The Poverty Trap

“In 42 states and DC, at least one predatory lender is using a rent-a-bank scheme to evade the law and make 100% to 225% APR loans that are illegal in those states.”

Americans for Financial Reform

When we roamed the earth as Neanderthals, our species worried about predators lurking at every turn, wanting to fatten themselves up at our expense. Today, the same dynamic exists, only now the predators are a species known as lending institutions, which have come up with a new scheme: hide behind a few unscrupulous, traditional banks to avoid state usury laws, and charge between 100%-200% + interest for items most of us need, but cannot afford to purchase outright (except puppies from pet stores—see below).

And these particular lending institutions certainly stalk their prey, by planting storefronts in the poorest neighborhoods, where they know the residents are weakened from lack of cash and desperate for credit. This is akin to the strategy of the Payday Loan lenders, which I discussed in a previous post. When have you seen loan sharks and pawn shops in a leafy suburb? Of course, the predators’ reach has grown exponentially with the proliferation of Internet banking, but the poor, working class and even middle-class borrowers in need of a loan are still targeted and pay a steep price.

Rent-A-Bank loans have been around since at least the 1990’s, and are simply a scheme to avoid the cap on interest rates that most states have enacted to protect consumers from paying insanely high rates and becoming trapped in a cycle of debt. Here is an explanation of the rent-a-bank scheme:

In the late 1990s, payday lenders started entering into “rent-a-bank” arrangements under which the payday lender marketed and took applications for loans, the bank technically approved and funded the loans, and the bank then immediately sold the loan or servicing rights back to the payday lender. The payday lender claimed that because the bank funded the loans, state interest rate limits did not apply. The National Consumer Law Center

According to a May report by “Stop the Debt Coalition” and noted in a press release by the Consumer Federation of America, national car repair shops, like Meinike, AAMCO, Jiffy Lube, Midas and local auto repair shops are advertising and even steering customers to finance through these unscrupulous lenders. If your credit cards are ready to burst and you have no spare cash, you’re forced to get financing, particularly for a necessity like car repair.

But it doesn’t stop with auto repair shops, these usury interest loans are pushed by furniture stores, other retail establishments and yes, pet stores, in nearly every state, even in those that actually enforce their usury laws. See the detailed charts in this article from the National Consumer Law Center that names some of the most prominent non-bank, predatory lenders and the FDIC regulated banks who front their scheme. The charts also show exactly in which states each unscrupulous lender does business.

Here’s a sample map for one of the biggest predatory lenders, EasyPay Finance.

The National Consumer Law Center also published a detailed piece on predatory “puppy loans”, which includes real stories of consumers who paid a small fortune for a puppy in a pet store or online, then financed that beautiful, living creature with a usury interest rate loan, ended up with a terribly sick or dead dog (because all pet store puppies are sourced from puppy mills, so of course they will be sick) and were then stalked by debt collectors wanting their 160% interest rate.

Let me digress: There is one easy way to avoid predatory puppy loans and that is to never walk into a pet store that sells live pets, unless you can be sure that each animal there is from a shelter or rescue. First, it makes me sick to realize that our society considers living creatures a product, which can be financed, no less. And I can’t believe that after decades of work by the ASPCA, The Humane Society of the United States, Best Friends Animal Society and hundreds of other animal welfare organizations and rescues, each of which have spent millions of dollars on ad campaigns, TV commercials and all sorts of outreach decrying puppy mills and their intimate connection with pet stores and online fake “breeders”, that people still pay thousands of dollars for what they think is a purebred dog in a store or online. You can get a super dog just like my crack research assistant, Bocci, at any local shelter across the country. If you must have a purebred dog or cat, please check the thousands of rescue organizations first, and then if you choose not to adopt or rescue, find a reputable breeder.

Fortunately there have been legal prosecutions of these usury rate lenders in a few states. One example is the settlement reached by the Attorney General of DC against Elevate Credit, Inc, a predatory online lender. This is a quick summary of that settlement:

 Attorney General Karl A. Racine today announced that Elevate Credit, Inc. (Elevate), a predatory online lender, will pay at least $3.3 million to refund over 2,500 District consumers who were misleadingly marketed high-cost loans and lines of credit, waive over $300,000 in interest owed by those consumers, and pay $450,000 to the District. The company will also be required to stop charging rates above the District’s legal cap of 24% and to cease deceptive and misleading business practices.  

Not bad, but what about the bank or banks that fronted these loans? Where is their liability? The rent-a-bank scheme circumvents the law, and in limited circumstances a few lenders have agreed to pay back monies defrauded from consumers. But I don’t believe the scheme itself is currently illegal. The underlying question, though, is why are FDIC regulated banks exempt from state usury laws that cap interest rates? There would be no scheme if all lenders were subject to state (or federal) usury laws.

I write Crime and Punishment not to tell you there are millions of people unnecessarily living below the federal poverty line in one of the richest countries on earth, that there are millions more living paycheck to paycheck and without health insurance, and that what’s left of the middle-class isn’t earning enough to buy the necessities, let alone save for retirement and send their children to college. I write this newsletter to help explain exactly why this is happening, what laws and policies need to be enacted or changed to help eliminate poverty, close the obscene economic inequality gap and foster a thriving middle class. It is our individual and collective actions that will make the difference.

I ask you to join me on our journey to understand the why behind the facts, so together we finally can find solutions to our most pressing economic issues and push to right the wrongs of our system. Each of us can thrive in this country, if we don’t allow ourselves to be beaten down by the very system we’re trying to make good in. One of the best ways to do this is to become an active member of your community and a participating citizen in our larger community.

And speaking of communities, you can also become a participating member of the Crime and Punishment community by signing up right now for a free or paid subscription.

Crime and Punishment: Why the Poor Stay Poor In America is a reader-supported publication. To receive new posts and support my work, please consider becoming a free or paid subscriber.

What needs to be done to stop predatory loans with usury interest rates, and lenders who find ways to do an end around of the law? Please share your thoughts on today’s post in the Comment Section below.

An…

Our policy is directed not against any country or doctrine but against hunger, poverty, desperation, and chaos. Its purpose should be the revival of working economy in the world so as to permit the emergence of political and social conditions in which free institutions can exist.” Secretary of State, George C. Marshall, June 1947

Secretary of Transportation Pete Buttigieg contributed to the 75th Anniversary celebration of the Marshall Plan, Berlin, Germany, May 2022.

Scrolling Twitter, I noticed a recent Tweet touting the celebration of the 75th Anniversary of the Marshall Plan taking place in May, in Berlin, Germany. The featured speaker for the event was our current Secretary of Transportation, Pete Buttigieg. As a political science student in college, I had a vague remembrance of the Marshall Plan—our country’s proposal to help Western Europe rebuild after World War II—and the marking of this anniversary, dubbed a “celebration” no less, intrigued me. Before I shared the Tweet, though, I noticed a few of the comments.

One of the responses said, and I’m paraphrasing, “What is Buttigieg doing in Europe when he has work to do here, in our country?” Well first, he likely was invited by Germany, the host of the celebration, and of course, one of our major allies in Western Europe. Our Secretary of Transportation, who now oversees one of the largest improvements to our country’s infrastructure in nearly 70 years, was invited to represent the U.S. to discuss the importance of the Marshall Plan to Europe’s recovery from World War II, which in large part helped the European nations rebuild their decimated infrastructure. But more importantly, Secretary Buttigieg chose to discuss what lessons we can learn today from the choice the United States made to extend help to another continent 75 years ago, and to celebrate what that investment meant, and still means to our global community. That is why Secretary Buttigieg was in Europe representing our country last month.

Note: The link to the transcript of Secretary Buttigieg’s full speech is listed below.

I am certainly not a historian, but I love history and realize its study is necessary to help us solve today’s problems. For those with the knowledge to appreciate and place in context the United States’ and the world’s history, I suggest you read Doris Kearns Goodwin, Douglas Brinkley and Substack’s own Heather Cox Richardson, among many other noted historians. What I hope to do here is to offer basic information about the Economic Recovery Program of 1948, which came to be known as the Marshall Plan, and the thinking behind it. But why it is still celebrated, and how we can we use its blueprint to help us move forward today are the more important questions we should be asking in our current, tumultuous world.

It was George C. Marshall, former Army Chief of Staff and the then U.S. Secretary of State, who first proposed a comprehensive program to rebuild Europe in a speech to the Harvard graduating class in June 1947. By April 1948, the Economic Recovery Program had passed Congress with bi-partisan support and was signed by President Truman. Our former enemies and our allies in Europe (16 countries in total), were now the recipients of our financial help and support to rebuild their nations.

Here’s a short excerpt from George C. Marshall’s 1947, “Harvard Yard’ speech:

According to information from the National Archives, the Economic Recovery Act of 1948 provided $13.3 billion over the next four years to help Europe rebuild its economy, literally from the ground up. And in turn, Europe’s reconstruction helped the United States:

… the Marshall Plan provided markets for American goods, created reliable trading partners, and supported the development of stable democratic governments in Western Europe. Congress’s approval of the Marshall Plan signaled an extension of the bipartisanship of World War II into the postwar years.

Additionally, the idea behind the aid was that an economically strong Europe could better fend off takeovers from surrounding countries hostile to democracy and would provide a foundation for democracy to flourish. In Marshall’s words: “Its purpose should be the revival of working economy in the world so as to permit the emergence of political and social conditions in which free institutions can exist.”

It was noted at the time that the United States failed to learn this lesson after World War I, when it generally pursued a policy of isolationism. By the time Hitler came to power in Germany, its economy was in shambles: workers’ wages had plummeted in the previous 5 years, and the full-time unemployment rate had soared along with the poverty rate. Here’s a snapshot of the German economy in 1932 -1933 from The Wiener Holocaust Library:

As a result, [of the Wall Street crash of 1929], wages fell by 39% from 1929 to 1932.  People in full time employment fell from twenty million in 1929, to just over eleven million in 1933. In the same period, over 10,000 businesses closed every year. As a result of this, the amount of people in poverty increased sharply.

Notably, the Soviet Union, our allies during World War II, rejected the aid we offered through the Marshall Plan. According to Dr. Henry Kissinger’s reflections on the Marshall Plan, written in 2015 for the Harvard Gazette: “But Soviet leader Joseph Stalin rejected the offer on ideological grounds. He denounced the plan as economic imperialism — a “ploy” to “infiltrate European countries” — and forced his satellites to follow suit, thereby defining the fault lines along which the basic Cold War strategy of containment was to occur.”

Although I’m not prone to quoting Dr. Kissinger, I think his analysis of the Marshall Plan and its impact on the world, with nearly 70 years of hindsight, is an important read.

I don’t want to paint too rosy of a picture of the benevolence of the Marshall Plan, but the idea of a government investing money to improve on-the-ground conditions and raise the average worker out of poverty is a positive. And what this does, aside from economics, is to give people hope. For example:

To British Foreign Secretary Ernest Bevin, the Marshall Plan was “a lifeline to sinking men” that brought “hope where there was none” by giving recipients permission not only to overcome their present difficulties, but to imagine their future prosperity in cooperation with the United States.

And to West German Chancellor, Konrad Adenauer, The Marshall Plan, gave Germany economic assistance but, more importantly, “new hope.” “Probably for the first time in history,” Adenauer said of Marshall’s speech, “a victorious country held out its hand so that the vanquished might rise again.”

Henry Kissinger, Harvard Gazette, 2015

In Secretary of Transportation Buttigieg’s talk in Germany last month, he drew another comparison—one between a country’s values (in terms of democracy or autocracy) and “its delivery of services and public goods”. This relationship is the heart of why both the initial bi-partisan infrastructure plan and the languishing Build Back Better Plan, must be delivered right now— to revitalize our aging infrastructure, pull millions of America’s people out of poverty and give each of us hope.

I’d love to hear your thoughts on this recent celebration of the Marshall Plan and whether you think its framework is still important today. Please add your ideas below!

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Crime and Punishment: Why t…

“The mental health effects of poverty are wide ranging and reach across the lifespan.” Psychiatric Times, 2018.

It has been difficult for me to think clearly this week, let alone write something of importance, that is not about the torrent of gun violence and death we’ve witnessed these last few weeks. (To clarify: we have not just “witnessed it”, many of us have given it the green light either by voting for those who refuse to pass substantial gun restrictions, or not forcing our elected officials to do so through boycotting, protesting and voting them the hell out of office). I’ll include myself in the group not boycotting and protesting…yet.

There’s been a lot of talk, particularly from those who are adamantly opposed to gun control, about providing additional mental health services in an effort to help avoid these tragedies. Here’s what Texas Governor (R) Greg Abbott said about mental health care access in the wake of the elementary school massacre in his state, as reported by NBC News:

Gov. Greg Abbott said Wednesday that the Uvalde school shooter had a "mental health challenge" and the state needed to "do a better job with mental health"…

NBC News also reported that “in April [of this year], he slashed $211 million from the department that oversees mental health programs.”

Since mental health is in the news again, I think a discussion of how poverty, or even a temporary lack of money, impacts both our individual and collective mental health. I’ve described in previous posts the overarching anxiety and even despair, that hover over your days when you know you don’t have enough money to cover your bills, when the debt keeps piling up and you’re pretty sure that short of a lottery win, you can’t envision a path to paying it off.

According to a 2018 article published in Psychiatric Times, there is a direct relationship between poverty and adverse mental health outcomes:

The evidence is strong for a causal relationship between poverty and mental health. 3 However, findings suggest that poverty leads to mental health and developmental problems that in turn prevent individuals and families from leaving poverty, creating a vicious, intergenerational cycle of poverty and poor health. 4

Clearly, this adverse relationship tends to keep people in poverty. When you’re anxious, worried, unable to sleep or eat properly, your physical health suffers too. And let’s not forget that no healthcare is available to those living below the poverty line in many states, because those states, ironically, states with the highest levels of poor people, have refused to accept the Affordable Care Act’s Medicaid expansion provisions. Additionally, when you are physically and mentally below par, you’re hardly ready to shine in a job interview.

To sum up: when you don’t have money, you tend to have poor physical and mental health and have much less access to proper health care than those in a higher economic status. And when you don’t feel well mentally, you’re much less likely to get a job, thus perpetuating the cycle of poverty.

Excess stress, especially stress that lingers over long periods of time, is a key factor that negatively impacts our mental health and could tip us over the edge. A 2016 article in The Guardian discusses the “strength-vulnerability model” of mental health which posits there is a tipping point, and it is different for everyone:

…our brains can only handle a certain amount of stress before a crucial threshold is crossed and we end up mentally ill. Some people can handle a lot of stress before a breakdown occurs, others not so much.

But what seems to be most damaging is living in poverty as a child. At a young age, it is more than stress, it can be trauma, both physical and financial, which stays with you well into adulthood. A Health Magazine article from just a year ago analyzes the various forms of trauma caused when children live in an environment where their basic needs are not being met. Children’s brains are still physically malleable into their mid- twenty’s and thus susceptible to neurological changes:

When basic needs aren't met consistently due to financial instability or poverty (the latter of which is often systemic, multi-generational, and difficult to overcome), it can have a neurological impact.…poverty affects the prefrontal cortex, which is what enables us to perform advanced cognitive tasks.

Our mental and physical health are inextricably linked, and when you add the effects of low-income and poverty to the inequities of health care, it is a potent, sometimes deadly combination. According to a study published in the Journal of the American Medical Association (JAMA), the difference between the average life expectancy of the poor and higher income people in the United States as of 2014, is 10-15 years.

There are federal and community programs for low-income areas to ease poverty and improve access to health care, but these gestures apparently are not enough.

"Without government programs, instead of one out of five children living in poverty, it would be one in three children living in poverty," Dreyer says. "So they really do help keep children out of poverty. The problem is, we need to expand and enhance them rather than fight just to keep them alive." The good news, he says, is programs such as the Supplemental Nutrition Assistance Program (or food stamps), WIC and school-lunch programs and certain tax credits that are permanently in place. (Dreyer is the president of the American Academy of Pediatrics)

What more can we do to improve our nation’s physical and mental health and close the gap in health outcomes between the rich and the poor?

Please leave your thoughts below. All comments are welcome!

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…In other words, inflation can provide businesses with pricing power and increase their profit margins. If profit margins are rising, it means the prices that companies charge for their products are increasing at a faster rate than increases in production costs. Investopedia, updated 12/2/21.

Rising prices are on everyone’s mind right now. Even if you can buy and sell Manhattan, you’re worried that both your purchasing power and your savings are eroding, and you’d be right. I’ve written about the rising cost of certain services, like an Amazon Prime membership, and questioned whether Amazon really had to raise its prices just as it is recording record profits. The answer is a resounding “No”, by the way, but it is important to discuss the basics of inflation, and why these indicators and the typical methods to temper inflation are no longer enough.

My thinking process is as different from an economist as my body is from an Olympic athlete—only worse. But I do have a proclivity for sniffing out a scam, particularly when presented with scenarios that don’t logically add up. After turning to a variety of economic experts and their take on today’s rising prices, there seems to be a missing link in our analysis of our country’s newest round of inflation that is being (mostly), willfully ignored. One thing I despise is to be told by “experts” that there is nothing new and different that can be done to solve a problem, and that seems to be exactly what is happening with this latest round of inflation.

Inflation is a measure of the rise in the cost of goods and services in a particular economy and over a specific period of time. A good primer on inflation written by Investopedia states: “Inflation can occur when prices rise due to increases in production costs, such as raw materials and wages…”. But there are other reasons for a rise in prices. See this nifty illustration, also from Investopedia:

These contributing factors to inflation are accepted without much question, and in fact, are correct—when production costs go up, companies pass those costs on to the consumer in the form of higher prices, when demand for a product goes up, like during the pandemic shutdown when there were lines around the block for toilet paper, companies raise the price of such goods so consumers pay more, when huge, international companies simply want to increase already sky-high profits, Amazon, Starbucks and many others simply raise prices so consumers pay more. Do you see a pattern here?

In response to rising inflation, the Federal Reserve, whose main functions are to control inflation and maintain robust employment, implements an array of “fiscal policies”, like raising interest rates, for example, which is known to help lower inflation by suppressing demand. And the cycle continues.

Here’s what I’ll dub a traditional economic take on our current inflation woes: Just ‘buckle up” and ride out the waves. Have a four minute listen—it’s worth it.

But there is a more thoughtful (and progressive) take on what to do about inflation. The common denominator is not the rising cost of production or increased demand, but that companies raise the price of goods and services so consumers pay more. But I am not referring to small businesses that just happen to have an extremely profitable year or two, or must raise their prices to some extent to cover higher wages or increased costs. Of course businesses of all sizes are entitled to make a profit, but I don’t think corporations that routinely make billions of dollars in profit each year and pay very little to nothing in federal taxes should gouge the American public. And that is exactly what these businesses are doing.

Don’t believe me! Take it straight from Robert Reich, former Secretary of Labor and Professor at the University of California, Berkley, and the corporate CEO’s themselves.

And who does both inflation, and the first step to correct that inflation, raising interest rates, hurt the most? Lower income to middle-class workers. Any gain in wages they’ve had over the last several years have been erased, and then some, by inflation. Meanwhile, the interest rates on their credit cards and loans will rise, so overall, their purchasing power will plummet. What to do so we don’t keep following the same pattern…and expecting the same result?

Robert Reich has an explanation of why these mega-companies can raise prices with impunity and proposes a few solutions that just might upend the paradigm…

Even More Readings On Inflation:

— https://www.wsj.com/articles/inflation-definition-cause-what-is-it-11644353564

— https://www.nytimes.com/2022/05/12/briefing/inflation-america-rising-prices.html

— https://www.nytimes.com/2022/05/12/podcasts/the-daily/rising-inflation-calculator.html

I’d love to hear your thoughts on rising inflation and what government can do about it. Do we have to just sit back and “enjoy” the ride, or are enforcing anti-trust laws and enacting federal, anti-price gouging legislation the way to go? Let’s have a discussion in the comment thread below.

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Crime and Punishment: Why the Poor Stay Poor In America is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

In some ways, NEPA [the National Environmental Policy Act, January 1, 1970] may turn out to be the most influential of our environmental laws for it not only sets forth our basic national goals for environmental protection, but it also tells us that essential to achieving them is foresight.

From the Council on Environmental Quality’s introduction to its tenth annual report, 1980.

NEPA has turned out to be an incredibly significant law because it laid out our Country’s vision for how we want to live on the planet, and that vision suddenly included the environment. NEPA requires that all federal agencies fully consider the “environmental impact” of every new project it undertakes that is likely to have a significant impact on the environment, including highways, airports, buildings and similar projects, and spawned the dreaded, voluminous Environmental Impact Statements (EIS) that everyone loves to read.

It also provides the legal basis to create the U.S. Environmental Protection Agency, and corresponding state EPA’s, plus a stack of environmental statutes and regulations passed between 1970 and 1980 alone.

Most of our businesses in the U.S., of all sizes, bemoan environmental regulations because it cuts into their profit margins to comply. But if our Country had not taken action when it did, or even at all, we would be living in one continuous stream of pollution, otherwise known as a garbage dump.

The 52nd Earth Day is over, and it’s a good time to reflect on Earth Days past and present. I remember the first Earth Day because I was already interested in the environment and vaguely knew what was going on with all the marches and demands for action. I also remember Earth Day 1990 because my mother died early that morning. I was working as a staff attorney for the Ohio EPA at the time and was scheduled to volunteer at a local Earth Day event. I showed up and spent most of the day at that celebration—better to have the opportunity to think about something more important than my personal loss.

Earth Day was born after at least two decades of watching our country pay the price of unchecked pollution, with massive oil spills, burning rivers and thick, smelly clouds of pollution billowing from factories around the country. As I wrote recently on Crime and Punishment, Rachel Carson had a major impact on the burgeoning environmental movement after the release of her book, Silent Spring, and her testimony before Congress. Her meticulous, scientific research remains potent even today. Members of Congress and the public were shocked at the time, but years would pass before any laws were enacted to rein in the use of pesticides. Ironically, 60 years after the publication of Silent Spring, both the class action and individual lawsuits against Monsanto and Bayer for the widespread cancer caused by its pesticide, Round-Up, are still not fully settled.

But the real significance of the first Earth Day and NEPA is captured in the quote from the Environmental Council’s report mentioned above—that the way to achieve the broad, environmental goals laid out in this law is with “foresight”. The foresight to realize that our collective actions today will impact our collective future. Fifty-two years later, our planet is on the brink of a climate apocalypse. We have acted with some foresight, but what is our next step?

Enjoy these few minutes with a real journalist, Walter Cronkite, as he reports on our first Earth Day, April 22, 1970.

Let me know your thoughts on Earth Day and its history. And I’d love to hear how you celebrated Earth Day 2022.

And if you are not already a free or paid subscriber, your support is welcome!

Crime and Punishment: Why the Poor Stay Poor In America is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

A Few Additional Readings About Earth Day

— From the EPA Archives on the 10th Anniversary of Earth Day, written by its founder, Senator Gaylord Nelson

https://archive.epa.gov/epa/aboutepa/earth-day-70-what-it-meant.html

— The History of Earth Day by earthday.org

https://www.earthday.org/history/

— A 2019 Smithsonian Magazine article on the 1969 Cuyahoga River fire.

https://www.smithsonianmag.com/history/cuyahoga-river-caught-fire-least-dozen-times-no-one-cared-until-1969-180972444/

—An Earth Day 2022 NY Times article about the 1969 Santa Barbara oil spill .

https://www.nytimes.com/2022/04/22/us/earth-day-1969-oil-spill.html

There are really two questions to ask about poverty: Whether individuals can pull themselves out of poverty in a system set up to punish the poor, not help them; and whether our entire country can greatly reduce or eliminate poverty through government action.

I’ve been thinking about these issues lately because I’ve seen an overwhelming number of social media comments, and comments on opinion pieces and longer form articles that rail against even the mere mention of helping the poor. Generally, the comments amount to: “Tell the lazy bums to get a job and stop living off the rest of us.”

Don’t we wish it were this easy? For example, in the last 40 years or so, wages have remained stagnant while the cost of living has gone up…and up. Below is a 2018 chart from the Pew Research Center that shows just how stark the difference is. While wages have risen since 2018, prices for the cost of goods and services have skyrocketed, making today’s purchasing power of the average worker about the same as it was 40 (or 50) years ago.

According to Peter Temin, MIT Economist, from his book, The Vanishing Middle Class: Prejudice and Power in a Dual Economy:

“Escaping Poverty Requires Almost 20 Years With Nearly Nothing Going Wrong.”

How does that statement sit with you? Do you believe it? How about when nothing goes right for an individual, or a entire race or gender? Getting sick or injured happens. Then what? Although I have only skimmed this book for now, I can see that Temin’s multi-layered analyses of purposeful public policies and systemic racial prejudices stemming from slavery, demonstrate how the poor are kept in their place. What I love about his conclusions is his characterizations of our laws and policies as choices. Of course our government has the ability and the power to make different choices—choices that favor a more just social and economic system in which nearly all of us can thrive, rather than just an elite few.

But here’s what Temin says about what policy choices our government has made to date: “The choices made in the United States include keeping the low-wage sector quiet by mass incarceration, housing segregation and disenfranchisement… “

And it’s quite clear that each of these specific policy choices Temin highlights are both overtly racist, and remain part of our laws and culture today.

In Crime and Punishment, I’ve discussed many of the reasons why the poor stay poor in America: usury interest rates on loans, credit scores made up by for-profit companies, punishing personal bankruptcy laws, our country’s poor social safety net, and I have yet to tackle one of our most detrimental policy choices—privately operated, for-profit health care. Each one of these accepted ways our society operates favors business over the individual and makes it more difficult for both individuals in financial need and the poor population as a whole to escape the poverty trap. Once we collectively understand who makes these laws and policy choices and why, we can empathize, rather than react with scorn, when a few of our more bold political leaders propose ways to narrow the now startling gap between the rich and poor with federal programs.

But there is another variable that might account for the ability to pull oneself out of poverty and that is luck, the proverbial “being in the right place at the right time.” For example, maybe if one of the jobs you interviewed for said “yes” instead of “no”, or you just happened to be talking with a friend of a friend who had a job opening you might be suited for, or whatever serendipitous moment led you to a way to earn a good income. Or not.

Malcolm Gladwell, the prolific and best selling author and speaker, wrote, among many fascinating books and articles, “Outliers The Story of Success” in which he discusses the variables that lead a person to achieve exceptional success and/or money. Gladwell emphasizes that “The biggest misconception about success is that we do it solely on our smarts, ambition, hustle and hard work, … There's an awful lot more that goes into it than we admit." And one of those variables is just plain good luck. The good fortune, for example, to be born into a nurturing family with the assets to afford a high quality education for their children or to be born during a technological boom and have unlimited access to computers (like Bill Gates).

“When asked what message he wanted people to take away after reading Outliers, Gladwell responded, "What we do as a community, as a society, for each other, matters as much as what we do for ourselves…”

Think about what our country can do to help people who aren’t so “lucky” reach their full potential, and at the bare minimum, help them escape the cycle of poverty.

Enjoy listening to Malcolm Gladwell discuss “Outliers”.

A note to make you aware of my writing schedule… My posting has been a little off lately because I’m getting ready to move at the end of April. But I will return to two full posts per week, generally published on Thursday and Sunday by May. For this week only, I’m combining my mid-week post with Sunday Evening Reads. Happy Easter, Passover and Spring to all who celebrate!

Feel free to share your thoughts in the Comment Section below.

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Crime and Punishment: Why the Poor Stay Poor In America is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

“It’s not just about money”

“That brings us to the bigger issue. This is not really a debate about fiscal policy. It’s about whether higher education should be a commodity or a public service.”

Maggie Astor, The New York Times, 2019

Our country has been debating for decades what to do about the rising cost of college tuition, enormous student loan debt, the size of government grants and loans for students and whether to make public, two and four year colleges tuition free. Recently though, President Biden has taken some action. He has to date, forgiven more student loan debt than any other President: $17 billion in targeted relief effecting over 700,000 people, and he extended the “pandemic related pause” on student loan repayments and interest three times (the latest extension will expire on May 1, unless it is extended again). And in mid-March, as part of the short term budget bill, Congress raised the maximum amount of a Pell Grant by $400 to $6,895. Although it doesn’t sound like much, it’s a 6.2% raise and the largest increase to Pell grants in 10 years.

Given rising tuition costs, though, it still isn’t enough to keep students out of poverty. According to this recent article from The Progressive Magazine:

Nearly 60 percent of U.S. college students reported struggling to meet basic needs—including food and housing—during the past year, with Black and Latinx students both more likely to need aid and less likely to get it. State funding for public higher education has decreased, as has federal support.

The story features several students who are living out of their cars in order to pay their tuition costs. Fortunately, over 30 schools across the country have started their own funding program called Faculty and Students Together (FAST) Funds that provide emergency money for students to keep them enrolled.

The article also points out a startling figure:

Forty years ago, a Federal Pell Grant would cover 75 percent of the costs of attending a public university, but now it covers only about 30 percent. Increases in the cost of living and the loss of jobs during the pandemic have put students in additional financial peril. 

This New York Times article from 2019, which discusses the then Democratic Presidential primary candidates’ varying take on whether public college should be tuition free, nails one of the big questions swirling about higher education today: Is it a commodity to be sold to students via interest bearing loans, or an idea, like free K-12 public schools were over 100 years ago, and deemed worthy of substantial government support?

I lean toward the latter idea: That by today’s standards, an education beyond high school is akin to a necessity, like K-12 was declared over a century ago. Although the Constitution leaves education decisions primarily up to the states, our founding fathers understood that an educated electorate is essential for a participatory democracy like ours. But educating our populace has been a shockingly slow process:

High school attendance did not become commonplace until the 20th century. In 1910, just 14% of Americans aged 25 and older had completed high school. As recently as 1970, the high school completion rate was only 55%. In 2017, 90% of Americans aged 25 and older had a high school degree.

Center on Education Policy

But there is what might be considered a competing thought, although I see it as complimentary to our ideal of an educated citizenry: Not everyone wants or needs a formal education beyond high school. I morphed my career from law to education about 20 years ago, and have loved teaching English and writing, and now I tutor writing at a community college. Perhaps it’s the nature of my position, but I see many students struggling with the basics of reading and writing and wonder whether their two year degree will help them better understand our world, which to me is the purpose of formal education, rather than use that diploma to get a job, perhaps not necessarily in their chosen field, simply to pay down their loans.

I believe formal education beyond high school is a positive and should be available for as many people in our country as possible, and the more intellectually rigorous the better. That specific type of learning is something no one can take away from you.

But neither is the hands on training for a job in the trades, like construction, electrical or plumbing work, among others. This NPR article published just days ago discusses the effect the pandemic had on higher education, including two-year colleges. It turns out that many students, like many employees, are pausing to re-think the purpose and direction of their education and career, and choosing a different path.

Since the pandemic began, more than a million students have held off from going to college, opting to work instead. Two-year public schools have been among the hardest hit — they're down about three-quarters of a million students. Skilled-trades programs are the exception. Across the country, associate's degree programs in fields like HVAC and automotive repair have seen enrollment numbers swell. NPR

When Transportation Secretary, Pete Buttigieg, was running for President in 2019, he often articulated interesting ideas that were different from the other candidates — he had a different way of analyzing the same issues but generating a different perspective. I don’t recall any other candidate in recent history, emphasizing that our economy should support and work for those who choose not to attend college, but here’s what Buttigieg said during a presidential debate:

In the steel town on the Ohio River where I was raised, I’m guessing that most of its population did not have college degrees. But most people did have steady jobs in the steel mills which paid enough to allow them a middle class life. They worked hard to support their families and many were able to send their children to college if they chose that route. My father graduated from the local Catholic College, but he didn’t need that degree to work as an insurance agent, or the other jobs he worked before that, yet he was proud that he was the first in his family to graduate college thanks to the GI Bill.

But now we have students whose apartment is their car, because they are trying to make it through college. Although some in this perilous situation are succeeding, like the woman featured in the Progressive Magazine story, how many others are not?

I’d love to hear your thoughts about forgiving student loan debt, climbing tuition prices, students living in their cars to get a degree, and whatever else strikes your fancy. Have at it!

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“It is the public that is being asked to assume the risks that the insect controllers calculate. The public must decide whether it wishes to continue on the present road, and it can do so only when in full possession of the facts… We still talk in terms of conquest. We still haven’t become mature enough to think of ourselves as only a tiny part of a vast and incredible universe. Man’s attitude toward nature is today critically important simply because we have now acquired a fateful power to alter and destroy nature.”

Rachel Carson, from a 1963 CBS interview

It’s a tad ironic, isn’t it, that I sit before an essentially blank page, (save for the words of an iconic writer), with the title “The Power of Words” looming over me, while I ponder something semi-important to say…

Rachel Carson has been an inspiration to me since I first read Silent Spring shortly before I entered high school, nearly a decade after the book was published, and she remains an inspiration today. This book is one of the many I read as a teen that influenced my thinking and directed my passions, and probably why I declared in my first class, on the first day of high school, that I wanted to practice environmental law.

It’s hard to believe that one person could be this prescient, but just look at the the few sentences quoted above. Essentially, Carson says that our citizens must have access to all of the facts before making an informed decision to assume the risks that are inherent in the use of certain products, in this case the wide use of pesticides, particularly DTD. And as a species, humans have to be “mature” enough to realize that we cannot conquer nature, but instead must learn to live in harmony with the natural world.

Another seminal book, Ralph Nader’s Unsafe At Any Speed, The Designed-In Dangers of The American Automobile, was published in 1965, a few years after Carson’s book . This 2015 New York Times article celebrating the 50th anniversary of its publication, details Nader’s early interests and what led him to examine the issue of automobile safety. He started his research in 1956 while a student at Harvard Law School and was inspired “by books that prompted change”, specifically noting Silent Spring.

His book “shook the automobile industry” and soon Nader was testifying before Congress, which led to the establishment of a new agency and federal laws to regulate the automobile industry.

“In September 1966 — about 10 months after the book was published — President Lyndon B. Johnson signed the National Traffic and Motor Vehicle Safety Act, requiring the adoption of new or upgraded vehicle safety standards, and creating an agency to enforce them and supervise safety recalls”.

This federal agency, the National Highway Traffic Safety Administration (NHTSA), published a report in 2015 summarizing the impact of federal automobile safety standards:

“…between 1960 and 2012 auto-safety measures, most of them government-mandated, had saved 613,501 lives, and that the fatality rate per mile of travel fell by eighty-one per cent, substantially because of safety-enhancing changes in automobile design.” (emphasis added)

Even Nader’s foes in the auto industry admitted that his book and Congressional testimony had a positive impact:

“The book had a seminal effect,” Robert A. Lutz, who was a top executive at BMW, Ford Motor, Chrysler and General Motors, said in a telephone interview. “I don’t like Ralph Nader and I didn’t like the book, but there was definitely a role for government in automotive safety.”

Rachel Carson also testified before Congress after Silent Spring was published, and her testimony, along with the discussions it provoked, sparked the environmental movement, including numerous federal laws to protect the environment from industrial practices, from the manufacture and use of pesticides to the Clean Air Act, Clean Water Act, and the regulation of solid and hazardous waste, among others. Even the American Chemical Society, in a booklet written in 2012 to commemorate the 50th anniversary of the publication of Silent Spring, stated:

“Carson’s scientific perspective and rigor created a work of substantial depth and credibility that sparked widespread debate within the scientific community and the broader public about the effect of pesticides on the natural world. These discussions led to new policies that protect our air, our water, and, ultimately, our health and safety.”

With decades of hindsight (and the articulate voices of important writers), I better understand that words, in the the right hands, are powerful tools to change our thinking as individuals and as a society. And often those words are captured in federal laws that in turn, save millions of lives and transform our society

Today, easily a third of our population wants government totally out of our lives. “Big government”, including the laws that regulate how companies conduct business, laws that protect consumers, our health and environment are anathema to them and viewed as an unnecessary intrusion upon their right to conduct themselves as they please.

But you are the people I want to hear from. What do you think about government regulation and the issues raised in this post? How far has our thinking progressed in the six decades since the publication of Silent Spring and Unsafe At Any Speed ? Have we matured yet?

And finally, what books do you think impacted our society for good or ill?

Please share your thoughts in the Comment Section below.

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Additional Reading:

A list of resources I used in this post plus a special link to Business Insider’s list of the “Books That Changed American Policy”

1.https://www.nytimes.com/2015/11/27/automobiles/50-years-ago-unsafe-at-any-speed-shook-the-auto-world.html

2.https://www.newyorker.com/magazine/2021/06/07/the-last-battle-over-big-business?utm_source=nl&utm_brand=tny&utm_mailing=TNY_Daily_060221&utm_campaign=aud-dev&utm_medium=email&bxid=5bd681c524c17c1048041215&cndid=52472253&hasha=50fd655bafac31c03e262ced7c8a769c&hashb=8fb92f14ab6b53c638201d0bb8bf76a5e0380b9b&hashc=706c0a098c9005fd871eab8b9e932e0501a5cb78f5efb73457008839e0e9ebf6&esrc=bounceX&mbid=CRMNYR012019&utm_term=TNY_Daily

3. https://www.acs.org/content/acs/en/education/whatischemistry/landmarks/rachel-carson-silent-spring.htm

4. https://archive.nytimes.com/www.nytimes.com/books/97/10/05/reviews/carson-obit.html?simple=True

5. https://www.businessinsider.com/books-that-changed-american-policy-2018-4

“More people die by accident today than at any time in American history. The accidental death toll in the United States is now over 173,000 people a year……An accident injures ninety-two people every minute of the year and kills twenty every hour.”

From the book: “There Are No Accidents. The Deadly Rise of Injury and Disaster—Who Profits and Who Pays the Price, by journalist, Jessie Singer

The United States is one of the top ten richest countries on Earth (by per capita GDP) and certainly has one of the largest economies by all measures. So why does it have the highest accidental death rate among dozens of other wealthy nations?

Perhaps it is because our country does not invest its money in our people and the services that care for them, especially for our most vulnerable populations. Elected officials have consistently tried to cut social safety net programs since their inception, and these cuts, plus elimination of programs altogether, are today’s rallying cry for a good 50% plus of those we elect to govern. The countries who have much stronger social programs, including government run medical coverage, have less poverty and much less accidental injury and death rates than the United States.

According to journalist Jessie Singer’s book, published in February, There Are No Accidents. The Deadly Rise of Injury and Disaster—who Profits and Who Pays the Price, not only does the United States have the most “accidental” injury and death compared to other rich countries, these injuries and death can be traced along economic and racial lines: the poor and minorities suffer more accidental injury and death than the wealthier and white population.

This recent interview with Singer in The New York Times discusses her reasons for writing the book, which tragically, were prompted by the death of her best friend, who was struck and killed by a drunk driver while riding his bike. She traces the history of accidental deaths in our country, which were drastically reduced after World War II with the expansion of the social safety net, more comprehensive regulation, especially in the workplace, and the rise of unions. After 1992, accidental deaths started to rise—Singer blames it on the advent of de-regulation in the Reagan era which coincided with the decline of unions. Unfortunately, accidental injury and death are continuing to rise, and today, it seems to have a fascinating intersection with the last five years or more of deregulation and the defunding of regulatory agencies, allowing them to do only a fraction of their work. According to statistics presented in an article by the Brookings Institution, there was both a slashing of existing government regulation and a decrease in new rule making during the Trump administration by comparison to his predecessors.

An analysis published in Government Executive explains why government regulation exists at all:

“Regulations are among the the stocks-in-trade of government—they are the tools through which the Environmental Protection Agency implements anti-pollution laws, the Interior Department enforces land-use provisions and the Consumer Financial Protection Bureau restricts payday lenders. The chief debates over regulation center on the philosophical and ideological differences over government’s responsibilities versus free market rights.”

“Free market rights” is an interesting concept. When I practiced environmental law, I heard a form of that argument from the regulated community endless times: “If our company has to comply with these regulations, we’ll go out of business,” they cried (and I mean literally cried). The problem was that “these regulations” prevented the companies from dumping raw sewage or toxic, cancer-causing chemicals into the water, land and air. I worked for nearly 15 years as an attorney for the Ohio EPA and still never saw a point where companies just automatically factored in the cost of compliance into the cost of doing business— instead they fought regulation at every opportunity.

But these same regulations, and probably more so those implemented by the Occupational Safety and Health Administration (OSHA), protect all of our country’s residents from accidental injury and death.

In the introduction to Singer’s book, she explains why the word “accident” is no longer used professionally to describe how an injury or death is caused — “the word accident erroneously implies that the injuries occur by chance and cannot be foreseen or prevented.” And she rightfully expresses outrage at the lack of accountability the driver who killed her friend expressed, simply by using the word “accident”, at his sentencing: “Words cannot express how truly sorry I am,” he told the court, for this accident that happened.” As Singer stated, this was “the disembodied telling, as if the killer had nothing to do with the killing.”

When government regulation is stripped and government has little to no positive presence in our lives, there tends to be a lack of accountability among its citizens. This could mean anything from driving intoxicated, to refusal to take a vaccine or wear a simple piece of cloth to protect fellow citizens against a deadly, contagious disease. Are we a nation of “rights”, or are we a nation of responsibilities— to each other and the common good?

Thomas L. Friedman, Pulitzer Prize winning journalist and author, and opinion columnist for The New York Times elaborates on this idea in a piece published last month, focusing on the Spotify/Joe Rogan/Neil Young controversy. Friedman states:

“This pervasive claim that “I have my rights” but “I don’t have responsibilities” is unraveling our country today,” and further explains that sentiment by arguing “When our trust in each other erodes, though, as is happening in America today, fewer people think they have responsibilities to the other — only rights that protect them from being told by the other what to do.”

I also believe that our trust in government and each other has eroded over the decades (sometimes for good reason), and this trust has to return if we want to unify our country and lift our citizenry to a higher plane of living, and if we want to encourage and help all of our people to thrive rather than simply exist.

Please share your thoughts in the Comment Section below.

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Now…on to today’s topic…

Senators Elizabeth Warren and Sheldon Whitehouse are making their priorities for our country clear: instead of assenting to continuous price hikes for everything, including the fuel that gets regular working Americans to and from their jobs, they are proposing to levy a tax on the extraordinary profits oil companies are raking in during a time of world crisis.

The tax would be imposed on the largest oil companies on a per barrel basis, and the money received would be returned to consumers each quarter. Senator Whitehouse “estimates that single filers would receive approximately $240 a year, and joint filers would get about $360..” Not a ton of money, but at least consumers would be repaid for some of the unplanned, out-of-pocket costs that are eating into the family budget.

This tax proposal is pretty straightforward but overlaps with another issue: Since we’ve cut off the importation of Russian oil, although it’s a fairly small percentage of our overall petroleum imports, ranging from 3% to 7%, our country has made and must keep its international commitments to cut the CO2 emissions that will stem climate change.

And the arguments are already starting: Do we permit more oil drilling in the United States, increasing risk of additional environmental degradation and reliance on fossil fuels, even for the short-term? Or does our country increase investments in renewable energy for a sustainable energy future, while buying petroleum from other countries for the near term and increasing someone else’s environmental degradation? A third alternative, or a strategy we can add to the other two is to cut back on driving and trade in those gas guzzling SUV’s for a hybrid or electric vehicle.

Here’s what Senator Markey had to say just a few days ago in his response to a proposal for more oil and gas drilling.

But wait, there are more complicating factors. This exhaustive article from The New York Times lays out the facts and analyzes the current conundrum of soaring gas prices, versus more drilling, versus oil companies refusing to drill so they can reap larger profits by keeping demand higher than supply.

“Even before the pandemic curbed demand for oil, U.S. producers had lowered production in an effort to pump up profits as investors demanded returns in the form of dividend payments and better financial performance.”

Ironically, the United States is for the most part, energy independent, and in fact, is the worlds largest oil producer since at least 2018. Why then, are gasoline prices getting so high that legislators are introducing a windfall profits tax? The one issue that the Times article did not address is why the major oil companies absolutely must pass on every penny of extra cost incurred to the consumer and blame it on alleged supply chain issues, and a myriad of other excuses.

When the world is facing a climate crisis, is this the time to increase our reliance on fossil fuels by increasing our supply of oil and/or importing more oil from around the world?

Let me know your thoughts in the Comments below.

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