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You can't individual financial education your way out of systemic poverty. Furthermore, the common pattern where poorer people spend money as soon as they get

You can't individual financial education your way out of systemic poverty. Furthermore, the common pattern where poorer people spend money as soon as they get it is, in fact, rational when you look at it from their perspective rather than your own (which, as with most people attempting to moralize to poor people about their choices, appears to be a perspective of "you should be doing absolutely everything you can to maximize your net cash flow"). First of all, people need things like little luxuries. A Starbucks coffee here. A joint to smoke there. We are not, and cannot make ourselves, robots who live only to produce. Second of all, they know, from experience going all the way back to childhood, that if they have an opportunity to splurge a little now and don't take it, they'll lose that opportunity. Third of all, they similarly know that regardless of whether they splurge on an ice cream cone today because it's 90°F out, whatever financial trouble that comes tomorrow to eat up the little surplus that makes that possible will still put them in debt. Being in debt $150 instead of $145 just doesn't make that much difference. And if they wanted to avoid that particular debt entirely, they'd have to give up 30 separate instances of "I have an extra $5 today, let me get something to make life a little less shitty". The only solution to the problems that lead to people not being able to save is increasing the amount of money they get paid.

pjc50 1y ago
There's also family situations where liquid savings are at risk of being spent by somebody else. I don't think the marshmallow test people factor that in, you'd need to have a third option where the kid waits dutifully for the extra marshmallow but it gets eaten by someone else in the meantime.
- vintermann 1y ago
  Yes. And that doesn't have to be an addict family member or a burglar, it can easily be e.g. a landlord who sees that you have more money, and charges you more money. There are a lot of people in a position to make you give up what you have, if they see that there's money to be squeezed. This is even more true collectively: as an individual, maybe you can get out by being 50% more frugal than the rest. But everyone can't be 50% more frugal than the rest. If everyone tries, it's even more likely that larger society claws it back through higher rents, lower wages etc.
  - barchar 1y ago
    Everyone can't be 50% more frugal than everyone else, but it's possible for "everyone else" to be something other than 3-4% (the current US savings rate). The money to sustain a high savings rate without a collapse in wages/demand ultimately comes from the government deficit, or deflation I suppose. This can be sustained even without productive real investment, if people just want savings the money will just sit around or repay debt without bidding anything up in the economy. > landlord who sees that you have more money, and charges you more money. You were getting a good deal then. Can happen with "affordable" housing I suppose.
- klabb3 1y ago
  This. If you’re poor and get money, there are all kinds of people interested in getting a slice, and if you’re a good person, you’ll probably have family members who genuinely could use it for necessities. Govt/creditors can also apply systemic pressure like ”oh you no longer qualify as poor this week, so we’ll take back your benefits”. Well thanks, now I’m poor again. Employers especially don’t like when people break out of poverty, because as soon as they have a buffer they can make choices and bargain. So there’s a lot of deep pocket incentive to keep people in their place.

pjc50 1y ago

There's also family situations where liquid savings are at risk of being spent by somebody else. I don't think the marshmallow test people factor that in, you'd need to have a third option where the kid waits dutifully for the extra marshmallow but it gets eaten by someone else in the meantime.

vintermann 1y ago
Yes. And that doesn't have to be an addict family member or a burglar, it can easily be e.g. a landlord who sees that you have more money, and charges you more money. There are a lot of people in a position to make you give up what you have, if they see that there's money to be squeezed. This is even more true collectively: as an individual, maybe you can get out by being 50% more frugal than the rest. But everyone can't be 50% more frugal than the rest. If everyone tries, it's even more likely that larger society claws it back through higher rents, lower wages etc.
- barchar 1y ago
  Everyone can't be 50% more frugal than everyone else, but it's possible for "everyone else" to be something other than 3-4% (the current US savings rate). The money to sustain a high savings rate without a collapse in wages/demand ultimately comes from the government deficit, or deflation I suppose. This can be sustained even without productive real investment, if people just want savings the money will just sit around or repay debt without bidding anything up in the economy. > landlord who sees that you have more money, and charges you more money. You were getting a good deal then. Can happen with "affordable" housing I suppose.
klabb3 1y ago
This. If you’re poor and get money, there are all kinds of people interested in getting a slice, and if you’re a good person, you’ll probably have family members who genuinely could use it for necessities. Govt/creditors can also apply systemic pressure like ”oh you no longer qualify as poor this week, so we’ll take back your benefits”. Well thanks, now I’m poor again. Employers especially don’t like when people break out of poverty, because as soon as they have a buffer they can make choices and bargain. So there’s a lot of deep pocket incentive to keep people in their place.