In the UK today the poor are a commodity and poverty is big business. That’s why the homelessness industry can afford conferences in luxury hotels, with slap up meals and drinks receptions. It’s why charity chief executives earn such eye-watering sums, or business empires like the Big Issue can be built beneath a charity facade. And these are the fuckers who are supposed to be helping. Alongside them lie the vultures of the welfare-to-work companies like Serco and G4S – a £20 billion industry designed to punish the poor with benefit sanctions and forced work schemes.
At no point in this elaborate system of so-called support, incentives and sanctions will the people who are poor be given what they need – which is more money. In fact much of the help is designed to do the opposite as it attempts to create behavior change by inflicting more poverty. Benfits are cut to ‘incentivise’ people to find a job whilst charities run advertising campains further stigmatising beggars to encourage them not to be homeless. Other anti-poverty organisations demand that the price of cheap alcohol is raised to stop people being alcoholics and call for bans on handing out free food to make life difficult for those on the streets. As these demands grow ever more shrill, the number of genuinely affordable homes and jobs that pay an adequate income shrink, alongside already meagre benefit payments. Yet because of the wonderful support the poor are offered – and all that money being spent – when people keep getting poorer then frankly, even most charity bosses think, it’s probably their own fault.
It is fucking grotesque. What poor people need is more money and what homeless people need is homes. As well as being glaringly obvious, this is also what the evidence shows. A study was featured in the Washington Post this week which tracked the personalities of 1,420 low income children in North Carolina over a period of 20 years. By pure chance during this period about a quarter of the children’s families received a windfall due to being part of a Native American tribe whose land had been used to host a casino. This led to the families receiving annual payments of around $4000 and meant that the researchers could measure the impact of this small rise in income on the children’s personalities. The results were clear – according to the researchers “there are large beneficial effects of improved household financial wellbeing on children’s emotional and behavioral health and positive personality trait development.”
The study also found that relationships between parents improved, family arguments decreased, and siginifcantly parents who had more money tended to use drugs and alcohol less.
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The Huge Racial Injustice Hidden in Our Credit Scores
Worried about the use of big data for corporate gain? Look not further than the credit scoring system in the US, which has profound impact on our daily lives and is a source and perpetuator of systemic racial injustice.
In response to aggressive marketing by the “big three” multinational credit bureaus – Equifax, Experian and TransUnion – employers, landlords and insurance companies now use credit reports and scores to make decisions that have major bearing on our social and economic opportunities. These days, your credit history can make or break whether you get a job or apartment, or access to decent, affordable insurance and loans.
Credit reports and scores are not race neutral. Rather, they embed existing racial inequities in our credit system and economy – to the point that a person’s credit information serves as a proxy for race.
For decades, banks have systematically redlined black and Latino neighborhoods, refusing to make conventional loans or locate branches in non-white and lower-income areas, notwithstanding laws that obligate banks to meet the credit needs of all communities they serve, consistent with safe and sound banking operations. Thanks to financial services deregulation and the advent of asset-backed securitization, a multi-billion dollar “fringe” financial system has filled the void, characterized by high-cost, destabilizing products and services, from payday loans to check-cashers – which banks typically also own or finance.
People and communities of color have been disproportionately targeted for high-cost, predatory loans, intrinsically risky financial products that predictably lead to higher delinquency and default rates than non-predatory loans. As a consequence, black people and Latinos are more likely than their white counterparts to have damaged credit.
This firmly-entrenched two-tiered financial system has had devastating consequences for entire neighborhoods of color. Starting in the 1990s, financial institutions began flooding historically-redlined neighborhoods with predatory mortgages that ultimately led to the meltdown of the global economy. Waves of foreclosures hammered neighborhoods of color for more than a decade before the crash and black and Latino Americans bore the brunt of the ensuing foreclosure crisis, recession and spiking unemployment. Droves of people turned to high-rate credit cards to cover even basic expenses, contributing to the consumer debt crisis and spawning a bottom-feeding debt-buying industry that purchases old debts on the cheap and then uses the courts to extract judgments disproportionately from people and communities of color. These judgments are then listed in their credit reports, which also brings down their credit scores, in turn limiting a whole range of opportunities.
Although Wall Street is no longer pumping toxic mortgages into black and Latino neighborhoods, people and neighborhoods of color continue to reel from the foreclosure crisis, which many predict is far from over. Meanwhile, racially discriminatory and subprime auto lending are on the rise, payday lenders continue to extract billions of dollars from low-wage workers, and student loan debt has surpassed the trillion dollar mark. One in five Americans has unpaid medical debt, with more than half of all African-Americans and Latinos carrying medical debt on their credit cards. By definition, people who take payday loans and have uninsured medical debt are struggling, and are likely to miss payments. Missed payments translate into decreased credit scores.
This information – unpaid medical and credit card debt, student loans, and mortgages, as well as foreclosures, bankruptcies, debt collection judgments, wage garnishments – appears on people’s credit reports and lowers their credit scores. And the credit bureaus make humongous profits by selling this information about all of us.
In New York City, a coalition of labor, community and civil rights groupsrecently won the strongest ban on employment credit checks in the country. It’s a major economic justice victory, but we know it’s just a first step. We knocked down this discriminatory barrier because there is no demonstrated connection between a person’s credit history and his or her likely job performance or character. Credit checks can also block applicants with no or “thin” credit histories, including many students and immigrants. Rather, using credit information to make hiring decisions – or to rent apartments, set insurance terms, or extend credit – is a clear way to perpetuate inequality, poverty and segregation.
Credit reports and scores are mirrors of our manifestly two-tiered financial system, and more broadly our system of racial wealth inequality and unequal opportunity. In our culture, indebtedness – and certainly failure to pay one’s debts – is deeply entwined with concepts of morality. The insidious notion that our credit history speaks to our reliability as human beings is largely taken for granted.
The credit bureaus and the information they sell have out-sized influence over our lives. It’s time to stop these pernicious practices and the systemic injustices that underlie them.
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