Face to Face with Inequality

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Join Us to Discuss How the Other Half Banks Oct. 12 @ 7pm in San Mateo


At 7pm on October 12, we will be hosting a casual group discussion at Kaffeehaus in San Mateo about the challenges low-income people face when attempting to access affordable financial services that meet their needs. Lacking alternatives, many people are forced to take out risky, high-interest payday and title loans to make ends meet. FAIR Money is currently conducting a series of interviews with payday loan recipients to understand why people turn to these services and the effect they have on their lives.

Mehrsa Baradaran explores these issues and potential solutions book How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy.

“…the banking industry, fattened on public subsidies (including too-big-to-fail bailouts), owes low-income families a better deal. She recounts the slow but steady demise of “banks with souls” — the community-based banks and credit unions that have been displaced by larger institutions…” –The New York Times

Should we go back to the days when the local post office offered banking services (like they still do in many European countries)? Are better regulations the answer? FAIR Money would like to include the Bay Area community in this conversation. For those with already full reading schedules, we have included a few videos below of Mehrsa Baradarian speaking about some of the topics in her book.

Please RSVP if you can make it. We hope to see you there!








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Explosion in Payday Lending Coverage

I just listened to a great podcast from NPR’s On Point that handily sums up the recent attention payday loans have been getting. They start off with Google’s recent ban on payday loan advertising and the recent Atlantic article on payday lending, then dive into a far-reaching discussion about the payday loan industry and its effects.


Source: The New York Times

Plenty of attention is given the systemic issues leading to people taking out payday loans (even the payday industry rep agrees). Lots of attention for postal banking as a potential alternative, too.

There’s a beautiful moment in the piece where one of the guests fields a call from a financial planner. The caller trots out the tired personal responsibility line, in response, the guest makes it known that low-income people are, generally, Good with Money, and the problems go far beyond the individual.

One of the guests is Mehrsa Baradaran, author of How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy. This looks like a great book for the summer reading list.


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Carrying Life in a Backpack

2014 marks the anniversary of LBJ’s War on Poverty.  50 years later, in a series on American hardship, Trip Gabriel writes about entrenched rural poverty in his article “50 Years Into the War on Poverty, Hardship Hits Back”. The article is a heartbreaking look at how government has failed the rural poor in Appalachia, a place where economic opportunities are scarce and roughly 47% of the population relies on social security as their only personal income. Their story reflects that of many, disenfranchised and disinvested in across the United States, as the Unconditional War on Poverty waned in popularity, leaving young people with little hope and few options. As Donald Bolden, quoted in the article, says, “‘Ain’t that a shame: I’m 30 years old and carrying my life around in a backpack.’”

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Affirmative Action the Conservative Way

Evan Mandery points out that so-called “legacy” preferences in college applications can be worth about 150 points on the SAT’s to the privileged applicant whose privileged parents got in to the elite schools before the competition got really stiff. I think non-legacies should start thinking about bringing suit for being excluded unfairly despite their own hard work.

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Forum on Student Debt in Palo Alto 4/24

pyd poster

Jeffrey Greger of the FAIR Money team will be joining Assemblymember Bob Wieckowski (author of the Students’ Bill of Rights), and Dave Walter (Stanford Law School’s Associate Director of Financial Aid) this Thursday in Palo Alto for a public forum on student debt. We encourage you to take part if you’re available, and look forward to seeing you there!

Thursday, April 24, in the Fireside Room at the Unitarian Universalist Church of Palo Alto, 505 E Charleston Road, Palo Alto, CA 94306.

Event Agenda:
6:00pm – Doors open*
6:30pm – Discussion begins
— Opening remarks, moderated discussion, audience questions
7:45pm – Event concludes

*Light refreshments will be provided.

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Is It Worth It? – Part II

Bob Samuels of the AFT has calculated the cost to society of free public higher education. His magic number is a cost of $127 billion annually, a figure offset by a variety of savings. (For instance, we’d see a significant reduction in the cost of student loan programs. And we could reap more taxes by ending tax breaks on on education-related investments, which turn out to be a handy tax shelter for the rich.)

By my calculations Samuels’ total cost, never mind the offsets, would be approximately the same amount of taxpayer money as the cost of war since 2001.

I haven’t got a clue how to calculate the total social benefit of free college tuition at all public institutions of higher learning in the U.S., but I am pretty sure we’d get more out of it than we get out of the war in Afghanistan.

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Is It Worth It?

Freakonomics has two related podcasts on the benefit (part I) and the cost (part II) of going to college, and it comes to the conclusion that, yes, it is totally worth it. Every year of education adds 8% to your income every year, so those 4 years of college would result in 32% additional income every year. People with more education retire later, meaning that the years in college with little to no income are canceled out on the back end. (This is not to speak of the fact that people with more education are happier and healthier, presumably because their work is not nearly so unbearable.) In other words, higher education turns out not to be too expensive, after all, right?

Well, maybe not. Steve Dubner doesn’t dwell on this, but he’s undoubtedly reporting averages. And when you think about that, you have to figure that some people get a lot more return on their education than 8% per education year for every year they work. And others get less. What if you’re in a not-so-economically-viable major in a below-average school in a geography with below-average employment opportunities? Is it still worth it then?

Another very reasonable question Dubner forgets to ask is whether it is reasonable for a college education to cost what it costs, considering the social benefit we all derive from having a population of people ready to do the work that needs doing. That the average college grad will see a reasonable return on his or her investment does not mean that it is “priced” correctly or fairly. In fact, the cost of higher education is thoroughly irrational, especially in view of the fact that it is not entirely clear what creates the value. Is it what you learn? Is it just the piece of paper–the reputation of the degree? Is it the network you become part of?

About 20 years ago, I taught at Chicago State University–an institution where the question of whether it is worth it should be very seriously considered by all prospective applicants–nearly all my students said that, if given the option, they would buy their degree outright and skip the bit about learning. At the time, this merely struck me as a very sad commentary on the quality of the education that lay within their reach, and I gave it up and lit out for the territories as soon as I could. Now I fear they understood something about the real world which I was way too naive to appreciate.

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The Feeling of Scarcity

In their book Scarcity, Sendhil Mullainathan and Eldar Shafir blame the apparently irrational act of taking out a payday loan (and taking out a second one to pay off the first, etc.) by poor people on the mindset induced by scarcity–that is, being poor makes it difficult to think about anything but getting money, the sooner the better. An interesting proposition.

In our research, we found some indications that talking about one’s financial straights leads to smarter decision-making, which would mean that if Mullainathan and Shafir are correct about the tunnel vision imposed by poverty, then talking to another person about the issue counteracts scarcity’s tendency to focus the mind on the getting of abundance ASAP.