Ezra Klein of The New York Times writes about poverty and the American economy:
Iām 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 leastĀ 25 Republican governorsĀ ā andĀ one Democratic governor [the one in Louisiana] ā to announce plans to cut off expanded unemployment benefits early. Chipotle said that it would increase prices by about 4 percent to cover the cost of higher wages, prompting the National Republican Congressional Committee to issue a blistering response: āDemocratsā socialist stimulus bill caused a labor shortage, and now burrito lovers everywhere are footing the bill.ā The [right-wing] outlet The FederalistĀ complained, āRestaurants have had to bribe current and prospective workers with fatter paychecks to lure them off their backsides and back to work.ā
But itās 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 werenāt yet jumping at the chance to return to poorly ventilated kitchens for $9 an hour, I was sent āA Guaranteed Income for the 21st Century,ā a plan that seeks to make poverty a thing of the past. The proposal, developed . . .Ā for the New Schoolās Institute on Race and Political Economy, would guarantee a $12,500 annual income for every adult and a $4,500 allowance for every child. Itās what wonks call a ānegative income taxā plan ā unlike a universal basic income, it phases out as households rise into the middle class.
āWith poverty, to address it, you just eliminate it,ā [one of the authors, Darrick Hamilton] told me. āYou give people enough resources so theyāre not poor.ā Simple, but not cheap. The team estimates that its proposal would cost $876 billion annually. To give a sense of scale, total federal spendingĀ in 2019 was about $4.4 trillion, with $1 trillion of that financing Social Security payments and another $1.1 trillion support Medicaid, Medicare, the Affordable Care Act and the Childrenās Health Insurance Program.
Beyond writing that the plan āwould require new sources of revenue, additional borrowing or trade-offs with other government funding priorities,ā [the authors] donāt say how theyād pay for it, [but] itās clearly possible. Even if the entire thing was funded by taxes, it would only bring Americaās tax burden to roughly the average of our peer nations.
I suspect the real political problem for a guaranteed income isnāt 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 didnāt 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. āPeople canāt reap the returns of their effort without some baseline level of resources,ā he said. āIf you lack basic necessities with regards to economic well-being, you have no agency. Youāre dictated to by others or live in a miserable state.ā
But those in the economy with the power to do the dictating profit from the desperation of low-wage workers. One manās misery is another manās quick and affordable at-home lunch delivery. āIt is a fact that when we pay workers less and donāt have social insurance programs that, say, cover Uber and Lyft drivers, we are able to consume goods and services at lower prices,ā Hilary Hoynes, an economist at the University of California at Berkeley . . .Ā
This is the conversation about poverty that we donāt like to have: We discuss the poor as a pity or a blight, but we rarely admit that Americaās 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 (āWhy should I have to pay for someone elseās laziness?ā) or tough-minded paternalism (āWork is good for people, and if they can live on the dole, they wouldā). But thereās 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 canāt 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 naĆÆve as to believe near-poverty and joblessness to be a comfortable condition or an attractive choice.
Most Americans donāt think of themselves as benefiting from the poverty of others, and I donāt think objections to a guaranteed income would manifest as arguments in favor of impoverishment. Instead, we would see much of what weāre 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 canāt fill open roles rather than for the workers who had good reason not to take those jobs. These would reflect not Americaās 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. Weād 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. āProgressives donāt like to talk about this,ā he told me. āThey want this kumbaya moment. They want to say equity is great for everyone when itās not. We need to shift our values. The capitalist class stands to lose from this policy, thatās unambiguous. They will have better resourced workers they canāt exploit through wages. Their consumer products and services would be more expensive.ā
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 isnāt among our priorities.
āUltimately, itās about us as a society saying these privileges and luxuries and comforts that folks in the middle class ā or however we describe these economic classes ā have, how much are they worth to us?ā Jamila Michener, co-director of the Cornell Center for Health Equity, told me. āAnd are they worth certain levels of deprivation or suffering or even just inequality among people who are living often very different lives from us? Thatās a question we often donāt even ask ourselves” . . .Ā
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