Half Changed World

T’s dad has been saying that we should take the boys skiing.  In particular, he’s suggesting that if D doesn’t learn to ski soon, he’ll never be "really good."

Cons:

• Skiing is ridiculously expensive, even at the dinky little mid-Atlantic ski areas that have almost no slope.  Between lift ticket and equipment, it gets up close to $100 a day per person.  We think long and hard about spending that kind of money.
• Especially when there’s no guarantee that the boys wouldn’t try it for 5 minutes and then want to go home.  D still has his training wheels on his bike, because when we take them off, he panics when he picks up any speed and puts his feet down.
• Downhill skiing is never particularly environmentally friendly, and is particularly not-so in the mid-Atlantic, where pretty much everything you ski on is man made.

Pros:

• Skiing is fun.  Downhill skiing is as close to flying as I’m ever likely to get without mechanical assistance.
• T’s dad is right that it’s easier to learn when you’re young, and not as discombobulated by falling down.
• D picked up skating this winter (on an indoor rink) pretty well, and many of the skills are transferable.
• I can imagine that at some point in the boys life, they will have friends who ski, and they may feel deprived/outside/something if they don’t know how.  Yes, this is a huge marker of class privilege.  But both T and I did learn to ski as children, and in some real way, I think we both feel slightly guilty at the idea of not passing this opportunity on to our kids.  Especially since we’re probably slightly more affluent, not less, than our parents were when we were young.  But — even setting aside the fact that T grew up in Michigan and could learn to ski on a local hill — I think skiing just wasn’t as crazy expensive a sport at the time.

Paul Krugman’s column yesterday is called "poverty is poison" and refers to the growing literature on how poverty harms children’s mental development.  He uses this as a starting point to complain that both Obama and Clinton’s anti-poverty proposals are "modest in scope and far from central to their campaigns."

I think this is unfair — as Shawn Fremstad at Inclusion argues, "Calling Clinton’s and Obama’s anti-poverty initiatives ‘modest in
scope’ only makes sense if one thinks that calling for say, universal
health care, has little do with reducing poverty and isn’t part of an
anti-poverty initiative." And even if you only look at more narrowly defined anti-poverty programs, the Pathways articles I mentioned last week contain proposals that are far from modest.

But that’s not really what I want to talk about. Krugman quotes this sentence from the Financial Times article: “many children growing up in very poor families with low social status
experience unhealthy levels of stress hormones, which impair their
neural development.”

Two things are striking in that sentence:

1)  The "with low social status" part of that sentence suggests that it’s relative poverty, not material deprivation, that causes the stunted neural development.  Margy Waller at Inclusion may be unhappy that Krugman’s still talking about "poverty," but this point is totally consistent with their overall argument.  (More on this later — I’m in the middle of reading Robert Frank’s Falling Behind, which is all about relative status.)

2) It suggests that stress is the main connection between poverty and poor child outcomes, not lack of educational experiences or the other things we talked about last week.

Unfortunately, the AAAS presentations that this statement is based on don’t seem to be available online.  Some of the speakers have other papers available, but they’re pretty technical, so it may take a while before I have the energy to work through them.

For those of you who don’t live in Virginia, the key piece of background information here is that the Virginia House of Delegates is generally controlled by the lunatic right.  These are people who aren’t sure that contraception should be legal, who would rather see all of Northern Virginia permanently frozen into gridlock than raise taxes to build roads, who think that preschool for poor kids is a socialist plot.  The Senate is usually more reasonable, even before the Democrats took back control in the last election.

So, I’m more than a little bit shocked to find myself supporting the payday lending reform bill adopted by the House of Delegates, rather than the sham reform being sponsored by Senate Majority Leader Dick Saslaw.  It’s not a perfect bill –while it theoretically imposes a 36 percent cap on interest rates, it allows for fees to be charged on top of that, which drives the real cost of lending far higher.  But it would be a good start, and would help prevent people from getting caught into an endless cycle of taking out another loan to pay off the first one. 

By contrast, the folks who have been fighting payday loans — including the AARP, the AFL-CIO, the NAACP, Voices for Virginia Children, and the Virginia Poverty Law Center — say that the Senate bill could be worse than nothing.  It’s hard not to conclude that campaign contributions are driving policy. 

As previously discussed here, there’s a real need for low-cost small dollar loans for people without great credit.  Even usurious rates can be worthwhile if the choice is losing your job when your car breaks down.  I’m not sure what the best solution is.  But a study from North Carolina — which banned payday loans a couple of years ago — shows that low-income people aren’t reporting hardship as a result of the ban.

Last time I posted about banking, reader Dave S. posted this link for the Predatory Lending Association.  I assume that anyone who spends a minute on that site will figure out that it’s a parody put up by the opponents of payday lending.  By contrast, I’m not sure that it’s immediately clear that the folks who were advertising on CNN during the coverage of the Potomac Primary results, with the URL "www.ReformPaydayVA.com" is the payday lending industry.

While we’re waiting for word from DC and Maryland on the primary results, I wanted to make a plug for the Stanford Center for the Study of Poverty and Inequality‘s new magazine, Pathways: a magazine on poverty, inequality, and social policy.  The first issue features essays on how to end poverty from Edwards, Clinton and Obama (McCain and Romney were invited to participate, but declined).  But I think the rest of the magazine is even better.

• It includes the best summary for a general audience I’ve read of the evidence on the impact of housing vouchers on economic opportunity.  DeLuca and Rosenbaum explain the differences between the overwhelmingly positive results for the families who received vouchers under Gautreaux, a court-ordered remedy in a desegregation case, and the more mixed results for families who received vouchers under Moving to Opportunity, a random assignment evaluation modeled after Gautreaux, and make some reasonable arguments about the lessons that policymakers should draw.
• Robert Frank (of The Winner Take All Society) explains why inequality is bad for rich people too, and argues for a progressive consumption tax.
• Charles Murray (of the Bell Curve) makes an case largely grounded in Frank’s reasoning for why interventions aimed at increasing opportunity for low-income families won’t reduce inequality.
• Becky Blank, codirector of the National Poverty Center at UMichigan, reviews the three Democratic candidates’ proposals and concludes that they "all have multifaceted and serious anti-poverty plans.  Anyone concerned with poverty issues could happily vote for any of them.  Edwards has made poverty a centerpiece issue for his campaign from the beginning; Clinton has the best early childhood proposals; Obama is the most thoughtful on jobs for disadvantaged youth and urban change and (for my money) the most creative in putting new policy ideas on the table, such as low-cost Internet service in poor neighborhoods.  But all of them understand that the measure of this country is not just the size of its GDP or the wealth of its richest citizens."

The whole magazine is available as .pdfs, and hard copy subscriptions are free.  Check it out.

When I blogged about the "privilege meme," I promised a post about the differences, and overlap, between privilege as measured by money and privilege as measured by social class.  I keep postponing that post, because it’s a complicated topic and I want to get it right.  But if I wait until I get my thoughts totally sorted out, I’ll never get to it. So here goes with some rough thoughts, and hopefully it will at least get the conversation started.

As noted before, the privilege meme included a bunch of questions that are mostly about money — did your parents own their own home, were you aware of bills, did you have a phone at home, do you have student loans, did you get to travel abroad — and a bunch of questions that are more about social capital — did your parents read to you, did they take you to museums, did they attend college.  Some people got very heated about this, arguing that they shouldn’t be considered "privileged" even though they were read to, had books, etc, because their family was very poor, and it was just because their parents prioritized education that they had these things.

So, the first thing to lay on the table is that these are in fact two different dimensions of social class, and it’s possible to be privileged in one respect but not the other. But, the next thing to point out is that, in practice, there’s a great deal of overlap between the two.  I’m thinking of the chapter in David Shipler’s The Working Poor about the upper-middle class mother who is impoverished by her divorce and her subsequent choice not to work full-time, so as to be able to spend more time with her children.  She’s quite low-income as a result, but is able to leverage her social capital to get her children scholarships at fancy private schools and other middle-class privileges.  Her experiences prove that you don’t have to have lots of money to have privilege, but it’s also quite clear that she’s got a lot of things going for her that the typical low-income single parent doesn’t.

There’s a couple of different explanations for the overlap between poverty and lack of home-based educational experiences, and depending on which one you think dominates, you come up with very different policy solutions for fixing this (if, in fact, you think there’s a need to fix it):

• One school of thought argues that it’s really about the money — if a parent can’t afford food, then books are a luxury, and parents who are working 80 hours a week to pay the rent don’t have the time to do things like attend parent teacher conferences.  This points towards cash transfer solutions.
• Another explanation is that parental characteristics like lack of English skills or learning disabilities lead to both poor labor market outcomes and to inability to navigate systems (such as libraries or schools) on their children’s behalf.  This points towards two-generational approaches, and education aimed at parents.
• A third explanation is that it’s cultural.  This has lots of variations, ranging from the stereotypical — poor parents don’t value educational opportunities for their children — to the sophisticated — Annette Lareau’s work on "accomplishment of natural growth" versus "concerted cultivation."  This points towards lots of tongue-clucking and finger-pointing, and possibly towards conditional cash transfers, which give low-income parents cash incentives for desired behaviors.

And I guess the fourth option is to say that it doesn’t matter the explanation, but what we need is better schools and preschools so that even kids whose parents don’t provide educational opportunities and support have a chance to get ahead.

Via Lauren at Faux Real Tho, I read about this exercise in encouraging students to gain awareness of social class.  As transformed to a meme, it’s basically a somewhat more thoughtful version of the "spoiled" meme that we discussed here previously*.

As it’s designed by a professor, it doesn’t have most of the flaws that made the "spoiled" version so irritating (although as it’s aimed at college students, it does have some generation-specific questions that are irrelevant to anyone born before about 1980 (eg. having a cell phone in college)). I didn’t actually score myself on it, but it looks like there’s only a handful of questions that I’d say no to, and yes, I’m pretty comfortable saying that I’m pretty privileged, both materially and in terms of social capital.**

That said, it’s gotten a bunch of scathing responses (as well as some supportive ones).  The authors of the original exercise and other class educators seem to pretty much dismiss their critics as privileged people who want to claim all their success as the result of their hard work, and thus deny the role of privilege/luck in their accomplishments.  And I’m not going to dispute that the "bootstraps" story is one of the strands in the discussions.

But I think they’re being overly dismissive of the people who say that the quiz includes too many things that "everyone" has, or things that the truly rich don’t have, because they consider it declasse.  Another way of phrasing this criticism is that the scale is designed to distinguish between deep poverty and middle-class backgrounds, but does a lousy job of distinguishing between middle-class and upper-middle-class or rich backgrounds — going to Europe every summer doesn’t get you more points than having saved for years to go once; owning a McMansion in McLean doesn’t get you more points than owning a small house in Woodbridge.

And I think that’s important, because the big economic story of the past two or three decades hasn’t been about the poor falling further behind the middle class, but the rich pulling away from everyone else.  (I’m not going to look for links now, but Paul Krugman’s written extensively about this.)  And those rich are very visible, which makes middle-class people are very aware of the ways in which they’re not privileged.  So it’s not just denial that makes people protest this quiz.

Maybe in the academic context that it was originated, focusing on the privileges experienced by people who don’t think of themselves as privileged is useful. (I read an interesting article recently that argued that support services at community colleges designed to help low-income students nonetheless reinforce privilege, because the students who are most disadvantaged, especially in terms of social capital, don’t learn about them.)  But in a broader context, especially a political context, it’s a pretty lousy strategy to tell people who feel like they’re losing ground that they’re actually still incredibly privileged by comparison to others.  Even if it’s true.

* I’m reaching the stage when more and more often, I red these things and say "didn’t we have this conversation already?"  I think that’s one of the reasons I’ve been posting less.

** There’s another point I want to make about the distinction and overlap between these two types of privilege, but this is long enough, so I’ll save it for another day.

Note that we’re now on the second page of comments, so click the >> at the bottom of the page to read the most recent ones.  I don’t know how to override this Typepad setting.

In honor of the Roe v. Wade anniversary, I’m highlighting the Hyde- 30 Years is Enough campaign to lift the restrictions on Federal funding of abortion services to poor women who receive health insurance through Medicaid.  Here are some of the reasons I oppose the Hyde amendment restrictions:

• I believe that the ability to control one’s reproduction should not be limited on the basis of income.  NNAF says it better than I can:

"We call for full public funding of abortion as a
part of comprehensive health care for all, and support for low-income
women to care for their children with dignity.  We stand for
reproductive justice, a world in which all women have the power and
resources necessary to make healthy decisions about their bodies and
their families."

• One of the main effects of the Hyde restrictions is to push abortions from the first trimester into the second.  This increases the health risks to the woman, raises the cost of the procedure, and pushes closer to the viability line.

• The logic of the Hyde amendment — and the related laws that prohibit coverage of abortion for federal employers, military personnel, and their dependents — is fundamentally flawed.  Supporters argue that even though abortion is legal, people should be able to avoid having their tax dollars support something that they consider immoral.  Well, I can think of a number of things that my tax dollars support that I consider immoral, and I don’t get to opt out. 

If you’re not poor, a federal employee, or a member of the armed services, these bans don’t affect you.  Now.  But if you hope to someday be covered by a public health insurance system, you should be paying attention.

It looks like Congressional leaders and the President are going to be meeting today to hammer out an agreement on the outlines of an economic stimulus package.  If you can possibly send an email or make a call to your representative and Senator this morning, and emphasize that any tax rebate should include everyone who pays payroll taxes, not just those who owe federal income tax, it could make a big difference.

Most people’s eyes glaze over when they start to read about the details of the stimulus proposals, so let me try to explain what’s going on and why it matters.

The key thing to understand is that this is a case where making sure that the rebate reaches low-income families is both the efficient and the just thing to do.  Liberals spend a lot of time arguing about the value of justice when it conflicts with efficiency, but there’s no conflict here, and this point isn’t getting enough attention.

• Efficiency:  If people get their rebate checks and stick them in the bank, this doesn’t actually stimulate the economy.  It only makes a difference when people spend their money, putting more money into the pocket of the people they’re buying from, and so on and so forth.  (This is in fact the argument behind Bush’s much maligned response to 9/11, encouraging people to go out and shop…)  And economists overwhelmingly agree that low-income people are more likely to go out and spend the additional money, because they’re more likely to have urgent unmet needs.  Upper-income people are more likely to stick the money in the bank.  All the news stories use a big screen TV as the example of what people might buy with the rebate, but upper income people are more likely to already have a big TV.  And especially if they think a recession is coming, it makes sense to build up a bit of a cushion.  (The CBO report is also unequivocal that business tax credits are inefficient stimulus, but the Dems seem to have already folded on that front.)
• Justice: You can make reasonable moral arguments that it makes sense to spread this windfall payment out equally among everyone in the US, or that it makes sense to give more to those who are most in need.  But what the Bush proposal would do is give less to those who are most in need and most to those who don’t need it.  Their claim is that they’re giving it to "everyone who pays taxes" but that’s a lie.  They want to only include people who pay federal income taxes, which totally excludes a huge chunk of low-income families — who do pay payroll taxes (for Medicare and Social Security), sales taxes, etc.  Moreover, families who are in the 10 percent bracket would only get a partial credit.

This should be a no-brainer.  But the Administration is proving once again that it places knee-jerk opposition to progressive taxation over common sense, and the Democrats in Congress haven’t consistently shown the backbone needed to stand up.  So call in this morning and demand a stimulus package that is both just and efficient.

Updated 1/24/2008:  Bush, Pelosi and Boehner announced their agreement today.  The good news is that at least a partial rebate — $300 — will go to anyone who earned at least $3000 (unclear what the reference year is, or the phase-in range, or any of that).  The bad news is that as part of the compromise, the House Democrats both accepted business tax credits that none of the economists think will do any good and gave in on demands for extended unemployment insurance and a temporary increase in food stamp benefits.  On the Senate side, the Dems are at least making noises about holding the line on including an extension of unemployment benefits.  So if you’re just reading this, and are inclined to make some calls, that’s probably the issue to focus on.

The Washington Post website has an interactive "choose your candidate" tool that purports to show you which candidate you should be supporting, based on their public statements on a variety of issues, and how important you say these issues are.  I spent some time playing with it, and it mostly demonstrated to me how close the Democratic candidates are on most of the issues that I care about.  If you can parse the differences between what they’re all saying on Social Security or immigration, you’re doing better than I am.  And while the tool lets you say how much you care about the issue in general, it doesn’t have any way for you to indicate how much you care about the differences in the candidates’ positions.  I think I gave up on it about halfway through, when it was saying I should be supporting Chris Dodd.

Precisely because the candidates are so close together on policy, the areas where they disagree, even a little, are getting a lot of attention, perhaps excessive.  One of the areas where some differences have shown up is on health care.  Kucinich is the only one standing up for a true single payor system, while Obama has criticized Edwards and Clinton for requiring everyone to get health insurance.  He’s dead wrong on this — both because you really do need to get everyone into the insurance pool in order to avoid people freeloading until they actually get sick, and because the attack on "mandates" is likely to come back and haunt him if he actually gets elected.  (I don’t have the energy to go hunting for a full set of links right now, but this has been exhaustively discussed in the wonkosphere. )

So, on one of the few areas of substantive difference, I think Obama’s wrong.  But I still think he’s my pick.  I’m embarrassed by that.  I’m a self-proclaimed policy wonk.  But he makes me want to believe. 

***

On a related topic, this week you’ll see an ad in my sidebar from the fine folks at One.org, who have asked all the candidates about what they’d do to fight international poverty and disease. Spotlight on Poverty and Opportunity is a similar exercise focused on domestic poverty.  Check them both out.

Last summer, I wrote about two social lending sites, one for money and one for stuff.  Borrowme seems to have gone under, without ever building up any steam.  But Prosper seems to still be functioning well, and hasn’t been totally swamped by the mortgage meltdown.

When I wrote about it, I hadn’t put any of my money into Prosper, but I did so in the fall.  I’ve now made 36 loans over the course of the past year, all of them for $50.  Two of them have already been repaid (ahead of schedule) and two of them are 3+ months late, and barring a miracle, likely to go into default.  Netting out the defaults, I’ve made a little more interest than I’d have gotten from the bank, but the difference is probably under $40.  So, not a particularly good return on the time spent reading through loan requests.  Although there’s a certain fascination with reading people’s stories…  I still think the real potential is for loans among people with 2nd and 3rd degree real life connections, but I see little evidence that’s what’s happening.

I’m slowly moving almost all of my real banking into the online world.  My main checking account is now at Ebank, which I love because I can take out money from any ATM without a fee.  I’m trying to figure out whether I think it’s unethical to keep our savings at Countrywide, which is offering awesome savings rates, presumably because they’re desperate for deposits to keep from sinking under all their bad loans.  (Yes, it’s FDIC insured.)  But they’ve got a reputation for being particularly unhelpful to borrowers in trouble.

D has been saying that he wants to save his money for a Nintendo DS.  I’m not thrilled at the idea of a handheld game system, but if he has the willpower to save that kind of money on a $1 a week allowance, we’re going to allow it.  I’m trying to convince him to open an account at a nearby bank that offers generous rates on kids’ accounts, but he likes having the piles of coins to play with and count.   We need to figure out if they offer safe deposit boxes — if so, we’re going to say goodbye and good riddance to SunTrust.

I was at a conference last week on accounts, assets and access.  It was a real eye-opener for me.  Call me naive, but I hadn’t realized how much money banks were making off of poor people on overdraft and late fees.  Now that  it’s been pointed out, it seems obvious — the dollar amounts that low-income people borrow are typically so low that even high interest rates don’t amount to much in dollar terms.  The killers are the fees.

Here’s an example of a card advertised as available to people with bad credit.  Not bad interest — only 9.9% APR.  But check out the fees — $29 set up fee, $95 one-time fee, $48 annual fee, $7 monthly fee.  And if you’re in this situation, you probably don’t have this cash on hand, so all of these fees are charged to the card when you get it.  So if you get the minimum possible credit limit of $250, your card will come to you with a balance of $179 and available credit of $71.  Oh, and they charge $11 for each autodraft (which actually costs them less to process than a check) and $25 each time they raise your credit limit.

Compared to that, a payday loan with a 100% interest rate doesn’t sound like such a bad deal.