Response to Mr Blair 3

I haven’t read Assets and the Poor, though I’ll give serious consideration to ordering it the next time I get a spare 25 bucks, but there is an excerpt – the first 5 pages – at Amazon which at least gave me a flavor for what Sherraden’s after and where he’s coming from. First response? Not good.

Unfortunately, Amazon won’t let me copy any of the excerpt and as rotten a typist as I am, I’m not going to copy large chunks by hand – it’s only 5 pages and you can read it for yourself in under 5 mins. The main thrust of his thesis seems to be that anti-poverty strategies have been based on income tansfers and income transfers don’t work. (Reminder: this book was written in 1991 and is therefore 16 years old and outdated by at least 10.)

There is widespread discontent with the failure of income transfers, such as Aid to Families with Dependent Children (AFDC).

Who, may I ask is discontented with it? And why? He doesn’t say though this is the opening and obviously the place to summarize that discontent. If he’s going to argue unhappiness, it would be nice to know where that unhappiness comes from and what its basis is. Especially since later on he admits income transfers have had a positive impact.

[I]ncome transfer has maintained…a minimum level of subsistence in the United States….In addition, welfare policy has buffered the severity of economic cycles by providing strong countercyclical fiscal stimuli.

IOW, it has done as much as conservative means-testing has allowed it to do and provided the minimum safety net which is all conservatives could stomach. Their intention was to hold welfare to the subsistence level and they succeeded in doing that. How, therefore, do we justify calling it a failure?

After decades of federal programs, it cannot be demonstrated that means-tested welfare policies permanently change people’s lives for the better.

Well, duh. Of course not. The policy was built to actively prevent “changing people’s lives for the better”. Conservatives, as I have demonstrated, wouldn’t stand for it. They didn’t even want the minimum subsistence aid, as they showed quite clearly when they came to power in ’94 and immediately began gutting as much of it as they could.

So already, right at the beginning, we’ve got problems. Sherraden has swallowed whole the carefully constructed conservative illusion that welfare doesn’t work without realizing that it doesn’t work because it was never allowed to work. The history of welfare since the 60’s is a story of deliberate, on-going sabotage by corporate-funded conservative forces. This is like reaching the conclusion that a Toyota is a terrible car because it never starts without including the fact that a neighbor has been stealing parts from it ever since you got it and the engine no longer has a starter, spark plugs, or a distributor.

The fact is that if you include that sabotage, the only reasonable conclusion is that we have no idea whether poverty programs as originally envisioned would work or not because they’ve never been tried. As I pointed out previously, Mr Blair, all the support services you mentioned – “job skills, financial education, parenting education, transportation, daycare and access to post-secondary education” have either never been implemented or been implemented so stingily, so sketchily, so piecemeal, and with so many eliminationist caveats and cut-offs that we don’t have anything like enough data to reach such a sweeping conclusion.

What we do have are indications from the much-better and more comprehensively funded pilot projects that have popped up here and there over the past 40 years, and they suggest very strongly, contrary to Mr Sherraden’s conclusion, that standard welfare policy actually does work if a good deal of money is spent on support services.

Let’s go back to Tommy for a moment. Although the job training portion of “Wisconsin Works” was largely a failure due to its emphasis on what turned out to be the wrong economic sector, in fact the rest of the program was quite successful. The people who did find jobs and didn’t have to pay for day-care services out of their tiny paychecks and didn’t lose their food stamps until counselors had determined their debts had been lowered sufficiently and so on and so on, maintained their job status right up to the moment those jobs were cut because of the Bush recession or moved overseas.

That result has been replicated time and again by well-funded pilot projects, but none of them has been implemented on a wider scale for one simple reason: they cost more than conservatives are willing to spend. Mind you, the entire yearly budget for WIC and AFDC combined is less than the Pentagon spent in an hour prior to the Second Gulf War. It has been estimated that spending on welfare programs what the Pentagon spends in a single 8-hr day could eliminate poverty in the US within a decade.

On three conditions, of course. First, the corporatocracy would have to not just stop moving jobs overseas but start bringing them back. Second, the investor class would have to let go of its recently acquired demand for consistent 30% returns and go back to the saner 7-10% returns of the 50’s and 60’s. And third, wages would have to be raised to pre-1980 levels, adjusted for inflation, which would mean corporate executives would have to give up their now ingrained habit of receiving insane levels of compensation and likewise return to pre-1980 standards. Actually, 1950’s standards would be even better – that was the last time corporate executives received reasonable rates of pay and not co-incidentally the last time we had a huge and quite stable middle class.

Which is not a disconnected comparison. The relationship is symbiotic. As Michael Parenti showed around the same time Sherraden wrote this book, history proves that poverty is not a mistake or an unfortunate and unnecessary side-effect of wealth. It’s a necessity. You can’t have great wealth without accompanying levels of abject poverty because poverty is what makes the accumulation of great wealth possible.

It’s a simple formula: every society has X amount of money floating around in it. The more that is transferred to the top, the less is on the bottom. A society can be considered prosperous, stable, and even-handed when the bottom has enough to live on with reasonable comfort. Unfortunately, that means the top has to be content with, to pick the average from the 50’s, 50 or 60 times what the average earner has rather than the 12,000 times that number in Imperial Rome or the 1500 times that number of today.

Sherraden’s attempt to by-pass income as a factor simply isn’t credible because it doesn’t include or even address the income disparity issue, and it is income measured against the cost of living that defines poverty. As long as the rich continue to skew the accumulation of wealth in their own direction, they are preventing it from going the other way. In other words, in order to get rich, they have to create the poor. Period.

And that’s what’s happening, of course. Last September, the Center for American Progress analyzed the Census Bureau’s latest figures. Here’s some of what they found.

[F]or the 37 million people living below the poverty line – about the size of the state of California – the economic outlook is far from positive. The data points to a growing trend of income inequality between the country’s richest families and everyone else, suggesting that the prospect of economic mobility for America’s working families is more challenging than ever.

The census figures point to an ever-shrinking middle class. Since 2000, the fraction of American households with incomes between $25,000 and $100,000 a year has declined by 1.3 percentage points, whereas the number of households earning more than $100,000 a year has held steady. So where did this 1.3 percent of households go? Not surprisingly, to the bottom of the income distribution. Specifically, the percentage of American households who earn less than $25,000 a year increased 1.4 percentage points during this same period, which equates to nearly 3.2 million more American households living below the $25,000 threshold in 2005 than in 2000.

Middle class families are not the only ones who have fallen. Even those families already at the bottom of the income distribution (i.e., below the $25,000 threshold) have experienced a decline. The new census figures show that 43 percent of the poor now live at half the poverty line (i.e., “deep poverty”), which, for a family of four means they live on a little less than $10,000 a year. This is a 1 percent increase over 2004, which equates to approximately 300,000 more people living in “deep poverty” in 2005 than the year before. This is also the highest percentage of people living in “deep poverty” on record (the U.S. Census Bureau started collecting this data in 1975).

While the downward economic spiral of America’s poor and middle class families is bad news enough, it is made all the more disturbing when the rise in inequality is considered. The average income for households in the bottom 20 percent of the income distribution is just $10,655 compared to $159,583 for those in the top 20 percent – a staggering 1,500 percent disparity and the highest percentage disparity on record. This top 20 percent of households now brings in 50.4 percent of all the income, compared to just 12 percent for the bottom 40 percent of households combined. Again, this is the highest share of income going to the richest 20 percent of households on record.

Bear in mind that this has been the pattern for 25 years. It isn’t new. It has been the norm since Reagan unleashed the extremes of capitalist greed with deregulation, open hostility to unions, and David Stockman’s trickle-down economics. At that 1.5% a year as an average (it probably isn’t; many years since 1980 have been much worse than that), there has been an increase in poverty of almost a third in the past quarter-century. As long as the economic playing field remains tilted toward the powerful and the greedy, poverty will continue to increase, and the best you can do will be to try to make poor people more comfortable with their poverty and more able to, with great sacrifice and discipline, acquire some small creature-comforts not available to them before – until the time comes when the powerful take those as well. And they will, don’t kid yourself.

If that’s enough for you, god bless you and good luck. What you’re doing is better than doing nothing. But it isn’t enough for me.

I want an equitable society where nobody starves because there are enough jobs at livable wages and the powerful are prevented from scooping up everything that isn’t nailed down. You want to end poverty? Then a more equitable distribution of our finite wealth is the only way to do it. Until that happens, I will NOT accept infant mortality rates comparable to the Third World’s, and I don’t have much interest in an anti-poverty strategy that is all band-aids and no tourniquets, all acceptance of the status quo and no rebellion against it.

(Part 1, Part 2)

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