Posts Tagged ‘poor’

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What does it mean that Dollar Tree is buying rival discount store Family Dollar in a cash-and-stock deal valued at about $8.5 billion?

It means, at a first cut, that Family Dollar stockholders will receive $59.60 in cash and the equivalent of $14.90 in shares of Dollar Tree for each share they own—a transaction valued at $74.50 per share, which is an approximately 23 percent premium to Family Dollar’s Friday closing price of $60.66—and that Dollar Tree will now have more than 13,000 stores in the U.S. and Canada—nearly three times as many as Wal-Mart Stores Inc. (although Wal-Mart’s square footage is still greater).

More generally, it means there’s a lot of profit to be made in selling discount commodities to the low-income and falling-income American families whose numbers have grown over the course of the past three decades, and especially in the midst of the Second Great Depression.

As Sriya Shrestha explains in her recently published study of dollar stores,

US consumers experience a kind of “thirdworldization,” that marks them not as exceptional but rather increasingly on par with rest of world as they become yet another population of consumers marked by their lack of income. Hence, multinational corporations’ and discount retailers’ techniques aimed at incorporating what are known in marketing literature as the “bottom of the pyramid” (poorest populations in poorest countries) overlap with methods used at US dollar stores. For example, brand- name goods at the dollar store are often sold in packages substantially smaller than the standard sizes found at Target or CVS. This technique also surfaces in places like India where companies like Unilever and Proctor & Gamble sell single-serving sachets of laundry detergent, fairness cream, and shampoo for around 2 rupees. These methods rely upon a particular model of frugality aimed at those with extremely limited incomes that actually costs the consumer more in the long-run. This contrasts with other recently popularized methods of shopping, like purchasing in bulk from warehouse retailers and couponing that actually save money. These latter shopping styles require more money upfront, time, storage space, and membership fees ensuring its association with normative American middle-class, feminine “home-making” and smart budgeting rather than poverty.

Thus, the sense of loss of an American consumer identity and American dream emerges through the sense of a compromised American exceptionalism as people in the US find themselves unemployed, underemployed, facing compromised conditions of labor and consumption. Chinese Tide detergent and Indian Colgate toothpaste make their way to US dollar stores because major US and European multinationals are now targeting growth markets among the middle classes and poor in the former peripheries of the global economy as the centers have slowly begun to crumble.

Clearly, poor and working-class families are being forced to have the freedom to pinch their pennies, which turns out to be a profitable opportunity for the likes of dollar stores that feed at the bottom of American capitalism.

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tumblr_n765tnDmrJ1r55d2io1_500 Mitt Is Back

tax havens

It’s now common (and has been since at least 2012) to argue that poor people are poor because they face a scarcity of money and time. The latest research along these lines is summarized by Maria Konnikova:

When we think of poverty, we tend to think about money in isolation: How much does she earn? Is that above or below the poverty line? But the financial part of the equation may not be the single most important factor. “The biggest mistake we make about scarcity,” Sendhil Mullainathan, an economist at Harvard who is a co-author of the book “Scarcity: Why Having Too Little Means So Much,” tells me, “is we view it as a physical phenomenon. It’s not.”

“There are three types of poverty,” he says. “There’s money poverty, there’s time poverty, and there’s bandwidth poverty.” The first is the type we typically associate with the word. The second occurs when the time debt of the sort I incurred starts to pile up.

And the third is the type of attention shortage that is fed by the other two: If I’m focused on the immediate deadline, I don’t have the cognitive resources to spend on mundane tasks or later deadlines. If I’m short on money, I can’t stop thinking about today’s expenses — never mind those in the future. In both cases, I end up making decisions that leave me worse off because I lack the ability to focus properly on anything other than what’s staring me in the face right now, at this exact moment.

But what about rich people? By the same logic, they have an abundance of money, which allows them to buy the time of others—and, together, their money and time allow them to capture even more money and time. One way they do this is by parking their money in offshore tax havens.

In fact, Gabriel Zucman (here is a link to the pdf of his 2013 article) estimates that $7.6 trillion—8 percent of the world’s personal financial wealth—is stashed in tax havens abroad. And three quarters of that total go unreported. What this means is a lot of time is spent in personal wealth management activities in these tax havens to attract and protect the money of wealthy individuals.

Mo’ better time, so that rich people can have mo’ better money.

Lee Judge cartoon for Dec

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general-prayuth-and-the-coup-in-thailand-altagreer-thai David Simonds cartoon on eurozone recovery

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