What You Should Think About Welfare

October 8, 2008

“Children and dogs are as necessary to the welfare of this country as Wall Street and railroads.”

–Harry S. Truman

To date this year, 281 times the Sun has risen over the eastern horizon.  It appears that there are no press reports of widespread dismay about these events.  After all the history and mechanics of the Earth-Sun relationship are largely understood.  When it comes to federal bailouts of major private institutions, there is nothing secret about the mechanisms at work or the history.  Yet again and again and again, this predictable phenomenon is met with disgruntled surprise.

Of course there have been some major failures in the history of U.S. business.  The predictable mechanism at work here is invocation of the domino theory.  Dotcom ventures that did not exist a few years previously are in a poor position to claim that their failure will have devastating ripples throughout the economy.  Yet a wide variety of industries can make just such an appeal.  Industrialists cite their sprawling supply chains as if even the best of their suppliers could not weather the loss of a major buyer.  Financial service providers tally every asset and liability together and paint a picture of total loss should the institution fail.   Firms in the energy or transportation sectors sometimes couple legitimate arguments with hyperbole about theoretical disasters.

Capitalist theories hold that businesses unable to sustain themselves in market competition should cease to be.  Their employees and other assets are thought best utilized by other productive endeavors.  Some idealize those theories to the extent that it is inconceivable any practical considerations might justify intervention to prop up a failing business.  In reality, those practical considerations sometimes exist.  In reality, their absence is often no barrier to federal largess.

In fact, corporate welfare often has nothing to do with corporate distress.  Handouts in the form of tax loopholes custom-designed for a specific industry or even a specific corporation have been routine business on Capitol Hill throughout our history.  Massive subsidies for companies already turning a healthy profit are also part of that history.  Sometimes, it seems like simply having the money and influence to make the appeal is enough to insure the state will provide generous support on demand.

Yet only during confluences of bleak economic news and extraordinary increases in spending on corporate welfare is there much vocal outrage.  Supporters of officials (and the system) behind this spending are often quick to change the subject when there is no ongoing economic crisis.  Many will quietly condemn the spending, but few will take umbrage to the same extent they would if those officials took progressive stances on social issues.  It is as if all that waste and inefficiency were a small price to pay for keeping up the fight against gay marriage and gun commerce regulation.

Since the dawn of the Reagan Revolution, this ideological orthodoxy has created a situation in which big businesses are catered to with wild abandon.  Recent events create the impression that no sum is too large when it comes to spending on corporate bailouts.  Yet public sector efforts to help out individual Americans in economic distress have lost as much ground as has been gained during this time.  The blend of ideology and hypocrisy here is at the heart of the ongoing concentration of the nation’s wealth.

Our de facto aristocracy does not lack state support.  Even if maintaining England’s Civil List was not a self-funding endeavor, the costs would be a molehill compared to the mountain of federal money poured into the coffers of politically connected corporations.  Again, capitalist theory holds that this money will be used to insure optimal productivity, or else competitors will triumph.  Even a cursory survey of trends in private executive over the past thirty years renders that view preposterous.

The astronomically large flows of money from taxpayers to major corporations fund a range of “business operations” that typically include obscene compensation packages for the very executives responsible for failing to sustain their ventures through private means.  The indirect nature of public support for colossal CEO pay levels somehow causes it to have less of a political impact than initiatives that extend public support to needy individuals.  Though much of the nation does support reasonable social spending, millions of Americans continue to have contempt for the very idea of individual welfare.

To the degree that proposed social spending does nothing to make the lives of actual human beings better, it deserves contempt.  Yet to the degree that it extends real opportunity or alleviates real harms, social spending deserves at least as much consideration as that subset of corporate welfare that actually bolsters the overall national economy.  After all, sometimes giving a helping hand to a struggling business really does preserve good jobs, promote a favorable balance of trade, generate more tax revenue, etc.  Far more often, giving a helping hand to a struggling individual really does preserve good health, promote career advancement, generate more tax revenue, etc.

As the Red Scare continues to leave so many voters afflicted with a crippling political phobia, almost nothing worthwhile escapes the “socialist” brand.  The specter of some absolute economic equality far beyond even the Soviet regime’s extremes is offered up as an inevitable consequence of such modest proposals as expanding educational finance spending or raising taxes on personal incomes beyond the first quarter million dollars per year.  By denying the middle ground’s existence, ideological extremists have effectively thwarted the advance of social services for three decades.

The stagnation of purchasing power for 80% of American households during that same thirty year span cannot be pure coincidence.  While the corporate power structure siphons the nation’s wealth uphill, ordinary citizens do not enjoy better protection from danger, greater opportunity to learn, superior infrastructure, rising prestige in the world, cleaner air, safer water, etc.

In the end, this is a profoundly backward approach to acting on the U.S. Constitution’s decree that the government ought see to the general welfare.  The world is full of examples establishing that serious anti-poverty relief, generous educational subsidy, and even universal health care can be implemented to good effect without threatening useful levels of economic inequality.  Virtually no American desires a future social order in which every individual experiences the same economic outcome, but we ought to be able to rally a consensus around the idea that every American deserve a future in which fairness is the principal architect of all economic outcomes.