The other day, during a political discussion (these days, pretty much every discussion gets political) my youngest son wondered aloud whether it had been a mistake to win the Civil War. The red states of the South have been an economic drag on the blue states for a long time–they send significantly fewer dollars to Washington than they receive courtesy of blue state largesse.
Democratic-leaning areas used to look similar to Republican-leaning areas in terms of productivity, income and education. But they have been rapidly diverging, with blue areas getting more productive, richer and better educated. In the close presidential election of 2000, counties that supported Al Gore over George W. Bush accounted for only a little over half the nation’s economic output. In the close election of 2016, counties that supported Hillary Clinton accounted for 64 percent of output, almost twice the share of Trump country.
Evidently, however, we don’t just live in different economies–lately, we also die differently.
Back in the Bush years I used to encounter people who insisted that the United States had the world’s longest life expectancy. They hadn’t looked at the data, they just assumed that America was No. 1 on everything. Even then it wasn’t true: U.S. life expectancy has been below that of other advanced countries for a long time.
The death gap has, however, widened considerably in recent years as a result of increased mortality among working-age Americans. This rise in mortality has, in turn, been largely a result of rising “deaths of despair”: drug overdoses, suicides and alcohol. And the rise in these deaths has led to declining overall life expectancy for the past few years.
What I haven’t seen emphasized is the divergence in life expectancy within the United States and its close correlation with political orientation. True, a recent Times article on the phenomenon noted that life expectancy in coastal metropolitan areas is still rising about as fast as life expectancy in other advanced countries. But the regional divide goes deeper than that.
It turns out that the “death divide” Krugman is addressing is closely correlated with political orientation.
I looked at states that voted for Donald Trump versus states that voted for Clinton in 2016, and calculated average life expectancy weighted by their 2016 population. In 1990, today’s red and blue states had almost the same life expectancy. Since then, however, life expectancy in Clinton states has risen more or less in line with other advanced countries, compared with almost no gain in Trump country. At this point, blue-state residents can expect to live more than four years longer than their red-state counterparts.
There are a number of possible explanations: blue states expanded Medicaid while most red states didn’t, for example. The gap in educational levels is probably implicated as well; better-educated people tend to be healthier than the less educated, for a number of reasons.
Krugman also notes differences in behavior and lifestyle that affect mortality. (Although obesity has dramatically increased all across America, obesity rates are significantly higher in red states.)
Krugman references–and debunks–conservative explanations for the death divide:
Conservative figures like William Barr, the attorney general, look at rising mortality in America and attribute it to the collapse of traditional values — a collapse they attribute, in turn, to the evil machinations of “militant secularists.” The secularist assault on traditional values, Barr claims, lies behind “soaring suicide rates,” rising violence and “a deadly drug epidemic.”
But European nations, which are far more secularist than we are, haven’t seen a comparable rise in deaths of despair and an American-style decline in life expectancy. And even within America these evils are concentrated in states that voted for Trump, and have largely bypassed the more secular blue states.
Although he doesn’t mention it, I’d also be interested in seeing a comparison of gun deaths in Red and Blue states.
Actually, conservatives like Barr inadvertently make a point: culture and values matter. Just not the way they think.
Even if you found yesterday’s post persuasive, a UBI seems politically impossible and cost prohibitive.
Politically, shifting from a paternalistic and judgmental “welfare” system to one awarding benefits based upon membership in the polity would not only require a significant culture change, but would be vigorously opposed by the large number of companies and individuals whose interests are served by America’s current patchwork of programs, subsidies and policies.
Then there’s the issue of cost.
Although Americans’ deeply-ingrained belief that people are poor because they made bad choices or didn’t work hard enough continues to be a barrier to a more generous and equitable social safety net, the most significant impediment to passage of a Universal Basic Income is the argument that has consistently been made to thwart universal healthcare– that America, rich as the country is, simply cannot afford such a Brave New World. This argument flies in the face of evidence from counties with far more robust safety nets: In 2012, the U.S. spent an estimated 19.4% of GDP on social expenditures, according to the Organization for Economic Co-operation and Development. Denmark spent 30.5%, Sweden 28.2% and Germany 26.3%. All of these countries have a lower central government debt to GDP ratio than the United States.
While specific economic recommendations aren’t possible in the absence of concrete, “fleshed out” policy proposals, it’s possible to identify ways in which universal programs might be financed, and how they might affect economic growth. The short answer is that both the UBI and some version of Medicare-for-All could be funded by a combination of higher taxes, savings through cost containment, economies of scale, reduction of welfare bureaucracy, the elimination or reform of existing subsidies, and meaningful reductions in America’s bloated defense budget.
Debates over taxes rarely if ever consider the extent to which individual taxpayers actually save money when government relieves them of the expense of a service. Even now, requiring citizens to make out-of-pocket payments for such things as scavenger services (in lieu of municipal garbage collection), or private police and fire protection or schooling, would vastly exceed the amounts individual households pay in taxes for those services. Low-income citizens, of course, would be unable to afford them.
The American public is positively allergic to taxes, even when a majority financially benefits from them. If low-and-middle income American families did not have to pay out-of-pocket for health insurance, and could count on a stipend of $1000/month, most would personally be much better off, even if they experienced increases in their tax rates. They would likely see other savings as well: for example, if the U.S. had national health care, auto and homeowners’ insurance rates could be expected to decline, because insurance companies wouldn’t have to include the costs of medical care in the event of an accident or injury in their actuarial calculations. Research also predicts the country would see a decline in crime, child and spousal abuse and similar behaviors that have been found to increase under the stresses associated with poverty. (The extent of such reductions and the cost savings attributable to them is speculative, but a substantial level of abatement seems likely.)
Most tax increases, obviously, would be levied against those capable of paying them. Americans used to believe in progressive taxation, and not simply to raise revenue. Taxes on the very wealthy were originally conceived as correctives, like tobacco taxes, that should be judged by their social impact as well as their ability to generate revenue. High tax rates on the rich were intended to reduce the vast accumulations of money that serve to give a handful of people a level of power deemed incompatible with democracy.
Right now they pay about 30% of their income in taxes. Increasing their overall average tax rate by about 10 percentage points would generate roughly $3tn in revenue over the next 10 years, while still leaving the 1% with an average post-tax annual income of more than $1.4m. (That new tax rate, by the way, would be about the same as the overall rate the richest 1% paid back in the 1940s and 1950s.)
As indicated, in addition to reducing inequality, progressive taxation does raise money, and there is widespread agreement that the very rich aren’t paying their share. At the 2019 Davos World Economic Forum, Dutch historian Rutger Bregman caused a mini-sensation by telling the uber-wealthy assembled there than the “real issue” in the battle for equality is tax avoidance and the failure of rich people to pay what they should. Momentum is clearly building for more progressive tax rates than the United States currently imposes.
There is also growing anger directed at the generosity of various tax credits and deductions, aka “loopholes,” that allow immensely profitable corporations to reduce their tax liabilities (or escape them completely). The use of offshore tax havens and other creative methods of eluding payment devised by sophisticated tax lawyers employed by the uber-wealthy is an ongoing scandal.
Real-world experiments like Governor Sam Brownback’s tax cuts in Kansas confirm that, contrary to the ideological arguments against imposing higher taxes on wealthy “makers,” high marginal rates don’t depress economic growth and cutting taxes doesn’t trigger an increase in either job creation or economic growth. In 1947, the top tax rate was 86.45% on income over $200,000; in 2015, it was 39.60% on income over $466,950. During that time span, researchers have found very little correlation between economic growth and higher or lower marginal rates. In 2012, the Congressional Research Service published a research study that rebutted the presumed inverse correlation between tax rates and economic growth.
Climate change is affecting America’s weather, increasing the urgency of efforts to reduce carbon emissions and increase the development and use of clean energy sources. Yet the United States spends twenty billion dollars a year subsidizing fossil fuels, including 2.5 billion per year specifically earmarked for searching out new fossil fuel resources, at a time in human history when the development of those resources is contraindicated. According to Oil Change International, permanent tax breaks to the US fossil fuel industry are seven times larger than those for renewable energy. At current prices, the production of nearly half of all U.S. oil would not be economically viable but for federal and state subsidies.
During the 2015-2016 election cycle oil, gas, and coal companies spent $354 million in campaign contributions and lobbying, and received $29.4 billion in federal subsidies in total over those same years – an 8,200% return on investment. The OCI report concluded that: “Removing these highly inefficient [fossil fuel] subsidies – which waste billions of dollars propping up an industry incompatible with safe climate limits – should be the first priority of fiscally responsible climate, energy, and tax reform policies.” Not incidentally, eliminating these subsidies would free up funds for other uses, including the social safety net.
Then there are farm subsidies– another 20 Billion dollars annually. Arguments for and against terminating these subsidies are more complicated than for fossil fuel subsidies, but the case for means-testing them is strong. In 2017, the USDA released a report showing that approximately half the money went to farmers with household incomes over $150,000. As Tamar Haspel wrote in the Washington Post, “That means billions of dollars, every year, go to households with income nearly three times higher than the median U.S. household income, which was $55,775 that year.”
Farm subsidies were created during the Depression in order to keep family farms afloat and ensure a stable national food supply. Since 2008, however, the top 10 farm subsidy recipients have each received an average of $18.2 million – that’s $1.8 million annually, $150,000 per month, or $35,000 a week. These farmers received more than 30 times the average yearly income of U.S. families. Millionaires are benefitting from a program originally established to protect family farms during times of economic distress.
Most citizens understand why government should not be providing billions of dollars to support companies that make climate change worse, or adding to the bottom lines of already-profitable corporate farms. Efforts to cut the military budget encounter genuine anxieties about endangering national security, as well as more parochial concerns from lawmakers representing districts with economies heavily dependent upon military bases or contractors. Those concerns may explain why U.S. military spending in 2017 was over 30% higher in real terms than it was in 2000.
The United States will spend $716 billion in 2019, and annually spends more than twice what Russia, China, Iran and North Korea spend collectively.
Critics of the military budget make three basic arguments: the budget is much bigger than threats to U.S. security require; very little of the money appropriated supports efforts to fight terrorist groups that pose the real threat in today’s world; and the countries that might threaten America militarily are historically few and weak. (Russia, for example, has an energy-dependent economy roughly the size of Italy’s. According to America’s intelligence community, its efforts to destabilize the U.S. are made through social media, assaults by “bots,” and hacks into vulnerable data repositories, not military action.)
The massive amounts that America spends on its military are used to support bases and troops that are ill-suited to the conduct of modern-day defense. (Even the Pentagon has estimated that base capacity exceeds need by 20%) The existence of this enormous military capacity also creates an incentive to substitute military intervention for the exercise of diplomacy and soft power (as the Japanese proverb warns, when the tool you have is a hammer, every problem looks like a nail.)
An argument can also be made that we are supporting a military establishment that is prepared to fight the last war, not the next one.
As one military expert has written, “counterterrorism is poorly served by manpower-intensive occupational wars, which rarely produce stability, let alone democracy.” He argues the U.S. could safely cut the military budget by 25%; even if he is wrong about the size of the savings that could be realized, knowledgable observers suggest that modernizing military operations, restraining America’s all-too-frequent interventions into the affairs of other countries, and focusing on actual threats would translate into very significant savings.
The elimination of fossil fuel subsidies, and the reduction of farm subsidies and military expenditures would allow lawmakers to achieve substantial savings while pursuing important policy goals. The government ought not be abetting climate change or further enriching wealthy Americans, and it is past time to reconfigure national defense to meet the challenges of the 21st Century.
Andy Stern lists a number of ways a UBI might be funded, including “cashing out” all or most of the existing 126 welfare programs that currently cost taxpayers $1 trillion a year. The UBI would make many if not most of these programs unnecessary.
Stein also lists a number of targeted tax proposals, including a Value Added Tax (VAT), that have been suggested by economists supportive of a UBI. As he points out, these and other proposals constitute a “menu” of possibilities. (Another example: If the UBI allows workers to cover basic essentials, taxpayers would be relieved of the need to supplement the wages of McDonalds and Walmart workers, saving government some ten billion dollars annually.) If and when America has a Congress that is serious about reforming both our democratic decision-making structures and our social infrastructure, that menu provides a number of options from which to choose.
America’s problem is a lack of political will to confront the special interest groups that currently feed at the government trough, not a lack of realistic funding mechanisms.
As regular readers of this blog know, I recently published a book titled Living Together. After a survey of various elements of our society that I identified as “broken,” I drew on a variety of research to propose an expanded social contract. An important part of that new social contract was a Universal Basic Income.
The book was an exercise in utopianism–most of my proposals won’t be adopted in my lifetime, if ever. But a girl can dream…
Be warned: Even the following, abbreviated explanation will make this post longer than usual. (But hey–it’s a holiday…)
_____________
Social scientists point to the ways in which America’s obsessive focus on individual responsibility and achievement obscures recognition of the equally important role played by the broader community within which we are embedded. A much-cited remark made by Elizabeth Warren during her first Senate campaign reminded listeners that communal infrastructure makes individual success and market economies possible:
“There is nobody in this country who got rich on their own. Nobody. You built a factory out there – good for you. But I want to be clear. You moved your goods to market on roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory… Now look. You built a factory and it turned into something terrific or a great idea – God bless! Keep a hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”
The fact that Warren’s observation garnered so much attention suggests that Americans rarely see individual success stories as dependent upon the government’s ability to provide a physical and legal environment within which that success can occur.
The importance of hard work and individual talent should not be minimized, but neither should it be exaggerated. When the focus is entirely upon the individual, when successes of any sort are attributed solely to individual effort, the importance of that infrastructure–and the effects of social and legal structures that privilege certain groups and impede others– become less visible.
Policies intended to help less fortunate citizens can be delivered in ways that stoke resentments, or in ways that encourage national cohesion. Consider public attitudes toward welfare programs aimed at impoverished communities, and contrast those attitudes with the overwhelming majorities that approve of Social Security and Medicare.
Social Security and Medicare are universal programs; virtually everyone contributes to them and everyone who lives long enough participates in their benefits. Just as we don’t generally hear accusations that “those people are driving on roads paid for by my taxes,” or sentiments begrudging a poor neighbor’s garbage pickup, beneficiaries of programs that include everyone (or almost everyone) are much more likely to escape stigma. In addition to the usual questions of efficacy and cost-effectiveness, policymakers in our diverse country should evaluate proposed programs by considering whether they are likely to unify or further divide Americans. Universal policies are far more likely to unify, an important and often overlooked argument favoring a Universal Basic Income.
What if the United States embraced a new social contract, beginning with the premise that all citizens are valued members of the American polity, and that (as the advertisement says) membership has its privileges?
Contracts are by definition mutual undertakings in which both sides offer consideration. In my imagined “Brave New World,” government would create an environment within which humans could flourish, an environment within which members would be guaranteed a basic livelihood, a substantive, excellent education, and an equal place at the civic table. In return, members (aka citizens) would pay their “dues:” taxes, a stint of public/civic service, and the consistent discharge of civic duties like voting and jury service.
In my Brave New World, government would provide both physical and social infrastructure.
We know the elements of physical infrastructure: streets, roads, bridges, utilities, parks, museums, public transportation, and the like; we might expand the definition to include common municipal services like police and fire protection, garbage collection and similar necessities and amenities of community life. Local governments across the country understand the importance of these assets and services, and struggle to provide them with the generally inadequate tax dollars collected from grudging but compliant citizens.
There is far less agreement on what the social infrastructure should look like and how it should be funded. The most consequential element of a new social infrastructure, and by far the most difficult to implement, would require significant changes to the deep-seated cultural assumptions on which the current economy rests. Its goals are to ease economic insecurities, reduce the gap between rich and poor, restore workers’ bargaining power and (not so incidentally) rescue market capitalism from its descent into corporatism and plutocracy. The two major pillars of that ambitious effort are a Universal Basic Income and single-payer health insurance.
The defects of existing American welfare policies are well-known. The nation has a patchwork of state and federal efforts and programs, with bureaucratic barriers and means tests that are expensive to administer and that operate to exclude most of the working poor. Those who do get welfare are routinely stigmatized by moralizing lawmakers pursuing punitive measures aimed at imagined “takers” and “Welfare Queens.” Current anti-poverty policies have not made an appreciable impact on poverty, but they have grown the bureaucracy and contributed significantly to stereotyping and socio-economic polarization; as a result, a number of economists and political thinkers now advocate replacing the existing patchwork with a Universal Basic Income.
A Universal Basic Income (UBI) is a stipend sent to every U.S. adult citizen, with no strings attached– no requirement to work, or to spend the money on certain items and not others. It’s a cash grant sufficient to insure basic sustenance; a number of proponents advocate $1000 per month. As Andy Stern, former President of the Service Employee’s International Union has written,
“A basic income is simple to administer, treats all people equally, rewards hard work and entrepreneurship, and trusts the poor to make their own decisions about what to do with their money. Because it only offers a floor, people are encouraged to make additional income through their own efforts… Welfare, on the other hand, discourages people from working because, if your income increases, you lose benefits,”
With a UBI, in contrast to welfare, there’s no phase-out, no marriage penalties, no people falsifying information–and no costly bureaucracy. Support for the concept is not limited to liberals and progressives. Milton Friedman famously proposed a “negative income tax,” and F.A. Hayek, the libertarian economist, wrote “There is no reason why in a free society government should not assure to all, protection against severe deprivation in the form of an assured minimum income, or a floor below which nobody need descend.” In 2016, Samuel Hammond of the libertarian Niskanen Center, noted the “ideal” features of a UBI: its unconditional structure avoids creating poverty traps; it sets a minimum income floor, raising worker bargaining power without wage or price controls; it decouples benefits from a particular workplace or jurisdiction; since it’s cash, it respects a diversity of needs and values; and it simplifies and streamlines a complex web of bureaucracy, eliminating rent seeking and other sources of inefficiency.
Hammond’s point about worker bargaining power is especially important. In today’s work
environment, characterized by dramatically-diminished unions and the growth of the “gig economy,” the erosion of employee bargaining power is confirmed by data showing that wages have been effectively stagnant for years, despite significant growth in productivity. With a UBI and single payer health coverage, workers would have the freedom to leave abusive employers, unsafe work conditions, and uncompetitive pay scales. A UBI wouldn’t level the playing field, but it would dramatically reduce the tilt. And if the robots do come—if the predictions of jobs that will be lost to automation are even close to accurate—a UBI could act as a national safety-net, helping the country avoid massive civil turmoil.
It is also worth noting that a UBI would have much the same positive effect on economic growth as a higher minimum wage. When poor people get money, they spend it, increasing demand.
An economist quoted in Forbes noted that when Native Americans opened casinos along the Rio Grande, they used the proceeds to deliver basic incomes to the tribal poor.
“Child abuse dropped drastically, crime dropped. Simply handing money to poor people was salutary. It really helped them. Being trapped in poverty, with the stress and insecurities associated with that, is progressively debilitating. Sometimes even the simplest kind of transfers can break the cycle.”
Counter-intuitive as it may seem, a significant body of research supports the
importance of a robust social safety net to market economies. As Will Wilkinson, vice-president for policy at the libertarian Niskanen Center, has put it:
“A sound and generous system of social insurance offers a certain peace of mind that makes the very real risks of increased economic dynamism seem tolerable to the democratic public, opening up the political possibility of stabilizing a big-government welfare state with growth-promoting economic liberalization.”
As Wilkinson argued in an article for the conservative National Review, contemporary arguments between self-defined capitalists and socialists misunderstand economic reality. The left fails to appreciate the role of capitalism and markets in producing abundance, and the right refuses to acknowledge the indispensable role safety nets play in placating the human, deeply-seated distaste for feelings of uncertainty and insecurity.
If we were a country that truly valued all citizens, these would be compelling arguments.
Neither one of you is going to be the Democratic nominee. And I certainly hope neither of you plans to splinter the vote and help Trump by running a third-party candidacy.
Steyer, you are just a (much) smarter, saner version of Trump. Your ads make it clear that you are unacquainted with the complexities of governing; you seem to think that because you were able to make a lot of money (which, to be fair, in your case you actually earned), you have what it takes to run the country.
Would you take your toothache to a dentist who was really smart and who’d made a lot of money but had never gone to dental school or filled a cavity? Of course not.
Bloomberg, you would actually be a more plausible Chief Executive than Tom Steyer–anyone who has been mayor of New York City for three terms understands federalism, Separation of Powers and the function–and limitations– of the Executive branch. But you are smart enough to know that the considerable baggage that experience generated means you have little chance of winning the nomination and initiating what would be billed as a fight between billionaires (a fight that would turn off the party’s Left, whose presence at the polls will be critical) despite the unholy amounts of money you are currently spending on advertisements.
Both of you need to put your massive egos aside and your billions to better use. Permit me to suggest some of those uses:
Buy Fox “News” and turn it into an actual news organization. If Newscorp refuses to sell–or even if you do get that done–go after Sinclair Broadcasting and/or other high-traffic propaganda outlets. (They can still tilt conservative, as that term used to be understood. Just not Trumpian.) (Longterm, you might consider funding that “Seal of Approval” media organization I’ve blogged about…)
If you MUST blanket the airwaves and Internet with political advertising, find the most creative people you can and go after McConnell and Trump and vulnerable Republican Senators. Hard.
Do you know what I would do if I were as rich as the two of you?
I’d hire the best private investigators I could find, and charge them with digging up the tax returns and other financial records Trump is so desperate to keep hidden, and with identifying his and “Moscow Mitch” McConnell’s connections to Russia. I’d instruct them to follow the tantalizing leads suggested in the Mueller report that were left unexamined. I’d send them looking for the high school grades and college transcript Trump doesn’t want anyone to see–not to mention the seamy details of his long friendship with Jeffrey Epstein. (I’d also ask them to find out what the hell it is that Trump has on Lindsay Graham.)
The two of you have the financial wherewithal to save the country. Don’t waste it on ego trips.
Among the columnists I admire–and, admittedly, envy for their eloquence–is Leonard Pitts. Pitts, for those unfamiliar with him, writes for the Miami Herald, but his column is widely syndicated.
Pitts recently wrote “An open letter to all you privately disgusted Republicans,” and in it (unlike our demented President) he really “tells it like it is.” He began by quoting former GOP Rep. Charlie Dent, who recently told CNN that his former colleagues continue to support Trump publicly because they fear the base, but “having spoken to many of them privately, they’re absolutely disgusted and exhausted by the president’s behavior.”
Pitts response was acerbic.
As the scope of Trump’s abuse of power grows ever more obvious, as his contempt for the rule of law grows ever more plain, as leaders of your party offer ever more threadbare justifications and rationalizations for that which is neither justifiable nor rational, we receive word that you folks are “privately … disgusted?”
As Rick Perry and others claim Trump as God’s “chosen one,” as a new Economist/YouGov poll finds that most Republicans rank him a better leader than Lincoln himself, as the party grows ever more indistinguishable from a cult, with Trump as he who must not be questioned, he whose wisdom is beyond mere mortal ken, we hear that off the record, you lot are “very concerned?”
One struggles for adjectives to convey how little that means, how insignificant is the comfort it offers.
Pitts is giving voice to the majority of American citizens who are not part of the cult, who are watching with increasing panic as men and women elected to tend the nation’s business violate their oaths of office by elevating their political prospects over the national interest, and remaining silent–supportive–while the administration dismantles and defiles our government.
Indiana has sent people to Washington that I know personally; I know they understand how appalling this President is, and how deeply he is damaging the country. Yet there has not been a peep, not a dissenting vote–party has consistently trumped integrity. (And yes, I used “trumped” intentionally.)
Pitts says it far better than I can:
Sixty years ago, Martin Luther King issued a warning: “If you fail to act now, history will have to record that the greatest tragedy of this period of social transition was not the strident clamor of the bad people, but the appalling silence of the good people.”
King was addressing white racial moderates, but it is remarkable — and disheartening — how well his warning fits you, who have prioritized your own political backsides above truth, above honor, above national interest. As the country lurches toward a precipice from which it will not recover, you count votes. In a time that demands every good man and woman raise their voices, you embrace the appalling silence instead….
We are posing for history here, ladies and gentlemen. One day we will be judged by what we said and did not say, the stands we took and did not take, in this moment of peril. And you, the party of Reagan and Eisenhower, T.R. and the apparently overrated Lincoln, are coming up well short. Where is your courage? Who broke your moral compass?
Enough with your private disgust and off-the-record concern. The times are calling. They demand you stand up like American women and American men — stand up like John McCain would long ago have done — and speak what you know to be true, what we all know to be true.
Or else, at the very least, please shut up completely. Let the rest of us mourn our country in peace.
