BY TOM WICKER
THE NEW AMERICAN POVERTY by Holt, Rinehart and Winston, $17.95..
IN A TYPICALLY expansive speech in May of 1983, President Ronald Reagan elaborated upon a major theme of modern American conservatism. He charged that government economic intervention since the New Deal—from the minimum wage in the thirties to food stamps in the sixties—had actually made Americans poorer than they otherwise would have been. Why? Because, as a more precise conservative spokesman might state it, only economic growth promotes affluence for all; social programs retard it by making the dependent more so.
To conservatives and neo-conservatives (often the more vehement of the two) the evidence for the latter point seems clear enough. Didn’t welfare expenditures, for example, explode in the late sixties as a consequence of Lyndon Johnson’s War on Poverty? And wasn’t that when the poor, blacks particularly, began to withdraw in great numbers from the labor force, in order to avoid work while mooching a living off taxpayers’ misguided largesse?
Well, no. One of the many virtues of Michael Harrington’s new book is that it takes such theories seriously enough to do them the justice of demolishing them rather than merely denouncing and denying them—for Mr. Harrington knows all too well that the notion that social spending only creates a dependent class has “inspired the White House, the editorialists and thousands of complacent conversations in the country clubs of America.” It is, in fact, the counterfeit currency of conventional thought about government and poverty in Ronald Reagan’s America.
Mr. Harrington makes clear that there was no explosion of handouts to the poor during the War on Poverty, such as it was. Another war, the one in Vietnam— costly in money as well as in lives—saw to that. From 1965 through 1968 the new Office of Economic Opportunity received a total of less than $6 billion, and in no year did it absorb as much as one percent of the federal budget. Social spending for the nonpoor, however, rose from $29.4 billion (30.1 percent of the federal budget) in 1961 to $197.8 billion (54 percent of the budget) in 1976. The difference was mostly in enormous outlays for increased Social Security benefits and Medicare for those over sixty-five, only about 15 percent of whom are poor.
It was not, moreover, in the late sixties but in the late fifties that the number of dropouts from the labor force began to grow, following a significant change in Social Security law offering not higher benefits but relaxed requirements for disability retirement. Blacks have taken advantage of this change relatively more often than whites, Mr. Harrington writes, for two reasons, which were pointed out by Donald O. Parsons several years ago:
1) Disability benefits are still hard to get (60 percent of initial applications were rejected in 1975); they are available only to those willing to give up their jobs; and they are capped at a low level. Obviously, therefore, disability benefits are most attractive to the lowest-paid workers with the least to lose upon withdrawal from the work force—usually blacks.
2) Medical statistics and death-rate studies show that blacks, typically at a disadvantage relative to whites in health care, nutrition, and other living conditions, are more likely to be disabled. Thus, Mr. Harrington points out, a badly underfinanced War on Poverty did not cause the relatively high rate of blackworker dropout; rather, “the economic and medical misery of black life . . . makes such withdrawal rational and even necessary.”
The New American Poverty abounds in such data-based debunking of conservative and neo-conservative articles of faith, and of familiar American myths and stereotypes. For instance:
• In 1979 most recipients (51.7 percent) of Aid to Families with Dependent Children (the widely scorned AFDC, which is what most Americans mean when they grind the word “welfare” between their teeth) were white. Also, 70.5 percent of AFDC families had only one or two children—not the teeming black spawn imagined at country-club luncheons. And in recent years illegitimate births have increased less rapidly among AFDC mothers than in the population as a whole.
• In the summer of 1982, when 10.4 million Americans were officially unemployed (not counting those out of the labor force), only 42 percent of them were protected by unemployment benefits, “and those payments averaged only 46 percent of their before-tax earnings, with the unemployed manufacturing workers getting only 36 percent of what they had been making.”
• The United States spent only about 14 percent of its gross national product on social programs in the late seventies, while West Germany spent more than twice that and still had lower rates of unemployment and inflation as well as a high rate of investment. This is weighty counterevidence for the conservative argument that the United States has fallen behind in productivity and competitiveness because it has starved private investment in favor of vast social spending. As for the “confiscatory” taxes Ronald Reagan fought to reduce, in 1980 the United States taxed itself less heavily than thirteen Western European nations.
This only skims the surface of the sophistries and delusions that Mr. Harrington punctures, mostly by sorting through a huge bag of academic studies, official reports, and census data. But Michael Harrington is primarily a man of ideas, and his book is concerned with far more than setting the record straight or trashing Ronald Reagan. In fact, he considers Mr. Reagan, as I do, a man of principles—however unfortunate those may be—and a strong political leader on behalf of them; and Harrington scrupulously points out that the new American poverty may have been worsened but was not caused by Reaganomics.
THE NATURE, PORTENTS, causes, and possible amelioration of that new poverty are Mr. Harrington’s themes. Misery, in his view, “has simultaneously become more intractable and more difficult to see” since the War on Poverty. More intractable because the forces behind it are more complex and less accessible. They are at least partly international—steel mills in South Korea, a U.S. trade deficit on the way to being the largest in history—and they include the technological revolution, the decline of traditional industries, and the erosion of mass markets for mass production. More difficult to see because nonpoor people living with economic uncertainty and in fear of declining real wages and chronic unemployment are understandably concerned mostly for themselves, and because one of the new poverty’s most frightening aspects is the large number of people not yet poor but in real danger of soon becoming poor—a number, Mr. Harrington calculates, “almost as large as the number officially defined as poor” (which is itself, he believes, vastly understated).
These intricate considerations, I reluctantly suggest, may mean that this carefully argued and documented book cannot have the public or political impact of Mr. Harrington’s seminal The Other America, which powerfully stimulated the Kennedy-Johnson anti-poverty efforts of the sixties. That, Mr. Harrington recalls with a certain rue, was a more optimistic and confident era. Everyone, it seemed, “was progressing steadily; a minority had been left behind. Therefore it would be a rather simple matter to deduct some few billions as they poured out of our industrial cornucopia and . . . to abolish the ‘pockets’ of poverty.”
Now all too many Americans, with reason, question their own futures; the cornucopia no longer overflows; the supposed simplicity of the task is in fact a greater complexity than could have been imagined even in Sargent Shriver’s supercharged anti-poverty shop; and the Reagan Administration and its acolytes have all but discredited the idea that government can, let alone should, do anything about poverty except heap benefits on the rich in the belief or the hope that something will trickle down to the poor.
Mr. Harrington has no truck with such economic Laetrile (to borrow a phrase from Robert Lekachman). What has it to do, for example, with the disquieting fact that so many workers have found themselves, in recent years, unemployed and then re-emploved—but in another kind of work, at lower pay? When a worker loses out in a primarymetals industry and relocates at an electronic-components plant, he or she may seem fortunate—but the re-entry salary is typically 61 percent of the old. Yet, while traditional industry declined, employment in the electronic-components field rose by 76 percent from 1960 to 1972, and by another 25 percent in the 1970s. Similarly, new entrants into the labor force now find far more openings in the low-paid service sector than in skilled crafts or industries. Thus, while the lower-income class grows because of such “skidding” and the upper-income group maintains itself because of favorable tax and other treatment, the once-great middle is declining.
Yet, Mr. Harrington notes, since Henry Ford decreed the $5-a-day wage, a well-paid and expanding middle class has been necessary to provide the mass market that consumed industry’s mass production. But now the trend, sure to pick up speed, is that “workers drop out of the middle, which contracts the market and therefore causes more workers, who had been producing for that middle, to drop out. And the spiral continues,” Indeed, the Bureau of Labor Statistics has estimated that in the 1980s there will be nearly a million new jobs for nurse’s aides, janitors, and fast-food workers, but only 133,000 for computer operators.
Concerned as he is with identifying and defining the new American poverty, Mr. Harrington devotes only the final chapter to specific ideas about what ought to be done. He is an unabashed socialist, but his ideas, as outlined here, are not primarily socialist—nor should they be shocking to anyone this side of William Simon. He does make the point that national economic planning—dread phrase—is not only necessary but already practiced by liberal and conservative administrations alike. For example, Ronald Reagan’s tax cuts of 1981 constituted a conservative “plan” by which his Administration sought to increase the capital available to the private sector, so that it could respond to the challenge of a new world economy.
Mr. Harrington, then, would “plan” for support and subsidies to companies investing in job-producing assets, particularly in depressed areas and industries; and companies closing plants and eliminating jobs by private decision without regard to social and economic consequences would lose benefits—certain tax deductions, for instance. He would also plan for differential interest rates—prohibitive on money lent for nonproductive corporate takeovers, preferential on loans for first homes.
He would plan, too, a public-works program to replace rotting bridges, crumbling sewers, and outmoded roads, to rebuild the rail system, and above all, to put people to work. In fact, the socialist Mr. Harrington’s first and most important prescription—full employment—is, it seems to me, profoundly democratic. He properly warns that “welfare for the rich as a means of promoting economic growth” produces more financial speculation and corporate takeovers than “real-world investment in job-generating enterprises.” He does not mean, of course, the illusory “full employment” reached when unemployment “falls” to seven percent (the “full employment” line just after the Second World War was two percent unemployment; as late as the Johnson Administration it was only three percent).
Real full employment would benefit not only the poor and those nonpoor in danger of slipping into poverty but also those already comfortably secure, improving the quality of life for all and easing the pressures of fear on the employed (that fear is one reason why not every employer favors full employment). It would kill the miserable sweatshop economy once again thriving at the bottom of the economic ladder and would greatly reduce Mr. Reagan’s enormous deficits.
Mr. Harrington is under no illusion that real full employment could be easily achieved, even if it were a national objective (which it never really has been). He points out, however, that effective jobs programs would ultimately help pay for themselves, reducing the federal deficit by $25 to $30 billion for every percentage point of employment gained. But he has still more radical ideas: if anything like full employment and his other proposals—including a national health service—are to be realized, “the eighties . . . must give an answer that the sixties never dared to mention . . . the redistribution of income and wealth.” That means primarily a radically reformed tax system.
AFDC, for example, cost $8.2 billion in 1983, but $28 billion in revenue was lost that year to Reaganomic special treatment of capital gains—“welfare for the rich” indeed! And 84 percent of the $19.6 billion in revenue lost annually from the deduction of home-mortgage interest goes to those with more than $30,000 a year in income. Low-income renters get no such break.
Michael Harrington is steadily intelligent, compassionate, knowledgeable, and restrained as he considers the new American poverty; and he is surely right about the need to correct the blatant imbalances that both contribute to it and prevent anything from being done. But I am afraid that I can’t share the note of limited optimism on which he ends: there is hope, he writes, because “programs that are in the self-interest of the majority are always in the special interest of the poor.” No doubt—but the “self-interest of the majority” is all too seldom visible through the fears and prejudices of that same majority, and there are plenty of economic predators and hot-eyed ideologues to deploy enough lobbyists, public-relations experts, hired economists, and storebought politicians to keep the vision of the majority nicely obscured.
If, moreover, full employment is the most effective medicine for the new American poverty and for the American majority (I quite agree that it is), but if the best hope for full employment rests on national economic planning of the sensible kind that Mr. Harrington advocates, on huge public-works expenditures in an era of monstrous deficits and latent fears of inflation, not to mention Ronald Reagan’s Pied Piper leadership in the opposite direction—if, above all, full employment depends on tax reform approved by Congress to redistribute wealth and income downward and to the public sector, then don’t bet your Reagan tax-cut benefits that it’ll ever happen. Don’t even bet your three-martinilunch money.