Is COVID-19 Capitalism’s Berlin Wall?

Salus rei publicae suprema lex
(the safety of the republic is the supreme law)

Cicero‘s De Legibus (book III, part III, sub. VIII)[1]

Mikhail Gorbachev had been pressing his perestroika (reform) agenda through a policy of glasnost (openness) and the Soviet fist was releasing its grip on Eastern Europe, setting the stage for Berliners to bring down their wall – which they did not because the Kremlin planned it, but because a flustered bureaucrat made up an answer to a question he wasn’t prepared for and a middle manager adlibbed a policy decision after senior management left him hanging.

“On the evening of Nov. 9, 1989, Gunter Schabowski, an East German government official, made a surprising announcement at a press conference.

“‘Permanent relocations,’ he said, ‘can be done through all border checkpoints between the GDR [East Germany] into the FRG [West Germany] or West Berlin.’ This news was set out as an incremental change in policy. But, after reporter Riccardo Ehrman asked when the regulations would take effect, Schabowski replied, ‘As far as I know, it takes effect immediately, without delay.’

“Schabowski’s press conference was the lead story on West Germany’s two main news programs that night, at 7:00 pm and 8:00 pm, with the takeaway being that the Wall, while it still stood, was no longer the firm dividing line it had long been. Since the late 1950s, the two stations broadcast to nearly all of East Germany, and the programs appeared there as well. That night, anchorman Hanns Joachim Friedrichs proclaimed, ‘This 9 November is a historic day. The GDR has announced that, starting immediately, its borders are open to everyone. The gates in the Wall stand open wide.’

“This was all the East German populace needed to hear. Citizens flocked to the border en masse sometime around 9:00 pm and found that, after initial confusion, the border guards were indeed letting people cross. This was a crucial flashpoint in the history between the two sides, as the guards could have easily fired on the crowd. However, according to historian Mary Elise Sarotte in her book The Collapse: The Accidental Opening of the Berlin Wall, no one among the East German authorities wanted to take the personal authority of issuing orders leading to the use of lethal force.

“By 11:00 pm, Harald Jager, the commander of the Bornholmer Strasse border crossing, let the guards open the checkpoints, allowing people to pass without their identities checked.

“To Jager, it was obvious that the five dozen men guarding the border were grossly outnumbered. He repeatedly attempted to contact his superior, Rudi Ziegenhorn, in order to ascertain how to handle the increasingly chaotic situation, as more and more people gathered at the gates. He was unable to get any clear guidance on how to proceed, but a superior in the background called Jager a coward for being unable to handle the situation. After 25 years of loyal service to the regime, according to Sarotte, Jager felt insulted and pushed to his limit.

“Jager was instructed by his superiors to let the biggest troublemakers through on a one-way ticket. But many of these so-called troublemakers were students and other young individuals who briefly entered West Berlin and then returned to the checkpoint for re-entry into East Berlin. However, the GDR was serious in its warnings that this was a one-way ticket. Their angry parents began to plead with officials not to keep them separated from their children, and by that point Jager was unwilling to argue on behalf of his superiors. After Jager made an exception for the parents, others demanded the same treatment as well. Having gone that far, it was simply too late. Thousands of people were demanding that the gates be opened. He was facing a momentous decision — open fire on the civilians, or let them through.

“At 11:30 pm, Jager phoned his superior and reported his decision: he would open all the remaining gates and allow the crowds to stream across the border.

“West Berliners greeted their counterparts with music and champagne. Some citizens began to chip away at the physical barrier with sledgehammers and chisels. The crowd began to chant “Tor auf!”—Open the gate! By midnight, the checkpoints were completely overrun.”[2]

Schabowski and Jager made history: Berlin reunited, Germany reunited, the Soviet Union finished, Russia re-established as a sovereign nation, a whole raft of new independent Balkan states created, Soviet-style Communism struck down, the Cold War ended, and capitalism crowned the winner of the economic ideology derby.

Not a bad night for a couple middle managers.

Capitalism’s Berlin Wall?

These days, history is being made just as suddenly, accidentally, randomly, unpredictably, and overwhelmingly, thanks to a microscopic mutant that preys on the body’s natural metabolic processes, turning nucleic acid into poison. Its impact is not on a divided city but on a divided world, bringing a sudden halt to life and business as usual.

The agent of change, of course, is COVID-19 –officially “severe acute respiratory syndrome coronavirus 2, or SARS-CoV-2” – the common cold gone bad, very bad.

“Coronaviruses are a large family of viruses that usually cause mild to moderate upper-respiratory tract illnesses, like the common cold, in people. However, three times in the 21st century coronavirus outbreaks have emerged from animal reservoirs to cause severe disease and global transmission concerns.

“There are hundreds of coronaviruses, most of which circulate among animals including pigs, camels, bats and cats. Sometimes those viruses jump to humans—called a spillover event—and can cause disease. Seven coronaviruses are known to cause human disease, four of which are mild: viruses 229E, OC43, NL63 and HKU1. Three of the coronaviruses can have more serious outcomes in people, and those diseases are SARS (severe acute respiratory syndrome) which emerged in late 2002 and disappeared by 2004; MERS (Middle East respiratory syndrome), which emerged in 2012 and remains in circulation in camels; and COVID-19, which emerged in December 2019 from China and a global effort is under way to contain its spread. COVID-19 is caused by the coronavirus known as SARS-CoV-2.”[3]

Yes, this is a defining moment in human history. And no, things will never be the same. Some people think one of those things is capitalism;

“The wheels are rapidly coming off of capitalism’s runaway train, and we’re in a collective, televised race to repair it.

“A highly contagious virus is rapidly debilitating and killing some of the most vulnerable people in communities across the world.

“The problem is, stopping the spread means hitting the pause button on global capitalism while we repair its machinery. Unfortunately, the system was built without one. And that means that bringing it to an unceremonious, grinding halt now has catastrophic human and economic consequences.”[4]

The capitalism that’s been infected by COVID-19 is the free market strain, as practiced for the past four decades principally in the USA and UK. There are and have been other versions of capitalism – for example the Keynesian economics that bailed us out of the Great Depression.

Soviet Communism was an economic ideology that didn’t deliver what it promised, instead enslaving citizens to a callous and brutal elite. Free market capitalism has similarly failed the people who go to work every day, who were supposed to prosper along with the capitalists, but haven’t.

Moments like tearing down the Berlin Wall, storming of the Bastille, or breaching the Winter Palace involved mobs overrunning cultural icons – physical structures. But how do you overrun a virus? And who would do the overrunning? Amazingly, the people most damaged by free market capitalism – the working middle class and the poor – continue to staunchly support the politicians who perpetuate it. The mob is simply unwilling to form. How do you make a revolution out of inexplicable indifference?

“…having discussed already how Coronavirus exposes and reveals the need for global systems, a radically reimagined world economy, the response from the average Westerner has been…a kind of deafening silence…mixed with a baffled pause, combined…sometimes, with an outraged ‘What?!!’”[5]

The Public Welfare Goes Missing

Free market capitalism is vulnerable because it eliminated what is most needed in a pandemic: a commitment to public welfare – which, as we’ve seen previously,[6] has been systematically eliminated from economic policy-making.

“The pandemic was not unexpected. But reality always differs from expectations. This is not just a threat to health. It may also be a bigger economic threat than the financial crisis of 2008-09.

“Dealing with it will require strong and intelligent leadership. Central banks have made a good start. The onus now falls on governments. No event better demonstrates why a quality administrative state, led by people able to differentiate experts from charlatans, is so vital to the public.

“The pandemic risks creating a depression. Salus rei publicae suprema lex (the safety of the republic is the supreme law). In war, governments spend freely. Now, too, they must mobilise their resources to prevent a disaster. Think big. Act now. Together.”[7]

Looking Out For The Common Good

In contrast to the USA and the UK, there are countries whose economic systems are built on “the safety of the republic is the supreme law.” Norway, for example.

“Norway’s readiness for health emergencies comes from its choice, all along, to prioritize the well-being of the people as a whole.

“As someone who has lived and worked in Norway, I see several ways in which the Norwegians’ prompt and efficient response draws on the advantages of what economists call “the Nordic model”—a design much different from that of the U.S.

“Meanwhile in the U.S., a recent survey by the First National Bank of Omaha found that 49% of Americans live paycheck to paycheck. What is to be done if those people can’t get to the jobs that keep them barely afloat? What does “self-quarantine” mean in that context? Or if employees receive no paid sick leave and can’t afford to stop working when they get sick? And what about the many who haven’t even had a job lately and find each day a struggle for food, including food-insecure college students whose colleges are closing?

“Such conditions are nearly inconceivable in Norway, where the social safety net is intact. A century ago, poverty was widespread but mass movements waged a successful nonviolent revolution in the 1920s and ’30s. By the time I got there, 1959, poverty had already been nearly eradicated, with everyone’s basic needs being met.”[8]

The missing public in the USA and UK is principally composed of capitalism’s key source of fuel: the people who go to work every day. Those workers both produce and consume, which makes them indispensable to both supply and demand.

Supply Side: Production

On the supply side,

“The primary issue is that late capitalism is not designed to be stopped, ever. In fact, the spectacular success of capitalist economics has only ever traditionally been measured by one north-star metric — growth —which is essentially just another term for infinite ‘value’ extraction— and in a general sense, it’s designed to self-organise, resource and innovate at a pace that requires machine-like commitment from a biologically volatile primary resource — human beings.

“In late capitalism’s fundamental design flaw, it is absolutely critical that the relative poor — the workers that create the value and deliver the results — remain healthy and active in order to hold the pieces together, because there is so little built-in redundancy for widespread personal crisis. This form of capitalism assumes that there will never be an unravelling serious enough to threaten it, which is why it’s got no proper killswitch….

“And at the back-end of 40 years of neoliberal, free-market economics, some of the world’s most ‘advanced’ political environments have either removed, privatised or hollowed out the basement machinery needed to stabilise capital markets by providing comprehensive, not-for-profit health, welfare and social services that step in to take the weight when crisis strikes.

“The loss of the working class is capitalism’s great nightmare. Alongside a terrible human cost, we’re watching entire industries that previously seemed indestructible falter – food service, hospitality, aviation and retail expecting massive state support in order to keep afloat — let alone make a profit. But the people are sick, and all dominos fall together, eventually.”[9]

Demand Side: Consumption

And on the demand side.

“Consumer sentiment, as measured by the University of Michigan’s monthly survey, saw its sharpest drop since October 2008 during the Great Recession.

“And even then, analysts said, the current decline significantly understated the coronavirus toll as two-thirds of the survey interviews were conducted before lock-down and physical distancing orders in mid-March shut down hundreds of thousands of shops, restaurants, offices and other large parts of the American economy.

“‘The economics of fear are now in plain sight,’ said Oxford Economics, a British economic research firm, noting that the pandemic ‘is dealing a major blow to confidence that will lead to a sharp retrenchment in consumer spending ‘

“That is especially worrisome because high levels of consumer confidence have consistently buoyed the U.S. economy in recent years, despite scant growth in spending power for most Americans.

“Some 70% of total U.S. economic output, or gross domestic product, is tied directly to consumer spending.”[10]

The Rentier Economy Takes The Hit

Particularly squeezed by the loss of a healthy and economically robust working class is the newly dominant “rentier economy” (a topic we’ve looked at before[11]), which drives prosperity to corporations and wealthy individuals through the extraction of rents from assets made artificially scarce by economic policy – affordable housing, for example.[12].

“It’s the end of the month, the rent is due, and a government-issued ban on going to work means a chunk of Britain is already broke, and another chunk is on borrowed time. If thousands aren’t running on fumes by the end of this month, they will be within weeks, and as the layoffs accelerate (which has its very own curve), it’ll be even worse by May.

“This is problematic for reasons commonly known as ‘maths’ — particularly given how the lower/middle access their income. The vast proportion of people’s access to money is through the kaleidoscope of an economy whose leadership won’t stop talking about how ‘wealth is zero sum’ but don’t address that wealth is not income, wages of which are a subtraction on a business’s finite cash reserve.

“This does not favour the working poor in an economy designed, incentivised and explicitly rewarded for its ability to maximise the return on everything. Personal wealth is a pipe dream in a world where the cost of living is always slightly too high, and personal income is slightly too low, and in the gig, self-employment or services economy, unstable, too.

“The profound explosion in UK housing prices in the last 15 years has created a rental market that now props up ownership as an exclusive club, and one that is often (but not always) only accessible via certain personal circumstance or privilege. It’s not uncommon for renters, particularly young, city-based renters (where the majority of the work is) to have to pay out more than half of their income in rent — before factoring in other arbitrary fees or securities. This significant, artificial increase in major, fixed costs against wages, means breaking out of the rental cycle is either a very long, very slow grind — or impossible.”

Although written specifically about the U.K., this analysis is applicable in the U.S. as well.

What’s next for capitalism?

About a year ago, economics Nobel laureate Joseph E. Stiglitz, offered a “progressive capitalism” alternative based on “the power of the market to serve society.”[13]

“The United States has the highest level of inequality among the advanced countries and one of the lowest levels of opportunity — with the fortunes of young Americans more dependent on the income and education of their parents than elsewhere.

“There is a broader social compact that allows a society to work and prosper together, and that, too, has been fraying. America created the first truly middle-class society; now, a middle-class life is increasingly out of reach for its citizens.

“We confused the hard work of wealth creation with wealth-grabbing (or, as economists call it, rent-seeking).

“The prescription follows from the diagnosis: It begins by recognizing the vital role that the state plays in making markets serve society.

“Progressive capitalism is based on a new social contract between voters and elected officials, between workers and corporations, between rich and poor, and between those with jobs and those who are un- or underemployed.

“Part of this new social contract is an expanded public option for many programs now provided by private entities or not at all

“This new social contract will enable most Americans to once again have a middle-class life.

“The neoliberal fantasy that unfettered markets will deliver prosperity to everyone should be put to rest.

“America arrived at this sorry state of affairs because we forgot that the true source of the wealth of a nation is the creativity and innovation of its people.”

A year after Stiglitz’s article, we have the COVID-19 lockdown. Will politicians act to restore the missing public welfare to economic policy-making, as Stiglitz urges? And, if they don’t, is the electorate willing to storm and overthrow the economic status quo ? Paradigms only shift when culture does, and a new economic paradigm requires more of a global perspective than we had before worldwide populist movements retrenched to aggressive nationalism. This trend leads one commentator to doubt voters will respond to the global pandemic with a newly expanded globalism.[14]

Changing the world means…changing the world. That might sound like a cliche. I assure you it’s not. The average white American liberal is concerned with a thing, maybe, if they’re really caring and intelligent, like healthcare for some of their society. But even that’s not nearly big enough. Without actually changing the world, the world doesn’t change. Westerners attempt to change their broken societies, without really grasping the fact that they need to put the world first.

“That means: without building global systems, nothing much will change. Every single existential threat of now, from pandemic to climate change to inequality to fascism, will simply rage on and continue. But you yourself probably think building global systems is either foolish, idealistic, unnecessary, or dangerous. You yourself are the thing stopping the world from changing — as much as you imagine you want to change the world. That’s true of almost every Western intellectual I can think of, and it’s true of most people, too.

“Our first task this century is therefore building a global consciousness. Teaching the world, especially the rich West, to care about the world. Why does that hedge funder live a better life than that poor Chinese dude, by sheer privilege of birth, because of a long history of violence and exploitation by one’s side against the other? Equality, freedom, justice, truth, selfhood — these notions have no meaning whatsoever at the global level yet in human history.”

“Surveillance Capitalism”

If we’re not willing to “think globally, act locally,” then what will fill the void? Some thinkers have suggested a much more chilling outcome: “surveillance capitalism” or the “surveillance economy.”[15] As bestselling author Uval Hoah Harari (Sapiens, Homo Deus, 21 Lessons for the 21st Century) explained in an article last week, the same technology that supports capitalism has been supercharged to fight the Plague. [16]

“In order to stop the epidemic, entire populations need to comply with certain guidelines. There are two main ways of achieving this. One method is for the government to monitor people, and punish those who break the rules. Today, for the first time in human history, technology makes it possible to monitor everyone all the time. Fifty years ago, the KGB couldn’t follow 240m Soviet citizens 24 hours a day, nor could the KGB hope to effectively process all the information gathered. The KGB relied on human agents and analysts, and it just couldn’t place a human agent to follow every citizen. But now governments can rely on ubiquitous sensors and powerful algorithms instead of flesh-and-blood spooks.

“In their battle against the coronavirus epidemic several governments have already deployed the new surveillance tools. The most notable case is China. By closely monitoring people’s smartphones, making use of hundreds of millions of face-recognising cameras, and obliging people to check and report their body temperature and medical condition, the Chinese authorities can not only quickly identify suspected coronavirus carriers, but also track their movements and identify anyone they came into contact with. A range of mobile apps warn citizens about their proximity to infected patients.

“You might argue that there is nothing new about all this. In recent years both governments and corporations have been using ever more sophisticated technologies to track, monitor and manipulate people. Yet if we are not careful, the epidemic might nevertheless mark an important watershed in the history of surveillance. Not only because it might normalise the deployment of mass surveillance tools in countries that have so far rejected them, but even more so because it signifies a dramatic transition from ‘over the skin’ to ‘under the skin’ surveillance.

“Hitherto, when your finger touched the screen of your smartphone and clicked on a link, the government wanted to know what exactly your finger was clicking on. But with coronavirus, the focus of interest shifts. Now the government wants to know the temperature of your finger and the blood-pressure under its skin.”

Few would argue that using state-of-the-art technology to slow an international pandemic is a bad thing, but the implications for expanded future use on consumers are deeply disturbing.

But it’s too easy to assume the worst.

It’s possible that the pandemic will catalyze economic reform, demanded by the neglected working class.[17]

“As my colleague Annie Lowrey wrote, the economy is experiencing a shock ‘more sudden and severe than anyone alive has ever experienced.’ About one in five people in the United States have lost working hours or jobs. Hotels are empty. Airlines are grounding flights. Restaurants and other small businesses are closing. Inequalities will widen: People with low incomes will be hardest-hit by social-distancing measures, and most likely to have the chronic health conditions that increase their risk of severe infections.

“Pandemics can also catalyze social change. People, businesses, and institutions have been remarkably quick to adopt or call for practices that they might once have dragged their heels on, including working from home, conference-calling to accommodate people with disabilities, proper sick leave, and flexible child-care arrangements. ‘This is the first time in my lifetime that I’ve heard someone say, Oh, if you’re sick, stay home,’ says Adia Benton, an anthropologist at Northwestern University.

“Perhaps the nation will learn that preparedness isn’t just about masks, vaccines, and tests, but also about fair labor policies and a stable and equal health-care system. Perhaps it will appreciate that health-care workers and public-health specialists compose America’s social immune system, and that this system has been suppressed.”

As the lead to Prof. Harari’s article says, “This storm will pass. But the choices we make now could change our lives for years to come.”

And some of us, at least, will live to see it.

[1] Wikipedia.

[2] The Gates in the Wall Stand Open Wide.’ What Happened the Day the Berlin Wall Fell. Time, November 9 2019. See also this article from the History Channel.:

[3] Coronaviruses, National Institutes of Health/ National Institute of Allergy and Infectious Diseases.

[4] Thomas K R, Coronavirus : How a global pandemic is single-handedly unravelling capitalist economics, Medium (Mar. 19, 2020).

[5] Hague, Umair, Will Coronavirus (Really) Change the World? Medium (Mar. 31, 2020)

[6] We previously explored this topic in this blog — see Free Market Capitalism’s Assault on the Public Good.

[7] The Virus Is An Economic Emergency Too, Financial Times (Mar. 17, 2020)

[8] The Nordic Secret to Battling Coronavirus: Trust, Yes! Magazine (March 17, 2020)

[9] Thomas, Coronavirus, op cit.

[10] American Consumers, Once Bulwark Of Economy, Are Rapidly Losing Confidence, MSN Monery (Mar. 27, 2020)

[11] For an introduction, see here and here.

[12] Thomas, K R, The Rent’s Due, but Britain’s Broke, Medium (Mar. 22, 2020)

[13] Progressive Capitalism Is Not an Oxymoron: We can save our broken economic system from itself, New York Times (April 19, 2019).

[14] Hague, Umair, op. cit.

[15] For an introduction to this topic, see The Age of Surveillance Capitalism by Shoshana Zuboff Review, The Guardian (Feb. 2, 2019).

[16] Harari, Yuval Noah: The World After Coronavirus, Financial Times (Mar. 20, 2020)

[17] How the Pandemic Will End, The Atlantic (Mar. 25, 2020)

Free Market Capitalism: Miracles, Magic, and Mental Illness

 

Free market economics promised magic.
We got the Hustle instead.

The Miracle-That-Isn’t

This year’s State of the Union Address featured an “economic miracle,” citing economic growth, decreased unemployment, and a soaring stock market. There’s nothing miraculous about any of that. It’s all on purpose. The U.S. economy is doing exactly what it’s designed to do — promote capitalism for capitalists — and it’s hitting on all cylinders.

Capitalists are people and companies with access to capital: the corporate nation-states and the people who own and manage them; the entrepreneurs who start them; and the financial firms who trade their securities. U.S. economic policy provides structural support for the massive amount of worldwide capital: low corporate taxes leave more profits in the companies’ coffers, and low capital gains taxes generate higher returns for those who provide the capital.

Since the new USA tax policy went into effect after the 2016 election, corporations have been using their profits to buy back their own securities in record amounts. Stock buybacks are easier to predict than corporate quarterly performance and dividends; instead, you get cash payouts on schedule. As for the shares that remain, when a company takes some of its shares off the market, the ones left are worth more – same numerator, smaller denominator. That’s good for the remaining shareholders and for executive compensation, which is largely based on share value. Stock buybacks have become what Goldman Sachs called the “dominant” reason for stock market demand.[1] Again, all of that is by design, and if you’re a corporation or investor, the Miracle-That-Isn’t is working just fine for you.

How’s all this working for the non-capitalists?

The Magic That Isn’t

Google “state of the union economic miracle,” and the results are predictable. The right crows over robust growth, the left nitpicks over percentage points, and neither side mentions that non-capitalists aren’t benefiting from the economic Miracle-That-Isn’t – none of that robust economic growth gets to them.

Non-capitalists don’t make money from capital, they work for a living, and their ranks include small businesses and self-employed individuals — your local tech consultant, plumber, florist, bookstore owner, micro-brewer. They aren’t capitalists. They’re not entrepreneurs either. Starting a business on a credit card, pledging your home as collateral, spending your savings to pursue a dream… those things don’t make you a capitalist.

All these working people were supposed to benefit from the same “free market” economic theory that’s powering the economic Miracle-That-Isn’t. This was supposed to happen because benefits at the top would “trickle down” to those below. (The term “trickle down” has been around since the 80’s. We don’t seem to notice that it’s condescending and stingy.) This theory was championed by Nobel prize-winning economist Milton Friedman and the Chicago School of Economics:

“The core of [the school’s teaching on the free market] was that the economic forces of supply, demand, inflation and unemployment were like the forces of nature, fixed and unchanging. In the truly free market imagined in Chicago classes and texts, these forces existed in perfect equilibrium, supply communicating with demand the way the moon pulls the tides

“Just as ecosystems self-regulate, keeping themselves in balance, the market, left to its own devices, would create just the right number of products at precisely the right prices, produced by workers at just the right wages to buy those products — an Eden of plentiful employment, boundless creativity and zero inflation.[2]

As we’ve seen previously, although Friedman and his colleagues characterized their capitalist vision as science, it wasn’t; it was instead a belief system, promoted with religious zeal. The belief was that “trickle down” would happen automatically, like magic. All you had to do was give capitalists free reign — cut taxes, provide trade protection and other incentives — and the economy would grow, the capitalists would get rich, and everybody else would be better off, too.

That’s the theory. Has it worked?

U.S. economic policy has given free market economics its best shot for four decades, including that most recent all-in super-size of the current administration. We now have the empirical data Friedman & Co. didn’t. What it shows is that the policy truly works at the top, but there’s no trickle down.

Trickle-down doesn’t happen magically.
It happens deliberately.
It happens when it’s part of the plan.
And when the plan is carefully executed.

Intentional trickle down policies need to work both sides of the ledger – income and expenses. For example, you could collect tax revenues on some of that newly-created economic “miracle” wealth and spend it for the benefit of the Public (which includes the capitalists). Trouble is, as we’ve seen previously, free market economics has eliminated the Public from policy-making. That leaves low unemployment as the best chance to move money to the pockets of the people who work for a living. But that’s not effective either, because not all jobs are created equal.

Jobs for the Poor

Free market economics’ belief that low unemployment is the best way to benefit non-capitalists has made jobs a sacred cultural norm. Young? Just starting out? Poor? Can’t make ends meet? Get a job! Jobs are morally right – they build character, they’re how you make your way in the world. Public goods and social safety nets are evil, but jobs are everlastingly good. If you don’t work (at a job), you don’t deserve to eat. (That’s in the Bible; [3].it’s also in Lenin’s The State and Revolution.) If unemployment is low, that means there are plenty of jobs to go around, and the slackers have no excuse.

Right?

Wrong.

The capitalist Miracle-That-Isn’t is not creating the kind of jobs that pay a living wage to full-time employees. The jobs are not full time, and the workers aren’t employees. Instead, the jobs are part of the new gig economy. The workers are self-employed contract labor, temporary and short-term. And since there is no Public good anymore, these new gig jobs have to pay enough to cover self-employed FICA and benefits, as well as living costs. That’s not happening, which means we now have something that sounds like a dance craze, but isn’t. We have…

The Hustle

The Hustle is what non-capitalists do when the Miracle-That-Isn’t creates gig jobs.

“Doing my taxes this year, I noticed that the W4 form has transformed into a somewhat confusing jumble of tables and boxes. In one of these boxes, you’re meant to identify if you’re working another job to make ends meet, like freelancing or picking up Instacart shifts. Basically, the form wants to know: “Are you hustling?”

“For most people I know, the answer is a resounding yes. A friend of mine is a talented videographer who bartends and takes odd jobs on the side. I know a preschool teacher who also babysits and moonlights as a Lyft driver. Two employees in my company run a side company and create content on Twitch. A fellow writer on Medium works a nine-to-five, then freelances in the evening. And me? I’m no different. I write, freelance in graphic design, and build websites to provide for my family.

“We’re hustling to make ends meet, ‘building our brand,’ ensuring our startup doesn’t tank, or dreaming about the day our side hustle takes off and we can walk into the office and give everyone the bird.

“Some of the things exacerbating Hustle Life™ are out of our control. I live in Austin, Texas, where the cost of living has skyrocketed in the past few years. Between 2017 and 2018, the cost of living rose by $20,000 per person, about a 33% increase. Also, the average CEO’s salary has grown by 940% since 1978, whereas their workers’ wages have grown by just 12%. It stands to reason, then, that most of us are hustling because we literally have to in order to survive.”[4]

The Hustle means living from paycheck to paycheck, with nothing left over for savings, home ownership, and other out-of-ordinary costs.

“It seems like everyone is just trying to make ends meet.

“One of the latest hashtag games making the rounds on Twitter TWTR, -4.31% invites social media users to provide pithy and honest answers to this open-ended statement: ‘With my next paycheck I will…’

“While these games generally draw amusing memes and witty zingers, many of the responses trending under #WithMyNextPayCheckIWill early Tuesday morning were pretty bleak, with ‘still be broke’ being the general consensus.

“This reflects just how many Americans are living paycheck to paycheck.

“Depending on the survey, that figure runs from half of workers making under $50,000 (according to Nielsen data) to 74% of all employees (per recent reports from both the American Payroll Association and the National Endowment for Financial Education.) And almost three in 10 adults have no emergency savings at all, according to Bankrate’s latest Financial Security Index.” [5]

Poor Becomes the Norm

When robust economic growth doesn’t tickle down, the gap widens between capitalists at the top and the poor at the bottom – this is the economic inequality that dominates economic news – and then the middle class falls into the gap and joins the poor. According to a 2017 Federal Consumer Financial Protection Bureau report,

“Measured by the By the Official Poverty Measure (OPM), more than 95 million Americans (nearly 30 percent of the total population) are either in poverty or considered ‘low-income’ (living below twice the poverty line) … That number rises to 140 million people (43.5 percent) when using the (SPM) [Supplemental Poverty Measure].”[6]

What do we mean by “poor”?

“The OPM was adopted in the mid-1960s and has garnered widespread criticism because it measures pretax income and food-purchasing power, updated yearly to account for inflation. That methodology, experts say, fails to capture many people struggling financially in modern society.

“The Census Bureau responded with the SPM, which since 2011 has measured after-tax income, food costs and other necessities such as clothing, housing and utilities. The SPM accounts for geographic variations in the cost of living, includes welfare benefits such as food stamps and housing subsidies, and subtracts child-care expenses.”[7]

Therefore, “poor” officially means you struggle with food, housing, utilities, and childcare. But what if you can’t come up with $500 to cover an unexpected expense[8] –does that count as a necessity? Or what about a car, washer and dryer, TV, air conditioning…maybe even home ownership, a shot at upward mobility, or relief from the insecurities of the gig economy? Are those necessities?

We have now landed squarely in the center of the necessity vs. luxury debate, which apparently will endure until the seas all melt, and to which the most reliable answer seems to be, it depends on what socio-economic level you’re talking about. For the middle class and up, things like a reliable car, smart phone, high-speed wireless, home ownership, savings… plus the occasional night out… are givens. As for the poor,

“There is a moralistic presumption that poor people, especially those receiving benefits, should not be spending money on anything but the bare essentials, denying themselves even the smallest ‘luxury’ that might make their lives less miserable.”[9]

If 32% – 43.5% of Americans are living at the official poverty line, the USA has truly become what one writer calls “the world’s first poor rich country.”[10] That means look left, look right, and one of you:

  • Does not plan for the future in the press of making ends meet right now;
  • Makes money and purchases stretch as far as possible;
  • Is shadowed by the what if? of emergencies and other unplanned costs;
  • Regularly opts out of social engagements for lack of funds;
  • Relies on unreliable transportation to get around;
  • Constantly sacrifices this in order to do and have that;
  • Does not ask for help because it’s too embarrassing and shameful.[11]

Things get worse when the poor become impoverished. Poor is lack of money, the inability to make ends meet. Poverty goes beyond poor: it is a mindset and belief system that drags the poor into a pit of mental ill health.

Why do the poor make so many dumb decisions?

The poor don’t, not necessarily. But the impoverished do. People use “poor” and “poverty” interchangeably, but not everyone who’s poor is also impoverished. The poor are poor because they lack money, but poverty goes further: it’s a chronic, grinding, demeaning, despairing condition that generates a specific outlook and way of approaching life. When that condition is shared, it becomes a culture. You might not know it when you’re around poor, but you definitely know it when you’re around poverty.

Poverty is institutionalized economic mental illness.

The Lost War on Poverty

“In the sixties we waged a war on poverty and poverty won.”

Ronald Reagan

Poverty is a “personality defect.”

Margaret Thatcher

That’s true: poverty won the war against it. But it’s also true that the poor lost.

The Gipper was referring to LBJ and his Great Society, but he got it wrong:  the Great Society failed to eliminate poverty because it never got all the way to dealing with it. Instead it took a more politically acceptable path focused on education and community involvement — not bad things, but there’s a difference.

As for the Iron Lady, there’s actually some truth in what she said, but almost certainly not in the way she probably meant it. She was more likely voicing the common attitude that the poor are intellectually impaired, morally flawed, prone to bad lifestyle choices, and criminally inclined, and therefore worthy of only the most grudging kind of help. That attitude and the Great Society reputed loss of its War on Poverty[12] explain a lot about today’s lack of safety nets for the poor – which, remember, refers to 40+ percent of Americans.

Rutger Bregman[13] tackles this subject in his book Utopia for Realists: And How We Can Get There (2017). (As smart and creative as he is, he still uses “poor” and “poverty” interchangeably. I wish he wouldn’t.):

“A world without poverty– it might be the oldest utopia around. But anybody who takes this dream seriously must inevitably face a few tough questions. Why are the poor more likely to commit crimes? Why are they more prone to obesity? Why do they use more alcohol and drugs? In short, why do the poor make so many dumb decisions?”

He continues with more tough questions:

“What if the poor aren’t actually able to help themselves? What if all the incentives, all the information and education are like water off a duck’s back? And what if all those well-meant nudges [toward self-help and away from government assistance] only make the situation worse?”

He then profiles the work of Eldar Shafir, a psychologist at Princeton, and Sendhill Mullainathan, an economist at Harvard, who formulated a theory of poverty based on the concept of “scarcity mentality.” Their research shows that the chronic poor are really good at scrambling after short term solutions, but tend to be inept at sustainable long-term thinking. It’s a matter of mental bandwidth: today’s urgency gets all the attention, leaving other matters to go begging (sometimes literally). In fact, their research estimates that poverty costs a person about 13-14 IQ points. In other words, living in a chronic state of being poor can eventually rewire the human brain to the point where clear thinking and prudent behavior are challenged. Hence the grain of truth in Margaret Thatcher’s comment that the poor have a “personality defect”: having your brain rewired by chronic poverty is a personality defect in the same way that a “personality disorder” is a mental illness.

Mental Illness On A Societal Level

But mental illness is not limited to impoverished individuals. It seems that economic policy may have created an entire “Generation of Sociopaths” of policy-makers and the people who elect them. That’s the premise of a book with that title.[14]

“What happens if a society is run by people who are, to a large degree, antisocial? I don’t mean people who are ‘antisocial’ in the general sense, the sort who avoid parties and hide from the neighbors, I mean people who are antisocial in the clinical sense: sociopaths. Could a sociopathic society function? Unfortunately, this is not a thought experiment or an investigation into some ramshackle dictatorship in a distant land; it is America’s lived experience. For the past several decades, the nation has been run by people who present, personally and politically, the full sociopathic pathology: deceit, selfishness, imprudence, remorselessness, hostility, and the works. Those people are the Baby Boomers, that vast and strange generation born between 1940 and 1964, and the society they created does not work very well.

“The goal of American politics has been, until the advent of the Boomers, the creation of a ‘more perfect Union’ and the promotion of the ‘general Welfare’ to ‘secure the Blessings of Liberty to ourselves and our Posterity.’ The Constitution promises as much, and over time America generally made good on that promise, first to a few, then to many. By the twentieth century, constitutional abstractions had taken concrete form, and ‘Blessings’ in the modern vernacular were understood to mean the creation of an ever larger and more affluent middle class. If the middle was not doing well, neither was America. James Carville, the operative who brought Bill Clinton to power as the first Boomer president, understood that modern politics boiled down to ‘It’s the economy, stupid.’ And the Council of Economic Advisors (CEA) has made clear how to evaluate that economy: the ‘well-being of the middle class and those working to get into the middle class… is the ultimate test of an economy’s performance.’ [Citing the 2015 Economic Report of the President] Measured against the Constitution’s noble imperatives of the more prosaic words of Carville and the CEA, America generally made a great success of things for two centuries. Since the Boomer’s ascension to power, American has accomplished far too little, and in many important ways has slid backward.”

The book ticks through the diagnostics on the clinical sociopathic checklist — e.g. risk seeking, breakdown of relationship, lack of long-term thinking and short-term gratification – and cites a 1991 report[15] issued by the National Institute of Health” compiling the work of UCLA, Yale, Johns Hopkins, Washington, and Duke universities, using DSM (Diagnostic and Statistical Manual of Mental Disorders) criteria that found higher levels of antisocial personality disorder in the Boomer cohort. The result goes beyond poverty-related individual mental illness, to systemic cultural mental impairment. (I’ll be looking further at all of this in upcoming posts.)

Why Poverty Matters to Capitalists (or Should)

Capitalists are sometimes characterized as unsympathetic to the poor, but it’s clearly in their best interests not to be: a sustainable economy needs consumers to buy the stuff they make. The rich can only buy so much, then it’s up to the rest of us, but we can’t do our part if our gig income is gone too soon. Ironically, the neglected middle class will have the last laugh. But by then nobody will be laughing.

“The fundamental law of capitalism is: When workers have more money, businesses have more customers. Which makes middle-class consumers—not rich businesspeople—the true job creators. A thriving middle class isn’t a consequence of growth—which is what the trickle-down advocates would tell you. A thriving middle class is the source of growth and prosperity in capitalist economies.

“Our economy can be safe and effective only if it is governed by rules. Some capitalists actually don’t care about other people, their communities, or the future. Their behavior, if left unchecked, has a massive effect on everyone else.

“The danger is that economic inequality always begets political inequality, which always begets more economic inequality. Low-wage workers stuck on a path to poverty are not only weak customers; they’re also anemic taxpayers, absent citizens, and inattentive neighbors.

“Economic prosperity doesn’t trickle down, and neither does civic prosperity. Both are middle-out phenomena. When workers earn enough from one job to live on, they are far more likely to be contributors to civic prosperity—in your community. Parents who need only one job, not two or three to get by, can be available to help their kids with homework and keep them out of trouble—in your school. They can look out for you and your neighbors, volunteer, and contribute—in your school and church. Our prosperity does not all come home in our paycheck. Living in a community of people who are paid enough to contribute to your community, rather than require its help, may be more important than your salary.

“Prosperity and poverty are like viruses. They infect us all—for good or ill.

“An economic arrangement that pays a Wall Street worker tens of millions of dollars per year to do high-frequency trading and pays just tens of thousands to workers who grow or serve our food, build our homes, educate our children, or risk their lives to protect us isn’t an expression of the true value or economic necessity of these jobs. It simply reflects a difference in bargaining power and status.

“Inclusive economies always outperform and outlast plutocracies. That’s why investments in the middle class work, and tax breaks for the rich don’t. The oldest and most important conflict in human societies is the battle over the concentration of wealth and power. Those at the top will forever tell those at the bottom that our respective positions are righteous and good for all. Historically we called that divine right. Today we have trickle-down economics.

“Some of the people who benefit most from that explanation are desperate for you to believe this is the only way a capitalist economy can work.

“The trickle-down explanation for economic growth holds that the richer the rich get, the better our economy does. But it also clearly implies that if the poor get poorer, that must be good for our economy. Nonsense.” .[16]::

What IS Magical and Miraculous

One thing that truly is miraculous about all this is that Americans persist in debating what’s a necessity and what’s a luxury. Why wouldn’t we want everybody to have as much as possible? Instead we concede luxuries to the capitalists but begrudge them to non-capitalists.

Similarly, Americans also persist in debating whether money can buy happiness, when we all know that of course it can, because it can buy things that make us happy – things like food, clothing, a place of our own, clean water to drink and take a shower in, safety and health, a chance to improve ourselves, a net to catch us if dreams don’t come true… all those things that used to be considered part of the Public Good. Countries that still provide those things for their citizens are the happiest in the world.[17] Countries that don’t – like the USA and the former Soviet Union – turn their citizens into a mob of stressed, afraid, hustling, poverty-avoiders who cast our sociopathic votes to elect sociopathic representatives who perpetuate more of the same.

Why?

  • Why wouldn’t we want all those things for ourselves, and for the people around us?
  • Why wouldn’t we think that having all those things is a sign that the human race is making progress, that we’re improving our lives, our world?
  • Why do we instead cling to the self-righteous and self-defeating notion that moral character requires suffering with unmet needs, poverty, and jobs that don’t pay the bills?
  • Why do we want our lives to be precarious and unhappy instead of secure and joyful?

And you know what else is miraculous?

That nobody notices the contradictions and double standards, how we perpetuate cultural norms that work against our own best interests, or that both economic growth and trickle down can’t happen without economic policies that favor both capitalists and non-capitalists.

  • The capitalists don’t notice.
  • The capitalist policy-makers don’t notice.
  • The non-capitalists don’t notice;
  • The former middle class — now the new poor — don’t notice.
  • The voters don’t notice.

The impoverished and the sociopaths don’t notice either, but we wouldn’t expect them to.

But wait — I guess it’s not quite true that nobody notices. I mean, the people quoted in this article notice, and they’re not nobody. But still…

I think we need a longer list of people who notice. A much longer list.

[1] See, for example: Share Buybacks Could Approach Record Levels In 2020 After 2019 Fell Short, S&P Global Market Intelligence (Feb. 13, 2020); Stocks To Buy For Buybacks, Forbes (Jan. 17, 2020); Buybacks Are The ‘Dominant’ Source Of Stock-Market Demand, And They Are Fading Fast: Goldman Sachs, MarketWatch (Nov. 9, 2019).

[2] The Shock Doctrine: The Rise of Disaster Capitalism, Naomi Klein (2017)

[3] “If any man does not work, neither let him eat.” 2 Thessalonians 3:10

[4] Sledge, Benjamin, We’ve Embraced the Hustle Life, and It’s Making Us Miserable, Medium (Mar. 5, 2020).

[5] A shocking number of Americans are living paycheck to paycheck, MarketWatch (Jan. 11, 2020).

[6] Joe Biden apparently got his math wrong when he said half of Americans are poor – see Fact Checker: Joe Biden’s Claim That ‘Almost Half’ Of Americans Live In Poverty, The Washington Post (June 20, 2019). Right-leaning Ballotpedia also corrected Biden’s math, concluding that only 32% of Americans are technically poor. On the other hand, progressive Common Dreams is sticking with one-half.

[7] Again from The Washington Post’s Fact Checker:

[8] A $500 surprise expense would put most Americans into debt, CBS New Money Watch (Jan. 12, 2017).

[9] Standing, Guy, Basic Income:  A Guide For the Open-Minded, Guy Standing (2017).

[10] Hague, Umair, Why America is the World’s First Poor Rich Country, Medium (May 23, 2018).

[11] Everyday Things Poor People Worry About That Rich People Never Do, Everyday Feminism (May 7, 2015),

[12] Not everyone agrees that we lost the War on Poverty. See this article that considers both sides.

[13] Rutger Bregman is a historian and author. He has published five books on history, philosophy, and economics. His book Utopia for Realists was a New York Times Bestseller and has been translated in 32 languages. The Guardian called him “the Dutch wunderkind of new ideas.”’

[14] Gibney, Bruce Cannon, A Generation of Sociopaths: How the Baby Boomers Betrayed America (2018). “Sure to be controversial,” Fortune said about the book, and it certainly is that.

[15] Psychiatric Disorders in America,

[16] A Wealthy Capitalist on Why Money Doesn’t Trickle Down, Yes! Magazine (Sept. 10, 2019).

[17] While free market indoctrinated Americans seems to have a bad case of being right instead of being happy, the social democracies that feature the public good routinely score the highest in The World Happiness Reporta list dominated by the Scandinavians:Finland again takes the top spot as the happiest country in the world according to three years of surveys taken by Gallup from 2016-2018. Rounding out the rest of the top ten are countries that have consistently ranked among the happiest. They are in order: Denmark, Norway, Iceland, Netherlands, Switzerland, Sweden, New Zealand, Canada and Austria. The US ranked 19th dropping one spot from last year.”

A Tale of Two Countries

pie cut in half

It’s official:  the U.S. is split in half — not just on everything, as we already know, but also in economic terms:  half of us are poor, half of us aren’t.

Well, not quite. Joe Biden apparently got his math wrong when he said half of Americans are poor. More accurately, according to a 2017 Federal Consumer Financial Protection Bureau report,

“Measured by the By the Official Poverty Measure (OPM), more than 95 million Americans (nearly 30 percent of the total population) are either in poverty or considered ‘low-income’ (living below twice the poverty line) … That number rises to 140 million people (43.5 percent) when using the (SPM) [Supplemental Poverty Measure].”

Fact Checker:  Joe Biden’s Claim That ‘Almost Half’ Of Americans Live In Poverty, The Washington Post (June 20, 2019)

Right-leaning Ballotpedia also corrected Biden’s math, concluding that only 32% of Americans are technically poor. On the other hand, progressive Common Dreams is sticking with one-half.

Glad we got that cleared up.

Besides, what’s “poor” anyway? Are we talking poverty, poor, low income, or what? Again from The Washington Post’s Fact Checker:

“The OPM was adopted in the mid-1960s and has garnered widespread criticism because it measures pretax income and food-purchasing power, updated yearly to account for inflation. That methodology, experts say, fails to capture many people struggling financially in modern society.

“The Census Bureau responded with the SPM, which since 2011 has measured after-tax income, food costs and other necessities such as clothing, housing and utilities. The SPM accounts for geographic variations in the cost of living, includes welfare benefits such as food stamps and housing subsidies, and subtracts child-care expenses.”

Therefore, apparently “poor” is about food, housing, utilities, and child-care  — subject to how much you make on the dole. But what about childcare for people not on public assistance — are you poor if you can’t afford that? Or how about healthcare, education, transportation? Internet access? Cell phone? Or what if you can’t come up with $500 to cover an unexpected expense? (Something 63% of American’s couldn’t do, according to this Forbes article.) Or what about a car, washer and dryer, TV, air conditioning…maybe even home ownership, a shot at upward mobility, or relief from the insecurities of the gig economy?

We have now landed squarely in the center of the necessity vs. luxury debate, which will endure until the seas all melt, and to which the most reliable answer seems to be, it depends on what socio-economic level you’re talking about. For the middle class and up, things like a reliable car, smart phone, high-speed wireless, home ownership, savings… plus the occasional night out… are givens. As for the poor,

 “There is a moralistic presumption that poor people, especially those receiving benefits, should not be spending money on anything but the bare essentials, denying themselves even the smallest ‘luxury’ that might make their lives less miserable.”

Basic Income:  A Guide For the Open-Minded, Guy Standing (2017) [1].

If “only” 32%, or maybe 43.5%, or even half of Americans are below, at, or just above the official poverty line, the USA has truly become what one writer calls “the world’s first poor rich country.” That means look left, look right, and one of you:

  1. Does not plan for the future in the press of making ends meet right now;
  2. Makes money and purchases stretch as far as possible;
  3. Is shadowed by the what if? of emergencies and other unplanned costs;
  4. Regularly opts out of social engagements for lack of funds;
  5. Relies on unreliable transportation to get around;
  6. Constantly sacrifices this I order to do and havc that;
  7. Does not ask for help because it’s too embarrassing and shameful.

Everyday Things Poor People Worry About That Rich People Never Do, Everyday Feminism (May 7, 2015),

If none of those apply, then either you’re a member of the top 10% economic upper class or you’re part of the middle class that hasn’t vanished yet. Otherwise, “poor” can happen even right here in our house. If I’d thought about it back in the day (but of course I didn’t), I’m sure there were three things I would have thought I’d never be:  old, poor, and infirm. Now, by federal standards, I’m all three. I’m also certain I never would have thought that the best financial day I’d ever have was the day I qualified for disability income. Amazing what a social safety net can do for your outlook.

Old, poor, and infirm are three reasons why I’ve been writing about economics and jobs for the past couple years. One of the many things I’ve learned is that law and economics are inseparable — which is obvious if we ever think about it, but usually we don’t. Click here for an article about how law creates economic reality.

Next up:  we’ll meet a human species you’ve probably never heard of.

[1] The results of my Google searches on necessities vs. luxuries were fascinating. I highly recommend your own. See, e.g., this article that cites a 2009 Pew Research Center poll re: what Americans considered necessities at that time. I didn’t find an exact Pew follow up, but for something close, see this 2016 research study that identified job security and the ability to save money as prerequisites for being considered middle class.

Poverty Gets Personal

poverty

“In the sixties we waged a war on poverty and poverty won.” – Ronald Reagan

Poverty is a “personality defect.” – Margaret Thatcher

The Gipper was referring to LBJ and his Great Society, but he got it wrong:  the Great Society failed to eliminate poverty because it never got all the way to dealing with it. Instead it took a more politically acceptable path focused on education and community involvement — not bad things, but there’s a difference. As for the Iron Lady, there’s actually some truth in what she said (we’ll look at that in a moment), but I suspect not in the way she probably meant it. She was more likely voicing the common attitude that the poor are intellectually impaired, morally flawed, prone to bad lifestyle choices, and criminally inclined, and therefore worthy of only the most grudging kind of help. That attitude and the Great Society’s reputed loss[1] in its War on Poverty explain a lot about today’s prevailing approach to poverty relief.

Rutger Bregman tackles this tough subject in his book Utopia for Realists: And How We Can Get There (2017):

“A world without poverty– it might be the oldest utopia around. But anybody who takes this dream seriously must inevitably face a few tough questions. Why are the poor more likely to commit crimes? Why are they more prone to obesity? Why do they use more alcohol and drugs? In short, why do the poor make so many dumb decisions?”

He continues with more tough questions:

“What if the poor aren’t actually able to help themselves? What if all the incentives, all the information and education are like water off a duck’s back? And what if all those well-meant nudges [toward self-help and away from government assistance] only make the situation worse?”

He then profiles the work of Eldar Shafir, a psychologist at Princeton, and Sendhill Mullainathan, an economist at Harvard, who formulated a theory of poverty based on the concept of “scarcity mentality.” Their research shows that the chronic poor are really good at scrambling after short term solutions, but tend to be inept at sustainable long-term thinking. It’s a matter of mental bandwidth:  today’s urgency gets all the attention, leaving other matters to go begging (sometimes literally). In fact, their research estimates that poverty costs a person about 13-14 IQ points. In other words, living in a chronic state of being poor can eventually rewire the human brain to the point where clear thinking and prudent behavior are challenged.

Hence the grain of truth in Margaret Thatcher’s comment.

One problem with that attitude, though, is that it uses the terms “poor” and “poverty” interchangeably. But not everyone who’s poor is also impoverished. At the simplest level, the poor are poor because they lack money. But poverty goes further:  it’s a chronic condition that generates a specific outlook and way of approaching life. When that condition is shared, it  becomes a culture. You know it when you’re around poverty; you might not know it when you’re around poor.

Government assistance programs don’t make that distinction. As a result, as Bregman states, social welfare has “devolved into a behemoth of control and humiliation.”

“An army of social services workers is needed to guide people through the jungle of eligibility, application, approval, and recapture procedures… The welfare state, which should foster people’s sense of security and pride, has degenerated into a system of suspicion and shame.”

Is it really that bad? Try applying for food stamps sometime.

Our bank account was thin after a business failure and some health issues. Following the advice of family. my wife applied for food stamps. Her experience was everything Bregman describes. Case in point: after two mandatory daylong job search classes (how to write a resume, set up a LinkedIn page, use the internet to check out online job postings…), she had to prove her willingness to work by reporting for 8 hours per week of wall-washing duty at a church community center. She washed the same walls every week — the same walls that other people were also washing every week — the cleanest walls in Denver. Washing walls — pointlessly, needlessly, endlessly — to prove you’re not a slacker.

Help with the grocery bill was bittersweet for a couple months, then we opted out. It’s easy to intellectualize and debate about “all the information and education” and “the jungle of eligibility, application, approval, and recapture procedures.” It’s not so easy when they get personal. We were poor but not impoverished, and the system was just too demoralizing to continue. Maybe that was the point.

Plus, earning money reduces or eliminates benefits — a result which economist Guy Standing calculates is equivalent to the imposition of a 80% tax. The quandary is obvious:  earn money or opt out of the system– either way, you pay the tax. Most people — even the cognitively-impaired — wouldn’t agree to a deal like that.

How did “Brother, can you spare a dime?” turn into this? Curiously, the current welfare system derived from the same post-WWII economic surge that rewarded working people. We’ll look at how that happened next week. In the meantime, have a listen:

brother can you spare a dime

This week’s post uses portions of a LinkedIn Pulse article I wrote last year about poverty, crime, and homelessness. Next week’s post will also tap that source. You might like to jump ahead and read the article:  Why Don’t We Just solve Some Problems For a Change?

[1] Not everyone agrees that we lost the War on Poverty. See this article that considers both sides.