There is no doubt in my mind that the scriptures admonish us to care for the poor. I believe that that admonishment includes caring for the spiritually poor as well as the materially poor, but we cannot ignore our responsibility for caring for those around us who lack food, shelter and other basic goods.
But I wonder how far we should take that inside this country as the United States becomes richer and richer.
When I hear a lot of the rhetoric about the poor coming from politicians, I often wonder if they have ever been in a typical poor person’s home lately. Poor people in the United States are rich compared to poor people in, say, Brazil, where I lived for four years.
Take a look at some of the statistics here, for example:
46 percent of all poor households actually own their own homes. The average home owned by persons classified as poor by the Census Bureau is a three-bedroom house with one-and-a-half baths, a garage, and a porch or patio.
80 percent of poor households have air conditioning. By contrast, in 1970, only 36 percent of the entire U.S. population enjoyed air conditioning.
Only six percent of poor households are overcrowded; two thirds have more than two rooms per person.
The typical poor American has more living space than the average individual living in Paris, London, Vienna, Athens, and other cities throughout Europe. (These comparisons are to the average citizens in foreign countries, not to those classified as poor.)
Nearly three quarters of poor households own a car; 31 percent own two or more cars.
97 percent of poor households have a color television; over half own two or more color televisions.
78 percent have a VCR or DVD player.
62 percent have cable or satellite TV reception.
89 percent own microwave ovens, more than half have a stereo, and a more than a third have an automatic dishwasher.
As a group, America’s poor are far from being chronically undernourished. The average consumption of protein, vitamins, and minerals is virtually the same for poor and middle-class children and, in most cases, is well above recommended norms. Poor children actually consume more meat than do higher-income children and have average protein intakes 100-percent above recommended levels. Most poor children today are, in fact, super-nourished and grow up to be, on average, one inch taller and ten pounds heavier than the GIs who stormed the beaches of Normandy in World War II.
It is also clear that some of the poorest areas of the United States are getting richer.
Unlike many of my neighbors in the area of Miami where I live, I have actually been in many poor peoples’ home lately. There are several people suffering in our ward who are poor, and we have put together projects to help them with repairing their roofs and walls. I home teach one man who lives on a 20-foot boat and works part-time because of a back injury. He probably makes $500/month. He is definitely about as poor as you can get in the United States these days. (It’s interesting to note that he is overweight because there are so many churches nearby offering free food).
On a personal level, I take King Benjamin’s speech to mean I have an obligation to give to beggars, and I do this all the time.
So, I am aware of poverty on a personal level, even though I am not personally poor now. For what it’s worth, I was raised by a single mother and lived in a 600 square foot house with a bedroom the size of a closet until I was in my teens. We were probably poor, although we didn’t realize it at the time.
But the poverty we see in the United States is simply nothing compared to Latin America, where I have traveled extensively. Arriving at the Rio de Janeiro airport and driving toward Copacabana or downtown, you pass the most horrific ghettoes I have ever seen. The air has a fetid smell of sewage. People live in cardboard box-sized homes stacked one upon the other. Naked kids run around all day long, and bony dogs eat garbage in the streets. There is electricity, but little running water, and no sewage systems. From what I’ve heard, the slums in India and Africa are notably worse.
So, I guess I would say I am sympathetic to individual cases of poverty in the United States but not convinced that there is much more we need to do about it in terms of public policy. Some of the government programs we have enacted over the years (AFDC, for example) have tended to make the situation worse by, for example, encouraging women not to marry and have more children so they can get more government aid. Meanwhile, the market tends to function in poor places like South Texas (and Miami) where people work to bring themselves out of poverty.
But I am open to the possibility some additional government programs may be necessary. So, I guess I would ask M* visitors for some input: if you think federal and state governments are not doing enough to help the poor, what specific programs do you think are necessary given the comparative prosperity in the United States today? How do you assure these programs encourage people to keep on working? Is there anything more the Church should be doing that it is not to help the poor in America?
Good post, good questions.
I think the condition of inner city schools is a disgrace to our country. Even if those children wouldn’t be considered poor by global standards, they are getting an education that will not equip them to, as you say, work to bring themselves out of poverty. So that would be my first suggestion for spending, tempered by the idea that we often make schools worse (or at least: not appreciably better) when we throw money at them. So I don’t claim to know exactly how to do it. . .
I think part of the issue with poverty is less poverty in an absolute sense than inequity and in particular the kind of jobs available for those with less technical skills. 40 years ago you could get a good paying job with average “intellectual” skills. Now, primarily because of globalization, modernization, and (to a lesser extent) immigration you can’t.
I understand my personal obligation to help the poor, but I do not understand any obligation to force my neighbors to help them as well. Any government program, if driven by taxes, will be the latter and I can’t see how that is moral.
Having said that, I absolutely love the idea of the Perpetual Education Fund. It allows us to contribute to help others improve their own situation, to learn skills they need to compete, to be able to have pride in their ability to provide for their families and to contribute to their communities. Regarding how the church could improve their care for the poor, it would be great to see the PEF program expand to include more countries, but that takes money so keep donating people!
For general attitudes about poverty and wealth, every Mormon needs to read Nibley’s Approaching Zion. We have a significant problem with conspicuous wealth in the Church.
Ronald Sider’s The Scandal of the Evangelical Conscience is good, too. We need a Mormon version of it.
I think Nibley in Approaching Zion often goes a tad overboard. While I agree with him on a lot, I also think he is an example of someone in a bit of an ivory tower who doesn’t have to be in the nitty gritty of making things. Roughly he just assumes we can all ignore human nature. Which, as a program for any community, just isn’t a good idea. Maybe for the City of Zion…
Aluwid, if there are community responsibilities then that answers you. If we take what you say literally, the way some extreme libertarians do, then it is just as wrong to take taxes for roads, schools, and so forth. Why is it fair to say my neighbor has an obligation to pay for an army but not to say subsidize treatment of autistic students in the school program?
Here are some of the elements that cause bad schools:
1. A lack of parental involvement and the associated lack of interest from parents and students alike.
2. Parents who work so much due to economic concerns (single moms, two underemployed parents) that they can’t get involved, leading to #1.
3. Teachers who are disheartened by 1 and 2 they’ve given up.
4. Parents who are too busy with their own personal, non-work, lives that they aren’t involved.
5. People who flee bad school districts in favor of good ones, leaving bad school districts to those who can’t escape.
6. #5 leaves to a depressed economy in bad areas, perpetuating the problem.
7. At the opposite end of the spectrum, helicopter parents can cause schools significant problems.
I generally believe that the average teacher is better equipped to teach than the average parent. There’s a difference between knowing a subject and knowing how to teach it (something most parents forget). I think schools sometimes overreach in an effort to replace some of the roles parents don’t fill in children’s lives (and we should legitimately get after the schools to not do this). I don’t think you fix most problems with more money – you fix problems with the “community” (led by PARENTS) and teachers teaming up in *appropriate* ways (along with adequate funding).
I don’t have a lot of suggestions on how to break schools out of the death spiral and are beyond fixing (don’t ask me how to fix LA or Dallas or extra-large urban areas). I am more familiar with solutions to the smaller problems before they escalate into larger issues. But, that’s not really the point of this post, so I won’t threadjack.
I admit that I am a bit of a hypocrite, in that I choose NOT to live in the inner city where the schools are bad, and have opted to live in a nice suburban school district. [I even turned down a new job last year in a different city in part because the resulting move would have required my children to attend a very poor school district.] I know Steve Evans had a few harsh words for me a few months back on a thread on another site regarding my opinions relative to busing students to achieve racial diversity. I’m the type of parent who will give the school leeway to teach my children and I’ll do whatever it takes to be involved and show my support, but not at the *expense* of my children. Don’t force me to attend a different school to make you feel better. So yes, I’m a bit of a hypocrite, and I don’t know how to fix schools already over the cliff.
But it seems to me that if you’d fix the core economy in an area, and got parents to the point they have the time and interest, you’d fix the educational quality of a school. I’ve seen this in action both as a parent, and as the son of educators.
Clark, I understand the need that a society has to defend itself, staff it’s court system, etc. The infrastructure that is required for the society to exist itself. But I don’t see the justice in forcibly moving money from the pocket of one citizen into the pocket of another when no work was performed to justify the transfer. Taxing fellow citizens to fund social programs might not be as direct as robbing a bank to fund a free clinic but I still don’t see it as very virtuous.
But I’m a pragmatist as well, let’s face it, social programs to some degree or another are here to stay. But I would be much more supportive of them if they were designed in a way to serve a community interest not a personal one. An example of this would be a recent proposal to fund science and technology training for students and then require them to perform some amount of service to the community (related to their training) in return after graduation.
But the bottom line is that I’m happy to discuss how I could personally help the disadvantaged, but I’m not as thrilled to talk about how I could force my neighbor to do it.
Clark (2) – At a very general level, I agree with you, but I hesitate when we get into specifics as the causes. Who is at fault for sending jobs overseas — the corporation or the consumer?
Do you buy strictly American? Do you *invest* strictly American? Or do you consider cost as a factor in your decision?
I work in outsourcing, both onshoring and offshoring models. So I’m probably destroying America, but then again, I’m probably helping save some of these companies from even more drastic measures.
An example of this would be a recent proposal to fund science and technology training for students and then require them to perform some amount of service to the community (related to their training) in return after graduation.
I read that and was intrigued. I would have *gladly* jumped at that opportunity if it had been available when I was a student.
I know a brother in a different ward — an IT dinosaur with seemingly outdated skills — who found himself unemployed for over a year. During that time, he landed a job teaching science and math in a large school district, and he loved it. He’s since found other work, but for a time, his availability helped his community while he was looking for a job.
Regarding sending jobs overseas. I don’t think there is “someone at fault.” I think it an inevitable aspect of technological advance and economic progress in the rest of the world. At best it’s something we can hope to guide – but even there we are limited.
What we can do is help our nation prepare for it. Something I don’t think we’ve done well.
What really scares me is that it seems destined to lead to a permanent underclass in the country. You’ll have the relatively rich and educated and the poor and less educated. We really don’t have a way for most with less abilities to make it in our country. (We’re still in a transitory period, of course – it’ll get worse) What will be the social effects of this? I don’t think most people want to think about it.
I don’t “buy American.” I personally find that a silly thing to do. (Although I’d think twice before buying Chinese food – I think local food is usually better) For the record I think denying 3rd world nations the ability to improve themselves by producing goods to be immoral.
So don’t take my comments as anti-offshoring. We’re preparing to offshore most of our printing in my business which will cost probably 10% of what we pay now. It’ll save us a lot of money but obviously will cost money for that business here in Utah.
Aluwid, I confess I don’t see your distinction between individual benefit and social benefit. Is taking care of an autistic youth by improved schooling services an individual benefit or social one? If so why?
Lots of interesting comments. Thanks. I’d encourage people to specifically address the questions at the end of my post, however. š
#1 Julie — I live in Miami just a few miles away from disgraceful public schools that have consistently gotten “F” scores. There is no solution for them. The state and the school district have worked to close them, and are sending kids to better-performing schools nearby. The solution to the school problem, which you are correct is essential, is a voucher program in which poor parents are offered more school choice. That has worked very well in Florida and forced under-performing schools to either get better or be closed.
#2 Clark — I have to very respectfully disagree with you. In our modern economy, you either adapt, re-train or you stay behind. And, by the way, blue collar workers are still doing pretty darned well in our economy compared to much of the world. I remember meeting two African-Americans visiting Brazil. The father was a janitor, the mother a teacher. It absolutely blew the minds of Brazilians that a black teacher and a janitor would have enough money to fly 12 hours to the other side of the world and go on vacation. Brazilians in that position would make a maximum of $100 a month and couldn’t even imagine flying an hour away on vacation. So, I’m not all that concerned about the equity issue for Americans. We’re doing fine. If you are going to remain a blue collar worker, you need to lower your expectations in terms of how you’re going to do compared to professionals and business owners — or you need to go to school and get new training.
I like the PEF and I like the idea of training in exchange for community service.
Geoff, the problem is that some people physically are not going to be able to adapt or retrain. Some could but primarily due to poor choices in their youth regarding education won’t. While it might make us feel good to say it’s their fault in terms of the effects on our country that doesn’t really matter. To me the question of who’s fault it is doesn’t matter.
As I said it isn’t how well these folks do relative to the rest of the world. Rather it is the social effects when you start to have larger and larger class divisions with an underclassed group having fewer and fewer real chances to move ahead.
While it’s nice to view things in terms of the rest of the world that really doesn’t deal with the social implications.
Ideally, from my perspective, we need to find a conservative solution to this otherwise the problem will get bad enough that Democrats will implement a solution with more problems.
So let me ask this –
At what does bishop need to get involved in the poverty in his ward? What are the conditions? What financial issues should the bishop even deserve to *know* about?
I’m a bit uncomfortable with some of the actions I’ve seen in my suburban stake in the DFW area — fast offerings going to pay mortgages that cost $2K, etc. I know of a bishop who thought it was criminal if a family didn’t have air conditioning (even in Texas, you can beat the heat without a/c). On the flip side, I know a bishop who no longer will use *any* FO to pay a mortage under any circumstances, and he keeps numbers of speculators in his file.
I know we preach “sustain life, not a lifestyle”, but where’s the line on determining the difference between life and lifestyle in American Mormonism?
Clark, I’ll stick with my “make my neighbor pay for it” example. I’m fine with expecting my neighbor to pay for infrastructure like roads, jails, etc since that fills a basic need for our society to function. The same goes for defense and police forces. I can’t really answer your autistic children question since I don’t know much about the extra resources required, improvement experienced, etc. So I’ll stick with a more obvious example: child healthcare. I think it’s a very worthwhile thing to talk about providing healthcare for children in need, but it’s not something that I would feel right expecting my neighbor to pay for. I don’t think I should force charity. I should encourage it yes, but not force it.
Related to this, and going back to the question that Geoff is asking. Perhaps an additional way that the Church could help the poor in America would be to start a charity program specifically to provide medical assistance to the poor? Perhaps especially of a preventative nature? I’m aware that there are free clinics and hospitals that receive a lot of charitable contributions but it seems like there is still a gap between that and the care experienced with health insurance. That’s something I’d be happy to contribute to and I could see it fill a need.
To clarify, I’m not saying that the church *should* do this (as your question says Geoff), I’m saying that the church *could* do this and I can see a benefit to it. The problem though is that the church is global and it might be hard to justify using funds for what would be seen as “extravagent” health care here in America rather than spending it on the basics that third world countries need.
Oh, I didn’t answer your request to stay on the questions from the end.
I think we really need to improve education and educational access. I think Bush’s “No Child Left Behind” is largely a failure. But I think the bigger problem is the whole way the school system works.
Finally I think we need to make university/vo-tec training more accessible. From purely a national perspective we need more trained people. But most importantly we have to maintain the reality of the American dream and make accession through “classes” in American more easy. i.e. someone born poor should be able to be successful.
The biggest things we have to do is rethink and re-invigorate K-4. (Since most studies show that it is astronomically harder to change habits and beliefs about education by the time kids hit Junior High) I also think we have to deal with the reality of that 1/3 who are significantly below average.
Clark –
I haven’t yet anyone who has lost their job through outsourcing or offshoring that shouldn’t have seen it coming. And I’m pretty absolute when I say that. And I include myself in that (the one time I got laid off) — I saw it coming and ignored the signs (fortunately, I had mad skillz and was one of the lucky ones).
Ideally, from my perspective, we need to find a conservative solution to this otherwise the problem will get bad enough that Democrats will implement a solution with more problems.
You know what? Most corporations are sleazy when it comes to job retraining and career development. They want to push it off on other entities. Strictly as it relates to training of offshored workers, I really think this is an area where the conservative movement *deserves* to let the Democrats impose whatever medicine they will. I see nothing wrong with companies being mandated into paying for job retraining of positions they move overseas.
I say, appoint Lou Dobbs as Corporate Retraining Czar and let it happen now! (As I continue to Outsource America!)
Rethink and re-invigorate K-4
Yes, a thousand times yes.
Although – it is possible to do some tangible things at the high school level. In Texas they are now mandating four years of science (hopefully, the non-ID variety) and four years of math to graduate — this year’s freshman are the first class. That seemed incredulously to me. Growing up north, *everyone* with any collegiate aspirations took four of each. Here, most with collegiate aspirations take four of each, but it hasn’t been mandated. I say mandating harder public education is a needed first step. We’ll probably not see the benefits of this for another 8-9 years (when they start graduating from college).
Now if we can just start loosening the hold football has on our school districts, we’ll be making another positive step.
Queuno, that may well be true but it doesn’t mean that, as a practical matter, they can easily do much about it. Say you’re in a small town in the south with only one or two large manufacturers. You’re in your late 40’s and have no college degree. You have a few kids still at home and are barely making ends meet. You know eventually your plant is going to close down. But what do you do?
Regarding passing the buck to corporations. Let’s say I’m buying from a local company and decide to buy from an Indian company. (Which, in fact, I’m doing) Who pays? For really large corporations lets say they want to close one division and ship it overseas. How is that sleazy? Why is the one company who uses subcontractors OK to go overseas but the company that didn’t do this is penalized? It doesn’t make a lot of sense to me. Further the unexpected cost is simply that companies will not bring as much “in-house” at all. Thereby undermining the very things folks are after.
Clark, I don’t disagree with your #13, but I wonder what exactly we can do that we’re not doing as a society already. In Miami, you see a lot of globalization displacement. Every time Honduras opens a new textile plant somebody in Miami loses a job. But there is a HUGE community college system in Miami, where textile workers can retrain for a myriad of better-paying jobs in the health care industry or to get computer skills, for example. Yet, a lot of them don’t do it. As you say, they made bad choices when they were younger, and they don’t feel comfortable going to school. Well, we can’t force them to go to school — either they will accept free schooling or they won’t.
I just don’t see what more government can do for these people. But I’m open to suggestions.
The issue of poverty in Asia, Latin America and Africa is now profoundly intertwined with environmental degradation and climate change driven by our profligate use of carbon based fuels.
Aid programs and the donations we make to international development NGOs, as well as the LDS church’s quite exemplary humanitarian activities : (http://www.lds.org/ldsfoundation/welfare/0,7133,1325-1-9–cWELFAREPOSTER,00.html), are all positive steps. However, they rely on us giving excess cash. There is no real element of sacrifice on our parts.
In what sense does the gospel require us to address such issues as – for instance – the fact that the US consumes a hugely disproportionate percentage of the world’s resources, and the habits of our daily lives which rely on patterns of over-consumption, to the huge detriment of the global environment, and the consequent deepening of poverty in parts of the world where livelihoods are utterly dependent on healthy ecosystems?
If I could have spent the money on some other use for myself or my family then how is donating it not a sacrifice?
Or is this just the background before you explain how it’s only right that I force my neighbor to sacrifice as well? Taking away his agency in order to meet a perceived moral good.
Geoff,
You know why they “own” their own homes?
It’s because they’ve been allowed to take out subprime mortgages on the houses with adjustable interest rates, 50 year repayment plans, and precious little background checking on the part of wholly irresponsible, and often downright predatory lenders.
Once you take out the first mortgage, you then take out a second mortgage to make house payments.
The intention is never to actually own the home. You are basically making a highly risky investment move, with living quarters attached. The scheme works, as long as the housing market is growing rapidly. If it is, you can sell out in about 5 years down the road with a profit.
Which works until the housing bubble collapses, like it’s doing today. Then the whole house of cards comes crashing down around you.
Then, if they are lucky, or savvy enough, they file for bankruptcy. If they are unlucky, they try to tough things out in the hopes of avoiding the stigma and final admission of defeat that bankruptcy represents. First, they deplete their 401(k)s in an attempt to pay off abusive bill collectors (funds that would have been protected in bankruptcy). Then they start selling all their other property that would have been protected. Then they run up credit card bills to pay for NECESSITIES (I haven’t had a bankruptcy client yet who was making frivolous purchases on credit). I’ve also seen people deplete their home equity in an attempt to pay off unsecured debts they have no realistic chance of paying back, often at the suggestion of either misguided or opportunistic commercial debt settlement firms. They also allow their homes to go into foreclosure – which often results in 10s of thousands of dollars being “forgiven” by the lender, which is then treated as “taxable income” by the IRS, who drops the hammer on these uninformed people quite ruthlessly.
In the end, I see people with about 10 to 100 thousand in unsecured debt, no house, an unreliable vehicle, a huge IRS debt (which can’t usually be discharged in bankruptcy), no retirement savings, a ruined credit rating, and scant personal possessions. They also often have debt collectors calling them at 3:00 AM and shouting at them with all sorts of profanity and outlandish threats to throw them in jail.
I file bankruptcy for them and they are very grateful for the breather. But I have a hard time seeing a light at the end of the tunnel for these people. I often fear that they are actually in a downward spiral. Their expenses simply exceed their income, and not because of luxury spending. I’m talking necessities. And their income just won’t cover it. I fear that they’ll simply be filing for bankruptcy again 8 years from now (the statutorily mandated waiting period between Chapter 7 bankruptcies).
You can talk about personal responsibility, and hard work, and the virtues of capitalism all you want. But from where I am sitting, we have an unabashedly PREDATORY system of incomprehensible complexity and hidden repercussions, that preys upon the weak and defenseless in society. There is no escape for these people. The free market doesn’t lift these people, it doesn’t provide them with opportunities. It steals their money, beats them senseless, and then leaves them lying on the side of the road, while well-dressed young Republicans sneer at what lazy bums they are and pass by on the other side of the road.
Incidentally, it’s not uncommon for illegal immigrants in my neighborhood to get car loans with over 30% interest rates.
We complain about the poverty Mexican immigrants are bringing to the US when it is actually our own people who are keeping them in that situation.
In so many ways, the free-market is simply failing to yield correct results. A large-scale course corrective is long overdue.
#22 I don’t mean in any way to denigrate the cash we do give. It makes a huge difference to people’s lives in real terms. And yes, of course money we donate is diverted from other uses and therefore involves an element of sacrifice.
But this sacrifice is comparatively little when we contemplate on the one hand how much of what we spend our money on is not really necessary, and on the other hand how obscene are the levels of poverty that exist in other countries.
And it’s precisely the sacrifice of chunks of way of life – which is generally consumerism-to-excess and obtained by and large at the expense of people in poor countries – that I’m suggesting would be a proper sacrifice and in keeping with gospel principles. Particularly when, as I say, it comes at the cost of the environment, over which God has given us stewardship with responsibilities.
We’re encouraged to go the extra mile. Not simply to engage in good works on a token level.
I don’t understand your point about forcing your neighbour or taking away his agency as my point neither advocated nor implied this.
How can doing more to make life better for fellow children of god be a “perceived” moral good.
Seth R, the problem you mention in #23 is especially bad in Miami, and I personally know a lot of people in the situation you are describing. In Miami, it is even worse, if you can believe it, for two reasons: property taxes have gone up 150 percent in six years and home insurance rates have doubled because of the hurricanes.
So, on top of all these people with predatory loans, and second mortgages, in Miami you have people with outrageous property taxes and mandatory insurance rates they can’t pay. It is devastating the middle class in Miami.
Now, having said all that, I have three questions for you: 1)did anybody put a gun to your clients’ heads and force them to sign up for mortgages they can’t afford?
2)Exactly what economic system is better than the (kind of) free market one we live in today?
3)Going back to the original questions in the beginning of this post, what exactly can government and politicians do to alleviate poverty in the United States? What programs need to be added or added to?
Kyle, I added the word “perceived” because we’ve now left the realm of “Third World Nations need money for food”, “Third World Nations need money for health care”, “Third World Nations need money for education”, to “Driving a SUV is causing the climate to change which is negatively impacting the environment and hurting third World Nations.” For the first three I see very real moral questions, for the latter I see it more as a political than moral question. I have very little faith in our current understanding of the global climate or that we know how to change it one way or another. (Or that our current climate is the most optimum and we should stick with it for that matter).
But if you are still focusing on what an individual can choose to do then I apologize for bringing it up, it’s just that I’m accustomed to having people talk about government control when they start down these lines. Yet, given that I suspect that we have far less ability to impact changing environment then others say, I think it would be best to focus on how to help people adapt to any changing environment conditions rather than try to change the global environment itself.
(This is the sound of Geoff B frantically trying to get this thread back on topic).
OK, so we are at comment #27, and I have gotten the following suggestions:
1)improve vo-tec/university system.
2)improve the K-4 education system.
3)Offer science job training in exchange for community service.
4)Expand the Perpetual Education Fund.
And Seth R has said something about not liking capitalism and the free market š
All of these are good suggestions. I’m in favor.
Questions: A)What exact changes need to be made? I have a lot of experience in the Vo-Tec educational situation in Florida. There is a huge free community college, paid for by taxpayers, that offers courses on just about everything. And then there are literally dozens of private, for-profit schools that will teach other specialized skills. These schools are bursting at the seams, and new schools are added every day. So, what should the government do about this that it is not doing today?
As for more money for public schools, well, we’ve been doing that for years, and bad schools stay bad. Obviously, something new needs to be done, and in Florida that has meant a voucher system and closing down non-performing schools.
I love the PEF. Let’s expand that in the Church.
But note that I have yet to receive a suggestion outside of education. This is good because, in contrast to the suggestions of our modern-day populists, I don’t think there’s much more the government can do to help the poor in the U.S. But again, I’m open to suggestions.
Aluwid, I appreciate your comments and agree that adaptation is absolutely necessary. I also think our personal behaviour changes – en masse – are likely to be more effective in slowing down global warming than any government action. But I think that there is a lot of truth in the equation: “Driving a SUV is causing the climate to change which is negatively impacting the environment and hurting third World Nations.”
And I very much disagree that this is not a moral issue.
The almost universal consensus of the world’s scientists – not adequately conveyed by the media – is that we are causing global warming and that we absolutely must reign in our burning of fossil fuels to slow it down before quite dreadful things start to happen. Dreadful things that will impact on the poor and vulnerable first and foremost.
Too often I think we use marginal ‘uncertainty’ in the science and the fact that there are undeniably natural variations in climate as an excuse to keep on burning oil, coal and gas at excessive levels because the truth is we are simply unwilling to give up our way of life, no matter who has to suffer for it. That there is ‘uncertainty’ in the science is enough for us. It’s what we want to hear. We don’t trouble ourselves to check it out and discover how much terrifying certainty there is.
The UK-based international development and anti-poverty agency Christian Aid has produced an excellent report on the connection between climate and poverty. I hope it’s okay for me to put the link here:
http://www.christianaid.org.uk/stoppoverty/climatechange/resources/climate_poverty.aspx
In any case, Aluwid, quite aside from the climate change issue there is the fundamental environmental issue. Even if there was no global warming, we should still be uncomfortable about the basic despoilation of local ecosystems in developing countries because of the mining required to feed our appetite for electronic goods, or the destruction of forests and use of desparately needed agricultural land for livestock so that we can take the kids out for ‘burgers’ for family home evening.
I’m still scratching my head trying to figure out how this became a thread on global warming.
“What a long, strange trip it’s been….”
#30 Yes I didn’t mean to threadjack Geoff and ask your pardon for it. It’s just that I think climate change and the environement are now terribly important poverty issues. And I also wanted to make the point that we may not only need to ‘give’ to alleviate poverty, we may need to be prepared to ‘give up’ a lot of things that are more fundamental in our lives.
When the main health problem of the poor is obesity you have to know that poverty isn’t just about means.
Poverty is more and more about attitude and the collectivist left wants to foster attitudes that perpetuate poverty and thereby a powerbase. Funny (or not so funny) that Kyle R should jump in with the collectivist bullcorn about global warming. One more route to global poverty that will allow the collectivists to take control.
But here we are on an ostensibly LDS blog and we can talk about everything except a conversion to Christ as a cure for poverty.
Read John 6.
I’m not a ‘collectivist’ nor particularly leftist. I believe in the old maxim of ‘Live simply so that others can simply live.’
I would have thought that conversion to Christ would also entail this view, as we are ourselves often the means the Lord has of blessing the lives of each other.
Give up Geoff, resistance is futile!
Kyle, every action I take in life could likely be shown to cause some negative impact on another in one small way or another. If you aggregate all those small little actions into one large clump then it might seem threatening, but going back down to the micro level there are a lot more ways that one can make a positive impact then to obsess over the little stuff.
If climate change is truly being caused by our actions then it would take governmental controls of an Orwellian nature to set them right. And again that is assuming that the resultant climate will not cause a higher degree of well being than our current climate, in which cause it would actually be a bad thing to stop the change. Given the circumstances I see it as much more effective to treat climate change as reality and work within the system to help others. Attempting to change the system will cause more problems then it’s solution is worth.
But again, the scale of the problem puts this firmly in the political arena. Is it really better for me to sacrifice hours every day taking public transportation rather than driving in order to make an infinitely small impact on the environment at the expense of being able to spend more time with my kids, being able to spend more time in church service, being able to earn additional money which gives me more resources to use to directly help others in concrete ways? I just don’t see it. I’m not saying that one shouldn’t do what they can to improve things, but keep everything in perspective.
Kyle R If a conversion to Christ cures global warming so be it but if it doesn’t so what? A conversion to Christ is entirely sufficient for the ills of the human race no matter what the outcomes environmentally or otherwise.
I will say this: The conversion would have many communitarian outcomes but no collectivist ones. Inside out is the opposite of outside in.
#34 You make intelligent points Aluwid. Your example of the reality of commuting to work is a fair one. I’m not suggesting we cut back absolutely in a fanatical way, but merely as much as we reasonably can, taking into account how much of our consumption of resources and fossil fuels is exessive. Driving willy-nilly on road-trips for pleasure for instance – to take the kids to Yellowstone every other weekend let’s say – would be an example of a situation where individual choice is less constrained and we can make meaningful cuts.
Government response and change in attitude in the guy-on-street micro level are both necessary. Demand can change the mode of supply if the will is there.
I agree it’s effective to “treat climate change as reality and work within the system to help others” but I don’t see why it should be this OR reduce our consumption.
Your suggestion that things should be kept in perspective is obviously common sense. But I’d say again that from the perspective of highly trained scientists, the situation is worsening far more than people realise and the idea that we may be headed for a more favourable climate is not one your hear them seriously kicking about.
It strikes me – (and sorry Geoff but this really was my main point) – how reluctant we are to make any real dents in our way of life despite the fact that our way of life puts us at the top of a planetary food chain with a lot of human suffering and poverty at the bottom.
I am a US expatriate living in Lagos, Nigeria. Many of the members of our ward live in extreme need, compared with what is considered a life of poverty in the US. They have no clean water, no electricity, they live in shacks, and there are no government support systems to help with food and shelter. The church in Nigeria has programs to help with job training so the members can work to better their living conditions. But church leaders are very constrained in what kind of financial support they can hand out, simply because there are so many in such great need. I understand that the church can’t take on all the problems of the people and society, or they will get even more “welfare converts.” But I question why bishops in the US can hand out large checks of church support to help people make their mortgage payments when often the members are in their situation of need because of their poor financial choices. Nigerian members can’t get help with the basic human needs.
#35 Georged, why should we wait before everyone converts to Christ before practicing some communtarian ethics on a planet where the basic resources for living are under such ferocious threat.
I’d like to point out that climate change is not really my main argument. The global environment is under threat – even quite apart from climate change – because we consume too much. Given the problem of poverty, this is a moral question. The gospel of Christ was given to us not merely for the comfort of our own personal salvation, but to put into practice on moral problems, even complex ones we’d rather not think about, even moral problems we’d rather pretend are simply ‘political’ problems.
CAW, you make an excellent point, which I would like to discuss in some future post. Is it right for us to give money in the U.S. to members who do not really face any threat of starvation or of losing their shelter when we have others who are facing real poverty? I consider it a very interesting dilemma. It really hits home when you live overseas in places like Brazil and Nigeria.
#37 Great point CAW and #38 good response Geoff B.
The way we define ‘need’ in the wealthy west seems ridiculous when compared to the so much more fundamental need of so many others in the world
In the FWIW department, the poverty level in the U.S. declined in 2006 for the first time since 2000:
http://biz.yahoo.com/ap/070828/poverty.html?.v=4
Geoff, I’m not necessarily advocating against capitalism per se. I’m just saying when you give the market full reign, you leave the nation very vulnerable to market failures.
The lending industry is a perfect case in point.
Normally, you would expect that the combination of enlightened self-interest among both borrowers and lenders would lead to a responsible and stable lending system that greatly increases liquidity of funds, and leads to all that Adam Smith goodness.
But that really isn’t the way things have panned out at all.
First off, the “enlightened” part of self-interest is rather lacking in very large segments of the US population. And no one is even suggesting ways in which this might be remedied. My suspicion is that the ignorance is so profound that it simply cannot be remedied in the foreseeable future.
Do people deserve to live in a cardboard box because they are stupid Geoff? Do their children deserve to have no future?
But let’s go to the lender side of things.
In the consumer credit industry, both mortgage lending, and unsecured lending, the risks associated with poor lending practices do not remain with the lenders.
When Visa, Bank of America, or Countrywide Lending issue a loan, that loan is immediately insured. These loans are immediately sold as securities on the stock market. People buy shares in a lender’s insurance plan. The idea is that if the economy is good, these insurance portfolios will turn a profit (due to less borrower defaults) and you’ll make money.
Allstate and other major insurers and reinsurers do something similar with highly risky insurance plans, such as flood insurance to residents of the Mississippi floodplains.
It’s quite ingenious actually, and I applaud whoever came up with it. It makes the lending industry much more resilient and reliable I think.
So what’s the problem. It’s actually rather apparent if you think about it for a moment.
Lenders have no incentive to lend responsibly.
If you were to cease payment on your Visa credit card today and refuse to fork over the cash, Visa wouldn’t lose a dime. First they would send demand letters, then they’d eventually sell the account to a collection agency for a mere fraction of the account balance. The collection industry makes money by buying accounts for cheap and then milking the debtor for whatever cash they can (sometimes legitimately, often not legitimately). Visa collects an insurance payout, and realizes absolutely zero loss.
So if there is no risk, why should Visa do background checks for creditworthiness?
Well, they don’t. As we all know, anyone can get a credit card. I tell my clients, the first piece of mail they receive after their bankruptcy discharge of debts goes through is likely to be a credit card offer. Lending offers are both indiscriminate and irresponsible.
Uncritical lending practices are bad enough, but it gets even worse than this. We’ve only examined how lenders handle risk, we haven’t touched on how they make a profit.
We all know that lenders make profit off of interest rates. It only makes sense that lenders will seek to maximize the interest rates. In and of itself, there’s nothing wrong with this. But combine it with the lack of internalized risk in the industry, and you can quickly see some big problems.
Who are the most profitable borrowers for Visa?
The responsible borrowers who pay their balance each month and maintain their low introductory interest rates?
Nope.
The most attractive borrower to Visa is a bad one. The person who makes minimum payments and carries large balances month to month. That is the kind of borrower that lenders like to see.
So what we have is this perverse sort of Alice in Wonderland effect where good is bad, and bad is good. This is why lenders more aggressively market to people with poor credit ratings, than people with good ratings. This is why you see credit card kiosks outside of freshman orientation at college campuses.
(I’m splitting this comment due to the filter)
But wait, you say. Surely this can’t last? It’s unsustainable. These people are all going to default!
Well, we’ve already talked about how there is no risk to the lender in case of a default. But we haven’t touched penalty fees.
Lenders have figured out that not only do bad credit risks rack up higher balances, but they also tend to engage in behavior that can be penalized. For example, numerous late payments allow for the lender to kick you into their standard 33% interest rate plan. Actually, I lied, even one late payment will typically push you into 33% land.
Also, you can nail them with late fees.
Believe it or not, this is actually where the lending industry makes most of its profit margins – on penalty interest rates and late fees.
So not only is there no risk associated with a bad borrower, there are actually hefty profits to be made. Those campus kiosks are literal goldmines.
Rational market behavior. Bad market results. No market-based method to correct the problem. It’s self-reinforcing.
Stupid comment filter….
Anyway…
It gets even worse when you find out that lenders are deliberately rigging the system to create bad borrower behavior. For instance, the entire eastern US pay their credit card bills to places “out west” like City of Industry, California. Why?
Well, because some bright MBA realized that the extra day in the mail meant more late payments. I’ve even known lenders to send out billing statements as late as two days before payment is due, in the hope that they can catch the borrower napping.
When you call in to dispute a charge, you will get about 9 minutes of call waiting – standard. Why?
It’s not because the phones are busy. There are actually plenty of service reps available to take your call, but they are instructed to put you on hold for 9 minutes. Why?
Because that same bright MBA calculated that 9 minutes is about how long it takes before two thirds of all callers will simply hang up in disgust.
Rational economic behavior.
My solution is not to get rid of debt insurance. But to institute federal regulations that require lenders to engage in more responsible lending.
Government market controls for free market failures. Not s-o-c-i-a-l-i-s-m, just plain common sense.
If Nibley’s Approaching Zion is too idealistic for you (#5), I would recommend Working Toward Zion, by Warner Woodworth, who teaches in the Marriott School at BYU. The book is on sale at the BYU bookstore for $7.95 and Amazon has it for $8. All profits generated by book sales are donated to the Church’s Humanitarian Aid fund.
Inspired by Nibley’s work (HN writes the preface), Woodworth suggests realistic, feasible applications of United Order principles in the modern world. You can check out his personal website here: http://marriottschool.byu.edu/emp/WPW/
In considering whether fast offerings should supply water to Nigerians or stave off foreclosures for Texans, D&C 51:10 often comes to mind: “And let that which belongeth to this people not be taken and given unto that of another church.” In this section, “church” is used as we would use “stake.”
Seth, this idea that the creditors buy insurance against default doesn’t make sense to me. In the long-term, which in a case like this wouldn’t be long at all, the insurance can’t cost less than the losses. What am I missing?
I’m not sure exactly if it is traditional “buying insurance” or not. But I do know that the risk is completely farmed-out onto the the stock market. As for the details, I don’t completely understand it myself.
Of course, when that sector of the stock market collapses, the lenders do tend to feel the bite, like mortgage lenders are right now. Countrywide Financial, the nation’s largest mortgage lender, is reporting that it’s in trouble. Expect a large federal bailout in the near future.
Seth, while I appreciate your passion and compassion on this issue, I am not sure any more regulation of the banking sector is needed. I just took out a mortgage, and I had to sign several federal “truth in lending” statements. Anybody who buys a house and gets a mortgage is, at least as far as the law goes, going in with eyes wide open (or at least they should have eyes wide open).
If it makes you feel better, I would completely oppose any federal bailout of any lender, and especially Countrywide. The market will resolve that situation — if Countrywide is well-managed and can handle its debt, it will survive. If not, its loans will be sold to other banks that are better managed. I predict no bailout will take place.
Geoff: (#20) Yet, a lot of them don’t do it. As you say, they made bad choices when they were younger, and they don’t feel comfortable going to school. Well, we can’t force them to go to school — either they will accept free schooling or they won’t.
The problem isn’t “feel[ing] comfortable” but often they can’t afford to go that long with no income (or a seriously decreased income). It’s one thing for a single childless guy in their early 20’s to live on $8,000 or less while going to school. (Like I did) Yet, when you have young children, medical expenses, higher housing costs and the like you typically feel that you don’t have that as a real option.
As to what the government can do. I honestly am not sure. I’m actually a bit cynical and think that by the time folks are 16 there’s not as much one can do. However I do think there’s a lot more we can do at K-4 that will have a huge impact 15 years from now.
Regarding free vo-tec training. Note that most states don’t have that. On a national level doing more like Florida would help. Certainly there will be some who, for whatever reasons, can’t handle change and won’t take advantage of the opportunities available. For people who refuse help you’re always going to be limited.
But let’s not say that applies to everyone.
One real problem though is that vo-tec like jobs will continue to go out of the country. There will always be a need for skilled welders and the like locally. But there will be fewer and fewer jobs. Realistically people either have to learn to start their own businesses (which is not easy in the least I can assure you) or enter the so-called information economy. But that requires far more education.
Yes, right now there are still a lot of so-called blue collar jobs out there. But they are becoming a smaller and smaller class.
Geoff (#49) I am not sure any more regulation of the banking sector is needed. I just took out a mortgage, and I had to sign several federal “truth in lending” statements. Anybody who buys a house and gets a mortgage is, at least as far as the law goes, going in with eyes wide open (or at least they should have eyes wide open).
I agree to a point. I don’t think the problem is regulation. If anything we have too much regulation (and perhaps too little inforcement of what is there) Having said that though most Americans are amazingly uneducated on basic household economics. More needs done there.
However part of the problem is that it’s not really something you can teach well in high school. You can do it, of course. But it’ll only work to a point. In a certain sense they are just too immature. And of course when people are older getting them to care is difficult.
So I don’t know a good way to get people to care about things that are important. Either economically or politically. People by and large want to be ignorant and yet simultaneously want to be taken care off. Which is the whole mentality in large measure of how Democrats address the issue. I’m opposed to that mindset and think we need to get people to take responsibility. But figuring out how is sometimes non-trivial. Especially for people brought up in bad environments.
John (47),
For details, you can Google “subprime mortgages”; over the last month or so, the NYTimes business section and the W$J have been publishing excellent stories (the W$J had a great human-interest front page story about a week ago).
The credit companies don’t technically buy insurance, but effectively, they hand the risk to Wall Street and, from there, to investors. Because the subprime loans are risky, a lender sells its portfolio to a bank (or someone like a bank), who creates different risk “tranches” and sells them off. If you’re risk-averse, you buy a safer tranche, which gets a good debt rating and pays you lower interest. If you’re looking for a bigger return, you buy a riskier tranche, which will pay higher interest. Then, when debtors make their payments, the interest and principal gets split and goes to the separate tranches. If people default, the safer tranches get paid first, and the riskier only get what’s left over, but if almost everybody pays, the bigger chunk goes to the high-risk tranches. (That’s oversimplified, but essentially true.)
What needs to be noted is, as Seth points out, the second the loan is made and sold, the lender bears no risk at all. The lender has lost its chance at getting the higher returns on risky, high-interest loans, but with, say, a week of making the loan (I’m not in the industry, so I don’t know the exact time), the lender has its money back. Like Seth points out, at least in the short run, this diminishes its incentive to make good loans, because it’ll be paid irrespective of the debtors’ repayment of their obligations.
And, regarding regulation or not, it’s worth reading this: http://www.salon.com/tech/htww/2007/08/28/credit_card_subprime/index.html
Geoff, even if people should have gone in with eyes wide open, as Clark points out, most Americans—especially those to whom these subprime loans were marketed—don’t have specialized knowledge in household economics. When I don’t know something, I sometimes rely on people who hold themselves out as experts. In many of these cases, the mortgage lenders and banks held themselves out as experts, and encouraged people to incur more debt than they should have, and encouraged them to take out a second loan to make their down payment. In fact, a friend of mine just bought, and she said the banks she went to insisted that she and her husband not put down 20%, and insisted that they take out larger loans, etc. She refused, but she is a well-educated professional, and u was only going to the bank for money, not for advice. I can easily see somebody with less confidence in their financial knowledge deciding that the banker is the expert, so the banker must be right.
#38 Kyle R Because the ONLY basis for true community is in Christ. (John 17) Everything else is a collectivist counterfeit.
Sam B., those assuming the risk by buying debts that the original creditors bundle up aren’t going to pay top dollar for debts they may not be able to collect. Shouldn’t that be a sufficient control limiting profligate lending?
John,
That’s the thing: the way they are packaged, some people will pay top dollar for debts they may not be able to collect. That’s the point behind junk bonds: you take a big risk, i.e., the company may default on its debt and you don’t get paid, but you also face a large potential reward, i.e., they have to pay a higher rate of interest in order to get the loan.
Still, if you were dealing with a single loan, you might be unwilling to make the loan. It’s almost an all-or-nothing proposition: either they pay you back or they don’t. But banks sell a lot of these loans to investment banks, which package them as collateralized debt obligations (“CDOs”) or collateralized mortgage obligations (“CMOs”). Say they package 100 mortgages together: chances are some percentage will default, but chances are, too, that some percentage will make the full payments. Because the odds are that somebody will pay in full, you can synthesize a AAA-quality derivative bond, and sell that to risk-averse people, of whom I am one. They’re almost guaranteed to be paid back, because some of the borrowers will repay their obligations, and the money goes to them first. Because of the likelihood of repayment, though, these bonds pay lower interest.
But there are investors who like risk. So the i-bank divides synthesizes a riskier debt instrument out of the 100 mortgages and sells it to these risk-lovers. If too many people don’t repay their mortgages, these people lose. But if people do repay, these people get a higher rate of return.
It’s ingenious, because it allows investors to invest in the risk-level they’re willing to countenance, but it can have some bad results, too, like allowing the actual loan originators to not care who they lend to. When housing prices are rising, effectively there’s no problem: people can refinance before the rate adjustment hits, and their home values support the refinancing. But if you get the perfect storm—like we have now—it all falls apart. And it’s not just the risk-aborbers who are hit. This is a big problem for Wall Street and for people who took out these loans right now, but there could be broader economic consequences over the next year, year and a half.
Geoff, I think we can all agree that a large chunk of Americans are dumb as a bag of rocks when it comes to home borrowing.
But thing is, I never see any solutions to this ignorance from the GOP wonks.
The position seems to boil down to:
“Those subprime borrowers are so stupid they deserve to lose their life’s savings. Maybe they’ll think twice before doing THAT again!”
Sure, but this tends to be a one-time shot. And despite centuries of predatory lending, Americans don’t seem to be getting any smarter on this issue.
So what’s your solution? Sit back and enjoy the carnage?
Sam B., everything you wrote matches up with the picture that there are some investors who want to risk their money on loans that have an excessive likelihood of default, and the financial markets have made it possible for them to do just that. On the creditor side of this issue, I don’t see anything to complain about what the mortgage companies have done.
On the personal side, I hope for an end to cheap credit. It’s driven up house prices, which is why I’ve been renting for the past three years. My rent is less than interest alone would be on a mortgage on an equivalent property.
Seth,
I pull CBR’s on people all across the country from time to time as part of my equipment finance business. In the expensive markets and Esp in CA this recently popped bubble was easy to see coming.
I think that based on my CBR pulls and views of the personal tax returns of many many CBRs that many many people are to blame themselves personally for their individual actions in the housing bubble burst.
For the last three years I have seen many people in CA with million dollar mortages and tax returns that do not support the monthly payments. Typically they have gotten a home equity loan to cover their personal income shortfall.
Its gotten so common that it even has a nickname “CA CBR”
These individuals are typically well educated small business people with college degrees.
#57. Seth, if lenders are committing fraud, they need to go to jail. If they are following the law, and people are agreeing to bad loans they can’t afford, then the people need to learn the hard way. Sorry, them’s the breaks. In a free society, you can’t go around being everybody’s babysitter.
John,
I answered your 58, but the page won’t let me post. There are problems with that approach (basically, the market distortions that insurance supply apply doubly here, because the lenders don’t have any copay or minimum deductible amount).
Geoff, they’re not committing fraud. But Wall Street (and again, I have nothing against Wall Street: I worked in midtown with Wall Street people until a year ago, and I’m going back in a month) develops complicated financial products faster than anyone can absorb them. You say people need to learn the hard way; why can’t they learn the easy way, by getting good advice from the people who hold themselves out as experts? You don’t necessarily need to do much; just impose some sort of fiduciary duty toward clients on mortgage lenders. Conservatives always argue that disclosure is the best type of regulation, and in large part I agree. Right now, they’re apparently not behaving in a manner that legally rises to fraud (which is, itself, a very high standard). That doesn’t mean that the law can’t change to make it fraud.
Let’s say I’m buying from a local company and decide to buy from an Indian company. (Which, in fact, I’m doing) Who pays? For really large corporations lets say they want to close one division and ship it overseas. How is that sleazy? Why is the one company who uses subcontractors OK to go overseas but the company that didn’t do this is penalized? It doesn’t make a lot of sense to me. Further the unexpected cost is simply that companies will not bring as much “in-house” at all. Thereby undermining the very things folks are after.
I don’t have a perfect answer. But I think that a company that is about to shift work overseas and lay off local employees is duty-bound to provide some sort of job placement and or training assistance. And if you’re buying a company, I’d say that’s part of the risk you’d assume.
If you decide to go overseas instead of hiring new staff, I don’t have a problem with it. If you decide to layoff 500 people and go overseas, I have a problem with that. Sorry, I do. And yes, I work in outsourcing and make these decisions all the time. Usually, I try to justify keeping the current headcount and adding overseas staff. My favorite tactic is to show how the existing US staff was already short-handed and we can’t let them go. That’s almost always true and easy to sell.
Obviously, this is not something that can be legislated. But I would hope that LDS businessmen would be more sensitive to these issues.
(Then again, I wouldn’t be opposed to a bad law being signed that tried to impose some responsibility for retraining or placement.)
Sam disclosure is the best type of regulation so long as one doesn’t get into information overload. And of course how do we tell if things are being disclosed? For instance do you know how to easily find out what the FDA inspections found about the plant where your chicken was slaughtered and packed? How much bacteria? What citations they had? I’m sure one could find it but it isn’t necessarily easy.