Liberalism, conservatism, Republicanism, and Democratism: these “ideologies” are so often and so easily discarded for the benefit of an organized group of political supporters that it isn’t reasonable to call them ideologies at all. When it comes to social benefits and burdens, only capitalism and socialism are consistent. Under capitalism you get what you earn, at least in theory, and those who believe effort and talent should be rewarded, and incentives are required to get people to work on behalf of others, can agree with that. Under socialism you get what you need, at least in theory, and those who believe we are all one human family can agree with that. In addition to what you earn in the marketplace and what you need at home, however, there is another justification for obtaining public benefits – what you’ve got. All too often, increasingly often, public benefits are services are provided to those who already have them, because they already have them. Even as others, who have greater needs, are denied. Even as others, who have earnings that are taxed to pay for the benefit, are also denied.
Allocating benefits to those that already have them, because they already have them, is feudalism. It flies in the face of American ideals of equality and equal opportunity. Even so, feudalism is increasingly popular in a country where most people have “made it” and have stopped worrying about those who have not. Increasingly common everywhere, feudalism is especially common in the State of New York, its national capital, in part because feudalism is what liberalism has devolved into.
In part, the rise of feudalism is the flip side of the failure of the “thin end of the wedge” strategy. Ideological liberals might prefer to complete the march to make a non-universal benefit universal, while ideological conservatives might prefer to roll such benefits back to nothing. Politically, however, it is easier for both to compromise by maintaining benefits for those who already have them, while denying access to future recipients. That way, the Democrats retain the loyal votes of their grateful existing beneficiaries, and Republicans avoid the opposition of better off people with a greater sense of entitlement.
Again, public and publicly subsidized housing is the best example. In the late 1950s and early 1960s, so much public and subsidized housing was built in New York City that, combined with a burst of private construction in advance of a zoning change, the city’s housing market nearly collapsed due to excess supply. Since the mid-1970s, however, very few new public and subsidized housing units have been built. In most cases, initial occupants have continued to occupy the “affordable” housing existing stock, even as others who are worse off lack affordable housing options. That is, perhaps, an unavoidable result of a shift in policy. In many cases, however, the new occupants of public housing and subsidized Mitchell-Lama buildings are the children of existing occupants. They know how to get on the waiting lists, keep their incomes low enough when applying (in the case of Mitchell-Lama, by applying during college), and get in.
New York City’s housing stock is much older and more compressed than that of the nation as a whole. In the United States, two-thirds of all housing units have three or more bedrooms; in New York City, only one-third are that large. This makes the city’s housing market difficult and expensive for families with children, especially low- and moderate-income families, who often live cramped in two-bedroom, one-bedroom, or even studio apartments. Those living in public and subsidized housing, however, are not asked to move to smaller apartments once their children are gone and their space needs fall. In the early 1980s then-Mayor Koch proposed asking such empty nesters to move to smaller units, with a moving subsidy, to make room for families. That proposal was almost instantly shot down. Those subsidized units, their occupants said, were theirs. But the units aren’t “theirs” based on what they have “earned,” because they aren’t paying market rents. And they aren’t “theirs” based on “need,” because objectively others need them more. The city’s scarce larger housing units, even those controlled or subsidized by the government, are allocated based on feudal tenure, to those that already have them.
The eligibility rules of the nation’s means-tested benefits include regulations that, in effect, base how well off one should be, in part, on how well off one has been. People who, from a capitalist perspective – what they earn – and a socialist perspective – what they need, are equal can end up living very different lives while receiving public benefits.
Medicaid and Food Stamps, for example, permit recipients to receive benefits while owning a house of any value and one car per adult, also of any value, if used for work or school. Money saved in pension plans, such as 401K plans, is also exempt from consideration, at least for food stamps. Retirement plans, home equity, and the value of motor vehicles accounts for the vast majority of household wealth accumulated by the vast majority of all but the wealthiest Americans. Therefore, a middle income or affluent household, one that has lost its source of employment earnings and used up its unemployment benefits, could theoretically receive Medicaid, food stamps, perhaps even welfare, all while living in a large, high amenity house, and driving one, two or even three late model cars. And it could emerge from such a difficult time, after eventually securing new employment, with all of its wealth still intact – with home equity to borrow against to finance college, and funds still in place to finance a comfortable retirement. Throughout its time receiving public benefits, and after, such a household would be much better off than a working poor family with the same income, or even a higher income.
Equal treatment for everyone, even those in unequal circumstances, is hard to argue against. Middle-income and affluent households are the people who pay the most into the system in taxes, so why would it be fair to force them to sell their homes, leave their communities and friendships, lose their retirement savings, and have their children leave their schools, rather than call on the assistance of the society that they themselves have been supporting? Equal benefit in a time of need is, by my standards, a fair deal for the working poor since they pay less in even in their better years, yet receive the same benefit when in need.
In the wake of the anti-welfare crusade, however, the availability of public benefits to those who are not poor seems hypocritical according to the principles of its proponents. Many of those proponents have asserted moral objections to providing aid to those who are poor, but have been silent on aid to those who are not. Welfare reformers have, as a goal, directing the poor away from any dependence on any public benefits. In the 1990s, as the number of people on “welfare” (as traditionally understood) fell, the number of people receiving food stamps and Medicaid fell as well, as states and localities used administrative barriers and obstacles to push people off the rolls. In fact, under the 1996 welfare reform act legal, working immigrants were denied such benefits as a matter of law. It is no surprise, therefore, that by the end of the decade a substantial share of those receiving such benefits were not poor, and a substantial share of those who were poor were not receiving the benefits. The “social safety net,” therefore, has multiple levels, based on where one was when one started to fall – not based on where one would be absent public assistance.
If middle-income people were forced to sell their homes, cash in their retirement savings, sell their automobiles, and live off the proceeds before turning to the government for help, they could eventually be forced to move into the same neighborhoods where many other Americans, including working Americans, live today. Bankruptcy laws, as well have acted to keep those who are in middle class from falling into poverty due to financial reverses, by allowing them to keep their homes. The new bankruptcy law may change that, but expect a big political reaction if it does on a large scale. The response to the mortgage disaster will be interesting. Any bailout prior to foreclosure and re-sale at a lower price will be bailing out investors, not homeowners, particularly those who do not yet have homes and will have the government working to keep the price inflated.
Poor Americans, if they suffer financial reverses, may very well end up on the street because they don’t have any accumulated wealth, whether exempt from benefit formulae and protected in bankruptcy or otherwise. Many of these Americans are kept out of middle income communities by zoning laws, which prevent single-family homes from being subdivided into affordable apartments in response to free market incentives.
The different levels of safety net, therefore, include far more than the personal wealth one may exempt when qualifying for benefits, and therefore one’s personal standard of living. The ability to own or rent a home in a particular place carries with it all kinds of social “quality of life” benefits that come with that place: educational opportunities, recreational amenities, even personal safety. Employment opportunities, as well, are more limited for those who live in communities where there is little business activity, and who do not have an automobile to take them elsewhere. If more Americans thought there was a chance that they could end up living in a poor community at some point in their lives, then perhaps there would be more concern about what life in those communities is like.
The hostility directed toward those on the lower rungs of the “social safety net,” combined with acceptance and support for better off people who receive benefits in a time of need, reveal the philosophical foundation of social policy today. Maintaining the poor in relatively comfortable poverty, rather than severe deprivation, is thought to be bad public policy. Advancing the poor out of poverty is thought to be an individual, not a social, responsibility. Preventing the affluent from falling into poverty when illness, disability, or unemployment strikes, however, is considered an essential role of government. Even better off people who have made bad choices, which as a result of the recent housing and home equity cash out boom there will be many. Very, very many.
In fact, the government has started to create new forms of public benefit with eligibility based entirely on the standard of living one had in the past. Take the federal Trade Adjustment Assistance Reform Act of 2002. It included tax benefits and direct subsidies to ensure the continuation of health insurance for people who claim to have lost their jobs, and their health insurance, due to free trade. Such people generally work in the shrinking, traditionally unionized, high-paid, high-benefit manufacturing sector. When factories close and workers with pre-existing health conditions, or who have families with pre-existing health conditions, lose their jobs, real hardship may result. They often have to find employment in companies and industries where pay is lower and health benefits are uncommon, such as the retail and service sectors, and find the cost of purchasing health insurance on their own to be prohibitive.
Why is it fair, however, for such people to receive subsidized health insurance while those who lose their jobs for other reasons, such as changing consumer tastes, the rise and fall of individual companies, industry trends, and technology, do not? In the early 1990s, New York City suffered a crushing economic downturn as advancing information technology – voice mail, word processing, electronic data interchange – allowed financial companies to either eliminate clerical jobs or outsource them to lower cost parts of the United States (like North Dakota) and eventually to lower wage countries (including those as far away as India). The employment loss among “pink collar” clerical workers, and the middle managers that supervised them, was in the hundreds of thousands. As my wife, a bank examiner, traveled from bank to bank during the period, she inevitably found that the staff she had interviewed a year or two earlier had all been fired, replaced by machines or by lower paid staff, without health benefits, elsewhere. None of these workers were offered special benefits to replace the health insurance they lost.
And what about the working poor people, and their self-employed bosses, who never were able to afford health insurance to start with, and never received public benefits? Why require them to pay additional federal, state, and local taxes to allow others to continue to receive benefits, at public cost, that they never had?
From a capitalism perspective, those “others” haven’t “earned” health insurance to a greater extent than those who are now, based on the judgment of the free market, in the same circumstances. From a socialist perspective, their “needs” are no greater. What is the underlying principle that provides some with benefits but not others? The answer is “feudalism” – the allocation of privileges and benefits by right of tenure — a growing but unspoken and unacknowledged justification for all kinds of public policy outcomes in the United States. In case after case the government, with the power to compel people to do what they do not wish to do, is using that power to make the less well off even less well off, the less influential even less influential, the less secure even less secure – all while protecting the better off from the consequences of free choice in the marketplace, or even the consequences of their own decisions.