I’m not going to pretend that I know how to interpret the jobs and inflation
data of the past few months. My view is that this is still an economy warped
by the pandemic and that the dynamics are so strange and so unstable that it
will be some time before we know its true state. But the reaction to the early
numbers and anecdotes has revealed something deeper and more constant
in our politics.
The American economy runs on poverty, or at least the constant threat of it.
Americans like their goods cheap and their services plentiful, and the two of
them together require a sprawling labor force willing to work tough jobs at
crummy wages. On the right, the barest glimmer of worker power is treated
as a policy emergency, and the whip of poverty, not the lure of higher wages,
is the appropriate response.
Reports that low-wage employers were having trouble filling open jobs sent
Republican policymakers into a tizzy and led at least 25 Republican governors
— and one Democratic governor — to announce plans to cut off expanded
unemployment benefits early. Chipotle said that it would increase prices by
about 4% to cover the cost of higher wages, prompting the National
Republican Congressional Committee to issue a blistering response:
“Democrats’ socialist stimulus bill caused a labor shortage, and now burrito
lovers everywhere are footing the bill.” The Trumpist outlet The Federalist
complained, “Restaurants have had to bribe current and prospective workers
with fatter paychecks to lure them off their backsides and back to work.”
But it’s not just the right. The financial press, the cable news squawkers and
even many on the center-left greet news of labor shortages and price
increases with an alarm they rarely bring to the ongoing agonies of poverty
or low-wage toil.
As it happened, just as I was watching Republican governors try to immiserate
low-wage workers who weren’t yet jumping at the chance to return to poorly
ventilated kitchens for $9 an hour, I was sent “A Guaranteed Income for the
21st Century,” a plan that seeks to make poverty a thing of the past. The
proposal, developed by Naomi Zewde, Kyle Strickland, Kelly Capatosto, Ari
Glogower and Darrick Hamilton for the New School’s Institute on Race and
Political Economy, would guarantee a $12,500 annual income for every adult
and a $4,500 allowance for every child. It’s what wonks call a “negative
income tax” plan; unlike a universal basic income, it phases out as households
rise into the middle class.
“With poverty, to address it, you just eliminate it,” Hamilton told me. “You give
people enough resources so they’re not poor.” Simple, but not cheap. The
team estimates that its proposal would cost $876 billion annually. To give a
sense of scale, total federal spending in 2019 was about $4.4 trillion, with $1
trillion of that financing Social Security payments and another $1.1 trillion
supporting Medicaid, Medicare, the Affordable Care Act and the Children’s
Health Insurance Program.
Beyond writing that the plan “would require new sources of revenue,
additional borrowing or trade-offs with other government funding priorities,”
Hamilton and his co-authors don’t say how they’d pay for it, and in our
conversation, Hamilton was cagey. “There are many ways in which it can be
paid for, and deficit spending itself is not bad unless there are certain
conditions,” he said. I’m less blasé about financing a program that would
increase federal spending by almost 20%, but at the same time, it’s clearly
possible. Even if the entire thing was funded by taxes, it would only bring
America’s tax burden to roughly the average of our peer nations.
I suspect the real political problem for a guaranteed income isn’t the costs but
the benefits. A policy like this would give workers the power to make real
choices. They could say no to a job they didn’t want or quit one that
exploited them. They could, and would, demand better wages or take time
off to attend school or simply to rest. When we spoke, Hamilton tried to sell it
to me as a truer form of capitalism. “People can’t reap the returns of their
effort without some baseline level of resources,” he said. “If you lack basic
necessities with regards to economic well-being, you have no agency. You’re
dictated to by others or live in a miserable state.”
But those in the economy with the power to do the dictating profit from the
desperation of low-wage workers. One man’s misery is another man’s quick
and affordable at-home lunch delivery. “It is a fact that when we pay workers
less and don’t have social insurance programs that, say, cover Uber and Lyft
drivers, we are able to consume goods and services at lower prices,” Hilary
Hoynes, an economist at the University of California at Berkeley, where she
also codirects the Opportunity Lab, told me.
This is the conversation about poverty that we don’t like to have: We discuss
the poor as a pity or a blight, but we rarely admit that America’s high rate of
poverty is a policy choice, and there are reasons we choose it over and over
again. We typically frame those reasons as questions of fairness (“Why should
I have to pay for someone else’s laziness?”) or tough-minded paternalism
(“Work is good for people, and if they can live on the dole, they would”). But
there’s more to it than that.
It is true, of course, that some might use a guaranteed income to play video
games or melt into Netflix. But why are they the center of this conversation?
We know full well that America is full of hardworking people who are kept
poor by very low wages and harsh circumstance. We know many who want a
job can’t find one, and many of the jobs people can find are cruel in ways
that would appall anyone sitting comfortably behind a desk. We know the
absence of child care and affordable housing and decent public transit makes
work, to say nothing of advancement, impossible for many. We know people
lose jobs they value because of mental illness or physical disability or other
factors beyond their control. We are not so naive as to believe near-poverty
and joblessness to be a comfortable condition or an attractive choice.
Most Americans don’t think of themselves as benefiting from the poverty of
others, and I don’t think objections to a guaranteed income would manifest
as arguments in favor of impoverishment. Instead, we would see much of
what we’re seeing now, only magnified: fears of inflation, lectures about how
the government is subsidizing indolence, paeans to the character-building
qualities of low-wage labor, worries that the economy will be strangled by
taxes or deficits, anger that Uber and Lyft rides have gotten more expensive,
sympathy for the struggling employers who can’t fill open roles rather than
for the workers who had good reason not to take those jobs. These would
reflect not America’s love of poverty but opposition to the inconveniences
that would accompany its elimination.
Nor would these costs be merely imagined. Inflation would be a real risk, as
prices often rise when wages rise, and some small businesses would shutter if
they had to pay their workers more. There are services many of us enjoy now
that would become rarer or costlier if workers had more bargaining power.
We’d see more investments in automation and possibly in outsourcing. The
truth of our politics lies in the risks we refuse to accept, and it is rising worker
power, not continued poverty, that we treat as intolerable. You can see it
happening right now, driven by policies far smaller and with effects far more
modest than a guaranteed income.
Hamilton, to his credit, was honest about these trade-offs. “Progressives don’t
like to talk about this,” he told me. “They want this kumbaya moment. They
want to say equity is great for everyone when it’s not. We need to shift our
values. The capitalist class stands to lose from this policy; that’s unambiguous.
They will have better-resourced workers they can’t exploit through wages.
Their consumer products and services would be more expensive.”
For the most part, America finds the money to pay for the things it values. In
recent decades, and despite deep gridlock in Washington, we have spent
trillions of dollars on wars in the Middle East and tax cuts for the wealthy. We
have also spent trillions of dollars on health insurance subsidies and
coronavirus relief. It is in our power to wipe out poverty. It simply isn’t among
our priorities.
“Ultimately, it’s about us as a society saying these privileges and luxuries and
comforts that folks in the middle class — or however we describe these
economic classes — have, how much are they worth to us?” Jamila Michener,
co-director of the Cornell Center for Health Equity, told me. “And are they
worth certain levels of deprivation or suffering or even just inequality among
people who are living often very different lives from us? That’s a question we
often don’t even ask ourselves.”
But we should.
Read more at: https://economictimes.indiatimes.com/news/international/world-news/what-the-rich-dont-want-to-admit-about-the-poor/articleshow/83502876.cms
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