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Tavis Smiley and Dr. Cornel West have been working hard to bring the issue of poverty into the consciousness of the citizens and political discourse of the United States. As a team, Smiley and West have been touring city to city, speaking to audiences concerned about the increasing wealth gap in this country. Their book, The Rich and the Rest of Us: A Poverty Manifeseto, is the culmination of their observations of American citizens throughout these travels.

While the economy is technically in recovery from the Great Recession, a vast slice of Americans have not experienced a real recovery. A “jobless recovery,” where the beneficiaries of an improving economy are the wealthy while the middle class struggles with unemployment, is not a real recovery. Despite this disadvantage, the prevalence and pervasiveness of poverty is still astonishing. According to Smiley and West, 150 million people in this country are in or near poverty. That number represents one out of every two individuals — half the country.

Tavis SmileyThe issue of poverty, affecting this number of individuals, is bigger than poverty itself. The government tallies 46 million Americans living in poverty according to the 2010 census and the government’s own definitions of poverty. Many more individuals are affected by poverty because they are living dangerously close. Many middle class households, particularly those already living in debt or in a paycheck-to-paycheck situation, are one lost paycheck away from a dangerous financial situation, and many families are already experiencing a personal decline due to the inability to find gainful employment.

Poverty has traditionally been a problem classified as urban or rural. Minorities have been and are disproportionately affected by poverty, but poverty is not a suburban problem, too. With white, middle-class families now facing the issue of poverty, whether by losing a job or being dangerously close to not being able to afford their homes, the issue is gaining more attention. While poverty is making life difficult for an increasing number of Americans, those in or seeking office, whether Democrats or Republicans, are not concerned. In order to receive a voice in political discourse, you need money. While the United States may have been founded on the ideals of freedom and liberty, these have generally only been granted to an elite selection of its inhabitants. The distribution of social power is expanded only by revolution among the disenfranchised.

Smiley and West contacted Consumerism Commentary with an interest in speaking to me about these issues — to defend their position, and to open my eyes to the realities faced even by the middle class in this country, many of whom are the “new poor.” We arranged an interview for the Consumerism Commentary Podcast, airing Sunday, May 13. Unfortunately, Dr. West was unable to participate in the interview at the last minutes as he was in New York waiting for a verdict after a conviction related to a political protest in that city. Tavis Smiley was able to participate, but our time together was short. We weren’t able to address all the questions I had prepared, but the discussion was valuable.

Listen to the entire discussion with Tavis Smiley, podcast host Jay Frosting, and myself, Luke Landes, once it is available this weekend. Smiley is the host of Tavis Smiley on PBS and The Tavis Smiley Show on Public Radio International. Update: Listen to the podcast here.

In the interview, Smiley dispelled many of the myths about poverty. One such myth is the idea that those in poverty are entirely to blame for their financial situation.

On Consumerism Commentary, I’ve written that taking personal responsibility for your decisions, financial and otherwise, plays the biggest role in achieving financial security and independence. This is today’s American promise: “Anyone can make it in America.” The media love rags-to-riches stories, even if it doesn’t reflect a reality for the majority of Americans. It’s true that this country’s brand of capitalism is favorable to the situations European immigrants left behind. Religious intolerance, a caste system based on ancestry, and an economic system wherein generally only the first-born male would have rights to any property drove pioneers to create a new society or join a country with a promise to create a better life for yourself. Never mind that doing so displaced others who occupied the land here.

Even in this new society, you had to be a member of the elite to receive the rights as endowed. Not everyone begins on equal footing. The lack of early educational opportunities throughout this country is one of the strongest causes of generational poverty. As Smiley addresses in the podcast, Washington state is the home to large multi-national corporations, providing a huge advantage to those who reside in Washington thanks to the tax these companies pay. The educational opportunities in Washington state far outshine the opportunities in Washington, D.C., for example. Until a quality education for the entire country is given priority, generational poverty will continue to exist.

In the interview, we also address the issue of austerity. The concept of reducing the deficit and national debt is and should be a high priority for policymakers, but the timing of austerity measures, such as reducing funding to societal programs, is just as important. Smiley argues that we cannot cut the budget for these important issues when the economy is not “flowing,” saying that the budget is being balanced on the backs of poor people. Budgets are moral documents, and you can determine a country’s real priorities by evaluating where the money is going. If this country does not address the economy for the 99 percent — those who have seen no benefit from this “jobless recovery” — rather than the “1 percent,” Smiley warns of the downfall of the United States as a world leader.

No empire in the history of the world that at some point did not falter or fail. Every empire had its day. Americans don’t want to think we could be dangerously close to the edge… Poverty is the moral and spiritual issue of our time.

Time did not permit us to explore all the topics I would have liked to cover in the interview with Tavis Smiley. For example, I would have liked to talk more about the Occupy movement and getting a national stage for the issue of poverty. In recent weeks, civil rights are again receiving national attention, from the perspective of same-sex marriage. Not to minimize that issue of equal treatment under the law for all individuals, poverty deserves the same attention from our nation’s leaders.

Be sure to subscribe to the Consumerism Commentary Podcast to hear the interview with Tavis Smiley, where we address more topics related to poverty than are outlined above, as soon as it is available. Be sure also to read The Rich and the Rest of Us: A Poverty Manifesto. Update: The interview is now available as a podcast here.

Photo: DC Central Kitchen

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On CNBC a few weeks ago, Warren Buffett told the television-viewing audience, among other things, that he would purchase a couple hundred thousand single-family homes right now, if it were practical to do so.

That seems like a ringing endorsement of buying residential real estate for its value as an investment. If the buyer also benefits from having shelter, it could only make the investment better. With low interest rates — and the average rates have decreased since Buffett made this statement — and a long holding period, Buffett believes real estate presents a better opportunity for growth than stocks.

Before Buffett made this declaration on television, I pondered if the timing might be right for buying a house. I was considering this not only as a general opinion but as a plan for myself. I’ve rented my living spaces for as long as I’ve been adult, and I’ve been an adult for half of my life at this point. Some people see purchasing a house as a rite of passage or a sign of maturity, but I haven’t fallen into that societal trap.

Purchasing a house is a decision made with both financial and non-financial considerations. There are many reasons or situations in which it’s not financially smart to purchase a house. If you don’t expect to stay in the same area for a long period of time, you could find yourself needing to sell your house at a loss or reluctantly becoming a landlord with varying levels of success. From a financial perspective, most people who claim to sell their homes for a profit forget all the costs that go into buying, maintaining, and selling their home beyond the purchase price and sale price.

If you ask the National Association of Realtors, it’s always a good time to buy. It’s also always a good time to sell. The industry doesn’t care, as long as you’re buying or selling rather than not doing anything; that’s how they get paid. When Warren Buffett is the individual offering advice, that’s a good time to start listening.

CNBC

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If you’ve ever browsed through the television guide, you might have seen that there are a good number of television shows dedicated to the real estate industry. House Hunters International, Million Dollar Listing, Extreme Makeover: Home Edition, and Real Estate Intervention are just a few of the cable or network television shows designed to allow the real estate industry and home improvement companies advertise and reach a wide audience of consumers.

Just looking in my own town, with recently-built single-family homes typically asking $700,000 and above, it makes me wonder how anyone can afford to live where I do. The entire town can’t consist of upper-level executives and business owners who comfortably earn $350,000 a year, can it? One town over, house prices typically range from $1 million to $2 million, but there’s no upper limit. This is clearly a location for well-off individuals. And considering I may be looking to settle down and buy real estate, I’ve been trying to get an understanding of local real estate forces.

BasketballBut celebrities — the top echelon of movie stars and athletes — are in their own class.

Michael Jordan is selling his 56,000 square-foot home, asking $29 million for the house in a suburb of Chicago. The house features an indoor basketball court with its own parking lot and access and a wine and cigar room.

Jerry Seinfeld is offering up his Colorado mansion for $18.25 million. His property is much smaller than Michael Jordan’s at only 14,200 square feet. The property sits on 26 acres, while Jordans’ only includes 7 acres of land. Compare this to my apartment, which is around 1,300 square feet. This is only one of the television star’s vacation properties, with 11 bedrooms and a spa.

Rapper 50 Cent has had his Connecticut mansion on the market since 2008, when the recession was in full swing. His original asking price of $19 million has dropped to $10 million, still higher than the amount he paid to buy the property from Mike Tyson’s ex-wife, $4.1 million.

Celebrities live in a different world, where dropping millions of dollars on a property is commonplace.

Photo: John-Morgan
CNN

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I’ll be thirty-six years old this month, officially closer to forty than thirty. I’ve never owned real estate. Once in a while, someone judges this as a failure on my part, or a reluctance to “grow up” or enter a more sophisticated stage of development, as if maturity was somehow related to the ownership of property. I live in a nice apartment for a good monthly cost, and owning a house in the area where I live would cost more than twice as much to own and have additional maintenance costs.

When I returned to New Jersey thirteen years ago, I never intended to stay in the state. Yet, I’ve spent my adult life here. I’ve had the flexibility to move from sharing a small apartment with three roommates to a comfortable living space. Thirteen years ago, I would never have been able to afford a house of my own, so I don’t regret my choices.

House for saleSince my financial situation has improved, I’ve also delayed buying a house. I see buying real estate as a more permanent decision, and I always assumed that I’d be starting a family before making a financial decision whose effects are more permanent. It’s a decision that should be shared in a family; otherwise, I might buy a house today and discover soon that the decision is incompatible with someone else.

From the financial perspective, though, signs point towards making that decision soon, even if it is on my own. Thirteen years ago, I thought that mortgage interest rates were low when real estate values were high, and interest rates were high when values were low. It seems that today’s economy features both low interest rates and low home values. There’s lower demand in real estate now mostly because those who already own are reluctant to sell for a loss, more people like me who are choosing renting over the high cost of buying, and the effects of the wave of new construction throughout the last decade that was intended to supply an ever-growing demand for real estate that never took place.

At the same time, there are more homes being sold for a loss and more foreclosures, keeping the value comparable homes down. The cost of buying and owning a home over 30 years hasn’t changed much, though. Maintenance and improvements cut into an owner’s return on investment. While these expenses are said to be priced into the monthly rent for those who choose not to purchase the home they live in, renting is often the better deal despite the hard work of a real estate agents’ industry group’s attempting to convince the public that it’s better to own. (Whether you’re buying or selling, the timing is supposedly always right.)

This doesn’t change the fact that there is a “nicer” selection of real estate available to buy than there is available to rent. If someone is planning to own at some point in the future, and has the funds available, the coordination of low interest rates mixed with historically low overall prices is the perfect combination. Sellers’ desperation right now, with the lack of demand for real estate, could make it easier to find negotiable deals.

Would you use today’s economy as an opportunity to move from renting to owning a home? Would you wait until your personal life was in the form you’d like before making a financial decision that would effect the next fifteen to thirty years of your life? Is any decision really permanent?

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