Thursday, December 8, 2016

Welfare programs aren't popular, but universal programs are

Social security card john q public
As liberals look for a new economic message, they should keep this in mind: it is important to understand the big political difference between welfare and universal programs. Means-tested welfare is unpopular in this country, but universal programs that help everyone are very popular. This simple political reality needs to be at the core of any big, sweeping progressive economic proposal. 

Tim Duy wrote a very insightful piece in response to Trump's popularity with working class whites in the Rust Belt, which concludes with this depressing prediction:
The dry statistics on trade aren’t working to counter Trump. They make for good policy at one level and terrible policy (and politics) at another. The aggregate gains are irrelevant to someone suffering a personal loss. Critics need to find an effective response to Trump. I don’t think we have it yet. And here is the hardest part: My sense is that Democrats will respond by offering a bigger safety net. But people don’t want a welfare check. They want a job. And this is what Trump, wrongly or rightly, offers.
I fear Tim is right about the huge mistake Democrats will likely make, but he is wrong about what people really want. People in need want immediate help, but they also want dignity, security, and a path to improvement. Means-tested "welfare" as it is thought of in this country provides only the first -- immediate help. Good jobs is one way to provide all four, but so are universal programs -- such as universal basic income, universal education, and universal health care.

Means-tested welfare is often accidentally or purposely designed to strip people of their dignity by making them beg for support, prove they are truly helpless, or piss into a cup to prove they are worthy. The complex, overlapping series of programs, each with different requirements, doesn't provide a true sense of security or a path forward. Attempts to move to a better city for employment or start a business could result in a loss of welfare that would become difficult to obtain again. The CBO found low income people face a massive effective marginal tax rate because for every dollar they earn, they risk losing a significant amount of government benefits.

Compare means-tested welfare with our universal programs that are provided to everyone. Medicare and Social Security are both wildly popular. So is Alaska's Permanent Fund Dividend, which gives everyone living in the state a check regardless of income. If everyone gets the same thing, there is true security and no issue of dignity.

I suspect part of the reason Obamacare has been so unpopular is that it is a means-tested welfare program instead of a universal program. In fact, Gallup found that by far the most popular way forward with health care is to replace Obamacare with single payer system. It is significantly more popular than repealing or leaving the law in place.

The fact that our welfare programs are often called a "safety net" is ironic. Anyone who has fallen into an actual safety net should know how difficult it is to climb out of and how it is impossible to get from the safety net back to the tightrope. The best thing Democrats could do is renounce the idea of means testing. If we believe something is essential, we should make it universal.  

We are facing a new world where technological automation is going eliminate jobs at an alarming rate. We are going to need a plan. One path forward is to create jobs by mandating inefficiency. The other is to embrace the increase in productivity and use it to provide everyone a basic income, education and health care.

Monday, December 5, 2016

A New, Non-Paternalistic Progressivism: Freedom from want, ignorance and illness

"Freedom From Want" - NARA - 513539
The left wing in America is facing a three-fold economic crisis: a crisis of competency, a crisis of perception and a crisis of automation. I believe the way forward is a progressive economic agenda actively stripped of the paternalism that dominates and needlessly complicates many social safety net programs.

This progressive agenda should be based on three simple goals: Freedom from want, freedom from ignorance, and freedom from illness. It's a platform that can be achieved simply and directly with three programs: universal basic income, universal public education, and universal health care.

The crisis of competency
The left in this country rallies around the vague concepts of "helping people in need" and equal rights for all. Yet when it comes to how to "help people in need," the left has become an ideological and practical mess. A big reason why is a combination of paternalism, moralism, and a corrupt belief that the only way to build political support for new programs is to funnel the money through private corporations who can skim millions off the top.

We "help people in need" with hundreds of different programs at a federal, state, and local level that create wasteful bureaucracies full of cracks. We have programs to help people buy food if they meet certain criteria. We have a program to help people if they can’t work for certain reasons. We have programs to help low income people pay for phones. We have programs to directly help some people pay for housing under certain conditions. We have a program to help low income people buy heating oil. We also have numerous local programs to indirectly help some poor people obtain housing by forcing affordable units in new developments, or forcing people to charge artificially low rents. We have programs to subsidize transit for certain people in certain cities. The list goes on.

So much money, time, and opportunity is wasted on such a complicated system because we often don’t trust poor people to know what they really need, and we are so concerned about only the deserving getting specific types of help. I think it is time, though, for us to have more faith in people.

The crisis of automation
Since others have written extensively about this I will not go into it in detail, but we are heading for a potentially massive employment crisis because of technology. Computer processing power has been growing exponentially. It effectively means the growth in computing that took 70 years will be doubled in just about two years. Technology will likely replace employment faster than people can prepare for new jobs. The best example of this is driving. Truck driving is the number one job in most states, and within one to two decades these jobs could be made obsolete. This massive displacement is going to need an equally massive solution.

The crisis of perception
Finally, the sheer complexity of all our numerous, overlapping programs to help people has allowed elements on the right to create a perception crisis for liberals. They stoke anger among working class people and poor people, arguing that all the benefits of our system are going to “others.” These “others” are often depicted as urban minorities and immigrants. Many of these rightwing messages are based on distortions and pure misinformation, but the design of some of our programs create a small kernel of truth for these distortions to crystalize around. For example, the design of Obamacare means a rather small group of young, healthy, middle class workers is being asked to indirectly subsidize a significant portion of the coverage expansion. Additionally, the way some programs are designed to provide equal outcomes means that poor people in more expensive urban areas can end up getting more government assistance than those in cheaper rural areas, strangely punishing those for living in more affordable areas.

Winning this argument takes aggressive counter-messaging by progressives, but it is a task that would be made dramatically easier if our programs were greatly simplified and made universal. Instead of a hundred programs to help a hundred differently defined groups, we had one program to help everyone. We need to only look at the difference in popularity between Obamacare and Medicare. It takes about two minutes to explain Medicare and how it will affect any person. Obamacare could take hours to explain.

The solution: Freedom from want, freedom from ignorance, and freedom from illness
Replacing nearly all of our safety net programs with a universal basic income would free people from want and worry. A modest, guaranteed income would let everyone meet their basic needs and give them the freedom to choose how. It's a system that would let the market decide how best to use resources to help people. Basic universal income will deal with the crisis that will be caused by automation, and it is a relatively simple concept for progressives to explain.

There are, though, a few instances where counting on the market or personal agency to make the best decisions for people won’t work. This requires two big additions to universal income. The first is education. People need to be educated to make sound decisions. Guaranteed basic education (including college) addresses this and helps prepare more people for a society where automation means there will be less need for low-skilled workers.

The second is health care. It is so essential, but the imbalance of information -- and the simple fact that there is no price people won’t agree to pay in a crisis to try to save the life of their loved ones -- means there will always be a market failure. Looking around the First World, there are numerous ways to provide universal health care for a fraction of what we currently spend. I would be happy with almost any of these systems but for simplicity would prefer something like Medicare for all. The important thing is that, like universal income, it be truly universal -- no means testing, and no weird regionally-based, sliding scale cost-sharing subsidies that would basically penalize poor people for working harder.

This is what left needs: an economic policy with broad appeal that can easily be explained and is easy to implement. It takes only nine words to explain the purpose and nine words to explain the programs.