COMMENT: What the rich do not admit about the poor | Newsletter
I’m not going to pretend I can interpret the recent months’ job and inflation data. In my view, this is still a pandemic skewed economy and the dynamics are so strange and unstable that it will be some time before we know its true state. But the response to the early numbers and anecdotes has revealed something deeper and more constant about our politics.
The American economy thrives on poverty, or at least on the constant threat. Americans like their goods cheap and their services galore, and the two of them combined need a large number of workers willing to do hard jobs at lousy wages. On the right, the slightest glimmer of working class power is treated as a political emergency, and the whip of poverty, not the lure of higher wages, is the appropriate response.
Reports of low-wage employers struggling to fill vacancies aroused Republican politicians and prompted at least 25 Republican governors – and one Democratic governor – to announce plans to end extended unemployment benefits early. Chipotle said it would raise prices by about 4% to cover the cost of higher wages, which sparked a violent reaction from the National Republican Congressional Committee: “The Democrats’ socialist stimulus package created a labor shortage, and now burrito- Lovers everywhere on the safe side bill. “The Trumpist Outlet The Federalist complained,” Restaurants had to bribe current and future workers with thicker paychecks to lure them off their bums and back to work. “
But it’s not just the right thing to do. The financial press, cable news screamers, and even many center-left members greet news of labor shortages and price hikes with an alarm they seldom raise of the ongoing agony of poverty or low wage labor.
As I watched Republican governors try to pauperize low-wage workers who had not yet seized the chance to return to poorly ventilated kitchens for $ 9 an hour, “A Guaranteed Income for the 21st” became a plan that made poverty a thing of the past should belong. Developed by Naomi Zewde, Kyle Strickland, Kelly Capatosto, Ari Glower, and Darrick Hamilton for the New School’s Institute of Race and Political Economy, the proposal would guarantee an annual income of $ 12,500 for each adult and a $ 4,500 allowance for each child . It’s what the Wonks call a “negative income tax plan”; In contrast to a universal basic income, it expires when households move up to the middle class.
“To fight poverty, you just get rid of it,” said Hamilton. “You give people enough resources so that they are not poor.” Simple, but not cheap. The team estimates its proposal would cost $ 876 billion annually. To give an idea of the scale, total federal spending in 2019 was about $ 4.4 trillion, with $ 1 trillion funding social security payments and another $ 1.1 trillion in support of Medicaid , Medicare, the Affordable Care Act, and the Children’s Health Insurance Program.
Aside from the fact that the plan would “require new sources of revenue, additional borrowing, or compromises with other government funding priorities,” Hamilton and his co-authors fail to say how they would pay for it, and in our conversation, Hamilton said it was cage. “There are many ways to pay for it, and deficit spending in itself is not bad unless there are certain conditions,” he said. I’m less smug when it comes to funding a program that would increase federal spending by nearly 20%, but at the same time it is clearly possible. Even if the whole thing were financed through taxes, that would bring America’s tax burden only about the average of our comparison countries.
I suspect the real political problem for guaranteed income is not the costs, but the benefits. A policy like this would allow workers to make real decisions. They could say no to a job they didn’t want or quit a job that was exploiting them. They could and would ask for better wages or take time off to go to school or just to rest. When we spoke, Hamilton tried to sell it to me as a truer form of capitalism. “People cannot reap the benefits of their efforts without a certain baseline level of resources,” he said. “If you lack basic needs for economic well-being, you have no capacity to act. They are dictated by others or live in a deplorable state. “
But those in the economy who have the power to do the dictation benefit from the desperation of low-wage workers. One’s misery is the quick and inexpensive delivery of lunch at home. “The fact is that if we pay workers less and don’t have social security programs that cover Uber and Lyft drivers, for example, we can consume goods and services at lower prices,” said Hilary Hoynes, an economist at the University of California in Berkeley, where she also runs the Opportunity Lab, told me.
This is the conversation about poverty that we don’t like to have: we discuss the poor as a shame or a nuisance, but we seldom admit that America’s high poverty rate is a political choice, and there are reasons why we choose and again. We typically formulate these reasons as questions of fairness (“Why should I have to pay for someone else’s laziness?”) Or persistent tutelage (“Work is good for people, and if they can live on wages they would”). But there is more to it than that.
It’s true, of course, that some could use a guaranteed income to play video games or merge with Netflix. But why are they the focus of this conversation? We know full well that America is full of hard working people who are kept poor by very low wages and harsh circumstances. We know that many who are looking for a job cannot find one, and many of the jobs that people can find are cruel in ways that would horrify anyone comfortably behind a desk. We know that the lack of childcare and affordable housing, as well as decent public transport, makes work, let alone advancement, impossible for many. We know that because of mental illness or physical disability or other factors beyond their control, people lose the job they value. We are not so naive as to believe that poverty and unemployment are a comfortable state or an attractive choice.
Most Americans don’t think they benefit from the poverty of others, and I don’t think that objections to guaranteed income would appear as arguments for impoverishment. Instead, we would only see much of what we are seeing enlarged: fears of inflation, lectures on how the state subsidizes indolence, praise for the character-forming qualities of low-wage work, worries about the economy being suffocated by taxes or deficits, anger that the Uber and Lyft trips have become more expensive, sympathy for the ailing employers who cannot fill vacancies instead of the workers who had good reasons not to take these jobs. These would not reflect America’s love of poverty, but resistance to the inconvenience that would come with its removal.
These costs aren’t just imaginary either. Inflation would be a real risk as prices often go up when wages go up and some small businesses would close when they had to pay their workers more. There are services that many of us now enjoy that would become rarer or more expensive if workers had more bargaining power. We would see more investment in automation and possibly outsourcing. The truth of our policies lies in the risks we do not accept, and it is growing workers’ power, not persistent poverty, that we consider unbearable. You can see this happening now, fueled by far smaller policies and with far more modest implications than guaranteed income.
Hamilton was honest about these compromises. “Progressives don’t like to talk about it,” he told me. “You want that kumbaya moment. They want to say that justice is great for all when it isn’t. We have to change our values. The capitalist class will lose on this policy; that is clear. They will have better equipped workers who they cannot exploit through wages. Your consumer goods and services would be more expensive. “
For the most part, America finds the money to pay for the things it cherishes. Over the past few decades, despite the deep stalemate in Washington, we have spent trillions of dollars on wars in the Middle East and tax cuts for the rich. We have also spent trillions of dollars on health insurance grants and coronavirus aid. It is in our power to eradicate poverty. It’s just not one of our priorities.
“Ultimately, it’s about us as a society saying that these privileges and luxury goods and amenities that people in the middle class – or how we describe these economic classes – have, how much they are worth to us?” Jamila Michener, Co-Director of the Cornell Center for Health Equity told me. “And are they worth a certain amount of privation or suffering or even just inequality among people who often lead very different lives from us? That is a question that we often do not ask ourselves. “
But we should.