Reality and Welfare Reform
BROCKWAY, GEORGE P.
The Dismal Science REALITY AND WELFARE REFORM BY GEORGE P. BROCKWAY The giveaway of Senator Daniel Patrick Moynihan's new Family Security Act—aka welfare reform—is its cost. I don't mean...
...It brings to mind Moynihan's first attempt at welfare reform which came when he was Richard M. Nixon's Domestic Affairs Adviser...
...I was astonished when, in the real world, I saw my first BX cable, and I remain skeptical of that sort of job training unless it is done on the job...
...Instead of the creative programs of the New Deal, the new scheme has its workfare, something Ronald Reagan wishes to be remembered for...
...I am not making any of this up...
...What will they be paid for this work...
...so let's just say that we'll have even more inflation...
...Everyone else, including more liberal (if they don't mind my using the word) Republican governors who will have to administer it, apparently hopes to repeal the provision either because of its negative cost effectiveness or because of its meanness...
...This is one feature of the bill insisted on by President Reagan and feverish-eyed Republicans like Senator OrrinG...
...Even if the JOBS training program should succeed beyond all rational expectations, even if the trainees could then be successful in finding work that would not (one of the requirements) displace anyone already working, we would have to head them off at the pass...
...If you have merely glanced at journalistic reports of the thoughts of our mainstream economists, you may think that when they talk about 6 per cent of the work force being unemployable, they are saying all those millions are too little educated, too stupid, too sick, or too pregnant...
...published a set of state guidebooks that is still unequaled...
...Does anyone suppose they don't know all that...
...Assuming we believe the unemployment figures, we already have too many people working for our own good...
...So I'll tell you...
...In 1987, something more than 60,000 corporations went bankrupt...
...We've seen the solution in action—but again my long memory probably misleads me, for hardly a man seems to be alive who remembers the famous days and years of the New Deal...
...The record supports his judgment...
...The price system is not simply what the stickers read in the supermarkets or how the bidding goes in the grain pit in Chicago...
...It counts all the millions who worked for the CCC, NYA, WPA, and the rest of the so-called alphabet-soup agencies as unemployed...
...but the real friction results from business coming and going...
...It's also hard lo imagine that the puny budget will make much of adent in the problem...
...Which approach was the really wasteful one...
...No one (except the fathers) can object to that, especially since it may persuade some to stay home with their families and thus prove rewarding all around...
...Moreover, our wartime experience demonstrates that the so-called First New Deal would have been a lot more successful if it had spent more, not less...
...Everyone knows, of course, that this was impossibly expensive and wasteful...
...But the point is that enabling millions of people to contribute to thecommon weal and to maintain their self-respect cost only 10 per cent more than doing nothing...
...He simply doubted that the improvements would ever come...
...They are speaking of friction in the economy—that is, time lost while workers are between jobs...
...I don't mean that the cost is to be given away...
...As I have previously quoted Disraeli, there are lies, damned lies, and statistics...
...There is all the seasonal unemployment—clerks and warehousemen let go after the Christmas rush, farm workers between seasons, people laid off in model changeovers...
...For my pan, I become depressed when I hear vocational education touted as a panacea...
...Yes, I know that theplan isn't intended to do anything about poverty, isn't meant to help the working poor, isn't supposed t ? shelter the homeless or nourish the ill-fed, has nothing to do with improving or expanding medical services...
...Our present price system will be relatively stable so long as there are 6 per cent unemployed or underemployed...
...The laudable aim of this program is to get people off the welfare rolls and into regular employment where they can be self-supporting and self-respecting...
...It's hard, therefore, lo be against more education...
...Everyone else knows that the New Deal failed...
...Hatch of Utah...
...it is the fault of thesystem and its ethics...
...It's no secret...
...Nevertheless, they totaled over $36 billion...
...He was well aware of Voltaire's dictum that the best is the enemy of the good, and he understood perfectly the argument that the benefits could be improved once the law was in place...
...I'm not aware that we have been without inflation since World War II, except for one year in President Harry S. Truman's second term, and one year in President Dwight D. Eisenhower's...
...Over the past several years, for example, AFDC payments have lost a good third of their value because of inflation...
...We've heard about our illiteracy rate and our inability to do simple arithmetic and our ignorance of our government and of history...
...If that was unemployment, we could stand a bit more of it...
...Since this provision does not take effect until 1994, it is a fair guess that New York's Democratic Senator Moynihan, among others, intends to try to repeal it after the Great Veto Threatener leaves the White House...
...As for the workfare amendment, it has already, in this Democratic Senate, survived by a 41-54 vole an attempt to table (and so defeat) it...
...The requirement is that by 1994, one parent in every two-parent family (an institution the bill is supposed to be encouraging) that receives benefits must be made to work at least 16 hours a week in what is grandly known as the Community Work Experience Program...
...Mainstream economics assumes that the way the rewards of the economy are distributed is none of its business...
...You can't object to that, either...
...They built thousands of schools, libraries, post offices, hospitals, and dams...
...To be sure, $300 million was a lot more in those days than it is at present...
...The regulations covering JOBS are moderately complicated, and some of them are not nice...
...I had the pleasure and privilege of knowing George Wiley, who was a wise and humorous and dedicated man...
...We created it in the image of mainstream economics, and theresult is not altogether pretty...
...Will that send the stock market into a tizzy...
...There are all the customers' men dropped after a market crash, and all those who lose their jobs when business temporarily slows, and those whose jobs disappear when their companies relocate for tax reasons—or in search of cheaper labor...
...but I want to talk about something more fundamental...
...Ten per cent larger...
...The Pentagon gets budget boosts on top of generous estimates of inflation, but I've noi noticed any rush to rectify the AFDC situation...
...In fact, one of its charms for the radical Right is thai it is expected to reduce expenditures for public housing, Food Stamps, Medicaid and Aid to Families with Dependent Children (AFDC...
...And what was the last prewar New Deal deficit...
...If that $900 million is deducted from the total, we have $2.44 billion left, or $488 million a year for everything the bill promises to do...
...Will it make the mortgage rate so high that home ownership becomes an impossible dream even for two-earner Yuppies...
...For the past 15 years we have been passing by on the other side (see "The Golden Mean," NL, November 2, 1987), and it will take a whole lot more than JOBS, as well as something a whole lot different, to change direction...
...Everyone knows this figureis too low, but I'm not going to quarrel with it—at least not here and now...
...Nor would it be unbearable to have urban streets swept and suburban leaves raked...
...Now, the millions who worked for those agencies in fact worked and in fact produced goods for the common wealth, and were in fact paid for it...
...It taxed and taxed, and spent and spent, and elected and elected, and still, in 1939, on the eve of World War II, the unemployment rate was 17.2 per cent...
...They emphasize t hat a real effort is going to be made to force fathers to share in the support of their offspring...
...We must train these people to be punctual, we are told, and to work diligently and not goof off...
...The friction is not the fault of the workers...
...Well, you know, beggars can't be choosers...
...and gave courses in every subject imaginable...
...Workfare should not be confused with what the sponsors of the Family Security Act consider its heart and sinews: JOBS (for Job Opportunities and Basic Skills...
...The only noninflationary way of helping the poor entails fundamentally changing the price system, specifically and dramatically narrowing the chasm between rich and poor...
...That's not exactly what they mean...
...made a start on public housing...
...I mean that the low cost betrays the modest ambitions of the bill...
...We know businessmen complain that ihey have to weary themselves with excessive interviews to find competent workers...
...Where does that leave us...
...and I have yet to meet even a professor of economic history who is aware of how that 17.2 per cent lies...
...Or this way: It's about a third of the projected cost of the additional space shuttle they're building...
...Wecouldn't afford to have so few people unemployed...
...The estimated expenditure is $3.34 billion over five years...
...It's known as free enterprise...
...As I've said, I'm dubious about the training being offered...
...I have had occasion to observe a couple of for-profit training schools in operation, too, and I really don't think the answer is privatization...
...Then there are all the "efficient" mergers, which are efficient because they fire people...
...it is our creation...
...We are told that the unemployment rate has now fallen to 5.2 per cent...
...The solution is jobs...
...That's $668 million a year, which may seem like a lot of money to you, but works out to $20.62 —exactly twenty dollars and sixty-two cents—for every man, woman and child living in poverty in the United States of America...
...Anyone who believes that mainstream economists know what they're talking about will answer all those questions in the affirmative...
...And so on...
...This is a judgment call with which I beg to differ...
...Zero...
...I'm merely going to note that currently received economic doctrine, taught in practically all colleges and universities in the land, and I am sure accepted as gospel by large majorities of both houses of Congress, holds that full employment actually means 6 per cent unemployment...
...Perhaps my long memory misleads me here, yet I recall the junior high school shop where I learned to solder Western Union splices and to thread separate black and white wires through clay pipes set in the joists and studs of a mocked-up house...
...produced plays and concerts...
...Under our present price system, anything substantial you do for those at the bottom has to cause inflation...
...This is not quite like Marx' industrial reserve army, because the important point is that these people must be drastically underrewarded, whether they work or not, and that the next 10-15 per cent above them can't be treated much belter (the average income of the bottom quintile of our families is below the poverty level...
...If unemployment really falls any lower than that, the economy is expected to overheat, and we'll have inflation...
...helped bring electricity to the farms...
...He deserves to get his wish...
...It leaves us with a JOBS program that is a mirage or a hoax...
...And the system is not a fact of nature...
...Anyway, after training the welfare recipients are supposed to get to work, and I don't at all object to that...
...Few experiences can be more disillusioning and dispiriting than undergoing training for the kinds of jobs that don't exist...
...restored thousands of acres of forests...
...No doubt some such free spirits exist, and they will always be good for Presidential anecdotes...
...paved thousands of miles of highways and sidewalks...
...Indeed, the newspapers and the airways are full of ominous questions right now: Will the Federal Reserve Board raise the interest rate again to head inflation off at the pass...
...painted pictures...
...Other things can cause inflation, too, but really helping the poor is sure to do so...
...The summaries given the press naturally accent the positive...
...Most of the bankruptcies were very small...
...They've heard it all before, but they haven't seen much good come of it...
...So let's look at it this way: $668 million is 0.00015—or 15 thousandths of 1 per cent—of the current GNP...
...The summaries further emphasize education (not the same as workfare...
...They do classify many people under those headings, but they mean something else as well...
...The republic would collapse without silly acronyms...
...That ain't hay, and it accounts for a couple of million people thrown out of work...
...The foregoing account for the 6 per cent friction in the economy...
...Will it abort our slowly recovering foreign trade...
...Yes, the last budget of Herbert Hoover's Presidency (fiscal year 1933) was only $2.8 billion in deficit...
...The thing about mainstream economics is that it starts with the price system as given...
...Will it make it harder to reduce the deficit...
...The attempt was defeated by a combination of conservatives opposed to any form of welfare and liberals led by the late George Wiley of the National Welfare Rights Organization, who pointed out that the proposed benefits were lower than those then in effect...
...I'm sorry, but I've overstated thecase a bit, for the $3.34 billion includes a "workfare" provision that will cost $900 million...
...3.1 billion...
...Again there's misunderstanding (and some of the economists even misunderstand themselves), for they make it sound as though there are several million people out there whimsically flitting from job to welfare to another job for no good reason...
...It includes all prices, interest rates, rents—the works—and particularly and especially wage and salary scales...
Vol. 71 • November 1988 • No. 20
