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There are also problems that can't be solved by businesses because they ARE profitable. For instance, a lot of aspects of poverty. Because people living payche

There are also problems that can't be solved by businesses because they ARE profitable. For instance, a lot of aspects of poverty. Because people living paycheck to paycheck are desperate for cash and typically don't have enough savings to open bank accounts, they're easy prey for money lending at incredibly high interest rates - including payday loans and pawn shops; and for check-cashing services that take a significant cut of their paycheck. If your credit score is low, you may be able to get a pre-paid debit card (since credit/debit cards are necessary these days even to do things like open App Store accounts so you can get [even free] apps on your phone in order to do things like apply to jobs or know when the bus is coming), but it'll eat away at your money with monthly fees - whereas if you have good credit and pay your balance monthly you can be fee free.

mjwhansen 9y ago
There should be a line drawn between services that cater to lower income people that are blatantly exploitative and those that appear to be profitable but are highly risky. Pawn shops and loan sharks are explorative. Yet, there has been much research done in recent years on the business of check-cashers and payday loans. They may appear profitable based on fees, yet the reason they charge fees or higher interest rates are due to the high cost of serving their populations. A higher risk of default means a higher rate of borrowing to compensate for the risk. Lisa Servon at Penn has done a lot of interesting work on this topic, and financial services for underserved populations in general: https://www.lisaservon.com https://www.lisaservon.com
- twobyfour 9y ago
  Yes, they solve one problem related to poverty. But because their motive is profit, they can do so only at a cost that exacerbates the underlying problem of not having enough money.
  - mjwhansen 9y ago
    Sure, it certainly does. Yet there are also for-profit solutions that are helping significantly with poverty as well and helping people manage the cash flow and savings issues of being poor — take Instant Financial, for instance, which allows workers to get paid daily[1], and Walmart’s MoneyCard app, which uses behavioral finance to trick people into saving money. When we close ourselves off to the idea that financial insecurity cannot be solved profitably, we close ourselves off to a multitude of potential solutions. [1] https://www.wsj.com/articles/apps-let-workers-make-every-day-a-payday-1511528400 https://www.wsj.com/articles/apps-let-workers-make-every-day... [2] https://www.google.com/amp/s/www.theatlantic.com/amp/article/521421/ https://www.google.com/amp/s/www.theatlantic.com/amp/article...

mjwhansen 9y ago

There should be a line drawn between services that cater to lower income people that are blatantly exploitative and those that appear to be profitable but are highly risky. Pawn shops and loan sharks are explorative. Yet, there has been much research done in recent years on the business of check-cashers and payday loans. They may appear profitable based on fees, yet the reason they charge fees or higher interest rates are due to the high cost of serving their populations. A higher risk of default means a higher rate of borrowing to compensate for the risk. Lisa Servon at Penn has done a lot of interesting work on this topic, and financial services for underserved populations in general: https://www.lisaservon.com https://www.lisaservon.com

twobyfour 9y ago
Yes, they solve one problem related to poverty. But because their motive is profit, they can do so only at a cost that exacerbates the underlying problem of not having enough money.
- mjwhansen 9y ago
  Sure, it certainly does. Yet there are also for-profit solutions that are helping significantly with poverty as well and helping people manage the cash flow and savings issues of being poor — take Instant Financial, for instance, which allows workers to get paid daily[1], and Walmart’s MoneyCard app, which uses behavioral finance to trick people into saving money. When we close ourselves off to the idea that financial insecurity cannot be solved profitably, we close ourselves off to a multitude of potential solutions. [1] https://www.wsj.com/articles/apps-let-workers-make-every-day-a-payday-1511528400 https://www.wsj.com/articles/apps-let-workers-make-every-day... [2] https://www.google.com/amp/s/www.theatlantic.com/amp/article/521421/ https://www.google.com/amp/s/www.theatlantic.com/amp/article...