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Being Poor-ish Revisited: Reader Questions (2021)

66 points by luu 5y ago

cft 5y ago
"but in case you want a real answer for Spain specifically, an internet person I know named Cassander explained to me that the basic cause of this is that because the US is richer than Spain, the quality of our good is higher and the the cost of labor similarly so; if I buy a can opener or rent a house, I’m forced to buy or rent something at a higher quality level" I am an American (San Franciscan) who have been staying in Córdoba Spain for half a year, and I see the opposite. The average quality of goods here is the same or often better than in the US. And everything is cheaper (and incomes are lower, too). All services are better: I was first stunned when a deli clerk at a medium level supermarket, similar to Safeway sliced me some cheese, and tried to carefully arrange all the slices vertically, before wrapping them, and then sincerely apologized because two slices broke. And it goes on. Food (especially supermarket) is healthier in San Francisco, it's higher quality and there's more variety. It's also way more expensive. The restaurant food is way tastier and cheaper in Spain, although i would not call it very healthy. Problem is that certain goods (computers, phones, electronic components) are never Spanish, but a lot of cars and high tech bikes are, for example. I had a very hard time getting a replacement Dell XPS13 fan here: not sold on any Spanish sites, and very long customs delays for a $20 part when shipped from the US. I ended up buying a MacBook pro from a local Mac reseller.
- abnercoimbre 5y ago
  Wow nice, a few questions if you don't mind: 1. Why are income levels lower? 2. Everything is cheaper, but is it cheap enough to be more affordable with the lower income? 3. Do you plan to stay in Spain long-term? Thanks!
  - cft 5y ago
    1. I do not yet know why. I think somebody may chime in on here. Maybe because there are no multinationals, the economy appears to be somewhat local, insulated. 2. Middle class here has way more comfortable life than in San Francisco. I mean life quality. If you want to do something new, eg some new tech, it's another matter. 3. For a while, but it's not super easy from the bureaucratic standpoint, without the EU residency. The bureaucracy here is very slow and inefficient.
    - gradschoolfail 5y ago
      Replying to 2. Curiously, curiosity (exploring tech) is cheaper in the US. I don’t see why it necessarily has to be, though. EU folks are more educated, hence they can select promising avenues and avoid boredom and even upfront costs. E.g. you want to train a new language model? Harnessing your polyglot nature, you find a far better kind of language model where you eschew the latest TPU. You learn quickly from Juergen Schmidhuber, whom Americans do not realize, has already solved everything in machine learning. It is hard to do new things in the EU because there is nothing new in the EU — someone already did it.
  - bruce511 5y ago
    I have not lived in the US, and I'm not an economist, so this is annecdonte, not data. 1. Things are cheaper because there are fewer rich[1] people. It makes sense to price things to the level where you make a little for each sale but keep your market large. There are intrinsically fewer people, which means less demand. A container of tin openers is still a container load to get rid of. Of course selling for less means you make less, meaning the seller does not become richer than his customers. There is also a massive difference in mindset between the US and everywhere else. In the US the only measure is money. If you have money, everything else flows from that, if you don't have money everything is harder. Outside the US, money is still a driving force, but not to the same degree. There is less opportunity to be a billionaire, so the top is somewhat pushed-down, but at the same time the bottom is higher, and the safety net is better. But we are all fish in water - we like what we know - Americans would not want to be Spain, and the Spanish would hate to be American. Europeans prioritize family time, vacations, shorter work weeks. Americans prioritize rich company owners. The latter allows for ordinary folk to become very rich. Or at least dream of it. [1] rich in the sense that they have disposable income enough to afford your thing.
    - Ultimatt 5y ago
      Billionaires per million people is about 1.8 in the USA and 1.5 in Germany. The opportunity is extremely similar, compared with say China that has plenty of billionaires but its 0.2 per million people. The reality is very simple, all of Europe looks extremely socialist in comparison to the USA. People don't need millions throughout their lifetime to cover medical bills. Student debt is either non existent or orders of magnitude lower etc. Europeans also work less per week, so you should adjust incomes to reflect prorated time worked.
      - wozniacki 5y ago
        This largely ignores the crucial role that the U.S. has played as global ensure-r of security, world order and enabler of global free trade. Peter Zeihan speaks at length about this.[1] For example Germany has recently said it would sharply increase its spending on defense to more than 2% of its economic output in one of a series of policy shifts.[1] Other European countries will be increasing their defense spending too. Formerly it was just the U.S. footing the lion share of the NATO bill. That will rapidly change. And that will also affect how much of the domestic spending it eats into. This has been largely ignored in past number crunching of living standards of various countries. [1] The places America cares about post Globalization | Peter Zeihan (2021) https://www.youtube.com/watch?v=_oeG170bv7k https://www.youtube.com/watch?v=_oeG170bv7k [2] Germany to increase defence spending in response to 'Putin's war' - Scholz https://www.reuters.com/business/aerospace-defense/germany-hike-defense-spending-scholz-says-further-policy-shift-2022-02-27/ https://www.reuters.com/business/aerospace-defense/germany-h...
  - yobbo 5y ago
    > 1. Why are income levels lower? USA is in a unique position where it can stimulate its economy to a degree that is treatise-wise impossible for EU governments in EMU, and (until recently) without causing inflation. Southern Europe used to have very high inflation before EMU. For Spain, there is no equivalent to all the US government debts held by China and Japan, which you might view as subsidies to the US government. A better question might be why Germany is wealthier than Spain. The answer will involve work ethic and discipline, attitude vs self-sacrifice, long-term strategic planning for industry, and so on. You probably won't see this is in individuals nowadays, but systemically and historically this might have been what "set the stage".
    - kurupt213 5y ago
      China hold very little US debt…around 1T USD. Americans are far and away the largest holders of US debt.
- kstenerud 5y ago
  It's a similar situation in Germany. Overall costs are lower than the time I lived in the USA, the quality is much better (especially food and education), the infrastructure is head-and-shoulders above (especially the roads, internet, phone plans, environment, litter, buildings in general). Taxes at the end of the day are close enough compared to California. Plus all the city centers are car-free zones. And a medical procedure won't bankrupt you.
  - chii 5y ago
    It's probably safe to say that the median person enjoys much higher quality of life in spain than the median person in the US. But i would also claim that it's also true that you can earn more money in the US, if you have the skill and may be initial capital, than you can in spain. So in the end, you end up with a land of opportunity in the USA, but not the land you would retire on.
    - kstenerud 5y ago
      This is true in any country with high inequality: Those lucky enough to have the opportunities can make a killing, because it comes at the cost of everyone else.
      - chii 5y ago
        > Those lucky enough to have the opportunities can make a killing, because it comes at the cost of everyone else. that's not strictly true. It's only true if the person making a killing is not producing any value. Wealth creation can be a positive-sum game, rather than a zero-sum game. I do believe that the USA's wealth creation opportunities are mostly positive-sum.
        kstenerud 5y ago
        That wasn't my experience in the 6 years I lived there. Even in the most advanced cities, the misery and squalor and decaying infrastructure was brutal. It's the only first world country I've lived in where I genuinely feared for my safety at times (especially in Chicago and Philadelphia). Did you know that they have to close down BART stations from time to time in order to clean out the human faeces that have gummed up the escalators? And the smaller towns in poor areas... yowsers! I've seen prison camps with better living conditions. Americans are always commenting about how unusually clean Canada is, but Canada is actually quite ordinary; that's how first world countries normally look.
- InCityDreams 5y ago
  >Food (especially supermarket) is 1) healthier in San Francisco, it's 2) higher quality and there's more 3) variety. How so, on all three points?
  - gumby 5y ago
    A lot of it is grown locally (other US states also import food from California, but it’s not local). Also in SF these days food prices are high for the US. Head east 100 miles and the food is the same as everywhere else: factory output even though that’s where a lot of food is grown! In California, most of the state (by land) is red state poor and votes accordingly. However 60+% of the population lives in a couple of blue state rich pockets, hence the politics. This is why, for example, at the national level the leader of the House of Representatives and the leader of its opposition are both from California.
heisenbit 5y ago
Higher returns are usually associated with risks and imho. one of the main reasons we have limited social mobility is the inability of poor people to take risks and people born into money taking risks.
- nicbou 5y ago
  Yep. I've worked a lot as a teenager, and amassed a modest sum. It allowed me to take a lot of risks, even after I moved out. It allowed me to go freelance and wait a long time to get paid. It allowed me not to work in university. It allowed me to easily relocate to another country. A decade later, this cushion has compounded many times and funded many more risks that paid off. Without those savings, I would have taken many more conservative decisions that would have left me in a very different situation.
- mupuff1234 5y ago
  The thing to note is that for rich people there is very minimal risk since they usually have a safety net to fall back on.
  - indymike 5y ago
    This is a paradox. Taking risks is derisked by wealth.
    - maximus-decimus 5y ago
      A better way to phrase it is you have the same risk of failure, but somebody who's rich can afford to fail.
    - dharmaturtle 5y ago
      The word "risk" is overloaded: https://www.optimizedportfolio.com/risk/ https://www.optimizedportfolio.com/risk/ There's risk as measured by volatility. This is exemplified by the stock market - it's highly volatile, but has a higher expected return than the bond market. People who can't afford the risk of the stock market (because it's too volatile) put their money into the bond market, which has less expected returns. There's risk of not meeting your retirement goals. There's risk of unemployment. There's risk of permanent loss of investment. There's risk that you can hedge with insurance. > rich people there is very minimal risk since they usually have a safety net to fall back on. Rich people have minimal _overall_ risk because they can afford to take large risky bets with positive expected return. This is because they have so much capital they can afford to take these bets over and over until the reward arrives (Kelly criterion). Poor people can't afford the risk, and therefore have to do things like pay for more insurance coverage, pay for extra warranty, or have a (relatively) large emergency fund.
donthellbanme 5y ago
Society, "Why don't you move to a cheaper place to live?" Answer, "I've lived in this county for years. My youth is pretty much gone. I barely have saving for this months rent, let alone moving expenses to a new city. Plus--the few friends I kinda have are my only emotional, and sometimes financial support ("Could I borrow $300 until next month friend. I have never not payed you back?"). Society, "Just do something. Work on cars? Do non-union construction work?". Answer, "The rules of my rental agreement state I can't work on any vechicle on their property. The town will fine me overnight parking, and any disabled vechicles. My hand tools are not sufficient. I need a minimum of two jacks, and four jack stands, and my tranny jack. Non-union construction work will not pay my rent, let alone any bills." Society, "The immigrants seems happy? Come on dude? You seem like a entitled American?" Answer, "Many have a support system. Many pool their money. I have no one to pool my resources with." Society, "Move back home?". Answer, "There is no home to move back to." Society, "Don't you have family to help you out?" Answer, "I do, but they arn't in much better shape than me." Society, "I just don't get it. You are brighter than me, but you are so pathetic?" Answer, "I just don't feel well. I tried Prozac, Escitalopram, Klonopin, Lexapro, the isomer to Lexapro, Trazadone (could end up in an icu with a needle in your brain due to a bad reaction), tri-cyclic antidepressants, off labeled Bupenorpine for depression (which works at first, but then you are just addicted. Small studies done, and not long term. I doubt placebo controlled.), and all the other medications I see on tv. My sleep is reversed, and I just lost hope, but haven't given up." Society, "Don't forget about Therapy? Therapy did wonders for my mother. She has no desire to shop-lift from Nordstrum's anymore.". (Nordstrom's looks up your buying habits before filing charges with the authorities. Doctor's wives are never turned in. Minorities are handed over with glee. Off topic--sorry.) Answer, "I was till tapping the register at work to pay for the visits. After 6 months, I was no better. The therapist said, "But it takes years of Therapy to get better! Just hang in there!" (THIS IS NOT ME. I own a home. I just have known too many homeless individuals. Seen a few Programmers age out of the industry, and end up in a thicket of Scotch Broom. Cops wake them up. A locked porta potty greets them after the wake-up call. It's not just loosing a job. It's having an emotional hiccup in your 20's. Life is very fragile for certain people. They are usually to proud to tell anyone until it becomes to late, and when they'd o reach out, their is usually zero real help.)
- 5y ago
jaclaz 5y ago
I think this article needs to be read together with this other one: https://www.residentcontrarian.com/p/on-the-experience-of-being-poor-ish https://www.residentcontrarian.com/p/on-the-experience-of-be...
AussieWog93 5y ago
"You mentioned poor people skills like fixing cars - couldn’t you market those to make some money on the side? Not easily. Poor people skills like fixing cars, appliance repair and Craigslist purchasing are absolutely essential to the family-on-an-extreme-budget experience, but they don’t translate very well to making more money, usually." It's so bizarre to read this, as I personally know so many people who make some really decent coin doing exactly these things mentioned (quite a few from dirt-poor backgrounds, and two who are functionally illiterate). To be fair, I run a fairly successful business selling used games for a living, so my social circle would look different to the author's - but on the other hand "selling poor people skills" basically describes every single Lebanese guy in Australia.
- willyt 5y ago
  The economics of fixing cars must be quite different in the US maybe parts are a lot cheaper but new cars are more expensive? I had a 10 year old Toyota estate car that was basically worth the scrap value of the metal but it ran ok. In year 11 it failed its yearly safety inspection, the part I needed to fix this was £700 on ebay I would have needed ramps to get under it and probably an oxy cutter to cut the old parts out as the bolts were all seized up. It would have cost me about £1400 for the local garage to do this work. I don’t have anywhere covered to do this work and it would have taken me days to do it in the rain with a significant chance of screwing it up. The garage that inspected the car told me to scrap it as it was not worth fixing. There’s no scrap dealer near me and it’s illegal to drive it so I phone the scrap dealer and the best I can get is to get it taken away for free. I looked online and found to my surprise that a new car that would suit us fine was ~£2300 per year in payments. I looked at what I had spent on repairs on the old Toyota and some other old cars I had and how much the depreciation had cost me and the figures are within £30/month. Which is why most people around here are driving quite new cars even though I know they are not making a much money.
- imtringued 5y ago
  I don't get it. Why on earth would anyone want a random person to fix your car? An apprenticeship in Germany only takes 3 years and then you are a real car mechanic. I get that people want to go to a cheap family owned garage but even those have competent and properly trained car mechanics.
imtringued 5y ago
>I’m suspicious that this particular lack of situational grease has a not-insignificant negative effect on the upwards mobility of the lower class. It wouldn’t be a huge effect, since with some planning you can still figure out how to transition with a minimal gap, but it’s definitely a bit riskier to abandon a low-paying but secure position for a position with better prospects but less known stability. The triple negative is incredibly tedious here. I will translate "I’m suspicious" as "I believe" even though it could equally be translated as "I don't believe", nice vague sentence here. second negative here: "that this particular lack of situational grease" third negative "has a not-insignificant" -> "significant" fourth negative "negative effect on the upwards mobility of the lower class" Final translation: "I believe lack of situational grease has a significant negative effect on upwards mobility of the lower class". Why am I bothering with this sentence? Why am I complaining so much? Because I want to make my own opinion clear. I will now rephrase the sentence in my own words. Liquidity preference is the cause of unequal wealth distribution. Let's use a very benign example. Students need a certain book from the library. There are 10 students but only 5 copies. Students can easily finish the book in 2 weeks and then bring it back to the library. However, if a student hasn't read the book, his chance of passing drops by 50% requiring him to study harder with worse material. Students have learned this lesson the hard way in previous courses and will want to get the book at all costs. So now they try to go the library as early as possible and get as many books as possible. Since students have 5 courses almost everyone is missing at least one book and only a handful of students actually have all of them. Some are missing more than two. There is one student without any books. The downside of being late or never getting a book is huge but there is also no downside to just never returning the book even once you have finished it, leaving some students stranded. Suddenly those early birds get a positive reputation and everyone believes being an early bird is a good personality trait that brings you on the path to success. The competition over books gets more and more aggressive. Instead of putting their energy into studying, students are spending their energy on elaborate ways to getting the books. One student has started working in the library and is guaranteed to obtain all books that way. This is clearly a case of corruption. Students with books live an easier life. All of this is a waste. If people cooperated and agreed that those who borrow a book must return it within two weeks then everyone would have equal access to the books. This gives everyone an incentive to finish the books sooner and thus free up more books for everyone. Students end up with better scores because they get access to the books they need and can have part time jobs outside the library. There are multiple ways to interpret this story. For example. The quantization of jobs into a 40 hour work week, when there are people who would rather work more or less, leads to a concentration of jobs on less than 100% of the working population that is seeking a job i.e. unemployment. In this case, it's jobs that are being hoarded, not books, because being without a job is absolutely awful, but working 10 hours more than you need has no significant downside. This also applies to land and money. Having too much books, work, land, money carries no downside. Having no books, work, land or money carries huge downsides despite the fact that there are enough books, enough work, enough land and enough money for everyone if all of them were fairly distributed. It's a local minima that humanity should get out of.
TimPC 5y ago
There is a sense in which being poor is a direct result of an accumulation of choices made over one’s life to date. However these choices are not made in a vacuum and are often influenced by things beyond one’s control. When I was in Junior kindergarten I didn’t think school was important didn’t pay attention to lessons from the teacher. At one point we were tested on sight words and I knew none of them. I came home and told my mother I was stupid. She thought otherwise, identified that I hadn’t made it a priority and taught me the material in two weeks. I learned to take things seriously going forwards as well. With different parents that life experience could have had very different outcomes with big effects on my life trajectory. I think many decision points are like my junior kindergarten experience and are as influenced by others as myself. Some people refuse to see this and focus on just the accumulation of choices without the factors that go into them.

66 points by luu 5y ago

cft 5y ago

"but in case you want a real answer for Spain specifically, an internet person I know named Cassander explained to me that the basic cause of this is that because the US is richer than Spain, the quality of our good is higher and the the cost of labor similarly so; if I buy a can opener or rent a house, I’m forced to buy or rent something at a higher quality level" I am an American (San Franciscan) who have been staying in Córdoba Spain for half a year, and I see the opposite. The average quality of goods here is the same or often better than in the US. And everything is cheaper (and incomes are lower, too). All services are better: I was first stunned when a deli clerk at a medium level supermarket, similar to Safeway sliced me some cheese, and tried to carefully arrange all the slices vertically, before wrapping them, and then sincerely apologized because two slices broke. And it goes on. Food (especially supermarket) is healthier in San Francisco, it's higher quality and there's more variety. It's also way more expensive. The restaurant food is way tastier and cheaper in Spain, although i would not call it very healthy. Problem is that certain goods (computers, phones, electronic components) are never Spanish, but a lot of cars and high tech bikes are, for example. I had a very hard time getting a replacement Dell XPS13 fan here: not sold on any Spanish sites, and very long customs delays for a $20 part when shipped from the US. I ended up buying a MacBook pro from a local Mac reseller.

abnercoimbre 5y ago
Wow nice, a few questions if you don't mind: 1. Why are income levels lower? 2. Everything is cheaper, but is it cheap enough to be more affordable with the lower income? 3. Do you plan to stay in Spain long-term? Thanks!
- cft 5y ago
  1. I do not yet know why. I think somebody may chime in on here. Maybe because there are no multinationals, the economy appears to be somewhat local, insulated. 2. Middle class here has way more comfortable life than in San Francisco. I mean life quality. If you want to do something new, eg some new tech, it's another matter. 3. For a while, but it's not super easy from the bureaucratic standpoint, without the EU residency. The bureaucracy here is very slow and inefficient.
  - gradschoolfail 5y ago
    Replying to 2. Curiously, curiosity (exploring tech) is cheaper in the US. I don’t see why it necessarily has to be, though. EU folks are more educated, hence they can select promising avenues and avoid boredom and even upfront costs. E.g. you want to train a new language model? Harnessing your polyglot nature, you find a far better kind of language model where you eschew the latest TPU. You learn quickly from Juergen Schmidhuber, whom Americans do not realize, has already solved everything in machine learning. It is hard to do new things in the EU because there is nothing new in the EU — someone already did it.
- bruce511 5y ago
  I have not lived in the US, and I'm not an economist, so this is annecdonte, not data. 1. Things are cheaper because there are fewer rich[1] people. It makes sense to price things to the level where you make a little for each sale but keep your market large. There are intrinsically fewer people, which means less demand. A container of tin openers is still a container load to get rid of. Of course selling for less means you make less, meaning the seller does not become richer than his customers. There is also a massive difference in mindset between the US and everywhere else. In the US the only measure is money. If you have money, everything else flows from that, if you don't have money everything is harder. Outside the US, money is still a driving force, but not to the same degree. There is less opportunity to be a billionaire, so the top is somewhat pushed-down, but at the same time the bottom is higher, and the safety net is better. But we are all fish in water - we like what we know - Americans would not want to be Spain, and the Spanish would hate to be American. Europeans prioritize family time, vacations, shorter work weeks. Americans prioritize rich company owners. The latter allows for ordinary folk to become very rich. Or at least dream of it. [1] rich in the sense that they have disposable income enough to afford your thing.
  - Ultimatt 5y ago
    Billionaires per million people is about 1.8 in the USA and 1.5 in Germany. The opportunity is extremely similar, compared with say China that has plenty of billionaires but its 0.2 per million people. The reality is very simple, all of Europe looks extremely socialist in comparison to the USA. People don't need millions throughout their lifetime to cover medical bills. Student debt is either non existent or orders of magnitude lower etc. Europeans also work less per week, so you should adjust incomes to reflect prorated time worked.
    - wozniacki 5y ago
      This largely ignores the crucial role that the U.S. has played as global ensure-r of security, world order and enabler of global free trade. Peter Zeihan speaks at length about this.[1] For example Germany has recently said it would sharply increase its spending on defense to more than 2% of its economic output in one of a series of policy shifts.[1] Other European countries will be increasing their defense spending too. Formerly it was just the U.S. footing the lion share of the NATO bill. That will rapidly change. And that will also affect how much of the domestic spending it eats into. This has been largely ignored in past number crunching of living standards of various countries. [1] The places America cares about post Globalization | Peter Zeihan (2021) https://www.youtube.com/watch?v=_oeG170bv7k https://www.youtube.com/watch?v=_oeG170bv7k [2] Germany to increase defence spending in response to 'Putin's war' - Scholz https://www.reuters.com/business/aerospace-defense/germany-hike-defense-spending-scholz-says-further-policy-shift-2022-02-27/ https://www.reuters.com/business/aerospace-defense/germany-h...
- yobbo 5y ago
  > 1. Why are income levels lower? USA is in a unique position where it can stimulate its economy to a degree that is treatise-wise impossible for EU governments in EMU, and (until recently) without causing inflation. Southern Europe used to have very high inflation before EMU. For Spain, there is no equivalent to all the US government debts held by China and Japan, which you might view as subsidies to the US government. A better question might be why Germany is wealthier than Spain. The answer will involve work ethic and discipline, attitude vs self-sacrifice, long-term strategic planning for industry, and so on. You probably won't see this is in individuals nowadays, but systemically and historically this might have been what "set the stage".
  - kurupt213 5y ago
    China hold very little US debt…around 1T USD. Americans are far and away the largest holders of US debt.
kstenerud 5y ago
It's a similar situation in Germany. Overall costs are lower than the time I lived in the USA, the quality is much better (especially food and education), the infrastructure is head-and-shoulders above (especially the roads, internet, phone plans, environment, litter, buildings in general). Taxes at the end of the day are close enough compared to California. Plus all the city centers are car-free zones. And a medical procedure won't bankrupt you.
- chii 5y ago
  It's probably safe to say that the median person enjoys much higher quality of life in spain than the median person in the US. But i would also claim that it's also true that you can earn more money in the US, if you have the skill and may be initial capital, than you can in spain. So in the end, you end up with a land of opportunity in the USA, but not the land you would retire on.
  - kstenerud 5y ago
    This is true in any country with high inequality: Those lucky enough to have the opportunities can make a killing, because it comes at the cost of everyone else.
    - chii 5y ago
      > Those lucky enough to have the opportunities can make a killing, because it comes at the cost of everyone else. that's not strictly true. It's only true if the person making a killing is not producing any value. Wealth creation can be a positive-sum game, rather than a zero-sum game. I do believe that the USA's wealth creation opportunities are mostly positive-sum.
      - kstenerud 5y ago
        That wasn't my experience in the 6 years I lived there. Even in the most advanced cities, the misery and squalor and decaying infrastructure was brutal. It's the only first world country I've lived in where I genuinely feared for my safety at times (especially in Chicago and Philadelphia). Did you know that they have to close down BART stations from time to time in order to clean out the human faeces that have gummed up the escalators? And the smaller towns in poor areas... yowsers! I've seen prison camps with better living conditions. Americans are always commenting about how unusually clean Canada is, but Canada is actually quite ordinary; that's how first world countries normally look.
InCityDreams 5y ago
>Food (especially supermarket) is 1) healthier in San Francisco, it's 2) higher quality and there's more 3) variety. How so, on all three points?
- gumby 5y ago
  A lot of it is grown locally (other US states also import food from California, but it’s not local). Also in SF these days food prices are high for the US. Head east 100 miles and the food is the same as everywhere else: factory output even though that’s where a lot of food is grown! In California, most of the state (by land) is red state poor and votes accordingly. However 60+% of the population lives in a couple of blue state rich pockets, hence the politics. This is why, for example, at the national level the leader of the House of Representatives and the leader of its opposition are both from California.

heisenbit 5y ago

Higher returns are usually associated with risks and imho. one of the main reasons we have limited social mobility is the inability of poor people to take risks and people born into money taking risks.

nicbou 5y ago
Yep. I've worked a lot as a teenager, and amassed a modest sum. It allowed me to take a lot of risks, even after I moved out. It allowed me to go freelance and wait a long time to get paid. It allowed me not to work in university. It allowed me to easily relocate to another country. A decade later, this cushion has compounded many times and funded many more risks that paid off. Without those savings, I would have taken many more conservative decisions that would have left me in a very different situation.
mupuff1234 5y ago
The thing to note is that for rich people there is very minimal risk since they usually have a safety net to fall back on.
- indymike 5y ago
  This is a paradox. Taking risks is derisked by wealth.
  - maximus-decimus 5y ago
    A better way to phrase it is you have the same risk of failure, but somebody who's rich can afford to fail.
  - dharmaturtle 5y ago
    The word "risk" is overloaded: https://www.optimizedportfolio.com/risk/ https://www.optimizedportfolio.com/risk/ There's risk as measured by volatility. This is exemplified by the stock market - it's highly volatile, but has a higher expected return than the bond market. People who can't afford the risk of the stock market (because it's too volatile) put their money into the bond market, which has less expected returns. There's risk of not meeting your retirement goals. There's risk of unemployment. There's risk of permanent loss of investment. There's risk that you can hedge with insurance. > rich people there is very minimal risk since they usually have a safety net to fall back on. Rich people have minimal _overall_ risk because they can afford to take large risky bets with positive expected return. This is because they have so much capital they can afford to take these bets over and over until the reward arrives (Kelly criterion). Poor people can't afford the risk, and therefore have to do things like pay for more insurance coverage, pay for extra warranty, or have a (relatively) large emergency fund.

donthellbanme 5y ago

Society, "Why don't you move to a cheaper place to live?" Answer, "I've lived in this county for years. My youth is pretty much gone. I barely have saving for this months rent, let alone moving expenses to a new city. Plus--the few friends I kinda have are my only emotional, and sometimes financial support ("Could I borrow $300 until next month friend. I have never not payed you back?"). Society, "Just do something. Work on cars? Do non-union construction work?". Answer, "The rules of my rental agreement state I can't work on any vechicle on their property. The town will fine me overnight parking, and any disabled vechicles. My hand tools are not sufficient. I need a minimum of two jacks, and four jack stands, and my tranny jack. Non-union construction work will not pay my rent, let alone any bills." Society, "The immigrants seems happy? Come on dude? You seem like a entitled American?" Answer, "Many have a support system. Many pool their money. I have no one to pool my resources with." Society, "Move back home?". Answer, "There is no home to move back to." Society, "Don't you have family to help you out?" Answer, "I do, but they arn't in much better shape than me." Society, "I just don't get it. You are brighter than me, but you are so pathetic?" Answer, "I just don't feel well. I tried Prozac, Escitalopram, Klonopin, Lexapro, the isomer to Lexapro, Trazadone (could end up in an icu with a needle in your brain due to a bad reaction), tri-cyclic antidepressants, off labeled Bupenorpine for depression (which works at first, but then you are just addicted. Small studies done, and not long term. I doubt placebo controlled.), and all the other medications I see on tv. My sleep is reversed, and I just lost hope, but haven't given up." Society, "Don't forget about Therapy? Therapy did wonders for my mother. She has no desire to shop-lift from Nordstrum's anymore.". (Nordstrom's looks up your buying habits before filing charges with the authorities. Doctor's wives are never turned in. Minorities are handed over with glee. Off topic--sorry.) Answer, "I was till tapping the register at work to pay for the visits. After 6 months, I was no better. The therapist said, "But it takes years of Therapy to get better! Just hang in there!" (THIS IS NOT ME. I own a home. I just have known too many homeless individuals. Seen a few Programmers age out of the industry, and end up in a thicket of Scotch Broom. Cops wake them up. A locked porta potty greets them after the wake-up call. It's not just loosing a job. It's having an emotional hiccup in your 20's. Life is very fragile for certain people. They are usually to proud to tell anyone until it becomes to late, and when they'd o reach out, their is usually zero real help.)

5y ago

jaclaz 5y ago

I think this article needs to be read together with this other one: https://www.residentcontrarian.com/p/on-the-experience-of-being-poor-ish https://www.residentcontrarian.com/p/on-the-experience-of-be...

AussieWog93 5y ago

"You mentioned poor people skills like fixing cars - couldn’t you market those to make some money on the side? Not easily. Poor people skills like fixing cars, appliance repair and Craigslist purchasing are absolutely essential to the family-on-an-extreme-budget experience, but they don’t translate very well to making more money, usually." It's so bizarre to read this, as I personally know so many people who make some really decent coin doing exactly these things mentioned (quite a few from dirt-poor backgrounds, and two who are functionally illiterate). To be fair, I run a fairly successful business selling used games for a living, so my social circle would look different to the author's - but on the other hand "selling poor people skills" basically describes every single Lebanese guy in Australia.

willyt 5y ago
The economics of fixing cars must be quite different in the US maybe parts are a lot cheaper but new cars are more expensive? I had a 10 year old Toyota estate car that was basically worth the scrap value of the metal but it ran ok. In year 11 it failed its yearly safety inspection, the part I needed to fix this was £700 on ebay I would have needed ramps to get under it and probably an oxy cutter to cut the old parts out as the bolts were all seized up. It would have cost me about £1400 for the local garage to do this work. I don’t have anywhere covered to do this work and it would have taken me days to do it in the rain with a significant chance of screwing it up. The garage that inspected the car told me to scrap it as it was not worth fixing. There’s no scrap dealer near me and it’s illegal to drive it so I phone the scrap dealer and the best I can get is to get it taken away for free. I looked online and found to my surprise that a new car that would suit us fine was ~£2300 per year in payments. I looked at what I had spent on repairs on the old Toyota and some other old cars I had and how much the depreciation had cost me and the figures are within £30/month. Which is why most people around here are driving quite new cars even though I know they are not making a much money.
imtringued 5y ago
I don't get it. Why on earth would anyone want a random person to fix your car? An apprenticeship in Germany only takes 3 years and then you are a real car mechanic. I get that people want to go to a cheap family owned garage but even those have competent and properly trained car mechanics.

imtringued 5y ago

>I’m suspicious that this particular lack of situational grease has a not-insignificant negative effect on the upwards mobility of the lower class. It wouldn’t be a huge effect, since with some planning you can still figure out how to transition with a minimal gap, but it’s definitely a bit riskier to abandon a low-paying but secure position for a position with better prospects but less known stability. The triple negative is incredibly tedious here. I will translate "I’m suspicious" as "I believe" even though it could equally be translated as "I don't believe", nice vague sentence here. second negative here: "that this particular lack of situational grease" third negative "has a not-insignificant" -> "significant" fourth negative "negative effect on the upwards mobility of the lower class" Final translation: "I believe lack of situational grease has a significant negative effect on upwards mobility of the lower class". Why am I bothering with this sentence? Why am I complaining so much? Because I want to make my own opinion clear. I will now rephrase the sentence in my own words. Liquidity preference is the cause of unequal wealth distribution. Let's use a very benign example. Students need a certain book from the library. There are 10 students but only 5 copies. Students can easily finish the book in 2 weeks and then bring it back to the library. However, if a student hasn't read the book, his chance of passing drops by 50% requiring him to study harder with worse material. Students have learned this lesson the hard way in previous courses and will want to get the book at all costs. So now they try to go the library as early as possible and get as many books as possible. Since students have 5 courses almost everyone is missing at least one book and only a handful of students actually have all of them. Some are missing more than two. There is one student without any books. The downside of being late or never getting a book is huge but there is also no downside to just never returning the book even once you have finished it, leaving some students stranded. Suddenly those early birds get a positive reputation and everyone believes being an early bird is a good personality trait that brings you on the path to success. The competition over books gets more and more aggressive. Instead of putting their energy into studying, students are spending their energy on elaborate ways to getting the books. One student has started working in the library and is guaranteed to obtain all books that way. This is clearly a case of corruption. Students with books live an easier life. All of this is a waste. If people cooperated and agreed that those who borrow a book must return it within two weeks then everyone would have equal access to the books. This gives everyone an incentive to finish the books sooner and thus free up more books for everyone. Students end up with better scores because they get access to the books they need and can have part time jobs outside the library. There are multiple ways to interpret this story. For example. The quantization of jobs into a 40 hour work week, when there are people who would rather work more or less, leads to a concentration of jobs on less than 100% of the working population that is seeking a job i.e. unemployment. In this case, it's jobs that are being hoarded, not books, because being without a job is absolutely awful, but working 10 hours more than you need has no significant downside. This also applies to land and money. Having too much books, work, land, money carries no downside. Having no books, work, land or money carries huge downsides despite the fact that there are enough books, enough work, enough land and enough money for everyone if all of them were fairly distributed. It's a local minima that humanity should get out of.

TimPC 5y ago

There is a sense in which being poor is a direct result of an accumulation of choices made over one’s life to date. However these choices are not made in a vacuum and are often influenced by things beyond one’s control. When I was in Junior kindergarten I didn’t think school was important didn’t pay attention to lessons from the teacher. At one point we were tested on sight words and I knew none of them. I came home and told my mother I was stupid. She thought otherwise, identified that I hadn’t made it a priority and taught me the material in two weeks. I learned to take things seriously going forwards as well. With different parents that life experience could have had very different outcomes with big effects on my life trajectory. I think many decision points are like my junior kindergarten experience and are as influenced by others as myself. Some people refuse to see this and focus on just the accumulation of choices without the factors that go into them.