Seeing people become destitute is even worse than seeing them already be destitute. That’s the concept behind a group that says they help poor and middle class people avoid the whiplash impoverishment that can follow financial windfalls.
The group, Stop Wealth from Ruining the Lives of the Poor and Middle Class, was created by Gladys Van Hol. She says she was inspired after reading an article about hundreds of lottery winners who needed to declare bankruptcy after running through the money. “It’s a miscarriage of economic justice to let poor and middle class people become rich suddenly,” she says. “They ruin themselves with drugs, gambling, and ladies of the night. They don’t know how to say no to moochers.”
So, from the dining room table of her Greenwich, Connecticut, home, Van Hol launched the non-profit organization.
For a fee, the group’s wealthy members take lottery winners’ money from them. Then the windfall is disbursed to a family or consortium of families with a long history of holding onto and growing wealth. The wealth stewards enrolled by SWRLPMC include the Rockefeller family, the Waltons, and the Koch brothers, among many, many others.
All winnings transfers are permanent, the group says. “These poor and middle class people will never see a dime, for their own good,” according to Van Hol.
Indeed, the latest academic research highlights the challenges faced by lottery winners. According to researchers at the University of Kentucky, University of Pittsburgh, and Vanderbilt University, lottery winners declare bankruptcy at twice the rate of the general population. The results of the research, by Scott Hankins, Mark Hoekstra, and Paige Marta Skiba, were published in The Review of Economics and Statistics.
SWRLPMC Vice President Patricia Del Rio says maintaining a familiar state of un-wealth protects poor and middle class people. “It’s like if you throw a party at a restaurant and the check comes to a couple thousand dollars. Fifteen percent of 2,000 is 300. Can you really give $300 to a waiter or waitress? Of course not. God knows what they’d spend it on. Better to tip $50, and teach restraint.”
We contacted economist Milton Hyack, the Adam Smith (Not Counting His Moral Philosophy) Fellow at the National Free Enterprise Society, to see what he made of the group. He says that SWRLPMC is very rationally built on the concept of marginal utility. “If you give some shmoe with a net worth of, like, 10k a million dollars, it’s going to pop his little brain. That’s such a big change for him. But give the same million dollars to a billionaire, and he will hardly notice it. That additional million can’t really buy him anything he couldn’t have gotten before. So, I ask you, who is the responsible steward for that money? From an economic perspective, this is a very virtuous organization.” Hyack adds that SWRLPMC could have a positive effect on the economy as a whole, since low- and middle-income Americans “lose their incentive to work if they have more than a paycheck or two saved up, whereas the wealthy have proven that they can live virtuous lives with hoards of riches in the vaults.”
Not everyone agrees that the group is doing good in the world. “I think these rich people are behaving despicably,” says Miriam Ponniker, president of Decent Lives for the Middle Class and Poor. “If they’re so concerned, why don’t they advise winners to keep the money in the annuities that the lotteries already offer? Or better yet, they could give the money to organizations that actually help people. Like mine. We are a 501(c)(3) tax-exempt organization.”
SWRLPMC’s Del Rio says the group will have no part of that. “We want to help the unfortunate, not dispense handouts.”
She adds that doubters should look at the effect the group is already having on the people it helps. “The proof is in the crème brûlée,” she says. She described one client, Oscar Schmall, a truck yard worker who lives in the Verdant Vista Mobile Home Park in Oswego, New York. Schmall won $7.5 million from the New York State Lottery earlier this year. “He’d already spent an irresponsible portion of his capital staying at the Trump Taj Mahal in Atlantic City, and when we found him he was just about to buy a new Ferrari,” says Del Rio. “Thank God we got there in time. I don’t think he had any idea how expensive maintenance and repairs are.” According to Del Rio, Schmall is now happily living back in his trailer and working in the truck yard. “He says he thinks his back will hold out a couple more years, which is longer than that money would have!”
Mr. Schmall could not be reached for comment, as his phone had been disconnected.
Mrs. Van Hol says the group is considering expanding the aid that they offer to the poor and middle class, and might start taking insurance settlements, bequests, and legal judgments off their hands.
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