{"id":26557,"date":"2016-10-17T11:05:24","date_gmt":"2016-10-17T18:05:24","guid":{"rendered":"https:\/\/franklycurious.com\/wp\/?p=26557"},"modified":"2016-10-16T20:39:55","modified_gmt":"2016-10-17T03:39:55","slug":"latte-lie","status":"publish","type":"post","link":"https:\/\/franklycurious.com\/wp\/2016\/10\/17\/latte-lie\/","title":{"rendered":"The Latte Lie and the Shaming of the Poor"},"content":{"rendered":"

\"LatteI happened upon an article from earlier this year by Helaine Olen, Buying Coffee Every Day Isn’t Why You’re in Debt<\/a>. It’s actually from her 2013 book, Pound Foolish: Exposing the Dark Side of the Personal Finance Industry<\/a><\/em>. And it gives me an opportunity to discuss this issue, which I think is very important. I am sick to death of this idea that if the poor were only thrifty (No latte for you!) all their problems would be solved.<\/p>\n

It’s hard enough being poor. But most places outside this country where you run into poor people, you notice something: they don’t reek of shame. But here in the United States they do. (We do, since I’ve been a fellow sufferer a couple of times.) Being poor is mostly a matter of bad luck. But here it is portrayed as justice. “If only the poor acted more like the rich!” In fact, this is exactly the argument made by prominent rich people like David Brooks and Charles Murray. But note: neither of them are racists. It’s just that their Great Brains lead them inextricably to the racist conclusions they draw.<\/p>\n

The Latte Lie<\/h2>\n

You probably know the old saying, “Look after the pennies and the pounds will look after themselves.” Well, no one much uses it anymore because it is so obviously false. But Olen noted that today, you will hear the same advice. She focused on the Starbucks latte. Many personal finance gurus explain that you aren’t poor because you’re out of work or making minimum wage. No: you are poor because you splurge on Starbucks lattes! And they justify it with highly distorted mathematics:<\/p>\n

[David] Bach calculated that eschewing a $5 daily bill at Starbucks… for a double nonfat latte and biscotti with chocolate could net a prospective saver $150 a month, or $2,000 a year. If she then took that money and put it all in stocks that Bach, ever an optimist, assumed would grow at an average annual rate of 11 percent a year, “chances are that by the time she reached sixty-five, she would have more than $2 million sitting in her account…”<\/div>\n

Note the many problems here. The $5 per day is actually not<\/em> $2,000, but $1,825. That matters a lot when you are compounding interest. And it isn’t just the latte but also a biscotti. Otherwise, you couldn’t make it to $5. Who these people are who have lattes every single day of their lives<\/em> I can’t say. But then he adds that this is all going to be invested and make 11 percent a year! Amazing.<\/p>\n

Olen reported on a more reasonable analysis that assumed $3 per latte and took into account things like taxes and inflation. The result? After 30 years of Starbucks deprivation, $50,000 would be saved. Time to retire in Grand Cayman, am I right?!<\/p>\n

Shame the Poor!<\/h2>\n

The truth is that the power elite love this kind of lie. It works on two levels. First, it gives them an excuse to not pay workers more. After all: just cut out those lattes and you’ll retire a millionaire! Second, it gives them an excuse to not pay workers more. Because the reason they<\/em> are rich is because they are frugal. Or they are when it comes to paying workers. When it comes to little things like a daily latte to make life bearable, they don’t deprive themselves. After all: they know that this business about the latte is just a useful lie.<\/p>\n

The whole thing reminds me of Randy Newman’s “God’s Song.” In it, all the religious people of the world get together and they ask God, “If you will not take care of us, won’t you please, please let us be?” And that’s the thing here. The rich are lucky to be so and the poor are unlucky to be so. (If you want to think of this in terms of genes, be my guest; but that’s not what I mean.) As a result, the rich should count their blessings. And they shouldn’t come up with stupid theories like the latte lie to make the lives of the poor harder than they already are.<\/p>\n