The first purpose of my
article was to move discussion of the new inequality from analyses of fact or
cause or consequence toward developing a sensible long-term plan for improving
the economic position of low-wage Americans. In this minimal goal I succeeded.
The commentators, some simpatico with the approach I outlined and some not,
have clarified the issues in developing a war on inequality.
My second purpose was to begin to lay out a new way to address
poverty. The strategies that I proposed are designed to fit naturally with
a free-enterprise, market-based economy-to "level the playing field"
through asset redistribution, increased opportunity to unionize, or starting-gate
equality-while maintaining a modest safety net or social insurance (social
wages, appropriately taxed) after that. These strategies sought to encapsulate
a basic level of citizen income into private property rights early on to preserve
redistributions to the low-income population and minimize interventions with
markets. I made cities the focal place for policy initiative for obvious reasons.
I read the responses to this "candidate plan" as
falling into two basic categories: some find the five strategies basically
right (though they often doubt political feasibility). Others favor more traditional
state policies. Tobin, Krugman, Heckman, and Cortes are in the first camp,
Piven, Hartmann, and Piore in the second, though all have their own distinct
take. The dividing line is whether one puts greater faith in government to
address problems or greater faith in individuals and citizen organizations
(such as Cortes's IAF), given appropriate initial conditions, to address problems.
To be sure, I agree that there can be no solution to the new
inequality without government, just as there can be no property-based capitalism
without government enforcing laws. And, to be sure, we need taxes to level
the field and give the low-income citizens, particularly children, a fair
chance in the market economy. And yes, there are good government programs,
of which the EITC may be an exemplar, and good training programs. I concur
with Jim Heckman that the best training is done early in life, vide starting-gate
equality. But once government accomplishes a basic redistribution, I believe
it should step aside and let us all compete fairly in the market (with some
modest social insurance for those who fare poorly). Heidi Hartmann encapsulated
the disagreement superbly. I believe that most people will prosper in an "ideal
virgin capitalism." She fears it will screw us all. That is a big gap
in orientation, though we favor many of the same specific policies.
I am less suspicious than Paul Krugman about the attitudes
of conservatives. I have encountered the diehard effort to deny the facts
but I have also talked with many businessfolk and political conservatives
who recognize that we have a problem and who can and, I hope, will contribute
to its solution. When I first began talking explicitly about finding policies
to "raise the bottom" of the income distribution through explicit
redistribution, even the big liberal foundations thought this an off-base
topic. Now there are conservatives willing to enter the conversation.
I am less suspicious of schemes to "privatize social security"
than Jim Tobin or most others. Sweden's Social Democrats have enacted a 2
percent mandatory tax for funding pensions above the state level, so Meidner
type plans are not dead. They have to be carefully drawn up and negotiated
with the business community, however, and not jammed down anyone's throats.
There will be numerous opportunities in the next several years to offer redistributive
alternatives to various right-wing schemas. I hope we will take those opportunities
and not circle the wagons in defense of Depression Era programs. If we follow
Frances Piven's road and don't take the initiative, I fear we are headed toward
more and more "welfare reforms."
Everyone says "amen" to unions, but only Michael
Piore addressed my scheme to give the right to legislate in this area to the
states. I look at public sector labor law, legislated at the state level,
and private sector law, nationally legislated, and see unions flourishing
under the former and dying under the latter. I believe that unions do enough
economic and social good that the more pro-union states will succeed in the
market. I am dubious that world markets determine all outcomes or that we
need world solutions.
Many commentators brought up the critical issue of turning
ideas into political and economic reality. In a world where the wealthy own
politics, it is hard to imagine things being all that different. But social
change occurs discontinuously, and those changes that occur in periods of
big change are the lasting ones. When the United States decides to address
inequality, we must have available serious plans to turn the big changes into
a long-term improvement in the economic position of the low-income citizens.
And, yes, we must all try to get the country to face the new inequality honestly,
and to create the constituency for it, as Cortes notes.
After reading the commentaries, I still don't think the road
to salvation is through old-fashioned welfare state policies, but that something
more radical is needed. Some of my conservative friends sometimes call the
radical solution citizen capitalism. Some of my left-oriented friends call
it propertied socialism. But, as Jim Tobin says, it don't matter what you
call it . . . liberalism, conservatism, progressivism, a new-New Deal or a
new-fair deal or whatever tickles your fancy. Let's keep pushing solutions
and who knows? If Evander Holyfield can knock out Mike Tyson, the United States
can knock out the scourge of the new inequality.
Originally published in the December 1996/
January 1997 issue of Boston Review