Barbara Ehrenreich: Looting the Lives of the Poor

May 17, 2012.
http://www.tomdispatch.com/archive/175543/

     Gordon Gekko, the infamously cutthroat capitalist
     and lead character in Oliver Stone's Wall Street,
     captured the heady years of the 1980s with a
     single, indelible line: Greed is good. Today, it is
     Edward Conard, a friend and former colleague of
     Mitt Romney's at the private equity firm Bain
     Capital, who has offered a new mantra for the 1%, a
     cri de coeur for the Gekkos of the twenty-first
     century: Inequality is good.

     In his new book Unintended Consequences: Why
     Everything You've Been Told About the Economy Is
     Wrong, Conard argues that gaping income inequality
     is an indication of a healthy economy, not a sick
     one. The more unequal we are, Conard told the New
     York Times Magazine, the better off we all will be.
     Why? Because economies grow and thrive when smart
     people devise solutions to our thorniest problems
     by inventing or perfecting goods and services.
     Conard singled out a group of twentysomethings
     sitting at a Manhattan coffee shop one afternoon,
     deriding them as lazy "art-history majors." Those
     people should be out creating businesses and taking
     risks, he insisted, because that's how societies
     prosper. And the way to encourage that risk-taking
     is the promise of obscene wealth for those who
     succeed (and, implicitly, dismal poverty for those
     who don't).

     How obscene should that wealth be? In 2008, the top
     1% commanded 21% of all income in America. Conard
     says our society would improve if only that figure
     were doubled.

     Needless to say, there is no shortage of Conard
     critics. The more respectful ones ask: Teachers do
     not fit Conard's entrepreneurial ideal -- are they
     no use to society? What about judges? Government
     regulators? Others dismiss Conard as an out-of-
     touch millionaire living in a fantasy land. For
     instance, Conard claims that wages for American
     workers have climbed in recent decades; in fact, as
     liberal economist Dean Baker notes, wages have
     barely kept pace with inflation. "We'll leave it to
     his shrink," Baker quipped, "to determine whether
     the problem is that Conard is deluded or
     dishonest."

     It's not hard to imagine how members of the working
     poor would react to Conard's message. Here he is
     urging them to take the leap and design more
     efficient soda cans or search engines, when, as
     TomDispatch regular Barbara Ehrenreich makes
     strikingly clear, the working poor who dare share
     food with the down-and-out or kick up their feet on
     a subway seat can land in a debtor's hell created
     for them by state and local governments and law
     enforcement agencies. Unlike Conard, Ehrenreich,
     the author of the bestselling Nickel and Dimed: On
     (Not) Getting By in America, had an actual urge to
     help those in trouble.  She's just launching the
     Economic Hardship Reporting Project, which will
     "will pay laid-off and/or underemployed journalists
     who are themselves caught in the maw of economic
     hardship to produce compelling stories."  (To catch
     Timothy MacBain's latest Tomcast audio interview in
     which Ehrenreich discusses how the poor get soaked
     and her latest project to fund investigative
     journalism on poverty, click here or download it to
     your iPod here.) -- Andy Kroll

Preying on the Poor: How Government and Corporations Use
the Poor as Piggy Banks

By Barbara Ehrenreich

Individually the poor are not too tempting to thieves,
for obvious reasons. Mug a banker and you might score a
wallet containing a month's rent. Mug a janitor and you
will be lucky to get away with bus fare to flee the
crime scene. But as Business Week helpfully pointed out
in 2007, the poor in aggregate provide a juicy target
for anyone depraved enough to make a business of
stealing from them.

The trick is to rob them in ways that are systematic,
impersonal, and almost impossible to trace to individual
perpetrators. Employers, for example, can simply program
their computers to shave a few dollars off each
paycheck, or they can require workers to show up 30
minutes or more before the time clock starts ticking.

Lenders, including major credit companies as well as
payday lenders, have taken over the traditional role of
the street-corner loan shark, charging the poor insanely
high rates of interest. When supplemented with late fees
(themselves subject to interest), the resulting
effective interest rate can be as high as 600% a year,
which is perfectly legal in many states.

It's not just the private sector that's preying on the
poor. Local governments are discovering that they can
partially make up for declining tax revenues through
fines, fees, and other costs imposed on indigent
defendants, often for crimes no more dastardly than
driving with a suspended license. And if that seems like
an inefficient way to make money, given the high cost of
locking people up, a growing number of jurisdictions
have taken to charging defendants for their court costs
and even the price of occupying a jail cell.

The poster case for government persecution of the down-
and-out would have to be Edwina Nowlin, a homeless
Michigan woman who was jailed in 2009 for failing to pay
$104 a month to cover the room-and-board charges for her
16-year-old son's incarceration. When she received a
back paycheck, she thought it would allow her to pay for
her son's jail stay. Instead, it was confiscated and
applied to the cost of her own incarceration.

Government Joins the Looters of the Poor

You might think that policymakers would take a keen
interest in the amounts that are stolen, coerced, or
extorted from the poor, but there are no official
efforts to track such figures. Instead, we have to turn
to independent investigators, like Kim Bobo, author of
Wage Theft in America, who estimates that wage theft
nets employers at least $100 billion a year and possibly
twice that. As for the profits extracted by the lending
industry, Gary Rivlin, who wrote Broke USA: From
Pawnshops to Poverty, Inc. -- How the Working Poor
Became Big Business, says the poor pay an effective
surcharge of about $30 billion a year for the financial
products they consume and more than twice that if you
include subprime credit cards, subprime auto loans, and
subprime mortgages.

These are not, of course, trivial amounts. They are on
the same order of magnitude as major public programs for
the poor. The government distributes about $55 billion a
year, for example, through the largest single cash-
transfer program for the poor, the Earned Income Tax
Credit; at the same time, employers are siphoning off
twice that amount, if not more, through wage theft.

And while government generally turns a blind eye to the
tens of billions of dollars in exorbitant interest that
businesses charge the poor, it is notably chary with
public benefits for the poor. Temporary Assistance to
Needy Families, for example, our sole remaining
nationwide welfare program, gets only $26 billion a year
in state and federal funds. The impression is left of a
public sector that's gone totally schizoid: on the one
hand, offering safety-net programs for the poor; on the
other, enabling large-scale private sector theft from
the very people it is supposedly trying to help.

At the local level though, government is increasingly
opting to join in the looting. In 2009, a year into the
Great Recession, I first started hearing complaints from
community organizers about ever more aggressive levels
of law enforcement in low-income areas. Flick a
cigarette butt and get arrested for littering; empty
your pockets for an officer conducting a stop-and-frisk
operation and get cuffed for a few flakes of marijuana.
Each of these offenses can result, at a minimum, in a
three-figure fine.

And the number of possible criminal offenses leading to
jail and/or fines has been multiplying recklessly. All
across the country -- from California and Texas to
Pennsylvania -- counties and municipalities have been
toughening laws against truancy and ratcheting up
enforcement, sometimes going so far as to handcuff
children found on the streets during school hours. In
New York City, it's now a crime to put your feet up on a
subway seat, even if the rest of the car is empty, and a
South Carolina woman spent six days in jail when she was
unable to pay a $480 fine for the crime of having a
"messy yard." Some cities -- most recently, Houston and
Philadelphia -- have made it a crime to share food with
indigent people in public places.

Being poor itself is not yet a crime, but in at least a
third of the states, being in debt can now land you in
jail. If a creditor like a landlord or credit card
company has a court summons issued for you and you fail
to show up on your appointed court date, a warrant will
be issued for your arrest. And it is easy enough to miss
a court summons, which may have been delivered to the
wrong address or, in the case of some bottom-feeding
bill collectors, simply tossed in the garbage -- a
practice so common that the industry even has a term for
it: "sewer service." In a sequence that National Public
Radio reports is "increasingly common," a person is
stopped for some minor traffic offense -- having a noisy
muffler, say, or broken brake light -- at which point
the officer discovers the warrant and the unwitting
offender is whisked off to jail.

Local Governments as Predators

Each of these crimes, neo-crimes, and pseudo-crimes
carries financial penalties as well as the threat of
jail time, but the amount of money thus extracted from
the poor is fiendishly hard to pin down. No central
agency tracks law enforcement at the local level, and
local records can be almost willfully sketchy.

According to one of the few recent nationwide estimates,
from the National Association of Criminal Defense
Lawyers, 10.5 million misdemeanors were committed in
2006. No one would risk estimating the average financial
penalty for a misdemeanor, although the experts I
interviewed all affirmed that the amount is typically in
the "hundreds of dollars." If we take an extremely
lowball $200 per misdemeanor, and bear in mind that
80%-90% of criminal offenses are committed by people who
are officially indigent, then local governments are
using law enforcement to extract, or attempt to extract,
at least $2 billion a year from the poor.

And that is only a small fraction of what governments
would like to collect from the poor. Katherine Beckett,
a sociologist at the University of Washington, estimates
that "deadbeat dads" (and moms) owe $105 billion in back
child-support payments, about half of which is owed to
state governments as reimbursement for prior welfare
payments made to the children. Yes, parents have a moral
obligation to their children, but the great majority of
child-support debtors are indigent.

Attempts to collect from the already-poor can be vicious
and often, one would think, self-defeating. Most states
confiscate the drivers' licenses of people owing child
support, virtually guaranteeing that they will not be
able to work.  Michigan just started suspending the
drivers' licenses of people who owe money for parking
tickets.  Las Cruces, New Mexico, just passed a law that
punishes people who owe overdue traffic fines by cutting
off their water, gas, and sewage.

Once a person falls into the clutches of the criminal
justice system, we encounter the kind of slapstick
sadism familiar to viewers of Wipeout. Many courts
impose fees without any determination of whether the
offender is able to pay, and the privilege of having a
payment plan will itself cost money.

In a study of 15 states, the Brennan Center for Justice
at New York University found 14 of them contained
jurisdictions that charge a lump-sum "poverty penalty"
of up to $300 for those who cannot pay their fees and
fines, plus late fees and "collection fees" for those
who need to pay over time. If any jail time is imposed,
that too may cost money, as the hapless Edwina Nowlin
discovered, and the costs of parole and probation are
increasingly being passed along to the offender.

The predatory activities of local governments give new
meaning to that tired phrase "the cycle of poverty."
Poor people are more far more likely than the affluent
to get into trouble with the law, either by failing to
pay parking fines or by incurring the wrath of a
private-sector creditor like a landlord or a hospital.

Once you have been deemed a criminal, you can pretty
much kiss your remaining assets goodbye. Not only will
you face the aforementioned court costs, but you'll have
a hard time ever finding a job again once you've
acquired a criminal record. And then of course, the
poorer you become, the more likely you are to get in
fresh trouble with the law, making this less like a
"cycle" and more like the waterslide to hell.  The
further you descend, the faster you fall -- until you
eventually end up on the streets and get busted for an
offense like urinating in public or sleeping on a
sidewalk.

I could propose all kinds of policies to curb the
ongoing predation on the poor. Limits on usury should be
reinstated. Theft should be taken seriously even when
it's committed by millionaire employers. No one should
be incarcerated for debt or squeezed for money they have
no chance of getting their hands on. These are no-
brainers, and should take precedence over any long term
talk about generating jobs or strengthening the safety
net. Before we can "do something" for the poor, there
are some things we need to stop doing to them.

Barbara Ehrenreich, a TomDispatch regular, is the author
of Nickel and Dimed: On (Not) Getting By in America (now
in a 10th anniversary edition with a new afterword). She
is most recently the founder of the just-launched
Economic Hardship Reporting Project, which supports
innovative journalism on poverty and economic hardship.
To listen to Timothy MacBain's latest Tomcast audio
interview in which Ehrenreich discusses how the poor get
soaked and her latest project to fund investigative
journalism on poverty, click here or download it to your
iPod here.

Follow TomDispatch on Twitter @TomDispatch and join us
on Facebook.

Copyright 2012 Barbara Ehrenreich

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