So in another thread, Starving Artist offered this:
Given that it’s somewhat off-topic for that thread, I figured I should make a new thread to discuss the merits of this. Essentially, as far as I understand, the claim being made is that the poor can offer their services independently and thus make a considerably better living for themselves.
Do we have any people here who have experience with this, or anything to comment on this? For a variety of reasons I will get into, I find this proposal mildly unrealistic.
It can work for many people. But many of those jobs require capital that poor folks don’t have such as cars or an ID card. And some of the poor are poor due to habits such as alcoholism that hinders their ability to sustain work. That was the case with my mother. She’d drink away excess money. She sure as hell wouldn’t invest it to earn more for the future.
But with decent habits, hygiene, and some working capital people can and do make good money working for themselves.
Well sure, if the poor can find a way to offer their services to the non-poor, who are the ones who have money to pay good wages, then they can do much better for themselves than they could when restricted to an economically depressed and starved neighborhood.
But it’s not always so easy to bring the labor to the table. Note that even in SA’s one example, it’s a college student who’s doing this work: i.e., someone quite educated and with significant exposure to middle-class environments even if not originally middle-class.
Then there’s the issue of paperwork and regulations if you’re really going to run your own business as opposed to just getting paid under the table for gigs. That’s not an easy hurdle even for the educated middle-class self-employed, and people from poor communities are going to find it even more daunting. (Immigrants are often so successful at this kind of small entrepreneurship because of community networks: immigrants from the same place tend to congregate in particular regions or municipalities where they stay in touch with one another, so when somebody needs legal advice, the neighbor’s aunt’s brother-in-law whose cousin’s daughter is a lawyer is brought into the loop, and so on.)
And finally, let’s run the numbers on this proposal. Take, for example, a metro area like Kansas City, which has about 35,000 “microbusinesses” that employ fewer than 10 people, a significant majority of the city’s total 50,000 businesses of all sizes. Great, yeah? Yeah!
Well, there are over 60,000 Kansas City residents with incomes below the poverty line. If we assume that only half of them are working-age adults, that still gives us at least 30,000 people who need to better themselves financially. If each of them started some kind of “microbusiness”, that would increase the total number of businesses in the area by over 50 percent. Can the economy really support that many new businesses operating profitably enough to lift their owners out of poverty? Where’s that kind of money going to come from?
Like almost everything else recommended as a road to prosperity for the poor as a group, entrepreneurship has the power to be very successful for the most healthy, capable, motivated, intelligent minority of the group. But I’m very skeptical of claims that these are workable large-scale solutions for poor people in general, if only they would just apply a little gumption and start raking in the cash.
Mow lawns? There are tons of people around who want to mow my feeble lawn. Set up a restaurant? Do you have a good hook? Sell drugs? Watch out for that other guy on the corner.
It works great if you have some sort of competitive advantage. But most calls like this ignore good business sense.
If you read a book on starting a business, you’ll find a warning about a business plan that says the market is $X million, so you can easily get 10% of it. As if the current companies in this market will let you have it.
Entrepreneurship is good, and is a way out of poverty, but it is not the way out of poverty.
No, economies are not zero-sum unless you are not doing anything that adds value. Turning X hours of spare time into needed work having been done adds value.
But if your client chooses to pay $100 to you for the goods or services that you offer rather than $100 to Bill for some other goods or services, your client feels that he is better off buying the goods/services that you supply, rather than the goods/services that Bill supplies. The extra value to you is offset by the reduction in value to Bill (more or less), but your client is better off by the difference in value (to your client) between your goods/services and Bill’s goods/services. So total value is increased.
Money is not the be-all and end-all of wealth, it is a tool to make it easier to exchange wealth. If your client gives you money you now have money to give to somebody else, but more importantly, you have provided a service to the client that is more valuable to them than the money they gave you, and you spent some of your time in exchange for some money that is more valuable to you than the time you spent. Value is created out of nowhere, because both sides got something out of the arrangement that is more valuable to them than what they gave away.
No, but economies don’t grow at infinite speed, either. At any given time there’s a certain amount of wealth floating around in an economy, and it doesn’t double in the blink of an eye, or anything like that. (It especially doesn’t spread in the blink of an eye: wealthy elites who have sudden access to new and vast sources of wealth, Beverly-Hillbillies-style, may get rich quick but it will take the whole economy longer to feel it.)
That’s why entrepreneurship is wildly successful for a very small number of originally poor people, reasonably successful for a larger minority of them, and not possible on the scale of the entire sector of the economy that’s in poverty. You just can’t scrape enough extra wealth out of the couch cushions and cupholders to get all the poor people earning middle-class profits all at once, even if they all miraculously became highly smart and competent and industrious all at once.
The post quoted in the OP was in response to my having been asked what I would say to someone on benefits who was claiming that there were no jobs available. I prefaced the quoted comments by mentioning the time honored response that employment want ads seem full of jobs that go wanting.
Further, it wasn’t my intention that every single person who’s poor should go out and launch themselves into entrepreneurship, but rather to illustrate that there are money making opportunities available for anyone who genuinely wants to work if jobs aren’t available, and/or who wants to earn an income considerably above minimum wage.
Now, can every single person who’s poor or unemployed or who’s become alienated from society and therefore lacks the type of personality to function well with customers succeed in these types of enterprise? The answer is no. But then again I never meant that every single person who needs a job or would like a decent income will be able to go out and successfully perform these types of jobs. But a great many can, especially if they aren’t the type to be thwarted by difficulties such as those mentioned by Kimstu and Voyager, who seem to feel that if any obstacle exists at all then the whole idea is hopeless.
Almost all successful people become successful by overcoming obstacles. If someone really wants to make money mowing lawns but lacks the funds for mowing equipment, they could take on a second job for a few months to earn the money to get the equipment they need. Or borrow it from family or friends if possible, or go to work at one of the other types of work I listed that don’t require much money to start, and do that until enough money is earned to buy the equipment they need. (A lot of people spend thousands of dollars and several years of schooling to qualify for jobs paying a lot less than that, so I’d think the extra effort and sacrifice would be worth it.) And it doesn’t take a lot of money to go into business cleaning windows or painting or cleaning houses or many of the other ways people can convert their labor into income. And with the advantage these days of the internet and Youtube videos, instruction in how to perform these kinds of work abound. And if someone doesn’t want to have to hassle with taxes, etc., they can simply use a small percentage of their earnings to have an accountant take care of it for them. See? Solutions can be easy-peasy if you don’t have a defeatist attitude.
Now, as far as saturated markets go, I can guarantee you there are people right now who haven’t yet gone to work mowing lawns who will be making good money at it a year from now. If the markets are all saturated with mowing services, where are their customers going to come from? They’re going to come about because some people are dissatisfied with the service they’re currently using or the price has gone up more than they’d like. Or their previous service has gone out of business or the owner retired. Others have just moved into a new home and are needing someone to mow their lawn. Some have been mowing their own lawn and have grown tired of it, or they’re a recently divorced career woman or elderly widow who suddenly find themselves in need of mowing service. The reality is that potential customers abound. The same applies to all the other income methods I listed (which, btw, only scratch the surface of the number of income opportunities that are out there). The opportunities are plentiful for those who actively seek them out.
So while Kimstu is right that there isn’t enough opportunity for every poor person in town to go out and make money doing these kinds of work, there is more than enough opportunity for those relative few who have the will to do so. The rest are defeatists with attitudes similar to those of Kimstu and Voyager, and therefore they are easily daunted because they see impossibility at every turn, or they simply lack the will to get out and do it.
Okay, now we’re getting down to brass tacks. Quantitatively, for approximately what percentage of a poor population do you think that entrepreneurship will realistically be a successful route to secure prosperity?
We all agree that financial success through self-employment isn’t possible for every poor person, and that it certainly is possible for some. What do you have to add to that assessment in the way of actual estimated numbers, and on what evidence are you basing your estimate?
[QUOTE=Starving Artist]
But a great many can, especially if they aren’t the type to be thwarted by difficulties such as those mentioned by Kimstu and Voyager, who seem to feel that if any obstacle exists at all then the whole idea is hopeless. […]
So while Kimstu is right that there isn’t enough opportunity for every poor person in town to go out and make money doing these kinds of work, there is more than enough opportunity for those relative few who have the will to do so. The rest are defeatists with attitudes similar to those of Kimstu and Voyager, and therefore they are easily daunted because they see impossibility at every turn, or they simply lack the will to get out and do it.
[/quote]
:dubious: Let’s take a look at what I actually said:
See, when Starving Artist says that some poor people can succeed by becoming entrepreneurs although not all of them can, he’s being positive and uplifting and inspiring. But when I say that some poor people can succeed by becoming entrepreneurs although not all of them can, I’m being defeatist and easily daunted and thwarted by difficulties and seeing impossibility at every turn. :rolleyes:
Newsflash, Starving Artist: calling a glass half-empty versus calling it half-full doesn’t change the fact that both descriptions are referring to exactly the same amount of liquid in the glass.
[QUOTE=Starving Artist]
Almost all successful people become successful by overcoming obstacles. […] See? Solutions can be easy-peasy if you don’t have a defeatist attitude. […] while Kimstu is right that there isn’t enough opportunity for every poor person in town to go out and make money doing these kinds of work, there is more than enough opportunity for those relative few who have the will to do so. The rest are defeatists […]
[/quote]
You gotta admire the sheer chutzpah of admitting in one breath that this individual entrepreneurship strategy is intrinsically incapable of assisting all poor people out of poverty, and in the next breath declaring that the unassisted majority don’t count because they’re losers anyway, so it’s their own fault.
So, Starving Artist, got that quantitative estimate for us yet? Best-case scenario, what’s the approximate percentage of the poor population who you think could succeed through entrepreneurship if they didn’t “have a defeatist attitude”, and what are you basing that number on?
The difference, I think, is that while Kimstu points to a variety of barriers (you have to be “healthy, capable, motivated, intelligent . . .”), Starving Artist sees only one (there is more than enough opportunity for those who “have the will”).
While Starving Artist’s faith in the Triumph of the Will is touching, it’s not convincing. You aren’t healthy merely because you want to be healthy; you aren’t capable merely because you want to be capable. You don’t have marketing skills, networking skills, organisational skills, etc necessary to run even a micro-enterprise successfully merely because you wish you had them.
(And the notion of taking a “second job” to save the capital needed to buy a truck or some industrial cleaning equipment is meaningless - literally - to someone who doesn’t have a first job.)
My problem with this is that there are a lot of people claiming that. The issue of “I am poor and see no path to advancement” is not just a personal problem, and I have tried not to frame it as such in this discussion. On a personal level, people make it out of poverty. Some of them. Good for them! They worked hard, they worked smart, they made it. On a societal level, the number that do is outright shameful compared to most of the rest of the western world - creating that better life for your kids is extremely hard in the USA.
Right. Nobody disputes that. But how many are there? And what risks are involved in trying to take them? These are important, non-trivial questions.
“If I fail, I’m dug even deeper into my hole” is never a pleasant prospect, but when you’re already barely scraping by, it’s downright terrifying. Good risk assessment is important here, and it’s also important when considering why so many people don’t just go start a lawn-care business.
This, on the other hand, seems removed from reality. “And if someone doesn’t want to have to hassle with taxes, etc., they can simply use a small percentage of their earnings to have an accountant take care of it for them.” So not only are these people at the bottom rung of society supposed to suddenly make tons of money in menial labor jobs anyone can do (sort of begs the question: why aren’t they all already doing that), they’re supposed to be making enough to be able to employ an accountant? Wat.
The problem with entrepreneurship is that it’s a classic Catch-22 situation: You need wealth to get it going in the first place. Without wealth, or collateral, it’s very risky or impossible to get that business going.
You’re demanding that I defend an argument I never made, either here or in the referenced thread. I said that if someone wants a job but none are truly available, they have the option of striking out on their own to create their own job, and quite possibly earn a handsome profit in the process.
I made no claim whatsoever that my recommendations apply to poor people as a whole, I made no claim as to what percentage they apply to, and I never said nor implied that the problem of the nation’s poor could be eliminated if only they all went out and made their own jobs.
One of the reasons for this is that most people simply don’t want to go to the trouble. Many are daunted by the prospect of going into a line of work they know nothing about, of finding customers, of getting along with customers and satisfying customers. They fear paperwork, and taxes. And most of all, they lack confidence and have no belief in themselves. Others just don’t want to put out the effort, preferring the devil of privation they’re already familiar with to the devil of trying to make it on their own. As I’ve said a couple of times now, they’re the ones who only want a job where they can go through the motions, with little or no responsibility, and come home at night to relax, drink beer and watch television. Still others don’t want to do even that, preferring to eke out an existence on government benefits for as long as they can, oftentimes because they receive more in money and benefits from the government than they can earn in the minimum wage jobs that are all they can qualify for.
It’s for these reasons and more that entrepreneurship isn’t the solution to eliminating the problem of the nation’s poor, but it is a solution for those who truly want to work and make pretty damn good money doing it.
And finally, I quarrel with your notion that only the “most healthy, capable, motivated, intelligent minority of the group” can succeed in this way. It takes no special intelligence to do any of the jobs I’ve referenced, nothing exceptional in the way of health, just normal health of the type that would allow the person claiming they can’t work because no jobs are available to perform said work if they could find it. And how much capability do think has to be involved? School kids mow lawns, paint houses, pass out advertising flyers door-to-door, etc. Mostly what is required physically and mentally is average capability of the sort any minimum wage job would require.
Pardon, but this is more of the very defeatism I’ve been talking about. How much of all that do you think is necessary to spend your day mowing lawns? Or painting a house? Or hauling unwanted items to the dump? You and Kimstu both are making things way more difficult complicated than reality requires. As I said, school kids mow lawns. How much in the way of marketing, networking and organizational skills do you think they have? Do a good job at the type of work you’ve chosen and positive word of mouth will eventually bring you more work than you can handle.
My comments were intended not only for the jobless but for those in low income jobs who’d like to find a way out of poverty and make a good income. This can also include people who are currently jobless but eventually find low paying work. Again, almost anybody who can work at all can do any of the kinds of jobs I’ve suggested. Some of them might take time, they might take sacrifice, and they might take overcoming adversity. But Rome wasn’t built in a day, and achieving the ultimate goal of self-employment with a comparatively high income seems to me to be well worth whatever it takes to get there.
I can’t speak to that because I don’t know what other countries do to create great jobs for their people’s kids. I do know that the educational system we’ve devolved in this country isn’t helping things any. When you have kids ‘graduating’ from high school unable to read at a second-grade level, it’s understandable that they’d have a hard time making it in life.
Yes, risk assessment is a consideration. But there are ways to minimize it. Spend some time on Youtube learning how to operate the equipment and how to do a good job. Maybe look for some lawn care forums online that you can read to get a handle on prices and techniques and learn how the other guys do what they do. You’ll be sitting at home anyway so what’s the harm? Then, assuming you already have a job, start out slowly in your spare time. If you don’t have a job then all you’re risking is a few hundred dollars, at least half of which you can recoup by selling your equipment. So then you’re out even less money and you’re right back where you started. Not really a big deal. But really, there isn’t much chance of failure barring a shortcoming of some sort on your part, like having a bad attitude with customers or an inability to turn off the TV and get out to work. Like I said, schoolboys mow lawns and paint houses. The prospect of failure is really pretty slight.
Yeah, you thought I was full of it when I said guys were mowing lawns for $30 too, until you apparently became convinced I was right. But be that as it may, on to your next point:
Yep, easy-peasy. Let’s say you’re out mowing six or eight lawns a day for $30 a pop. I would think you could build your service up to that level pretty easily within a month or so. That’s $180 to $240 bucks a day! Now, I don’t know how much an accountant would charge to keep track of your receipts and handle your taxes, but I would think it shouldn’t be more than $150 - $200 a month, if that. Wouldn’t take much of his time. So on a five day work week you’re grossing $900 to $1,200 a week, or roughly $3,600 to $4,800 a month. Surely you can see now that paying a minimal amount for an accountant to handle the taxes and paperwork you don’t want to be bothered with (or perhaps are intimidated by) is not such an extravagance after all.
And don’t forget, there are lots of ways people can make money besides lawn care. Mowing has sort of become the focus for now but the underlying principles are pretty much the same for all of them. (And don’t forget that in most parts of the country mowing is only possible for six months a year or so, but like I said in the other thread some of those guys make enough during mowing season to live on all year.)
And now I’m out for the night and have a fairly busy day tomorrow. If you have other questions feel free to PM me as I may not have time tomorrow to participate in this thread much.
School kids are subsidized. It’s one thing to do that kind of work to make spending money when your basic needs are already taken care of. Doing it for a LIVING, when you involve taxes, employees, real competition, health insurance, and the prospect of, after that is all dealt with, have enough money to pay your rent and feed your family? Entirely different kettle of fish.
I’m just going to reiterate: you’re proposing that people at the bottom rung of society make way more than minimum wage doing menial, low-skill jobs (where, as you seem to point out, they’ll be competing with, among others, schoolchildren) with tools they don’t own, rented or bought with money from I have no idea where. Within a very short period of time, they’ll make enough to be able to afford an accountant.
There’s no part of this that sounds even the slightest bit absurd or unlikely to you?
