price_of_citizenship.jpg (9774 bytes) The Price of Citizenship

Chapter One

Chapter One: The American Welfare State

The Architecture of the American Welfare State

Welfare State:

  1. Public branch
  • public assistance
  • social insurance
  • taxation
  1. Private branch
  • independent sector
    - charities and social services
  • employee benefits

The term "welfare state" refers to a collection of programs designed to assure economic security to all citizens by guaranteeing the fundamental necessities of life: food, shelter, medical care, protection in childhood, and support in old age.

  • Public assistance has been marked by"
  1. stigma - "undeserving poor"
  2. administered and funded locally rather than federally.
  3. being inexpensive (AFDC ,1% of GDP).
  • Social insurance
  1. Cost of social insurance programs dwarfs public assistance.
  2. Social security and Medicare are national programs.
  3. provides more generous benefits than do any public assistance programs.
  • Taxation "hidden welfare state"
  • tax breaks for social purposes was more than twice the amount spent on AFDC.
  • Independent sector
  1. charity, volunteerism and philanthropy
  2. In the mid-1990s, annual cost was $568 Billion (roughly the cost of Social Security and Medicare combined).
  • Employee benefits
  • exceeds even those of the independent sector (1992, $824 billion. 

America's welfare state not only retains a mixed economy, it also remains remarkably local and decentralized.

National Programs

  • Social Security
  • Medicare
  • Food Stamps
  • EITC (Earned Income Tax Credit)

State Programs (partially or wholly state programs)

  • workers' compensation
  • unemployment compensation
  • Medicaid
  • Block grants for child welfare
  • private

Its links to employment, as well as its decentralization, distinguish the American welfare state from its counterparts in other industrial nations. In no other modern industrial nation is health care an earned privilege rather than a human right. Welfare reform (1996 transmuted survival itself into a privilege contingent on work.

America, unlike other advanced nations, lacks national health insurance. It has no family allowance. More of its children remain in poverty than does any comparable country. It spends far less on active labor market policies, such as job training and job creation. Public outlays on pensions, health insurance, and other income maintenance was ranked lowed among the G-8.

The U.S. incarcerates a far higher proportion of its population than does any western European country. Avg. Rate is 78 per 100,000, whereas, in the states it is 519 per 100,000.

European welfare states reduce labor force participation by making it possible to live without work. But in the process they also redistribute income and increase equality.

Poverty and dependence in America have never been easy or pleasant to endure, but a century ago they were immeasurably worse.

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Welfare and the Conservative Ascendancy

Conservatism built on a demographic base in the South and the suburbs, draw strength from its affliction with evangelical and fundamentalist Protestantism, and from ideas disseminated by conservative think tanks underwritten by big money.

It's ascendancy signaled a victory for international business.

"The welfare state, they believed, increased the cost of business by raising taxes and forcing business to raise wages to attract workers who found an alternate source of support in public benefits."

Relentless international competition and massive military spending directed limited federal funds away from the welfare state. The economic stresses felt by ordinary workers fueled a hostility toward welfare and the dependent poor, driving politics in a conservative direction.

Instead of directing anger at the wealthy and powerful, the fusion of race and taxes deflected the hostility of hard-pressed lower and middle-class Americans away from the source of their deteriorating economic position and toward disadvantaged minorities - and,, in the process, eroded support for the welfare state. This scenario played itself out worldwide.

Race and economic insecurity propelled politics rightward and weakened popular support for welfare states. Lower- and middle-class whites were angry at competition from blacks, scared by economic insecurity, and upset at the transformation of the old racial order. "Suburbia" did not take kindly to rent subsidies, school balance schemes, growing Negro migration or rising welfare costs.

The 1970s saw the emergence of the Conservative Christians (a term that includes evangelicals and fundamentalists) who entered politics in order to protect their interests and reverse the moral corruption of the nation.

The Christian Right's involvement resulted in fundamentalist politics opposed to the social and moral tendencies of modern government "but in support of economic policies favorable to the middle-class" - a movement crucial for building both the electoral and financial base of conservatism.

By the 1990s, evangelicals and fundamentalists constituted the largest and most influential grass-roots movement in American politics.

The Christian Right supported Republican candidates who won 55% of the seats in congress and were a crucial element in Congress that voted to "end welfare as we know it".

The cash to pay for the rightward movement of American politics and culture and bankroll the attack on the welfare state derived primarily from two sources:

  1. political action committees
  2. non-profit research centres "think tanks"

Conservative think tanks not only produce ideas - they market them. Liberal organizations did not begin to match the outreach efforts of conservatives, whose ideas, often unchallenged and based on inaccurate data, powerfully shaped public opinion about politics, the economy, and the welfare state.

An 'intellectual movement' that started in the States in the 1950s and 1960s created a new conservatism that wove together three intellectual strands - economic, social and nationalist.

  1. economic stressed free markets and minimal government regulation.
  2. social led toward the restoration of social order and private morals by authoritarian government.
  3. nationalist streak favored heavy public spending on the military.

Conservative thought found acceptance because of the economic strains on ordinary Americans, the anger and fear aroused by the end of the racial order in the South and affirmative action in the North, the needs of international business, the wage pressures felt by American firms, and the resurgent evangelical Protestantism that spread outward from the South. American exceptionalism was another factor(American patriotism).

Keynesian economic theories are rejected and a theoretical attack against activist government is led by Milton Friedman. "By 1980 the climate of economic thinking in the U.S. had changed utterly from the orthodoxy of 1965." Keynesian economics, which had sustained the welfare state, appeared dead.

'Losing Ground' (1984) by Charles Murray became the Reagan administration's new bible. Murray argued for the withdrawal of government from social welfare, assaulted welfare from a market-based, libertarian, anti-government perspective.

'Beyond Entitlement: The Social Obligations of Citizenship (1986) by Lawrence Mead, justified big government in conservative terms and focused on society, not the individual. Mead advocated enforced social obligations for the poor. The major problem with government social programs, claimed Mead, lay in their permissiveness, not their size.

Ronald Reagan may have used Murray as his bible on welfare reform, but the major welfare legislation of his term in office owed much more to Mead.

The unrestrained capitalism that invaded the former Soviet bloc showed the dislocation and misery that unbridled markets and the shredding of social safety nets could create. Still, in the U.S., not only communism and socialism but social democracy and its offspring, the welfare state, seemed anachronisms, vestiges of a discredited and outmoded political philosophy.

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Dependence, Devolution and Markets

In the 1980s, public policy redefined the American welfare state:

  1. dependence (reliance for support on someone else)
  2. devolution
  3. markets
  1. "Dependency at the bottom of the society and not economic equality is the issue of the day."
  2. "one-size fits all" became one of the harshest criticisms of social policies and programs, In the 1980s the federal government began to transfer to states many of the services it had funded since the 1970s, leaving states to pay for them as they could.
  3. "Markets epitomize decentralized, atomized decision-making." "The idea that an individual should receive unearned benefits contradicts the core assumptions on which markets rest." The move to the market is a global phenomenon. Markets assume rationality: rational individuals act in ways that serve their self-interest, therefore, governments should interfere with markets as little as possible. The recent application of market models to public policy as an attempt to resolve the contradiction between markets and welfare states by linking benefits more closely to employment, reducing dependence, and privatizing services.

Political discussions of the welfare state and other public policy issues remain by and large content with loose metaphors and abstract assumptions that rationalize the actions of those who hold power.

Ultimately, the responsibility for economic security should rest not with charity, employers, or the state, but with autonomous individuals taking charge of their lives.

  • Whom do market-based policies really serve?
  • What are the forms of capital and who controls them?
  • Who actually participates in the exchange, and does it create casualties?

Imbalance of power inherent in market-based policies, but little or no debate on its strengths and limits.

In the 1980s,

  1. dependency on public and private support and on the paternalism of employers came to an end.
  2. Devolution of authority (transfer) from the federal government to the states, from states to counties, and from the public to the private sector. "one-size fits all."
  3. Application of market models to social policy.
    - "Most human activity can be understood as nothing but a series of markets, and that outcomes would be improved if constraints on market behaviour were removed."

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