David Cormack: Poorness charges interest

We built a system where so much opportunity is around money, writes David Cormack. Photo / 123RF

Comment by David Cormack

I bang on a bit. I can be very repetitive. But I feel like I need to repeat my main points many times. And my main point, the one that has been an undercurrent through a lot of my columns is how expensive it is to be poor.

A few jobs ago I had Koru Club membership as part of my remuneration package. I used to sit in Koru Clubs at various airports eating my free scrambled eggs, and drinking my free booze. As I enjoyed the trappings of my corporate bourgeois life, I'd think to myself that those who had more money got free food and drink, while those with much less would have to pay exorbitant airport costs for a soggy sandwich.

Another example I've already mentioned is how much cheaper a monthly pass is for public transport. If you can't afford that then you get stuck on the more expensive daily fare - all because you're already short of money.

Being poor is compounding. We built a system where so much opportunity is around money. And the opportunity to get more money is dependent on having a lot of money to start with. By design, this system entrenches elitism while if you have the misfortune of being born into a poorer household then you're odds on to stay poor throughout your life.

A factor that we don't often think about is that this trap goes both ways. It not only continues to cost you money, but it also stops you from earning more.

You might be short of money and then get a slight toothache. But dentists are expensive so you hold off doing anything about it, hoping it'll just get better of its own accord. Except it doesn't. So next year you're in the can for what could be a thousand dollar root-canal.

Or your power bill is paid by automatic payment, except this month there wasn't quite enough so your bank charges you a fee for being overdrawn. Who do you think is most likely to fall into overdraft? People who can easily afford overdraft fees, or those struggling?

Got a 20 year old car? It's probably cheaper to keep doing those $600 repairs than it is to buy a new one that's less likely to break down.

And having no money means you're less inclined to take innovative risks that could lead to success and fortune. When you're poor, your temptation to take risks that could pay-off handsomely is greatly reduced, even if the odds are good. If the risk of failure is potential homelessness or starvation you're going to play it safe, but keep yourself on the breadline. While someone who could afford for something to go wrong will often get the chance to cash in on it going right.

The way society is structured around money and assets means that your margin for error when you're poor is tiny, but that same margin for error when you're wealthy is much bigger. You might be earning enough to just scrape by, but if a surprise medical issue occurs, or a car breaks down, or your washing machine dies, then that can throw your entire budget out.

Come from wealth? Those surprise expenses will just be a speed bump as you sail along.

The bitter irony is that giving money to the poor is far better for the country than leaving unearned income in the hands of a small group of the rich. Poorer people will spend that money back into the economy, while the rich will bury that money in property, or offshore, or in holidays overseas.

Why do we let this happen? Why don't we help each other up instead of expecting us all to pull ourselves up by our bootstraps when some of us can't even afford boots? We're a community of people not a collection of individuals.

We should definitely reward excellence. But let's also do it at the same time as ensuring that nobody is struggling. Because the person struggling needs our help far more than the person who's already thriving.

Let's stop being ruled by a system that constantly rewards the very top while routinely stamps on the bottom. It's not fair that a booming stock market means the rich get richer but a plummeting one means the poor lose their jobs. It's time for everyone to get a decent lifestyle. It's time to not accept a rigged system. It's time to remind them that we are a community of many, and they are a Koru Lounge of few.

- David Cormack has worked for the Labour and Green Parties and interned for Bill English while studying