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Americans are poor because we want it that way


Something I’ve written about before is that we simply haven’t adjusted yet, psychologically and politically, to the fact that modern developed economies produce so much wealth that getting rid of poverty should be a fairly minor distributional problem, that merely requires a social commitment to getting rid of it.

Ezra Klein touches on this:

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. . . .

As it happened, just as I was watching Republican governors try to immiserate low-wage workers who weren’t yet jumping at the chance to return to poorly ventilated kitchens for $9 an hour, I was sent “A Guaranteed Income for the 21st Century,” a plan that seeks to make poverty a thing of the past. The proposal, developed by Naomi Zewde, Kyle Strickland, Kelly Capatosto, Ari Glogower and Darrick Hamilton for the New School’s Institute on Race and Political Economy, would guarantee a $12,500 annual income for every adult and a $4,500 allowance for every child. It’s what wonks call a “negative income tax” plan — unlike a universal basic income, it phases out as households rise into the middle class.

“With poverty, to address it, you just eliminate it,” Hamilton told me. “You give people enough resources so they’re not poor.”

But where will the money for this come from?

The team estimates that its proposal would cost $876 billion annually. To give a sense of scale, total federal spending in 2019 was about $4.4 trillion, with $1 trillion of that financing Social Security payments and $1.1 trillion supporting Medicaid, Medicare, the Affordable Care Act and the Children’s Health Insurance Program.

Beyond writing that the plan “would require new sources of revenue, additional borrowing or trade-offs with other government funding priorities,” Hamilton and his co-authors don’t say how they’d pay for it, and in our conversation, Hamilton was cagey. “There are many ways in which it can be paid for and deficit spending itself is not bad unless there are certain conditions,” he said. I’m less blasé about financing a program that would increase federal spending by almost 20 percent, but at the same time, it’s clearly possible. Even if the entire thing was funded by taxes, it would only bring America’s tax burden to roughly the average of our peer nations.

“Possible” is a severe understatement. $876 billion represents less than the growth in the personal fortunes of America’s 651 billionaires over the course of the 16 months of the COVID pandemic. Not, mind you, anything like those fortunes themselves, but merely the growth in the personal fortunes of 651 people over the past year and a third. Simply slapping a modest annual wealth tax on the increased annual wealth of obscenely rich Americans would by itself pay for somewhere between a third and half of the cost of eliminating poverty in this country, via straightforward wealth redistribution. So why don’t we get rid of poverty by giving people without money money?

I suspect the real political problem for a guaranteed income isn’t the costs, but the benefits. A policy like this would give workers the power to make real choices. They could say no to a job they didn’t want, or quit one that exploited them. They could, and would, demand better wages, or take time off to attend school or simply to rest. When we spoke, Hamilton tried to sell it to me as a truer form of capitalism. “People can’t reap the returns of their effort without some baseline level of resources,” he said. “If you lack basic necessities with regards to economic well-being, you have no agency. You’re dictated to by others or live in a miserable state.”

But those in the economy with the power to do the dictating profit from the desperation of low-wage workers. One man’s misery is another man’s quick and affordable at-home lunch delivery. “It is a fact that when we pay workers less and don’t have social insurance programs that, say, cover Uber and Lyft drivers, we are able to consume goods and services at lower prices,” Hilary Hoynes, an economist at the University of California at Berkeley, where she also co-directs the Opportunity Lab, told me.

Eliminating poverty — again, doing this is simply a policy choice — would make comfortable people slightly less comfortable, because they (we) would be thrust back to the same level of wealth they (we) had to endure ten or maybe twenty years ago. Things like food and transportation and personal services would be a little more expensive and a little less convenient for the non-poor, because there wouldn’t be poor people to exploit via economic terrorism.

And we can’t have that, because socialism makes the baby Jesus cry.

The $21 trillion American economy remains the whorechild of John Calvin and Ayn Rand, which means that about 50 million Americans wake up poor every morning, because we want it that way.

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