[lbo-talk] thoughts on CPI?

Michael Perelman michael at ecst.csuchico.edu
Sun Jan 20 15:26:31 PST 2008


Here are a few sentences from my Confiscation of American Prosperity, which I think are relevant, because it excludes certain types of costs that fall heavily on the poor.

I had a former student ask his bosses do not collect such data. He reported back that they were completely disinterested. Anyway, here is the text:

The reported income of the poorer segments of society does not account for the many extra expenses that poor people pay. For example, the data ignores the late fees that banks and other corporations charge. In 2004, banks, thrifts, and credit unions collected a record $37.8 billion in service charges on accounts, more than double what they received in 1994, according to the Federal Deposit Insurance Corporation and the National Credit Union Administration. Banks continue to raise fees for late payments, low balances, and over the limit charges to as much as $39 per violation. Some banks even charge for speaking with a service representative. Naturally, these fees predominately fall on the poor (Chu 2005; Foust 2005).

Insurance companies charge more for people in poor neighborhoods. The poor also find themselves at the mercy of predatory lenders. To make matters even worse, their food costs more because they lack convenient access to grocery stores. Even though the government disregards these factors in assembling its statistics about wealth and income, they can be significant (Brookings Institution 2006).

-- Michael Perelman Economics Department California State University Chico, CA 95929

Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu michaelperelman.wordpress.com



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