Entrepreneurship as a way out of poverty

[Slash1972]

This thread seems to be devolving into yet another “Here are some things poor people can try in order to not be poor” vs “Here are the reasons (excuses) why poor people CAN’T do those things” thread.

This is not true for poor immigrants. Why is this true for the native poor?

Perhaps it’s because poor immigrants can’t sit around complaining about immigrants who “TURK R JERBS!” so they actually go out and try to make a better living?

[octopus]

@Kimstu

:rolleyes: Yes, I know.

How does any of this tedious and pompous dorksplaining in any way invalidate or correct anything that I actually said? What I said is that wealth in an economy doesn’t expand at infinite speed, even though economies are not zero-sum.

That remains true whatever proxy you use to estimate wealth in an economy, whether it’s money, labor and raw materials, or any combination thereof. Whatever you’ve got that’s growing the economy, you can’t turn it into increased value all at once, and you especially can’t distribute the effects of that increased value among all the participants in the economy all at once.

I apologize if my feeble little joke about “scraping wealth out of the couch cushions and cupholders”, to symbolize the impossibility of an economy’s immediately absorbing and supporting a sudden huge increase in economic activity, confused you about what I actually meant.
You don’t appear to be very good at judging what other people do or don’t fail to realize.

Not for the superficial reasons that you patronizingly and incorrectly imagine.

Infinite speed is completely irrelevant. Policy and action that grows the economy are relevant. Entrepreneurship grows the economy. So what if there exists some lag. And who cares if everyone doesn’t get some proportional benefit from the economic growth. What has “everyone” done to earn it. May I refer a book for you? https://play.google.com/store/books/details?id=VLTYAwAAQBAJ&source=productsearch&utm_source=HA_Desktop_US&utm_medium=SEM&utm_campaign=PLA&pcampaignid=MKTAD0930BO1&gl=US&gclid=CJm5t5n59cwCFYhTgQodYWcOBg&gclsrc=ds

Maybe hensplaining will help.

[octopus]

@Damuri_Ajashi

You don’t need a lot of paperwork to mow lawns. It may not be a pathway to prosperity but its a living.

The same can be said of selling firewood, being a small jobs handyman, selling food from carts (see hot dog carts), driving a taxi, etc.

Immigrants don’t start businesses because its relatively easy for them, they start businesses because no one will hire them. The communication barrier is a large hurdle so they can’t get jobs and as greencard holders (if that), they do not qualify for most forms of government assistance).

What they do have is average or above average intelligence or skills and a lot of desperation. Do you honestly think that the infrastructure that makes it possible for your neighbor’s aunt’s brother-in-law’s, cousin’s daughter being a lawyer predates the immigrant community’s small business activity? The immigrant communities in NYC didn’t come preassembled with lawyers and accountants. Their businesses flourished first then the lawyers showed up. Before then we used the yellow pages to find our lawyers.

What the immigrant community has that the poor community doesn’t have is above average intelligence and a sizable dose of desperation.

You know people can move anywhere in the 48 contiguous states pretty easily.

I think “gumption” is harder come by at any income level than people think. Reasonably good health is important but you don’t have to be particularly clever to run a small business.

So often we hear “It’s hard to move!” And yet the immigrants have made much harder moves and are more successful. Work ethic and drive counts for a lot.

[running_coach]

@Kimstu

Sure, but the point here is that it’s claimed that such occupations are realistic “pathways to prosperity” for some unspecified (but apparently assumed to be large) proportion of the poor population.

Most of the US poor do have some kind of a living, as opposed to literally perishing from want and privation. The issue being debated here (right up there in the thread title, in case you missed it) is not “entrepreneurship as a way to achieve basic survival in poverty”, but “entrepreneurship as a way out of poverty”.
Sure, and the ones who succeed network with later arrivals from the same immigrant community in order to grow additional businesses (often in the same fields).
I don’t say it originally predates it, but for established and growing immigrant communities, the two go together. Sure, the first immigrants are making it on their own against very stiff odds, but the later immigrants and descendants, who constitute the vast majority of any established immigrant communities, have benefited substantially from existing networks (which is a good thing).

I mean, it’s not just a coincidence that we’ve got huge percentages of nail salons that are Vietnamese-owned, donut shops that are Cambodian-owned, greengrocers that are Korean-owned (though that network is on the decline as more Koreans assimilate into the general middle class), motels that are (often Gujarati) Indian-owned, and so forth. The pioneers use their acquired expertise to increase their industry share with the aid of the newcomers.
Oh yes, and it doesn’t cost anything at all. There’s no such thing as not being able to afford to move elsewhere.

Aren’t immigrants required to have a certain amount of funds, promised job or a sponsor?
Or has that been changed?

[Damuri_Ajashi]

@Budget_Player_Cadet

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?

Its not absurd. The accountants that do the books for small businesses like that aren’t CPAs. You don’t have to hire Ernst & Young.

Mowing lawns is shorthand for landscaping. You are doing things other than just mowing lawns. It is back breaking work that you don’t hire out to school children. Its not unrealistic, its just really hard work.

If you have some basic carpentry, electrical and plumbing skills, you can hire out as a handyman but once again, it is hard work to install an attic ladder or repair a deck or put in insulation.

Learn how to install solar cells. You can get started in that field for a few thousand dollars.

[octopus]

@running_coach

Aren’t immigrants required to have a certain amount of funds, promised job or a sponsor?
Or has that been changed?

The folks swimming the Rio Grande care about that nonsense?

[Kimstu]

@Slash1972

This thread seems to be devolving into yet another “Here are some things poor people can try in order to not be poor” vs “Here are the reasons (excuses) why poor people CAN’T do those things” thread.

Except that nobody is saying that “poor people CAN’T do those things”. Everybody knows and acknowledges that some poor people successfully bootstrap their way out of poverty. (Which is an admirable accomplishment, btw, and props all round for those who achieve it.)

What we skeptics are trying to get a handle on is what the intrinsic limitations of these bootstrapping techniques are, as far as providing general solutions to poverty is concerned. *If all poor people were healthy and motivated and willing to work hard in their own businesses, then approximately what percentage of them could transition in a short time in a given economy from poverty to middle-class prosperity?

Show us your numbers and the data behind your rationales.*

And remember, as I noted in my first example about Kansas City, we’re talking about poor populations that would literally almost double the number of existing “microbusinesses”, which themselves constitute far more than half the number of all businesses in the local economy.

If you’re arguing that virtually all or even most of that massive number of start-ups would be successful as long as their owners were willing to work hard, then by all means, go ahead and make your case. Let’s see your numerical estimates and your reasons for inferring them.

[Damuri_Ajashi]

@Kimstu

Let’s say eight, since we’re in this to make money, after all. So to keep you earning at full strength for a five-day week, you need forty customers.

Unless all of them want regular weekly mowing at the same rate, you need other customers to fill your time in between mowing to them. Let’s say, at a quite conservative estimate, that you need a customer base of 100 to keep you reliably mowing an average of 40 lawns per week.

Building up a regular customer base of 100 within just “a month or so” sounds pretty fast to me, but let’s assume it’s true. You probably have to get a pretty wide geographical range to provide it (especially for poor people who live in cities where, you know, lawns aren’t all that common.) All that travel takes time and money too, of course. And that’s assuming zero dry spells or other conditions that make people cut back on lawn-mowing, which it would be rather unwise to count on.
Sure, for the two or three months left in the summer after you’ve managed to build up your business to full-time work. Now it’s October and nobody wants their lawns mowed any more. That $10K or so that you grossed, under the rosiest assumptions of full employment, no dry spells, etc. (which of course doesn’t factor in the cost of equipment, transportation, maintenance, fuel, etc.) isn’t going to stretch very far over the fall and winter.

In short, Starving Artist, your optimism about the ease and profitability of this lawn-care business turns out to be based on blindly ignoring a lot of crucial facts. What you petulantly call “defeatism” is merely acknowledging reality.

Wait! If people can’t make a reasonable living under the most optimistic of scenarios, then how the fuck to people make a living under normal circumstances?

[octopus]

@Kimstu

Except that nobody is saying that “poor people CAN’T do those things”. Everybody knows and acknowledges that some poor people successfully bootstrap their way out of poverty. (Which is an admirable accomplishment, btw, and props all round for those who achieve it.)

What we skeptics are trying to get a handle on is what the intrinsic limitations of these bootstrapping techniques are, as far as providing general solutions to poverty is concerned. *If all poor people were healthy and motivated and willing to work hard in their own businesses, then approximately what percentage of them could transition in a short time in a given economy from poverty to middle-class prosperity?

Show us your numbers and the data behind your rationales.*

And remember, as I noted in my first example about Kansas City, we’re talking about poor populations that would literally almost double the number of existing “microbusinesses”, which themselves constitute far more than half the number of all businesses in the local economy.

If you’re arguing that virtually all or even most of that massive number of start-ups would be successful as long as their owners were willing to work hard, then by all means, go ahead and make your case. Let’s see your numerical estimates and your reasons for inferring them.

Is poverty absolute or relative wealth? If it’s relative there will always be a lowest 10%. Real life isn’t Lake Woebegone.

Since I grew up in a trailer park and have first hand experience with poverty I can tell you that poor people can earn money. I’ve seen it. What poor people have a hard time doing is saving money or spending money wisely. Poor people’s behavior quite often is the reason for poverty. I grew up in the bottom decile. I’m now in the top 1-2% in large part due to behavior and that included working as a child.

[msmith537]

@Kimstu

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?

If 1000 people start new businesses that employ an average of 5 people, isn’t 5000 people being productive better than 5000 people sitting on their ass collecting checks for doing nothing? Those people put money back into the system stimulating growth for more businesses and the cycle continues.

@manson1972

This thread seems to be devolving into yet another “Here are some things poor people can try in order to not be poor” vs “Here are the reasons (excuses) why poor people CAN’T do those things” thread.

It’s basically a textbook example of the welfare trap. The logic is if you aren’t going to end up raking in cash like Elon Musk, being an entrepreneur isn’t worth the effort and risk when compared to just collecting welfare checks for doing nothing.

[running_coach]

@octopus

The folks swimming the Rio Grande care about that nonsense?

Thank you for that fucking useless answer.
I’m sure there are few illegal aliens who can start an actual business (business license, certification, tax numbers and all that) and stay off the grid.

[octopus]

@running_coach

Thank you for that fucking useless answer.
I’m sure there are few illegal aliens who can start an actual business (business license, certification, tax numbers and all that) and stay off the grid.

Now now. No need to be a potty mouth. I just find it cute that you think those who swim the border or pay coyotes to smuggle them across care about being 100% legitimate once inside the good ol’ USA.

Ever see the huge day labor markets in some areas of the country? Where if you had a truck and needed a ditch dug or something you could just drive to the corner and get 20 day laborers for cash?

When I got $350 worth of pine straw for my lawn I didn’t ask for paperwork. It’s not my job to enforce the law. I just wanted pine straw placed at a reasonable price. I don’t care if the workers are black, brown, white or purple. I don’t care if they claim the income.

That’s how illegal labor can exist. It fills a demand and the customer in many cases doesn’t care.

[Kimstu]

@octopus

Infinite speed is completely irrelevant.

It’s not irrelevant, because what the pro-bootstrap crowd are proposing here as a solution to poverty is a massive near-term increase in the number of prosperous microbusinesses. The question of how fast the economy could or would have to grow in order to make all those new businesses successful is extremely relevant.

Remember, we’re not talking here about the occasional hard-working poor individual using their lawn-care startup or whatever to bootstrap their way out of poverty. Everybody agrees that there’s no question that that works fine for a few individuals at a time.

What we’re discussing here is how effective such entrepreneurship could be at providing large-scale exodus from poverty.

[QUOTE=octopus]
Policy and action that grows the economy are relevant. Entrepreneurship grows the economy.
[/quote]

So it does, indeed. The vital question here is how fast it can grow the economy. What are the quantitative constraints on the speed of economic growth if some unspecified (but apparently assumed to be large) percentage of poor people suddenly launch a massive expansion of the existing microbusiness sector? How large would that growth have to be to make the majority of those new businesses sustainably profitable?

[QUOTE=octopus]
So what if there exists some lag.

[/quote]

So we need to know how much lag we’d be talking about here. Obviously, large amounts of lag in the ability of the economy to absorb all the new businesses would result in large numbers of those businesses failing. Which is kind of an important issue if we’re proposing such businesses as a large-scale solution to poverty.

[QUOTE=octopus]
And who cares if everyone doesn’t get some proportional benefit from the economic growth. What has “everyone” done to earn it.

[/quote]

It’s not a question of “everyone” getting “proportional benefit” from economic growth or what they’ve done to “earn” it: the issue is that if we actually want to implement an effective large-scale solution to poverty via economic growth, the benefits of that growth need to impact people throughout the economy.

FFS, dude, this isn’t rocket science, but it isn’t just fortune-cookie maxims either. Strategies that are being seriously proposed as solutions to economic problems need quantitative rationales.

@octopus

May I refer a book for you? https://play.google.com/store/books/details?id=VLTYAwAAQBAJ&source=productsearch&utm_source=HA_Desktop_US&utm_medium=SEM&utm_campaign=PLA&pcampaignid=MKTAD0930BO1&gl=US&gclid=CJm5t5n59cwCFYhTgQodYWcOBg&gclsrc=ds

Maybe hensplaining will help.

Oh for pity’s sake. You’re trying to dodge a serious and complicated question about the extent and timeframe in which existing economies can expand to accommodate some massive percentage increase in their microbusiness sector by referring me to the morality fable of the Little Red Hen? :rolleyes:

Pal, you are so far out of your depth in this discussion that it’s almost literally sad.

[Voyager]

@Starving_Artist

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.

I specifically said that it is a way out of poverty, so I hardly claimed that the idea was hopeless. But unless you think Ralph Kramden could have been rich if he had worked just a bit harder, not all moneymaking opportunities work out. Especially those hatched by people maybe not at the top of their class.

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.

You should read The Black Swan some time. We tend to focus on those who overcame obstacles and did well, and exclude those equally as hard working and skilled who did not do well. The guy who got rich flipping houses is in the papers and maybe sells courses - the hundred people who went broke flipping houses usually aren’t.
In the book he gives an example of a woman who wrote a best seller. People studied what she had done, and found all the things she did right. Her publisher gave her a big advance for her next book. She wrote it and it bombed. She had gotten lucky.
For every “The Martian” there are a thousand self-published books which go nowhere. My wife judged a contest and a bunch of them are sitting in boxes in our bedroom.

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.

This is the I can succeed by taking work away from established companies fallacy which I mentioned. What if the existing lawn mower service isn’t run by idiots? Now, if you live someplace where a new development is opening up, with lots of new lawns, you might get lucky and start even with existing services. If not, you might want to do some market research first. Just assuming there is plenty of business because you are better than the installed base is a good way to fail.

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.

And you seem to be assuming that anyone who fails doe so because he doesn’t have the will to succeed. Look at how many startups funded by VCs fail. Is it because of will, or is it because the technology was harder than they thought, or the market turned. I work in Silicon Valley, so I hardly consider success impossible. But “I think I can, I think I can” does not represent a business plan.

[octopus]

@Kimstu

It’s not irrelevant, because what the pro-bootstrap crowd are proposing here as a solution to poverty is a massive near-term increase in the number of prosperous microbusinesses. The question of how fast the economy could or would have to grow in order to make all those new businesses successful is extremely relevant.

Remember, we’re not talking here about the occasional hard-working poor individual using their lawn-care startup or whatever to bootstrap their way out of poverty. Everybody agrees that there’s no question that that works fine for a few individuals at a time.

What we’re discussing here is how effective such entrepreneurship could be at providing large-scale exodus from poverty.
So it does, indeed. The vital question here is how fast it can grow the economy. What are the quantitative constraints on the speed of economic growth if some unspecified (but apparently assumed to be large) percentage of poor people suddenly launch a massive expansion of the existing microbusiness sector? How large would that growth have to be to make the majority of those new businesses sustainably profitable?
So we need to know how much lag we’d be talking about here. Obviously, large amounts of lag in the ability of the economy to absorb all the new businesses would result in large numbers of those businesses failing. Which is kind of an important issue if we’re proposing such businesses as a large-scale solution to poverty.
It’s not a question of “everyone” getting “proportional benefit” from economic growth or what they’ve done to “earn” it: the issue is that if we actually want to implement an effective large-scale solution to poverty via economic growth, the benefits of that growth need to impact people throughout the economy.

FFS, dude, this isn’t rocket science, but it isn’t just fortune-cookie maxims either. Strategies that are being seriously proposed as solutions to economic problems need quantitative rationales.
Oh for pity’s sake. You’re trying to dodge a serious and complicated question about the extent and timeframe in which existing economies can expand to accommodate some massive percentage increase in their microbusiness sector by referring me to the morality fable of the Little Red Hen? :rolleyes:

Pal, you are so far out of your depth in this discussion that it’s almost literally sad.

I’m not proposing that in a global economy a country as large and diverse as the US can solve all poverty with the free market. I don’t think everyone becoming an entrepreneur would work. I think it would help especially combined with a policy of a basic income and removal of unnecessary barriers to trade like the minimum wage.

[Kimstu]

@msmith537

If 1000 people start new businesses that employ an average of 5 people, isn’t 5000 people being productive better than 5000 people sitting on their ass collecting checks for doing nothing?

Yes, of course it is. The questions here are quantitative: What proportion of those 5000 new businesses have a reasonable chance of being successful? How many new businesses could we introduce in the same timeframe without decreasing the average chance of success? What number of these new businesses would have to be successful in order to make this approach an effective large-scale “way out of poverty”?

[octopus]

@Kimstu

Yes, of course it is. The questions here are quantitative: What proportion of those 5000 new businesses have a reasonable chance of being successful? How many new businesses could we introduce in the same timeframe without decreasing the average chance of success? What number of these new businesses would have to be successful in order to make this approach an effective large-scale “way out of poverty”?

And no one can answer that. That’s like asking how many hurricanes will spawn directly from 200 new coal electricity plants in China.

[Chronos]

I have personal experience with something very close to what Starving Artist is describing.

Back when I was a kid, a friend of mine got some big fancy toy or another, and told me that he earned the money for it himself by shoveling snow for neighbors. Well, that seemed like a pretty good idea to me, so the next snow day we had, I spent the entire day going door to door in my neighborhood asking everyone if they wanted their sidewalks shoveled.

I had zero people take me up on the offer. And even if I had had one, if I had gotten paid anything like a reasonable rate for it, it still wouldn’t have been enough to make it worth the full day I spent going around looking for customers. It might have worked for my friend, but what I hadn’t taken into account was that he lived in a much nicer neighborhood, with neighbors who could afford to pay the neighbor kid to shovel their walk instead of doing it themselves. And it’s not like we could have moved to a neighborhood like that ourselves: We couldn’t afford it (which was a large part of why the idea seemed so appealing to me in the first place).

Are there other entrepreneurial enterprises a poor person could pursue? Perhaps. But they’re going to be a lot harder to find than just going door to door offering to do yardwork. And if that’s the best idea that Starving Artist can come up with, then it’s no wonder that the poor folks themselves mostly can’t come up with anything better, either.

[Kimstu]

@octopus

I don’t think everyone becoming an entrepreneur would work.

Well, we’re all agreed on that. And we’re also all agreed that for at least a few poor people, becoming an entrepreneur works just fine.

What we’re debating here is what kind of actual numbers we can realistically identify in the vast gulf between “all” and “a few”. How many new microbusinesses would have to be created, and be successful, to constitute a statistically significant “way out of poverty” for a given poor population? How many such microbusinesses could a given local economy support with some identified likelihood of success?
Spouting moral mottoes about the importance of hard work and perseverance and initiative is easy. Figuring out realistic quantitative answers to complex economic and sociological questions is hard.

[octopus]

@Kimstu

Well, we’re all agreed on that. And we’re also all agreed that for at least a few poor people, becoming an entrepreneur works just fine.

What we’re debating here is what kind of actual numbers we can realistically identify in the vast gulf between “all” and “a few”. How many new microbusinesses would have to be created, and be successful, to constitute a statistically significant “way out of poverty” for a given poor population? How many such microbusinesses could a given local economy support with some identified likelihood of success?
Spouting moral mottoes about the importance of hard work and perseverance and initiative is easy. Figuring out realistic quantitative answers to complex economic and sociological questions is hard.

I say don’t worry about unknowable numbers and work on growth friendly policies with a decent helping of carefully implemented redistribution. The problem is we can’t implement a wise social safety net due to political opposition from the left and the right. And that is sad. I’m a right wing Republican with libertarian leanings yet I don’t have an issue with paying taxes for productive programs. And I know others like me.