I have been travelling for most of today so I have to keep this post…
I get a lot of hate E-mail. The hate used to be expressed in handwritten tomes from those with old typewriters and too much time on their hands. Sometimes there would the anonymous phone call telling me that if I kept advocating the closure of say the coal industry (my region has the largest coal export port in the world) I wouldn’t see the week out. More often these days the spleen comes via E-mail from rather odd addresses (made up hotmail etc) telling me that I am a waste of space because I support active fiscal intervention to restore full employment. “How can I care so much for the unemployed … they are the dregs of the earth and would be better shot … like you” is a typical turn of phrase. Anyway, I notice that the right-wing always gets personal when evidence against their claims is produced. Then they slink back to their desks and determine that the facts before them are not facts at all (because they violate their ideological precepts) and precede to reinvent history. This exercise is otherwise known as making stuff up. I think in these situations interaction is less productive than action. Accordingly I regularly sing to myself as I work – “We gonna smash their brains in – Cause they ain’t got nofink in ’em” (curious? see later)!
On the topic of hate – and not at all typecasting myself or comparing myself with anyone – I love this speech from FDR at Madison Square Gardens in 1936 as he was campaigning for re-election. The full transcript is available HERE.
Here is a sample to remind you that not much changes:
It is needless to repeat the details of the program which this Administration has been hammering out on the anvils of experience. No amount of misrepresentation or statistical contortion can conceal or blur or smear that record. Neither the attacks of unscrupulous enemies nor the exaggerations of over-zealous friends will serve to mislead the American people.
What was our hope in 1932? Above all other things the American people wanted peace. They wanted peace of mind instead of gnawing fear.
First, they sought escape from the personal terror which had stalked them for three years. They wanted the peace that comes from security in their homes: safety for their savings, permanence in their jobs, a fair profit from their enterprise.
Next, they wanted peace in the community, the peace that springs from the ability to meet the needs of community life: schools, playgrounds, parks, sanitation, highways-those things which are expected of solvent local government. They sought escape from disintegration and bankruptcy in local and state affairs.
They also sought peace within the Nation: protection of their currency, fairer wages, the ending of long hours of toil, the abolition of child labor, the elimination of wild-cat speculation, the safety of their children from kidnappers.
And, finally, they sought peace with other Nations-peace in a world of unrest. The Nation knows that I hate war, and I know that the Nation hates war.
I submit to you a record of peace; and on that record a well-founded expectation for future peace-peace for the individual, peace for the community, peace for the Nation, and peace with the world.
Tonight I call the roll-the roll of honor of those who stood with us in 1932 and still stand with us today.
Written on it are the names of millions who never had a chance-men at starvation wages, women in sweatshops, children at looms.
Written on it are the names of those who despaired, young men and young women for whom opportunity had become a will-o’-the-wisp.
Written on it are the names of farmers whose acres yielded only bitterness, business men whose books were portents of disaster, home owners who were faced with eviction, frugal citizens whose savings were insecure …
For nearly four years you have had an Administration which instead of twirling its thumbs has rolled up its sleeves. We will keep our sleeves rolled up.
We had to struggle with the old enemies of peace-business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.
They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.
Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me-and I welcome their hatred.
I should like to have it said of my first Administration that in it the forces of selfishness and of lust for power met their match. I should like to have it said of my second Administration that in it these forces met their master.
The rest of the speech is well worth studying as it documents much more clearly than current Presidential speeches the class divisions in American politics and the lying, cheating power elites that will do anything to keep the interests of capital and government closely aligned. Any hint that government might stray towards helping workers attain a modicum of security and “peace” (in FDR’s words) is resisted by the conservatives.
I have been studying the economic history of the Great Depression again a lot lately because it is clear that it is a major headache for the conservatives who are increasingly revising the actual facts to justify the claim that the New Deal made things worse and deprived people of their liberty.
It is an argument that almost anyone who lived through the period would laugh at. Only conservatives in well-paid jobs or independent means of income at the time would have dared to suggest that the jobs programs were anything but essential.
I love this cartoon from the period that portrayed the well-to-do that went to the Trans-Lux theatre in New York to hiss FDR. The exhibit at the Library of Congress says it was drawn by one Peter Arno who:
… lampoons a group of middle-aged socialites hissing at President Franklin D. Roosevelt at the Trans-Lux, a popular New York theater. In this drawing, unlike the published version, the group appears scantily dressed, perhaps for a costume party. Though highly popular with most Americans, Roosevelt was strongly disliked by many members of the conservative, social elite. The Trans-Lux often screened newsreels that featured the president.
The modern revisionists – many of them rabid Austrian Schoolers – are now claiming that the public works programs introduced by FDR made the Great Depression worse – for example, HERE (read this in-between meals so as not to sacrifice your nutritional levels). There are many similar examples of this sort of bile which pretends to carefully examine the historical record but essentially just makes the record up to suit.
One of the worst examples I have read is from regular right-wing Bloomberg commentator Amity Shlaes who wrote a book along similar lines (The Forgotten Man) which grossly misused the official data to suit her argument. Trying to prove that FDRs public works programs didn’t reduce the unemployment rate she counted the workers employed in those programs as unemployed. That is just one of many errors in scholarship that you will find in that book. It is a disgraceful piece of work.
This Politico article (February 13, 2009) – Revisionists’ blind view of New Deal – by Matthew Dallek is on sound historical ground.
Please read my blog – The conservative reconstruction of history – for more discussion on this point.
Anyway, the attacks on FDR are clearly motivated at warning the current US administration away from introducing any such programs which are the only way a government can effectively eat into entrenched unemployment and get the economy moving again when the real economy has slipped as much as it has.
I note that the current US President doesn’t sound anything like FDR in his speeches. By his words and actions he is pitching policy towards “organised money” and not towards the “millions who never had a chance-men at starvation wages, women in sweatshops, children at looms” and not towards those desperate “young men and young women for whom opportunity had become a will-o’-the-wisp.”
Which brings me to the topic of the blog – welfare systems. I read an interesting (academic) article today – Falling Short of the Promise: Poverty Vulnerability in the United States and Britain, 1993-2003 – which was published in The American Journal of Sociology, Vol. 116, No. 1 (July 2010), pp. 232-271 (Thanks Scott for the source). The link will only allow you to download the article if your institution has access to JSTOR.
So what is this article about? Simple, the neo-liberal attempts to dismantle the welfare systems that were put in place in various forms after the Second World War to protect workers from income fluctuations arising from the vagaries of the market and/or other sources of insecurity (sickness, old-age, etc) have increased the vulnerability of people to poverty and disadvantage.
Surprised? I wasn’t because I see this sort of research often and have done work in this area myself. For example, we cover these themes in our 2008 book – Full Employment abandoned.
The fact is that this type of research – documenting the damage the neo-liberal policy structures have caused – is getting easier to do because the datasets available are longer in duration – that is, we are now getting more and more data and longer time-series which makes standard statistical analysis more credible.
As I have written before, the conservatives have made an art form of denying mass unemployment. To justify abandoning full employment the mainstream economics theories had to reconstruct mass unemployment.
The world-wide neo-liberal resurgence came in the mid-1970s as governments around the world reacted poorly to the OPEC oil shocks. The contractionary policies designed to quell inflation caused a surge in unemployment and the economic dislocation that followed provoked a paradigm shift in macroeconomics. The overriding priority of macroeconomic policy shifted towards keeping inflation low and eschewed the use of active fiscal policy. Concerted political campaigns by neo-liberal governments, aided and abetted by a capitalist class intent on regaining total control of workplaces, hectored communities into accepting that mass unemployment and rising underemployment was no longer the responsibility of government.
As a consequence, the insights gained from the writings of Keynes and others into how deficient demand in macroeconomic systems constrains employment opportunities and forces some individuals into involuntary unemployment were discarded. Mass unemployment was no longer constructed as a systemic failure (deficient aggregate spending). Policy makers progressively adopted Milton Friedman’s conception of the natural rate of unemployment which redefined full employment in terms of a unique unemployment rate (the NAIRU) where inflation is stable. The NAIRU is allegedly determined by supply forces and is invariant to Keynesian demand-side policies.
The resurgence thus alleged that free markets guarantee full employment (that is, Say’s Law which was discredited in the 1930s) and claimed that Keynesian attempts to drive unemployment below the NAIRU would be self-defeating and inflationary.
The NAIRU approach alleges that individuals “choose” unemployment by not searching effectively for available jobs, by failing to develop appropriate skills, by having poor work attitudes (that is, being plain lazy), and by being overly selective in terms of jobs they would accept.
Governments reinforce this individual lethargy by providing income support payments and imposing restrictive regulations on hiring and firing.
Neo-liberals claim the role of government should be restricted to ensuring individuals are “employable” which involves making it harder to access income support payments by imposing pernicious compliance programs; reducing or eliminating other “barriers” to employment (for example, unfair dismissal regulations); and forcing unemployed individuals into training programs to redress deficiencies in their skills and character.
As the neo-liberal ideology became entrenched in the policy making domains of government, advocacy for the use of discretionary fiscal and monetary policy to stabilise the economy diminished, and then vanished. The rhetoric was not new and had previously driven the failed policy initiatives during the Great Depression.
However, history is conveniently forgotten and Friedman’s natural rate hypothesis seemed to provide economists with an explanation for high inflation and alleged three main and highly visible culprits – the use of government deficits to stimulate the economy; the widespread income support mechanisms operating under the guise of the Welfare State; and the excessive power of the trade unions which had supposedly been nurtured by the years of full employment.
All were considered to be linked and anathema to the conditions that would deliver optimal outcomes as prescribed in the neoclassical economics textbooks. With support from business and an uncritical media, the paradigm shift in the academy permeated the policy circles. After the policy commitment to full employment was jettisoned, unemployment accelerated and has never returned to the low levels that were the hallmark of the Keynesian period.
It was alleged that governments could only achieve better outcomes (higher productivity, lower unemployment) through microeconomic reforms. As a result, governments began cutting expenditures on public sector employment and social programs; culled the public capacity to offer apprenticeships and training programs, and set about dismantling what they claimed to be supply impediments (such as labour regulations, minimum wages, social security payments and the like). Privatisation and outsourcing accompanied these policy shifts.
The agenda was clear – reduce government protection of the weak and transfer power to employers by undermining the capacities of trade unions to bargain for advantage.
That the NAIRU approach seduced governments at all is more difficult to understand given the fact that since 1975 there have never been enough jobs available to match the willing labour supply in most nations. It was absurd to base income support payments on relentless job search when there were not enough jobs to go around.
It was inefficient to force the unemployed to engage in on-going training divorced of a paid-work context. But all that was lost on these ideologically-obsessed governments and their policy advisers. The flawed doctrine of full employability mainly functioned to subsidise the needs of private capital by suppressing wages and conditions and creating desperation among the unemployed.
There is also compelling evidence from developing countries that the type of programs that FDR introduced – broad-based public works – reduce poverty because they provide employment.
In 2008 I did some work for the ILO in South Africa, which involved an evaluation of the South African Expanded Public Works Programme (EPWP) and designing a minimum wage framework for the scheme (and hence the economy as a whole). I found without reservation that poverty rates fell when these schemes were introduced.
Please read the blogs that this search string generates for more discussion of the role of employment creation in less developing nations.
Anyway, back to the main topic.
The article – Falling Short of the Promise: Poverty Vulnerability in the United States and Britain, 1993-2003 – notes that:
In early industrializing nations, poverty was the expected life-long condition of a large segment of the population. Those born into the working class almost certainly faced a future at or barely above the level of subsistence. The rise of modern welfare states in the mid-20th century saw the establishment of a variety of measures aimed at protecting vulnerable members of society from serious want … The promise of the welfare state was that it would improve the long-range picture for those at risk of poverty by redistributing social and economic resources.
It is clear that the welfare states reduced poverty. Many credible references (I know the research) are cited to support this contention. But at the same time, over the last two decades or so, the previous trends towards eliminating poverty in advanced nations has been reversed.
The authors say that “in many welfare states a share of the population continues to experience recurrent or persistent deprivation” and this has been exacerbated by the “refashioning of social safety nets during the 1990s-most notably in the United States and Britain”.
They choose to compare United States and Britain to see:
… how well the promise of the welfare state is being fulfilled in an era of reform … The United States and Britain make useful case studies of poverty dynamics, risk factors, and the impact of social transfers. Both are classed as liberal, or minimally redistributive, welfare states … and both established welfare-to-work programs during the 1990s …
The comparison is interesting because the authors also note that there are some key differences in the way the two nations have behaved during the neo-liberal onslaught on the welfare system:
Britain’s policies-for example, universal child benefits and inclusive access to unemployment compensation and housing support-are more closely linked to those of the highly redistributive European social democratic welfare states … In addition, the British government explicitly prioritized poverty reduction from 1997 onward and introduced a wide range of programs aimed at accomplishing this … By contrast, American reforms focused on slashing welfare rolls and devoted less attention to poverty reduction or to the structural supports (e.g., child care and health benefits) that make paid work economically viable for the poor …
I won’t go into the technical detail of their study which uses econometric modelling to make the comparisons. Based on the differences noted in the way the “reform” process has been implemented in both nations, the authors expected “to see differences between the two countries with respect to poverty vulnerability, despite their broadly similar approaches to social welfare”.
So what did they find?
The authors provide an excellent literature review. One of the recurring findings in the literature is that:
… poverty patterns conform broadly to predictions drawn from welfare regime theory. Rates and durations are lowest in nations where programs are most redistributive and highest where they are least so … Likewise, poverty’s association with social class and with market-related risks such as unemployment appears especially strong in liberal welfare states …
The authors conclude (after controlling for many known causes of poverty and correcting for common measurement errors) that:
1. “… poverty is not as temporary as has been suggested in the bulk of research on observed individual poverty dynamics … in the United States, persistence rather than transience was the dominant form of hardship experienced over this decade-long period”.
2. “Our results also modified the view that poverty risks are widely dispersed across the population. Instead, we determined that nearly half of each
national sample was expected never to fall below 60% of the median income (the stayer group).”
3. “… vulnerability is concentrated among those with particular social characteristics”.
4. “The model estimates also highlighted differences between these two reforming liberal welfare states with respect to the kinds of poverty histories engendered. Persistence, though evident in both countries, was seen to affect twice the proportion of working-age Americans as Britons. Moreover, in the United States, persistence characterized the majority of poverty experiences over the decade, whereas in Britain, occurrences were most often temporary.”
5. Poverty “risks were considerably less equitably distributed in the United States than in Britain”.
6. “These results all point to differences between the United States and Britain with respect to how well their social safety nets protect vulnerable citizens from want. Our analysis of the direct impact of redistributive programs on individual poverty dynamics shed additional light on this distinction. In general, we found that Britons were better protected by social transfers than Americans. British programs were more effective at reducing poverty persistence, at increasing the probability that those who were poor would escape the following wave, and at reducing the risks attached to social location.”
What do the authors think their work means for policy?
They argue that in contrast to the neo-liberal policy approach that “shifted … emphasis from endorsing redistribution and institutional change to promoting individual responsibility and positive life course planning … [which] … is nowhere more evident than in the United States …” their research finds that:
… over a period in which both nations’ governments enacted reforms based on notions of individual responsibility, many vulnerable citizens were left still wanting. At the same time, the comparative story is one in which Britain’s stronger social safety net and explicit commitment to poverty reduction were associated with less persistent poverty and less vulnerability based on social location. That story, evidenced here in multiple ways, indicates that unless structural supports and redistribution remain central elements of antipoverty policy, welfare states risk falling far short of their promise.
The “falling short of promise” is of-course the agenda that the neo-liberals promote. Government rhetoric is about making a difference to the lives of the poor (in a positive way) but their policies are hurting the poor.
The results of their work clearly show that when the government provides a comprehensive “social safety net” people “who fall into poverty” can “pull themselves out” again. The results show that “Americans who become poor are more likely to stay that way.”
The study shows that government fiscal interactions clearly have a positive effect on poverty reduction.
In an article – Welfare Works Better than Bootstraps – published in the Stanford Social Innovation Review, one of the authors of the study said:
I think it all comes down to how you as a society respond to those most vulnerable within it … Do you cut them loose and say: ‘You’re on your own-we did it, now you go do it, too’? Or do you say … we as a society are going to try to mitigate inequalities? It’s a choice of the society, and America has always been more individualistically based than other social democratic countries.
The author also says that this “distinction may now be fading” because of the fiscal austerity program that the new British government is now implementing.
I think this type of research has great relevance for how a government chooses to intervene at the macroeconomic level. I consider an essential aspect of a comprehensive welfare state to include employment guarantees.
In that context, I broaden the concept of a welfare state to be an integral part of macroeconomic policy management – so that the employment guarantee system provides all the benefits that a traditional welfare state will provide (income security etc) but also provides a nominal price anchor to allow full employment to be compatible with price stability.
That is how I see the concept of the Job Guarantee which would ensure that employment opportunities are provided for all those willing to work.
The Job Guarantee (JG) is a policy proposal to restore the role of the public sector as a significant employer, and to do so in a way that also controls inflation.
This category provides links to many blogs I have written on this topic.
The Job Guarantee approach is based on a buffer stock principle whereby the public sector offers a fixed wage job to anyone willing and able to work, thereby establishing and maintaining a buffer stock of employed workers which expands (declines) when private sector activity declines (expands), much like today’s unemployed buffer stocks.
The Job Guarantee provides a platform for developing a national skills base and can be extended in a flexible way to providing jobs to accommodate individuals with special physical, intellectual and behavioural needs.
It can be adapted to address the needs of rural and remote communities, and to reflect cultural norms within indigenous and ethnic minorities.
It is a very inclusive income support program. The Job Guarantee is intended as a platform to: provide economic security and social integration for those whose labour is currently being under-utilised; reduce social dislocation arising from unemployment and poverty; and contribute to the quality of life of all by its contributions to a better environment, public amenity and improved services.
As a minimum wage employer that accommodates the poaching of its skilled workers by other employers, and even facilitates this practice when extra workers are needed in the private sector, the Job Guarantee is a superior price stabiliser than the present method that entails keeping millions of people precariously unemployed and under-employed, and in a condition of skill-atrophying idleness, social exclusion and poverty.
The lying neo-liberals can say what they like. History and credible research show that these sorts of programs really enhance the outcomes for the disadvantaged.
All governments as a minimum act of intervention should introduce employment guarantees as part of their welfare systems. The macroeconomic principles underpinning the Job Guarantee constitute an alternative economic paradigm to that which has dominated economic policy-making over the last 30 years, and which has entrenched under-employment, fuelled private debt and, ultimately, led to the worst crisis in 80 odd years.
To finish the week, I have been listening to one of the classic albums today – Linton Kwesi Johnson’s 1979 – Forces of Victory – released in 1979.
One of the songs is particularly relevant to today’s introduction – Fite Dem Back – which inspired the title of the blog. LKJ wrote the song as a statement about the increasing influence of right-wing movements in the UK and Europe during the 1970s. Not much has changed and the target group now extends more broadly.
Here are the lyrics – learn the melody and sing along as you go through the day!:
We gonna smash their brains in
Cause they ain’t got nofink in ’em
We gonna smash their brains in
Cause they ain’t got nofink in ’em
Some a dem say dem a niggah haytah
An’ some a dem say dem a black beatah
Some a dem say dem a black stabbah
An’ some a dem say dem a paki bashah
Fashist an di attack
Noh baddah worry ’bout dat
Fashist an di attack
Wi wi’ fite dem back
Fashist an di attack
Den wi countah-attack
Fashist an di attack
Den wi drive dem back
We gonna smash their brains in
Cause they ain’t got nofink in ’em
We gonna smash their brains in
Cause they ain’t got nofink in ’em
I think the same about the deficit terrorists and related conservatives – “their brains” – “ain’t got nofink in ’em” – better to just smash them. My blog is my way of attempting to advance that aim.
The Saturday Quiz will be back sometime tomorrow.
That is enough for today!