Patterns of Resource Inadequacy and American Values
Craig was five when his father died in an automobile accident. Since the accident involved only his father's car, which skidded on an icy patch of roadway, there were no suits for damages. At the time of the accident Craig's parents had little in the way of savings or other assets, and the father's life insurance coverage was quite modest. Craig's father was in his mid-twenties and had been a high school teacher for several years. Craig's mother had never worked, apart from summer jobs in high school and between her two years of college. Grandparents from both sides of the family offered assistance of various kinds: emotional support, food, child-care, and money.
As survivors of a member of the labor force, Craig and his mother might each expect to receive social security benefits from Old Age, Survivors, and Disability Insurance (OASDI). The amount of these monthly support checks would depend on the father's earnings history. Under current rules Craig would receive benefits until he finished high school. The same benefits would be accorded to Craig had his father been permanently and totally disabled rather than killed in the accident, or had Craig's parents divorced prior to the accident so long as Craig had not been formally adopted by a stepfather.
But under slightly different circumstances, social security would not protect Craig. For example, suppose Craig's father had not yet
worked long enough to earn social security survivor's eligibility for his family. Or suppose that Craig's father had contracted an illness that forced him to stay home from work for several months. No general public program provides protection against this contingency. (State workers' compensation programs cover only job-related illnesses and injuries.) Rather, Craig's fate would depend on whether his father's employer provided for paid sick leave and private group medical insurance. Or suppose the crisis was that Craig's father had been indefinitely laid off from work. The family would then have to rely on state unemployment compensation, which provides benefits of limited duration.
As a final example of the inadequacies of current programs, consider Darlene, a two-year-old whose father deserted Darlene's mother during pregnancy. Darlene's mother, like Craig's mother, is young and has no experience or work skills that would command good wages in the labor market. Further, Darlene's extended family cannot afford to offer assistance other than intermittent child-care. With no savings and no family support to fall back on, Darlene and her mother will qualify for public assistance from Aid to Families with Dependent Children (AFDC), more commonly known as "welfare." Like workers' compensation and unemployment insurance, AFDC benefits follow general federal guidelines but vary markedly from one state to another and even within states. Generally, eligibility for AFDC provides access to Medicaid benefits, food stamps, and limited public housing assistance.
AFDC benefits provide crucial support, but the recipients pay a price, for welfare, unlike social security, is not considered an earned right but a form of public charity. Because eligibility for welfare is not based on prior contributions but on need, many Americans—including many welfare recipients—view being on welfare as a sign of disgrace, a mark of failure in a land of opportunity, an affront to personal dignity. And surviving on the largesse of public charity rather than on one's personal accomplishments sets recipients apart from the members of—and thus membership in—mainstream society.
Let us suppose that Darlene's mother is determined to be off welfare and to be self-supporting as soon as possible. Once she finds a job, the AFDC benefits will begin to disappear. The specific income levels at which benefits are withdrawn vary from state to state, but the following pattern is typical. For several months the
first few dollars of earnings that Darlene's mother makes each week do not affect AFDC benefits. Thereafter, an allowance is made for work-related expenses—child-care, for example—but above that allowance each three dollars of earnings reduces benefits by two dollars. After four months nearly all earnings above limited work-related expenses reduce benefits dollar for dollar, and earnings above modest cutoff points lead to the cessation of AFDC and Medicaid benefits. If earnings subsequently drop below the cutoff points, benefits are not reinstated until the family again reaches a designated level of destitution. If Darlene's mother is typical of many AFDC recipients, she will manage to obtain independence from welfare, perhaps more than once.
I could add variations to these predicaments, but two points should already be clear. First, Craig and Darlene's needs for food, clothing, housing, child-care, and medical care remain about the same regardless of the scenario we pick. While a few children have exceptional medical-care or dietary needs, generally what varies from one scenario to another is not the child's needs but the availability of public and private resources to meet those needs. Second, no matter which scenario we pick, we cannot reasonably blame Craig or Darlene for ending up in a situation that may or may not provide resources to meet their basic needs. All these disruptive incidents—death, illness, layoffs, desertion—are well beyond the children's control.
While these points are clearest in a discussion of the plight of young children, they apply to all citizens of advanced industrial societies. Because we no longer live in an era of economically self-sufficient homesteaders, individuals' needs for public policy protection from certain social hazards are greater than they were a century ago. We can no longer look to the model of the society that prompted the liberal tradition—the society that grew out of Locke and Adam Smith's ideas. The gradual transformation of America into an advanced industrial society has left us more, not less, vulnerable to social hazards.
Wage Dependency and Vulnerability
Through the first half of the nineteenth century America was a nation of farmers, shopkeepers, and small businessmen living in small towns. Capitalism was local and commercial, rather than national
and industrial, and the family was a self-sustaining economic unit. Family members worked largely within the confines of the household, on the family's land, or in the family's shop or other small business. Gradually, however, technological development and increases in economic centralization and differentiation combined to erode households' self-sufficiency. More people began to work outside the family for wages or salary. And as needs came to be more commonly supported by participation in the labor market, fewer families held their own land or other businesses. Today, only a small fraction of Americans owns household-sustaining property. The vast majority of us, including many professional and managerial people, are dependent for our livelihoods on selling our labor in the market.
Wage dependency creates the preconditions for wage vulnerability. Any disruption in wages threatens a worker's ability to meet basic needs. And many disruptions to participation in the labor market—disabling injury, aging, recession, plant closings due to loss of international competitiveness—lie beyond the control of an individual worker. Even households in the top quintile of income distribution are not immune to such hazards. Only the very wealthiest households can sustain themselves over lengthy periods without labor market participation and without recourse to outside assistance, such as public social programs.
Other trends characteristic of advanced industrial societies reinforce the problems of wage dependency and vulnerability. As people go to work for others, they tend to move from rural to urban environments, and urban settings afford fewer opportunities for household production of food and shelter. Additionally, the nuclear family, itself an adaptation to urban industrial society, has been splintered by desertion and divorce, events that often leave women and their children without a source of adequate income. New households based on remarriage, sibling ties, and friendships have reduced some, but by no means all, of these difficulties. Finally, as life expectancies increase well beyond society's conception of the duration of people's economic usefulness, a growing proportion of elderly people find themselves excluded from regular participation in the labor market.
In addition to these trends associated with wage dependency and vulnerability, the prices of customary and essential services
have far outpaced normal income levels. The rural household of the early nineteenth century was largely self-sufficient not only with respect to basic goods but also with respect to services. For example, home remedies were the rule for illness or injury, in part because of the expense of hiring a physician, particularly the cost of transportation, but in part because a professional healer could not always be expected to achieve results more encouraging than those of a layperson.
Today, in contrast, the efficacy of sophisticated medical services is far superior to lay remedies, and people who cannot acquire access to the most crucial of these services cannot successfully claim full membership in contemporary society. Indeed, in a wage-dependent economy, individuals rely heavily on medical care to cure the illnesses or injuries that disrupt their ability to earn a living. Yet while medical care is increasingly important, it is also extremely expensive, beyond the reach of most people's incomes. The fortunate have their medical bills paid for by private insurance or public social programs; the unfortunate often go without even the most basic care.
In sum, an intrinsic characteristic of advanced industrial societies is that families are no longer independent economic units. In light of the family's loss of self-sufficiency, modern societies have created social programs to provide a measure of protection for their citizens. In the United States, as in other advanced industrial societies, these social programs are intended to cushion people against episodic disruptions of income as well as to sustain people whose economic resources are persistently insufficient.
Patterns of Resource Inadequacy
Resource inadequacy refers to two related but distinct problems: episodic financial shortfalls and persistent poverty. These are not hard-and-fast categories. Some households are beset by both problems at once, and others experience alternating periods of each. But this distinction highlights two general patterns of social distress that require different public policy responses.
Episodic resource inadequacy results from a particular event or crisis—childbirth, illness, aging, unemployment, divorce—that overwhelms a household whose income is usually well above the
poverty line. Suddenly, the household's income is disrupted or expenses for necessary goods and services (most often medical) exceed its income. These episodes sometimes drive households into poverty, but often the shortfall is covered by savings, private or public insurance, changes in household membership, or the entry of unemployed household members into the work force.
In contrast, poverty is characterized by an ongoing low level of income and wealth. In this sense, poverty is a time- and culture-bound circumstance. A standard of living that we would deem impoverished in the United States in 1988 might well be superior to that of a nineteenth-century American family or a present-day Mauritanian family—neither of which would be considered impoverished by its own culture's standards.
By current American norms, about four households in ten experience at least one year of poverty in the course of a decade. Households impoverished by contemporary American standards generally suffer from both material and cultural disadvantages vis-à-vis more mainstream households. Three of these households experience poverty-level incomes in more than one year during the decade, and roughly one in ten falls below the poverty threshold for the entire decade. For every household that is impoverished all or much of the time, then, there are many more that experience poverty intermittently, frequently spending years only barely beyond outright destitution.
Episodic Inadequacy and Social Insurance
With the exception of aging, the conditions that trigger episodic resource inadequacy are unpredictable and, as a rule, people beset by such problems are not blamed for their difficulties. Unemployment was once an exception to this rule, even when dismissal was caused by macroeconomic forces, but this tendency seems to be changing. Nor is blame usually cast in situations that may reasonably be seen as the consequences of purposive action (divorce, childbirth), although in specific instances such acts may be deemed irresponsible or negligent.
That such episodic problems call for social insurance to prevent beleaguered citizens from falling into poverty is an idea that has taken hold across the world. Indeed, in comparison to many
Western European societies, the United States has been laggard in accepting the concept of social insurance and in implementing this concept through public social programs. Nonetheless, even here social insurance now has an extensive history and public support and government funding for specific programs are high.
The essential task of social insurance is to widely distribute, over time and a broad population, much of the cost of individual crises. Though programs vary widely, several principles are common to all. First, the more short-lived the hazard, the more easily it may be handled. Lengthy episodes can be accommodated so long as they are relatively rare or their annual costs are either relatively low or balanced by high contributions. (Longer life expectancies, which create longer periods of retirement for a larger proportion of the population, upset this balance and are now posing serious difficulties for social insurance programs like social security.) Second, social insurance programs must have some mechanism by which potential beneficiaries contribute to the support of the system. Such contributions take various forms: labor, service in the armed forces, and payment of income or payroll taxes. Third, programs must establish guidelines and formulas for distributing the resources to beneficiaries. Typically, social insurance programs redistribute resources horizontally (across an individual's life cycle) rather than vertically (from rich to poor). Although some vertical redistribution occurs, cross-strata reallocation is neither the primary objective nor consequence of these programs.
In the United States the largest social insurance program by far is social security (OASDI); smaller insurance programs include: Medicare, railroad retirement, black lung payments, workers' compensation, unemployment insurance, and veterans' benefits. If we measure American public provision against the programs of many other advanced societies, universal medical-care insurance and general child-care assistance are the most obvious gaps in American social policy.
One explanation for these gaps is the widely accepted notion that American political culture supports a peculiarly strong preference for market as opposed to public solutions to social problems. In this cultural climate private insurance flourishes, but it is inherently unable to meet all the basic needs of many individuals and remain profitable. For example, there are no realistic private coun-
terparts for public benefits for dependent children, support for single-parent households, and unemployment insurance. And profitability requires that private insurance contracts for illness, disabling injury, retirement, or death pose limitations on eligibility or on the size and duration of benefits. Further, contributions are generally risk-rated, with participants who face the greatest risks paying the highest premiums. But because individual risk and ability to pay are often inversely related, those with the greatest need for insurance are also those least likely to be able to afford it.
Among those fortunate enough to have private insurance, there are wide variations in the breadth and depth of coverage. Many professionals, managers, and unionized industrial workers acquire fairly thorough private coverage through group insurance. But large portions of the population do not belong to such groups and do not have the resources to purchase individual policies. Even people who succeed in obtaining, say, private medical insurance find that exclusionary riders, deductibles, and coinsurance and copayment provisions may leave them personally liable for substantial medical costs. Similarly, workers covered by private retirement pensions often discover that inflation, not to mention fund mismanagement or the demise of the sponsoring firm, cuts deeply into the value of their pensions. Other difficulties arise when workers change employers. Sickness, disability, and life insurance are less troubling in these regards, but good coverage can be quite expensive.
Some of the deficiencies of private insurance are amenable to reform through legislative pressure and initiatives. But the ultimate responsibility for meeting the needs of vulnerable citizens is apt to remain a public matter.
Poverty and Social Merging
Poverty associated with varying degrees of material and cultural disadvantages, the second pattern of resource inadequacy, is not so obviously constructed of discrete problematic episodes. Relatively few households are perpetually impoverished, but many face lengthy spells of poverty or near poverty. Thus the distinction made earlier between problems arising from income disruption and problems stemming from occasional need for expensive services is rather
irrelevant to the plight of households for which even fairly modest expenses can pose a continuing problem.
Nor do the needs of the poor lend themselves to traditional social insurance solutions. People in poverty are not generally coping well with their material needs, and they require both intangible and material resources in order to merge with more materially successful portions of society. As I will detail in subsequent chapters, it is possible to link this infusion of resources to a beneficiary's contributions, but it is generally less feasible to make public benefits a reward for prior contributions as is the case with social insurance. Rather, the crux of social merging involves concurrent self-help contributions: people near the bottom of the socioeconomic ladder receive benefits that facilitate and supplement their own efforts to increase their material resources in socially acceptable ways, with the ultimate goal of merging with the socioeconomic mainstream.
In contrast to the essential task of social insurance programs—spreading the costs of episodic individual problems—the basic task for merging programs is to improve people's long-term incentives, opportunities, and capacities for meeting basic needs in socially acceptable and personally dignified ways. This is a more demanding enterprise than providing social insurance, but the progress made in the last 150 years by advanced societies offers hope of further reducing the proportion of their citizens who cannot meet basic needs.
The United States does not now have prominent social programs whose primary efforts are focused on merging objectives. Instead we have a series of programs that provide resources for basic needs to people with little or no income and wealth at the time of application. These means-tested public assistance programs include AFDC, Supplementary Security Income (SSI), Medicaid, food stamps, general assistance, veterans' pensions, housing assistance programs, and basic educational opportunity grants. Throughout the 1980s the largest public assistance income maintenance program, AFDC, has had 10–11 million beneficiaries a year (largely single women and their children), slightly less than a third as many as social security. These recipients received $13–15 billion in benefits annually—a bit less than one-thirteenth the amount spent on social security in the early 1980s. And overall
AFDC expenditures have remained fairly constant, while social security outlays have risen sharply from year to year.
According to the measures used by the federal government, at any given time roughly 30 to 35 million Americans experience poverty. But there is significant turnover among the poor, and "the poor" are not a homogeneous group. Indeed, one may wonder whether a single label—the poor—adequately describes the life situation of all Americans whose income and wealth are at the lowest levels. In the sociological literature we find two contending schools of thought. What we could call the attitudinalist position is exemplified by the analyses of Edward C. Banfield. For him, the predicament of lower-class people is miserable, not because they are sound persons without opportunities, but because they are flawed individuals who cannot take advantage of constructive opportunities. Banfield attributes this improvidence to an individual's inability to delay gratification, to a general incapacity to take the future into account. Accordingly, he faults social policies aimed at this underclass for creating unrealistic expectations and for encouraging flawed individuals to continue, indeed to expand, their improvidence.
In contrast, Herbert J. Gans offers a situationalist interpretation of the plight of the poor. Gans describes the poor as generally sound people who face unusually discouraging circumstances beyond their control. Where Banfield sees improvidence, Gans contends that what constitutes rational action for severely disadvantaged people may differ sharply from what is rational for middle-class citizens. Specific forms of public intervention, he argues, may provide the resources and skills the poor need to overcome some of the social disadvantages they suffer.
Few views about the impoverished are capable of bridging these two schools of thought. But if we acknowledge the obvious—that the poor, like other large social groups, includes both miscreants and relatively sound persons—our attention shifts from speculating about the character of these persons as a class to trying to understand how individuals end up in one category rather than another. For instance, what life experiences set apart the underclass that Banfield discusses? What kinds of disadvantages are germane and how frequently do these experiences arise? Such investigations belie many popular generalizations about the poor. For example,
minorities do not constitute a majority of the poor, although some minorities are disproportionately represented. And the vast majority of low-income Americans either work, sometimes full-time, or have compelling reasons for not working. Most members of this latter group, which constitutes well over half of the total, are single mothers and their children; in smaller numbers are the elderly, the physically disabled, and the blind. It is this group that holds a near monopoly on the receipt of public assistance supported by the federal government. The working poor, in contrast, receive little or no public assistance and their number includes higher proportions of single persons, childless couples, and two-parent families.
More importantly, it does not appear that attitudes alone are responsible for poverty. Across the socioeconomic spectrum most Americans profess nearly identical attitudes toward matters such as work and family obligations. Realizing what these attitudes call for does vary markedly, owing to a variety of subtle psychological factors as well as obvious sociological factors that are beyond an individual's control. Thus we might reasonably ask that social programs encourage responsible activity. For instance, we should expect them to support the efforts of the disadvantaged to merge with mainstream society or, at the very least, programs should not foster the growth of an underclass that makes no sustained effort to live by the values of mainstream society.
Unfortunately, American means-tested programs not only fail to support merging objectives, they may actually discourage them. In chapter 6 I will examine this issue in detail, but for now two points are of particular relevance. First, public assistance programs rarely emphasize improving incentives, opportunities, and capacities for constructive activities among impoverished people. With the exception of basic educational opportunity grants for needy college students, public assistance programs are designed to provide subsistence-level material support for specific categories of impoverished people.
Second, the major means-tested income maintenance program, AFDC, is not limited to persistently poor people. There is substantial turnover among recipients, and leaving or joining the program often hinges on discrete events, such as a change in household composition or finding or losing a job. In this, AFDC addresses episodic resource inadequacy, similar to the forms of insurance
discussed earlier. Equally important, AFDC and allied programs (most notably Medicaid) contain significant financial disincentives for recipients to improve their lot in the work force. The strength of these disincentives has led some policy analysts to assert that these means-tested programs are functioning as poverty-maintenance devices, perhaps with the latent purpose of social control by regulation, rather than as social merging programs.
Although expenditures for AFDC are but a fraction of those allocated to social security, the United States does spend an unusually high proportion of its income-maintenance budget, about 12 percent, on means-tested programs. Only a few other industrial nations come close on this score. One disputed interpretation of this statistic is that the United States has a larger proportion of low-income persons. An alternative interpretation proceeds from the fact that we spend a smaller proportion of gross national product on social insurance forms of income maintenance than do other advanced societies. Perhaps, then, we rely on means-tested programs to meet some needs that other societies address through social insurance. Whether or not this interpretation explains the discrepancy, it raises the notion that a change in the balance of social insurance and means-tested programs might be beneficial. As a concept, social insurance seems truer to American values of self-reliance and individual effort. Social insurance programs, therefore, are more likely to be perceived as fair and would be less politically vulnerable than our present means-tested programs.
From this analysis of resource inadequacy problems, we may conclude that American public policy could be strengthened in three ways. First, because the concept of social insurance is fairly widely accepted and works reasonably well in the American context, social security should be expanded to cover a broader range of both hazards and people. Specifically, people overwhelmed by episodic crises would be covered by social insurance rather than having to apply for means-tested public assistance programs. Second, we need to devise programs that improve the opportunities available to disadvantaged people and provide the incentives and training they need to take advantage of these opportunities. Third, we need some type of income-maintenance and medical program to provide for those people who cannot on their own join the mainstream because of mental illness or retardation, addiction to
various substances, chronic and disabling physical afflictions, and criminality or other serious psychological deficits. Policy recommendations concerning the first two of these enterprises constitute the final goal of this book.
Public Programs and American Values
It is frequently argued that the United States lags behind other advanced industrial societies in public social provision because a broad social policy agenda conflicts to a peculiar degree with core American values. Samuel P. Huntington identifies six such values: liberty, equality, individualism, democracy, the rule of law under a constitution, and concerns for limited and local government. In the next three chapters I will expand this set a bit, but already we see the crux of the problem. In Huntington's terms, these core values collectively provide American political culture with an antistatist tinge that makes ambitious state programs directed against resource inadequacy difficult to achieve. This view is consistent with Donald J. Devine's earlier thesis about the Lockean character of the American political culture.
Nonetheless, there is an undeniable pragmatic, or operational, strand running through American political culture. Anxiety about and instances of vulnerability to various social hazards lead most Americans to support public programs such as national health insurance. Thus in pragmatic affairs liberalism, in the contemporary American sense of the term, predominates, and herein American political culture rather resembles the cultures of other advanced societies. Pragmatic liberalism, however, repeatedly clashes with America's more abstract or ideological principles, which are the domain of the antistatist values of classical liberalism (Locke and Adam Smith).
An alternate analysis of the disjunctions in American values, presented by Jennifer L. Hochschild, observes that with respect to assessments of fairness, or distributive justice, Americans tend to apply different principles to particular domains of life. Concepts of distributive justice tend to be more egalitarian within the family (the socializing domain) and within the realm of public issues (the political domain) than in the workplace (the economic domain). Situations that cross domains (for example, cases in which partici-
pants can be viewed both as fellow members of the labor force and as fellow citizens) frequently provoke confused responses.
It is not clear, however, that the mass culture is especially relevant for the character of American public programs. Various political scientists and sociologists argue that the values of the American elite have been particularly influential in directing American social policy and shaping public opinion. Scholars generally agree on the distinctive character of elite values in the United States, but some question whether all segments of the elite are adequately characterized by Huntington's antistatist collection of values. In general, American bureaucrats are less homogeneous than their European counterparts (broader recruitment patterns), while American politicians are more homogeneous than the Europeans (no leftist parties). Finally, the attitudes of many American bureaucrats and legislators are more favorable to state involvement in social provision than Huntington's description of core values would suggest.
Three assumptions about American political culture inform my analyses and recommendations. First, Huntington's list of core values provides a useful starting point, although it needs to be expanded and the multiple and frequently conflicting meanings of these values must be enunciated. But basically we must accept antistatism as setting some limitations on American public policy.
Second, this collection of values does not form an internally coherent ideology relatively impervious to change. Rather, these values are loosely defined, ambiguous, and inconsistent. In Huntington's words, "Defined vaguely and abstractly, these ideas have been relatively easily adapted to the needs of successive generations."
Third, because these core values are adaptable, a capable and determined group of elites could today—following the example of the originators of social security—reshape American political institutions. In particular, the early Social Security Board successfully distinguished social security from public assistance and placed social security in the category of earned rights, similar to public education, rather than gratuitous public benefits. This emphasis on earned benefits challenged the near stranglehold that self-reliance had previously held with respect to human dignity. Especially against the macroeconomic forces of the Great Depression, a contributory system of earned benefits came to be seen as a dignified
way for individuals to cope with social hazards beyond their control.
The central implication of public social programs is that market distribution is flawed in some respects. This implication leads us to an inquiry about the nature of distributive justice. Wholehearted proponents of laissez-faire argue that free markets represent a natural evolution and that although one may wish to fiddle marginally with distribution, the topic of justice is as irrelevant to a discussion of distribution as to a discussion of mountain lions killing deer. But I want to approach the topic of distributive justice through the concept of socioeconomic rights, rights to basic material resources that sustain human activity. And these rights both reinforce and pose problems for other values of importance to the American cultural context, most notably for negative liberty and economic efficiency.
Before I turn to the matter of distributive justice, the compatibility of socioeconomic rights and two core values can be mentioned quickly and then set aside. There is no inherent incompatibility between socioeconomic rights and the rule of law under a constitution. A particular conception of socioeconomic rights or a particular manner of realizing socioeconomic rights through public programs might be incompatible with the U.S. Constitution. But since 1937, when the Supreme Court held that social security fell within Congress's powers to tax and appropriate funds, there have been no general challenges to the constitutionality of social programs and the rights they create. Additionally, there is no incompatibility between socioeconomic rights and procedural democracy in Huntington's sense of popular control of government. Throughout advanced industrial societies systems of multiple political parties competing in frequent elections held under rules of universal adult suffrage coexist with socioeconomic rights. With these two points behind us, let us examine the compatibility of socioeconomic rights and American conceptions of distributive justice.