Tuesday, February 16, 2010

The high cost of poverty

It's no secret that on a personal level, poverty is expensive. Bills can't be paid on time so interest is added on top of the bill that couldn't be paid in the first place. Fees and penalties are added on a checking account with too low a balance. Interest rates are higher for poor people. Insurance of all types is too expensive, so the uninsured risks losing everything. Poor people risk losing property and even risk losing their lives. Having no insurance, medical problems are ignored instead of receiving early treatment.

The law is tougher on poor people. There's a big difference between being able to hire an expensive law firm and getting stuck with a public defender -if you can get one at all. Justice too often goes to the highest bidder. A poor person is more likely to get into trouble with the law. They drive old beater cars that get stopped for bad lights, excessive rust, broken springs, cracked windshields -all kinds of things that the poor person can't afford to fix. The police officer can then check the driver's sobriety, and check for any other violations that might catch his eye. Rich people with new cars don't get stopped for brake lights that don't work.

Housing is expensive for the poor person. The poor person has to rent rather than buy. Instead of fixing windows, doors and putting in insulation, he pays more every month for heating and cooling. Can't replace an old inefficient furnace so money is wasted on fuel and repairs. Can't afford to put a new roof on, so patches get put on patches, water damages ceilings, and mold starts to grow.

When you are poor, all those things play against each other. The expense of one thing causes neglect in other areas that then become more expensive problems.

Things spiral downwards from there. The list goes on and on.

Now let's expand things a bit. Think of all the people who've lost their jobs, had pay cuts, or lost income in other ways. They've started down the slippery slope of poverty. If they are very lucky, they are able to replace the income before things get out of hand. Maybe they run up the credit cards a bit more than they normally would. Roof repairs get put off for a few months. They drive their car a year longer than they normally would.

If they don't get their income back, expenses can pile upon expenses. Before long, the bills get too big to ever get paid. They become one of those poor people -the sort of people they've looked down on all these years. That's happening to a lot of people. More, I suspect, than government statistics would indicate.

Poor individuals become poor families. Poor families become poor communities. Poor communities become poor towns and cities. Then we get poor counties, states, national governments and maybe even whole regions. Take a good long deep look at what's happening to the European Union if you doubt me. Focus on Greece, Ireland, Portugal and Spain if you need a hint.

All the things that affect the individual affects nations. A nation cannot replace its aging infrastructure. It's one patch job on top of another, until even the patches are unaffordable. Then bridges collapse. National grids keep running old equipment longer and work it longer. Blackouts become common. A nation's health care slips until it can't handle a shock like a pandemic. As a nation weakens, other stronger nations begin to push it around. As the economy falters, there's no money for extras. (Ever wonder why the moon missions have been canceled? We can't afford it anymore.) Eventually, a nation can no longer afford necessities. Water projects fall. Energy development comes to a stop. Snow isn't plowed off the streets. Firemen are laid off at the same time arson increases. Police are let go while crime is on the upswing. Garbage isn't picked up anymore.

Just like a poor individual's life gets complicated, government's life gets complicated too. The garbage in the street becomes a health hazard just when medicine is in trouble. Buildings burn down, reducing tax revenue. Spotty grid power hurts business productivity, again reducing tax income. Businesses may even leave for places in better shape. Unplowed streets keep people at home, reducing their earnings and spending. The lowered economic activity again affects tax revenue.

Are there solutions? Sure, but the best bet would have been prevention.

The person who's making a lot of money who does wise things, is much better off when income is reduced. Instead of spending money on fancy vacations and big cars, debt is paid down. Money is invested in solar electric panels, gardens, greenhouses, house insulation and other things to reduce day to day living costs. Believe me, it's good to have a significant percentage of alternative electric power than can't be shut down by the power company.

The nation could have gotten it's financial house in order. It didn't. Solar panels could have put on every house in America for less money than the war in Iraq. We couldn't do that now, the nation is too poor. Money could have been spent improving railroads and canals -more efficient ways of moving goods and people than the highway system. Too late.

It takes vision, for an individual or a government, to prepare for poverty during rich times.

Are there things individuals and governments can do once they become poor? Sure, they can freeze in the dark. Well, that's one possibility. There are others, but as time goes on they become more and more unattractive.

An individual could accept they'll never get better than a minimum wage part time job and reduce living costs to that level. A nation could prepare to lose its status on the world stage and downscale voluntarily.

Individuals have been known to adjust -a few, painfully. I don't know of any nations that downsize voluntarily. Empires collapse; they don't have yard sales.

It's tough to be poor.


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