reduced.  For the poor that shows up everywhere from the recurrence of payday loans in America to the interest rates and borrowing practices of small farmers and rag collectors in India.  Making it that day or month is the test, the devil take the hindmost.

            Scarcity in essence reduces the mental bandwidth that might be accessible for what people not involved in such stressful or survival contests might see as higher priorities or rational choices like planning ahead, using self-control, or solving other life problems, which all lead to trade-offs, crises, and other problems.  The authors cite studies that compare the issues of the poor and others facing scarcity with the same loss of mental computing power or IQ points as losing a night without sleep.  If the problems faced by the poor then are permanent, then so is the loss of ability to deal with anything but survival, creating a perpetual cycle of defeat.

            What policy makers, organizers, and others need to understand from Scarcity is that these problems do not flow from personal failings or immoral lifestyles or careless living, but involuntary psychic disabilities that could befall anyone facing scarcity as permanent, chronic life experiences.  In other words, have a heart, this could – and does – happen to all of you, too, when you are faced with not enough time, money, and other resources, whether or not you realize it, not just the poor.  When looking down your nose, be careful, you might see someone just like yourself.

 

Why Deny the Poor Access to Telephone Service and the Internet?

lifeline solicitation-500x654Ocean Springs    We can say with confidence and without fear of correction that the coming year will see yet more full scale battles in the war against the poor.

Anyone can make that list.  Certainly it starts with the headliners right now as extended unemployment benefits are being terminated, food stamps are still on the chopping block in the farm bill, and vast hordes are still lined up nationally and state by state building obstacles to access to affordable healthcare.

And, just to pick one example, if you aren’t poor yet, look at the risks in front of you if you are a regular working stiff and don’t have health insurance according to reports from health actuaries.  The average American under 65 years of age will have a healthcare bill of $2700 this year.  5% of Americans will have really bad luck and equally bad health and end up with $47000 worth of health bills, pushing you lower down the economic ladder.  20% will have bills of $13,300 which would be devastating to many.  Yet, we have people saying, go naked with no insurance?  And, I’m not even talking about the problems of low wage jobs or unaffordable housing.  Pick your poison.

Nor do there seem to be limits on how many battles can be waged against the poor.

In Georgia, for example, advocates joined by the telephone industry itself had to sue to temporarily stop the legislature from trying to put a $5 per month fee on the bills for free telephones enabled by the FCC for 15 million lower income Americans.  These “lifeline” phones only give 250 minutes per month of time, but are what they claim, a lifeline for those who can’t afford them but need the ability to make doctor’s appointments, call ambulances, and handle the basic requirements of life.  Some of the howlers are so concerned that someone may have snuck one of these phones who didn’t qualify that they want to pretend that punishing the poor might be the way to stop it, as if a scamster wouldn’t be equally able to go for $5 bucks on that fraud.

Why slap the hand of the FCC on one of the few things they are doing right for the poor, especially given the spectacular failure of the FCC’s $10 per month internet access program for the poor with Comcast and other companies, who continue to promise the sky and deliver spit?  The fact that Cox and Times-Warner delivered even less is small comfort.  No sense pretending that there is a fair shot at the poor pulling themselves up by their bootstraps.  First, they don’t have boots, and then no internet either.

This is an issue throughout North America:

According to Statistics Canada, 54% of households in the lowest quartile of $30,000 or less do not have home internet access. This is roughly consistent with a report prepared for the U.S. Department of Commerce that finds 57% of homes earning less than $25,000 have no computer and that only 43% have home internet, compared with 93% with household income over $100,000.

That number was quoted in a piece  advocating support of ACORN International and ACORN Canada’s digital divide campaign.

About the only protection low income families have now is from the NSA and the spying machine since they aren’t on the internet and might not be on phones enough either. Small comfort.  Maybe it’s time to stop the war on the poor and do something different?

Millennium Village Projects, Internet Access, and Understanding the Poor

Millennium Villages project Tiby Mali 2008New Orleans    As the gap between rich and poor widens, there is huge confusion from the uppers about what in the world are the lowers thinking and doing.   I read an article the other day about the controversy in South Africa over a young family with two children who moved into a house in the settlements with their housekeeper for a month to get a feel for it all.  I thought to myself.  Yawn.  What harm could it really cause, regardless?

            On the other hand, I’m approaching the end of Nina Munk’s book called The Idealist:  Jeffrey Sachs and the Quest to End Poverty, and I’m not sure that I will finish because it’s so depressing.   Granted it is hard to clothe Sachs as a knight in shining armor on this quest, not because of his brutal past as a proponent of severe, killing austerity programs in Bolivia, Poland, and Russia, but because he is an arrogant and narcissistic bull in the fragile china shop of the poor.  Yet, I’ve read all of his books since poverty became his mission and despite my reservations, I’ve rooted for the success of his Millennium Villages Projects in Africa, because he’s right to shrillingly advocate for more dollars to be spent in development and because if you don’t have a better horse in the race, bet on the one that’s running.  Unfortunately he hasn’t raised the money needed, despite the accuracy of his argument of the relative cost of so much change and his own tireless efforts.  More painfully from chapter to chapter in The Idealist the failures are deeply rooted in his refusal to listen to the very people living in the villages and understand what he is seeing and hearing.   We worked with his institute in New Orleans after Katrina.  His books argued for community organizing and popular participation, but I could tell he didn’t understand how to do it, but was just repeating something that sounded right.   We reached out to help, but he’s a busy man, but not so busy that he and the rest of us won’t feel the pain that comes in Africa from his project’s failures that are now pervasive.

            Reading an op-ed in the Times entitled “Let the Poor Have Fun,” perhaps made this point better indirectly.   Talking about the expansion of electricity and the internet to poor villages, the author made the case that it was OK for television sets to be plugged in before hospital incubators.  One would follow the other without coercion, scolding, and top-down pressure.  Believe me, I’ve sidled up to a computer in cybercafés all over the world in the slums of India, the Philippines, Kenya, and Mexico and watched my seatmates pitch in their coins so that 3 or 4 could crowd around movies or video games at top volume, and never thought twice, because I’m Ok with them learning skills, and it takes skills to be able to learn to use the computer or cellphones or whatever for work, health and life.

            The poor aren’t asking to be instructed.  If you bother to listen to them, they’re asking to be enabled.   With the enough money and tools, people rise to the task.  It doesn’t take moving into their homes, throwing millions into crops they don’t want to grow and can’t sell, or wrapping up bitter pills in hard candy, it takes listening, and then working with people to make their change happen their way.   Start simple and finish strong.  It’s hard, but it works.

Going after Grameen Bank and Social Enterprises in Bangladesh

grammeenNew Orleans   I have sometimes been critical of the Grameen Bank, the microlending institution founded in Bangladesh, and am generally skeptical of claims that debt is an effective poverty reduction mechanism,  but the efforts of the Bangladesh government to take control of the institution, seemingly to seize all of its social enterprise assets is troubling. 

It’s hard to get the full story anywhere, but in Bangladesh, as we have all witnessed in the factory fire tragedy and their ham-handed handling of so-called “reforms” in the labor laws governing union organizing, the challenges are immense.  Nonetheless, it is hard to see how a financial institution with 8.4 million shareholders, who are the bank’s borrowers, can have its control diluted by the government’s increase of its share from 25 to 51% without any voice by the shareholders.  One board member quoted in the Wall Street Journal said, “How can the government, which is the minority shareholder, impose its will on us who own the majority?” That seems an excellent question.

            Make no mistake though.   If you visit Dhaka, when you notice the few skyscrapers in that huge city, you are equally surprised when you learn that many of them house microlending operations including Grameen.   These are big, big businesses, and no doubt have irked the government because they have also become the go-to vehicle for huge corporate foreign direct investments and the largesse of the donor community.  There’s no “mom-and-pop” here.

            Part of the problem for the government is precisely this far reaching economic empire built by Grameen, including 48 other businesses among them the nation’s largest mobile phone company.  In such a poor country the phone operation is a ripe plum.  According to the Journal:

Mobile operator Grameenphone, for example was started with a loan from the Soros Foundation.  The company a joint venture with Norwegian telecom company, Telenor, is now the country’s largest mobile operator, a listed company with a market capitalization of $2.6 billion and a 40% market share.  Telenor owns 58% of Grameenphone.  Grameen Telecom, a not-for-profit set up by Mr. Yunus, hold 34%, while the remaining 10% trades on the Dhaka Stock Exchange.

The government wants to break all of this up, but they may not fully appreciate that the financial model of the bank itself if is not sustainable, since it relies on a daily payment and collection system requiring thousands and thousands of paid collectors also leading to a significantly high interest rate of easily more than 20% per loan.  Yunus, who was pushed out of the bank in 2011, claims that no Bank money was used for these other social enterprises and that they are nonprofits, but it is unclear what relationship they have to the Bank and its sustainability.  The government claims that these additional businesses enriched Yunus’s family, but no details have been made public.   Some relatives may have jobs there, but in such a sprawling empire in such a poor country, it is reasonable that they would almost inevitably be employed somewhere.  

With the governing party seeking to control Grameen and the opposition party promising Grameen’s independence if they are elected, this all seems destined to end miserably for the poor and whatever benefits they are getting from Grameen.   The whole situation is of a piece with too many others around the world, where social enterprises seem good to governments and politicians if they are small and precious, but once large and robust, seem inviting targets for takeover and dissolution.  Businesses get reforms and reconstruction.  Social enterprises it seems get retribution and destruction.  

FCC’s Connect2Compete Disconnected at Cox Cable & Payday Embarrasses Chase

New Orleans    Remember the poor…low and moderate income families who will always be with us?  Well, more evidence keeps piling up that when it comes to internet access and a lifeline to the 21st Century, the “volunteer” efforts by the big cable companies are continuing to make the FCC’s claims of lowering the digital divide a tragic joke.

I listened to calls yesterday made by an eligible mother with school age children to Cox Cable.  Cox along with Times-Warner and several other companies supposedly after claiming in late 2011 that they were going to following the flawed promises of the Comcast settlement to provide less than $10 per month internet and a $150 computer, joined the new FCC organized Connect2compete effort to finally implement the program in the fall of 2012.  The Connect2Compete program like much of Comcast’s program has been something of a stealth campaign, but we continue to be committed to seeing if low income families can finally access lower cost internet.

This woman having heard about the program from Local 100, called Cox Cable in New Orleans on the only available number.  Cox had no idea what she was talking about?  Low priced cable?  No way!  Connect2compete?  Huh?  Then she was transferred to a technical person when she persisted in asking how to apply.  The technical person had the same responses which all added up to “no clue.”  The technical person finally transferred her to a Cox manager who after several minutes of hearing the woman describe what she had heard about the program finally replied, “oh, yeah, we tried that program with a couple of schools in the fall, but the program was terminated in January, is there anything else I can help you with?”  That’s it.  Nada!

An earlier member had also called Cox Cable in New Orleans and been told there was no such program but that she would be called back.  Miracles never cease, and she was called back and told to call another number with Connect2compete.  When she called that number, she was not able to get through on her zip code to the automatic system.  The zip code was for the famous 9th ward.  When she called again and entered another zip code, she could get no farther into the system because you had to have an authorization code passed out by one of few schools that were engaged by Cox in the program, I presume.   It hardly matters, since she was stopped there.

Whatever this connect2compete is, it is categorically NOT a program to extend internet access to the poor.  The FCC and their cable company comrades should be shamefaced at the cynicism of these efforts.

Perhaps being publicly shamed by your own con games even works every once in a while!  Jamie Dimon, CEO of JP Morgan Chase, in a rare retreat from his usual “damn the torpedoes” arrogance, reportedly admitted that their ripping off Chase customers for thousands of dollars as the collectors for payday lending companies was even past the pale for Chase.  He swears that he is going to fix the problem.  I’m not sure which problem he’s going to fix.  The one where Chase is collecting money from their customers in one the states where payday lending is banned or the one where they are allowing their buddies to hit an account with collections multiple times and run up thousands of dollars of overdraft charges to Chase’s own benefit rather than their own.  Let’s hope it’s both, but when it comes to banking and shame, there’s really only so much we can count on.

Wall Street Journal Continues Curious Campaign against Lifeline Telephone for the Poor

New Orleans   Spencer Ante and the Journal continue their curious, and in many ways deceptive, campaign against the FCC’s lifeline telephone program, which allow the poor to have basic access to a telephone for less than $10 a month for emergency messages and a limited number of texts and calls.  The company’s’  providing the service still make money, just not as much on the regular customers, and if the lifeline customer exceeds the limits, then they make more of course.

Last week in the Journal the front page story was on the significant decrease in lifeline telephone users due to a 2012 policy of the FCC requiring outreach via mail to lifeline telephone holders to re-verify their accounts, since previously eligibility had been accessed through self-certification.  Not to get nostalgic, but last week the Ante and the Journal reported clearly that all sources attributed the decrease to the users failure to respond.  This week, Ante slid over that concession, saying instead, “A Wall Street Journal review of FCC data showed that more than 40% of the subscribers at the program’s top carriers were either ineligible or failed to show that they were unqualified.”  The new spin allows the Journal to advance their unproven claims of fraud in the program, even as the program’s cost and number of users decreased.

The culprit in this story is the new, smaller companies that were allowed in recent years by the FCC to participate in the program and therefore compete for the business.  The legacy companies were not as interested in the smaller profits of the lifeline program, but the new upstarts were anxious to build a customer base and satisfied with the smaller profits of the program, so were involved in aggressive customer outreach in low income communities.  I would have thought the Journal would at least play some lip service to the old school conservative arguments about the benefits of increased competition, free enterprise, etc, etc.  In the age of Murdoch and his communication conglomerate though, the battle cry seems to be to circle the wagons and protect the big boys.   Attacking the poor is of course as old school as it gets, but that is just the way business is done under either paradigm it seems.

The story rakes as one of the smaller outfits over the coals for turning in applications in without a signature in Wisconsin and makes something of 23 people who might have more than one phone.  There seems to be no current comment on one change involving the FCC’s lack of recognition, especially in multi-unit apartment complexes, that qualified individuals might share the same address.  The Journal perhaps sees that as possible fraud, rather than life for the poor.  Neither is there any mention that one of the largest new companies in the market is Mexican billionaire Carlos Slim’s Tracphone operation.  Maybe the Journal wants to tread more carefully in that direction before slinging out more innuendo.

I’m not sure why the Journal has launched this new campaign, but lifeline telephone service is an essential for the poor and elderly, and as I have argued in Citizen Wealth, we need to achieve maximum eligible participation.   The cost of this program dropped in 2012, but it is still unclear if everyone who should be getting the program is receiving the benefit.  Furthermore, as even Ante reported earlier, this service is paid for by consumers and then passed back through the FCC, so this is not a taxpayers’ dollars being misused situation.

If you can figure out the real beef here, call me, maybe?