The Cost of Poverty, Literally

Here’s a sobering piece in the Atlantic on how much money poor Americans lose just by trying to manage their finances. A not-so-fun fact:

Approximately 70 million Americans don’t have a bank account or access to traditional financial services. That’s more people than live in California, New York, and Maryland combined. It’s more than the number who voted for Barack Obama (or Mitt Romney) in the 2012 election.

The writer calls for “financial education” and says “it’s also an opportunity for technology,” suggesting that

mobile apps can begin to replace the infrastructure of banks, allowing us to send money to friends, family, and businesses, and manage the sum that’s left over.

And the conclusion:

Ultimately, the solution to this problem will require the financial tech community to adopt a familiar economic philosophy. Poverty is painful, and it’s the responsibility of a fair society to make it feel easier.

Sure, mobile apps might help to manage limited funds, but this really wins the aim-low prize of the day. Technology can help make poverty “feel easier”? Simply by circumventing the check-cashing places and payday lenders who gouge the poor?

Here’s a better idea: Go directly to the problem and eradicate poverty. Insist on mandated living wages in all states. Make housing affordable for all. Provide childcare and healthcare.

American culture loves to view technology as a panacea. The writer of this article doesn’t necessarily do that, but he contributes to the problem by privileging technical solutions that address the symptoms, rather than humanitarian solutions for the real problem. Technology can help to solve these problems, but it can’t fix them. Only we can.

2 thoughts on “The Cost of Poverty, Literally

  1. “Go directly to the problem and eradicate poverty. Insist on mandated living wages in all states. Make housing affordable for all. Provide childcare and healthcare.”

    At best these are all long term goals. At worst, these are impossible given mainstream US values. (I don’t see mandated living wages across the board every being politically feasible.)

    A app company that doesn’t become a price gouger itself (maybe a non profit) could give real assistance in the short term.

    And there is no reason why we can’t work towards both long term and short term goals.

    • Thanks for your comment. In fact, the U.S. is making progress on the living wage front, for example, in Seattle, with Obama’s mandate earlier this year, and the fast-food strikes that have happened around the country. These would have been unthinkable even 10 years ago. These problems are solvable if we have the will to address them. Yes, they’re difficult, but that’s precisely why I think we need to choose the right problems. When the media focuses on short-term solutions, it’s distracting and wastes energy. An app that helps save a few bucks for people whose poverty is already hopeless doesn’t help, but it does give the illusion of helping, and that can actually prevent progress because people think something is helping. What might happen if all those brilliant app designers channeled their energy into solving the root problems? And the media would look very different if more writers aimed a little higher.

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