FAIR MONEY

Face to Face with Inequality


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Poverty Apps and What’s Wrong with Them

The New York Times magazine for May 3 has an article Want a Steady Income? There’s an App for That, about the app Even, which means to tackle extreme income volatility and the attendant risk of having to resort to short-term loans like payday loans and title loans and similar forms of subprime exploitation. As Even explains their (currently non-existent) service:

With Even, you can stop worrying about low paychecks. Because you’ll get the same consistent money, every payday. For $3/week. No interest. Zero fees. Less stress.

In essence, Even looks at the history of your income, calculates the monthly average, and pays out that amount to you regardless of how much you make. When make more, it holds back money to build a cushion. When you make less than the average, it makes up the difference out of your savings–and there’s a suggestion it might even kick in some money if you haven’t built up your cushion yet. In other words, it’s a short-term savings account that costs you money: $3/week. (I’m not sure how “zero fees” manages to add up to $3/week.)

The article’s author, Anand Girigharadas, is appropriately skeptical and point out that if you don’t have enough money, smoothing it out won’t help you.  He  quotes Heather, one of the people he portrays: Thinking about money gives her a jolt, “like you’re about to get into a car accident.” And she feels this way, not because she foolishly spent money she needed to save up, but because she’s got a crappy job and a boatload of debt, incurred in part to receive the training that would qualify her to do that crappy job.

Income volatility is bad, of course, but only if you live near the edge or are already way off the cliff. The real problem is the disappearance of good jobs that pay a predictable living wage. As Girigharadas puts it:

People in Silicon Valley may believe there’s an app for everything. That’s their hammer. But improving the lot of the poor will require other tools, including an old one the valley often wants to wish away: politics.

Efforts to tackle some of the negative consequences of inequality (such as income volatility) without trying to tackle the underlying causes (stagnating wages, shifting more and more risk from the corporation to workers, shifting more and more profits from the workers to the corporation), just end up papering over the ugly truths of unregulated capitalism.

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FAIR Money Meetup on Inequality

FAIR Money is kicking off a monthly Meetup on Saturday March 21 in San Francisco. We’re hoping to meet other people who are interested in inequality and who are itching to do something constructive about it. Interested in joining us? Check out the Meetup page.

We’re planning to make it a movable feast and pick different locations around the Bay Area, so if you can’t make it this time, perhaps another month will work for you.

We hope to see you there!


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Economic Realities of the 21st Century

The Economic Policy Institute calculates that in 2010, six members of the Walton family siphoning profits from the Walmart empire were together worth $89.5 billion. That amount of wealth is equal to the total value held by the bottom 41.5% of Americans, a staggering 48.8 million US households.

For more insight into how Walmart beggars low-income families and lets the rest of us pay for the consequences, see the PBS documentary Store Wars or How McDonald’s and Walmart became Welfare Queens.


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The Moral Hazards of Too Much Money

If you think the pursuit of happiness is essentially a private affair, then recent research findings regarding the impact of inequality will make a hash of your most cherished beliefs. A Greater Good article summarizing the research on inequality points out that people are happiest and most compassionate in countries with the least inequality. And it’s not the poor who are short on compassion, but the wealthy. People who are significantly wealthier than others, it turns out, are not only less generous but also more apt to drive over hapless pedestrians who find themselves in a crosswalk when the wealthy come barreling down the street. People who are given an obvious advantage in games of monopoly still think they are brilliant and deserving when they win. Food for thought. 


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Inequality

Bill Moyers talked to economist Richard Wolff yesterday about the astonishing rise of inequality in the last 30 years. One telling fact is that peak purchasing power of the minimum wage was in 1968. Advancing inequality is astonishing not because it’s unprecedented, but because it’s happening in a so-called democracy, with the apparent consent of the governed.

Sadly, this aligns with a striking non-finding from the FAIR Money research: nobody talked of social injustice in connection with their personal finances, even though all but one or two had drawn an extremely short stick in the lottery of American life. All our participants internalized their difficulties as personal challenges, which may tip over the edge into personal failure anytime. This is why FAIR Money means to develop tools that give people more power in their own financial lives and, perhaps, a footing to participate differently in the political decision-making that affects them every day in every way.