Saturday, January 28, 2006

America's Greatest Growth Industry: Businesses That Exploit The Poor

While many American companies such as GM and Ford battle for their financial lives, and other industries are under a huge foreign assault from cheap imports from low wage overseas labor, one segment of the American business community has seen an unprecented growth rate. Businesses that exploit and prey upon the poor are now a $78 billion dollar segment of the American economy.

Poor neighborhoods are dotted with check cashing businesses that charge 10% of the working poor's paycheck to cash their small paychecks because many of these persons do not have a bank account to cash their paycheck for little or nothing. Car title loans companies charge 300-500% annual interest to the poor who need to pay for rent to prevent being homeless or for a few groceries or need emergency funds to keep their electricity from being shut off. Rent to own furniture stores sell the poor a few sticks of furniture such as a bed to sleep on, rather than some hardwood floor, on claimed "long easy credit terms", that can cost many times the actual retail value for an item. Payday loan companies charge a hefty fee on the meager paychecks of the poor who cannot already survive on the tiny paychecks they earn. And the classic pawnshops and other businesses that buy used items claim that they'll take an item "off your hands", like it's some great saintly favor for a tiny paid price, and then sell the items for many times the price paid. Sometimes the profit margin is ten times the price paid to the seller.

As American workers steadily became poorer in the Mid 90's with the huge influx of cheap imports and the death of many high paying union jobs , replaced by minimum wage service jobs with little or no benefits, the financial decline of the American worker spurred an entire industry of new businesses that exploit the poor of America. In 1970, the bottom third of U.S. wage earnes earned 10 times as much as the top 1% of wage earners. By 2004, the top 1% of wage earners, or about 29,000, now earn as much as the bottom 1/3 of all U.S. workers combined. The radical redistribution of the wealth policies of "trickle down" economics, tax cuts that benefit the wealthy but redistribute local and state taxes to the average person and the poor of the Reagan, Bush 1 and Bush 2 Administrations have helped to spur a tiny class of the ultra wealthy and now a broad underclass of working poor.

During the 2004 Republican Convention in New York, those that gave large amounts to the Republican Party or to organizations of wealthy Bush supporters such as the Bush Rangers, were taken to Cartier jewelers in New York to pick out a free gift by a chartered shuttle. This included the owner of a chain of payday loan, check cashing and poor exploiting businesses that contributed $1 million dollars to various Republican organizations and committees. In many states, Republicans have blocked legislation limiting the interest rates or fees charged by payday loan, car title and other businesses because of strong lobby efforts or donations from this lobby. Normal banks and savings and loan businesses operate under strict federal regulations, but at the state level, primarily Republican politicians act on behalf of the loan-shark industry to keep it free of government regulation and in the business of exploiting the poor of America. This ruthless class warfare by the wealthy and their stooges in government keeps the poor locked in an endless cycle of poverty with little hope of climbing out.

The credit card became a means for many of the working poor to survive on money they did not have. But many companies charged such high interest rates and unrealisticly low minimum payments that it would take as long as 57 years to pay off some cards because so little of the payment goes towards the principle payment. The Bush Administration and the Republican Congressional leadership pushed through legislation to benefit the big credit card companies and limited both bankruptcy and required larger minimum credit card payments, but refused to act on behalf of American consumers and to limit the interest rates charged.

It is women and minorities most likely to be victimized by all these schemes to hurt the working poor, keeping both as a permanent American underclass.

At one time it seemed like burglars, crackheads, alcoholics and gamblers were the greatest clientele of the pawnshop. But today it is the working poor who count on these and other businesses such as payday loan, check cashing, car title loan and second hand and pawnshops to get barely by for a few more days, or to prevent their lights or heat from being shut off, or from becoming homeless because they cannot pay the rent.

Because the poor have little ability or finances to lobby government and control the flow of legislation in America, any sensible and moral regulations against this loan shark industry are difficult to achieve because of the huge lobby strength of this $78 billion dollar industry that takes advantage of the poor. About the only consolation many can take is that it may take time to slowly control some of the worst offenders in this industry, and that the religious community know full well that Scripture forbids usuary of this sort and will continue to press upon the conscience of lawmakers the blantant immorality of this industry. But for now this industry that exploits the poor comes across as a terrible blowback to the type of abuses you'd expect in the days of Oliver Twist's early industrial revolution England.

4 Comments:

At 8:25 AM, Blogger Lizzy said...

Paul,

You have a double post!

 
At 9:16 AM, Blogger Paul Hooson said...

Don't know why the double post happened, Lizzy. It was't there when I first posted the feature. But I solved the problem. Strange thing about that double post, a probable system glitch of some sort.

 
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