payday loans

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pages: 279 words: 76,796

The Unbanking of America: How the New Middle Class Survives by Lisa Servon

Affordable Care Act / Obamacare, Airbnb, basic income, Build a better mousetrap, business cycle, Cass Sunstein, choice architecture, creative destruction, Credit Default Swap, employer provided health coverage, financial exclusion, financial independence, financial innovation, gender pay gap, George Akerlof, gig economy, income inequality, informal economy, Jane Jacobs, Joseph Schumpeter, late fees, Lyft, M-Pesa, medical bankruptcy, microcredit, Occupy movement, payday loans, peer-to-peer lending, precariat, Ralph Nader, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, sharing economy, too big to fail, transaction costs, unbanked and underbanked, underbanked, universal basic income, Unsafe at Any Speed, We are the 99%, white flight, working poor, Zipcar

much higher interest rates: Kelly Dilworth, “Average Credit Card Interest Rates Rise to 15.07 Percent,” CreditCards.com, October 2014. http://www.creditcards.com/credit-card-news/interest-rate-report-100114-up-2121.php 5. PAYDAY LOANS: MAKING THE BEST OF POOR OPTIONS 77 Payday loans are illegal: For the number of states where payday loans are illegal, see Pew Charitable Trusts, “State Payday Loan Regulation and Usage Rates” (Washington, DC: Pew, July 11, 2012). http://www.pewtrusts.org/en/multimedia/data-visualizations/2014/~/media/data%20visualizations/interactives/2014/state%20payday%20loan%20regulation%20and%20usage%20rates/report/state_payday_loan_regulation_and_usage_rates.pdf usage has increased dramatically: For a summary of the emergence of the payday loan industry, see Bruce Miller (Managing Director, Stephens), “Credit: Where We Are and Where We’re Going,” paper presented at FiSCA at 25 Conference, Chicago, October 2012.

Each state has different rules: For a summary of this information, see Pew Charitable Trusts, “State Payday Loan Regulation and Usage Rates.” Georgia and North Carolina: Morgan and Strain, “Payday Holiday.” A 2008 study examined: Ibid. Compared with other states: Ibid. 90 “plausibly inferior” alternatives: Zinman, “Restricting Consumer Credit Access: Household Survey Evidence on Effects Around the Oregon Rate Cap.” Other states have placed: Pew Charitable Trusts, “How State Rate Limits Affect Payday Loan Prices” (Washington, DC: Pew, 2014). http://www.pewtrusts.org/en/research-and-analysis/fact-sheets/2014/04/10/how-state-rate-limits-affect-payday-loan-prices payments in Colorado amount: For the number of states where payday loans are illegal, see Pew Charitable Trusts, “State Payday Loan Regulation and Usage Rates” (Washington, DC: Pew, July 11, 2012). http://www.pewtrusts.org/en/multimedia/data-visualizations/2014/~/media/data%20visualizations/interactives/2014/state%20payday%20loan%20regulation%20and%20usage%20rates/report/state_payday_loan_regulation_and_usage_rates.pdf after the legislation: Ibid. 91 Pressure on policymakers: At the time of this writing, the CFPB had not yet released its new rules for payday lenders.

But once the media reported that these loans were basically the same as payday loans, the banks stopped offering the products. The risk to their reputation was too great. Of course, banks do offer all of us a short-term loan. It’s called an overdraft, and if it had a repayment period of seven days, the APR for a typical incident would be over 5,000 percent. Americans paid $38 billion in overdraft fees in 2011, more than they paid to payday lenders. The shrinkage of credit has also caused people to juggle their available credit and use payday loans in ways that would seem counterintuitive without complete knowledge of individuals’ situations. For example, some people who take out payday loans also have credit cards that are not maxed out. It would seem that they should use the credit cards before getting a payday loan, right? Not necessarily.


pages: 299 words: 83,854

Shortchanged: Life and Debt in the Fringe Economy by Howard Karger

big-box store, blue-collar work, corporate social responsibility, credit crunch, delayed gratification, financial deregulation, fixed income, illegal immigration, labor-force participation, late fees, London Interbank Offered Rate, low skilled workers, microcredit, mortgage debt, negative equity, New Journalism, New Urbanism, offshore financial centre, payday loans, predatory finance, race to the bottom, Silicon Valley, Telecommunications Act of 1996, telemarketer, underbanked, working poor

An extreme example is the situation of Lisa Engelkins, who entered into 35 back-to-back payday loan transactions over 17 months, paying $1,254 in fees to extend a $300 payday loan.24 Table 5.1 is an example of a hypothetical payday loan history.76 Ralph Johnson takes out 10 payday loans a year, which is close to the national average. Despite admonitions by payday lenders that “a cash advance is a short-term solution to an immediate need, it is not intended for repeated use in carrying an individual from payday to payday,”25 these loans are generally not used this way. Payday lenders maintain that the industry provides needed credit for emergencies. However, a 2003 study by the Southwest Center for Economic Integrity found that 67% of payday borrowers used their loans to pay general nonemergency bills.26 For many people, payday loans lead to a pattern of chronic borrowing and chronic debt.

However, a 2003 study by the Southwest Center for Economic Integrity found that 67% of payday borrowers used their loans to pay general nonemergency bills.26 For many people, payday loans lead to a pattern of chronic borrowing and chronic debt. Table 5.1. Connie’s $300 payday loan. According to the Center for Responsible Lending, only 1% of all payday loans go to one-time emergency borrowers who pay their loan within two weeks and don’t borrow again within a year. Conversely, 66% of borrowers initiate 5 or more loans a year, and 33% take out 12 or more loans a year. Ninety-one percent of all payday loans are made to borrowers with five or more loans a year. On average, payday customers receive 8-13 loans a year. These chronic borrowers form the backbone of payday-industry profits. For example, borrowers who receive 5 or more payday loans a year account for 91% of payday lenders’ revenues, and 56% of this revenue is generated by customers who take out 13 or more loans a year.2777 Payday loans exacerbate credit problems by postponing the inevitable for two weeks at an exorbitant cost.

In the United States, the number of payday lenders grew from a few hundred in 1990 to more than 25,000 in 2002, with the industry expecting to double in size over the next few years.10 In fact, there are now more payday loan shops in America than McDonald’s restaurants.11 The largest payday lenders are Advance America (1,375 stores in 30 states); ACE Cash Express (1,000 stores in 30 states); Check ‘n Go (800 stores in 26 states); Dollar (700 stores in 24 states); Check into Cash (650 stores in 24 states); and Cash America International (470 stores in 18 states).12 The growth of the payday industry has been explosive, with loan volume rising from $10 billion in 2000 to $25 billion by 2003. This $25 billion included 83 million payday loans costing 7.6 million customers about $3.4 billion.13 Surprisingly, this growth occurred despite 19 states’ prohibiting payday loans at triple-digit interest rates.14 Payday loans (also known as “payday advances” or “deferred deposit loans”) are about twice as profitable as standard pawn-based loans.15 In 2002 the percentage of payday loans charged off as uncollectible in Virginia was 3.4%. In North Carolina, only 6% of payday checks were returned for insufficient funds (NSF). Lenders recovered 69% of the value of those checks.16 According to the Center for Responsible Lending, payday lenders report losses of 10-12 cents for every dollar lent and a 34% pretax return on investment.


pages: 424 words: 121,425

How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy by Mehrsa Baradaran

access to a mobile phone, affirmative action, asset-backed security, bank run, banking crisis, banks create money, barriers to entry, British Empire, call centre, Capital in the Twenty-First Century by Thomas Piketty, cashless society, credit crunch, David Graeber, disintermediation, disruptive innovation, diversification, failed state, fiat currency, financial innovation, financial intermediation, Goldman Sachs: Vampire Squid, housing crisis, income inequality, Internet Archive, invisible hand, Kickstarter, M-Pesa, McMansion, microcredit, mobile money, moral hazard, mortgage debt, new economy, Own Your Own Home, payday loans, peer-to-peer lending, price discrimination, profit maximization, profit motive, quantitative easing, race to the bottom, rent-seeking, Ronald Reagan, Ronald Reagan: Tear down this wall, savings glut, the built environment, the payments system, too big to fail, trade route, transaction costs, unbanked and underbanked, underbanked, union organizing, white flight, working poor

Consider the following comments that the CFBP and the Pew Charitable Trusts gathered from payday lending customers in support of payday loans:69 “Well I can say I normally get a payday loan only for emergency like [sic] if I need to pay a bill. I feel I get great service and the money I need.” —J. B. from Birmingham, AL “I have unfortunately had to use the services of the Payday loans. Again, unfortunately it is easier to get these loans than to apply for and receive a loan from the bank that is using your money to supply others with loans and other functions.” —D. M. from Alliance, OH “Payday loans have helped several times when bills and unexpected circumstances arise. The limits are great, not too high so an individual can keep it under control. It’s less hassle than going to a bank for those without the best credit.” —Craig from Wellington, AL “Payday loans have helped me pay medical bills and buy medicine for me and my mom, bought me gas and helped me get my car fixed when money was tight.

The CFPB found that the average consumer had over ten transactions over a twelve-month period and paid a total of $574 in fees, which does not include the loan principal. 43. “On average, a payday loan takes 36 percent of a person’s pre-tax paycheck, Bourke [project director at Pew] said.” “States with Highest, Lowest Payday Loan Rates,” USA Today, April 20, 2014, accessed March 17, 2015, www.usatoday.com/story/money/personalfinance/2014/04/20/id-nv-ut-have-among-highest-payday-loan-rates/7943519/. 44. Richard Cordray, “Remarks at the Payday Field Hearing,” March 25, 2014, accessed March 17, 2015, www.consumerfinance.gov/newsroom/director-richard-cordray-remarks-at-the-payday-field-hearing/. 45. CFPB, “Ask CFPB: What Is a Payday Loan?,” accessed September 29, 2014, www.consumerfinance.gov/askcfpb/1567/what-payday-loan.html. 46. Ibid. 47. According to a study done by the Center for Responsible Lending, the median loan-to-value ratio among borrowers is 26 percent.

Until the demand stops (that is, people are less poor) or fair credit becomes more widely available, variations on high-interest small loans will keep popping up. Because those who need payday loans are already struggling financially, there is some evidence that prohibiting these loans may actually hurt consumers. Paige Skiba found that check bouncing, customer complaints, and Chapter 7 bankruptcies all increased significantly in Georgia after payday loans were prohibited in 2004.118 Donald Morgan and Michael Strain also used data from Hawaii and found similar results. Pew found that if individuals were faced with a shortfall and payday loans were unavailable, 81 percent of borrowers said they would have to cut back on expenses such as food.119 For years, economists have tried to study the effects of payday loans on their borrowers. After a recent review of all the economic research attempting to answer the big question, “Do payday lenders, on net, exacerbate or relieve customers’ financial difficulties?”


No Slack: The Financial Lives of Low-Income Americans by Michael S. Barr

active measures, asset allocation, Bayesian statistics, business cycle, Cass Sunstein, conceptual framework, Daniel Kahneman / Amos Tversky, financial exclusion, financial innovation, Home mortgage interest deduction, income inequality, information asymmetry, labor-force participation, late fees, London Interbank Offered Rate, loss aversion, market friction, mental accounting, Milgram experiment, mobile money, money market fund, mortgage debt, mortgage tax deduction, New Urbanism, p-value, payday loans, race to the bottom, regulatory arbitrage, Richard Thaler, risk tolerance, Robert Shiller, Robert Shiller, the payments system, transaction costs, unbanked and underbanked, underbanked

Tables 2-8 and 2-9, for example, show that, overall, respondents who use other types of credit are also more likely to use payday loans. For instance, those using 12864-02_CH02_3rdPgs.indd 44 3/23/12 11:55 AM managing money 45 Table 2-8. Use of Payday Loans among Users of Other Alternative Financial Services Percent Payday loan use Other AFS a Pawnshop Cash advance RAL Rent-to-own Pension cash-out Overdraft By users of other AFS By nonusers of other AFS 16 14 9 16 12 13 3 4 3 4 4 2 Source: Detroit Area Household Financial Services study. a. For all services, difference is significant at the 10 percent level after controlling for age, race, gender, and income. a pawnshop are much more likely to use a payday loan (16 versus 3 percent). Those who used a credit card for a cash advance are much more likely to use a payday loan (14 versus 4 percent). Households that took out a refund anticipation loan (RAL) at tax time (see Barr and Dokko 2007) are much more likely to use a payday loan (9 versus 3 percent), as are rent-to-own users (16 versus 4 percent) and those who cashed out a pension or insurance policy in the past three years (12 versus 4 percent).

Households that took out a refund anticipation loan (RAL) at tax time (see Barr and Dokko 2007) are much more likely to use a payday loan (9 versus 3 percent), as are rent-to-own users (16 versus 4 percent) and those who cashed out a pension or insurance policy in the past three years (12 versus 4 percent). Moreover, payday usage in the AFS sector and bank overdrafts in the formal sector are often complementary: those who have Table 2-9. Use of Other Alternative Financial Services among Payday Loan Users Percent Other AFS use Other AFS a Pawnshop Cash advance RAL Rent-to-own Pension cash-out Secured card Credit-card late fee Overdraft By users of payday loans By nonusers of payday loans 40 24 45 20 19 37 43 57 10 7 21 5 6 9 21 19 Source: Detroit Area Household Financial Services study. a. For all but credit-card late fee, difference is significant at the 10 percent level after controlling for age, race, gender, and income. 12864-02_CH02_3rdPgs.indd 45 3/23/12 11:55 AM 46 michael s. barr used an overdraft from their bank account are more than five times more likely to use a payday lender than those who overdrew their accounts.

IV 2010). 12864-06_CH06_3rdPgs.indd 146 3/23/12 11:56 AM borrowing to make ends meet 147 Payday borrowing is a fringe practice among LMI households in the Detroit area. Only 4 percent of respondents say they “looked into getting a loan of $100 or more from a check casher, payday-loan store, or other place that gives you a payday loan” during the three years preceding the survey interview. Only 3 percent report having taken the payday loan from the lender during the year before the survey interview. Part of the reason that so few respondents approach payday lenders may be the restrictive qualifications for loan eligibility. As a general requirement, a source of steady income and a checking account are necessary to qualify for a payday loan. As table 6-1 suggests, however, payday borrowers are much more likely than non–payday borrowers to use a wide variety of other forms of short-term credit. Demographics of Short-Term Borrowers The demographics of the users of short-term credit are, by and large, similar to those of the overall sample in the DAHFS study, suggesting that demographic variation does not explain whether LMI households use these short-term credit products.


pages: 305 words: 89,103

Scarcity: The True Cost of Not Having Enough by Sendhil Mullainathan

American Society of Civil Engineers: Report Card, Andrei Shleifer, Cass Sunstein, clean water, computer vision, delayed gratification, double entry bookkeeping, Exxon Valdez, fault tolerance, happiness index / gross national happiness, impulse control, indoor plumbing, inventory management, knowledge worker, late fees, linear programming, mental accounting, microcredit, p-value, payday loans, purchasing power parity, randomized controlled trial, Report Card for America’s Infrastructure, Richard Thaler, Saturday Night Live, Walter Mischel, Yogi Berra

The subtext being “I’m focusing on what needs to get done now!” Next month’s budgeting is an abstraction, something to turn to later. Like all the worthy goals that do not matter when you’re speeding to the hospital, the long-term economics of the payday loan do not matter at that moment. This is why payday loans are so attractive—people turn to them when they are tunneling on putting out a fire. And their best feature is that the loans put out this fire, quickly and effectively. Their worst feature—that the fire will return in the future, possibly enlarged—is obscured. Of course, none of this is unique to payday loans or to money. Think about putting off answering an e-mail. When we take on this time debt, we focus on the benefits: “Right now I need to get other things done.” We do not spend much time asking ourselves, “How will I make time for this later?”

We have also seen that incentives can be less effective in circumstances like this. When you’re tunneling, many rewards can fall outside the tunnel. Why not instead think about financial products, logistical interventions, or working conditions that help workers deal with financial volatility and help clear some bandwidth? Here is a stark example. Many workers, as we saw in chapter 5, resort to payday loans. Yet it’s worth observing that a payday loan is often simply a loan against work that has already been done. The worker who takes a payday loan halfway through the pay cycle has already earned half her paycheck. The need for a loan is largely due to the fact that payment happens with a delay. Why should an employer have workers taking these loans, potentially falling into scarcity traps, taxing bandwidth, and resulting in lower productivity, especially when the employer can himself give pay advances at low cost?

In 2006, there were more than 23,000 payday lender branches in the United States, which was more than all the McDonald’s (12,000) and Starbucks (almost 9,000) locations combined. Sandra’s practice of rolling over and accumulating fees is also common. Three-quarters of all payday loan volume comes from rollovers, ultimately accounting for $3.5 billion in fees each year. Why do those strapped for cash take on such extreme loans that they cannot afford to pay back? Why do they allow themselves even to start down such a slippery slope? Such questions typically lead to debates about the importance of personal responsibility or about how unscrupulous businesses prey on low-income individuals; they fuel discussions about the myopia of the poor and the need for financial education. Consumer advocates bemoan the payday loan industry as predatory and push to ban these loans. Others point out that when you’re in real need, a loan, however expensive, can be better than no loan.


pages: 263 words: 79,016

The Sport and Prey of Capitalists by Linda McQuaig

anti-communist, Bernie Sanders, carbon footprint, clean water, diversification, Donald Trump, energy transition, financial innovation, Kickstarter, Menlo Park, Naomi Klein, neoliberal agenda, new economy, offshore financial centre, oil shale / tar sands, payday loans, profit motive, risk/return, Ronald Reagan, Steve Jobs, strikebreaker, union organizing

The Financial Consumer Agency of Canada, the federal government’s consumer protection watchdog, observes in an understatement that payday loans are “an expensive way to borrow money” but that the demand for them is growing: while one in fifty Canadians turned to payday loans in 2009, that number rose to one in twenty-five in 2014. According to the Canadian Payday Loan Association, almost two million Canadians resort to payday loans each year.27 All this points to the crying need for a banking system that isn’t based on exploiting the desperation of financially vulnerable people. A public banking system, operated through the post office, could fill that ticket. And it could do so without financial risk to taxpayers. Payday loans are offered only to individuals with a reliable source of income, either from an employer or from the government. This means a postal bank could safely offer a payday loan — but at a dramatically lower interest rate, notes Anderson.

But the task force went on to scuttle even this option by suggesting that it might be hard for the post office to find banks or credit unions agreeing to such a partnership.30 As for the serious problem of payday loan operators, the task force saw little help the post office could offer. The task force reached this surprising conclusion again due to the extensive input of the bankers’ association, which “indicated that many users of payday loan lenders choose the service because of the relative anonymity it affords.” Really? Apparently, the bankers’ word on this was enough to dismiss reports that hundreds of thousands of low-income Canadians pay the punishing interest rates demanded by payday loan operators, not because they want to be anonymous, but because no other banking option exists for them. With the help of the bankers’ association, the task force was able to put those concerns to rest, and conclude that Canada has a “well-­established banking market that serves Canadians well.”31 Amen.

Interestingly, there is also growing pressure to revive postal banking in the United States, where it operated from 1911 to 1967. The renewed interest was sparked by a 2014 report from the U.S. Postal Service’s inspector general, which suggests that the post office could offer much cheaper banking services than payday loan operators while earning nine billion dollars a year for the cash-strapped national postal service. The report notes that an estimated sixty-eight million Americans are not served by the traditional banks. Many of these people are vulnerable, low-wage workers who turn with anxiety to payday lenders. In the state of Arizona alone, there are 650 payday loan businesses, some so busy they operate twenty-four hours a day. The American Bankers Association slammed the inspector general’s report, dismissing postal bank loans as the “worst idea since the Edsel.” But the cause of postal banking — dubbed “a central bank for the poor” — has gained ground among influential progressives.


pages: 252 words: 72,473

Weapons of Math Destruction: How Big Data Increases Inequality and Threatens Democracy by Cathy O'Neil

Affordable Care Act / Obamacare, Bernie Madoff, big data - Walmart - Pop Tarts, call centre, carried interest, cloud computing, collateralized debt obligation, correlation does not imply causation, Credit Default Swap, credit default swaps / collateralized debt obligations, crowdsourcing, Emanuel Derman, housing crisis, I will remember that I didn’t make the world, and it doesn’t satisfy my equations, illegal immigration, Internet of things, late fees, mass incarceration, medical bankruptcy, Moneyball by Michael Lewis explains big data, new economy, obamacare, Occupy movement, offshore financial centre, payday loans, peer-to-peer lending, Peter Thiel, Ponzi scheme, prediction markets, price discrimination, quantitative hedge fund, Ralph Nader, RAND corporation, recommendation engine, Rubik’s Cube, Sharpe ratio, statistical model, Tim Cook: Apple, too big to fail, Unsafe at Any Speed, Upton Sinclair, Watson beat the top human players on Jeopardy!, working poor

,” Atlantic Monthly, September 25, 2015, www.​theatlantic.​com/​technology/​archive/​2015/​09/​facebooks-​new-​patent-​and-​digital-​redlining/​407287/. American Express learned this the hard way: Ron Lieber, “American Express Kept a (Very) Watchful Eye on Charges,” New York Times, January 30, 2009, www.​nytimes.​com/​2009/​01/​31/​your-​money/credit-​and-​debit-​cards/​31money.​html. Douglas Merrill’s idea: Steve Lohr, “Big Data Underwriting for Payday Loans,” New York Times, January 19, 2015, http://​bits.​blogs.​nytimes.​com/​2015/​01/​19/​big-​data-​underwriting-​for-​payday-​loans/. On the company web page: Website ZestFinance.​com, accessed January 9, 2016, www.​zestfinance.​com/. A typical $500 loan: Lohr, “Big Data Underwriting.” ten thousand data points: Michael Carney, “Flush with $20M from Peter Thiel, ZestFinance Is Measuring Credit Risk Through Non-traditional Big Data,” Pando, July 31, 2013, https://​pando.​com/​2013/​07/​31/​flush-​with-​20m-​from-​peter-​thiel-​zestfinance-​is-​measuring-​credit-​risk-​through-​non-​traditional-​big-​data/.

These WMDs have many of the same characteristics as the value-added model that derailed Sarah Wysocki’s career in Washington’s public schools. They’re opaque, unquestioned, and unaccountable, and they operate at a scale to sort, target, or “optimize” millions of people. By confusing their findings with on-the-ground reality, most of them create pernicious WMD feedback loops. But there’s one important distinction between a school district’s value-added model and, say, a WMD that scouts out prospects for extortionate payday loans. They have different payoffs. For the school district, the payoff is a kind of political currency, a sense that problems are being fixed. But for businesses it’s just the standard currency: money. For many of the businesses running these rogue algorithms, the money pouring in seems to prove that their models are working. Look at it through their eyes and it makes sense. When they’re building statistical systems to find customers or manipulate desperate borrowers, growing revenue appears to show that they’re on the right track.

The greatest divide is between the winners in our system, like our venture capitalist, and the people his models prey upon. Anywhere you find the combination of great need and ignorance, you’ll likely see predatory ads. If people are anxious about their sex lives, predatory advertisers will promise them Viagra or Cialis, or even penis extensions. If they are short of money, offers will pour in for high-interest payday loans. If their computer is acting sludgy, it might be a virus inserted by a predatory advertiser, who will then offer to fix it. And as we’ll see, the boom in for-profit colleges is fueled by predatory ads. When it comes to WMDs, predatory ads practically define the genre. They zero in on the most desperate among us at enormous scale. In education, they promise what’s usually a false road to prosperity, while also calculating how to maximize the dollars they draw from each prospect.


pages: 135 words: 26,407

How to DeFi by Coingecko, Darren Lau, Sze Jin Teh, Kristian Kho, Erina Azmi, Tm Lee, Bobby Ong

algorithmic trading, asset allocation, Bernie Madoff, bitcoin, blockchain, buy and hold, capital controls, collapse of Lehman Brothers, cryptocurrency, distributed ledger, diversification, Ethereum, ethereum blockchain, fiat currency, Firefox, information retrieval, litecoin, margin call, new economy, passive income, payday loans, peer-to-peer, prediction markets, QR code, reserve currency, smart contracts, tulip mania, two-sided market

– The Balance.” 21 Feb. 2019, https://www.thebalance.com/what-are-prize-linked-savings-accounts-4587608. 14. “PoolTogether raises $1 Million to Expand Prize Linked ....” 3 Feb. 2020, https://medium.com/pooltogether/pooltogether-raises-1-million-to-expand-prize-linked-savings-protocol-eb51a1f88ed8. 15. “Payday Loans: Disadvantages & Alternatives – Debt.org.” https://www.debt.org/credit/payday-lenders/. 16. “People are arrested after falling behind on payday loans.” 23 Feb. 2020, https://www.cnbc.com/2020/02/22/people-are-arrested-after-falling-behind-on-payday-loans.html. Accessed 24 Feb. 2020. 17. “Argentina inflation expected at 53% in December ... – Reuters.” 11 Sep. 2019, https://www.reuters.com/article/argentina-economy/argentina-inflation-expected-at-53-in-december-2019-treasury-officials-idINKCN1VX09U. 18. “Argentina’s ‘little trees’ blossom as forex controls fuel black ...” 5 Feb. 2020, https://www.reuters.com/article/us-argentina-currency-blackmarket/argentinas-little-trees-blossom-as-forex-controls-fuel-black-market-idUSKBN1ZZ1H1. 19.

~ Why is this important? We think that Sablier has the potential to help those who live paycheck to paycheck. These people are those most vulnerable to delays in their income, where even a few days of delay would mean that they do not have the means to put food on the table. And when that happens, they often resort to payday loans—a short term, uncollateralized loans with very high interest rates (up to 500% APR).15 With astronomical interest rates and limited income, payday loan lenders are especially susceptible to debt spirals—one that has seen many arrested in the US for being unable to repay their loan.16 Trust Streamed payment can be especially useful for new, remote contract workers who prior to this had to trust their new employers to actually pay them for the work they do. When a contract is signed through Sablier, both parties know for sure that payments are being made and can verify it in real time.


pages: 239 words: 70,206

Data-Ism: The Revolution Transforming Decision Making, Consumer Behavior, and Almost Everything Else by Steve Lohr

"Robert Solow", 23andMe, Affordable Care Act / Obamacare, Albert Einstein, big data - Walmart - Pop Tarts, bioinformatics, business cycle, business intelligence, call centre, cloud computing, computer age, conceptual framework, Credit Default Swap, crowdsourcing, Daniel Kahneman / Amos Tversky, Danny Hillis, data is the new oil, David Brooks, East Village, Edward Snowden, Emanuel Derman, Erik Brynjolfsson, everywhere but in the productivity statistics, Frederick Winslow Taylor, Google Glasses, impulse control, income inequality, indoor plumbing, industrial robot, informal economy, Internet of things, invention of writing, Johannes Kepler, John Markoff, John von Neumann, lifelogging, Mark Zuckerberg, market bubble, meta analysis, meta-analysis, money market fund, natural language processing, obamacare, pattern recognition, payday loans, personalized medicine, precision agriculture, pre–internet, Productivity paradox, RAND corporation, rising living standards, Robert Gordon, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley startup, six sigma, skunkworks, speech recognition, statistical model, Steve Jobs, Steven Levy, The Design of Experiments, the scientific method, Thomas Kuhn: the structure of scientific revolutions, unbanked and underbanked, underbanked, Von Neumann architecture, Watson beat the top human players on Jeopardy!

Merrill asked what she would have done if she had not been able to reach him, and he recalls that she told him that she would have taken out another “payday loan.” Merrill knew something about finance and risk assessment, but her remark sent him researching the payday lending market—loans made to people with jobs, but with poor credit ratings or none at all. At any given time, an estimated twenty-two million payday loans are outstanding, and the fees paid by payday borrowers amount to $8 billion a year—a lot of money from those in the working population who can least afford it. Merrill saw a market in need of greater efficiency and a business opportunity that would provide the social benefit of lower costs for borrowers in the subprime consumer market. The missing ingredient, Merrill concluded, was Google-style data analytics. “Underwriting, Meet Big Data” is the ZestFinance corporate motto. A typical payday loan, Merrill explains, is for a few hundred dollars for two weeks, and rolls over ten times, or twenty-two weeks.

The fees are all paid first, with the principal due at the end—a cycle that repeats every time the loan is rolled over. In a traditional payday loan, he says, a person pays $1,500 to borrow $500 over twenty-two weeks. Using ZestFinance, Merrill says, a borrower generally pays $920 to borrow $500 for twenty-two weeks—still a lot but far less than a standard payday loan. The payments along the way pay off both interest and principal. There is no big “balloon” payment at the end. The better deal for borrowers, Merrill says, is made possible by ZestFinance’s data-sifting algorithms, which reduce the risk of default by 50 percent compared with a typical payday loan. ZestFinance assumes less risk, so it can charge less and still turn a profit on its loans. To make its risk assessments, ZestFinance’s machine-learning models work on tens of thousands of data “signals” in seconds.

“If you don’t have $500 today, you’re not likely to have $600 in two weeks,” she says, referring to the principal on a $500 loan plus $100 in interest fees. “So you have to keep going back to them. It’s a vicious cycle.” Yet a loan using the ZestFinance alternative, she says, involved payments of $95 every two weeks—split between interest and principal—until the loan was paid off. The total cost was hundreds of dollars less than a conventional payday loan would have been, she estimates. Richardson, her husband, and their two children were moving into a slightly larger rental property at a time when her husband’s hours as an assistant manager at a fast-food restaurant had been cut. The loan, she says, was “a little extra to get us over the hump.” So correlation rules—but not always. One of the most celebrated examples of the power of correlation has been Google Flu Trends.


pages: 406 words: 113,841

The American Way of Poverty: How the Other Half Still Lives by Sasha Abramsky

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Affordable Care Act / Obamacare, American Legislative Exchange Council, bank run, basic income, big-box store, collective bargaining, deindustrialization, fixed income, Francis Fukuyama: the end of history, full employment, ghettoisation, Gini coefficient, housing crisis, illegal immigration, immigration reform, income inequality, indoor plumbing, job automation, Kickstarter, Mark Zuckerberg, Maui Hawaii, microcredit, mortgage debt, mortgage tax deduction, new economy, Occupy movement, offshore financial centre, payday loans, plutocrats, Plutocrats, Ponzi scheme, Potemkin village, profit motive, Ronald Reagan, school vouchers, upwardly mobile, War on Poverty, Washington Consensus, women in the workforce, working poor, working-age population, Works Progress Administration

According to the Center for Financial Services Innovation, every year fifteen million Americans use payday loans, auto title loans, pawn shops, and other cogs in the low-income debt machine.8 Micro-loans issued by nonprofits could be used as a short-term alternative to these exploitative products, providing a method for the poor to access credit to tide them over rough patches in a way that doesn’t condemn them to endless fees and exorbitant interest rates. That’s what the company Progresso Financiero does in California and Texas. Aimed mainly at Hispanics in the two states, the short-term loans are provided at roughly 36 percent—far higher than the long-term loans given out by banks so that people can buy homes and cars, but far lower than those of payday loan companies, the fees and penalties on which can rapidly add up to several hundred percent annually.

There are people who are poor because they have made bad choices, gotten addicted to drugs, burned bridges with friends and family—and then there are people who have never taken a drug in their lives, who have huge social networks, and who still can’t make ends meet. There are people who have never held down a job, and others who hold down multiple, but always low-paying, jobs, frequently for some of the most powerful corporations on earth. There are people who have never had a bank account and use payday loans and other predatory lending sources whenever they need access to extra cash, and there are others who, during more flush times, owned huge suburban houses and expensive cars. There are children whose only hot meals are what they are given at school, and young adults who have nothing now and never really had anything earlier in life either. There are military veterans who have struggled to find a place in civilian life, middle-aged and once-middle-class people falling down the economic ladder as the recession fails to fully lift, and elderly people cascading into destitution as savings evaporate and expected equity in their homes fails to materialize.

The young couple with four children had recently moved from Albuquerque, New Mexico, to a small, impoverished community in California’s Central Valley so that her husband could take up a new job with the company. His health benefits were due to begin in January. But, a few weeks beforehand, Megan’s appendix ruptured; lacking medical insurance, the family was bankrupted by close to $100,000 in medical bills. Their credit shattered, they resorted to borrowing from one payday loan company after another. Five or six days after I was home from the hospital, I got my first hospital bill. About two weeks after that, I got my first failure to pay notice, saying that “you have not paid your $96,000 hospital bill.” The dollar pay raise had knocked us off housing benefits; we went from $612 rent to $1,030 rent. Knocked us off food stamps, so we didn’t get any food assistance.


pages: 135 words: 49,109

Hand to Mouth: Living in Bootstrap America by Linda Tirado

payday loans, plutocrats, Plutocrats, quantitative easing, telemarketer, unpaid internship

No matter what sort of credit rating you have, if your car’s water pump goes out, you can’t get a $300 loan from a bank. When something like that happens, some small emergency that I can’t actually afford until the next paycheck, I’ve generally had three options: a payday loan, borrowing from friends, or doing without. My friends aren’t always exactly flush themselves, leaving me with two choices: make it to work or not. When I’ve lived in the country or cities without good public transportation, making it to work has generally meant payday loans. I’m kind of torn about payday lenders—the storefront small lenders that everyone’s up in arms about. The way these places work is pretty simple: You give them some kind of collateral, like a postdated check, if you have a checking account, or a car title.

It was totally worth $15. I figure that at some point it will occur to someone, somewhere, that the reason there are so many payday loan places is that there are so many people whose checks simply will not last a whole pay period unless everything goes perfectly, and that people who have things like perfect weeks aren’t the sorts of people who’ve ever cashed a check at Wal-Mart at three a.m. because they ran out of the napkins they’d been using as toilet paper for two days. Those people will find a less shitty way of doing business; perhaps someone can start a nonprofit bank that charges minimum fees or something. For now, we have our fees to pay. I put furniture rental in the payday loan column because rental places are in the business of letting poor people have nice things for more than retail. The rental is simple; it’s just making twelve easy payments of $99.99 for something that might actually cost closer to $1,000 if you paid it all at once.

And payday lenders are brutal about getting it back. If any one of my employees was in default, we’d dread answering the phone. They’d call constantly. And they call for years. Meanwhile, clearly it’s usury to charge 400 percent APR. So I should be wholeheartedly against them, right? But the thing is, I’m not. Because they do serve a purpose that no one else does for poor people. I don’t think in terms of annual APRs when I’m getting a payday loan. I think of it as a $15 poor tax. Every time we need to borrow $100 for a week, it costs $15. Are these places preying on the weak? Yep. Is it less moral than huge banks preying on the same demographic? Probably not, and those assholes have never bailed me out of a tight spot before. The payday places, evil empire though they are and all, actually do fill a niche where there’s a real need. I’ve used them in the aforementioned water pump scenario and once when I got the flu and missed three days’ work on a week I couldn’t afford a short paycheck.


pages: 443 words: 98,113

The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not Pay by Guy Standing

3D printing, Airbnb, Albert Einstein, Amazon Mechanical Turk, Asian financial crisis, asset-backed security, bank run, banking crisis, basic income, Ben Bernanke: helicopter money, Bernie Sanders, Big bang: deregulation of the City of London, bilateral investment treaty, Bonfire of the Vanities, Boris Johnson, Bretton Woods, business cycle, Capital in the Twenty-First Century by Thomas Piketty, carried interest, cashless society, central bank independence, centre right, Clayton Christensen, collapse of Lehman Brothers, collective bargaining, credit crunch, crony capitalism, crowdsourcing, debt deflation, declining real wages, deindustrialization, disruptive innovation, Doha Development Round, Donald Trump, Double Irish / Dutch Sandwich, ending welfare as we know it, eurozone crisis, falling living standards, financial deregulation, financial innovation, Firefox, first-past-the-post, future of work, gig economy, Goldman Sachs: Vampire Squid, Growth in a Time of Debt, housing crisis, income inequality, information retrieval, intangible asset, invention of the steam engine, investor state dispute settlement, James Watt: steam engine, job automation, John Maynard Keynes: technological unemployment, labour market flexibility, light touch regulation, Long Term Capital Management, lump of labour, Lyft, manufacturing employment, Mark Zuckerberg, market clearing, Martin Wolf, means of production, mini-job, Mont Pelerin Society, moral hazard, mortgage debt, mortgage tax deduction, Neil Kinnock, non-tariff barriers, North Sea oil, Northern Rock, nudge unit, Occupy movement, offshore financial centre, oil shale / tar sands, open economy, openstreetmap, patent troll, payday loans, peer-to-peer lending, plutocrats, Plutocrats, Ponzi scheme, precariat, quantitative easing, remote working, rent control, rent-seeking, ride hailing / ride sharing, Right to Buy, Robert Gordon, Ronald Coase, Ronald Reagan, Sam Altman, savings glut, Second Machine Age, secular stagnation, sharing economy, Silicon Valley, Silicon Valley startup, Simon Kuznets, sovereign wealth fund, Stephen Hawking, Steve Ballmer, structural adjustment programs, TaskRabbit, The Chicago School, The Future of Employment, the payments system, The Rise and Fall of American Growth, Thomas Malthus, Thorstein Veblen, too big to fail, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, Y Combinator, zero-sum game, Zipcar

It has increased the fragility of the economy and the probability of another financial crash. Payday loans, credit card and catalogue debt are the bane of the precariat. Finance imposes extra costs on the economically disadvantaged. Those in and out of casual jobs, with fluctuating low incomes, dependent on state benefits, or with a record of debt, however petty or short-lived, are often denied cheaper forms of credit and must borrow or obtain credit from lenders who charge much higher rates. This further increases social income inequality. Payday loans, perhaps the most parasitic rent-extraction practice, came to prominence after the financial crash of 2008. These very short-term loans at eye-watering rates of interest aim to tide people over for a few days before payday when their low wages run out. In the USA, payday loan storefronts outnumber McDonald’s restaurants and are the prime source of credit for 90 million unbanked Americans.

In 2015, worried by the extent of debt and the growing housing bubble, the government raised taxes and reduced subsidies on buy-to-let properties. While this may deter some from starting or expanding buy-to-let activities, it does nothing to shrink the pool of existing buy-to-let debt. Landlords with large mortgages will be in trouble if interest rates rise. This new form of debt seems as risky as any other. PREDATORY CREDITORS: CREDIT CARDS, CATALOGUES AND PAYDAY LOANS ‘I use Mastercard to pay Visa.’ Bumper sticker Rent-seeking capitalism relies on inducing people to spend more than they can safely afford. This contrasts with the old Fordist model, in which corporations were encouraged to pay decent wages – a practice started by Henry Ford for his employees – on the grounds that workers had to be able to buy the goods and services being produced. Today, wages are kept down on grounds of ‘competitiveness’ with wages in some other part of the world, while desired domestic consumption is fanned by easy credit.

In the USA, payday loan storefronts outnumber McDonald’s restaurants and are the prime source of credit for 90 million unbanked Americans. The average unbanked household pays more than $2,400 each year for storefront financial services, even though they are banned in fourteen US states. And some of these lenders are operated or backed by the very Wall Street banks that refuse cheap loans to poor people.20 In Britain, the coalition government eventually introduced rules to limit the predatory behaviour of payday loan companies, which were charging financially illiterate people as much as 5,000 per cent annual interest and deducting money from borrowers’ bank accounts without their say-so. Even after the new rules came in, Wonga (the lender that came to symbolise the sector) was still able to charge an annualised rate of 1,509 per cent, and QuickQuid one of 1,212 per cent. A new breed of online lender, expanding rapidly in the USA with names like ZestFinance and LendUp, provides short-term small loans with annual interest rates of up to 390 per cent per annum.


pages: 297 words: 84,009

Big Business: A Love Letter to an American Anti-Hero by Tyler Cowen

23andMe, Affordable Care Act / Obamacare, augmented reality, barriers to entry, Bernie Sanders, bitcoin, blockchain, Bretton Woods, cloud computing, cognitive dissonance, corporate governance, corporate social responsibility, correlation coefficient, creative destruction, crony capitalism, cryptocurrency, dark matter, David Brooks, David Graeber, don't be evil, Donald Trump, Elon Musk, employer provided health coverage, experimental economics, Filter Bubble, financial innovation, financial intermediation, global reserve currency, global supply chain, Google Glasses, income inequality, Internet of things, invisible hand, Jeff Bezos, late fees, Mark Zuckerberg, mobile money, money market fund, mortgage debt, Network effects, new economy, Nicholas Carr, obamacare, offshore financial centre, passive investing, payday loans, peer-to-peer lending, Peter Thiel, pre–internet, price discrimination, profit maximization, profit motive, RAND corporation, rent-seeking, reserve currency, ride hailing / ride sharing, risk tolerance, Ronald Coase, shareholder value, Silicon Valley, Silicon Valley startup, Skype, Snapchat, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, The Nature of the Firm, Tim Cook: Apple, too big to fail, transaction costs, Tyler Cowen: Great Stagnation, ultimatum game, WikiLeaks, women in the workforce, World Values Survey, Y Combinator

“Innovating in Science and Engineering or ‘Cashing In’ on Wall Street? Evidence on Elite STEM Talent.” Working Paper 16-067. Harvard Business School. Silvergate, Harvey. 2011. Three Felonies a Day: How the Feds Target the Innocent. New York: Encounter Books. Skiba, Paige Marta. 2012. “Regulation of Payday Loans: Misguided?” Washington and Lee Law Review 69 (2): 1023–1049. Skiba, Paige Marta, and Jeremy Tobacman. 2011. “Do Payday Loans Cause Bankruptcy?” Vanderbilt Law and Economics Research Paper No. 11–13, December 1, 2011. Skiba, Paige Marta, and Jeremy Tobacman. 2008. “Payday Loans, Uncertainty, and Discounting: Explaining Patterns of Borrowing, Repayment, and Default.” Vanderbilt Law and Economics Research Paper No. 08–33, August 21, 2008. Skorup, Brent. 2013. “Reclaiming Federal Spectrum: Proposals and Recommendations.” Columbia Science and Technology Law Review 15 (Fall): 90–124.

National Bureau of Economic Research, Washington, DC. Egan, Mark, Gregor Matvos, and Amit Seru. 2016. “The Market for Financial Adviser Misconduct.” NBER Working Paper No. 22050. National Bureau of Economic Research, Washington, DC. Ehrenfreund, Max. 2016. “A Majority of Millennials Now Reject Capitalism, Poll Shows.” Washington Post, April 26, 2016. Elliehausen, Gregory. 2009. “An Analysis of Consumers’ Use of Payday Loans.” Monograph No. 41. Financial Services Research Program, George Washington University. Elson, Charles M. 2003. “What’s Wrong with Executive Compensation?” Harvard Business Review, January 2003. Enns, Peter K. 2015. “Relative Policy Support and Coincidental Representation.” Perspectives on Politics 13 (4): 1053–1064. Ensminger, Jean, and Joseph Henrich, editors. 2014. Experimenting with Social Norms: Fairness and Punishment in Cross-Cultural Perspective.

A Review of Alan Manning’s Monopsony in Motion.” International Journal of the Economics of Business 11, no. 3 (November): 369–378. Larcker, David F., Nicholas E. Donatiello, and Brian Tayan. 2017. “CEO Talent: America’s Scarcest Resource? 2017 CEO Talent Survey.” Stanford Graduate School of Business, Stanford University, September 2017. Lawrence, Edward C., and Gregory Elliehausen. “A Comparative Analysis of Payday Loan Customers.” Contemporary Economic Policy 26, no. 2 (April): 299–316. Lea, Richard. 2015. “The Big Question: Are Books Getting Longer?” Guardian, December 10, 2015. Lee, Michelle Ye Hee, and Elise Viebeck. 2017. “How Congress Plays by Different Rules on Sexual Harassment and Misconduct.” Washington Post, October 27, 2017. LeFevre, Judith. 1988. “Flow and the Quality of Experience During Work and Leisure.”


pages: 217 words: 73,289

Tails I Lose: The Compulsive Gambler Who Lost His Shirt for Good by Justyn Rees

call centre, payday loans, South China Sea

But the fact was, the lawyer who had agreed to take on the case had just secured legal aid. No deposit was needed. “How much?” “Five grand.” “When?” he asked me. “Um… well, now, really. I could pay you back in about six months. I have a dividend payment due in January.” Alex didn’t ask any questions. He wrote me a cheque there and then. I felt guilt as I drove away from the docks. Even when I told myself that the money would clear off all the payday loans, I still felt wretched. I had lied about something I knew Alex would respond to. It wasn’t just a lie, it was betrayal. What kind of a friend was I? I flicked on the radio. The sports bulletin followed the news headlines. Andy Murray was involved in a tight tennis match against Roger Federer; the final set was about to start. I dialled the familiar number and transferred £100 to my betting account and backed the Scotsman.

There were so many lies, I lost sight of what was real and what was pure fantasy. Almost all my money was now disappearing to service my debt and pay for groceries and essential bills. I let the rent slip, but luckily the landlord had either not noticed, or was being incredibly nice by not chasing me. In order to feed my gambling habit, I looked elsewhere for credit. When I had taken out as many payday loans as I could, I called my mother and arranged to see her. Like Alex, she was so pleased to see me. Her home in Kent was a long way from Derbyshire and my visits had become less frequent. I think she was a little worried about signing the guarantor loan documents when I laid them out before her, but I assured her that I had an excellent opportunity to buy more shares in the company and that I would repay her long before the term of the loan ended.

He was almost apologetic at first. I told him the truth. We agreed to meet up on Tuesday, with the HR director. I watched dust particles dance in a ray of sunlight as I lay on the floor, still holding the phone long after I’d said goodbye. Tuesday’s meeting didn’t take long. Over the weekend, they had looked at the emails in my account from the last few months and discovered that more than half the communications were from payday loan companies. It was quite clear I couldn’t continue as an account director. We came to an agreement which avoided a disciplinary hearing. I had shares to cover the payments on my card. The whole thing was managed efficiently and sensitively. But I was now out of work, with little prospect of ever again working in the industry of which I had once been at the very pinnacle. There was no time to say goodbye to my friends and work colleagues.


pages: 255 words: 75,172

Sleeping Giant: How the New Working Class Will Transform America by Tamara Draut

affirmative action, Affordable Care Act / Obamacare, always be closing, American ideology, battle of ideas, big-box store, blue-collar work, collective bargaining, creative destruction, David Brooks, declining real wages, deindustrialization, desegregation, Detroit bankruptcy, Donald Trump, Edward Glaeser, ending welfare as we know it, Ferguson, Missouri, financial deregulation, full employment, immigration reform, income inequality, invisible hand, job satisfaction, knowledge economy, knowledge worker, low skilled workers, mass incarceration, minimum wage unemployment, mortgage tax deduction, new economy, obamacare, occupational segregation, payday loans, pink-collar, plutocrats, Plutocrats, Powell Memorandum, profit motive, race to the bottom, Ralph Nader, rent-seeking, rising living standards, Ronald Reagan, shared worldview, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, trickle-down economics, union organizing, upwardly mobile, War on Poverty, white flight, women in the workforce, young professional

But as is the case for many workers in food and retail, Javier’s hours and days off vary from week to week, and his hours are deliberately kept just under full-time so that he does not become eligible for benefits. Despite the fact that Javier and his wife work as close to full-time as they can (she works at Big Lots), the couple has needed to rely on payday loans to pay their bills, which perversely became harder to meet after their household income rose high enough to disqualify them for food stamps. The payday loan payment comes directly out of Javier’s paycheck—a $300 bite out of a $700 paycheck, accumulating interest at an annual rate of 200 percent. These are hard facts for Javier to swallow. “I really don’t want to be stuck with those payday loans,” he told me. “Everything else, God provides. We have clothes. We go to food banks, they provide food.” But a bigger paycheck would get him free of the payday lenders and maybe even allow him and his wife to afford things like his kids’ school pictures or the yearbook his daughter wants.

A Better Deal would mean that all children would grow up in the United States with the knowledge that we want them to fulfill their dreams and have invested in a high-quality combination of higher education and training options for them to do just that. A Better Deal would mean that Javier, whom we met in Chapter 3, who stocks shelves in the freezer department at Walmart, wouldn’t have to rely on payday loans to pay his bills, because his paycheck, and his wife’s paycheck from working in retail, would be enough to pay the rent and keep the fridge stocked and the lights on. It would mean that their children, unlike Javier, who dreamed of going to college but had neither the cultural nor the financial resources to do so, would grow up knowing that this country makes it possible for anyone, regardless of their background, to get the education or training they want to be their best.


pages: 172 words: 48,747

The View From Flyover Country: Dispatches From the Forgotten America by Sarah Kendzior

"side hustle", Affordable Care Act / Obamacare, American ideology, barriers to entry, clean water, corporate personhood, crowdsourcing, David Brooks, David Graeber, Donald Trump, Edward Snowden, George Santayana, glass ceiling, income inequality, low skilled workers, Lyft, Marshall McLuhan, Mohammed Bouazizi, new economy, obamacare, Occupy movement, payday loans, pink-collar, post-work, publish or perish, Richard Florida, ride hailing / ride sharing, Silicon Valley, the medium is the message, trickle-down economics, Uber and Lyft, uber lyft, unpaid internship, Upton Sinclair, urban decay, War on Poverty, WikiLeaks, women in the workforce

Living on a Gamble In rural Missouri, there is a store called Nick’s Gun and Pawn. Locals can trade their weapons for household items, or vice versa. It is one of many examples of one of the most overlooked stories in the great recession: the explosion of pawnshops and payday loan outlets throughout the U.S. Between 2009 and 2011, the rate of Americans using high-cost nonbank credit soared to 14 percent, and included a rise in population segments once considered economically advantaged, but now unable to afford daily needs. Pawnshops and payday loans are the flip side of the United States’ turn to charity over justice. Both phenomena speak to a seemingly permanent impermanence: the replacement of a reliable salary for hard work, with high-cost gambles and unpredictable donations. In much of the U.S., possessions are not things you own.

They were simply priced out to a new location. That new location is often an impoverished suburb, which lacks the glamour to make it the object of future renewal efforts. There is no history to attract preservationists because there is nothing in poor suburbs viewed as worth preserving, including the futures of the people forced to live in them. This is blight without beauty, ruin without romance: payday loan stores, dollar stores, unassuming homes, and unpaid bills. In the suburbs, poverty looks banal and is overlooked. In cities, gentrifiers have the political clout—and accompanying racial privilege—to reallocate resources and repair infrastructure. The neighborhood is “cleaned up” through the removal of its residents. Gentrifiers can then bask in “urban life”—the storied history, the selective nostalgia, the carefully sprinkled grit—while avoiding responsibility to those they displaced.


pages: 164 words: 57,068

The Second Curve: Thoughts on Reinventing Society by Charles Handy

"Robert Solow", Airbnb, basic income, Bernie Madoff, bitcoin, bonus culture, British Empire, call centre, Clayton Christensen, corporate governance, delayed gratification, Diane Coyle, disruptive innovation, Edward Snowden, falling living standards, future of work, G4S, greed is good, informal economy, Internet of things, invisible hand, joint-stock company, joint-stock limited liability company, Kickstarter, Kodak vs Instagram, late capitalism, mass immigration, megacity, mittelstand, Occupy movement, payday loans, peer-to-peer lending, plutocrats, Plutocrats, Ponzi scheme, Ronald Coase, shareholder value, sharing economy, Skype, Social Responsibility of Business Is to Increase Its Profits, Stanford marshmallow experiment, Steve Jobs, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transaction costs, Veblen good, Walter Mischel

Interestingly, only 18 per cent thought that this was a heavy burden. Too many are happily living a Ponzi life, paying today’s expenditure with tomorrow’s money, and will come to rue it when their incomes sag or the cost of credit rises and mortgages become expensive once again. These debts are making a nonsense of much of the welfare system at the poorer levels of society where half of the benefits paid out can go straight away to pay the interest on payday loans, with not enough left over to live on, let alone pay off the original loan. It can be a trap for life. Businesses will tell you that credit, or gearing as they call it, is no bad thing in moderation. It allows you to grow without waiting for your savings to accumulate. Gearing is only a fancy term for ‘buy now pay later’. That works as long as the extra profit exceeds the cost of the credit plus the repayment.

But bigger debt means bigger interest payments and therefore less money to make up the Ponzi gap. Like more ordinary folk, they can’t win in the long run. A Ponzi mindset has come to be endemic in modern society. It is too easy to live in the present and let the future take care of itself. Except that it never does. Borrowing from the future to pay for today is made all too easy by those who make their money from our liabilities. Payday loans, logbook finance, where people borrow against their cars, interest-free offers from retailers, all encourage us to postpone the payback day and hope that something will turn up before it is too late. Ponzi thinking is addictive, and dangerous. We can lose control of our lives, living at the behest of our creditors. Governments cannot save us from ourselves, nor would we want them to. Indeed, in their eagerness to grow the economy and encourage consumption they are unlikely to try to curb our enthusiasm to borrow to spend.

The likelihood of any government enacting such a draconian policy must be minuscule, but a moderated version that, for example, required all mortgages to be extended in length by 50 per cent, might be possible. Alternatively and more usefully, governments could help us to discipline ourselves by requiring all borrowers to provide details of their existing financial state when applying for a loan of any sort. This is already happening in Britain, with increasingly stringent requirements for affordability tests for mortgages and payday loans. That requirement in itself could be a wake-up call to review one’s whole financial situation, including provision for the longer-term future. Credit and affordability checks in themselves are not enough. They do provide useful warning signs but they don’t provide the answers to the problems they throw up, other than to say you can’t have this loan or this purchase. That protects but does not teach.


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The Two-Income Trap: Why Middle-Class Parents Are Going Broke by Elizabeth Warren, Amelia Warren Tyagi

activist fund / activist shareholder / activist investor, business climate, Columbine, declining real wages, equal pay for equal work, feminist movement, financial independence, labor-force participation, late fees, McMansion, mortgage debt, new economy, New Journalism, payday loans, school choice, school vouchers, telemarketer, urban sprawl, women in the workforce

Similarly, when Texaco executives were accused of using racial slurs to refer to African Americans, the company was boycotted, sued for millions of dollars, and forced to adopt new practices to ensure that its black employees had better opportunities. 107 But when a Citibank official said in sworn affidavits that she regularly added extra fees to a home mortgage “[i]f someone . . . was a minority,” there was little response. Citibank quietly agreed to a cash settlement with the FTC, and there were no press releases from the NAACP, no interviews on the evening news, no calls for Citibank’s highly visible CEO, Sandy Weill, to resign. Subprime lending, payday loans, and the host of predatory, high-interest loan products that target minority neighborhoods should be called by their true names: legally sanctioned corporate plans to steal from minorities. Many years ago, a host of community groups worked together to oppose discriminatory lending and to help pass the Community Reinvestment Act despite stiff opposition from the banking industry. It is time for these groups to come together again to eliminate the modern version of economic discrimination, which parades under different names but has the same devastating effects.

Available at http://www2.fdic.gov/hsob/ [3/20/2003]. 75 The nine interest rate cuts by the Federal Reserve in 2001 did not affect most fixed-rate cards and had only modest effects on variable-rate cards. Cecily Fraser, “A $10 Billion Windfall: Credit Card Lenders Don’t Pass on Full Interest-Rate Cuts,” CBS MarketWatch.com, October 3, 2001. Available at http://www.cbs. marketwatch.com [2/2/2003]. 76 Interest on so-called payday loans can be in the 300-1,000 percent range. FDIC, Payday Lending FYI: An Update on Emerging Issues in Bankruptcy (January 29, 2003). 77 Mansfield, “The Road to Subprime ‘HEL’,” pp. 492-495. The initial Depository Institutions and Monetary Control Act (DIDMCA), which allowed banks to pay higher interest to depositors and preempted state usury laws, passed the House on September 11, 1979, by a vote of 367 to 39, and passed the Senate on November 1, 1979, by a vote of 76 to 9.

Available at http://www.census.gov/hhes/www/housing/ahs/01adtchrt/tab3-1.html [3/22/03]. 105 HUD, Federal Housing Authority Single Family Mortgage Insurance Foreclosures, Cumulative by Number and Percent, 1982-2002, unpublished data. 106 In Chicago, 41 percent of the city’s subprime refinancing occurs in black neighborhoods, although only 10 percent of the overall refinancing takes place in these same neighborhoods. HUD, Unequal Burden. An Illinois study found that there are 37 percent more payday loans issued in minority neighborhoods than in white neighborhoods. Woodstock Institute, Unregulated Payday Lending Pulls Vulnerable Consumers into Spiraling Debt, Reinvestment Alert Number 14 (Chicago: Woodstock Institute, March 2000). Available at www.woodstockinst.org/alert.pdf [2/2/2003]. 107 In 1996, a Texaco employee revealed secret tape recordings he had made of Texaco executives disparaging African-American employees and discussing the shredding of documents pertaining to a discrimination case.


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925 Ideas to Help You Save Money, Get Out of Debt and Retire a Millionaire So You Can Leave Your Mark on the World by Devin D. Thorpe

asset allocation, buy and hold, call centre, diversification, estate planning, fixed income, Home mortgage interest deduction, index fund, knowledge economy, money market fund, mortgage tax deduction, payday loans, random walk, risk tolerance, Skype, Steve Jobs, transaction costs, women in the workforce, zero-sum game

Being strategic with the money can have a big impact on your family’s lifestyle in the long run. Consider which of these circumstances best describes your situation and follow the guidance to get the most out of your raise. Awash in debt: if you can barely make ends meet each month, it may be because you’re over extended, with credit card debt, car loans and maybe even a payday loan or two that are eating away at every penny you bring home. Put the money from the raise toward the smallest debts—probably the payday loans—to quickly reduce the monthly outflow for debt payments. Barely scraping by: if you’ve been frugal forever and have successfully stayed out of debt, but you haven’t accumulated much and don’t own a home, now is a great time to put your focus on buying a home. Put the raise toward a savings account for a down payment and get serious about putting your family in a stable, permanent situation.

You’ll also have a new debt totaling $4,308 at the end of 36 months. If you borrow the money on a more expensive credit card, say one with a 24% interest rate, after three years the monthly deficit will have grown to $204 per month. At the higher interest rate, your debt will have grown to $5,200 instead. These numbers are tame compared to what would happen if you start using payday loans to close the gap in your budget. Payday loans often feature fees and terms that bring the interest rate far above 100% per year. If you use 200% as a low estimate of the cost, after one year your monthly shortfall will have grown to $636 per month and your balance after just one year would be a scary $3,215. Long before three years, your loan balance would exceed what any payday lender would advance. This discussion highlights the importance of a budget to control your spending and the need for the family to make some joint sacrifices, if need be, at the end of the month to avoid borrowing money you won’t have the wherewithal to repay.


pages: 407 words: 136,138

The Working Poor: Invisible in America by David K. Shipler

always be closing, Bonfire of the Vanities, call centre, David Brooks, full employment, illegal immigration, late fees, low skilled workers, payday loans, profit motive, Silicon Valley, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, union organizing, Upton Sinclair, War on Poverty, working poor

This pattern prevails in Illinois, for example, where state examiners found that rollovers made up yy percent of all payday loan transactions. The average customer had ten such renewals, which meant paying fees totaling up to twice the amount borrowed.6 Eventually, you may have to borrow from another payday loan merchant to pay the fees at the first. And so on and on and on. Furthermore, the loans are not technically loans in some states, because there’s a check. And if a check bounces, more severe penalties apply than those for unrepaid loans. Borrowing $300, for instance, an Indiana woman paid a $30 fee and wrote a check for $330. When the check bounced, her bank and the payday loan establishment charged $80 in fees. Then the lender took her to court, won triple damages of $990, lawyer’s fees of $150, and $60 in court costs.

“If they ask questions, preparers are supposed to answer.” Many customers simply do not know what questions to ask. Poverty is like a bleeding wound. It weakens the defenses. It lowers resistance. It attracts predators. The loan sharks operate not only from bars and street corners, but also legally from behind bulletproof glass. Their beckoning signs are posted at some 10,000 locations across the country: “Payday Loans,” “Quick Cash,” “Easy Money.” You see them in check-cashing joints and storefront offices in poor and working-class neighborhoods. They have organized themselves into at least a dozen national chains, and they charge fees equivalent to more than 500 percent annual-ized interest. They also provide a much needed service. Say you’re short of cash, and the bills are piling up, along with some disconnection notices.

Her wages from the bakery were deposited directly, but they were gone as soon as they hit the ledger. “I have maybe $8 in the account every week,” she said. “You can’t get less than ten from the money machine, so if I have five, I can’t get five.” If she went to a teller, the bank levied a $3 charge. She was so low one January that she had to pay a $15 fee for a two-week $100 advance from a storefront payday loan operation. Her fellow workers in the bakery were trapped in gloom. Nothing there encouraged her. As she began the job, one employee after another cautioned her: “You don’t want to work here.” She heard the warning even from an assistant supervisor who had been her high school classmate. “Debra, I know you don’t want to work here,” she remembered her classmate saying. “How long you been here?”


pages: 189 words: 64,571

The Cheapskate Next Door: The Surprising Secrets of Americans Living Happily Below Their Means by Jeff Yeager

asset allocation, carbon footprint, delayed gratification, dumpster diving, index card, job satisfaction, late fees, mortgage debt, new economy, payday loans, Skype, upwardly mobile, Zipcar

The cheapskates next door will eat nothing but ramen noodles for a year before they’ll even think about taking out any of these loans: PAYDAY LOANS—Borrow against your next paycheck at an annual interest rate that’s often 400 percent or higher, and that’s before “renewal fees” and other add-ons; CREDIT CARD CASH ADVANCES—As if the interest on credit card purchases isn’t bad enough, interest on cash advances is usually much higher, averaging about 22 percent, plus an additional up-front fee of as much as 5 percent; CAR TITLE LOANS—If you own a car outright, you can borrow about 55 percent of its value—at an annual interest rate of around 300 percent, plus hefty monthly renewal fees. Default, and the lender takes your wheels. [Note to Self: Anything money-related that’s advertised on daytime TV probably isn’t a good deal.] Savings: Variable, but a $1,000 payday loan carried for a month will probably cost you about $225 in interest and fees—what a deal!

They frequently don’t take out student loans to finance their college educations (Chapter 4), or they borrow the absolute minimum amount possible and pay it off before even thinking about borrowing for anything else after college. They will take out a mortgage to buy a home, but usually buy a more modest home than they could qualify for, stay in it a good long time, and pay off their mortgage early (Chapter 10). And what about second mortgages, home equity loans, lines of credit, reverse mortgages, payday loans, etc., etc., etc., to pay for home remodeling, the kid’s college, a summer cottage, retirement, a European vacation, etc., etc., etc.? Get outa here! The cheapskates next door couldn’t give a flying fig about any of those “loan instruments.” As John “Doc” Dochnahl told me, “If you can’t afford to pay for it now, you can’t afford it.” How do they do it? How do the cheapskates next door avoid the pitfalls of debt that ensnare so many Americans from such a young age?


pages: 378 words: 110,518

Postcapitalism: A Guide to Our Future by Paul Mason

Alfred Russel Wallace, bank run, banking crisis, banks create money, Basel III, basic income, Bernie Madoff, Bill Gates: Altair 8800, bitcoin, Branko Milanovic, Bretton Woods, BRICs, British Empire, business cycle, business process, butterfly effect, call centre, capital controls, Cesare Marchetti: Marchetti’s constant, Claude Shannon: information theory, collaborative economy, collective bargaining, Corn Laws, corporate social responsibility, creative destruction, credit crunch, currency manipulation / currency intervention, currency peg, David Graeber, deglobalization, deindustrialization, deskilling, discovery of the americas, Downton Abbey, drone strike, en.wikipedia.org, energy security, eurozone crisis, factory automation, financial repression, Firefox, Fractional reserve banking, Frederick Winslow Taylor, full employment, future of work, game design, income inequality, inflation targeting, informal economy, information asymmetry, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Internet of things, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, late capitalism, low skilled workers, market clearing, means of production, Metcalfe's law, microservices, money: store of value / unit of account / medium of exchange, mortgage debt, Network effects, new economy, Norbert Wiener, Occupy movement, oil shale / tar sands, oil shock, Paul Samuelson, payday loans, Pearl River Delta, post-industrial society, precariat, price mechanism, profit motive, quantitative easing, race to the bottom, RAND corporation, rent-seeking, reserve currency, RFID, Richard Stallman, Robert Gordon, Robert Metcalfe, secular stagnation, sharing economy, Stewart Brand, structural adjustment programs, supply-chain management, The Future of Employment, the scientific method, The Wealth of Nations by Adam Smith, Transnistria, union organizing, universal basic income, urban decay, urban planning, Vilfredo Pareto, wages for housework, WikiLeaks, women in the workforce

For now, what we know is that fiat money – when combined with free-market economics – is a machine for producing boom-and-bust cycles. Left to run unsupervised, it could – before we’ve even considered the other destabilizing factors – push the world economy towards long-term stagnation. FINANCIALIZATION Go to any of the British towns devastated by industrial decline and you’ll see the same streetscape: payday loan stores, pawnbrokers and shops selling household goods on credit at hyper-inflated interest rates. Next to the pawnbrokers you’ll probably find that other gold mine of the poverty-stricken town: the employment agency. Look in the window and you’ll see ads for jobs at the minimum wage – but which require more than minimum skill. Press operatives, carers on night shift, distribution centre workers: jobs that used to pay decent wages now pay as little as legally possible.

The USA, under neoliberalism, boosted profits by impoverishing its own citizens. The truth is, as finance has seeped into our daily lives, we are no longer slaves only to the machine, to the 9-to-5 routine, we’ve become slaves to interest payments. We no longer just generate profits for our bosses through our work, but also profits for financial middlemen through our borrowing. A single mum on benefits, forced into the world of payday loans and buying household goods on credit, can be generating a much higher profit rate for capital than an auto industry worker with a steady job. Once every human being can generate a financial profit just by consuming – and the poorest can generate the most – a profound change begins in capitalism’s attitude to work. We’ll explore this later, in Part II. For now, to summarize: financialization is a permanent feature of neoliberalism.

By the time you had computerized your production line, innovation elsewhere meant you had to rip it out and start again. But after around 2004, with the rise of the internet and mobile data, technology began to enable new business models: we called it Web 2.0. It also started to produce tangible new behaviours among large numbers of people. It became normal to pay with plastic; normal to put your whole private life online for ever; normal to go online to get a payday loan at 1,000 per cent interest. At first, the exhilarating rush of new technology was taken as justifying all the pain we’d gone through to get free markets. The British miners had to be smashed so that we could have Facebook; telecoms had to be privatized so that we could all have 3G mobile phones. That was the implicit rationale. Above all, however, it was the change in human terms that was critical.


pages: 223 words: 77,566

Hillbilly Elegy: A Memoir of a Family and Culture in Crisis by J. D. Vance

Affordable Care Act / Obamacare, blue-collar work, cognitive dissonance, late fees, medical malpractice, obamacare, payday loans, Peter Thiel, Ronald Reagan, Rubik’s Cube, school vouchers, Silicon Valley, unbiased observer, upwardly mobile, working poor

One ended up in an abusive relationship that produced a child before the mom was old enough to purchase cigarettes. The oldest overdosed on drugs and was arrested not long after he graduated from high school. This was my world: a world of truly irrational behavior. We spend our way into the poorhouse. We buy giant TVs and iPads. Our children wear nice clothes thanks to high-interest credit cards and payday loans. We purchase homes we don’t need, refinance them for more spending money, and declare bankruptcy, often leaving them full of garbage in our wake. Thrift is inimical to our being. We spend to pretend that we’re upper-class. And when the dust clears—when bankruptcy hits or a family member bails us out of our stupidity—there’s nothing left over. Nothing for the kids’ college tuition, no investment to grow our wealth, no rainy-day fund if someone loses her job.

One Friday morning I dropped off my rent check, knowing that if I waited another day, the fifty-dollar late fee would kick in. I didn’t have enough money to cover the check, but I’d get paid that day and would be able to deposit the money after work. However, after a long day at the senate, I forgot to grab my paycheck before I left. By the time I realized the mistake, I was already home, and the Statehouse staff had left for the weekend. On that day, a three-day payday loan, with a few dollars of interest, enabled me to avoid a significant overdraft fee. The legislators debating the merits of payday lending didn’t mention situations like that. The lesson? Powerful people sometimes do things to help people like me without really understanding people like me. My second year of college started pretty much as my first year had, with a beautiful day and a lot of excitement.

During the past few Christmas seasons, I’ve found myself in large department stores, buying toys for kids I’ve never met. As I shop, I’m reminded that wherever I fell on the American socioeconomic ladder as a child, others occupy much lower rungs: children who cannot depend on the generosity of grandparents for Christmas gifts; parents whose financial situations are so dire that they rely on criminal conduct—rather than payday loans—to put today’s hot toys under the tree. This is a very useful exercise. As scarcity has given way to plenty in my own life, these moments of retail reflection force me to consider just how lucky I am. Still, shopping for low-income kids reminds me of my childhood and of the ways that Christmas gifts can serve as domestic land mines. Every year the parents in my neighborhood would begin an annual ritual very different from the one I’ve become accustomed to in my new material comfort: worrying about how to give their kids a “nice Christmas,” with niceness always defined by the bounty underneath the Christmas tree.


pages: 976 words: 235,576

The Meritocracy Trap: How America's Foundational Myth Feeds Inequality, Dismantles the Middle Class, and Devours the Elite by Daniel Markovits

"Robert Solow", 8-hour work day, activist fund / activist shareholder / activist investor, affirmative action, Anton Chekhov, asset-backed security, assortative mating, basic income, Bernie Sanders, big-box store, business cycle, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, carried interest, collateralized debt obligation, collective bargaining, computer age, corporate governance, corporate raider, crony capitalism, David Brooks, deskilling, Detroit bankruptcy, disruptive innovation, Donald Trump, Edward Glaeser, Emanuel Derman, equity premium, European colonialism, everywhere but in the productivity statistics, fear of failure, financial innovation, financial intermediation, fixed income, Ford paid five dollars a day, Frederick Winslow Taylor, full employment, future of work, gender pay gap, George Akerlof, Gini coefficient, glass ceiling, helicopter parent, high net worth, hiring and firing, income inequality, industrial robot, interchangeable parts, invention of agriculture, Jaron Lanier, Jeff Bezos, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, knowledge economy, knowledge worker, Kodak vs Instagram, labor-force participation, longitudinal study, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, mass incarceration, medical residency, minimum wage unemployment, Myron Scholes, Nate Silver, New Economic Geography, new economy, offshore financial centre, Paul Samuelson, payday loans, plutocrats, Plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, precariat, purchasing power parity, rent-seeking, Richard Florida, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, school choice, shareholder value, Silicon Valley, Simon Kuznets, six sigma, Skype, stakhanovite, stem cell, Steve Jobs, supply-chain management, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, Thomas Davenport, Thorstein Veblen, too big to fail, total factor productivity, transaction costs, traveling salesman, universal basic income, unpaid internship, Vanguard fund, War on Poverty, Winter of Discontent, women in the workforce, working poor, young professional, zero-sum game

to twenty-two thousand by 2016: See Federal Deposit Insurance Corporation, “For Your Information: An Update on Emerging Issues in Banking, Payday Lending,” January 29, 2003, www.fdic.gov/bank/analytical/fyi/2003/012903fyi.html; Stephen J. Dubner, “Are Payday Loans Really as Evil as People Say?,” Freakonomics, April 6, 2016, accessed November 19, 2018, http://freakonomics.com/podcast/payday-loans. McDonald’s and Starbucks franchises combined: Bethany McLean, “Payday Lending: Will Anything Better Replace It?,” Atlantic, May 2016, accessed November 19, 2018, www.theatlantic.com/magazine/archive/2016/05/payday-lending/476403. McLean attributes the claim about McDonald’s and Starbucks to Dartmouth economist Jonathan Zinman. $7.4 billion on payday loans: Pew Charitable Trusts, Payday Lending in America: Who Borrows, Where They Borrow, and Why (July 2012), 35, www.pewtrusts.org/~/media/legacy/%20uploadedfiles/pcs_assets/2012/pewpaydaylendingreportpdf.pdf.

Just as Henry Ford’s decision to pay his workers enough for them to desire and to afford his cars epitomized the Great Compression’s egalitarian economy, so Walmart’s practice of paying its workers so little that they cannot afford to shop other than at thrift retailers epitomizes today’s unequal economy.) Thrift finance has also grown rapidly, to become an inescapable part of middle-class life. Payday loans give this pattern an open and notorious illustration. Payday lending serves people who obviously cannot afford their own lives, even week to week. The obviousness of the shortfall gives the business a bad odor, but that has not stopped its increase. The payday lending industry has grown from fewer than five hundred stores in the early 1990s, to twelve thousand in 2002, to twenty-two thousand by 2016. There are more payday lending stores in the United States today than there are McDonald’s and Starbucks franchises combined, and in 2012, Americans spent $7.4 billion on payday loans. Moreover, this open expression of thrift finance is only the small tip of a massive iceberg. Middle-class households accumulated substantial savings at midcentury, and as recently as the late 1970s, the bottom 90 percent of the income distribution enjoyed a savings rate of between 5 and 10 percent.

The borrowing does not go to frivolous or extravagant purchases, but instead overwhelmingly serves socially legitimate (or even necessary) expenses, that nevertheless exceed the incomes mid-skilled labor can command. Indeed, seven out of every ten low- and middle-income households reported using credit cards as a “safety net,” to pay unavoidable costs such as medical expenses and car and house repairs. Middle-class households quite generally subsist on what are functionally payday loans, required to paper over the widening gap between middle-class needs and stocks. Especially against the backdrop of increasingly insecure earnings, debt used to finance consumption casts an inescapable shadow of catastrophe. As Charles Dickens’s Mr. Micawber complained, “Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result, happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.”


pages: 850 words: 254,117

Basic Economics by Thomas Sowell

affirmative action, air freight, airline deregulation, American Legislative Exchange Council, bank run, barriers to entry, big-box store, British Empire, business cycle, clean water, collective bargaining, colonial rule, corporate governance, correlation does not imply causation, cross-subsidies, David Brooks, David Ricardo: comparative advantage, declining real wages, Dissolution of the Soviet Union, diversified portfolio, European colonialism, fixed income, Fractional reserve banking, full employment, global village, Gunnar Myrdal, Hernando de Soto, hiring and firing, housing crisis, income inequality, income per capita, index fund, informal economy, inventory management, invisible hand, John Maynard Keynes: technological unemployment, joint-stock company, Just-in-time delivery, Kenneth Arrow, knowledge economy, labor-force participation, land reform, late fees, low cost airline, low cost carrier, low skilled workers, means of production, Mikhail Gorbachev, minimum wage unemployment, moral hazard, offshore financial centre, oil shale / tar sands, payday loans, price discrimination, price stability, profit motive, quantitative easing, Ralph Nader, rent control, road to serfdom, Ronald Reagan, Silicon Valley, surplus humans, The Bell Curve by Richard Herrnstein and Charles Murray, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, transcontinental railway, Vanguard fund, War on Poverty

But payday loans are not made for a year, so the annual rate of interest is irrelevant, except for creating a sensation in the media or in politics. As one owner of a payday loan business pointed out, discussing annual interest rates on payday loans is like saying salmon costs more than $15,000 a ton or a hotel room rents for more than $36,000 a year, {443}since most people never buy a ton of salmon or rent a hotel room for a year. Whatever the costs of processing payday loans, those costs as well as the cost of risk must be recovered from the interest charged—and the shorter the period of time involved, the higher the annual interest rate must be to cover those fixed costs. For a two-week loan, payday lenders typically charge $15 in interest for every $100 lent. When laws restrict the annual interest rate to 36 percent, this means that the interest charged for a two-week loan would be less than $1.50—an amount unlikely to cover even the cost of processing the loan, much less the risk involved.

Short-term loans to low-income people are often called “payday loans,” since they are to be repaid on the borrower’s next payday or when a Social Security check or welfare check arrives, which may be only a matter of weeks, or even days, away. Such loans, according to the Wall Street Journal, are “usually between $300 and $400.”{441} Obviously, such loans are more likely to be made to people whose incomes and assets are so low that they need a modest sum of money immediately for some exigency and simply do not have it. The media and politicians make much of the fact that the annual rate of interest (as they loosely use the term “interest”) on these loans is astronomical. The New York Times, for example referred to “an annualized interest rate of 312 percent”{442} on some such loans. But payday loans are not made for a year, so the annual rate of interest is irrelevant, except for creating a sensation in the media or in politics.

But, since most American lenders are apt to be white, and they turn down whites at a much higher rate than they turn down Asian Americans, racial discrimination seems an unlikely explanation. Where there are lenders who specialize in large, short-term loans to high-income people with expensive possessions to use as collateral, these “collateral lenders” (essentially pawn shops for the affluent or rich) charge interest rates that can exceed 200 percent on an annual basis. These interest rates are high for the same reasons that payday loans to low-income people are high. But, because the high-income loans are secured by collateral that can be sold if the loan is not repaid, the high interest rates are not as high as with loans to low-income people without collateral. Moreover, because a collateral lender like Pawngo makes loans averaging between $10,000 to $15,000,{447} the fixed process costs are a much smaller percentage of the loans, and so add correspondingly less to the interest rate charged.


pages: 511 words: 132,682

Competition Overdose: How Free Market Mythology Transformed Us From Citizen Kings to Market Servants by Maurice E. Stucke, Ariel Ezrachi

affirmative action, Airbnb, Albert Einstein, Andrei Shleifer, Bernie Sanders, Boeing 737 MAX, Cass Sunstein, choice architecture, cloud computing, commoditize, corporate governance, Corrections Corporation of America, Credit Default Swap, crony capitalism, delayed gratification, Donald Trump, en.wikipedia.org, George Akerlof, gig economy, Goldman Sachs: Vampire Squid, Google Chrome, greed is good, hedonic treadmill, income inequality, income per capita, information asymmetry, invisible hand, job satisfaction, labor-force participation, late fees, loss aversion, low skilled workers, Lyft, mandatory minimum, Mark Zuckerberg, market fundamentalism, mass incarceration, Menlo Park, meta analysis, meta-analysis, Milgram experiment, mortgage debt, Network effects, out of africa, payday loans, Ponzi scheme, precariat, price anchoring, price discrimination, profit maximization, profit motive, race to the bottom, Richard Thaler, ride hailing / ride sharing, Robert Bork, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, Shoshana Zuboff, Silicon Valley, Snapchat, Social Responsibility of Business Is to Increase Its Profits, Stanford prison experiment, Stephen Hawking, The Chicago School, The Market for Lemons, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, Thomas Davenport, Thorstein Veblen, Tim Cook: Apple, too big to fail, transaction costs, Uber and Lyft, uber lyft, ultimatum game, Vanguard fund, winner-take-all economy

Reg. 54472 (November 17, 2017), https://www.govinfo.gov/app/details/FR-2017-11-17/2017-21808. 26.Payday, Vehicle Title, and Certain High-Cost Installment Loans, 84 Fed. Reg. 4252 (proposed February 14, 2019), https://www.federalregister.gov/documents/2019/02/14/2019-01906/payday-vehicle-title-and-certain-high-cost-installment-loans. 27.Charles Elmore, “Payday Loan Crackdown on Ice under Trump Pick Who Got Donations,” Palm Beach Post, January 17, 2018, https://www.palmbeachpost.com/business/payday-loan-crackdown-ice-under-trump-pick-who-got-donations/4cxbrwOnM3YtvLg8Oo4YbJ/. 28.15 U.S.C. § 45(n) (2012) (defining unfair acts or practices as those that cause or are “likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition”). 29.

In response, Congress passed several laws, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, which gave the newly formed Consumer Financial Protection Bureau (CFPB) the power to crack down on unfair, deceptive, and abusive acts or practices. We emphasize abusive, because it enables the CFPB to stop financial institutions from preying on our weaknesses when offering financial products or services.23 The CFPB used this authority to crack down on payday debt traps that have plagued communities around the country. Unscrupulous lenders compete in offering short-term payday loans to consumers who cannot reasonably repay them. The CFPB spent over five years researching this toxic competition, including reviewing over one million comments on its proposed rule from payday borrowers, consumer advocates, faith leaders and tribal leaders, payday and auto title lenders, state regulators, and attorneys general. What it found was that, faced with unaffordable payments, “cash-strapped consumers must choose between defaulting, re-borrowing, or skipping other financial obligations like rent or basic living expenses such as buying food or obtaining medical care.”24 The result was companies’ profiting as the cash-strapped borrowers paid far more in fees than what they received in credit.

Take, for example, the 2016 and 2018 US elections, where we saw progressive ballot initiatives being overwhelmingly approved in both conservative and liberal states. Even if we can’t do much under the Trump administration to demand that the CFPB crack down on exploitative abuses by payday lenders, we can act on a local level, like the voters in South Dakota who, in the same election cycle that brought us Trump, overwhelmingly approved a ballot measure that effectively banned payday loans (by capping the permissible interest rate to 36 percent).62 We can follow the voters in nineteen states, who through ballot initiatives or political pressure, in 2019 increased their state’s minimum wage. This includes Arkansas, whose voters overwhelmingly rebuffed the efforts of the elected Republican officials and chamber of commerce, and raised the minimum wage to $11 per hour, which is significant in a state where one of every 5.5 residents lives in poverty.63 We can follow the voters in Idaho, Nebraska, and Utah, who strengthened their safety net by expanding the Medicaid health care programs to adults with incomes of up to 138 percent of the federal poverty line.64 Or we can consider a simple conversation Alastair Mactaggart had among friends at a social outing.


pages: 342 words: 94,762

Wait: The Art and Science of Delay by Frank Partnoy

algorithmic trading, Atul Gawande, Bernie Madoff, Black Swan, blood diamonds, Cass Sunstein, Checklist Manifesto, cognitive bias, collapse of Lehman Brothers, collateralized debt obligation, computerized trading, corporate governance, Daniel Kahneman / Amos Tversky, delayed gratification, Flash crash, Frederick Winslow Taylor, George Akerlof, Google Earth, Hernando de Soto, High speed trading, impulse control, income inequality, information asymmetry, Isaac Newton, Long Term Capital Management, Menlo Park, mental accounting, meta analysis, meta-analysis, MITM: man-in-the-middle, Nick Leeson, paper trading, Paul Graham, payday loans, Ralph Nader, Richard Thaler, risk tolerance, Robert Shiller, Robert Shiller, Ronald Reagan, Saturday Night Live, six sigma, Spread Networks laid a new fibre optics cable between New York and Chicago, Stanford marshmallow experiment, statistical model, Steve Jobs, The Market for Lemons, the scientific method, The Wealth of Nations by Adam Smith, upwardly mobile, Walter Mischel

The causes of high discount rates are hotly debated, and the environment certainly plays a significant role. For example, evidence suggests that poor people are especially prone to have high short-term discount rates.45 They frame economic decisions in narrow terms, using blinders, which is one reason why so many poor people are trapped by crushing debt loads. Poor people are more likely to get “payday” loans—high-interest-rate advances on their next paycheck.46 They are less likely to understand that the charges for payday loans are absurdly high, even compared to credit card rates. Or perhaps they do understand, but must have the money at once anyway. It remains unclear which way the causation runs: are people poor because they have high discount rates, or do they have high discount rates because they are poor? Young people also tend to have high discount rates.

Some rules also can help, though we need the willpower to follow them.52 We might tell ourselves that before we can put off a task, we must have a unique reason for why we aren’t doing it today and we must commit to completing the task in the future by putting it on our calendar for a specified future date.53 Web-based tools such as RescueTime.com can help us plan by keeping track of precisely how we fritter away time. Just as the best diet aids involve keeping track of what we eat, the best time management aids involve keeping track of what we do. Borrowers can reduce their present biases by thinking more carefully about future costs, comparing the cost of a payday loan to the effective interest rate of a credit card, or looking at the estimated cost or savings for a year.54 Employers can help us avoid our high short-term discount rates by automatically enrolling us in a savings plan unless we opt out.55 For many straightforward tasks, it helps to impose strict deadlines.56 On the other hand, there can be real benefits from putting tasks off, and we should recognize those as well.


pages: 369 words: 90,630

Mindwise: Why We Misunderstand What Others Think, Believe, Feel, and Want by Nicholas Epley

affirmative action, airport security, Amazon Mechanical Turk, Cass Sunstein, crowdsourcing, cuban missile crisis, drone strike, friendly fire, invisible hand, meta analysis, meta-analysis, Milgram experiment, payday loans, Peter Singer: altruism, pirate software, Richard Thaler, school choice, social intelligence, the scientific method, theory of mind

Arguably not spending enough time actually learning in school. Longer school days, shorter summer breaks, and fewer vacations improve student achievement. If you want students to do better in school, a good place to start is to have them spend more time in it. • REDUCING POVERTY. Poverty is one of society’s most persistent problems, and the poor don’t seem to be helping themselves as much as they should. They disproportionately take out payday loans with obscenely high interest rates, getting themselves caught in endless debt traps that require taking on more debt to pay off past debt. One common theory about poverty explains it in the language of mental deficiencies: the poor are simply not as smart as the rest of us, and they do stupid things with their money that keep them poor. What’s the fix? A common strategy is to roll out financial literacy classes to teach the poor to be smarter.

Those classes seem to help the poor very little.30 The reason may be that the poor turn out to be smarter and more informed about money than these policies imply. In one set of experiments, psychologists found that poor people make fewer mistakes on financial problems that routinely trip up the wealthy.31 One of the bigger problems is the lack of trust in financial institutions that is rampant in poor communities, which is compounded by the lack of access to simple banking services like savings accounts. The poor take out payday loans in part because they don’t have other banking services they can rely on. One effective way to help break the chronic debt trap is to give the poor access to banking services. Poverty will not yield to simple solutions like this alone, of course, but it’s unlikely to yield at all using assumptions that poverty is largely the product of stupidity. • REDUCING OBESITY. Americans are in the midst of a growing obesity epidemic.

Omaha Indians Onion, 5.1, 8.1 On Killing: The Psychological Cost of Learning to Kill in War and Society (Grossman), nts.1n opinion polls, xx, 5.1, 8.1, nts.1n Orwell, George owl butterflies, 4.1, 4.2, 4.3 Pain in Neonates (Avery) Pakistan Palestinians, Palestine, 8.1, 8.2 Palin, Sarah paranoia parents perception of danger and see also children Paro (robot), n parochial altruism, 3.1, nts.1n parroting payday loans performance appraisals perspective deception and egocentrism and, 5.1, 5.2, 5.3, 5.4 getting of, 8.1, 8.2, 8.3, aft.1, nts.1n getting of, barriers to gift selection and, 8.1, nts.1n interracial interactions and taking of, 8.1, 8.2, 8.3, 8.4, 8.5, 8.6, nts.1n talking stick and transparency and pets, anthropomorphism and, 4.1, 4.2, 4.3, 4.4, nts.1n Philadelphia, Pa. Phillips, Mark D., n physicians desensitization to patients of, 3.1, 3.2, nts.1n empathy and malpractice issue and Piaget, Jean, 5.1, 5.2 pigs, 4.1, 4.2 Piro, George Pitt, Brad Pittsburgh Pirates, n planning fallacy politics egocentrism and, 5.1, 5.2, 5.3, 5.4, 5.5 incumbent advantage and inferential brain function and, 3.1, nts.1n lying and naïve realism and snap judgments and stereotypes and, 6.1, 6.2, 6.3, 6.4 polls, polling, xx, 5.1, 8.1, nts.1n Ponca Indians, 3.1, 3.2, 3.3 popcorn Popov, Alex poverty banking system and context and reduction of, 7.1, 7.2 praying mantises preferences, prf.1, 2.1, 6.1 Principles of Psychology (James) prisoners, anthropomorphism and progressive storytelling, n Proust, Marcel, prf.1, aft.1 psychics, 2.1, 8.1 psychological distance, 3.1, 3.2, 3.3 psychological experiments, correlation and, 1.1, 1.2, nts.1n psychology attention limitation experiment in, n behaviorism and, 4.1, nts.1n correspondence bias and, 7.1, 7.2, 7.3, 7.4, 8.1 curse of knowledge and Newton’s “tapping study” and, 5.1, nts.1n Piaget and Quiz Bowl experiment and, 7.1, 7.2, 7.3 public speaking, egocentrism and, 5.1, 5.2, nts.1n Putin, Vladimir, 1.1, 1.2 Quiz Bowl experiment, 7.1, 7.2, 7.3 racial profiling racism, 2.1, 2.2 dehumanization and profiling and stereotypes and Ramachandran, V.


pages: 279 words: 90,888

The Lost Decade: 2010–2020, and What Lies Ahead for Britain by Polly Toynbee, David Walker

banking crisis, battle of ideas, Boris Johnson, call centre, car-free, centre right, collective bargaining, congestion charging, corporate governance, crony capitalism, David Attenborough, Dominic Cummings, Donald Trump, Downton Abbey, energy transition, Etonian, first-past-the-post, G4S, gender pay gap, gig economy, Gini coefficient, global village, high net worth, housing crisis, income inequality, industrial robot, Intergovernmental Panel on Climate Change (IPCC), James Dyson, manufacturing employment, mass immigration, moral panic, mortgage debt, North Sea oil, offshore financial centre, payday loans, pension reform, quantitative easing, Right to Buy, Saturday Night Live, selection bias, smart meter, Uber for X, urban renewal, working-age population

A BBC interview with a nurse captured how it felt to be stigmatised and excluded: ‘I see more misery and hardship for myself and my children. I have just been awarded a 1 per cent rise, and yet the cost of living continues to increase. The chancellor has cut tax credits in an underhand way. It seems as a single parent and a public sector worker I am an enemy of the state.’ Foreign journalists who came to film the food banks found themselves tripping over sleeping bags in doorways. Welcome to the country of homelessness, payday loans, bedroom tax and zero-hours contracts. But the era’s winners won big. One in five of those born in the 1950s now owned a second property. The total wealth embodied by second homes, buy-to-let investments and those foreign gîtes, rural villas and flats on the Costa climbed to £941 billion. The old did well, the young badly (even if some of them will later in life become lucky inheritors). Top people coined it; recipients of benefits suffered.

Andy’s business was post-post-industrial, making things at a small, specialised scale in a sort of symbiotic relationship with the big producers, increasingly Chinese. Brexit disrupted everything, shaking out people, attitudes, expectations – and, of course, decoupling from the EU had only just begun. During these years, the basic health of the UK economy was not sound, despite the slow recovery from recession. It relied on household consumption, fuelled by borrowing on credit cards. If you were too poor to have a credit card, you could borrow from the payday loan company Wonga – until it went bust. The plight of the north-east was symbolised when Newcastle United’s players ran out displaying Wonga’s name on their chests. But buying brought pleasure. Poor families bought their sofas from BrightHouse – another company making money from immiseration – at 69.9 per cent interest. People and skills were out of balance. In the most obvious of market failures, companies large and small would not train staff either because they did not rate skills (another congenital disease) or because it was cheaper to buy them in from abroad.

Robert Joyce of the IFS said figures showing the geographical concentration of affluence and high incomes in London (the capital had at least a third of the UK’s top 1 per cent) ‘may be one reason why many of those on high incomes don’t realise quite how much higher their incomes are than the average’. The Golden Goose An academic geographer, who should have known better, blamed London’s ‘monstrous predominance’. But the capital was itself hugely divided. Poverty characterised Tower Hamlets, Newham and Dagenham, and to millions of its struggling denizens it did not feel like the streets were paved with gold. London had the highest rate of child poverty of any English region; payday loans were nowhere more rife than in Croydon. The City of London, for better or worse, continued to generate not just a large slice of GDP, but also the UK’s external earnings, without which the economy would have looked a lot worse. The ONS confirmed that since 2010, three regions – London, the south-east and east – took in more tax revenue than was spent there, and the gap between them and the rest of the UK was stark.


pages: 504 words: 143,303

Why We Can't Afford the Rich by Andrew Sayer

accounting loophole / creative accounting, Albert Einstein, anti-globalists, asset-backed security, banking crisis, banks create money, basic income, Boris Johnson, Bretton Woods, British Empire, business cycle, call centre, capital controls, carbon footprint, collective bargaining, corporate raider, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, crony capitalism, David Graeber, David Ricardo: comparative advantage, debt deflation, decarbonisation, declining real wages, deglobalization, deindustrialization, delayed gratification, demand response, don't be evil, Double Irish / Dutch Sandwich, en.wikipedia.org, Etonian, financial innovation, financial intermediation, Fractional reserve banking, full employment, G4S, Goldman Sachs: Vampire Squid, high net worth, income inequality, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, Isaac Newton, James Dyson, job automation, Julian Assange, Kickstarter, labour market flexibility, laissez-faire capitalism, land value tax, low skilled workers, Mark Zuckerberg, market fundamentalism, Martin Wolf, mass immigration, means of production, moral hazard, mortgage debt, negative equity, neoliberal agenda, new economy, New Urbanism, Northern Rock, Occupy movement, offshore financial centre, oil shale / tar sands, patent troll, payday loans, Philip Mirowski, plutocrats, Plutocrats, popular capitalism, predatory finance, price stability, pushing on a string, quantitative easing, race to the bottom, rent-seeking, Ronald Reagan, shareholder value, short selling, sovereign wealth fund, Steve Jobs, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transfer pricing, trickle-down economics, universal basic income, unpaid internship, upwardly mobile, Washington Consensus, wealth creators, WikiLeaks, Winter of Discontent, working poor, Yom Kippur War, zero-sum game

If the debts were to be cancelled – or ‘forgiven’, as they used to say, as if being in debt were a sin – those prudent lenders, those financial benefactors, would lose out; worse, the debtors would not learn their lesson, and they would soon come to expect to be subsidised by others! This is how many people think about debt. In the words of Nicholas Mirzoeff, a New York University professor active in the Occupy Wall Street movement, Debt has become the means of subjecting everyone – from sovereign nations to homeowners and victims of payday loan sharks – to a mixture of ersatz morality and threats. Pay your debts or else you’re a bad person or bad country, and so bad things will happen to you.35 By such means, creditors maintain ideological as well as economic dominance. On the other hand, precisely because ‘debt’ has a negative tone, we may prefer to think of its positive flip-side, ‘credit’. The consumer finance industry has played this option brilliantly.

Daily interest payments on personal debt are £162 million.49 To their cost, many people do not realise how high rates of interest can be: high or ‘usurious’ rates of interest have become common for consumer credit, with some store cards charging rates of interest well above 20% per year. In Britain the annual percentage rate of interest on Homebase and Dorothy Perkins cards in 2014 was 29.9%.50 £1.5 billion of transactions are made with plastic cards every day. So-called payday loans – small loans for short periods of time – are in a league of their own, incurring enormous rates of interest – Ferratum charges a typical Annual Percentage Rate of interest of 2,591%, while Wonga, the highest-profile payday lender in the UK, charges 5,853%.51 That might sound downright nasty, but Wonga advertises its loans through television commercials featuring puppets of loveable, funny old people – Betty, Earl and Joyce – making small talk.

Those in the next 10% get roughly as much interest as they pay out, while those in the top 10% get more than they pay out, and within that group the richest of course enjoy the biggest surplus (Figure 5.1). In Britain, the Positive Money researchers estimate that only the top 10% get more in interest than they pay out, and of course it’s the 1% who get the most.56 This redistribution through interest on debt is a major cause of inequality. Interest payments made by people on their mortgages, credit cards, car loans, payday loans and so on provide banks and other financial institutions with a major source of unearned income to ‘invest’ in a host of ways, often by re-lending it to others to extract still more. Similarly: Government debt . . . can be thought of as a means for upward redistribution of income, from ordinary taxpayers to rich bondholders. Instead of taxing rich people, governments borrow from them, and pay them interest for the privilege.


pages: 667 words: 149,811

Economic Dignity by Gene Sperling

active measures, Affordable Care Act / Obamacare, autonomous vehicles, basic income, Bernie Sanders, Cass Sunstein, collective bargaining, corporate governance, David Brooks, desegregation, Detroit bankruptcy, Donald Trump, Double Irish / Dutch Sandwich, Elon Musk, employer provided health coverage, Erik Brynjolfsson, Ferguson, Missouri, full employment, gender pay gap, ghettoisation, gig economy, Gini coefficient, guest worker program, Gunnar Myrdal, housing crisis, income inequality, invisible hand, job automation, job satisfaction, labor-force participation, late fees, liberal world order, longitudinal study, low skilled workers, Lyft, Mark Zuckerberg, market fundamentalism, mass incarceration, mental accounting, meta analysis, meta-analysis, minimum wage unemployment, obamacare, offshore financial centre, payday loans, price discrimination, profit motive, race to the bottom, RAND corporation, randomized controlled trial, Richard Thaler, ride hailing / ride sharing, Ronald Reagan, Rosa Parks, Second Machine Age, secular stagnation, shareholder value, Silicon Valley, single-payer health, speech recognition, The Chicago School, The Future of Employment, The Wealth of Nations by Adam Smith, Toyota Production System, traffic fines, Triangle Shirtwaist Factory, Uber and Lyft, uber lyft, union organizing, universal basic income, War on Poverty, working poor, young professional, zero-sum game

Annie Waldman, “How a For-Profit College Targeted the Homeless and Kids with Low Self-Esteem,” ProPublica, March 18, 2016, https://www.propublica.org/article/how-a-for-profit-college-targeted-homeless-and-kids-with-low-self-esteem. 97. See “Exhibit 27,” Villalba et al. v. ITT ESI et al., January 3, 2017, https://predatorystudentlending.org/wp-content/uploads/2018/02/Exhibit-27-Description-of-how-ITT-prevented-other-opportunities-473-statements.pdf. 98. In the thirty-six states that have payday loans available, as of early 2016. Pew Charitable Trusts, “Payday Loan Facts and the CFPB’s Impact,” January 14, 2016, https://www.pewtrusts.org/en/research-and-analysis/fact-sheets/2016/01/payday-loan-facts-and-the-cfpbs-impact. 99. Desmond documented how landlords in poor neighborhoods refuse to make repairs even when conditions are dangerous, knowing that their tenants are desperate for cheap rent and housing stability and will be reluctant to leave. If tenants withhold rent in order to prompt the landlord to take action, oftentimes the landlord will simply evict them.

Annie Waldman at ProPublica brought to light the case of a former foster care youth with learning disabilities who was misled into taking out $6,000 in student loans, for a program that she would not complete, which was sent to collections, ultimately destroying her credit score and then preventing her from being able to get affordable housing for herself and her two-year-old child.96 In a class-action suit against ITT Technical Institute, 473 students submitted statements that detailed how the debt they accumulated while there prevented them from achieving life goals ranging from getting a better education to having children.97 Abusive payday lending is another example. Millions of workers simply do not earn enough or see such fluctuations in their wages that an unexpected expense of several hundred dollars—say, to repair a car that is needed to keep a job or to fix a hot-water heater—can leave an individual with no other options but to take out an abusive payday loan with effective interest rates that average nearly 400 percent.98 That can lead to an inescapable debt trap that leads to major life setbacks. Landlord exploitation can similarly lead to catastrophic consequences for families. Abuse by landlords of vulnerable families can be among the most devastating assaults on economic dignity imaginable.99 This is why the existence of a permanent federal agency, the Consumer Financial Protection Bureau (CFPB), signed into law by President Obama in 2011 and spearheaded by two decades of advocacy by Elizabeth Warren against predatory financial behavior, is so critical.


pages: 383 words: 108,266

Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions by Dan Ariely

air freight, Al Roth, Bernie Madoff, Burning Man, butterfly effect, Cass Sunstein, collateralized debt obligation, computer vision, corporate governance, credit crunch, Daniel Kahneman / Amos Tversky, David Brooks, delayed gratification, endowment effect, financial innovation, fudge factor, Gordon Gekko, greed is good, housing crisis, IKEA effect, invisible hand, lake wobegon effect, late fees, loss aversion, market bubble, Murray Gell-Mann, payday loans, placebo effect, price anchoring, Richard Thaler, second-price auction, Silicon Valley, Skype, The Wealth of Nations by Adam Smith, Upton Sinclair

For people who are already in financial distress, this is clearly not going to be easy to accomplish, nor am I naive enough to think that we can completely eliminate the problem of the financial planning fallacy. But we can guard ourselves against the bumps in the financial road by putting aside some money to give us a cushion, and by so doing we might be able to put a dent in the planning-fallacy problem and make it less acute. Finally, I think that punitive finance practices—including high-interest credit cards, car title loans, payday loans,* and the like—that prey upon those with the fewest resources have to be controlled. It is more appropriate, fair, and better for the economy, as a whole, if we spread the cost of financial services such as checking accounts, credit cards, and insurance among all customers rather than forcing those with fewer resources and fewer options to carry a large part of the burden. At the end of the day we have to realize that when we financially squeeze people who don’t have much financial juice in them, it hurts all of us

., 205–6 “No Child Left Behind” policy, 85 Norton, Mike, 135 nucleus accumbens, 203, 208 O oaths, honesty and, 208–9, 211–13, 215 Obama, Barack, 323–24 Ofek, Elie, 159–60, 338 online auctions, 135–36 open-source software, 81 options, 139–53 abundance of, in modern democracy, 148 aversion to loss and, 148–49 college students’ choice of major and, 141–42 consciously closing, 150–51 “door game” and, 143–48 downside of, 140 important, vanishing of, 149 romantic relationships and, 142, 148, 150 sale prices and, 148–49 similar, choosing between, 151–53 Xiang Yu’s story and, 139–40 ordering food or drinks, 231–38 enjoyment of choices and, 232, 235–36, 237, 238 need for uniqueness and, 237–38 out loud vs. in private, 231–32, 233–36, 237–38 strategy for, 238 Orhun, Yesim, 136, 338–39 osteoarthritis, arthroscopic knee surgery and, 174–76 outsourcing, 81–82 overdraft fees, 301–2 ownership, 127–38 aversion to loss and, 134, 137, 138 Duke University basketball tickets and, 127–33 of points of view, 137–38 pride of, putting work into something and, 135 “trial” promotions and, 136–37 value in owner’s eyes increased by, 129–35, 265–69 virtual, online auctions and, 135–36 P pain, experience of, xxiii–xxiv, xxvi–xxvii expectation and, 179 painkillers: epidural, during childbirth, 103–4 price and efficacy of, 180–84 parking illegally, theory of rational crime and, 291–92 passion: underprediction of effect of, 98–99 see also arousal patient compliance, 260–64 Paulson, Henry, 304–6, 310, 311–12 pay, see compensation; salaries payday loans, 304 paying, pain of, restaurant meals with friends and, 248–50 pearls, 23–25 black, demand for, 24–25, 26 Pennebaker, James, 315, 316 Pepsi, taste tests of Coke and, 166–68 perception: expectations and, 155–72, 293–94; see also expectations; taste inherent biases in, xxvi–xxvii Perfectly Legal (Johnston), 204 personal lives: arbitrary coherence and, 43–45 separation of social and market norms and, 67–69, 75–76, 77–78 petroleum geologists, decline of ethics and values among, 211 pharmaceuticals, 210 conflicts of interest and, 293, 295 marketing hype and efficacy of, 190–91 price and efficacy of, 180–84, 190 Pittinsky, Todd, 169 Pittman, Bob, 60 placebo effect, 173–94 Airborne and, 275–78 author’s experience with Jobst suit and, 192–94 conditioning and, 179 energy drinks and, 184–87 faith in drug, procedure, or caregiver and, 179 Gerbi’s worm secretions and, 177 knowingly treating patients with, 187–90 marketing hype and, 186–87, 190–91 moral dilemmas in experiments on, 191, 194 mummy powder and, 177–78 origin of term, 176–77 pharmaceuticals and, 180–84, 190 power of suggestion and, 178–79 price and, 176, 180–87, 190 royal touch and, 188 surgical procedures and, 173–76, 178, 191 planning fallacy, 297–304 automobile insurance and, 299–301 FREE!

Of course, if you took the regular mortgage, you would owe nothing by the end of the 10 years and would also own your home, but if you took the interest-only mortgage, you would still owe $300,000 (at which point you will take on a new mortgage, and so on). * For a helpful perspective, see M. P. Dunleavy, “Making Frugality a Habit,” New York Times (January 9, 2009). * Since 1990, the number of places in the United States that give “payday” loans has grown faster than the rate at which Starbucks shops have opened.


pages: 256 words: 79,075

Hired: Six Months Undercover in Low-Wage Britain by James Bloodworth

Airbnb, Berlin Wall, call centre, clockwatching, collective bargaining, congestion charging, credit crunch, deindustrialization, Fall of the Berlin Wall, gig economy, Jeff Bezos, low skilled workers, Network effects, new economy, North Sea oil, Panopticon Jeremy Bentham, payday loans, post-work, profit motive, race to the bottom, reshoring, Silicon Valley, Travis Kalanick, Uber for X, working poor, working-age population

Waiting a week is bad enough; waiting an entire month is an intolerable burden that throws people into dire straits and only encourages the opportunists who prey on poverty’s perpetual victims. Because the job centre does not cover the period from when you get a job until the point at which you are actually paid, there is always a window in which getting hold of things ‘on tick’ is the only way to maintain a decent standard of living. It is this sort of thing which has fuelled the parasitic payday loan industry, the modern-day equivalent of the loan sharks who at one time would stalk ground-down estates in order to squeeze money out of their impoverished clients with an army of threatening enforcers. One of Britain’s biggest payday lenders increased its profits thirty-two-fold in the years after the 2008 recession, while nine of the ten biggest payday lenders saw their turnover double in the three years after 2010.9 Since then, the industry has been reined in somewhat by tighter legislation, but the desperation that leads many people to seek out high-interest loans in the first place remains.

.: These Poor Hands 23, 149, 190 courier firms 211, 215, 217, 223, 236, 244–7, 250, 256, 257 Cwm, Wales 147, 148, 187, 190, 195, 196, 197 Cwmbran, Wales 143 Daily Express 124–5 Daily Mail 66, 134, 188 Dan (bicycle courier) 248, 249 Dangerfield, George 72 Davies, Idris 148–9 Gwalia Deserta (Wasteland of Wales) 148 ‘The Angry Summer’ 174 debt 62, 69, 146, 151, 153 Deliveroo 215, 217, 223, 250, 256, 257 democratic socialists 192 Department for Work and Pensions 133 Dickens, Charles 29, 205, 210, 249; Hard Times 138–9 Disclosure and Barring Service (DBS) 88–90, 109–10, 214 Dorothy (housemate of JB) 203, 204–5 DriveNow 217 Dropit 217 Eastern Europe, migrant workers from 11, 13, 15, 21, 24, 26–7, 30, 32, 33, 34, 45, 57, 61–2, 75, 114–16, 128–9, 154, 203–4, 260–1 see also under individual nation name Ebbw Vale, Wales 147, 149, 154; legacy of de-industrialisation in 187–200 Elborough, Travis 93 emergency housing 96 employment agencies 1, 16, 19, 20, 23, 37, 38, 39, 40, 41, 42, 43, 56, 65–6, 70, 72, 73, 82, 86, 127, 130, 158, 189, 194 see also under individual agency name Employment and Support Allowance (ESA) 248 employment contracts/classification: Amazon 19–20, 53, 58 care sector 87–8, 107–8, 116 Uber 214–15, 222, 229–35, 243, 245, 250–2, 257 zero-hours see zero-hours contracts employment tribunals 38, 229–30, 243–4 English seaside, debauchery and 92–3 Enterprise Rent-A-Car 214 ESOL (English for Speakers of Other Languages) programmes 115–16 European Economic Community (EEC) 195 European Referendum (2016) 61, 195–6 Evening Standard 208, 241 Express & Star 59–60 Fabian Society 109 Farrar, James 229–31, 232, 233, 234, 236, 238, 240, 241–2, 250, 254, 255–6 Fellows of the Academies of Management 17 Fernie, Sue 182 financial crisis (2008) 1, 2, 45, 125, 195, 209 Flash (former miner) 165–8, 170, 171–2, 174, 175, 176–8, 179, 188, 196 Fleet News 246 Foot, Michael 149 football 56, 58, 92, 94, 97, 98, 126, 135, 169 fruit picking 61 FTSE 123, 262 Gag Mag 122 Gallagher, Patrick 246 Gary (homeless man, Blackpool) 96–104, 105 Gaz (Gag Mag seller, Blackpool) 122 GDP 146 General Election (2015) 109 General Strike (1926) 148, 149, 173 gentrification 219 Geoff (former miner) 189, 190, 191, 193 ‘gig’ economy 2, 208–10, 217–18, 232, 236, 242, 243–4, 248, 249–50, 252, 257 see also Uber Gissing, George: New Grub Street 64 GMB union 36 grammar schools 261 Guardian 5, 235 Hamstead Colliery, Great Barr 169 Hazel (home carer) 110–11, 114, 115, 116, 117, 119 Heller, Joseph: Catch-22 235–6 Hemel Hempstead 54, 70 Henley, William Ernest: ‘England, My England’ vii Hoggart, Richard: The Uses of Literacy 45 home care worker (domiciliary care worker): Disclosure and Barring Service (DBS) checks 88–90, 109–10 employment contracts 87–8, 107–8, 116, 118, 120 length of home care visits 108–9, 110 local authority budget cuts and 107–10 MAR (Medication Administration Record) sheets 114, 115 migrant workers as 114–16 negligent 86–7 privatisation of social care and 106–8, 109 recruitment 82–4 ‘shadowing’ process 88, 109–10 societal view of 106 staffing crisis 85–6, 119 suicide rate among 100 typical day/workload 110–14, 118 unions and 88 view job as vocation 86–7 wages/pay 107–8, 117, 118–19, 159 Home Instead 119 homelessness 95–105, 138, 187, 208 hostels 95, 96, 101, 102 housing/accommodation: Amazon workers, Rugeley 20–2, 24–6 Blackpool 80, 124, 137–8 buy-to-let housing market 24 emergency housing 96 homelessness and 95, 96, 101, 102, 137–8 hostels 95, 96, 101, 102 inability to buy 62 landlords and 12, 21, 24, 39, 67, 69, 95–6, 137–8, 164, 204, 206, 258 London 203–8 migrant workers and 20–2, 24–6, 197–8 social housing 62, 206 Swansea 124, 150 housing benefit 96, 137–8, 248 immigration 26–7, 61, 115–16, 128–9, 144, 193, 197–9, 236, 259–61 see also migrant workers indeed.co.uk 83–4 independent contractors 209, 248, 251–2 Independent Workers Union of Great Britain (IWGB) 230, 257 inequality 18, 73, 123, 125, 207–8, 226, 238, 262, 263 inflation 2, 122 job centres 19, 96, 133–6, 139–40, 156, 158 Joe (housemate of JB) 22 John Lewis 23, 83 Joseph Rowntree Foundation 70, 159 June (call centre employee) 181–2, 183, 184 Kalanick, Travis 215, 228, 229, 233, 235 Kelly, Kath 66 Khan, Sadiq 256 Koestler, Arthur: The God that Failed 228 Labour Party 7, 57, 59, 61, 109, 144, 149, 150, 173, 174 Ladbroke Road, Notting Hill, London 219 Lamb, Norman 109 Lancashire Evening Post 104–5 landlords, private 12, 21, 24, 39, 67, 69, 95–6, 137–8, 164, 204, 206, 258 Lea Hall Colliery, Staffordshire 31–2, 54, 55, 56, 57 Lea Hall Miners’ Social Club, Staffordshire 55, 56, 74 Len (step-grandfather of JB) 143–4 Lili (London) 203–4 living wage 1, 85, 160, 246 Lloyd George, David 172 loan sharks 151, 156 local councils 104–5, 164 London 201–57 accommodation/housing in 65, 203–8, 218 gentrification in 219 ‘gig’ economy in 208–57, 263 homelessness in 95 migrant labour in 205–6, 213, 239 wealth divide in 207–8, 238 London Congestion Charge 254 London Courier Emergency Fund (LCEF) 247 London Metropolitan Police 90 London, Jack 205 low-skilled jobs, UK economy creation of 153 Lydia (Amazon employee) 70 Macmillan, Harold 3 manufacturing jobs, disappearance of 59, 139 Marine Colliery, Cwm, Wales 190 Mayhew, Henry 4, 205 McDonald’s 52, 68, 83 Merkel, Angela 196 Metcalf, David 182 middle-class 6, 39, 51, 67, 68, 69, 72–3, 74, 75, 149, 178, 205, 258, 259, 260, 262, 263 migrant labour: Amazon use of 11, 12, 13, 15, 20, 21, 22–7, 30, 32, 33, 34, 44, 45, 46, 51, 53, 57, 61–2, 65, 71–5, 258, 260–1 care home workers 114–16 ‘gig’ economy and 203–6, 213, 239 restaurant workers 154 retail sector and 128–9 Miliband, Ed 109 mining see coal mining Miners’ Federation of Great Britain (MFGB) 173 Miners’ Strike (1984–5) 3, 174–7 minimum wage 1, 7, 55, 62, 84, 107, 108, 118, 135, 155, 159, 173, 189–90, 209, 212, 235, 236, 245, 250, 262 Morecambe, Lancashire 137–8 Morgan family 156–8 Morgan, Huw: How Green Was My Valley 147 Moyer-Lee, Jason 257 National Coal Board (NCB) 54, 170, 171 National Institute for Health and Care Excellence (NICE) 108 National Union of Miners (NUM) 174, 176 New York Times 222 NHS (National Health Service) 106, 108, 247 Nirmal (Amazon employee) 45–6, 51 Norbert (Amazon employee) 71–5 nostalgia 3, 60, 93–4, 216 Nottingham 2, 151–2 objectivism 228 oil crisis (1973) 122–3 Oliver, Jamie 154 Orwell, George 56, 169 Palmer, William 29 pay see wages and under individual job title and employer name payday loans 156 PayPal 216 Pimlico Plumbers 251–2 platform capitalism 215 PMP Recruitment 19, 189–90 Poland, migrant workers from 128–9, 130, 135, 197–8 ‘poor, the’ 145 Port Talbot, Wales 166, 176, 190, 196 ‘post-truth’ discourse 199 ‘post-work’ world 165 poverty: Blackpool and 132, 137 class and 4 darkness and 96 diet/weight and 137 ease of slipping into 5 Eastern Europe and 26 monthly salary and 156 as a moral failing 188–9 press treatment of 66–7 time and 67 working poor living in 194 Preston, Lancashire 100, 105, 138–9 private school system 123 progressive thought 262 Public Accounts Committee (PAC) 107 Putin, Vladimir 71 Rand, Ayn 228–9, 235, 236; The Fountainhead 228, 229 recession (2008) 1, 45, 104, 121, 125, 156 ‘regeneration’ 55, 60–1, 146 rent-to-own 157–8 retirement, working in 58–9 Reve, Gerard: The Evenings 160 Robin (Cwm) 196, 197 Rochelle (home care worker) 117–19 Romania, migrant workers from 11, 12, 13, 15, 20, 21, 22–7, 32, 44, 46, 51, 53, 61, 65, 71–5, 203, 206, 258 Ron (former miner) 170, 195 Royal London 59 Royal London pub, Wolverhampton 71 Royal Mail 151 Rugeley, Staffordshire 28–35 Amazon distribution centre in 11–76, 79, 86, 119, 127, 128, 159, 258 decline of coal mining industry in 31–2, 54–6, 57, 169 disappearance of manufacturing jobs from 54–63 high street 28–35 immigration and 30–4, 193–4 Tesco and 58–9, 62–3 Scargill, Arthur 175 scientific management theories 17 Scotland Yard 90 self-employment: ’gig’ economy and 214–15, 222, 229–30, 234, 243–4, 245, 246, 249, 250–1 increase in numbers of workers 2, 209 ‘independent contractors’ and 209, 248, 251–2 Selwyn (former miner) 175, 178, 179, 263–4 Senghenydd, Glamorgan pit explosion (1913) 169–70 Shelter 104 Shirebrook Colliery, Derbyshire 55 Shu, William 250 Silicon Valley, California 210, 232 Sillitoe, Alan: Saturday Night and Sunday Morning 2, 3, 94 Sky Sports News 126 social democracy 3, 263 social housing 62, 206 socialism 7, 56, 131, 144, 148, 149, 173 social mobility 58, 199, 261 South Wales Miners’ Museum, Afan Argoed 166, 196 South Wales Valleys 141–200 accommodation in 150, 197 Amazon in 145–6 beauty of 148 call centre jobs in 153–64, 180–6 coal industry and 143–4, 147–9, 165–79, 180, 188, 189, 190–1, 193, 195, 196 immigration and 197–9 JB’s family history and 143–4 legacy of de-industrialisation in 187–200 nostalgia and 147 radical history of 149–50 see also under individual place name ‘spice’ 95 Sports Direct 55 squatting 96, 99 steel industry 176, 180, 188, 189, 190, 196–7 Steven (housemate of JB) 124, 126, 127–31 Stoke-on-Trent 58–9 suicide 99–100 Sunday Times 175 ‘Best Companies to Work For’ 154 Rich List 125 Swansea, Wales 145–6, 150–2, 154–64, 176, 178, 197, 205 Tata Steel 190 tax 65, 69, 70, 118, 146, 158, 159, 163, 164, 212, 229, 244, 246, 248, 251, 255 Taylor, Frederick W.: The Principles of Scientific Management 17 Tesco 35, 57, 58–9, 62–3 Thatcher, Margaret 122, 123, 146, 174–5, 193, 207, 263–4 Thorn Automation 57 Thorn EMI 59 trade unions: Amazon and 36 B&M and 130, 131 call centres and 160, 181, 184–5, 186 care sector and 88 coal industry decline and 55–6, 173, 174, 263–4 decline of 2, 3, 35 ‘gig’ economy and 230, 257, 261 objectivism and 228 oil crisis (1973) and 122 Thatcher and 123, 174, 193, 263–4 Wales and 144, 149 see also under individual union name Trades Union Congress (TUC) 173 transgender people 40–1 Transline Group 19, 20, 37, 38, 39, 40, 41, 43, 65–6, 86 Transport for London (TFL) 211, 212–13, 214, 233, 254, 256 Tredegar Workmen’s Medical Aid Society 247 Trefil, Wales 149 Trump, Donald 7 Uber 207, 211–57 ‘account status’ 221 clocking in at 218 corporation tax and 229 customers 221, 222, 226–7, 237–41, 244, 257 driver costs/expenses 214, 217, 233, 241, 246, 253–5 driver employment classification/contract 214–15, 222, 229–35, 243, 245, 250–2, 257 driver hours 221, 226, 230, 232, 233, 236, 246, 253, 255 driver numbers 211–13, 233–5 driver wages/pay 212, 218, 221, 229–30, 235, 236, 237, 240, 241, 244, 246, 252–5 employment tribunal against (2016) 229–34 flexibility of working for 213–14, 218, 230–3, 248, 250–1 James Farrar and see Farrar, James migrant labour and 213, 236 ‘Onboarding’ class 224–5, 238, 241, 256 opposition to 215–17 philosophy of 228–9, 235, 236 psychological inducements for drivers 222–3 rating system 225–7, 232, 238, 239, 243, 253 rejecting/accepting jobs 221–2, 224–5 ride process 219–21 surge pricing 237, 238, 253 TFL and 211, 212–13, 214, 233, 254, 256 Travis Kalanick and see Kalanick, Travis UberEATS 256 UberPOOL 225, 240–2, 253, 255–6 UberX 212, 225, 240, 241, 255 VAT and 229 vehicle requirements 214 unemployment 2, 32, 36, 62, 121–3, 132, 138, 148, 157, 172, 178, 179, 189–95, 199, 218 Unison 88, 108 Unite 55, 160 United Private Hire Drivers 230, 257 university education 3, 6, 61, 62, 123, 150–1, 152, 153–4 USDAW 130–1 Vettesse, Tony 138 Vicky (care sector supervisor) 86, 87 Wade, Alan 121, 123–4 wages: Amazon 18, 19, 37–9, 42–3, 65–6, 68, 69, 70, 159 call centre 155–6, 158–60, 164, 180 care sector 107–8, 117, 118–19, 159 living wage 1, 85, 160, 246 minimum wage 1, 7, 55, 62, 84, 107, 108, 118, 135, 155, 159, 173, 189–90, 209, 212, 235, 236, 245, 250, 262 Uber 212, 218, 221, 229–30, 235, 236, 237, 240, 241, 244, 246, 252–5 wage stagnation 2 see also under individual employer, job and sector name Wealth and Assets Survey 207–8 wealth inequality 18, 73, 123, 125, 207–8, 238 Wells, H.


pages: 267 words: 72,552

Reinventing Capitalism in the Age of Big Data by Viktor Mayer-Schönberger, Thomas Ramge

accounting loophole / creative accounting, Air France Flight 447, Airbnb, Alvin Roth, Atul Gawande, augmented reality, banking crisis, basic income, Bayesian statistics, bitcoin, blockchain, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, Cass Sunstein, centralized clearinghouse, Checklist Manifesto, cloud computing, cognitive bias, conceptual framework, creative destruction, Daniel Kahneman / Amos Tversky, disruptive innovation, Donald Trump, double entry bookkeeping, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Ford paid five dollars a day, Frederick Winslow Taylor, fundamental attribution error, George Akerlof, gig economy, Google Glasses, information asymmetry, interchangeable parts, invention of the telegraph, inventory management, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, job satisfaction, joint-stock company, Joseph Schumpeter, Kickstarter, knowledge worker, labor-force participation, land reform, lone genius, low cost airline, low cost carrier, Marc Andreessen, market bubble, market design, market fundamentalism, means of production, meta analysis, meta-analysis, Moneyball by Michael Lewis explains big data, multi-sided market, natural language processing, Network effects, Norbert Wiener, offshore financial centre, Parag Khanna, payday loans, peer-to-peer lending, Peter Thiel, Ponzi scheme, prediction markets, price anchoring, price mechanism, purchasing power parity, random walk, recommendation engine, Richard Thaler, ride hailing / ride sharing, Sam Altman, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley startup, six sigma, smart grid, smart meter, Snapchat, statistical model, Steve Jobs, technoutopianism, The Future of Employment, The Market for Lemons, The Nature of the Firm, transaction costs, universal basic income, William Langewiesche, Y Combinator

Another new entrant, Upstart, is a fintech that uses educational data in addition to traditional credit scores to assess credit risk and capture the risky end of the credit market. And fintechs such as Avant and ZestFinance (founded by former Google CIO Douglas Merrill) combat payday loan-sharking. By using machine learning and analyzing a huge number of data points per credit applicant, they believe they can calculate risk far better than traditional banks and thus can offer loans to individuals who otherwise would be at the mercy of the payday loan industry. In 2016, Chinese Internet giant Baidu invested in ZestFinance, with the aim of bringing data-rich consumer credit scoring to China. Fintech start-ups also disrupt traditional investment management. For example, Stash has been pushing to break apart the share as the smallest possible unit of investment, instead enabling their customers to buy fractions of a share.


pages: 230 words: 76,655

Choose Yourself! by James Altucher

Airbnb, Albert Einstein, Bernie Madoff, bitcoin, cashless society, cognitive bias, dark matter, Elon Musk, estate planning, Mark Zuckerberg, money market fund, Network effects, new economy, PageRank, passive income, pattern recognition, payday loans, Peter Thiel, Ponzi scheme, Rodney Brooks, rolodex, Saturday Night Live, sharing economy, short selling, side project, Silicon Valley, Skype, software as a service, Steve Jobs, superconnector, Uber for X, Vanguard fund, Y2K, Zipcar

Guess what domain name belonged to most of the people who bought the book using bitcoin: amazon.com. So whether or not bitcoin is the winner, I have no idea. But someone will win, and many people are looking at ways to do this. Payday loans are another phenomenon in financial technology. There’s a massive alternative banking industry comprised of people who, for various reasons, don’t use traditional banks. I’m not sure why they’ve opted to do this. Maybe they don’t trust the banks or maybe the banks don’t trust them. But here’s something that will never go away: people who live paycheck to paycheck, a rising phenomenon, often need money the day or days before their check arrives. What do they do? They go to a payday loan company that might charge them one dollar for a hundred-dollar check even though their paycheck may be there tomorrow. That’s 365 percent interest. A payday lender charges much higher interest rates than the banks.


pages: 444 words: 138,781

Evicted: Poverty and Profit in the American City by Matthew Desmond

affirmative action, Cass Sunstein, crack epidemic, Credit Default Swap, deindustrialization, desegregation, dumpster diving, ending welfare as we know it, fixed income, ghettoisation, glass ceiling, Gunnar Myrdal, housing crisis, informal economy, Jane Jacobs, jobless men, Kickstarter, late fees, mass incarceration, New Urbanism, payday loans, price discrimination, profit motive, rent control, statistical model, superstar cities, The Chicago School, The Death and Life of Great American Cities, thinkpad, upwardly mobile, working poor, young professional

In many cases, this annual benefit is as much a boost to landlords as to low-income working families.44 In fixating almost exclusively on what poor people and their communities lack—good jobs, a strong safety net, role models—we have neglected the critical ways that exploitation contributes to the persistence of poverty. We have overlooked a fact that landlords never have: there is a lot of money to be made off the poor.45 The ’hood is good. Exploitation thrives when it comes to the essentials, like housing and food. Most of the 12 million Americans who take out high-interest payday loans do so not to buy luxury items or cover unexpected expenses but to pay the rent or gas bill, buy food, or meet other regular expenses. Payday loans are but one of many financial techniques—from overdraft fees to student loans for for-profit colleges—specifically designed to pull money from the pockets of the poor.46 If the poor pay more for their housing, food, durable goods, and credit, and if they get smaller returns on their educations and mortgages (if they get returns at all), then their incomes are even smaller than they appear.

Daniel Patrick Moynihan, The Negro Family: The Case for National Action (Washington, DC: US Department of Labor, 1965). 45. This point is indebted to Satter’s Family Properties. 46. On rip-off schemes, see Alan Andreasen, The Disadvantaged Consumer (New York: The Free Press, 1975); Michael Lewis, The Big Short: Inside the Doomsday Machine (New York: Norton, 2010), 20; David Caplovitz, The Poor Pay More (New York: The Free Press, 1967). On payday loans, see Pew Charitable Trust, Payday Lending in America: Who Borrows, Where They Borrow, and Why (Washington, DC: Pew, July 19, 2012); Gary Rivlin, Broke, USA: From Pawnshops to Poverty, Inc. (New York: Harper, 2010). 47. On markets being embedded in state and social relations, see Mark Granovetter, “Economic Action and Social Structure: The Problem of Embeddedness,” American Journal of Sociology 91 (1985): 481–510; Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time (Boston: Beacon Press, 2001 [1944]).


pages: 263 words: 80,594

Stolen: How to Save the World From Financialisation by Grace Blakeley

"Robert Solow", activist fund / activist shareholder / activist investor, asset-backed security, balance sheet recession, bank run, banking crisis, banks create money, Basel III, basic income, battle of ideas, Berlin Wall, Big bang: deregulation of the City of London, bitcoin, Bretton Woods, business cycle, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, collective bargaining, corporate governance, corporate raider, credit crunch, Credit Default Swap, cryptocurrency, currency peg, David Graeber, debt deflation, decarbonisation, Donald Trump, eurozone crisis, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, fixed income, full employment, G4S, gender pay gap, gig economy, Gini coefficient, global reserve currency, global supply chain, housing crisis, Hyman Minsky, income inequality, inflation targeting, Intergovernmental Panel on Climate Change (IPCC), Kenneth Rogoff, Kickstarter, land value tax, light touch regulation, low skilled workers, market clearing, means of production, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, negative equity, neoliberal agenda, new economy, Northern Rock, offshore financial centre, paradox of thrift, payday loans, pensions crisis, Ponzi scheme, price mechanism, principal–agent problem, profit motive, quantitative easing, race to the bottom, regulatory arbitrage, reserve currency, Right to Buy, rising living standards, risk-adjusted returns, road to serfdom, savings glut, secular stagnation, shareholder value, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, the built environment, The Great Moderation, too big to fail, transfer pricing, universal basic income, Winter of Discontent, working-age population, yield curve, zero-sum game

So, like many of us do, he left it for a while — thinking that maybe he’d be able to make enough that week to work it off. Before he even got close, he started receiving threatening letters from the council’s bailiffs. They informed him that his late payment meant that his fine had doubled — and it kept doubling. Before long, Jerome was in £1,000 worth of debt to Camden Council. Now completely desperate, he took out an extremely high-interest payday loan to pay off his debts to the council. By this point, he was paying out more in expenses and debt repayments every week than he was earning at CitySprint. A few days later, the bailiffs returned to clamp Jerome’s £400 bike. The next day, his older brother found his body in the woods where they used to play as children. Jerome Rogers, nineteen years old and with no history of mental illness, had killed himself because he was overwhelmed by debt.

In this way, middle-earners were able to acquire elite identities through wealth, even as wealth has become much more concentrated amongst the top 1%, who have also become much less socially mobile than ever before. On the other hand, those without access to such wealth and capital gains could still buy into the new consumer culture by taking out unsecured credit through credit cards, overdrafts, and payday loans. Corporations also started jumping on the bandwagon by offering consumers low-interest credit to purchase cars and consumer durables. Over time, the differential experiences of finance-led growth led to a divergence between the economic experience of the property-owning classes and those of everyone else. For the wealthy, debt is a luxury. Access to interest-only or low-deposit mortgages has allowed many families to jump onto the property ladder and watch their wealth increase, transforming their class identity.


pages: 284 words: 92,387

The Democracy Project: A History, a Crisis, a Movement by David Graeber

Bretton Woods, British Empire, corporate personhood, David Graeber, deindustrialization, dumpster diving, East Village, feminist movement, financial innovation, George Gilder, John Markoff, Lao Tzu, late fees, Occupy movement, payday loans, planetary scale, plutocrats, Plutocrats, Ralph Nader, reserve currency, Ronald Reagan, seigniorage, too big to fail, trickle-down economics, unpaid internship, We are the 99%, working poor

In 2004, for example, those eighteen to twenty-four ended up paying 22 percent of their income on debt payments (this includes principal, but doesn’t include service charges, fees, and penalties)—with about a fifth paying more than 40 percent—and for twenty-five- to thirty-four-year-olds, the cohort most impacted by student loans, things were even worse: they spent an average of a quarter of their income on debts. And these figures are true of younger Americans as a whole, regardless of education. We need hardly speak of the fate of that roughly 22 percent of American households so poor they have no access to conventional credit at all, who have to resort to pawn shops, auto title, or payday loan offices that charge as much as 800 percent annual interest. And all this was true before the crash! In the immediate wake of 2008 everyone in America who had any means to reduce their debt, and hence, the amount of their income siphoned off to Wall Street, immediately began to do so—whether by frenetically paying off credit card debt, or walking away from underwater mortgages. This might give a sense of how dramatic was the change: Yet at the same time, certain types of loans had been set up in such a way that this really wasn’t possible.

As a result student loan debt continues to balloon at a giddy rate, the total amount owed having long since overtaken total credit card debt and other forms of debt as well: TOTAL DEBT BALANCE AND ITS COMPOSITION Mortgage 72% HE Revolving 5% Auto Loan 6% Credit Card 6% Student Loan 8% Other 3% *2011Q3 Total: 11.656 Trillion Aside from students, the other group stuck in the debt trap is the working poor—above all working women and people of color—who continue to see huge chunks of their already stagnating earnings culled directly by the financial services industry. They are often called the “subprimers,” since they are those most likely to have signed up for (or been tricked into) subprime mortgages. Having fallen victim to subprime mortgages with exploding adjustable rates, they are now faced with being harassed by collectors, having their cars repossessed, and, most pernicious of all, having to resort to payday loans for emergency expenses, such as those related to health care, since these are the Americans least likely to have meaningful health benefits. Those paydays operate with annual interest rates of roughly 300 percent a year. Americans in either of those overlapping categories—the working class and underemployed graduates with crippling student loans—are actually paying more of their income to Wall Street than they pay to the government in taxes.


Upstream: The Quest to Solve Problems Before They Happen by Dan Heath

Affordable Care Act / Obamacare, airport security, Albert Einstein, bank run, British Empire, Buckminster Fuller, call centre, cloud computing, cognitive dissonance, colonial rule, correlation does not imply causation, cuban missile crisis, en.wikipedia.org, epigenetics, illegal immigration, Internet of things, mandatory minimum, millennium bug, move fast and break things, move fast and break things, payday loans, Ralph Nader, RAND corporation, randomized controlled trial, self-driving car, Skype, Snapchat, subscription business, urban planning, Watson beat the top human players on Jeopardy!, Y2K

The harm is that the little ones crowd out the big ones. Imagine a single mother who can barely pay the bills each month and who has maxed out her credit card. Her kid needs $150 to play in a local basketball league. She can’t bear to say no—it’s one of the few healthy opportunities open to him in the neighborhood. But she doesn’t have the money and is still 10 days from her next paycheck. So she takes out a payday loan from the lender down the street. She’ll need to repay the loan in a month with 20% interest (the equivalent of a 240% APR). And if she doesn’t, it will roll over, and the interest will mount. It’s not a huge amount of money, but it might be enough extra debt to make her precarious finances topple. A financial advisor would say the woman has made a bad financial decision. But her son got his opportunity, and she has bought herself a few days or a few weeks of crucial maneuvering room.

Abby, who dealt with two missing security tags in three hours, didn’t think to ask, Why does this keep happening? The nurse who nabbed extra towels didn’t think, Hey, we’ve got a process problem here—we need a plan for handling three-day weekends. The nurses were tunneling. Their time was scarce; their attention was scarce. Grabbing towels from another department—which might cause that department to run out a few hours later—is roughly the equivalent of taking a payday loan. The bill will come due, but not right now. For the moment, the nurses can keep digging forward. Is the intent of this story to throw stones at nurses? Hardly. My guess is that if Anita Tucker had picked another group of professionals to shadow—lawyers or flight attendants or teachers—the results would have been about the same. And, by the way, think of how unnatural it would have been for those nurses to escape the tunnel.


pages: 359 words: 97,415

Vanishing Frontiers: The Forces Driving Mexico and the United States Together by Andrew Selee

Berlin Wall, call centre, Capital in the Twenty-First Century by Thomas Piketty, Donald Trump, energy security, Gini coefficient, guest worker program, illegal immigration, immigration reform, income inequality, income per capita, informal economy, job automation, low skilled workers, manufacturing employment, oil shale / tar sands, open economy, payday loans, Richard Florida, rolodex, Ronald Reagan, Silicon Valley, Silicon Valley startup, Steve Wozniak, Y Combinator

America Móvil, started by Carlos Slim, owns both Tracfone and Straight Talk, which dominate the pay-as-you-go cell phone market in the United States, where users purchase the airtime they need rather than sign a monthly contract. This model is particularly popular in Mexico, and Slim’s businesses originally targeted Mexican immigrants, but then the services caught on with younger cell phone users who didn’t want to be tied to a monthly plan. Mexico’s Grupo Electra owns Advance America, the leading check-cashing and payday-loan service in the United States, also serving lower-income Americans who rely on small loans to get them from paycheck to paycheck. By sheer coincidence, Advance America has one of its paycheck offices in Poplar Bluff, Missouri, right next to one of the city’s six or seven Mexican restaurants and not far from the Mid-Continent Nails factory. No one truly foresaw this outcome when NAFTA was first negotiated.

Kueski uses everything from neighborhood data to behavioral analytics to determine the creditworthiness of clients and then makes small online loans that range from 1,000 to 9,000 pesos (roughly $55 to $500). Most customers repay the loans within twenty-two days, and there is only a 12 percent default rate—most of which can be easily rescheduled for payment over a slightly longer period. “We want an experience where people can [access funds] quickly, simply, conveniently, transparently,” says Flores, and “in which the client is treated with respect.” It’s a sharp contrast to the way that payday-loan services and pawnshops work in Mexico. Surprisingly, he’s found that almost a quarter of the applications come from smallbusiness owners who need a loan to pay their employees on time. Technology innovation in Guadalajara was once mostly the province of large foreign-owned corporations, but today a growing number of Mexican-owned tech start-ups are taking hold. Jaime Reyes, the former HP general manager who now serves as the first secretary for innovation, science, and technology in the state of Jalisco, where Guadalajara is located, says that Mexican-owned companies now make up close to 40 percent of all tech companies, up from only 15 percent ten years ago.


pages: 375 words: 105,067

Pound Foolish: Exposing the Dark Side of the Personal Finance Industry by Helaine Olen

American ideology, asset allocation, Bernie Madoff, buy and hold, Cass Sunstein, Credit Default Swap, David Brooks, delayed gratification, diversification, diversified portfolio, Donald Trump, Elliott wave, en.wikipedia.org, estate planning, financial innovation, Flash crash, game design, greed is good, high net worth, impulse control, income inequality, index fund, London Whale, longitudinal study, Mark Zuckerberg, money market fund, mortgage debt, oil shock, payday loans, pension reform, Ponzi scheme, post-work, quantitative easing, Ralph Nader, RAND corporation, random walk, Richard Thaler, Ronald Reagan, Saturday Night Live, Stanford marshmallow experiment, stocks for the long run, too big to fail, transaction costs, Unsafe at Any Speed, upwardly mobile, Vanguard fund, wage slave, women in the workforce, working poor, éminence grise

This was not a problem of relative youth. Median income for Americans ages forty-five to fifty-four fell from $66,800 to $61,000 in 2010. Of course, the national savings rate was decreasing. How could it not? From 10 percent in the early 1980s it had fallen to near zero at the millennium and still continued to plunge as the 2000s rolled on and desperate Americans turned to credit cards, lines of home equity, payday loans…pretty much anything to keep up with the bills. In the period between 2000 and 2008, Americans’ borrowed home equity more than doubled, from $5.4 trillion to $11.2 trillion. Revolving and installment debt also almost doubled, from $1.4 trillion to $2.6 trillion. As college costs soared, student loan debt piled up, increasing from an average of $12,750 per borrower in 1996 to a record-breaking $27,200 for students graduating with the aid of loans in 2011.

Guess who had a plan?” Ramsey’s politics can best be described as muddled conservative. He appears regularly on Fox Business News (despite the cancellation of his show), proselytizes for supply-side economics, and in 2010 endorsed unsuccessful Republican candidate Zach Wamp for governor of Tennessee. At the same time, Ramsey despises industries that prey on the poor, and reserves special disgust for the payday loan business, calling them “scum-sucking bottom-feeding predatory people who have no moral restraint,” and repeatedly begs politicians to outlaw them. There’s no love lost for the banks, either, whom he regularly castigates for handing out credit cards and home mortgages to people who clearly did not have the means to pay back the debt. And he can sound like a breathless teenager in love for the first time when he discusses Elizabeth Warren and her fight to protect consumers against the ravages of the easy credit industry—something of an unusual position for someone who generally supports anti-big government candidates.


pages: 364 words: 104,697

Were You Born on the Wrong Continent? by Thomas Geoghegan

Albert Einstein, American Society of Civil Engineers: Report Card, banking crisis, Berlin Wall, Bob Geldof, collective bargaining, corporate governance, cross-subsidies, dark matter, David Brooks, declining real wages, deindustrialization, ending welfare as we know it, facts on the ground, Gini coefficient, haute cuisine, income inequality, John Maynard Keynes: Economic Possibilities for our Grandchildren, knowledge economy, knowledge worker, laissez-faire capitalism, low skilled workers, Martin Wolf, McJob, minimum wage unemployment, mittelstand, offshore financial centre, Paul Samuelson, payday loans, pensions crisis, plutocrats, Plutocrats, purchasing power parity, Ralph Waldo Emerson, Robert Gordon, Ronald Reagan: Tear down this wall, Saturday Night Live, Silicon Valley, The Wealth of Nations by Adam Smith, Thorstein Veblen, union organizing, Wolfgang Streeck, women in the workforce

And although I got better before I left, I was thrilled to come back to Chicago and go to the office. “Forgive me,” I said to everyone. And for the next four years I took no vacation. Yes, I had to admit: Germany was dark. But with no social democracy, it would have been a lot darker. 5 Clash of Civilizations Meanwhile, America had become dark. There was the nightmare of Bush v. Gore. We did not seem like a democracy. We had big tax cuts for the rich, and payday loans for the poor. Every day I went to Caffè Baci and read the Financial Times and would root for Germany and hope that, in terms of GDP, it would do a little better. Many a time, in the half hour for lunch, I would think: shouldn’t I be back over there pushing up GDP? I kept thinking, as I said, that in the 1930s people on the left went to die in Madrid. In the same way, it’s our duty to spend in Berlin.

Yes, just as they, as angels, cannot intervene in human affairs, so I, as a foreigner, also observe. I have to hold someone else’s coat. As to the future of the German model, they have to fight that fight. Yes, I might talk about “taking off my angel wings,” but it’s kind of ridiculous to get involved. It’s Europe. Besides, if I was stuck in a social democracy, I’d just have to play defense. In the U.S., I’ve the luck of getting to go on the attack. When I come back here and see a payday loan store offering loans at 365 percent, yes, I could weep. Yet it’s a thrill to know I can take off my wings. “Oh, we can’t have anything like Europe has, can we?” That’s what some say. It’s a fair question. I think it’s quite possible. I now have stopped rereading and underlining Streeck’s great essay, “German Capitalism: Does It Exist? Can It Survive?” Still, I recall his central, disheartening point that the German model, with its works councils and the rest, was simply too hard to copy in other countries.


pages: 468 words: 123,823

A People's History of Poverty in America by Stephen Pimpare

"Robert Solow", affirmative action, British Empire, car-free, clean water, cognitive dissonance, Columbine, Daniel Kahneman / Amos Tversky, deindustrialization, delayed gratification, dumpster diving, East Village, Frederick Winslow Taylor, George Gilder, hedonic treadmill, hiring and firing, Howard Zinn, illegal immigration, impulse control, income inequality, index card, Jane Jacobs, low skilled workers, Mahatma Gandhi, mass incarceration, meta analysis, meta-analysis, moral panic, Naomi Klein, New Urbanism, payday loans, Ralph Waldo Emerson, Ronald Reagan, The Bell Curve by Richard Herrnstein and Charles Murray, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, Thomas Malthus, union organizing, urban renewal, War on Poverty, white flight, working poor, Works Progress Administration

It was a grim, crowded little store smelling of camphor. There were some gloomy East Side people standing around. The walls were covered with strange objects: guitars, shovels, blankets, clocks; with lace curtains, underwear and crutches; all these miserable trophies of the defeat of the poor.75 While by 2003 there were still some 11,600 pawnshops in the United States, Caskey suspects that payday loan brokers are replacing them as the emergency resource of choice. Perhaps as many as 15 percent of all Americans had used these high-cost (but easily obtained) loans by 2004, paying annualized rates of 350 to 1,000 percent. There were ten thousand institutions in this lucrative business by 2001, increasingly owned by large corporations with multiple storefronts throughout the country. Those who use check cashers instead of bank accounts are charged as much as 3.5 percent for each check they cash, and pay $1.50 (and more) per money order; they are more likely to be younger, less educated, poorer, black, and Hispanic.

See National Welfare Rights Organization (NWRO) O’Beirne, Kate obesity rates occupation-based charities O’Connor, Stephen Olmstead, Frederick Law Operation Santa (New York letter-writing program) Orleck, Annelise orphanages/orphan asylums and African American children Brace’s “orphan trains,” and child labor demographics of orphan population Orshansky, Molly Orshansky method/Orshansky poverty line Orwell, George The Other America (Harrington) Ozark Hotel (Chicago) Packard, Elizabeth Paine, Thomas Parker, M.A. Parker, Star patronage pawnshops payday loans/check-cashing services Pease, Lewis Peguy, Charles Pennsylvania Gazette Pension Act (1818) pension programs and occupation-based charities Townsend’s movement for national old-age pension and veterans and widows A People’s History of the United States (Zinn) Perez, Marcello Personal Responsibility and Work Opportunity Reconciliation Act (1996). See also welfare reform “pesthouses,” Philadelphia colonial almshouses colonial debtor’s prisons colonial hospitals for the sick poor colonial-era distribution of wealth colonial-era poverty rates family homeless shelters late-eighteenth-century poor neighborhoods police round-ups of homeless men Pierce, Franklin Piven, Frances Fox Place, Jeff police harassment of the homeless political participation and diminished expectations of the poor and disenfranchised ex-felons and income inequality and poor people’s opinions of government and relief recipients The Poor Pay More (Caplovitz) poor whites, Southern during Civil War colonial immigrants as indentured servants and history of welfare in the American South and slavery poorhouses.


pages: 435 words: 120,574

Strangers in Their Own Land: Anger and Mourning on the American Right by Arlie Russell Hochschild

affirmative action, Affordable Care Act / Obamacare, Bernie Sanders, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, clean water, collective bargaining, Deep Water Horizon, desegregation, Donald Trump, ending welfare as we know it, equal pay for equal work, Exxon Valdez, feminist movement, full employment, greed is good, guest worker program, invisible hand, knowledge economy, McMansion, minimum wage unemployment, new economy, obamacare, oil shock, payday loans, Richard Florida, Ronald Reagan, school vouchers, Silicon Valley, sovereign wealth fund, Thorstein Veblen, urban sprawl, working poor, Yogi Berra

Given his dangerous work at Pittsburgh Plate Glass, he is happy to be alive. “All my co-workers from back then are dead; most died young,” he tells me as he slowly leads me through a tidy home toward the dining room table on which he has set coffee cups, coffee, cookies, and a large photograph album. Driving north from Lake Charles through southwest Louisiana to DeRidder, I had passed a miscellany of gas stations, Family Dollar stores, payday loan offices, diners, and lush, green rice fields—crayfish were sometimes cultivated in the wet canals between rows of rice—flat on all sides to the horizon. Some 200 miles west of DeRidder, on land bordering Texas, lay a vast pine wilderness, once a no-man’s-land where the legendary outlaws Bonnie and Clyde robbed and roamed. To the north lay soy, sugarcane, and bean fields, oil derricks nodding in the far distance.

Fishing rods rattle in the back, along with a three-pound bag of pecans “crushed but not shelled” that she plans to give away to friends. Sulphur is an industrial town of 20,000 built in the 1870s. Out of the car window I see signs of many other lines of work in Louisiana: Richard’s Boudin and Seafood Market, Sulphur Pawn and Discount Center, Bebop’s Ice House, lumber yards, barber shops, Family Dollar stores, Walgreens, J.C. Penney, PayDay Loans of Sulphur, and EZ Cash. As we head for her old school, she begins to describe her childhood. “I was born in the middle of the pack, fourth of six. My dad was the oldest of ten, and my mom was the youngest of seven, and everyone married and had kids. On Daddy’s side alone I have forty-six cousins, and on my mom’s side it’s about the same. One of my mother’s sisters had eleven.” Like many of those I talked to, Janice describes her childhood as “poor but happy.”


pages: 170 words: 49,193

The People vs Tech: How the Internet Is Killing Democracy (And How We Save It) by Jamie Bartlett

Ada Lovelace, Airbnb, Amazon Mechanical Turk, Andrew Keen, autonomous vehicles, barriers to entry, basic income, Bernie Sanders, bitcoin, blockchain, Boris Johnson, central bank independence, Chelsea Manning, cloud computing, computer vision, creative destruction, cryptocurrency, Daniel Kahneman / Amos Tversky, Dominic Cummings, Donald Trump, Edward Snowden, Elon Musk, Filter Bubble, future of work, gig economy, global village, Google bus, hive mind, Howard Rheingold, information retrieval, Internet of things, Jeff Bezos, job automation, John Maynard Keynes: technological unemployment, Julian Assange, manufacturing employment, Mark Zuckerberg, Marshall McLuhan, Menlo Park, meta analysis, meta-analysis, mittelstand, move fast and break things, move fast and break things, Network effects, Nicholas Carr, off grid, Panopticon Jeremy Bentham, payday loans, Peter Thiel, prediction markets, QR code, ransomware, Ray Kurzweil, recommendation engine, Renaissance Technologies, ride hailing / ride sharing, Robert Mercer, Ross Ulbricht, Sam Altman, Satoshi Nakamoto, Second Machine Age, sharing economy, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, smart cities, smart contracts, smart meter, Snapchat, Stanford prison experiment, Steve Jobs, Steven Levy, strong AI, TaskRabbit, technological singularity, technoutopianism, Ted Kaczynski, the medium is the message, the scientific method, The Spirit Level, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, too big to fail, ultimatum game, universal basic income, WikiLeaks, World Values Survey, Y Combinator

You did some recycling, too – and there’s a reminder about solar energy from the local branch of Greenpeace. These are relatively mundane things. But what if anti-Semites are targeted with increasingly personalised virulent content, simply because a model suggests they’ll spend more time viewing it? Or perhaps you can sell 20 per cent more anti-depressants to people if you catch them at a certain point in the week and use messages that play to low self-esteem. What if payday loan ads and gambling offers were precisely worded and targeted at the very moment that someone is most vulnerable or short on cash? The extent to which our choices are ever truly free might depend on your view of free will (a group of philosophers known as ‘hard determinists’ question whether free will exists at all). But, at the very least, big data algorithms throw up important questions regarding new locations of power, influence and control.


pages: 173 words: 53,564

Fair Shot: Rethinking Inequality and How We Earn by Chris Hughes

"side hustle", basic income, Donald Trump, effective altruism, Elon Musk, end world poverty, full employment, future of journalism, gig economy, high net worth, income inequality, invisible hand, Jeff Bezos, job automation, knowledge economy, labor-force participation, Lyft, M-Pesa, Mark Zuckerberg, meta analysis, meta-analysis, new economy, oil rush, payday loans, Peter Singer: altruism, Potemkin village, precariat, randomized controlled trial, ride hailing / ride sharing, Ronald Reagan, Second Machine Age, self-driving car, side project, Silicon Valley, TaskRabbit, The Bell Curve by Richard Herrnstein and Charles Murray, traveling salesman, trickle-down economics, uber lyft, universal basic income, winner-take-all economy, working poor, working-age population, zero-sum game

Almost to a fault, every poor and middle-class person in these studies was attempting to build a nest egg. Nearly all the participants had savings accounts and many of them thought up ways to make it harder for them to touch that money. One woman in Mississippi purposefully opened a savings account in a credit union an hour’s drive away from her home. She cut up her ATM card to make it harder to withdraw money from it, and she destroyed her checkbook so she wouldn’t be tempted by payday loans, which often require a signed check as collateral. Despite many similar stories of thoughtfulness and preparation from the families interviewed for the study, few of the participants managed to create long-term savings because of unpredictable life events like collapses in wages, hospitalizations, or unexpected childcare costs. If instability has become the new norm, a second effect of the winner-take-all economy on workers’ lives is the absence of economic mobility, the chance to get ahead.


pages: 169 words: 52,744

Big Capital: Who Is London For? by Anna Minton

Airbnb, Berlin Wall, Big bang: deregulation of the City of London, Boris Johnson, Capital in the Twenty-First Century by Thomas Piketty, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, Donald Trump, eurozone crisis, Fall of the Berlin Wall, Frank Gehry, high net worth, housing crisis, illegal immigration, Kickstarter, land value tax, market design, new economy, New Urbanism, offshore financial centre, payday loans, quantitative easing, rent control, Right to Buy, sovereign wealth fund, the built environment, The Wealth of Nations by Adam Smith, urban renewal, working poor

The idea was that the policy would get households to move into smaller properties, but with few available, the main result has been debt and mental and physical health problems with disabled families particularly hard hit, as they often need a spare room for essential home adaptations or equipment to enable them to live independently. Research commissioned by the government itself found households cutting back on essential food and heating. Forty per cent reported being in arrears with their rent, a quarter said they had to borrow money, mostly from friends, and at least 7 per cent cited having to resort to payday loans.36 When the United Nations Special Rapporteur on housing, Raquel Rolnik, visited the UK in 2013 she reported, to the fury of the UK government, that a number of welfare reforms along with cuts in housing benefits ‘appear to compromise the realization of the right to adequate housing and other related human rights’.37 The final report stated: The Special Rapporteur regrets that some policies and practices which have resulted in the progressive realization of the right to adequate housing are being eroded, and that the structural shape of the housing sector has changed to the detriment of the most vulnerable.


pages: 190 words: 56,531

Where We Are: The State of Britain Now by Roger Scruton

bitcoin, blockchain, business cycle, Corn Laws, Donald Trump, Downton Abbey, Fellow of the Royal Society, fixed income, garden city movement, George Akerlof, housing crisis, invention of the printing press, invisible hand, Khartoum Gordon, mass immigration, Naomi Klein, New Journalism, old-boy network, open borders, payday loans, Peace of Westphalia, sceptred isle, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, web of trust

The philosophy of the Other has pursued a winding and fascinating course in recent times, and has been especially influential in France, thanks to Alexandre Kojève, and to those who attended his interwar lectures: Levinas, Lacan, Sartre and de Beauvoir especially. 2Alexander Betts and Paul Collier, Refuge: Transforming a Broken Refugee System, London, 2017. 3The Times, 27 May 2017. 4The root of ummah is umm, mother. 5Douglas Murray, The Strange Death of Europe, London 2017. 6See Citizens Advice Bureau, pamphlet on Payday Loans, published March 2016. 7See the Tractarian Henry Wilberforce’s illuminating defence of the parish, as an ideal of local government answering to both material and spiritual needs, but at the time when he wrote rendered impotent by the mass migration to the cities: Henry William Wilberforce, The Parochial System: An Appeal to English Churchmen, 1838, reprinted Memphis, 2012. On the historical significance and social strength of the parish, see Andrew Rumsey, Parish: An Anglican Theology of Place, London, 2017. 8For a true, but anecdotal, account of this, see my News from Somewhere, London, 2004. 9Elinor Ostrom, Governing the Commons, Cambridge, 1990.


pages: 209 words: 53,175

The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness by Morgan Housel

"side hustle", airport security, Amazon Web Services, Bernie Madoff, business cycle, computer age, coronavirus, discounted cash flows, diversification, diversified portfolio, Donald Trump, financial independence, Hans Rosling, Hyman Minsky, income inequality, index fund, invisible hand, Isaac Newton, Jeff Bezos, Joseph Schumpeter, knowledge worker, labor-force participation, Long Term Capital Management, margin call, Mark Zuckerberg, new economy, Paul Graham, payday loans, Ponzi scheme, quantitative easing, Renaissance Technologies, Richard Feynman, risk tolerance, risk-adjusted returns, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, Stephen Hawking, Steven Levy, stocks for the long run, the scientific method, traffic fines, Vanguard fund, working-age population

One was the GI Bill, which offered unprecedented mortgage opportunities. Sixteen million veterans could buy a home often with no money down, no interest in the first year, and fixed rates so low that monthly mortgage payments could be lower than a rental. The second was an explosion of consumer credit, enabled by the loosening of Depression-era regulations. The first credit card was introduced in 1950. Store credit, installment credit, personal loans, payday loans—everything took off. And interest on all debt, including credit cards, was tax deductible at the time. It tasted delicious. So we ate a lot of it. A simple story in a simple table: Household debt in the 1950s grew 1.5 times faster than it did during the 2000s debt splurge. 3. Pent-up demand for stuff fed by a credit boom and a hidden 1930s productivity boom led to an economic boom.


pages: 179 words: 59,704

Meet the Frugalwoods: Achieving Financial Independence Through Simple Living by Elizabeth Willard Thames

"side hustle", Airbnb, asset allocation, barriers to entry, basic income, buy and hold, carbon footprint, delayed gratification, dumpster diving, East Village, financial independence, hedonic treadmill, IKEA effect, index fund, indoor plumbing, loss aversion, McMansion, mortgage debt, passive income, payday loans, risk tolerance, Stanford marshmallow experiment, universal basic income, working poor

I could tell that these had once been elegant brick-front row houses with curling spirals of wrought iron, expansive front steps, and square, tidy gardens out front. Now, they were chopped into warrenlike apartments fronted by patches of dirt littered with cans, newspapers, broken glass, and cigarette butts. There was an empty lot a block up from my apartment, choked with weeds and bags of garbage. Laundromats, bodegas, an off-brand dollar store, hair salons, storefront churches, and payday loan businesses were what the neighborhood offered. Graffiti coated everything, even the metal grates that shop owners pulled down to protect their glass storefronts every night. There were no restaurants or banks or gyms or coffee shops or clothing stores or grocery stores or doctor’s offices. But there were people everywhere: out on stoops, chatting, calling to one another, laughing, scolding kids who ran around barefoot, seemingly oblivious to the broken glass and trash.


pages: 194 words: 59,336

The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life by J L Collins

"side hustle", asset allocation, Bernie Madoff, buy and hold, compound rate of return, diversification, financial independence, full employment, German hyperinflation, index fund, money market fund, nuclear winter, passive income, payday loans, risk tolerance, Vanguard fund, yield curve

Unfortunately, few will ever even see this as an option. There are pervasive and powerful marketing forces at work seeking to obscure the idea that such a choice exists. We are relentlessly bombarded with messages telling us that we absolutely need the latest trinket and that we simply must have the most fashionable of currently trending trash. We’re told that if you don’t have the money, no problem. That’s what credit cards and payday loans are for. It is this thinking that makes it so hard for most people to see that it is possible to reach a million dollar net worth on an income of $25,000. This is not some evil conspiracy at work. It is simply business pursuing its own needs. But it is deadly to your wealth. The science behind the art of this persuasion is truly impressive, and the financial stakes are huge. The lines between need and want are continually and intentionally blurred.


pages: 261 words: 64,977

Pity the Billionaire: The Unexpected Resurgence of the American Right by Thomas Frank

Affordable Care Act / Obamacare, bank run, big-box store, bonus culture, business cycle, collateralized debt obligation, collective bargaining, commoditize, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, Deng Xiaoping, financial innovation, housing crisis, invisible hand, Kickstarter, money market fund, Naomi Klein, obamacare, payday loans, profit maximization, profit motive, road to serfdom, Robert Bork, Ronald Reagan, shareholder value, strikebreaker, The Chicago School, The Myth of the Rational Market, Thorstein Veblen, too big to fail, union organizing, Washington Consensus, white flight, Works Progress Administration

CHAPTER 2 1929: The Sequel Seventy-nine years after the Great Crash, we got our own economic calamity, a crushing bust to put the exclamation point on the end of an anemic boom. As a lesson in the built-in treachery of the system, the collapse was unexcelled in living memory. As an indictment of official America’s consensus economic doctrine, it surpassed any plaint about NAFTA, any righteous editorializing about the payday loan industry, any fretting about the concentration of wealth into ever-fewer hands. If you had brought the world’s teenaged anarchists together in some great international congress and asked them to design an ideal crisis, they could not have discredited market-based civilization more completely than did the crash of 2008. Committee to Give the Huge Middle Finger It happened, to begin with, on the watch of president George W.


pages: 246 words: 68,392

Gigged: The End of the Job and the Future of Work by Sarah Kessler

Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, basic income, bitcoin, blockchain, business cycle, call centre, cognitive dissonance, collective bargaining, crowdsourcing, David Attenborough, Donald Trump, East Village, Elon Musk, financial independence, future of work, game design, gig economy, income inequality, information asymmetry, Jeff Bezos, job automation, law of one price, Lyft, Mark Zuckerberg, market clearing, minimum wage unemployment, new economy, payday loans, post-work, profit maximization, QR code, race to the bottom, ride hailing / ride sharing, Second Machine Age, self-driving car, shareholder value, sharing economy, Silicon Valley, Snapchat, TaskRabbit, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, union organizing, universal basic income, working-age population, Works Progress Administration, Y Combinator

An app called Even helped employees with unpredictable schedules plan for the uneven income. Whenever a worker was paid less than her average, Even deposited extra money in her account, interest-free. When she made more than her average, Even paid itself back. It created the semblance of steady income. Even eventually partnered with Walmart to give employees an option to receive part of their paycheck before their two-week pay period was over, helping them avoid payday loans if they faced an unexpected expense. Another startup called Honest Dollar provided retirement savings accounts for independent workers. It offered a $5 monthly discount to drivers for Lyft, which introduced it in a blog post as “an easy, affordable investing platform built with independent contractors in mind.”8 (Goldman Sachs acquired Honest Dollar four months later.) An organization called Peers.org aimed to collect these sorts of services onto a single platform and to entice companies to participate by contributing to benefits like healthcare and retirement savings.


pages: 212 words: 69,846

The Nation City: Why Mayors Are Now Running the World by Rahm Emanuel

Affordable Care Act / Obamacare, Airbnb, blockchain, carbon footprint, clean water, deindustrialization, Donald Trump, Edward Glaeser, Enrique Peñalosa, Filter Bubble, income inequality, informal economy, Jane Jacobs, Kickstarter, Lyft, megacity, new economy, New Urbanism, offshore financial centre, payday loans, ride hailing / ride sharing, Ronald Reagan, Silicon Valley, The Death and Life of Great American Cities, the High Line, transcontinental railway, Uber and Lyft, uber lyft, urban planning, War on Poverty, white flight, working poor

That way, working families can pay bills on time and better plan for the future. We worked with the Center for Economic Progress, a nonprofit that offers free tax preparation services to low-income Chicago families, to study the pilot. The study showed that families which received the EITC quarterly had improved their financial stability. The quarterly payment enabled families to stay out of the claws of the payday loan business. * * * Economic growth is good, especially when it works for everyone. But another one of the primary jobs of a mayor is to be a steward, to carefully weigh the costs and benefits of the manner in which money is spent and the ways in which subsidies and tax breaks are doled out. There are times, of course, when some corporate tax breaks make sense. Sometimes even an elimination of a tax is a good idea—we did away with the head tax in Chicago, which put a $4-per-employee tax on employers with more than fifty full-time workers.


pages: 662 words: 180,546

Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown by Philip Mirowski

"Robert Solow", Alvin Roth, Andrei Shleifer, asset-backed security, bank run, barriers to entry, Basel III, Berlin Wall, Bernie Madoff, Bernie Sanders, Black Swan, blue-collar work, Bretton Woods, Brownian motion, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, complexity theory, constrained optimization, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, dark matter, David Brooks, David Graeber, debt deflation, deindustrialization, do-ocracy, Edward Glaeser, Eugene Fama: efficient market hypothesis, experimental economics, facts on the ground, Fall of the Berlin Wall, financial deregulation, financial innovation, Flash crash, full employment, George Akerlof, Goldman Sachs: Vampire Squid, Hernando de Soto, housing crisis, Hyman Minsky, illegal immigration, income inequality, incomplete markets, information asymmetry, invisible hand, Jean Tirole, joint-stock company, Kenneth Arrow, Kenneth Rogoff, Kickstarter, knowledge economy, l'esprit de l'escalier, labor-force participation, liberal capitalism, liquidity trap, loose coupling, manufacturing employment, market clearing, market design, market fundamentalism, Martin Wolf, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, Naomi Klein, Nash equilibrium, night-watchman state, Northern Rock, Occupy movement, offshore financial centre, oil shock, Pareto efficiency, Paul Samuelson, payday loans, Philip Mirowski, Ponzi scheme, precariat, prediction markets, price mechanism, profit motive, quantitative easing, race to the bottom, random walk, rent-seeking, Richard Thaler, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, school choice, sealed-bid auction, Silicon Valley, South Sea Bubble, Steven Levy, technoutopianism, The Chicago School, The Great Moderation, the map is not the territory, The Myth of the Rational Market, the scientific method, The Wisdom of Crowds, theory of mind, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, Tobin tax, too big to fail, transaction costs, Vilfredo Pareto, War on Poverty, Washington Consensus, We are the 99%, working poor

., none at all) and thus lacked “skin in the game”; this echo chamber of contempt ricocheting throughout the news media was so extravagantly over the top that it became the target of satire on many of the usual cable outlets, such as Jon Stewart and Stephen Colbert.72 In the current climate, it seems there is almost nothing you could do to the poor that would earn you opprobrium and ostracism from polite company, (maybe) short of sexual molestation of children. Prior to the 1980s, the practice of “salary purchase,” aka “payday loans,” had been outlawed; but a concerted effort beginning at the state level progressively legalized this particular form of predatory lending. As of 2008, there were more payday lender outlets in the United States than there were McDonald’s and Burger King restaurants combined, with turnover that dwarfed casinos, the other major poverty vampire operation.73 What is astounding about such operations is that they are no longer treated as reviled bottom-feeders by both the media and politicians, but rather as exemplary of the types of legitimate businesses that provide opportunity and salvation in the current contraction.

See Neoliberal Thought Collective (NTC) Nugent, Ted NYU (New York University) O Obama, Barack Occam’s Razor Occupiers Occupy Handbook Occupy London Occupy Movement Occupy Wall Street (OWS) Odyssey (Homer) Old Thinking Oldham, Taki, Turf Wars Open questions Open Society The Open Society and Its Enemies (Popper) Oracle at Delphi Ordoliberalism Oreskes, Naomi Original Sin O’Rourke, Kevin Orszag, Peter Orwell, George Osborne, George Outsourced Self (Hochschild) OWS (Occupy Wall Street) P Page, Scott Palin, Sarah Pareto, Vilfredo Patterson, Scott, Dark Pools Paul, Ron Paulson, Hank Payday loans Payne, Christopher PBS Peck, Jamie Pecora, Ferdinand Perry, Rick Pesaran, Hashem Pew Economic Policy Group Financial Reform Project Philip Morris Phillips Curve Philosopher’s Stone Pimco Pinochet, Augusto Pinto, Edward Pissarides, Christopher Pity the Billionaire (Frank) Plant, Raymond Plato Plehwe, Dieter Ponzi scheme Poon, Martha Popper, Karl Portes, Richard Posner, Richard Power Auctions Predator Nation (Ferguson) Prediction as red herring Prescott, Edward C.


pages: 280 words: 79,029

Smart Money: How High-Stakes Financial Innovation Is Reshaping Our WorldÑFor the Better by Andrew Palmer

Affordable Care Act / Obamacare, algorithmic trading, Andrei Shleifer, asset-backed security, availability heuristic, bank run, banking crisis, Black-Scholes formula, bonus culture, break the buck, Bretton Woods, call centre, Carmen Reinhart, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, computerized trading, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, David Graeber, diversification, diversified portfolio, Edmond Halley, Edward Glaeser, endogenous growth, Eugene Fama: efficient market hypothesis, eurozone crisis, family office, financial deregulation, financial innovation, fixed income, Flash crash, Google Glasses, Gordon Gekko, high net worth, housing crisis, Hyman Minsky, implied volatility, income inequality, index fund, information asymmetry, Innovator's Dilemma, interest rate swap, Kenneth Rogoff, Kickstarter, late fees, London Interbank Offered Rate, Long Term Capital Management, longitudinal study, loss aversion, margin call, Mark Zuckerberg, McMansion, money market fund, mortgage debt, mortgage tax deduction, Myron Scholes, negative equity, Network effects, Northern Rock, obamacare, payday loans, peer-to-peer lending, Peter Thiel, principal–agent problem, profit maximization, quantitative trading / quantitative finance, railway mania, randomized controlled trial, Richard Feynman, Richard Thaler, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Shiller, short selling, Silicon Valley, Silicon Valley startup, Skype, South Sea Bubble, sovereign wealth fund, statistical model, Thales of Miletus, transaction costs, Tunguska event, unbanked and underbanked, underbanked, Vanguard fund, web application

It is a very large industry: there are twenty-four thousand payday outlets in the United States, compared with a little more than fourteen thousand McDonald’s restaurants in 2012. A survey by the Federal Deposit Insurance Corporation found that roughly one in twelve American households, or some 17 million adults, are “unbanked,” meaning they lack a current account; another one in every five households has an account but uses alternatives as well—payday loans, check-cashing services, pawn shops, and the like.1 A lot of guff is talked about the evils of payday lending. When people have a need for cash, it is generally better for them to go to actual businesses with physical outlets than to turn to loan sharks with baseball bats. Although predatory lenders undoubtedly exist, the deeper problem is that even the good ones end up charging high rates of interest in order to cover not just their operating costs, but also the higher credit risks that they are taking on by making unsecured loans to low-income borrowers.


pages: 202 words: 72,857

The Wealth Dragon Way: The Why, the When and the How to Become Infinitely Wealthy by John Lee

8-hour work day, Albert Einstein, barriers to entry, Bernie Madoff, butterfly effect, buy low sell high, California gold rush, Donald Trump, financial independence, high net worth, intangible asset, Kickstarter, Mark Zuckerberg, negative equity, passive income, payday loans, self-driving car, Snapchat, Stephen Hawking, Steve Jobs, stocks for the long run, stocks for the long term, Tony Hsieh, Y2K

Cash investors are offering desperate sellers a solution when no one else can. Of course there is a payoff. Sellers are relieved of their burden; they get a fast, secure deal and we get a profit. The BBC once interviewed me on this subject, and I was adamant that it is not exploitative to help people who urgently need to get their money out of their properties or be relieved of the burden of mortgage repayments. It's like payday loans, which are now getting a bad reputation. If people need to borrow money to eat and heat their houses, what other options have they got? If the government can't help them, and their friends and family can't help them, they have to go to someone who can. One of the most touching stories I remember was a widow who called me and said she wanted to sell her house as fast as possible. She hadn't been able to sleep even a night in it since her husband had died.


pages: 294 words: 77,356

Automating Inequality by Virginia Eubanks

autonomous vehicles, basic income, business process, call centre, cognitive dissonance, collective bargaining, correlation does not imply causation, deindustrialization, disruptive innovation, Donald Trump, Elon Musk, ending welfare as we know it, experimental subject, housing crisis, IBM and the Holocaust, income inequality, job automation, mandatory minimum, Mark Zuckerberg, mass incarceration, minimum wage unemployment, mortgage tax deduction, new economy, New Urbanism, payday loans, performance metric, Ronald Reagan, self-driving car, statistical model, strikebreaker, underbanked, universal basic income, urban renewal, War on Poverty, working poor, Works Progress Administration, young professional, zero-sum game

According to Seeta Peña Gangadharan of the London School of Economics and Political Science, financial institutions use metadata purchased from data brokers to split the real estate market into increasingly sophisticated micro-populations like “Rural and Barely Making It” and “X-tra Needy.” While the algorithms that drive this target-marketing don’t explicitly use race to make decisions—a practice outlawed by the Fair Housing Act of 1968—a category like “Ethnic Second-City Strugglers” is clearly a proxy for both race and class.6 Disadvantaged communities are then targeted for subprime lending, payday loans, or other exploitative financial products. Reverse redlining is rational discrimination. It is not discriminatory in the sense that it relies on hostile choices being made by racist or classist individuals. In fact, it is often characterized as inclusionary: it provides access to financial products in “underbanked” neighborhoods. But its outwardly neutral classifications mask discriminatory outcomes that rob whole communities of wealth, compounding cumulative disadvantage.


pages: 252 words: 75,349

Spam Nation: The Inside Story of Organized Cybercrime-From Global Epidemic to Your Front Door by Brian Krebs

barriers to entry, bitcoin, Brian Krebs, cashless society, defense in depth, Donald Trump, employer provided health coverage, John Markoff, mutually assured destruction, offshore financial centre, payday loans, pirate software, placebo effect, ransomware, Silicon Valley, Stuxnet, the payments system, transaction costs, web application

While some are using ransomware and data harvesting, Savage said, many other former affiliates and managers of failed scareware, pharma, and pirated software partnerkas are casting about for the next big thing. “It’s a period of innovation, and people clearly are looking around for another sweet spot that’s as good as pharma, which made more money more reliably than anything else out there,” he said. “A few affiliate programs are trying to peddle pirated e-books and movies; others are getting into [advertising] payday loans. There are now tons of programs that will write term papers for students. That seems to be a big thing now.” The other factor weighing on the spam industry, Savage says, is that many affiliates have found more success advertising websites using so-called “black SEO” techniques to manipulate search engine rankings for their sites. He notes that the biggest earner by far across thousands of GlavMed pharmacy affiliates was a black SEO expert who used the nickname “Webplanet.”


pages: 700 words: 201,953

The Social Life of Money by Nigel Dodd

accounting loophole / creative accounting, bank run, banking crisis, banks create money, Bernie Madoff, bitcoin, blockchain, borderless world, Bretton Woods, BRICs, business cycle, capital controls, cashless society, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, commoditize, computer age, conceptual framework, credit crunch, cross-subsidies, David Graeber, debt deflation, dematerialisation, disintermediation, eurozone crisis, fiat currency, financial exclusion, financial innovation, Financial Instability Hypothesis, financial repression, floating exchange rates, Fractional reserve banking, German hyperinflation, Goldman Sachs: Vampire Squid, Hyman Minsky, illegal immigration, informal economy, interest rate swap, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, Kickstarter, Kula ring, laissez-faire capitalism, land reform, late capitalism, liberal capitalism, liquidity trap, litecoin, London Interbank Offered Rate, M-Pesa, Marshall McLuhan, means of production, mental accounting, microcredit, mobile money, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, negative equity, new economy, Nixon shock, Occupy movement, offshore financial centre, paradox of thrift, payday loans, Peace of Westphalia, peer-to-peer, peer-to-peer lending, Ponzi scheme, post scarcity, postnationalism / post nation state, predatory finance, price mechanism, price stability, quantitative easing, quantitative trading / quantitative finance, remote working, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Shiller, Satoshi Nakamoto, Scientific racism, seigniorage, Skype, Slavoj Žižek, South Sea Bubble, sovereign wealth fund, special drawing rights, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, Veblen good, Wave and Pay, Westphalian system, WikiLeaks, Wolfgang Streeck, yield curve, zero-coupon bond

Thompson’s “The Moral Economy of the English Crowd in the 18th Century,” which describes rioting against those merchants and traders who raised the price of grain to exploit short-ages (Thompson 1971: 78–79). More recent examples include various forms of price regulation such as the minimum wage, trade tariffs, price gouging, and antidumping laws. In the financial sector, attempts to regulate interest rates—capping payday loans, for example—might be seen as examples of just pricing. The just price is considered by Aquinas to be objectively fair. It is both “fixed” and “real.” According to Simmel, however, the principle merely “corresponds with the substantialist-absolutist world view” that was characteristic of the Middle Ages, which assumes that there is an objective relationship between an object and its price. For Simmel, far from being objective, such a price is “subjective in the worst sense of the word” and therefore arbitrary: it is an “inadequate valuation that made a momentary constellation [of value] into a fetter for future developments” (Simmel 2004: 317).

See also death of God; eternal return; Übermensch Nigeria, 301 ninety-nine percent, 3, 129–30, 370–71 nihilism, 141, 142 Nishibe, Makoto, 345 Nixon, Richard, 45, 98–99, 244 Nixon shock, 45n Nobel Prize, 330 nomos, 262, of the Earth, 222, 223 nongovernmental organizations (NGOs), 239 nonpecuniary values, 287, 294 North, Peter, 373 North Atlantic Treaty Organization (NATO), 239 Nostradamus, 49 Nuer, 284 numismatics, 165; sociological, 34 nummus, 223, 262 occultism, 7, 11; and capital, 56, 154 Occupy movement, 1, 3, 50, 130n55, 201, 267, 370 Oedipus complex, 149, 150, 230 Oesterreichische Nationalbank, 20n Old Glory Mint, 361 one trillion dollar platinum coin, 385, 386, 387, 392 optimal currency area (OCA), 20, 253 order of worth, 200 Organisation for Economic Co-operation and Development (OECD) Orléan, André, 19, 43–46, 250; on Mauss, 32 Ortega y Gasset, José, 247 overaccumulation, in Bataille, 176; in Baudrillard, 192; and financialization, 61n22; in Harvey, 68, 166, 243; Marxian concept of, 65, 88, 205 overbanking, 122, 124 overproduction, 57, 73 Owen, Robert, 342 Pan, 77, 246 panic, etymology, 77n; financial, 77 paradox of thrift, 208, 347, 348 parallax view, 80–81, 205 Park, Robert, 319 Parsons, Talcott, 8, 34, 230, 276n patriarchy, 336 Patton, Paul, 227 Paulhan, Jean, 172n payday loans, 325 PayPal, 378, 380n Peace of Westphalia, 216 Pecunix, 42, 316 Peebles, Gustav, 304–5 peer-to-peer (P2P) currencies, 105, 365, 370 peer-to-peer (P2P) lending, 247, 316 peer-to-peer (P2P) payment networks, 365 pension fund socialism, 77 pension funds, 59, 68, 75, 110, 129n52, 132, 221, 243 pensioners, 2, 22, 72, 77, 88, 126 perfect money, 14, 30, 197, 315, 316, 317–22, 326, 328–30, 339, 341, 356–57, 375, 382 perfect society, 30, 315, 316, 320–21, 322, 326, 329–30, 351 Perroux, François, 207 philanthropy, 166 Pixley, Jocelyn, 315n Plato, 200, 313 Platonism, 322, 326 Plender, John, 50 Poe, Edgar Allen, 185 poetry, 313, 314, 331 Polanyi, Karl, 13, 36, 57n16, 271, 279–86, 291, 292, 294, 299, 306; on the double movement, 128, 280, 311; on embeddedness, 279, 280–81, 285; on fictitious commodities, 279–80; on formal versus substantive approaches to the economy, 285; The Great Transformation, 279, 282, 284, 286; on limited and general purpose money, 279, 282–83, 285, 286, 325, 373; on the market, 372, 279–81; on money and language, 297; on planned laissez-faire capitalism, 280 Polillo, Simone, 218–19 Polybius, Histories, 239 Ponzi, Charles, 117n Ponzi finance, 58, 117n, 118, 199; and Bitcoin, 368 Ponzi stage, 120.


pages: 278 words: 83,468

The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries

3D printing, barriers to entry, call centre, Clayton Christensen, clean water, cloud computing, commoditize, Computer Numeric Control, continuous integration, corporate governance, disruptive innovation, experimental subject, Frederick Winslow Taylor, Lean Startup, Marc Andreessen, Mark Zuckerberg, Metcalfe’s law, minimum viable product, Mitch Kapor, Network effects, payday loans, Peter Thiel, pets.com, Ponzi scheme, pull request, risk tolerance, selection bias, Silicon Valley, Silicon Valley startup, six sigma, skunkworks, stealth mode startup, Steve Jobs, the scientific method, Toyota Production System, transaction costs

We have serviced more than 10,000 customers in the past year alone across all the outlets.”5 A LEAN STARTUP IN GOVERNMENT? On July 21, 2010, President Obama signed the Dodd–Frank Wall Street Reform and Consumer Protection Act into law. One of its landmark provisions created a new federal agency, the Consumer Federal Protection Bureau (CFPB). This agency is tasked with protecting American citizens from predatory lending by financial services companies such as credit card companies, student lenders, and payday loan offices. The plan calls for it to accomplish this by setting up a call center where trained case workers will field calls directly from the public. Left to its own devices, a new government agency would probably hire a large staff with a large budget to develop a plan that is expensive and time-consuming. However, the CFPB is considering doing things differently. Despite its $500 million budget and high-profile origins, the CPFB is really a startup.


pages: 278 words: 82,069

Meltdown: How Greed and Corruption Shattered Our Financial System and How We Can Recover by Katrina Vanden Heuvel, William Greider

Asian financial crisis, banking crisis, Bretton Woods, business cycle, buy and hold, capital controls, carried interest, central bank independence, centre right, collateralized debt obligation, conceptual framework, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, declining real wages, deindustrialization, Exxon Valdez, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, fixed income, floating exchange rates, full employment, housing crisis, Howard Zinn, Hyman Minsky, income inequality, information asymmetry, John Meriwether, kremlinology, Long Term Capital Management, margin call, market bubble, market fundamentalism, McMansion, money market fund, mortgage debt, Naomi Klein, new economy, offshore financial centre, payday loans, pets.com, plutocrats, Plutocrats, Ponzi scheme, price stability, pushing on a string, race to the bottom, Ralph Nader, rent control, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, sovereign wealth fund, structural adjustment programs, The Great Moderation, too big to fail, trade liberalization, transcontinental railway, trickle-down economics, union organizing, wage slave, Washington Consensus, women in the workforce, working poor, Y2K

Lee Scott among them, squeezed the American worker’s wages, the other hand was reaching out with the tempting offer of credit. In fact, easy credit became the American substitute for decent wages. Once you worked for your money, but now you were supposed to pay for it. Once you could count on earning enough to save for a home. Now you’ll never earn that much, but, as the lenders were saying—heh, heh—do we have a mortgage for you! Payday loans, rent-to-buy furniture and exorbitant credit card interest rates for the poor were just the beginning. In its May 21 cover story on “The Poverty Business,” BusinessWeek documented the stampede, in just the last few years, to lend money to the people who could least afford to pay the interest: Buy your dream home! Refinance your house! Take on a car loan even if your credit rating sucks! Financiamos a Todos!


pages: 362 words: 83,464

The New Class Conflict by Joel Kotkin

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, affirmative action, Affordable Care Act / Obamacare, American Society of Civil Engineers: Report Card, Bob Noyce, California gold rush, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, creative destruction, crony capitalism, David Graeber, deindustrialization, don't be evil, Downton Abbey, Edward Glaeser, Elon Musk, energy security, falling living standards, future of work, Gini coefficient, Google bus, housing crisis, income inequality, informal economy, Internet of things, Jane Jacobs, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John von Neumann, Joseph Schumpeter, Kevin Kelly, labor-force participation, low-wage service sector, Marc Andreessen, Mark Zuckerberg, mass affluent, McJob, McMansion, medical bankruptcy, Nate Silver, New Economic Geography, new economy, New Urbanism, obamacare, offshore financial centre, Paul Buchheit, payday loans, Peter Calthorpe, plutocrats, Plutocrats, post-industrial society, RAND corporation, Ray Kurzweil, rent control, rent-seeking, Report Card for America’s Infrastructure, Richard Florida, Silicon Valley, Silicon Valley ideology, Steve Jobs, technoutopianism, The Death and Life of Great American Cities, Thomas L Friedman, too big to fail, transcontinental railway, trickle-down economics, Tyler Cowen: Great Stagnation, upwardly mobile, urban planning, urban sprawl, War on Poverty, women in the workforce, working poor, young professional

Bill Gross, the company’s Managing Director, has characterized “the new normal” as one “of muted western growth, high unemployment and relatively orderly delevering.”71 Another key mainstream writer, economist Robert Samuelson, believes we are in the midst “a generational war” in which the young are destined to be losers in the “withering of the affluent society.” As he puts it: “For millions of younger Americans—say, those 40 and under—living better than their parents is a pipe dream. They won’t.”72 Some financial experts believe that future generations, by lacking stable employment or any kind of financial equity, will become more dependent on the kinds of instruments, such as prepaid credit cards and payday loans, that have historically been associated with the poor.73 The future facing this generation, suggests the American Prospect, is an unemployment rate twice the national average and “flat or declining wages.”74 American Herbivores Some commentators on millennials suggest that these downwardly mobile trends are accepted, and even embraced, by the new generation. Whereas previous generations of adults wished for their children to do better than themselves, many pundits increasingly have pushed a more déclassé vision, with fewer families, more singles, and less focus on upward mobility.


pages: 304 words: 85,291

Cities: The First 6,000 Years by Monica L. Smith

clean water, diversified portfolio, failed state, financial innovation, hiring and firing, invention of writing, Jane Jacobs, New Urbanism, payday loans, place-making, Ponzi scheme, South China Sea, telemarketer, the built environment, The Fortune at the Bottom of the Pyramid, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, trade route, urban planning, urban renewal, wikimedia commons

He notes that time is the one unchangeable factor in human life and that all of the outcomes of decision making are inescapably bound up in the fact that there are only twenty-four hours in a day. Educating oneself about the best way to spend resources is in and of itself a time-consuming occupation among people in the middle class (just think about how much time you’ve spent looking for that “perfect” gift). In the past, going into debt for bling was different from the hand-to-mouth debt of day laborers, and it still is: payday loans and car-title loans cater to an entirely different socioeconomic spectrum from credit cards and home-equity loans that can be expended for an infinitely large number of purposes . . . including, ironically, the consolidation of other debts. The challenges of choice are not new to the modern age. Two thousand years ago, the Roman writer Petronius gave a firsthand glimpse of the social awkwardness that comes with choosing the wrong things.


pages: 316 words: 87,486

Listen, Liberal: Or, What Ever Happened to the Party of the People? by Thomas Frank

Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, American ideology, barriers to entry, Berlin Wall, Bernie Sanders, blue-collar work, Burning Man, centre right, circulation of elites, Clayton Christensen, collective bargaining, Credit Default Swap, David Brooks, deindustrialization, disruptive innovation, Donald Trump, Edward Snowden, Fall of the Berlin Wall, financial innovation, Frank Gehry, full employment, George Gilder, gig economy, Gini coefficient, income inequality, Jaron Lanier, Jeff Bezos, knowledge economy, knowledge worker, Lean Startup, mandatory minimum, Marc Andreessen, Mark Zuckerberg, market bubble, mass immigration, mass incarceration, McMansion, microcredit, mobile money, moral panic, mortgage debt, Nelson Mandela, new economy, obamacare, payday loans, Peter Thiel, plutocrats, Plutocrats, Ponzi scheme, post-industrial society, postindustrial economy, pre–internet, profit maximization, profit motive, race to the bottom, Republic of Letters, Richard Florida, ride hailing / ride sharing, Ronald Reagan, sharing economy, Silicon Valley, Steve Jobs, Steven Levy, TaskRabbit, Thorstein Veblen, too big to fail, Travis Kalanick, Uber for X, union organizing, urban decay, women in the workforce, Works Progress Administration, young professional

The one great achievement of Obama’s presidency, the health insurance reform known as “Obamacare,” has many flaws, but it also subsidizes the purchase of coverage by people who otherwise can’t afford it. This detail was an important victory for the poor—and also a measure without which Obamacare could not accomplish the other things it does, such as stopping insurers from cancelling sick people’s insurance. Another triumph was the establishment of a Consumer Financial Protection Bureau in 2010, a much-needed regulatory agency that is supposed to keep an eye on predatory practices by payday loan shops, credit card companies, and the like. The CFPB is especially interesting to the historian of modern liberalism because its mission statement denounces debt products of the past that were “overly complicated” as well as “loans that [Americans] did not fully understand”—qualities that some well-graduated Democrats often think of in positive terms.16 One place where workers definitely came first was Obama’s 2012 reelection campaign.


pages: 273 words: 85,195

Nomadland: Surviving America in the Twenty-First Century by Jessica Bruder

Affordable Care Act / Obamacare, back-to-the-land, big-box store, Burning Man, cognitive dissonance, crowdsourcing, full employment, game design, gender pay gap, Gini coefficient, income inequality, Jeff Bezos, job automation, Mars Rover, new economy, off grid, payday loans, Pepto Bismol, precariat, Ronald Reagan, Saturday Night Live, sharing economy, six sigma, supply-chain management, union organizing, urban sprawl, white picket fence, Y2K

-So when the obviously homeless old man you have observed hiding his trash bag of stuff in a bush near your van every morning smiles and says hello like he knows you, it is unnerving to say the least. -Because you realize you have joined the growing club of people who live on the streets, and there is not so much difference between the two of you after all. A few days later, LaVonne followed up with a guilt-wracked confession. She explained in a new post that she’d been relying on payday loans to survive the month and, at $255 each, they were due in a week with $45 interest apiece. She was upset and ashamed. Her RTR friend Sameer, who was traveling with Mr. Pico the chihuahua, wrote back quickly: I wish I was in your vicinity so I could give you, my sister, a hug. I would like to let you know that you are not alone in this situation. I can remember myself and Mr. Pico sitting in the forest in Dolores, Colorado, eight days before payday with the needle on the gasoline tank reading almost empty, five days’ worth of food and two days’ worth of water . . . . . .


pages: 245 words: 83,272

Artificial Unintelligence: How Computers Misunderstand the World by Meredith Broussard

1960s counterculture, A Declaration of the Independence of Cyberspace, Ada Lovelace, AI winter, Airbnb, Amazon Web Services, autonomous vehicles, availability heuristic, barriers to entry, Bernie Sanders, bitcoin, Buckminster Fuller, Chris Urmson, Clayton Christensen, cloud computing, cognitive bias, complexity theory, computer vision, crowdsourcing, Danny Hillis, DARPA: Urban Challenge, digital map, disruptive innovation, Donald Trump, Douglas Engelbart, easy for humans, difficult for computers, Electric Kool-Aid Acid Test, Elon Musk, Firefox, gig economy, global supply chain, Google Glasses, Google X / Alphabet X, Hacker Ethic, Jaron Lanier, Jeff Bezos, John von Neumann, Joi Ito, Joseph-Marie Jacquard, life extension, Lyft, Mark Zuckerberg, mass incarceration, Minecraft, minimum viable product, Mother of all demos, move fast and break things, move fast and break things, Nate Silver, natural language processing, PageRank, payday loans, paypal mafia, performance metric, Peter Thiel, price discrimination, Ray Kurzweil, ride hailing / ride sharing, Ross Ulbricht, Saturday Night Live, school choice, self-driving car, Silicon Valley, speech recognition, statistical model, Steve Jobs, Steven Levy, Stewart Brand, Tesla Model S, the High Line, The Signal and the Noise by Nate Silver, theory of mind, Travis Kalanick, Turing test, Uber for X, uber lyft, Watson beat the top human players on Jeopardy!, Whole Earth Catalog, women in the workforce

Race, gender, and class influence pricing in a variety of obvious and devious ways. Women are charged more than men for haircuts, dry cleaning, razors, and even deodorant. Asian-Americans are twice as likely to be charged more for SAT prep courses.22 African American restaurant servers make less in tips than white colleagues.23 Being poor often means paying more for necessities. Furniture on installment plans costs more than outright purchase. Payday loans have a far higher interest rate than bank loans. Housing is considered affordable if it takes 30 percent or less of a household’s monthly income, but poor renters are often stuck paying more for housing because of a variety of factors related to economic instability. “In Milwaukee, the majority of poor renters devote at least half their income to rent, and a third pay at least 80 percent,” sociologist Pat Sharkey writes in a review of two ethnographies, Matthew Desmond’s Evicted: Poverty and Profit in the American City and Mitchell Dunier’s Ghetto: The Invention of a Place, the History of an Idea.24 Inequality is unfair, but it’s not uncommon.


pages: 725 words: 221,514

Debt: The First 5,000 Years by David Graeber

Admiral Zheng, anti-communist, back-to-the-land, banks create money, Bretton Woods, British Empire, carried interest, cashless society, central bank independence, colonial rule, commoditize, corporate governance, David Graeber, delayed gratification, dematerialisation, double entry bookkeeping, financial innovation, fixed income, full employment, George Gilder, informal economy, invention of writing, invisible hand, Isaac Newton, joint-stock company, means of production, microcredit, money: store of value / unit of account / medium of exchange, moral hazard, oil shock, Panopticon Jeremy Bentham, Paul Samuelson, payday loans, place-making, Ponzi scheme, price stability, profit motive, reserve currency, Right to Buy, Ronald Reagan, seigniorage, sexual politics, short selling, Silicon Valley, South Sea Bubble, Thales of Miletus, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, transatlantic slave trade, tulip mania, upwardly mobile, urban decay, working poor, zero-sum game

It did not help here that in 1980, U.S. federal usury laws, which had previously limited interest to between 7 and 10 percent, were eliminated by act of Congress. Just as the United States had managed to largely get rid of the problem of political corruption by making the bribery of legislators effectively legal (it was redefined as “lobbying”), so the problem of loan-sharking was brushed aside by making real interest rates of 25 percent, 50 percent, or even in some cases (for instance for payday loans) 120 percent annually, once typical only of organized crime, perfectly legal—and therefore, enforceable no longer by just hired goons and the sort of people who place mutilated animals on their victims’ doorsteps, but by judges, lawyers, bailiffs, and police.25 Any number of names have been coined to describe the new dispensation, from the “democratization of finance” to the “financialization of everyday life.”26 Outside the United States, it came to be known as “neoliberalism.”

My purpose here has been less to engage with it directly than to show how it has consistently encouraged us to ask the wrong questions. Let’s take this last paragraph as an illustration. What is Ferguson really saying here? Poverty is caused by a lack of credit. It’s only if the industrious poor have access to loans from stable, respectable banks—rather than to loan sharks, or, presumably, credit card companies, or payday loan operations, which now charge loan-shark rates—that they can rise out of poverty. So actually Ferguson is not really concerned with “poverty” at all, just with the poverty of some people, those who are industrious and thus do not deserve to be poor. What about the non-industrious poor? They can go to hell, presumably (quite literally, according to many branches of Christianity). Or maybe their boats will be lifted somewhat by the rising tide.


pages: 316 words: 91,969

Gray Lady Down: What the Decline and Fall of the New York Times Means for America by William McGowan

affirmative action, Affordable Care Act / Obamacare, corporate governance, David Brooks, different worldview, East Village, friendly fire, haute couture, illegal immigration, immigration reform, liberation theology, medical residency, New Journalism, obamacare, payday loans, postnationalism / post nation state, pre–internet, uranium enrichment, yellow journalism, young professional

(Harbinger has since sold off some of its stake, and did not stand any candidates for election to the board in 2010.) In the meantime, mounting debt forced the Times to turn to another outsider, the Mexican telecommunications billionaire Carlos “Slim” Helu, for a loan of $250 million so it can make interest payments on that debt. The analyst Henry Blodgett described the transaction with Slim as “the corporate equivalent of borrowing money from a payday loan shop.” Whereas the Times had once characterized Slim as a “robber baron,” now it was calling him a “shrewd investor.” When one of Slim’s holdings got involved in a Mexican telecommunications scandal in early 2010, the Times was accused of dragging its feet in reporting it out of deference to its financial angel. And in May 2010, Slim added to his stake after Harbinger sold off some of its holdings.


pages: 339 words: 88,732

The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies by Erik Brynjolfsson, Andrew McAfee

"Robert Solow", 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, access to a mobile phone, additive manufacturing, Airbnb, Albert Einstein, Amazon Mechanical Turk, Amazon Web Services, American Society of Civil Engineers: Report Card, Any sufficiently advanced technology is indistinguishable from magic, autonomous vehicles, barriers to entry, basic income, Baxter: Rethink Robotics, British Empire, business cycle, business intelligence, business process, call centre, Charles Lindbergh, Chuck Templeton: OpenTable:, clean water, combinatorial explosion, computer age, computer vision, congestion charging, corporate governance, creative destruction, crowdsourcing, David Ricardo: comparative advantage, digital map, employer provided health coverage, en.wikipedia.org, Erik Brynjolfsson, factory automation, falling living standards, Filter Bubble, first square of the chessboard / second half of the chessboard, Frank Levy and Richard Murnane: The New Division of Labor, Freestyle chess, full employment, G4S, game design, global village, happiness index / gross national happiness, illegal immigration, immigration reform, income inequality, income per capita, indoor plumbing, industrial robot, informal economy, intangible asset, inventory management, James Watt: steam engine, Jeff Bezos, jimmy wales, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kevin Kelly, Khan Academy, knowledge worker, Kodak vs Instagram, law of one price, low skilled workers, Lyft, Mahatma Gandhi, manufacturing employment, Marc Andreessen, Mark Zuckerberg, Mars Rover, mass immigration, means of production, Narrative Science, Nate Silver, natural language processing, Network effects, new economy, New Urbanism, Nicholas Carr, Occupy movement, oil shale / tar sands, oil shock, pattern recognition, Paul Samuelson, payday loans, post-work, price stability, Productivity paradox, profit maximization, Ralph Nader, Ray Kurzweil, recommendation engine, Report Card for America’s Infrastructure, Robert Gordon, Rodney Brooks, Ronald Reagan, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Simon Kuznets, six sigma, Skype, software patent, sovereign wealth fund, speech recognition, statistical model, Steve Jobs, Steven Pinker, Stuxnet, supply-chain management, TaskRabbit, technological singularity, telepresence, The Bell Curve by Richard Herrnstein and Charles Murray, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, Tyler Cowen: Great Stagnation, Vernor Vinge, Watson beat the top human players on Jeopardy!, winner-take-all economy, Y2K

The economists Annamaria Lusardi, Daniel J. Schneider, and Peter Tufano conducted a 2011 study asking people about “their capacity to come up with $2,000 in 30 days.” Their findings are troubling. They concluded that, “Approximately one quarter of Americans report that they would certainly not be able to come up with such funds, and an additional 19% would do so by relying at least in part on pawning or selling possessions or taking payday loans. . . . [In other words, we] find that nearly half of Americans are financially fragile. . . . [A] sizable fraction of seemingly ‘middle class’ Americans . . . judge themselves to be financially fragile.”8 Other data—about poverty rates, access to health care, the number of people who want full-time jobs but can only find part-time work, and so on—confirm the impression that while the economic bounty from technology is real, it is not sufficient to compensate for huge increases in spread.


pages: 255 words: 92,719

All Day Long: A Portrait of Britain at Work by Joanna Biggs

Anton Chekhov, bank run, banking crisis, call centre, Chelsea Manning, credit crunch, David Graeber, Desert Island Discs, Downton Abbey, Erik Brynjolfsson, financial independence, future of work, G4S, glass ceiling, industrial robot, job automation, land reform, low skilled workers, mittelstand, Northern Rock, payday loans, Right to Buy, Second Machine Age, six sigma, Steve Jobs, trickle-down economics, unpaid internship, wages for housework, Wall-E

It’s been estimated that 30 per cent have a reading age of 11 or less; 40 per cent in Cardiff joined up as a ‘last resort’. A third of recruits drop out before completing basic training. A soldier in Major D’s company will have to leave the army because he joined his friends in taking cocaine on a night out and got caught; another was AWOL; yet another had built up such a degree of debt with a bank and a payday loan company that he had only £50 a month to live on out of a £1,200 monthly salary. Major D and the platoon commander set out to repair the situation: they went to the bank and spoke to the manager, and the interest was cleared. Then they spoke to the loan company, ‘who were very good’ and wrote off their interest. The soldier should be free of debt in six months. Major D’s brother, who works in banking, tells him that sort of pastoral care is unheard of in his workplace.


pages: 400 words: 88,647

Frugal Innovation: How to Do Better With Less by Jaideep Prabhu Navi Radjou

3D printing, additive manufacturing, Affordable Care Act / Obamacare, Airbnb, Albert Einstein, barriers to entry, Baxter: Rethink Robotics, Bretton Woods, business climate, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, cloud computing, collaborative consumption, collaborative economy, Computer Numeric Control, connected car, corporate social responsibility, creative destruction, crowdsourcing, disruptive innovation, Elon Musk, financial exclusion, financial innovation, global supply chain, IKEA effect, income inequality, industrial robot, intangible asset, Internet of things, job satisfaction, Khan Academy, Kickstarter, late fees, Lean Startup, low cost airline, low cost carrier, M-Pesa, Mahatma Gandhi, megacity, minimum viable product, more computing power than Apollo, new economy, payday loans, peer-to-peer lending, Peter H. Diamandis: Planetary Resources, precision agriculture, race to the bottom, reshoring, risk tolerance, Ronald Coase, self-driving car, shareholder value, sharing economy, Silicon Valley, Silicon Valley startup, six sigma, smart grid, smart meter, software as a service, standardized shipping container, Steve Jobs, supply-chain management, TaskRabbit, The Fortune at the Bottom of the Pyramid, The Nature of the Firm, transaction costs, Travis Kalanick, unbanked and underbanked, underbanked, women in the workforce, X Prize, yield management, Zipcar

US credit-card debt rose by 8% in 2013 to $38.2 billion, and UK savings fell to 5.4% of household net disposable income in 2013 from 7.8% in 2009 – a serious worry for governments and lenders. Barclays Bank, a UK multinational banking and financial services company, reports that people tend to have little consideration for “rainy days”. Most have no significant savings, spending what they earn and getting by only as long as they have a job. More worryingly, some customers face severe financial strain, typically use payday loans, are late with repayments and withdraw cash on credit cards. This latter group might be expected to reduce spending on nonessentials, but they actually spend more than average, precisely when they are in financial trouble. Worried that such behaviour on a large scale could harm the bank and the economy, Barclays has begun to look at how it might turn around its profligate customers. One approach is through its financial health programme, which helps customers visualise their financial behaviour and meet savings targets.


pages: 366 words: 94,209

Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity by Douglas Rushkoff

activist fund / activist shareholder / activist investor, Airbnb, algorithmic trading, Amazon Mechanical Turk, Andrew Keen, bank run, banking crisis, barriers to entry, bitcoin, blockchain, Burning Man, business process, buy and hold, buy low sell high, California gold rush, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, centralized clearinghouse, citizen journalism, clean water, cloud computing, collaborative economy, collective bargaining, colonial exploitation, Community Supported Agriculture, corporate personhood, corporate raider, creative destruction, crowdsourcing, cryptocurrency, disintermediation, diversified portfolio, Elon Musk, Erik Brynjolfsson, Ethereum, ethereum blockchain, fiat currency, Firefox, Flash crash, full employment, future of work, gig economy, Gini coefficient, global supply chain, global village, Google bus, Howard Rheingold, IBM and the Holocaust, impulse control, income inequality, index fund, iterative process, Jaron Lanier, Jeff Bezos, jimmy wales, job automation, Joseph Schumpeter, Kickstarter, loss aversion, Lyft, Marc Andreessen, Mark Zuckerberg, market bubble, market fundamentalism, Marshall McLuhan, means of production, medical bankruptcy, minimum viable product, Mitch Kapor, Naomi Klein, Network effects, new economy, Norbert Wiener, Oculus Rift, passive investing, payday loans, peer-to-peer lending, Peter Thiel, post-industrial society, profit motive, quantitative easing, race to the bottom, recommendation engine, reserve currency, RFID, Richard Stallman, ride hailing / ride sharing, Ronald Reagan, Satoshi Nakamoto, Second Machine Age, shareholder value, sharing economy, Silicon Valley, Snapchat, social graph, software patent, Steve Jobs, TaskRabbit, The Future of Employment, trade route, transportation-network company, Turing test, Uber and Lyft, Uber for X, uber lyft, unpaid internship, Y Combinator, young professional, zero-sum game, Zipcar

But taking a cue instead from the hands-on, do-it-yourself bias of the digital age, the activists came up with a much simpler solution: buy the debt. They launched a project called the Rolling Jubilee,48 raising money from donors to buy back and then dissolve debt. With just $700,000 of initial donations, they have managed to dissolve over $17 million of student debt and $15 million of medical debt and are now targeting payday loans and private probation debts.49 And the more people they get out of debt, the more new donors they create. Such solutions may not be highly technological, but they are digital in spirit, especially in the way they retrieve the peer-to-peer mechanisms of mutual aid and distribute personal risk and liability throughout a network. Finally, the solution itself is a hack of the existing, highly exploitative system; pennies-on-the-dollar leverage afforded to credit packagers is used instead to relieve debts twenty-five times greater than the donated amount.


Hiding in Plain Sight: The Invention of Donald Trump and the Erosion of America by Sarah Kendzior

"side hustle", 4chan, Berlin Wall, Bernie Sanders, borderless world, Chelsea Manning, Columbine, corporate raider, desegregation, don't be evil, Donald Trump, drone strike, Edward Snowden, Ferguson, Missouri, Francis Fukuyama: the end of history, hiring and firing, illegal immigration, income inequality, Jaron Lanier, Jeff Bezos, Jeffrey Epstein, Julian Assange, Mohammed Bouazizi, Naomi Klein, Nelson Mandela, new economy, payday loans, plutocrats, Plutocrats, QAnon, Robert Hanssen: Double agent, Ronald Reagan, Silicon Valley, Skype, Thomas L Friedman, trickle-down economics, unpaid internship, white flight, WikiLeaks, Y2K, zero-sum game

* * * Missouri bled cash and it bled bodies. The economic crash of 2008 shattered St. Louis’s tenuous comeback, obliterating retail and office jobs while decimating the agricultural and manufacturing sectors across the rest of the state. The abandoned lots and hollowed-out houses from earlier decades of hardship were joined by foreclosed homes and empty offices. Workers were laid off in droves, long-standing malls closed, and payday-loan outlets multiplied. Some outlets combined pawn shops with gun shops, allowing Missourians to trade in their jewels for weapons. People wanted weapons because they felt afraid. I watched as St. Louis’s storefronts shuttered while Manhattan’s bankers walked free. I watched as people on television, none of them from around here, assured Americans that the economy was cyclical, a line that smacked of spin.


We Need New Stories: Challenging the Toxic Myths Behind Our Age of Discontent by Nesrine Malik

affirmative action, Affordable Care Act / Obamacare, barriers to entry, Bernie Sanders, Boris Johnson, British Empire, centre right, cognitive dissonance, continuation of politics by other means, currency peg, Donald Trump, feminist movement, financial independence, Francis Fukuyama: the end of history, gender pay gap, ghettoisation, glass ceiling, illegal immigration, invisible hand, mass immigration, moral panic, Nate Silver, obamacare, old-boy network, payday loans, planetary scale, Ponzi scheme, race to the bottom, Ronald Reagan, Saturday Night Live, sexual politics, Steven Pinker, The Bell Curve by Richard Herrnstein and Charles Murray, Thomas L Friedman, transatlantic slave trade

It collapsed HR codes of conduct, measures against hate speech and incitement (to be found in the majority of professional establishments, academic or otherwise) and general decisions made in the interest of protecting the student body into censorious activity. One university was given a ‘red’ ranking, indicating that the institution ‘has banned and actively censored ideas on campus’, because its student union banned advertising by payday loan companies on campus. The university said it was ‘simply a common sense effort to prevent exploitation of students.’ In 2018, it emerged that Spiked received six-figure donations from the Charles Koch Foundation – the Kochtopus was extending its tentacles to the UK. Manipulating of data to come up with free speech campus hysteria headlines is a common practice. Research by Vox published in 2018 takes issue with what has become an entire genre of US college campus free speech panic, one that includes books, online magazines and is the theme of regular columns in the American press.


pages: 354 words: 99,690

Thinking About It Only Makes It Worse: And Other Lessons From Modern Life by David Mitchell

bank run, Boris Johnson, British Empire, cognitive dissonance, collapse of Lehman Brothers, credit crunch, don't be evil, double helix, Downton Abbey, Etonian, eurozone crisis, haute cuisine, Julian Assange, lateral thinking, Northern Rock, offshore financial centre, payday loans, plutocrats, Plutocrats, profit motive, sensible shoes, Skype, The Wisdom of Crowds, WikiLeaks

Online roulette: “If you’re even reading this slogan, it appeals to you slightly, which means you’re bound to piss all your money away somehow, so it might as well be on this.” McDonald’s: “Ever felt like putting on some elasticated jogging bottoms and really letting go? Why not today? Two years and 15 stone down the line, you can always bounce back via a fat-camp documentary on Sky.” British Airways: “No one is actually going to save the environment, so you might as well enjoy it while it lasts.” Payday loans: “If you were the sort of person who was ever going to understand compound interest, you wouldn’t be in this mess. We can literally put off the shitstorm until next week. I mean, next week! It’ll probably never happen!” Cancer Research UK: “Don’t think of this as chucking your money away altruistically, like with Amnesty. Face it, you’re never going to go to North Korea but, with your diet, bowel cancer is a very real possibility.”


pages: 361 words: 97,787

The Curse of Cash by Kenneth S Rogoff

Andrei Shleifer, Asian financial crisis, bank run, Ben Bernanke: helicopter money, Berlin Wall, bitcoin, blockchain, Boris Johnson, Bretton Woods, business cycle, capital controls, Carmen Reinhart, cashless society, central bank independence, cryptocurrency, debt deflation, disruptive innovation, distributed ledger, Edward Snowden, Ethereum, ethereum blockchain, eurozone crisis, Fall of the Berlin Wall, fiat currency, financial exclusion, financial intermediation, financial repression, forward guidance, frictionless, full employment, George Akerlof, German hyperinflation, illegal immigration, inflation targeting, informal economy, interest rate swap, Isaac Newton, Johann Wolfgang von Goethe, Johannes Kepler, Kenneth Rogoff, labor-force participation, large denomination, liquidity trap, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, moveable type in China, New Economic Geography, offshore financial centre, oil shock, open economy, payday loans, price stability, purchasing power parity, quantitative easing, RAND corporation, RFID, savings glut, secular stagnation, seigniorage, The Great Moderation, the payments system, The Rise and Fall of American Growth, transaction costs, unbanked and underbanked, unconventional monetary instruments, underbanked, unorthodox policies, Y2K, yield curve

Low-income households and individuals go without banks for various reasons, including the inability to meet minimum deposit requirements, monthly service fees, and lack of convenient access in lower-income neighborhoods. In the United States, more than 8% of households were un-banked in 2013, according to an FDIC survey.3 Another 20% were underbanked, meaning they also used alternative financial services outside the banking system, including prepaid cards, payday loans, pawn shops, and check-cashing services. More than 25% of adult Americans do not have a credit card. Unfortunately, the cost of not having bank access is high. Check-cashing services charge exorbitant fees; for immigrants and others who need to wire funds abroad and transfer money to relatives, the transaction costs can amount to 10–15% or more. Storing cash at home and carrying cash greatly increases the chance of theft.4 The risks of being subject to fraud are much higher outside the regulated financial sector.


pages: 336 words: 95,773

The Theft of a Decade: How the Baby Boomers Stole the Millennials' Economic Future by Joseph C. Sternberg

Affordable Care Act / Obamacare, Airbnb, American Legislative Exchange Council, Asian financial crisis, banking crisis, Basel III, Bernie Sanders, blue-collar work, centre right, corporate raider, Detroit bankruptcy, Donald Trump, Edward Glaeser, employer provided health coverage, Erik Brynjolfsson, eurozone crisis, future of work, gig economy, Gordon Gekko, hiring and firing, Home mortgage interest deduction, housing crisis, job satisfaction, job-hopping, labor-force participation, low skilled workers, Lyft, Marc Andreessen, Mark Zuckerberg, minimum wage unemployment, mortgage debt, mortgage tax deduction, Nate Silver, new economy, obamacare, oil shock, payday loans, pension reform, quantitative easing, Richard Florida, Ronald Reagan, Saturday Night Live, Second Machine Age, sharing economy, Silicon Valley, sovereign wealth fund, TaskRabbit, total factor productivity, Tyler Cowen: Great Stagnation, uber lyft, unpaid internship, women in the workforce

And then there were all the other huge things Washington got wrong for Millennials after 2008, policies that were so wrong they arguably outweigh the benefits of Pell Grant expansion. The fundamental problem all along has been that there is no market mechanism to warn colleges, lenders, parents, or students themselves that an individual student might be making a bad financial decision to go to college. For any other type of loan a person takes out—from a credit card to a payday loan to a mortgage—the lender assesses the potential borrower’s creditworthiness and the riskiness of the loan (Does this person have a good credit rating? Is the loan backed by collateral?) and then proposes an interest rate that compensates for the risk. That interest rate in turn sends a strong signal to the borrower, forcing her to think about whether she’ll really be able to repay. This market mechanism is missing in student loans, which are offered at one ultralow, subsidized interest rate to all borrowers regardless of the course of study, quality of the school, or likelihood that the student will ever be able to repay.


pages: 335 words: 98,847

A Bit of a Stretch: The Diaries of a Prisoner by Chris Atkins

Boris Johnson, butterfly effect, collapse of Lehman Brothers, crowdsourcing, Donald Trump, Elon Musk, forensic accounting, G4S, housing crisis, illegal immigration, index card, Mark Zuckerberg, Milgram experiment, Panopticon Jeremy Bentham, payday loans

I’d normally cross the wing to avoid Samuels, as he has regular spice attacks and is constantly fighting the screws. He’s about 50, and is surprisingly ripped for someone who’s spent most of their life on crack. He slopes into our cell talking 19 to the dozen, blurring the line between words, groaning and laughing. ‘Man got mad debts, innit. Big man on da Fours gonna fuck me up, you get me.’ Samuels is heavily indebted to a spice dealer, and the interest is accruing faster than a payday loan. He has no means to pay, but the dealer keeps supplying more drugs on tick. Things have now come to a head, as a screw has just found a phone in the dealer’s cell. The dealer will have to appear before an adjudicator – a visiting magistrate who rules on serious offences – and the punishment is likely to be an extra month on his sentence. The dealer has instructed Samuels to take the heat for the phone, in lieu of the debt.


pages: 371 words: 110,641

On the Run: Fugitive Life in an American City by Alice Goffman

ghettoisation, informal economy, mass incarceration, payday loans, traffic fines, unemployed young men, working poor

When I first came to the neighborhood in 2002, 93 percent of its residents were Black. Men and boys stood at its busiest intersection, offering bootleg CDs and DVDs, stolen goods, and food to drivers and passersby. The main commercial street included a bulletproofed Chinese takeout store that sold fried chicken wings, single cigarettes called loosies, condoms, baby food, and glassines for smoking crack. The street also included a check-cashing store, a hair salon, a payday loan store, a Crown Fried Chicken restaurant, and a pawnshop. On the next block, a Puerto Rican family ran a corner grocery. Roughly one-fourth of the neighborhood’s households received housing vouchers, and in all but two households, families received some type of government assistance.13 6th Street is not the poorest or the most dangerous neighborhood in the large Black section of Philadelphia of which it is a part—far from it.


pages: 364 words: 108,237

Janesville: An American Story by Amy Goldstein

1960s counterculture, Affordable Care Act / Obamacare, collective bargaining, Donald Trump, job-hopping, mass affluent, payday loans, uranium enrichment, War on Poverty, women in the workforce, working poor, Works Progress Administration

A recent Heart of the City Outdoor Art Campaign has splashed large pastel murals on the sides of downtown buildings, each mural commemorating one of Janesville’s first decades, from its founding in 1836. The mural on the back of City Hall, illustrating the coming of the railroad through town in the 1850s, has a steam locomotive and a spike-driving man, and, lettered across the bottom, “History. Vision. Grit.” So Janesville goes on, yet it is altered. The change can be glimpsed from the many “For Sale” signs that appeared along residential streets, from the payday loan franchises that opened along the Milton Avenue commercial drag running north from downtown, from the enlarged space now occupied by the Salvation Army Family Center. And the citizens of Janesville? They set out to reinvent their town and themselves. Over a few years, it became evident that no one outside—not the Democrats nor the Republicans, not the bureaucrats in Madison or in Washington, not the fading unions nor the struggling corporations—had the key to create the middle class anew.


pages: 274 words: 93,758

Phishing for Phools: The Economics of Manipulation and Deception by George A. Akerlof, Robert J. Shiller, Stanley B Resor Professor Of Economics Robert J Shiller

"Robert Solow", Andrei Shleifer, asset-backed security, Bernie Madoff, business cycle, Capital in the Twenty-First Century by Thomas Piketty, collapse of Lehman Brothers, corporate raider, Credit Default Swap, Daniel Kahneman / Amos Tversky, dark matter, David Brooks, desegregation, en.wikipedia.org, endowment effect, equity premium, financial intermediation, financial thriller, fixed income, full employment, George Akerlof, greed is good, income per capita, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kenneth Rogoff, late fees, loss aversion, market bubble, Menlo Park, mental accounting, Milgram experiment, money market fund, moral hazard, new economy, Pareto efficiency, Paul Samuelson, payday loans, Ponzi scheme, profit motive, publication bias, Ralph Nader, randomized controlled trial, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, short selling, Silicon Valley, the new new thing, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, theory of mind, Thorstein Veblen, too big to fail, transaction costs, Unsafe at Any Speed, Upton Sinclair, Vanguard fund, Vilfredo Pareto, wage slave

A recent economics article on “hand-to-mouth consumption” shows that in 2010 the median US working-age family held less than one month’s income in cash, or in checking, savings, or money-market accounts; in addition, but not surprisingly, the median direct holdings of stocks or bonds was exactly zero.6 A study using British diaries of spending gives another indication that many are just juggling the bills; for monthly earners, expenditures are down a full 18 percent in the last week of the monthly pay period, relative to expenditures in the first week after payday.7 We also know that a significant fraction of households do not make it. Some 30 percent of households say they have resorted to super-high-interest “alternative forms of borrowing” at least once over the past five years; those methods include, for example, use of pawn shops, auto-title loans, or short-term payday loans.8 In 2009 a full 2.5 percent of householders reported they had gone bankrupt in the past two years (most of which had been pre-Crash).9 That 2.5 percent may seem like a small, relatively innocuous number; nevertheless, it suggests that a quite significant fraction of the population will go bankrupt over the course of their lifetimes. No one knows the rate of repeat bankruptcy; but if, for example, those with one bankruptcy have two more over the course of their fifty-odd years of adulthood, then slightly more than 20 percent of the US population will go bankrupt in their adult life.10 Eviction is another way to not make it.


pages: 519 words: 104,396

Priceless: The Myth of Fair Value (And How to Take Advantage of It) by William Poundstone

availability heuristic, Cass Sunstein, collective bargaining, Daniel Kahneman / Amos Tversky, delayed gratification, Donald Trump, East Village, en.wikipedia.org, endowment effect, equal pay for equal work, experimental economics, experimental subject, feminist movement, game design, German hyperinflation, Henri Poincaré, high net worth, index card, invisible hand, John von Neumann, Kenneth Arrow, laissez-faire capitalism, Landlord’s Game, loss aversion, market bubble, mental accounting, meta analysis, meta-analysis, Nash equilibrium, new economy, Paul Samuelson, payday loans, Philip Mirowski, Potemkin village, price anchoring, price discrimination, psychological pricing, Ralph Waldo Emerson, RAND corporation, random walk, RFID, Richard Thaler, risk tolerance, Robert Shiller, Robert Shiller, rolodex, social intelligence, starchitect, Steve Jobs, The Chicago School, The Wealth of Nations by Adam Smith, ultimatum game, working poor

It’s not hard to understand why this makes dealers anxious to close a deal. Forty-seven Pricing Gender A group including Sendhil Mullainathan and Eldar Shafir conducted a particularly ambitious experiment in the fall of 2003. They got permission from a large consumer lender in South Africa to test a grab bag of psychological tricks in its junk-mail pitches for loans. The lender was offering the equivalent of American payday loans—short-term cash for the working poor, at loan shark rates. The lender sent letters offering a special interest rate to 53,194 past customers. Among other factors, Mullainathan and Shafir’s team tested the effect of having a photograph in the mailing. They found stock photos of pleasant, smiling faces and put them in the lower right corner of the letter, near the signature. This implicitly suggested that the person depicted was a bank employee, maybe the one who had written the letter.


pages: 382 words: 107,150

We Are All Fast-Food Workers Now: The Global Uprising Against Poverty Wages by Annelise Orleck

airport security, American Legislative Exchange Council, anti-communist, Bernie Sanders, big-box store, British Empire, call centre, Capital in the Twenty-First Century by Thomas Piketty, card file, clean water, collective bargaining, corporate social responsibility, deindustrialization, Deng Xiaoping, Donald Trump, Ferguson, Missouri, financial deregulation, Food sovereignty, gig economy, global supply chain, global value chain, immigration reform, indoor plumbing, Kickstarter, land reform, land tenure, Mahatma Gandhi, mass immigration, McJob, means of production, new economy, payday loans, precariat, race to the bottom, Rana Plaza, rent-seeking, ride hailing / ride sharing, road to serfdom, Ronald Reagan, Rosa Parks, shareholder value, Skype, special economic zone, Triangle Shirtwaist Factory, union organizing, War on Poverty, women in the workforce, working poor

“Each family shares one foil packet of shampoo,” says Binos, if they have water. A tiny rented room in the zone costs half of their monthly salary—before taxes. Most workers take home between $41 and $51 a month. The cost of living in the zone is lower than in the US but not by that much. Workers take loans from employers to make it till the next paycheck. “So they fall deeper and deeper into debt every month because the companies charge high interest on the payday loans. It keeps them almost enslaved. They work till they have no more energy,” Binos says, sad and angry in a soft-spoken way. In 2016, hourly compensation costs for Filipino garment workers were among the lowest in the world. And yet, Philippine government officials and factory owners warn Binos that factories will shut down and move to Bangladesh “if our workers earn too much money.” She lays her hands palms-up on the table.


pages: 397 words: 112,034

What's Next?: Unconventional Wisdom on the Future of the World Economy by David Hale, Lyric Hughes Hale

affirmative action, Asian financial crisis, asset-backed security, bank run, banking crisis, Basel III, Berlin Wall, Black Swan, Bretton Woods, business cycle, capital controls, Cass Sunstein, central bank independence, cognitive bias, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, Daniel Kahneman / Amos Tversky, debt deflation, declining real wages, deindustrialization, diversification, energy security, Erik Brynjolfsson, Fall of the Berlin Wall, financial innovation, floating exchange rates, full employment, Gini coefficient, global reserve currency, global village, high net worth, Home mortgage interest deduction, housing crisis, index fund, inflation targeting, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Just-in-time delivery, Kenneth Rogoff, Long Term Capital Management, Mahatma Gandhi, Martin Wolf, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, money market fund, money: store of value / unit of account / medium of exchange, mortgage tax deduction, Network effects, new economy, Nicholas Carr, oil shale / tar sands, oil shock, open economy, passive investing, payday loans, peak oil, Ponzi scheme, post-oil, price stability, private sector deleveraging, purchasing power parity, quantitative easing, race to the bottom, regulatory arbitrage, rent-seeking, reserve currency, Richard Thaler, risk/return, Robert Shiller, Robert Shiller, Ronald Reagan, sovereign wealth fund, special drawing rights, technology bubble, The Great Moderation, Thomas Kuhn: the structure of scientific revolutions, Tobin tax, too big to fail, total factor productivity, trade liberalization, Washington Consensus, Westphalian system, WikiLeaks, women in the workforce, yield curve

Politicians will be quick to claim credit, but there will be no practical way to determine whether any is deserved. Dodd-Frank’s Missing Pieces Far more important than anything that Dodd-Frank does are the things that—for good or ill—it does not do. The most obvious deficiency is its silence on GSEs. Although Senator Dodd and Representative Frank found space to empower regulators to crack down on retail payday loans and to order companies to report purchases of “conflict gold” from Africa, they somehow neglected to say anything about some of the chief culprits behind the housing bubble and subsequent financial collapse. Fannie Mae and Freddie Mac facilitated—if not encouraged—all the mortgage-underwriting excesses of the 2000s. GSEs have already become the most expensive part of financial rescue efforts, and taxpayers remain potentially liable for hundreds of billions of dollars in additional losses.


pages: 421 words: 110,406

Platform Revolution: How Networked Markets Are Transforming the Economy--And How to Make Them Work for You by Sangeet Paul Choudary, Marshall W. van Alstyne, Geoffrey G. Parker

3D printing, Affordable Care Act / Obamacare, Airbnb, Alvin Roth, Amazon Mechanical Turk, Amazon Web Services, Andrei Shleifer, Apple's 1984 Super Bowl advert, autonomous vehicles, barriers to entry, big data - Walmart - Pop Tarts, bitcoin, blockchain, business cycle, business process, buy low sell high, chief data officer, Chuck Templeton: OpenTable:, clean water, cloud computing, connected car, corporate governance, crowdsourcing, data acquisition, data is the new oil, digital map, discounted cash flows, disintermediation, Edward Glaeser, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, financial innovation, Haber-Bosch Process, High speed trading, information asymmetry, Internet of things, inventory management, invisible hand, Jean Tirole, Jeff Bezos, jimmy wales, John Markoff, Khan Academy, Kickstarter, Lean Startup, Lyft, Marc Andreessen, market design, Metcalfe’s law, multi-sided market, Network effects, new economy, payday loans, peer-to-peer lending, Peter Thiel, pets.com, pre–internet, price mechanism, recommendation engine, RFID, Richard Stallman, ride hailing / ride sharing, Robert Metcalfe, Ronald Coase, Satoshi Nakamoto, self-driving car, shareholder value, sharing economy, side project, Silicon Valley, Skype, smart contracts, smart grid, Snapchat, software is eating the world, Steve Jobs, TaskRabbit, The Chicago School, the payments system, Tim Cook: Apple, transaction costs, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, winner-take-all economy, zero-sum game, Zipcar

Still another potential source of future growth is the hundreds of millions of “unbanked” people, both in the developing world and in less affluent neighborhoods in the U.S. and other developed countries, who currently have no access to tools that can help them pay their bills, borrow money, save, and make investments. Because they live in areas without bank branches and lack the capital needed to qualify for a traditional bank account or line of credit, the unbanked are forced to rely on costly, inconvenient, and sometimes fraudulent alternatives like check-cashing services, money order businesses, payday loan companies, and illegal loan sharks. These substandard financial operators represent another barrier to self-sufficiency that makes it harder for the poor to escape poverty. Now that millions of these less affluent consumers have access to mobile technology in the form of cell phones, the possibility of creating affordable online financial platforms customized to their needs has become a reality.


pages: 386 words: 116,233

The Millionaire Fastlane: Crack the Code to Wealth and Live Rich for a Lifetime by Mj Demarco

8-hour work day, Albert Einstein, AltaVista, back-to-the-land, Bernie Madoff, bounce rate, business process, butterfly effect, buy and hold, cloud computing, commoditize, dark matter, delayed gratification, demand response, Donald Trump, fear of failure, financial independence, fixed income, housing crisis, Jeff Bezos, job-hopping, Lao Tzu, Mark Zuckerberg, passive income, passive investing, payday loans, Ponzi scheme, price anchoring, Ronald Reagan, upwardly mobile, wealth creators, white picket fence, World Values Survey, zero day

Besides, the banks and utility companies are big, rich companies-they are the enemy.” You put faith into politicians and government to change the system, instead of focusing on how you can change yourself. “A bigger government is the solution. More regulation, more programs, and more services. The government should serve the people. Rich people should pay more in taxes for their good fortune-they can afford it and I can't!” You view pawnshops, payday loan stores, and credit cards as a means of supplemental income. “Groceries can't wait until the next paycheck-my family has to eat! Besides, there's a sale on crab legs for only $18 a pound.” You have filed for bankruptcy at least once. “It wasn't my fault-I overextended myself and didn't expect to lose my job. I didn't expect a recession. I don't feel bad about bankruptcy because it wipes my slate clean and I can start over fresh.


pages: 349 words: 114,914

We Were Eight Years in Power: An American Tragedy by Ta-Nehisi Coates

affirmative action, Affordable Care Act / Obamacare, Bernie Madoff, Bernie Sanders, Broken windows theory, Charles Lindbergh, crack epidemic, crony capitalism, David Brooks, deindustrialization, desegregation, Donald Trump, fear of failure, Ferguson, Missouri, Gunnar Myrdal, housing crisis, Howard Zinn, income inequality, jitney, low skilled workers, mandatory minimum, mass incarceration, moral panic, new economy, obamacare, payday loans, phenotype, Ronald Reagan, Rosa Parks, single-payer health, The Bell Curve by Richard Herrnstein and Charles Murray, War on Poverty, white flight

But in the age of the Obama presidency, expressing that kind of patriotism is presumably best done quietly, politely, and with great deference. — THIS SPRING I FLEW down to Albany, Georgia, and spent the day with Shirley Sherrod, a longtime civil rights activist who embodies exactly the kind of patriotism that Obama esteems. Albany is in Dougherty County, where the poverty rate hangs around 30 percent—double that of the rest of the state. On the drive in from the airport, the selection of vendors—payday loans, title loans, and car dealers promising no credit check—evidenced the statistic. When I met Sherrod at her office, she was working to get a birthday card out to Roger Spooner, whose farm she’d once fought to save. In July 2010, the conservative commentator Andrew Breitbart posted video clips on his website of a speech Sherrod had delivered to the NAACP the previous March. The video was edited so that Sherrod, then an official at the U.S.


pages: 311 words: 130,761

Framing Class: Media Representations of Wealth and Poverty in America by Diana Elizabeth Kendall

Bernie Madoff, blue-collar work, Bonfire of the Vanities, call centre, David Brooks, declining real wages, Donald Trump, employer provided health coverage, ending welfare as we know it, fixed income, framing effect, Georg Cantor, Gordon Gekko, greed is good, haute couture, housing crisis, illegal immigration, income inequality, mortgage tax deduction, new economy, payday loans, Ponzi scheme, Ray Oldenburg, Richard Florida, Ronald Reagan, Saturday Night Live, telemarketer, The Great Good Place, Thorstein Veblen, trickle-down economics, union organizing, upwardly mobile, urban planning, working poor

A woman referred to as “Melissa” in the book was still working at Walmart, where her wages had risen from $7 to $10 an hour in the intervening nine-year period.135 In his 2010 book, Gary Rivlin emphasizes the exploitation of the working poor by the “poverty industry.” According to Rivlin, the recession has not been equally difficult for everyone: the “mercenary entrepreneurs” have enriched themselves by preying on the “credit-hungry working poor” and misleading them about instant tax refunds, payday loans, subprime mortgages, pawnshop specials, and rental furniture and appliances with strings attached.136 Were it not for books like these, the mainstream media might not have published as many reports about the growing problems of the working poor. Through media framing of stories about this group and the increasing problem of long-term unemployment, journalists provide media audiences with information and explode myths that have perpetuated and exacerbated economic and social inequalities in this country for many years.


pages: 497 words: 143,175

Pivotal Decade: How the United States Traded Factories for Finance in the Seventies by Judith Stein

"Robert Solow", 1960s counterculture, activist lawyer, affirmative action, airline deregulation, anti-communist, Ayatollah Khomeini, barriers to entry, Berlin Wall, blue-collar work, Bretton Woods, business cycle, capital controls, centre right, collective bargaining, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, deindustrialization, desegregation, energy security, Fall of the Berlin Wall, falling living standards, feminist movement, financial deregulation, floating exchange rates, full employment, Gunnar Myrdal, income inequality, income per capita, intermodal, invisible hand, knowledge worker, laissez-faire capitalism, liberal capitalism, Long Term Capital Management, manufacturing employment, market bubble, Martin Wolf, new economy, oil shale / tar sands, oil shock, open economy, Paul Samuelson, payday loans, post-industrial society, post-oil, price mechanism, price stability, Ralph Nader, RAND corporation, reserve currency, Robert Gordon, Ronald Reagan, Simon Kuznets, strikebreaker, trade liberalization, union organizing, urban planning, urban renewal, War on Poverty, Washington Consensus, working poor, Yom Kippur War

Beginning in the 1980S, the financial services industry found a home in FDR’s party. Despite popular outrage, the industry blocked legislation in the Democratic Congress prohibiting usury. Usury used to be illegal, but in 1980 Jimmy Carter and the Democratic Congress repealed all interest rate controls and the national law prohibiting usury. This repeal is what makes it possible for credit card companies to charge 30 percent interest and lenders to make the notorious “payday” loans that charge desperate people a real interest rate of more than 500 percent. Legislation capping rates at 15 and 18 percent failed to pass the Congress and the Senate in early 2009.118 Banks blocked a law, once championed by Obama, to allow bankruptcy judges to lower the amounts owned on mortgage loans.119 The financial services industry is probably more concentrated than it was before the crisis.


pages: 500 words: 145,005

Misbehaving: The Making of Behavioral Economics by Richard H. Thaler

"Robert Solow", 3Com Palm IPO, Albert Einstein, Alvin Roth, Amazon Mechanical Turk, Andrei Shleifer, Apple's 1984 Super Bowl advert, Atul Gawande, Berlin Wall, Bernie Madoff, Black-Scholes formula, business cycle, capital asset pricing model, Cass Sunstein, Checklist Manifesto, choice architecture, clean water, cognitive dissonance, conceptual framework, constrained optimization, Daniel Kahneman / Amos Tversky, delayed gratification, diversification, diversified portfolio, Edward Glaeser, endowment effect, equity premium, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, George Akerlof, hindsight bias, Home mortgage interest deduction, impulse control, index fund, information asymmetry, invisible hand, Jean Tirole, John Nash: game theory, John von Neumann, Kenneth Arrow, Kickstarter, late fees, law of one price, libertarian paternalism, Long Term Capital Management, loss aversion, market clearing, Mason jar, mental accounting, meta analysis, meta-analysis, money market fund, More Guns, Less Crime, mortgage debt, Myron Scholes, Nash equilibrium, Nate Silver, New Journalism, nudge unit, Paul Samuelson, payday loans, Ponzi scheme, presumed consent, pre–internet, principal–agent problem, prisoner's dilemma, profit maximization, random walk, randomized controlled trial, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Coase, Silicon Valley, South Sea Bubble, Stanford marshmallow experiment, statistical model, Steve Jobs, Supply of New York City Cabdrivers, technology bubble, The Chicago School, The Myth of the Rational Market, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, transaction costs, ultimatum game, Vilfredo Pareto, Walter Mischel, zero-sum game

If a $100 windfall could pay the overdue utility bill or replace the kids’ shoes that are now too small, opportunity costs are front and center. However, this incessant fretting about opportunity costs takes a toll. Having to constantly worry about where the money is going to come from to pay the rent makes it hard to keep up with everything, and may contribute to some of the bad decisions made by the poor, such as taking out and rolling over payday loans. † The median is the statistical term for middle. If all the prices are ranked from high to low, the median answer is the one with as many answers higher as lower. ‡ A recent study finds that when U.S. supermarkets were confronted with the challenge of a Walmart entering their home market, all suffered, but those who used a promotional pricing strategy (e.g., frequent sales) experienced significantly greater revenues and long-term viability than an everyday low price strategy (Ellickson, Misra, and Nair, 2012). 8 Sunk Costs Vince paid $1,000 to an indoor tennis club that entitled him to play once a week for the indoor season.


pages: 496 words: 131,938

The Future Is Asian by Parag Khanna

3D printing, Admiral Zheng, affirmative action, Airbnb, Amazon Web Services, anti-communist, Asian financial crisis, asset-backed security, augmented reality, autonomous vehicles, Ayatollah Khomeini, barriers to entry, Basel III, blockchain, Boycotts of Israel, Branko Milanovic, British Empire, call centre, capital controls, carbon footprint, cashless society, clean water, cloud computing, colonial rule, computer vision, connected car, corporate governance, crony capitalism, currency peg, deindustrialization, Deng Xiaoping, Dissolution of the Soviet Union, Donald Trump, energy security, European colonialism, factory automation, failed state, falling living standards, family office, fixed income, flex fuel, gig economy, global reserve currency, global supply chain, haute couture, haute cuisine, illegal immigration, income inequality, industrial robot, informal economy, Internet of things, Kevin Kelly, Kickstarter, knowledge worker, light touch regulation, low cost airline, low cost carrier, low skilled workers, Lyft, Malacca Straits, Mark Zuckerberg, megacity, Mikhail Gorbachev, money market fund, Monroe Doctrine, mortgage debt, natural language processing, Netflix Prize, new economy, off grid, oil shale / tar sands, open economy, Parag Khanna, payday loans, Pearl River Delta, prediction markets, purchasing power parity, race to the bottom, RAND corporation, rent-seeking, reserve currency, ride hailing / ride sharing, Ronald Reagan, Scramble for Africa, self-driving car, Silicon Valley, smart cities, South China Sea, sovereign wealth fund, special economic zone, stem cell, Steve Jobs, Steven Pinker, supply-chain management, sustainable-tourism, trade liberalization, trade route, transaction costs, Travis Kalanick, uber lyft, upwardly mobile, urban planning, Washington Consensus, working-age population, Yom Kippur War

The rich have gotten richer and the poor poorer: the country’s median income actually fell by 5 percent between 2010 and 2013, to $46,700, while middle-class incomes continue to stagnate. All of this makes Americans the perfect mass market for cheap Asian goods—just like billions of other customers around the world. Indeed, tens of millions of poor Americans don’t have smartphones that would allow them to access lower-cost mobile banking and instead pay high fees for low-balance bank accounts, debit cards, check-cashing services, or payday loans. They would all be better off with cheap Asian smartphones and WeChat, not to mention low-cost Indian generic medicines, which already represent one-third of the US market. Americans’ binge consumption has meant not only endless shopping for largely unnecessary merchandise but also binge eating at all-you-can-eat restaurants that are fueling the nation’s obesity crisis. Even a shift from bingeing to an “experience economy” will benefit hard-working Asians, who push themselves overtime in the gig economy, have lower rates of drug addiction, and can thrive in hot entrepreneurial areas such as selling coding courses or Chinese lessons.


pages: 457 words: 128,838

The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order by Paul Vigna, Michael J. Casey

Airbnb, altcoin, bank run, banking crisis, bitcoin, blockchain, Bretton Woods, buy and hold, California gold rush, capital controls, carbon footprint, clean water, collaborative economy, collapse of Lehman Brothers, Columbine, Credit Default Swap, cryptocurrency, David Graeber, disintermediation, Edward Snowden, Elon Musk, Ethereum, ethereum blockchain, fiat currency, financial innovation, Firefox, Flash crash, Fractional reserve banking, hacker house, Hernando de Soto, high net worth, informal economy, intangible asset, Internet of things, inventory management, Joi Ito, Julian Assange, Kickstarter, Kuwabatake Sanjuro: assassination market, litecoin, Long Term Capital Management, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, McMansion, means of production, Menlo Park, mobile money, money: store of value / unit of account / medium of exchange, Nelson Mandela, Network effects, new economy, new new economy, Nixon shock, offshore financial centre, payday loans, Pearl River Delta, peer-to-peer, peer-to-peer lending, pets.com, Ponzi scheme, prediction markets, price stability, profit motive, QR code, RAND corporation, regulatory arbitrage, rent-seeking, reserve currency, Robert Shiller, Robert Shiller, Ross Ulbricht, Satoshi Nakamoto, seigniorage, shareholder value, sharing economy, short selling, Silicon Valley, Silicon Valley startup, Skype, smart contracts, special drawing rights, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, supply-chain management, Ted Nelson, The Great Moderation, the market place, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, Turing complete, Tyler Cowen: Great Stagnation, Uber and Lyft, uber lyft, underbanked, WikiLeaks, Y Combinator, Y2K, zero-sum game, Zimmermann PGP

In Canada, the United Kingdom, Germany, and Australia, the proportion of people above the age of fifteen with a bank account ranges from 96 percent to 99 percent. But head to the United States, and the figure slips to 88 percent. Add in a separate “underbanked” category—that is, those who may have a bank account, but also are driven to “nontraditional” banking sources such as check cashers or payday loans—and the percentage of the American population with insufficient access to the financial system exceeds 30 percent. Whereas China has delivered bank accounts to 64 percent of its people, in Argentina, despite Buenos Aires’ large, educated, and internationally savvy middle-class population, just 33 percent of the country is banked, a figure less even than India’s 35 percent. In the Philippines, where remittances are so valued that returning OFWs (Overseas Filipino Workers) are exempted from airport taxes and given fast-track passport-processing at Manila Airport, only 27 percent of the population have bank accounts.


pages: 444 words: 128,701

The Meat Racket: The Secret Takeover of America's Food Business by Christopher Leonard

agricultural Revolution, barriers to entry, commoditize, estate planning, facts on the ground, invisible hand, longitudinal study, mortgage debt, payday loans, price discovery process, price stability, Ralph Nader, women in the workforce, zero-sum game

The brick buildings along Main Street speak to the grandeur of Holdenville’s past, with ornate stonework and cornices adorning the skyline through the middle of town. But the elements have been hard on the buildings, and the economy unable to preserve them. Windows are boarded up, bricks are crumbling, and paint peels off the walls. Businesses downtown reflect an economy that long ago quit growing and now exists by cannibalizing itself. An inordinate number of pawn shops dot the strip downtown, while several check-cashing and payday loan shops advertise the opportunity to borrow money against the meager paychecks most residents earn. The unemployment rate is among the highest in Oklahoma, and those citizens lucky enough to have a job earn just a fraction of the average pay of their relatives who left for big-city jobs. When Bill Moeller saw Holdenville, he knew it was perfect. The city had a population that was hungry for work and would welcome a new company in town.


pages: 488 words: 144,145

Inflated: How Money and Debt Built the American Dream by R. Christopher Whalen

Albert Einstein, bank run, banking crisis, Black Swan, Bretton Woods, British Empire, business cycle, buy and hold, California gold rush, Carmen Reinhart, central bank independence, commoditize, conceptual framework, corporate governance, corporate raider, creative destruction, cuban missile crisis, currency peg, debt deflation, falling living standards, fiat currency, financial deregulation, financial innovation, financial intermediation, floating exchange rates, Fractional reserve banking, full employment, global reserve currency, housing crisis, interchangeable parts, invention of radio, Kenneth Rogoff, laissez-faire capitalism, liquidity trap, means of production, money: store of value / unit of account / medium of exchange, moral hazard, mutually assured destruction, non-tariff barriers, oil shock, Paul Samuelson, payday loans, plutocrats, Plutocrats, price stability, pushing on a string, quantitative easing, rent-seeking, reserve currency, Ronald Reagan, special drawing rights, The Chicago School, The Great Moderation, too big to fail, trade liberalization, transcontinental railway, Upton Sinclair, women in the workforce

Indeed, this inequality led to alternative policy responses in the Anglo-Saxon countries versus the social welfare countries of continental Europe. In the former group (United States, United Kingdom, Ireland, Spain, Iceland, Australia, and New Zealand) the response was one of democratization of credit that allowed households to borrow and spend beyond their means: the boom in mortgage and consumer credit (credit cards, auto loans, student loans, payday loans, subprime loans, and so on) led to a massive increase in private household debts that found it matching in the rising leverage of the financial sector (banks and shadow banks). This financial system leverage was abetted by reckless financial deregulation—repeal of Glass Steagall, non-regulation of derivatives, explosion of toxic financial innovation, rise of a subprime financial system, explosion of the shadow banking system.


pages: 586 words: 159,901

Wall Street: How It Works And for Whom by Doug Henwood

accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, affirmative action, Andrei Shleifer, asset allocation, asset-backed security, bank run, banking crisis, barriers to entry, borderless world, Bretton Woods, British Empire, business cycle, capital asset pricing model, capital controls, central bank independence, computerized trading, corporate governance, corporate raider, correlation coefficient, correlation does not imply causation, credit crunch, currency manipulation / currency intervention, David Ricardo: comparative advantage, debt deflation, declining real wages, deindustrialization, dematerialisation, diversification, diversified portfolio, Donald Trump, equity premium, Eugene Fama: efficient market hypothesis, experimental subject, facts on the ground, financial deregulation, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, George Akerlof, George Gilder, hiring and firing, Hyman Minsky, implied volatility, index arbitrage, index fund, information asymmetry, interest rate swap, Internet Archive, invisible hand, Irwin Jacobs, Isaac Newton, joint-stock company, Joseph Schumpeter, kremlinology, labor-force participation, late capitalism, law of one price, liberal capitalism, liquidationism / Banker’s doctrine / the Treasury view, London Interbank Offered Rate, Louis Bachelier, market bubble, Mexican peso crisis / tequila crisis, microcredit, minimum wage unemployment, money market fund, moral hazard, mortgage debt, mortgage tax deduction, Myron Scholes, oil shock, Paul Samuelson, payday loans, pension reform, plutocrats, Plutocrats, price mechanism, price stability, prisoner's dilemma, profit maximization, publication bias, Ralph Nader, random walk, reserve currency, Richard Thaler, risk tolerance, Robert Gordon, Robert Shiller, Robert Shiller, selection bias, shareholder value, short selling, Slavoj Žižek, South Sea Bubble, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Market for Lemons, The Nature of the Firm, The Predators' Ball, The Wealth of Nations by Adam Smith, transaction costs, transcontinental railway, women in the workforce, yield curve, zero-coupon bond

These operations range from the negligently optimistic to the outright criminal, and show a special fondness for locating in places like Long Island, Florida, and Vancouver. This survey excludes the lowlifes who take in $200-300 billion a year by preying on the poor and desperate — brokers who demand 20% on a WALL STREET second mortgage, pawn shops who charge 240% on loans, finance companies who charge 300%, check-cashing services that charge 2,000% for quick "payday" loans, layaway artists and rent-to-own schemers (Hudson 1996). While they're undoubtedly part of the financial industry, I'll ignore them; the point of this book is to tar the folks with the good reputations, if only to preempt the "bad apple" defense. funds of several sorts Individuals who deal with brokers can trade stocks, bonds, options, and other exotic instruments, but many also turn to mutual funds and other managed investment vehicles to do the research and trading work for them.


pages: 598 words: 134,339

Data and Goliath: The Hidden Battles to Collect Your Data and Control Your World by Bruce Schneier

23andMe, Airbnb, airport security, AltaVista, Anne Wojcicki, augmented reality, Benjamin Mako Hill, Black Swan, Boris Johnson, Brewster Kahle, Brian Krebs, call centre, Cass Sunstein, Chelsea Manning, citizen journalism, cloud computing, congestion charging, disintermediation, drone strike, Edward Snowden, experimental subject, failed state, fault tolerance, Ferguson, Missouri, Filter Bubble, Firefox, friendly fire, Google Chrome, Google Glasses, hindsight bias, informal economy, Internet Archive, Internet of things, Jacob Appelbaum, Jaron Lanier, John Markoff, Julian Assange, Kevin Kelly, license plate recognition, lifelogging, linked data, Lyft, Mark Zuckerberg, moral panic, Nash equilibrium, Nate Silver, national security letter, Network effects, Occupy movement, Panopticon Jeremy Bentham, payday loans, pre–internet, price discrimination, profit motive, race to the bottom, RAND corporation, recommendation engine, RFID, Ross Ulbricht, self-driving car, Shoshana Zuboff, Silicon Valley, Skype, smart cities, smart grid, Snapchat, social graph, software as a service, South China Sea, stealth mode startup, Steven Levy, Stuxnet, TaskRabbit, telemarketer, Tim Cook: Apple, transaction costs, Uber and Lyft, uber lyft, undersea cable, urban planning, WikiLeaks, zero day

Data brokers use your data to sort you into various marketable categories. Want lists of people who fall into the category of “potential inheritor” or “adult with senior parent,” or addresses of households with a “diabetic focus” or “senior needs”? Acxiom can provide you with that. InfoUSA has sold lists of “suffering seniors” and gullible seniors. In 2011, the data broker Teletrack sold lists of people who had applied for nontraditional credit products like payday loans to companies who wanted to target them for bad financial deals. In 2012, the broker Equifax sold lists of people who were late on their mortgage payments to a discount loan company. Because this was financial information, both brokers were fined by the FTC for their actions. Almost everything else is fair game. PERSONALIZED ADVERTISING We use systems that spy on us in exchange for services.


pages: 527 words: 147,690

Terms of Service: Social Media and the Price of Constant Connection by Jacob Silverman

23andMe, 4chan, A Declaration of the Independence of Cyberspace, Airbnb, airport security, Amazon Mechanical Turk, augmented reality, basic income, Brian Krebs, California gold rush, call centre, cloud computing, cognitive dissonance, commoditize, correlation does not imply causation, Credit Default Swap, crowdsourcing, don't be evil, drone strike, Edward Snowden, feminist movement, Filter Bubble, Firefox, Flash crash, game design, global village, Google Chrome, Google Glasses, hive mind, income inequality, informal economy, information retrieval, Internet of things, Jaron Lanier, jimmy wales, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, late capitalism, license plate recognition, life extension, lifelogging, Lyft, Mark Zuckerberg, Mars Rover, Marshall McLuhan, mass incarceration, meta analysis, meta-analysis, Minecraft, move fast and break things, move fast and break things, national security letter, Network effects, new economy, Nicholas Carr, Occupy movement, optical character recognition, payday loans, Peter Thiel, postindustrial economy, prediction markets, pre–internet, price discrimination, price stability, profit motive, quantitative hedge fund, race to the bottom, Ray Kurzweil, recommendation engine, rent control, RFID, ride hailing / ride sharing, self-driving car, sentiment analysis, shareholder value, sharing economy, Silicon Valley, Silicon Valley ideology, Snapchat, social graph, social intelligence, social web, sorting algorithm, Steve Ballmer, Steve Jobs, Steven Levy, TaskRabbit, technoutopianism, telemarketer, transportation-network company, Travis Kalanick, Turing test, Uber and Lyft, Uber for X, uber lyft, universal basic income, unpaid internship, women in the workforce, Y Combinator, Zipcar

Whether in airport security lines or on e-commerce sites, our data is being run through the decision-making mill. We are judged on the basis of our personal data and our social-media presence, with little opportunity to dispute its accuracy or confront a real human being. Like demographic, medical, or credit data, information gleaned from social media is increasingly being taken up with the promise that it can tell companies and governments about who people are and predict their actions. Lenders, from payday loan companies to mortgage giants, have taken to looking at customers’ social-media accounts. Their reasoning is that strong social networks may reveal a customer’s reliability, particularly if he lacks a credit history, and that this information may be more up-to-date than what’s contained in a credit report. Others are pairing the social graph with even more information: GPS coordinates, the applicant’s behavior on the phone or Web site while submitting an application, online purchases, friends’ credit histories, hardware and software used.


pages: 580 words: 168,476

The Price of Inequality: How Today's Divided Society Endangers Our Future by Joseph E. Stiglitz

"Robert Solow", affirmative action, Affordable Care Act / Obamacare, airline deregulation, Andrei Shleifer, banking crisis, barriers to entry, Basel III, battle of ideas, Berlin Wall, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, collapse of Lehman Brothers, collective bargaining, colonial rule, corporate governance, Credit Default Swap, Daniel Kahneman / Amos Tversky, Dava Sobel, declining real wages, deskilling, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, financial innovation, Flash crash, framing effect, full employment, George Akerlof, Gini coefficient, income inequality, income per capita, indoor plumbing, inflation targeting, information asymmetry, invisible hand, jobless men, John Harrison: Longitude, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kenneth Rogoff, London Interbank Offered Rate, lone genius, low skilled workers, Marc Andreessen, Mark Zuckerberg, market bubble, market fundamentalism, mass incarceration, medical bankruptcy, microcredit, moral hazard, mortgage tax deduction, negative equity, obamacare, offshore financial centre, paper trading, Pareto efficiency, patent troll, Paul Samuelson, payday loans, price stability, profit maximization, profit motive, purchasing power parity, race to the bottom, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, shareholder value, short selling, Silicon Valley, Simon Kuznets, spectrum auction, Steve Jobs, technology bubble, The Chicago School, The Fortune at the Bottom of the Pyramid, The Myth of the Rational Market, The Spirit Level, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, trickle-down economics, ultimatum game, uranium enrichment, very high income, We are the 99%, wealth creators, women in the workforce, zero-sum game

Many states tried to circumscribe its activities, but it used its political influence (it had senior ex-politicians, including a former leader of the Republicans in the House of Representatives, on its board) to try to get federal preemption (whereby weaker federal rules preempt the rights of states to regulate). In 2006 Rent-a-Center (with nationwide revenues in excess of $2 billion) was successfully sued by the state of California for deceptive business practices. See http://oag.ca.gov/news/press_release?id=1391. Credit cards and payday loans provided other venues for predatory practices. Among many discussions, see, e.g., Robert Faris, “Payday Lending: A Business Model That Encourages Chronic Borrowing,” Economic Development Quarterly 17, no. 1 (February 2003): 8–32; James H. Carr and Lopa Kolluri, Predatory Lending: An Overview (Washington, DC: Fannie Mae Foundation, 2001). 12. A well-performing financial sector is absolutely essential for a well-performing economy.


pages: 533

Future Politics: Living Together in a World Transformed by Tech by Jamie Susskind

3D printing, additive manufacturing, affirmative action, agricultural Revolution, Airbnb, airport security, Andrew Keen, artificial general intelligence, augmented reality, automated trading system, autonomous vehicles, basic income, Bertrand Russell: In Praise of Idleness, bitcoin, blockchain, brain emulation, British Empire, business process, Capital in the Twenty-First Century by Thomas Piketty, cashless society, Cass Sunstein, cellular automata, cloud computing, computer age, computer vision, continuation of politics by other means, correlation does not imply causation, crowdsourcing, cryptocurrency, digital map, distributed ledger, Donald Trump, easy for humans, difficult for computers, Edward Snowden, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Ethereum, ethereum blockchain, Filter Bubble, future of work, Google bus, Google X / Alphabet X, Googley, industrial robot, informal economy, intangible asset, Internet of things, invention of the printing press, invention of writing, Isaac Newton, Jaron Lanier, John Markoff, Joseph Schumpeter, Kevin Kelly, knowledge economy, lifelogging, Metcalfe’s law, mittelstand, more computing power than Apollo, move fast and break things, move fast and break things, natural language processing, Network effects, new economy, night-watchman state, Oculus Rift, Panopticon Jeremy Bentham, pattern recognition, payday loans, price discrimination, price mechanism, RAND corporation, ransomware, Ray Kurzweil, Richard Stallman, ride hailing / ride sharing, road to serfdom, Robert Mercer, Satoshi Nakamoto, Second Machine Age, selection bias, self-driving car, sexual politics, sharing economy, Silicon Valley, Silicon Valley startup, Skype, smart cities, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, smart contracts, Snapchat, speech recognition, Steve Jobs, Steve Wozniak, Steven Levy, technological singularity, the built environment, The Structural Transformation of the Public Sphere, The Wisdom of Crowds, Thomas L Friedman, universal basic income, urban planning, Watson beat the top human players on Jeopardy!, working-age population

In the United States, more than 80 per cent of consumers search online before buying a product. The results OUP CORRECTED PROOF – FINAL, 28/05/18, SPi РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Algorithms of Distribution 269 they are shown directly delimit the set of options from which they choose in making their purchases.29 Often algorithms will apply class distinctions: online shopping platforms routinely display advertisements for payday loans to less well-off groups.30 Every algorithm of this kind will benefit some groups more than others. The question is, whose interests should they prioritize? The seller or the buyer? Rich or poor? These are quintessential questions of distributive justice. Algorithms and Price Finally, algorithms increasingly intervene in the most fundamental machinery of the market economy: the price mechanism.


Colorado by Lonely Planet

big-box store, California gold rush, carbon footprint, Columbine, East Village, haute couture, haute cuisine, Kickstarter, payday loans, Steve Wozniak, trade route, transcontinental railway, young professional

It even has dinosaur fossils. Out back there’s a 13-building replica of old Main St from the 1930s along with a covered wagon. Together it all paints a picture of Sterling’s human and natural history. Further north of the interstate, Old Sterling sits in a cozy six-square block grid. Edged by an active railyard, it still has dated brick-house charm, but it’s a pretty depressed place with a few pawn shops and payday loan joints beckoning on the new Main St strip. Clearly, there’s no reason to stay the night in Sterling, but there is a fun place to eat. Eating J & L Cafe DINER $ ( 970-522-3625; 423 N 3rd St; mains $6.25-9.99; 5:15am-8pm; ) A local joint steeped in country music where the men wear cowboy hats and the women talk with a hint of western twang. It serves breakfast all day, burgers, chili and chicken fried steak.


pages: 1,104 words: 302,176

The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War (The Princeton Economic History of the Western World) by Robert J. Gordon

"Robert Solow", 3D printing, Affordable Care Act / Obamacare, airline deregulation, airport security, Apple II, barriers to entry, big-box store, blue-collar work, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Charles Lindbergh, clean water, collective bargaining, computer age, creative destruction, deindustrialization, Detroit bankruptcy, discovery of penicillin, Donner party, Downton Abbey, Edward Glaeser, en.wikipedia.org, Erik Brynjolfsson, everywhere but in the productivity statistics, feminist movement, financial innovation, full employment, George Akerlof, germ theory of disease, glass ceiling, high net worth, housing crisis, immigration reform, impulse control, income inequality, income per capita, indoor plumbing, industrial robot, inflight wifi, interchangeable parts, invention of agriculture, invention of air conditioning, invention of the sewing machine, invention of the telegraph, invention of the telephone, inventory management, James Watt: steam engine, Jeff Bezos, jitney, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, labor-force participation, Loma Prieta earthquake, Louis Daguerre, Louis Pasteur, low skilled workers, manufacturing employment, Mark Zuckerberg, market fragmentation, Mason jar, mass immigration, mass incarceration, McMansion, Menlo Park, minimum wage unemployment, mortgage debt, mortgage tax deduction, new economy, Norbert Wiener, obamacare, occupational segregation, oil shale / tar sands, oil shock, payday loans, Peter Thiel, pink-collar, Productivity paradox, Ralph Nader, Ralph Waldo Emerson, refrigerator car, rent control, Robert X Cringely, Ronald Coase, school choice, Second Machine Age, secular stagnation, Skype, stem cell, Steve Jobs, Steve Wozniak, Steven Pinker, The Market for Lemons, The Rise and Fall of American Growth, Thomas Malthus, total factor productivity, transaction costs, transcontinental railway, traveling salesman, Triangle Shirtwaist Factory, undersea cable, Unsafe at Any Speed, Upton Sinclair, upwardly mobile, urban decay, urban planning, urban sprawl, washing machines reduced drudgery, Washington Consensus, Watson beat the top human players on Jeopardy!, We wanted flying cars, instead we got 140 characters, working poor, working-age population, Works Progress Administration, yellow journalism, yield management

In 1850, the Singer Sewing Machine Company began to sell its machines on installment to consumers through agents.10 By the 1870s, such a machine could be purchased for as little as $1 down and fifty cents per week. This stage of installment purchases extended beyond the prosperous classes to working-class households, including recent immigrants. The late nineteenth century also brought the development of “wage assignment” loans, similar to today’s “payday” loans, in which the collateral was a legal claim on the future wages of the borrower. Administering these loans required new types of information gathering, as borrowers could lie about the amount of their wages or the security of their employment. Lenders tended to favor workers who had stable employment, such as government or clerical workers, and they sometimes resorted to bribes to gain access to the payroll records of their borrowers.