The ‘Boots’ theory of socioeconomic unfairness

Are you familiar with the Captain Samuel Vimes ‘Boots’ theory of socioeconomic unfairness?

One in three adults in the UK would struggle to access mainstream lending. That’s a lot.

Do brush up on your Pratchett, folks.

The following is an extract from his 1993 Discworld novel Men at Arms.

It goes like this:

“The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money. Take boots, for example. He earned 38 dollars a month plus allowances. A really good pair of leather boots cost 50 dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about 10 dollars. 

“The thing was that good boots lasted for years and years. A man who could afford 50 dollars had a pair of boots that’d still be keeping his feet dry in 10 years’ time, while the poor man who could only afford cheap boots would have spent 100 dollars on boots in the same time and would still have wet feet.”

You can’t argue with that, can you?

It’s expensive being poor.

And you want to help this man catch a break, don’t you?

This man and many like him who are forced by poverty to make uneconomical decisions… who are one unexpected expense away from dire straits. A broken boiler, a leaky tap, an unexpected repair… a small, mundane life event and their ability to keep their head above water, financially, is shot to smithereens… and they slide below the poverty line just like that.

And what then?

As we said last week, a lot of people don’t have friends and relatives they can rely on to help when money is tight. A lot of folks don’t know to turn to a credit union for an affordable, fair loan. They may turn to traditional providers after a Google search… get rejected… and then they may end up in the claws of a loan shark. And then they are stuck.

A horizon of limited options becomes even more constrained.

Sam Vimes doesn’t have the option to buy the expensive boots. He knows it would be better value for money, of course he knows that. But he doesn’t have the option. And I don’t think we can stretch the analogy too far even if we tried.

14% of the UK population face financial exclusion and access issues when it comes to credit.

That’s approximately 7 million people.

That’s also the number of households in the USA that have no access to credit.

None at all.

Sometimes that’s the distance between good boots and cheap boots that will fall apart in a year. Sometimes it’s the distance between shabby boots and no boots at all.

Incidentally, folks who can’t access traditional credit are not the only ones at risk… some of the folks who can access mainstream lending can still find themselves sliding into subprime because of a legitimate, mainstream product that was just not right for them and it pushed them further into poverty.

Because it is really expensive being poor.

It’s an access problem, not a lifestyle choice, in case you were wondering.

One in three adults in the UK would struggle to access mainstream lending.

That’s a lot.

But it’s not even the whole story.

I found out recently that in the UK there are 6 million credit-invisible young adults.

They have no credit history yet… they have low confidence… they don’t know that they could get credit. They may have never heard of credit unions. They may have been raised in households that historically ended up excluded from mainstream financial services and that is all they know.

The reasons vary.

What seems consistent is the fact that the people who need fair products the most may not know where to look or may not have the confidence to go looking.

One in three adults in the UK are anxious about money.

50% of those are between 18 and 34.

And why are they anxious?

Because they see their money not making it to the end of the month.

Because they see their families suffer, stuck in debt.

Because they know about the ‘Boots’ theory of economic injustice first hand.

Poverty, I hear you say.

It’s terrible. It’s sad.

But it’s not good business.

Nobody wants to be the poor man’s bank… and nobody wants to see themselves as the poor man.

Of course not.

It feels shameful, defeatist and permanent to even speak in those terms, doesn’t it?

But it’s not poverty we are talking about, is it? Rather we are talking about the fact that poverty is expensive.

It’s access we are talking about. It’s economic justice and boots.

A rainy day would affect all of us, but not equally.

The heavens open on us all… but some of us have sturdy boots on our feet and some are walking around with cardboard soles getting soaked.

That’s not poverty.

That’s economic unfairness.

What is your organisation doing about it?

#LedaWrites

Leda Glyptis is FinTech Futures’ resident thought provocateur – she leads, writes on, lives and breathes transformation and digital disruption.

She is a recovering banker, lapsed academic and long-term resident of the banking ecosystem. 

Leda is also a published author – her first book, Bankers Like Us: Dispatches from an Industry in Transition, is available to order here.

All opinions are her own. You can’t have them – but you are welcome to debate and comment!

Follow Leda on Twitter @LedaGlyptis and LinkedIn.