NPR has been investigating the scammy world of subprime lease-to-own smartphone contracts targeted at low-income markets. Here’s an excerpt:
NPR visited six MetroPCS locations that offer SmartPay and called a dozen more, and their representatives made the same 90-day pitch — even though many customers don’t qualify for it.
Atchley doesn’t have a lot of spare cash, and he wanted out. He couldn’t return the phone for a refund to MetroPCS because, he says, he had already talked on it for over an hour. And when he called a Better Finance, their rep didn’t help either, he says.
Atchley and 231 other SmartPay customers have filed complaints with the Better Business Bureau and five have filed with federal regulators, consistently saying they were misled.
Update at 3:44 PM ET: Dave Weigel has also just published a piece on a related topic: abusive subprime auto lenders and their political influence. There is a much more detailed report in yesterday’s New York Times Dealbook on the dangerous world of car title loans to low-income folks.
A review by The New York Times of more than three dozen loan agreements found that after factoring in various fees, the effective interest rates ranged from nearly 80 percent to over 500 percent. While some loans come with terms of 30 days, many borrowers, unable to pay the full loan and interest payments, say that they are forced to renew the loans at the end of each month, incurring a new round of fees.
Customers of TitleMax, for example, typically renewed their loans eight times, a former president of the company disclosed in a 2009 deposition.
[…] roughly one in every six title-loan borrowers will have the car repossessed, according to an analysis of 561 title loans by the Center for Responsible Lending, a nonprofit in Durham, N.C.
As a side note, I’ve also just blocked 19 categories of credit & lending advertising on this site because I noticed predatory ads showing up next to this post unfortunately. Hopefully those go away quickly.
Topics: Big Ideas – Cash transfers for poverty; Nigerian politics; US state legislatures. People: Bill, Nate, Sasha. Produced: December 1st, 2014.
– Big Ideas: Are cash transfers more effective on poverty than “workfare” and tax cuts?
– Is Nigeria’s ruling PDP feeling threatened in the upcoming elections? Are Boko Haram attacks widening?
– What should we expect from US state legislatures after heavy Republican wins in 2014?
Episode 109 (53 min)
– AFD: “Social inclusion, anti-poverty policy are great for the economy!”
– The Globalist: “Bolivia: Where Socialism Appears to Work”
– AFD: “Weirdly, tax cuts don’t solve poverty, finds UN in New Zealand”
– AFD: “Indonesia debuts world’s largest cash transfer program ever”
– AFD: “Report: Tear gas used in Nigeria parliament”
– AFD: “Nigeria government raids opposition offices”
– AFD: “Kano: Boko Haram strikes Nigeria’s 2nd largest city”
– African Arguments: “Nigeria Forum – What Happens When Oil Prices Fall?”
– AFD: “Beyond the Senate: The 2014 state losses”
– Al Jazeera America: “The Democratic comeback plan”
RSS Feed: Arsenal for Democracy Feedburner
iTunes Store Link: “Arsenal for Democracy by Bill Humphrey”
And don’t forget to check out The Digitized Ramblings of an 8-Bit Animal, the video blog of our announcer, Justin.
Earlier this year, Indonesians elected Joko “Jokowi” Widodo as their new president. The Jakarta governor’s background was unusual in Indonesian federal politics extremely humble:
A former carpenter and furniture exporter who was born in a slum in Central Java Province, he will be the first president in Indonesian history not to emerge from the country’s political elite or the ranks of former army generals.
For Indonesia’s very poor and near-poor, this election choice is already paying dividends — quite literally:
As part of the three-card package comes a pre-activated mobile phone SIM card linked to a saving account at state-owned Bank Mandiri. Using this system, the government said it hopes to transfer 200,000 rupiah ($16.50) a month to 15.5 million poor and homeless families to ease the pain of the fuel subsidy cuts. Beneficiaries will be able to cash in their payments at designated bank branches and post offices. If successful, the new system will become the world’s largest government-funded cash-transfer programme, bigger than Brazil’s Bolsa Familia, a similar scheme that has covered 12 million families since its launch in 2003.
Previously from Arsenal For Democracy — on cash transfer experiments in Brazil and Bolivia: “Social inclusion, anti-poverty policy are great for the economy!”
President Jokowi, then Governor of Jakarta, shakes hands with a crowd in January 2013. (Credit: Provincial Government of Jakarta via Wikimedia)
Building off the theme in my most recent post, about anti-poverty programs in Bolivia and Brazil, let’s look at two industrialized economies. A UNICEF report compared the anti-child-poverty programs of the (center-right) New Zealand government with the anti-child-poverty programs of neighboring Australia (led by a center-left government until 13 months ago). Here’s what they found, according to TV NZ:
A United Nation’s report says New Zealand’s child poverty and inequality rates aren’t improving, despite what it describes as the Government’s ‘ambitious’ programme of tax cuts.
It says several Australian policies, which have increased Government spending on families with one-off payments, have had a greater effect.
The National Advocacy Manager for UNICEF NZ, Deborah Morris-Travers, says the numbers suggest the Government needs to review how it is tackling child poverty.
“The report points to Australia where cash payments were made available to low-income families, protecting the poorest children and stimulating consumption to promote recovery. This is contrasted with New Zealand’s policy of tax cuts, which have done nothing to improve the situation for child poverty.”
What a surprise!
Granted, while Australia is similar in many ways, it is also many times larger by population and economic capacity; so how does New Zealand’s effort stack up against other peer economies?
There has been a 0.4% drop in child poverty rates here [in New Zealand]. But in similar-sized countries like Norway and Finland, child poverty rates have reduced by 4.3% and 3.2%, respectively.
In other words, further evidence (like in Brazil and Bolivia) that simpler, more direct transfer programs — instead of the indirect, “trickle-down” tax cut theories George H.W. Bush once dubbed “voodoo economics” — seems to work better to combat extreme poverty, even in developed economies.
After all, the very poor tend to earn so little money that they are not paying taxes that can be cut. Without a “negative income tax” system, tax refund money will never reach them directly. Hence, direct and hassle-free benefits have more impact. The money in such programs goes directly to the problem spots and helps establish a clear safety net and economic floor for children. That allows them to grow up healthier and with better prospects, while permitting up their parents to make ends meet and start to climb the economic ladder out of dire poverty and debt traps.
Most US eyes on Latin America right now are turned to Brazil, where President Dilma Rousseff was just re-elected, ushering in a fourth consecutive term for the Silva/Rouseff anti-extreme-poverty agenda launched in 2002 under her predecessor.
Meanwhile, however, Bolivia — under more avowedly socialist leadership — is also continuing to (more or less) balance its budget, increase its social spending, and grow its macroeconomy substantially. Martin Hutchinson explains why in an article in The Globalist:
Part of it is the effect of commodity prices described above [in the article] and of Morales’ savvy and determined renegotiation of mining and energy contracts. Obviously, if commodity and energy prices are low during the next five years, Bolivia will have considerable difficulties.
What truly sets Morales apart is this: As Bolivia’s first indigenous President, Morales has made great efforts to include the indigenous community – currently about 40% of Bolivia’s population – in the formal economy. He has provided them with both welfare payments and job preferences in order to increase their participation in the economy.
in situations where a large proportion of the population is so poor that it does not participate properly in the economy it is possible to achieve a “growth dividend” by bringing them into full participation.
As they transition into full economic activity, their output allows the national economy to grow significantly, producing extra output and extra tax revenues, while enriching the economy as a whole – and not just the elites.
Hutchinson also points to the Bolivian and Brazilian models that — contrary to US and UK trends for a century and a half — don’t make the very poor jump through hurdles to qualify for government assistance, which seems to get better and less corruptible results on poverty:
In uplifting the very poorest, direct cash transfers with only simple conditionality are highly effective. A program […] costs only a couple of percent of GDP – far less than massive infrastructure schemes.
Yet, it reaches the poorest in society effectively – and, unlike infrastructure projects it cannot be gamed by economic elites – via shady corruption deals that are often part and parcel of large-sized public investment projects.
Here’s a thing Chris Christie just said at the U.S. Chamber of Commerce today:
“I gotta tell you the truth: I’m tired of hearing about the minimum wage. I really am.
“I don’t think there’s a mother or father sitting around a kitchen table in America tonight who are saying, ‘You know, honey, if our son or daughter could just make a higher minimum wage, my God, all of our dreams would be realized.’”
And if you haven’t immediately identified the problem with that statement (which I helpfully bolded), here’s a good summary from Steve Benen:
Also note the part of his comments related to children: as if the minimum wage is primarily for young people.
Whether Christie is tired of hearing the truth or not, the fact remains that the vast majority of Americans who work for the minimum wage are over the age of 20. About half of them work full time.
It’s not about creating economic conditions in which “all of their dreams would be realized”; it’s about creating economic opportunities for those who are struggling to keep their heads above water and combatting systemic poverty.
I’m a bit curious as to what sort of service industry jobs typically staffed by adults Christie believes are not paid at minimum wage (or arguably less, in the case of waitstaff jobs). I’m guessing he probably doesn’t interact directly with those people anyway, however.
Governor Christie’s efforts to block a minimum wage raise in New Jersey were eventually overturned by a statewide ballot initiative.
Had he and other political leaders raised the minimum wage at state and federal levels more consistently over the past couple decades, to keep pace with inflation, the real purchasing power of every minimum wage paycheck would have remained at levels high enough that people wouldn’t be bringing up the issue so frequently now. Instead, it was allowed to decline significantly in value, leaving full-time minimum wage workers and near-minimum wage workers below the poverty line and unable to make ends meet.
Raising the minimum wage further would help significantly boost aggregate demand in the economy and thus spur consumption-driven growth. The experience of other peer economies with higher prevailing wages has demonstrated that there is plenty of room to sustain higher wages before there are any harms to the job market. It would also reduce the burden on government assistance programs and allow small businesses to hire more people to meet the increased consumer demand resulting from people having more spending money available and less debt to pay off.
15 years after a US-led NATO bombing campaign freed the predominantly Muslim province of Kosovo from Serbia, youth unemployment stands at 70%. Now more than a hundred young residents, from a country with a huge statue of Bill Clinton in the capital (photo below), have gone off to join anti-American terrorist groups in Syria and Iraq.
Balkan fighters have participated in Islamist insurgencies elsewhere in the past, but more often against Russia — which, unlike the US, supported Serbia against its Muslim neighbors in the former Yugoslavia. This time, would-be combatants from places like Kosovo are joining ISIS, a group that has moved beyond attacking places in Syria and is now staging suicide attacks in Iraq’s capital against the US-supported government — using at least one Kosovar recruit so far — and has called for attacks on U.S. and British citizens everywhere.
The talk and stories of people disappearing to the Syrian conflict from Kosovo, a country of 1.8 million people, now abound. This is especially true after Kosovar fighters began propagandizing from Syria to folks back home over social media. Even some former NATO assets have reportedly joined up to become jihadists in Syria. In another case, a man kidnapped his 8-year-old son away from his wife and went to Syria with him. Senior religious officials in Kosovo have been arrested for allegedly preaching recruitment on behalf of extremist religious groups in Syria, including ISIS.
The general population disapproves very strongly of the one or two hundred citizens who have gone to join extremist groups in Syria. But Kosovo has no jobs for the vast majority of young men. In contrast, ISIS can offer excitement and a sense of purpose, along with food provisions and payroll funds from the millions of dollars added daily to its cash reserves. And the situation is not unique. Nearby Bosnia, which also has been experiencing very high unemployment and has an even more extensive prior history of contributing recruits to Islamic extremist insurgencies all over, has seen some of its citizens be similarly lured to the civil war in Syria.
The lessons, as always, are that you can’t fix every problem with airstrikes and you can’t fight extremism without fighting poverty and joblessness. A multi-million dollar Western grant for jobs training and creation in the Balkans wouldn’t go amiss right now. Too bad they’re cutting such programs in their own countries already.
Statue of Bill Clinton in Pristina, Kosovo, November 2009. (Credit: Arian Selmani via Wikimedia)