On the Biden CTC, Expert Endorsement Rings Hollow

Oren Cass September 28, 2021 - Family
RECOMMENDED READING
Family Feud: Child Allowance Edition
Family Financial Security: Senator Mitt Romney on the Right’s Fight to Support Our Most Important Institution
American Institutions and the American Family: A Conversation with Yuval Levin

A sure sign that the Child Tax Credit (CTC) should not become a permanent program of unconditional cash payments is that its advocates refuse to say their proposal out loud. President Biden pitches the policy as a “significant tax cut to America’s working families.” The White House webpage dedicated to raising awareness uses the phrase “working families” five times in the first three paragraphs and then features four illustrative infographics, all of working families already above the poverty line.

Now, a group of 448 economists has issued an open letter, urging congressional leaders to make permanent the CTC’s one-year expansion. But the letter makes no mention that these payments would be entirely disconnected from work. Either the economists are unaware of this reality, or, more likely, they’ve chosen to make tendentious claims in its face.

“Expanding the CTC would dramatically reduce childhood poverty,” the letter declares, and “research shows that reducing child poverty improves” all manner of outcomes. But notice the sleight of hand in that two-part formulation. It’s not the CTC’s free-cash approach to poverty reduction that their research supports. In fact, five of the first six studies they cite concern Earned Income Tax Credits (EITC), paid only to working households with the explicit objective of rewarding work. The sixth concerns food stamps, a conventional safety-net program very different from unconditional cash handouts.

When stated plainly, the chain of logic is rather less sophisticated than the economists might hope their citations imply: Children raised in poverty fare worse than children raised in better-off households. Giving households money so that their incomes exceed the poverty threshold will mean that fewer children are in poverty. Therefore, outcomes will improve. QED.

Continue Reading at Institute for Family Studies
Oren Cass
Oren Cass is the executive director at American Compass.
@oren_cass
Recommended Reading
Family Feud: Child Allowance Edition

The Niskanen Center’s Samuel Hammond and the American Enterprise Institute’s Scott Winship debate the case for a “child allowance.”

Family Financial Security: Senator Mitt Romney on the Right’s Fight to Support Our Most Important Institution

A conversation with Senator Mitt Romney about the future of family benefits in the U.S. and what it means for the right-of-center’s future.

American Institutions and the American Family: A Conversation with Yuval Levin

A robust discussion of how well American institutions are fostering the flourishing of American families, hosted by American Compass and Capita.

Keep the Child Credit Tied to Work

Oren Cass, Wells King September 14, 2021 - Family
Photo by Picsea on Unsplash
Recommended Reading
Americans Support a Generous Child Benefit Tied to Work
The Family Income Supplemental Credit
Put Working Families at the Front of the Line for Help

The Biden administration is trying to launder widespread support for emergency COVID relief into irreversible changes to the nation’s economic policy. Upon signing the $1.9 trillion American Rescue Plan (ARP) in March, President Biden explained that “everything in this package is designed to relieve the suffering and to meet the most urgent needs of the nation.” But within a week, he was celebrating that “this is the first time we’ve been able to, since the Johnson administration and maybe even before that, to begin to change the paradigm.” Fortunately, the American people are smarter than that, as their attitudes toward the expanded Child Tax Credit make clear.

Riding the wave of bipartisan enthusiasm for direct checks in response to the pandemic’s economic shutdowns, the ARP implements a one-year expansion of the Child Tax Credit: nearly doubling its value, offering payments monthly instead of at year’s end, and, most importantly, making all families eligible regardless of whether anyone in the household works. (Previously, as the term “tax credit” implies, the credit was paid only to families with taxable income, as a credit against taxes paid.) Just a few months into the “temporary” program’s implementation, Democrats are proposing to include a multi-year extension in their budget package, with proponents daring anyone to rescind their newly created entitlement.

Voters are nonplussed. Separate polls in July by Morning Consult and YouGov both found support for the one-year program but opposition to making it permanent. Now, American Compass has released the results of a more in-depth survey that shows both how little COVID has shifted the nation’s permanent attitudes and how badly the idea of unconditional, unending cash subverts American principles of reciprocity and self-sufficiency.

Our survey of 2,000 registered voters found top-line results similar to the other polls: 56% support at least the one-year expansion while 26% oppose even that; 36% favor a permanent expansion while 46% prefer only a temporary expansion or oppose it altogether. Democrats and Republicans had predictably partisan views, while Independents opposed the permanent expansion by 27% to 55%.

For those supporting permanent expansion, we asked whether they preferred it for “all families, regardless of whether they work to earn money” or “only for families that have at least one working adult.” After offering those options, only 28% of voters were left supporting permanent, unconditional cash. Among Democrats, support fell below half. White, college-educated Democrats were the only group where even 51% were in favor.

This helps make sense of the concerted effort to obscure the true nature of the policy. President Biden has infuriated progressives by avoiding any mention that families without earned income are eligible, while his administration struggles to get those families enrolled. The White House webpage dedicated to the program uses the term “working families” five times in the first three paragraphs. Four friendly infographics highlight what families with different income levels can receive, but the lowest-income example features two working adults with household income already above the poverty line. Even on “Child Tax Credit Awareness Day,” the president began his statement by calling his policy “a significant tax cut to America’s working families.”

Biden proudly touts that sending out checks will “cut child poverty in half,” but this argument is unpopular when Americans understand the premise. Our survey explained that the poverty-reduction claim came from counting the new government benefit as income and asked respondents their reaction. More than half rejected the Biden talking point and instead sided with the view that “reducing poverty means getting families to the point where they can support themselves.” Only one-third agreed that “if sending money to families raises their total income above the poverty line, the government is doing a good job reducing child poverty.” Working-class voters were least likely to accept the handout model of poverty reduction, and even among Democrats only 53% were supportive. Independents were nearly as committed to self-sufficiency as Republicans.

Voters aren’t being stingy; they just want to see a connection to work. Our survey found that increasing the credit’s size was far more popular than extending it to all families regardless of work status. We also asked how benefit eligibility should be calculated, offering three options: the current expansion’s unconditional formulation; the pre-expansion system in which the credit value cannot exceed the value of taxes owed; or an income-match formula that caps the credit value at a household’s total earnings the prior year, similar to Senator Josh Hawley’s Parent Tax Credit proposal.

No option garnered a majority. The unconditional option received 40% support, but 60% of Americans preferred some requirement that the family earn income itself: either the income-match (32%) or the status quo ante (28%). This places the median voter squarely in the camp supporting an expanded credit capped at household income. That option was the most popular one with working-class voters and Independents. Even among Republicans, the status quo option earned only 47% support, meaning that most preferred something more generous and the median Republican preferred the income-match.

In the upcoming budget debates, Democrats will argue that extending the Child Tax Credit expansion merely means continuing a popular program. They are wrong and must be called on it. But Republicans will find themselves on even weaker ground if they propose nothing in response but the old system, which provides a credit only against taxes paid and thus offers little for hard-working households with low tax liability.

What America needs, and what American voters want, is more creative policymaking that better supports families—including those who don’t earn enough to pay much in taxes—but always with the expectation that families receiving public support are also working to support themselves.

Click here to read the full survey report.

Oren Cass
Oren Cass is the executive director at American Compass.
@oren_cass
Wells King
Wells King is the research director at American Compass.
@wellscking
Recommended Reading
Americans Support a Generous Child Benefit Tied to Work

A significant opportunity exists for bipartisan cooperation on a permanent, expanded Child Tax Credit that maintains a connection to work.

The Family Income Supplemental Credit

This paper presents the case for a per-child family benefit that would operate as a form of reciprocal social insurance paid only to working families.

Put Working Families at the Front of the Line for Help

American Compass executive director Oren Cass argues that a policy that sustains people in joblessness is not ultimately anti-poverty.

Making It Easier to Make Ends Meet

Hannah Ketcham June 16, 2021
Photo via Unsplash.
Hannah Ketcham
June 16, 2021
Introducing the Edgerton Essays | Oren Cass Foreword to the Edgerton Essays | Chris Arnade A Quiet Destruction | Victor Davis Hanson The Relationships That Don’t Fit on a Spreadsheet | Mary Thompson On Family Policy, Proceed with Great Caution | Robin Taylor Making It Easier to Make Ends Meet | Hannah Ketcham “Family Policy” Should Include Caring for Maternal Health | Bianca Labrador Enabling Families to Support Each Other | MeChell Roache-Johnson Do They Even Know Who They Represent? | Angel Bernard Don’t Talk to Us Like We’re Idiots | Guy Stickney What I Wish Our Politicians Knew | Sheila Wilkinson Social Security Was Supposed to Be Secure | Nancy Merical Does Anyone in Power Notice When Government Services Fail? | Dorothy Ramsey COVID’s Toll on the American Dream | Ruby Nicole Day How Essential Are the ‘Email Job’ Caste? | Gord Magill Our Policies Are Failing Working Mothers | Kelly Nicole A Dream Achieved—Through Mere Luck | Peter Martuneac When Work Doesn’t Seem to Pay | Sasha Burns When Student Loans Pay for Nothing but Palm Trees | Kim Quillen The American Dream Isn’t Dead, It’s Just Misunderstood | Jeffery McNeil Where Do Parents Go When Public Schools Go ‘Woke’? | Joshua Clemmons Moving Beyond Surviving to Thriving | Ethel Hunter Conservation, Farming, and the Wisdom of Our Elders | Kelly Liddington Not Every Family Wants a Big Yard | Kendra Holten Conclusion to the Edgerton Essays | Patrick T. Brown
RECOMMENDED READING
Family Feud: Child Allowance Edition
Family Financial Security: Senator Mitt Romney on the Right’s Fight to Support Our Most Important Institution
American Institutions and the American Family: A Conversation with Yuval Levin

6 a.m. is much too early for this tired mama. But nonetheless, I hear that little pitter-patter of onesie-covered feet coming down the hall into our room. With a soft “Mom, can I have a banana?” my day begins, whether I’m ready for it or not. A few minutes later, my husband is out the door before the rest of us are finished eating breakfast so he can get a head start on one of his three jobs while we still have daylight.

I know our family is just like thousands of others who are doing everything they can to make ends meet and get food on the table for their little ones. We want to make sure our two little toddlers can eat healthy, organic food, ideally without breaking the bank, so we’ve started trying to raise our own food, and drive 30 minutes each way to the budget grocery store instead of the name-brand one in town. Everywhere we can, we try to be thrifty. We don’t go out to eat, we buy all of our clothes secondhand—heck, we even cut our own hair to save a little money.

But it still isn’t enough. We feel like we are drowning most days.

Why is that? Why is life so expensive? We make “too much” money to qualify us for food banks or government assistance, and yet where we currently are, in the “lower middle class,” doesn’t afford us much wiggle room to save money for our kids’ future, pay for child care, plan for retirement, etc.

We trim our budget down as much as we can, yet somehow still don’t have enough money to save up for that replacement car that we know we’ll need soon, or to buy plane tickets to visit our out-of-state family. And that’s not to mention the strain of health care costs: no one should feel scared to take their child to the ER because they are worried they can’t afford the bill before their deductible is met, yet that is reality for many.

Government assistance programs are in place for a reason and would be helpful if they were more accessible to families even just slightly above that magic number they established as the “poverty line.” But really, I’d love to be able to help bring in some extra income, but can’t afford to.

Isn’t that a funny concept? Daycare (that would allow us both to be contributing to society by working) is too expensive. We have no family in the area, so daycare or babysitters are our only option and we can’t afford it. So I stay at home, wishing desperately I could use the skills I went to school for to help provide for our family and give us a little more financial breathing room.

I don’t have grand solutions to offer politicians or demands that they make changes for me and other families like ours. I know a lot of families have it worse than us, and yet the cost of living still seems unaffordable. A bigger child tax credit might help, but I just wish politicians would be aware of how hard it can be to keep our family healthy, clothed, housed, and fed, and take our struggles seriously.

Their constituents are working three jobs to put bread on the table for their families, and still feel like they’re falling behind. Middle-class families shouldn’t feel like they can’t afford to make ends meet, and yet too many of us do.


Edgerton Essays are a project of American Compass and the Ethics and Public Policy Center, and feature the perspectives of working-class Americans on the challenges facing their communities and families and the debates central to the nation’s politics. If you or someone you know might be interested in contributing to the series, click here for more information.

Hannah Ketcham
Hannah Ketcham
Hannah Ketcham was born and raised in Nebraska, but now lives in rural Pennsylvania where she and her husband are raising their two small children along with chickens, goats, pigs, and rabbits.
Recommended Reading
Family Feud: Child Allowance Edition

The Niskanen Center’s Samuel Hammond and the American Enterprise Institute’s Scott Winship debate the case for a “child allowance.”

Family Financial Security: Senator Mitt Romney on the Right’s Fight to Support Our Most Important Institution

A conversation with Senator Mitt Romney about the future of family benefits in the U.S. and what it means for the right-of-center’s future.

American Institutions and the American Family: A Conversation with Yuval Levin

A robust discussion of how well American institutions are fostering the flourishing of American families, hosted by American Compass and Capita.

Unemployment and the Labors of Love

Amber Lapp August 10, 2021 - Understanding America
Photo by Sharon McCutcheon on Unsplash
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Gimme Shelter

As I was reading sociologist Sarah Damaske’s new book, The Tolls of Uncertainty: How Privilege and the Guilt Gap Shape Unemployment in America, I was struck by a realization: though I’ve spent a good deal of the past 11 years interviewing working-class young adults in Ohio, I have met relatively few who have received unemployment insurance (UI).

Instead, I more often hear stories of people being denied or disqualified from UI, like fast-food manager Gina who says she was denied UI in 2020 when her employer said her leave was voluntary (her children’s daycare closed during the pandemic). Or Mark, a contract laborer for a construction company, whose work dried up but who was ineligible for UI because of his status as self-employed. Without health insurance, work, or any other benefits, an injured knee that required surgery left him with thousands of dollars of medical debt he was unsure if he’d ever be able to pay.

For those I’ve interviewed who do qualify for UI, the system’s clunkiness often renders it unhelpful. Dan filed for unemployment after losing his job as a union stagehand. “I filed for unemployment, and as soon as it went through I got work. So, I didn’t even get an unemployment check.” For such low-wage workers, for whom a week without work can be the difference between a place to live and an eviction notice, but who can find new work relatively quickly in the service sector, the existing UI system is nearly irrelevant.

The unprecedented strain of the COVID-19 lockdowns and economic recession have only reinforced these challenges. Far from the intentions of its Depression-era origins, the existing UI system is not working for America’s most vulnerable workers. A July 2020 report from the Congressional Budget Office found that, among the unemployed, the least educated were the least likely to receive unemployment benefits “because a relatively large fraction of people in that group will not qualify for such benefits.”

Given this state of affairs, The Tolls of Uncertainty is a timely inquiry into our unemployment system, how it fails many Americans and exacerbates class divides.

Drawing on interviews with 100 unemployed Pennsylvanians, Damaske concludes: “Unemployment is an institution—like workplaces, families, or schools—that both generates and reproduces inequalities.” Benefits are calculated based on income, giving the most to those who make the most (and coincidentally those who are also most likely to have substantial savings and to get severance pay—typically middle-class men). Meanwhile, low-wage workers, many of whom were below the poverty line even while working full-time, receive benefits that plunge them further into the kind of poverty and debt out from which it is difficult to climb.

But particularly striking are the ways in which the working and middle classes navigate the rules and regulations of unemployment differently—and how this exacerbates inequalities. We see this especially as people are looking for work, and in the outcomes of their searches.

Some job-seekers took a “deliberate” approach. Three-quarters of the middle-class women and nearly half of the middle-class men, Damaske found, sought work “quickly and methodically,” as if it were a job itself. These job-seekers felt they had the right to be somewhat selective about the jobs they applied to in the first place and to turn down a job offer that was not suitable. Damaske alleges that this is a “bending” of the rules since Pennsylvania law requires that benefit recipients must accept almost any offer of “suitable work,” defined as “any work you are capable of performing.”

Meanwhile, others opted to “take time”—half of the middle-class men in Damaske’s panel—and intentionally stalled their searches, often saying that they first needed a break. Pennsylvania regulations require UI recipients to actively search for work and to apply for at least two jobs a week, but there are simple ways to bend the rules—for instance, by applying only to positions for which you’re unqualified and unlikely to be hired. Typical of this approach was Neil, a hotel manager and avid fly-fisherman who lost his job during prime fishing season and decided to enjoy his hobby before beginning a job search. “I’ve been enjoying the past few weeks of not having much responsibility because it’s been 25 years of more than most normal people would work, and the stresses. So, I’m like gosh, darn, it’s my time.” A more extreme example was Dean, who used his severance pay to take a vacation to Europe and then returned home to collect unemployment.

The working class, however, could afford no such luxury, save for a few who considered a career change or a return to school. Two-thirds of working-class men and a quarter of working-class women took an “urgent” approach to their job search. Though they were the most likely to be chronically unemployed, working-class men were also the most likely to begin applying immediately to every available job, whether it was something they’d done before or not, within a 45-minute commute (the state requirement).

Tight finances and a strict interpretation of unemployment law often mean that the unemployed working class feels that they cannot turn down a “bad job.” For example, Anthony, a skilled electronics technician whose work in the past had earned enough for his wife to stay home full-time, worked for a year stocking shelves at a grocery store making $8/hour because he felt obligated to accept any job he could find. Work is approached as a means to an end—the end being family—unlike the more middle-class tendency to extract high levels of meaning from work outside the home.

According to Damaske, such divergent attitudes and approaches underscore research findings that, from a young age, the middle class learns that rules can be bent—even broken—whereas the working class learns a more literal adherence to authority. And in the case of the unemployment system, those who adhere strictly to the rules are at a disadvantage. One year later, most of the middle-class men in Damaske’s sample, including those who had taken time, were employed and either maintaining or almost maintaining the lifestyle they had before the job loss. Some even found better jobs than they’d had before. Almost everyone else was falling behind.

But it is working-class women, in particular, who found themselves “doubly disadvantaged” by the financial instability of unemployment and, in Damaske’s account, “those pesky traditional gender beliefs” associated with parenting. While they often needed to work, working-class mothers were “diverted” and lacked the basic resources—like child care or transportation—to begin and sustain a job search. Poor and working-class women, particularly single moms, echo these challenges in my own interviews. Earlier this year, some told me that a monthly child benefit could help unemployed parents get back to work by allowing them to fix a broken vehicle, have gas money, or pay a babysitter.

But the barriers to employment can be less tangible for these women. One interviewee told Damaske that the thing preventing her job search was “just stress.” Unemployed women, she found, often describe “feeling guilty” and then connect that sense of guilt to their decisions about health and housework:

It was striking to me that unemployed women attempted to make up for losing their jobs by doing more household chores, but the unemployed men did not. The women and men did not simply talk about guilt differently. Rather, guilt was a regular part of women’s language surrounding their unemployment as well as their household labor and childcare, but it was almost entirely absent from men’s talk.

The unemployed women in Damaske’s sample were more likely than men to give up their health insurance, to go without necessary medical care or doctor’s visits, and to stop eating healthy foods. Women often described these decisions as a way to make sacrifices so that their children and partners didn’t have to.

I have no doubt that the experience of this pervasive “guilt gap” is a disproportionately female burden. Though the context is different, in the past year since the birth of my fifth child I became aware that I was living in a state of near-constant guilt, thinking that, no matter what I was doing, I was not doing enough. I’m thankful to Damaske for highlighting the guilt gap and giving a name to realities many women experience but that are rarely acknowledged or poorly understood.

And yet, self-sacrifice comes with the territory of motherhood. Tolls of Uncertainty, which can descend into tedious tit-for-tat accounting of household chores, ultimately loses this larger vision: “We must continue to interrogate the ideals behind expectations of mothering—specifically those that suggest mothers should place their families at the center of their lives and do anything for them.” What if many, women included, find aspects of these beliefs not pernicious but grounding?

The least we can do for moms who are sacrificing sleep and autonomy is to honor them by ennobling their sacrifices with some sort of shared cultural script that acknowledges the work they are doing. Without that, mothers risk living in the no man’s land between warring narratives—one that lionizes women’s paid work outside the home but dismisses unpaid work within it, the other that treats paid work as a potentially irresponsible distraction from a woman’s real work of raising children.

With this in mind, family policy conversations become, somewhat unexpectedly, relevant to the conversation about unemployment as one part of the solution. Damaske arrives at a similar conclusion, arguing that one important solution to the inequalities of unemployment is an expanded child care credit. While parents do need more support as they seek to combine work and raising children, I think that a solution that only helps families with all adults in the workforce disregards the preferences of the working class—even if they reflect “those pesky traditional gender roles.”

In my own interviews, I’ve found that working-class young adults are quick to distance themselves from the rigid gender roles in the home that they sometimes ascribe to their parents’ generation. “I’m not the barefoot and pregnant kind of guy,” one man said when describing why it wouldn’t bother him if his wife made more money than him, emphasizing that he sees himself and his wife as “equal.” At the same time, these couples are more likely to say that their ideal arrangement when kids are young is for one parent to stay at home—sometimes referencing their own memories of long hours in daycare as kids. An at-home parent—whether it’s mom or dad—is often seen as an obvious good, if one can afford it.

A more universal child allowance or some alternate family support would honor this diversity of preferences and, rather than being a disincentive to work, could increase labor force participation. Such supports could be complemented by reforms to help the UI system better meet workers’ needs—like greater clarity about rules and eligibility in the handbook and orientation for newly unemployed, increased federal support of career and technical education (Damaske notes that, among the working class, those with specialized vocational training were more likely to rebound after employment), and new benefit calculations that match minimum wage workers’ incomes at 100% and tier replacement levels for everyone else.

But such an approach requires a different set of values, a renewed appreciation of the work of the home as more fundamental than the marketplace, and of the family as, in Erika Bachiochi’s words, “that person-oriented island in a market-driven sea.” In the economy, a person may be moved about in the chess game of corporate mergers, or replaced in the chase for short-term profits, but in the family no person is interchangeable. And though the market may deal its impersonal blows, we ought not to lose sight of the personhood of the unemployed, nor the families to whom they are bound.

The Tolls of Uncertainty: How Privilege and the Guilt Gap Shape Unemployment in America, by Sarah Damaske (Princeton University Press, 336 pp. $28)

Amber Lapp
Amber Lapp is a research fellow at the Institute for Family Studies and co-investigator of the Love and Marriage in Middle America Project.
@AmberLappOH
Recommended Reading
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Farah Stockman’s new book, American Made: What Happens to People When Work Disappears, documents the closure and relocation of an Indianapolis Rexnord bearing plant to Mexico and Texas. Stockman, a New York Times reporter, was assigned to cover the Rexnord plant after then-candidate Trump tweeted about its pending closure and the scheduled relocation of a nearby Carrier plant to Mexico in 2016.

California Dreamin’

San Francisco’s mainstream media and political elite have tried to downplay such stories. But the trends are impossible to ignore. California is one of just a handful of states to see dramatic increases in its homeless population.

Gimme Shelter

Only the Rich Can Play is an uncomfortable reminder that no matter how much you may appreciate an idea’s intellectual lineage or conceptual clarity, no plan survives first contact with the enemy. It deserves inclusion on political science syllabi as a case study in how a billionaire’s idea can flow from a Davos brainstorming session to Washington’s halls of power and become the law of the land.

The Surprising Nordic Lesson for U.S. Welfare

Michael Jindra July 20, 2021 - Family
RECOMMENDED READING
Family Feud: Child Allowance Edition
Family Financial Security: Senator Mitt Romney on the Right’s Fight to Support Our Most Important Institution
American Institutions and the American Family: A Conversation with Yuval Levin

Cash payments to families with children will begin this month, thanks to the Biden administration’s stimulus that significantly enlarges and extends child benefits. This won’t end the debate over the best way to reduce poverty—it will only become more pressing as the benefit’s one-year expiration date approaches. Is this the best way to help struggling families? Some argue we are repeating mistakes of the 1960s–1990s AFDC (“welfare”) program that left many dependent on government aid, with little incentive to find work, while even some conservatives favor generous child allowances. As both sides look for a clear answer, European countries with strong welfare states provide some unexpected lessons that can point us toward bipartisan solutions.

Before the arrival of COVID-19, the U.S. was seeing growing numbers of people, especially men, dropping out of the workforce. Given the far-reaching effects of the pandemic, this will likely continue, even when labor demand is back to normal. The strong pull of streaming, video games, and social media will only make that trend worse. In this environment, one possible downside of cash payments is an additional incentive not to work.

Any program of cash payments should include a way to nudge people into work, as appropriate for individual situations. Unfortunately, as the high rates of labor force dropout in the U.S. attest, we do not have a good track record on that. The comprehensive welfare states of Western Europe, such as in Scandinavia, show a penchant for strong efforts to get people into work and off welfare. Many of these countries have generous child allowances, but underlying these generous welfare benefits is an assumption of everyone’s contributions to wider society, at least to the extent able, in what can be called “conditional reciprocity.” The prized equality of Scandinavia, for instance, has always been accompanied by an emphasis on duty: “Do your duty, claim your rights.

This philosophy creates stronger pressure on people to work than is common in the American system, where the government often hesitates to tell individuals what to do. The American conception of freedom means a stronger inclination to leave each other alone. The Nordic states, however, have two faces. One is the egalitarian, open face that takes care of everyone through welfare programs. But the other is a strong pressure for people to conform, and that is part of what makes their welfare system work, instills corporate responsibility, and keeps executive compensation from getting too high.

Non-Nordic countries can also have “tight” welfare systems. Switzerland puts strong pressure on people to work, and authorities may also ask other family members to support adult individuals before welfare payments kick in, much as in some Asian countries where family expectations to support needy relatives is strong. Three years ago, the Swiss gave permission to investigators to use GPS tracking devices to go after potential welfare cheats. The Netherlands is now taking stronger measures to ensure people on welfare are attempting to work, including sanctioning them if they don’t dress “appropriately” for work interviews. At the extreme, which I certainly won’t recommend, is China, which has an extensive community surveillance system to track welfare benefits and the deservingness of those who receive them.

Admirers of these strong welfare states often fail to note their rather intrusive aspects, as they often assume that aid is usually given without conditions. Yet a study of welfare policy around the world found that job search assistance plus “strict monitoring and sanctions” improved employment chances. Also, political support for welfare policies is often dependent on how much people (including welfare recipients themselves) trust that these programs aren’t abused. While unconditional aid would be simpler than conditional aid, a healthy social safety net requires some paternalism, much as we accept it in many other parts of our society.

A sense of reciprocity is key to making these programs work. In this sense, American Compass’s Oren Cass and Wells King are right to argue for policies that “should be understood not as a ‘child allowance,’ but rather as a form of reciprocal social insurance” for working people. This is crucial for maintaining political support for welfare programs.

Libertarian-leaning plans that replace social programs with unconditional cash payments suffer from this weakness. Sen. Mitt Romney’s early 2021 plan, for instance, replaced programs like TANF and SNAP with cash payments. TANF includes case managers, and while SNAP does not, it has some restrictions on what kinds of products to buy (though it could be doing more to encourage healthier eating and help lower the devastating impact that COVID-19 and other diseases have on marginalized populations). A recent major study also shows that it’s not cash payments that make the big difference in people’s lives, but relationships, especially parental, that stimulate child learning, personality, and behaviors and provide guidance for important life decisions.

Democrats will soon try to make these temporary child tax credits permanent. As that debate heats up, we should consider whether their current design is the best way enable people to enter and succeed in the labor force and avoid the problems we saw in AFDC between the 1960s and 1990s.

In a society with more intense consumer choices and entertainment options, greater care needs to be taken to help people into the workforce and to live healthy lives. European models of social welfare are built with this in mind, and incorporate it into their systems in various ways, formal and informal. Once we lose this Scandinavian-like balance of rights and responsibilities and shift to an entitlement mentality, the welfare state becomes more precarious. Case management or mentoring programs administered by the successor to the AFDC program, TANF, or, more often, by nonprofit agencies that do relational work such as coaching and mentoring, can help get people who struggle back into the cycle of reciprocity on which all societies are built. National service programs, if done well, can help in this process. Without the sense of reciprocity and the programs that go with it, strong welfare systems are in danger of withering.

Michael Jindra
Michael Jindra is a cultural anthropologist at Boston University whose current writing centers on the relationship between lifestyle diversity and economic inequality, including on how nonprofits help the poor.
@mjindra1
Recommended Reading
Family Feud: Child Allowance Edition

The Niskanen Center’s Samuel Hammond and the American Enterprise Institute’s Scott Winship debate the case for a “child allowance.”

Family Financial Security: Senator Mitt Romney on the Right’s Fight to Support Our Most Important Institution

A conversation with Senator Mitt Romney about the future of family benefits in the U.S. and what it means for the right-of-center’s future.

American Institutions and the American Family: A Conversation with Yuval Levin

A robust discussion of how well American institutions are fostering the flourishing of American families, hosted by American Compass and Capita.

Why Do Libertarians Support User Fees but Not a Family Wage?

Michael Lind July 8, 2021 - Labor
RECOMMENDED READING
Family Feud: Child Allowance Edition
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American Institutions and the American Family: A Conversation with Yuval Levin

If there is one thing that libertarians, free-market conservatives, and even many center-left neoliberals agree on, it is the logic of paying for highways and other forms of infrastructure out of user fees rather than general taxes. This approach, they argue, is both fairer and more efficient: fair because it ensures those who use the infrastructure pay for its costs, including long-term maintenance and repair; efficient because the amount spent on infrastructure will correspond to users’ willingness to pay.

This same logic should apply to ensuring that workers earn a family-supporting wage. Wages are to workers’ output what user fees are to highways and toll bridges. The benefits from the labor of most workers in the private sector go entirely to the customers who purchase the private, excludable goods or services that the workers provide, not to the general public.

Logically, then, libertarians who want to prevent infrastructure users from free-riding on taxpayers who do not use the infrastructure should also insist that the consumers of private goods and services pay prices, and employers pay wages, that incorporate all of the costs of the worker who provides the good or service. This would include occupational training (the equivalent of installation), regular wages high enough to pay for day-to-day living expenses (the equivalent of operating expenses) and enough extra to pay for purely private health care and to save for an adequate retirement based on purely private savings (long-term maintenance).

Contemporary libertarians and neoliberals often call themselves “classical liberals.” But two of the original classical liberals, Adam Smith and David Ricardo, took precisely the view that I am describing. They thought that customers and employers, not the general public, should pay for all of workers’ living costs.

If wages were too low, Smith worried that workers would not be able to support themselves as individuals, much less support their families. The result would be social chaos:

The lowest class being not only overstocked with its own workmen, but with the overflowing of all the other classes, the competition for employment would be so great in it, as to reduce the wages of labor to the most miserable and scanty subsistence of the laborer. Many would either starve, or be driven to seek a subsistence either by begging, or by the perpetration perhaps of the greatest enormities.

An alternative to starvation, begging, crime, and revolt was public welfare, which had existed for centuries in Britain in the form of the Poor Laws. But Smith denounced the punitive nature of the poverty relief system of his day: “There is scarce a poor man in England of forty years of age, I will venture to say, who has not in some part of his life felt himself most cruelly oppressed by this ill-contrived law.” None of these evils would exist, Smith believed, if employers paid adequate wages.

Ricardo agreed. He supported reductions in spending on poverty relief on the grounds that taxes to maintain the poor on welfare would absorb money that could otherwise go into job-creating investment and wages. What distinguishes Ricardo from contemporary libertarian and conservative advocates of welfare cuts was his assumption that wages would rise, not fall, if employers (and customers) had to pay the full price of “maintenance” for a worker.

In defining the full price of labor, Smith and Ricardo were both far more generous than today’s free marketeers. Both took it for granted that an adequate wage was a family wage that could pay for a breadwinner and a non-working parent and children—not one that paid only for “the most miserable and scanty subsistence of the laborer,” in Smith’s words.

As Smith observed, “A man must always live by his work, and his wages must be at least sufficient to maintain him. They must even on most occasions be somewhat more, otherwise it would be impossible for him to bring up a family, and the race of such workmen would not last beyond the first generation.”

In addition to thinking in terms of breadwinner wages sufficient to maintain entire working-class families, genuine “classical liberals” like Smith and Ricardo also insisted that an adequate wage was defined by standards of comfort in particular countries, not by physiological minima for survival, like 1200 calories a day.

Contemporary libertarians and free-market conservatives love to point out that the poor in America are better off in absolute terms than the poor in developing countries or the affluent in earlier historic eras. In America many poor people have phones, color TVs, and cars! What are they complaining about?

Both Smith and Ricardo rejected this argument. They defined poverty in relative, not absolute terms. Here is Smith in The Wealth of Nations:

By necessaries I understand, not only the commodities which are indispensably necessary for the support of life, but whatever the customs of the country renders it indecent for creditable people, even of the lowest order, to be without. A linen shirt, for example, is, strictly speaking, not a necessary of life. The Greeks and Romans lived, I suppose, very comfortably, though they had no linen. But in the present times, through the greater part of Europe, a creditable day-laborer would be ashamed to appear in public without a linen shirt, the want of which would be supposed to denote that disgraceful degree of poverty which, it is presumed, nobody can well fall into without extreme bad conduct. Custom, in the same manner, has rendered leather shoes a necessary of life in England.

Ricardo agreed with Smith that relative poverty and social custom, not absolute poverty, was the measure of an adequate minimal family wage. In chapter five of On the Principles of Political Economy of Taxation (1817) Ricardo wrote:

It is not to be understood that the natural price of labor, estimated even in food and necessaries, is absolutely fixed and constant. It varies at different times in the same country, and very materially differs in different countries. It essentially depends on the habits and customs of the people. An English laborer would consider his wages under their natural rate, and too scanty to support a family, if they enabled him to purchase no other food than potatoes, and to live in no better habitation than a mud cabin; yet these moderate demands of nature are often deemed sufficient in countries where ‘man’s life is cheap’, and his wants easily satisfied. Many of the conveniences now enjoyed in an English cottage, would have been thought luxuries in an earlier period of our history.

Although they pretend to be “classical liberals,” today’s libertarians and free-market conservatives reject both the family wage, which Smith and Ricardo supported, and their definition of poverty in relative rather than absolute terms. Moreover, instead of insisting that market wages be adequate to make public welfare and social insurance systems unnecessary, libertarians and free-market conservatives have no objection to the existence of a welfare state that allows employers to pay wages that are too low for a single worker—much less an entire family—to survive on without taxpayer subsidies in the form of means-tested or universal welfare programs of some kind.

This makes sense if you view the thinkers, pundits, and politicians of the free-market right not as authentic classical liberals, but as inconsistent and unprincipled lobbyists for employer and business interests. To my knowledge, not a single prominent libertarian in the 20th or 21st centuries has ever argued along with Ricardo that abolition of welfare would force employers to pay much higher market wages—high enough to cover a worker’s family and the worker’s own retirement. On the contrary, libertarians often support a safety net of some kind, including Milton Friedman’s negative income tax or Charles Murray’s universal basic income—but usually on the condition that the safety net be stingy and linked to work requirements that force people to work for undesirable jobs, including those that pay below-poverty wages. In other words, the conventional libertarian welfare state is a welfare state designed in the interest of employers. Its purpose is to privatize the benefits of low-wage work for employers and customers, while socializing the costs and minimizing the bargaining power of workers with employers.

As we have seen, classical liberals like Smith and Ricardo rejected the views of wages and poverty that are orthodox on the free-market right today. But there were 19th century precedents in Britain itself for today’s American libertarian orthodoxy.

In his classic tale “A Christmas Carol,” Charles Dickens includes a scene in which the rich businessman Ebenezer Scrooge is approached by gentlemen trying to raise money for charity. The fundraisers make the same argument about relative poverty made by Adam Smith and David Ricardo:

“At this festive season of the year, Mr. Scrooge…it is more than usually desirable that we should make some slight provision for the Poor and destitute, who suffer greatly at the present time. Many thousands are in want of common necessaries; hundreds of thousands are in want of common comforts, sir.”

Scrooge irritably rejects the Smith-Ricardo argument about “common comforts” defined by relative poverty:

“Are there no prisons?” asked Scrooge.

“Plenty of prisons,” said the gentleman, laying down the pen again.

“And the Union workhouses?” demanded Scrooge. “Are they still in operation?”

“They are. Still,” returned the gentleman, “I wish I could say they were not.”

“The Treadmill and the Poor Law are in full vigour, then?” said Scrooge.

“Both very busy, sir.”

“Oh! I was afraid, from what you said at first, that something had occurred to stop them in their useful course,” said Scrooge. “I’m very glad to hear it… I help to support the establishments I have mentioned: they cost enough: and those who are badly off must go there.”

Unlike Smith and Ricardo, and like the modern free-market right, Scrooge had no objection to paying adequate taxes or donations to support a minimal, punitive, pro-employer welfare state—the Poor Law, with its treadmills and workhouses—and prisons for the poor who turned to crime. For Scrooge, as for modern libertarians and free-market conservatives, the alternative favored by Smith and Ricardo—paying every worker a family wage that enables one earner to support a caregiver spouse and children at a standard of living considered decent by their national society—was unthinkable.

If you think I am being unfair, I direct your attention to an op-ed by Phil Gramm and Mike Solon that appeared just before Christmas, on December 23, 2020, in the Wall Street Journal: “In Defense of Scrooge, Whose Thrift Blessed the World.”

If there is to be a welfare state and you take the logic of Smith and Ricardo seriously, it should mimic what rational workers, paid a family wage according to the custom of the country, would create on their own through their mutual private efforts in ideal conditions.

Such a “mutualist” welfare state might look very much like today’s universal social insurance systems of Social Security, Medicare, and unemployment insurance. It makes more sense for rational and provident workers to pool their personal “maintenance and repair” money for old age, unemployment, and sickness in solidaristic mutual insurance schemes, paid for by more or less flat contributions, than to create millions of separate, prefunded savings accounts. If the economy is working, a pay-go system in which employed workers cross-subsidize the retired and unemployed and perhaps children and caregivers will be more reliable than a system of millions of individual accounts invested in different combinations of assets, often unwisely.

Making payroll taxes the fees for participation in the mutual social insurance club has the effect of being a work requirement that deters free riders. The fact that social insurance systems are not radically redistributive is a feature, not a bug. Their purpose is to ensure that billionaires as well as low wage workers who go bankrupt have a safety net, not to transfer wealth from the rich to the poor. In short, a contributory, universal, comprehensive, and compulsory social insurance system is the sort of thing that well-paid workers in a hypothetical Smith-Ricardo economy might set up themselves.

Means-tested, non-contributory welfare poses more of a challenge than universal, contributory social insurance. In addition to the goal of providing adequate short-term relief to individuals in distress, means-tested welfare programs for working-age people can be designed to promote one of two incompatible social objectives: raising the bargaining power of workers who are between jobs in negotiating with employers, or incentivizing the “idle poor” to break their “addiction” to “welfare dependency” and join or rejoin the workforce.

While there is no doubt that a few “idle poor” exist, the majority of those who use programs like food stamps and housing vouchers are regular workers who have fallen on hard times and stop using these programs when they find jobs with adequate wages. Of the remainder, many have behavioral problems like mental illness or substance abuse and their challenges are mainly psychological and medical, not economic.

Instead of trying to address these two populations with their different problems through a single set of means-tested programs, it would make more sense to pay for the generous custodial care of citizens whose behavioral problems impede long-term attachment to the workforce out of general taxation, as a kind of state-administered charity.

This would enable safety net programs to be designed on the assumption that most who use them will do so only temporarily—allowing the programs’ design to bolster the bargaining power of ordinary workers who happen to find themselves between jobs. For example, longer (though still time-limited) periods of unemployment insurance would allow workers, including breadwinners, to “hold out” longer in negotiations with employers for a higher “reservation wage.”  As Adam Smith observed:

In all such disputes the master can hold out much longer… Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment.  In the long-run the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate.

Now comes the final objection from supply-side libertarians pretending to be classical liberals: Won’t high wages bankrupt the economy by taking money away from investment? 

David Ricardo provides the demand-side rejoinder. Ricardo’s reputation has suffered from his identification with the “iron law of wages,” holding that wages will inevitably be driven down to the minimum needed for workers to survive. But Ricardo stressed that such a catastrophe would only occur in a stagnant economy trapped in “the stationary state”—not in a country enjoying a period of “progressive prosperity” enabled by technology and productive capitalism. According to Ricardo, wages “may, in an improving society, be constantly above” subsistence wages, because investment-driven productivity growth would permit higher profits, higher wages and higher future investment, in a virtuous circle.

The closest labor force equivalent to an infrastructure system paid for by user fees would be a system of wages high enough to pay for both the “operating expenses” (day-to-day consumption at a middle-class standard) and universal contributions to cover the “maintenance expenses” (bouts of sickness and unemployment as well as prolonged retirement) of both a worker and the worker’s family.

If you don’t agree, don’t complain to me. Take it up with the classical liberals Adam Smith and David Ricardo.

Michael Lind
Michael Lind is a professor of practice at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin and the author of more than a dozen books, most recently The New Class War.
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Social Security Was Supposed to Be Secure

Nancy Merical May 26, 2021
Photo via Unsplash
Nancy Merical
May 26, 2021
Introducing the Edgerton Essays | Oren Cass Foreword to the Edgerton Essays | Chris Arnade A Quiet Destruction | Victor Davis Hanson The Relationships That Don’t Fit on a Spreadsheet | Mary Thompson On Family Policy, Proceed with Great Caution | Robin Taylor Making It Easier to Make Ends Meet | Hannah Ketcham “Family Policy” Should Include Caring for Maternal Health | Bianca Labrador Enabling Families to Support Each Other | MeChell Roache-Johnson Do They Even Know Who They Represent? | Angel Bernard Don’t Talk to Us Like We’re Idiots | Guy Stickney What I Wish Our Politicians Knew | Sheila Wilkinson Social Security Was Supposed to Be Secure | Nancy Merical Does Anyone in Power Notice When Government Services Fail? | Dorothy Ramsey COVID’s Toll on the American Dream | Ruby Nicole Day How Essential Are the ‘Email Job’ Caste? | Gord Magill Our Policies Are Failing Working Mothers | Kelly Nicole A Dream Achieved—Through Mere Luck | Peter Martuneac When Work Doesn’t Seem to Pay | Sasha Burns When Student Loans Pay for Nothing but Palm Trees | Kim Quillen The American Dream Isn’t Dead, It’s Just Misunderstood | Jeffery McNeil Where Do Parents Go When Public Schools Go ‘Woke’? | Joshua Clemmons Moving Beyond Surviving to Thriving | Ethel Hunter Conservation, Farming, and the Wisdom of Our Elders | Kelly Liddington Not Every Family Wants a Big Yard | Kendra Holten Conclusion to the Edgerton Essays | Patrick T. Brown
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Politicians today are out of step with the many elderly—like me—who live on Social Security alone. They propose spending tax dollars on cancelling student loans or health care for illegal immigrants or other proposals that aren’t really “needs.” Meanwhile, this money comes out of the pockets of hardworking Americans, many of whom may depend on the monthly disbursements after retirement as their only source of income.

I thought Social Security was supposed to be secure. But we often are warned that the dollars allocated for this purpose are running out. Why are politicians so eager to spend money on everything but maintaining this contract?

As a widow whose husband worked from the age of eighteen to the early retirement age of 62, I find it hard to swallow the fact that his contributions over those years may be endangered. Whether due to the funds being used for purposes other than what they were intended for, or politicians preferring to spend money they don’t have on things we don’t need, it feels like we’re being robbed.

This is personal for me. I turned down a college scholarship when my husband insisted I be a stay-at-home mom, so I didn’t contribute much to Social Security. But I worked harder at occasional odd jobs and crafting in order to raise our four children than did mothers employed by banks or other well-paying institutions, even if I got paid less.

By the time my husband died last year at the age of 84, his poor investment choices had depleted all of our funds intended for retirement—other than Social Security. My excellent mathematical skills, along with frugality, had previously allowed us to live on those disbursements. But after he was diagnosed with cancer and passed (leaving me a widow at almost 80 years old), I found myself trying to make ends meet and avoid poverty on the meager sum of $1,488 per month.

My expenses didn’t drop much: fewer groceries to buy, I guess, and less spent on specialists. But others rose alarmingly, starting with my husband’s funeral expenses and final medical bills, then hiring people to perform the maintenance work I could not accomplish, followed by higher costs for car insurance and utilities, and all on that same fixed amount every month.

And now I hear my government wants to pay out more to illegal immigrants who have never paid a dime in taxes than to the widow of a man who paid thousands of dollars in taxes over the years. This saddens and angers me. Where is the loyalty to Americans who worked hard for decades? When did a government “for the people” begin to forget its promises to Americans and become so obsessed with spending money on people who haven’t paid into the system?

I’ve had my share of hard times and have had to resort to robbing Peter to pay Paul many times. But when my elected officials talk about robbing the taxes paid by hardworking Americans to benefit non-American or non-contributing people, it’s time to take a step back. Before we start taking on trillions of dollars in new spending for whatever new program happens to sound good, let’s make sure we can make good on the promises that have already been made.


Edgerton Essays feature the perspectives of working-class Americans on the challenges facing their communities and families and the debates central to the nation’s politics. If you or someone you know might be interested in contributing to the series, click here for more information.

Nancy Merical
Nancy Merical lives in Jackson County, West Virginia, where she taught piano for many years.  She enjoys creating greeting cards, framed prints, and painted rocks, which she sells at various fairs across the state.
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Is Sweden a Free-Market Welfare State?

Michael Lind May 13, 2021 - Conservative Economics
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Forget American exceptionalism. Tiny social democratic Sweden is the country that embodies humanity’s future in the eyes of much of the global liberal left. A generation ago, the liberal economist Robert Heilbroner famously described his utopia as “a slightly idealized Sweden.”

Now, the Niskanen Center’s Samuel Hammond has tried to draft Sweden for the libertarian team. According to Hammond, Sweden is a model of the “free-market welfare state,” which combines libertarian economic policies in trade, immigration, and labor market deregulation with high levels of social insurance to cushion the blows to those who lose out from free market competition.

Hammond justifies his description of Sweden with a four-fold typology of economic regimes, in which the horizontal axis contains “Anti-Market” and “Pro-Market” and the vertical axis “Pro-Transfer” and “Anti-Transfer.” This provides four ideal-typical regimes: Pro-Government (anti-market/pro-transfer), Reactionary Populism (anti-market/anti-transfer), Anti-Government (anti-transfer/anti-market), and Free-Market Welfare State (pro-market/anti-transfer).

He describes the Anti-Government model as traditional libertarianism and the Pro-Government model as social democracy. Reactionary populists, meanwhile, “leverage resentments against foreigners and other perceived ‘takers’ to justify restricting transfer programs, closing the border, and intervening in the economy to the benefits of particular firms or interest groups.”

Hammond warns that “measured economic freedom in the US has been slowly declining in recent years, and under the influence of an emboldened ‘nationalist’ wing of the conservative movement, there’s a risk that the trend will accelerate towards the reactionary-populist quadrant.”

Sweden’s “free-market welfare state” model, which allegedly combines libertarian economics with generous after-tax redistribution, shows the world how to escape the trap of reactionary populism, according to Hammond:

When social insurance states like Sweden ventured down the path of market interventionism, they nearly killed the goose that laid the golden egg, making their generous spending programs seem unaffordable relative to (off-budget) command-and-control regulations. It’s a vicious cycle that, absent liberalizing reforms, leads down the road to serfdom, as has tragically happened in Venezuela.

While it is true that Sweden adopted some neoliberal reforms after an economic crisis in the early 1990s, Sweden is not, and never has been, a free-market welfare state. Sweden remains one of the world’s most corporatist regimes, with high levels of unionization and highly regulated labor markets. In 2016, University of Greifswald Professor Detlef Jahn classified Sweden as the second most corporatist country in the world, following Austria and leading Belgium, the Netherland, Norway, Germany, and Finland.

A slightly liberalized but still union-dense regime with an important role for collective bargaining in wage-setting is not a “free market” economy—at least not where labor is concerned. Writing in Politico about Amazon’s attempt to open installations in Sweden last year, Melissa Heikkilä notes: “Amazon’s turbo-capitalism corporate culture goes against the grain of Sweden and the rest of the Nordic countries, which pride themselves in their strong labor unions and sustainability.” She goes on: “The Swedish labor market is regulated by collective agreements between companies and unions, giving workers plenty of power over corporate decisions. Approximately 70 percent of Swedish workers belong to a union.”

Almaz Zelleke argues that the link between a generous welfare state and strong, if not rigid, forms of organized labor is the norm, not the exception, writing that “other European nations with larger and more diverse populations than the Nordic nations have managed to provide universal healthcare and education, child allowances, and good public infrastructure to their citizens without Sweden’s bilateral labor negotiations or solidaristic wage policy, but they have done so in conjunction with other kinds of coordinated labor and economic policy—a very inflexible labor market (in the case of France) or firm-level co-determination (in the case of Germany), for example [emphasis added].”

Despite the close links between high unionization rates and welfare state generosity in Sweden and the other Nordic social democracies, Hammond mentions unions and collective bargaining in his essay only in passing.

In the case of Chile, Hammond concedes that the country only maintained “an open, liberal market regime” (compared to Allende’s radical Marx-influenced statism) because it “also expanded collective bargaining and labor rights.” In other words, Chile’s economic liberalization survived only thanks to an increase in “corporatist” collective bargaining—which made the country less of a free-market welfare state!

Hammond shrewdly observes that the decline of union membership in the U.S. may have encouraged the proliferation of often-ludicrous licensing requirements for traditional working-class occupations. This is plausible but irrelevant to his argument. After all, the purpose of licensing restrictions, unionization, high statutory minimum wages, and restrictions on the amount of immigrant labor is the same: to raise the wages of workers in particular sectors or in general by rigging labor markets—reducing competition among workers while forcing employers and consumers, directly or indirectly, to pay higher wages.

What does social insurance have to do with higher wages? At best, lengthy periods of unemployment insurance can allow unemployed workers to hold out a little longer while searching for jobs with higher wages and benefits (the “reservation wage” theory). But the labor market changes that libertarians seek—eliminating unions, lowering licensing requirements, eliminating the minimum wage or allowing it to be eroded by inflation, and flooding particular labor markets with skilled or unskilled immigrants, depending on the sector—tend to lower wages. That is the whole point. Libertarians think wages in many economic sectors in the U.S. are artificially high and want to eliminate impediments to competition that can drive the wages of allegedly overpaid workers down to their “natural” or “efficient” levels.

To be sure, champions of the free-market welfare state may argue that workers will not lose overall income in their system, even if deregulated markets drive down the wages they are paid by their employers. In all modern economies, most workers have at least two sources of income: wages from employers and the “social wage” provided by taxpayers, in the form of in-kind benefits or the flexible cash assistance that pro-social insurance libertarians prefer. In the free-market welfare state, if I understand the argument, higher levels of social insurance and social assistance would compensate for the further decline in wages of many workers that will result from the anti-union, anti-licensing, anti-minimum wage and high-immigration policies of the same free-market welfare state.

A low-wage, high-transfer economy is a good deal for employers, who can offload more of the costs of a worker’s subsistence to taxpayers. A low-wage, high-transfer economy is also a bargain for consumers, who can enjoy lower prices thanks to the low wages earned by the producers of the goods and services they consume. However, it is not clear why taxpayers in general should subsidize employers and consumers of low-wage labor in this way, rather than support policies to keep taxes somewhat lower by rigging labor markets through various well-designed (if “reactionary” and “corporatist”!) interventions that ensure that those who benefit the most from a worker’s labor—employers and consumers—pay more of the subsistence costs of the worker. The low-wage, high-transfer, free-market welfare state privatizes the benefits of less-protected, lower-wage labor for employers and consumers, while socializing the costs.

Speaking of immigration: Hammond argues that generous social insurance benefits that take the form of “universal programs are particularly adept at reducing the demand for parochial interventions, and, when linked to prior contributions, can even mitigate the backlash against immigration.” The theory that a generous contributory welfare state can reduce popular resistance to high levels of immigration is interesting—but it is certainly not supported by Sweden’s experience. On the contrary, large-scale immigration has produced a powerful populist, restrictionist backlash in the “free-market welfare state” of Sweden that is no different from the similar voter revolts that are reshaping politics in the U.S., Britain, France, Germany, Italy, and other countries with a wide variety of social insurance systems.

Sweden was most generous to foreign refugees and immigrants when it had a highly homogeneous population and little immigration. But now, according to the Migration Policy Institute, in response to an influx of refugees from the Balkans and more recently Syria and the Middle East, the Swedish government has moved in a restrictive direction: “Since 2016, access to benefits such as free housing and a daily allowance have been eliminated for failed asylum seekers or those who have received expulsion orders, as well as those who have ignored the deadline for voluntary return.”

In a September 2020 report, “Sustainable migration policy for the long term,” Sweden’s Cross-party Committee of Inquiry on Migration proposed further restrictive immigration measures: “[P]ermanent residence permits should only be granted to aliens who meet the requirements of Swedish language skills and civic knowledge, who can support themselves, and where there is no doubt, with regard to the alien’s expected way of life, that a permanent residence permit should be granted.” Just last month, the Swedish government—a center-left coalition of Social Democrats and Greens—asked parliament to enact these restrictive immigration measures, a move that Euronews described as “a U-turn towards a stricter policy on immigration.”

Denmark is another country that neoliberals and libertarians point to as one that reconciles free markets with generous social insurance. But consider this Deutsche Welle headline from March of this year: “Why Denmark is clamping down on ‘non-Western’ residents.” According to the story: “The Danish government plans to swap a controversial law targeting immigrant neighborhoods for another that cracks down harder.”

As for New Zealand, another country that Hammond cites as further along the road to the free-market welfare state ideal than the U.S., a 2017 Wall Street Journal headline reads: “Kiwis First: New Zealand Cracks Down on Immigration.”

The closer you look at Hammond’s examples of free-market welfare states, the more “corporatist” and “reactionary populist” features—from unionization to increasing restrictions on immigration—become apparent. Post-labor progressives and their new allies among pro-social-insurance libertarians are free to search the globe for a country that embodies free trade, high immigration, deregulated labor markets, and massive redistribution of income. But the fact that neither Sweden nor any country resembling that ideal can be found anywhere on earth suggests that the free-market welfare state is an ever-receding, ever-vanishing mirage.

Michael Lind
Michael Lind is a professor of practice at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin and the author of more than a dozen books, most recently The New Class War.
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Breaking the Spell

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Once upon a time, a conservative must have greatly offended a powerful sorcerer. How else to explain the curse afflicting American politics, which condemns each generation to toil anew under the mistaken belief that fighting poverty is merely a matter of sending money to the poor? Twenty-five years after welfare reform, we seem to be back where we started, with Democrats crowing that the $1.9 trillion Covid-19 relief bill, which sends cash to every family for each of their children, will “cut child poverty in half.”

Perhaps, as a matter of government statistical reporting, child poverty will plunge in 2021. Give people cash, count it as income that lifts them above the poverty line, and—voilà—poverty “solved.” Lyndon Johnson’s Great Society similarly reduced the poverty rate for households with children from 16 percent in 1965 to 11 percent in 1969. Unfortunately, even as anti-poverty spending proceeded to triple from 1970 to 1995, the poverty rate for households with children stubbornly climbed back to 16 percent.

What went wrong? By one measure, the flood of resources accomplished its goal: the poverty rate for households headed by a single mother dropped from 52 percent in 1965 to 45 percent in 1969 and then fell a bit further, to 42 percent by 1995. But at the same time, the number of single-mother households exploded.

Continue Reading at City Journal
Oren Cass
Oren Cass is the executive director at American Compass.
@oren_cass
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The Left’s Welfare Extremism

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Family Feud: Child Allowance Edition
Family Financial Security: Senator Mitt Romney on the Right’s Fight to Support Our Most Important Institution
American Institutions and the American Family: A Conversation with Yuval Levin

In the New York Times on Tuesday, I made the case for paying a generous new family benefit to households that have earned income of their own. A single mother with two young children, who had worked part-time at the minimum wage the prior year, could receive $800 in cash each month — nearly $10,000 annually. Little did I know, this “monstrous” idea is akin to vicious child abuse and marks me as “a profoundly evil man” for distinguishing between working families and the non-working poor. With alarming speed, an insistence that all families receive no-strings-attached cash has become table stakes in the Left’s bizarro discourse. As with social issues, where positions held by Barack Obama now constitute unconscionable bigotry, long-running and bipartisan views about fighting poverty lie suddenly beyond the pale.

At Jacobin, Matt Bruenig titled his response, “Oren Cass Is Insisting That Starving Some Kids Is Important for Society” and warned that I think families “need some tough love (hunger and homelessness).” Substack blogger Will Wilkinson titled his response to the proposal “Against Child Hostages” and featured a photo of a child cowering in a corner from a chain-wielding hand. The caption: “Don’t hit me Mr. Cass! Mommy is picking up a shift at Chili’s, I promise!” How recent is this attitude? When I spoke alongside Wilkinson at a Kennedy School panel on “big economic ideas [to] solve economic inequality” in 2018, his “big idea” was . . . zoning reform.

The problem, you see, is that my proposal for a Family Income Supplemental Credit (Fisc) does not go as far as Senator Mitt Romney’s Family Security Act, which would offer nearly universal payments — thus including families disconnected from work entirely. The Fisc caps a family’s annual benefit at its prior year’s earnings, so no earned income would mean no benefit, though the existing safety net would remain intact. Still, the Fisc is more generous for lower-income households than what Senators Marco Rubio and Mike Lee have proposed, which is in turn more generous than anything else seriously considered in recent memory on the right-of-center. It is also more generous than anything Hillary Clinton ever proposed, or Barack Obama, or . . . one gets the picture.

This question — whether cash benefits should go to households regardless of work — promises to be a central debate in the coming years. To be clear, the question is not whether to help those who cannot support themselves; it is how to do so. If this week’s efforts are any indication, the debate is one the Left has positioned itself to lose catastrophically. They are staking themselves to commitments that are empirically wrong and politically foolish.

Continue Reading at National Review
Oren Cass
Oren Cass is the executive director at American Compass.
@oren_cass
Recommended Reading
Family Feud: Child Allowance Edition

The Niskanen Center’s Samuel Hammond and the American Enterprise Institute’s Scott Winship debate the case for a “child allowance.”

Family Financial Security: Senator Mitt Romney on the Right’s Fight to Support Our Most Important Institution

A conversation with Senator Mitt Romney about the future of family benefits in the U.S. and what it means for the right-of-center’s future.

American Institutions and the American Family: A Conversation with Yuval Levin

A robust discussion of how well American institutions are fostering the flourishing of American families, hosted by American Compass and Capita.

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