Michael Lind, Penguin Random House 240 pages
Keep your hands off of my Medicare!
This was the rallying cry of an Obamacare opponent, made during a 2009 debate convened by South Carolina Republican Rep. Robert Inglis. Inglis responded by politely informing his constituent that Medicare services are actually “provided” by the government. Others were not so gentle. The slogan was adopted by progressives as a symbol of the invincible ignorance that the poor have when they rebel against the government’s generosity. Libertarians soon joined the fray.
Michael Lind, author of Hell To Pay and The American Conservative contributor, argues that the mockers, who were inspired by the bipartisan conspiracy to suppress American wages in hell to pay are wrong. The “government-hands” guy had a profound understanding of the nature and purpose of Medicare, as well as other mutual-aid programs from midcentury. Progressives and conservatives both see such programs as state charities or cash assistance. The left celebrates this, while the right condemns it.
The New Deal generation saw these programs as earned benefit, which accrued as workers made payroll contributions. This was an extension of the earlier mutual-aid group created by workers in order to protect themselves from the chaos of industrial capitalism. With programs such as Medicare and Social Security the government took over administration of mutual aid in order to encourage widespread participation. The funds belonged by right to the labor force.
Why was it important for New Dealers to make this distinction? FDR said to one of his advisors that “we put these pay-roll contributions there to give contributors a moral, legal, and political right…to collect their benefits.” No politician will ever be able to scrap my social insurance program if those taxes are there. On the other hand, unconditional handouts funded through general taxes, as advocated by today’s liberals, would be susceptible to the whims and fancies of the political elite. Lind, with his disdainful attitude towards elite certainty, writes that FDR, far from mocking those who say, “Keep your government’s hands off my Medicare,” would be delighted.
Mutual-aid programs such as Medicare and Social Security – you should never refer to them as “entitlements”.– went hand-in-hand, in the immediate years after World War II, with a strong degree of economic and political power amongst workers. This led to mass prosperity. More recently, neoliberal capitalism–characterized by deregulation, financialization, and, above all, the ruthless demolition of barriers to the free movement of capital, goods, services, and people–has steadily eroded labor’s power. It has yielded what Lind describes as a low-wage/high-welfare model whose harms ramify far beyond the economy.
We have an economy that produces working poor people. Millions of Americans are unable to survive without the help of government. Numerous statistical snapshots show the reality of low wages. Four out of five food stamp families include at least one employee, and half of married food stamp families have two. Or the fact that one quarter of all workers, and half of those working in fast food, rely on public welfare for their survival. My go-to statistic (not cited by Lind), is that nearly half of American adults struggle to find $400 to cover an emergency expense.
This brings us to the “high-welfare” half of the model. Lind clarifies that “high welfare” does not mean the United States is a country with a generous safety net. These programs are based on means testing and are very conservative. Instead, “high welfare”, means that public assistance is a significant part of the incomes for the working poor. (Typically, half of their incomes, according to Lind’s estimate).
Taxpayers pay for these programs, which puts to rest the idea that market forces will magically find the best wage for each worker based on his marginal productivity. Lind shows that wages are not an indicator of bargaining power but rather a measure of public policy. Current public policy subventions low-wage and high-welfare economies at the bottom of the labor ladder. Or, as Lind writes in a rage-filled tone:
The poorest workers, who lack representation from organized labor, cannot survive on wages below poverty. As a condition for receiving public assistance, they are forced to accept any job that is available, even if it pays poverty wages. The low-wage jobs create welfare dependency and the welfare state encourages low-wage employment …. Some workers are trapped under the control of both exploitative employers, and punitive welfare bureaucrats for the rest of their lives. Their serf-like position, which is incompatible with pride and self-reliance, can even be passed on to their descendants.
The evisceration and destruction of unions in the private economy was not the inevitable outcome of globalization or automation. Lind’s The New Class War and this book confirm that a free trade and immigration regime, which allows corporations to arbitrage wage, tax and regulatory regimes across states and countries, was not inevitable. The American elite chose the nightmare order, sometimes against the wishes of both party voters.
Lind, however, refuses to succumb to despair. This is what makes him different from the deterministic, gloomy socialists and the nostalgic right. Hell To Payis full of fresh, but realistic, ideas on how to restore the power of the working class in the 21st Century. From a careful diversification of the way we think about trade (instead of the current one size fits all universalism), to the restoration wage boards, and the tripartite corporatism of government, labor and capital. His cheery practical-mindedness recalls the best of the Hamilton-Lincoln-FDR-Eisenhower tradition of political economy, to which Lind has devoted a career. Michael Lind is a hero because he has kept the flame of this honorable tradition.
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Dear Readers: I will be taking four weeks off to complete my next book proposal. Please consider purchasing my upcoming book, Tyranny, Inc., which will be released by Penguin Random House on 15 August. This book is about coercion, which permeates our society as consumers and workers.
In a series of original reports, I trace the rise of this privatized tyranny, from wage and schedule precarity to Wall Street’s destructive takeover of real economics, to the game of corporate bankruptcy in order to deny justice for harmed customers. I also show how Americans can fight back by restoring the midcentury traditions of class compromises and countervailing powers. Your support means a lot to me because many of the themes in the book were first developed in this column. Pre-order here.
