Real Change News | Private wealth, public penury

April 29, 2009
Vol: 16 No: 21

Interview

Private wealth, public penury

by: Trevor Griffey , Contributing Writer

Alice O’Connor sees plenty to trouble her in the history of our country’s safety net

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If the economic crisis has given you a sense of historical déjà vu, you’re not alone. Unregulated capitalism’s latest failure has people increasingly turning to the past — to the history of the Great Depression and the New Deal — for concepts and metaphors to make sense of the present and express visions for the future.

To put the current crisis in broader historical perspective, Real Change spoke with Alice O’Connor, an historian of the American welfare state at UC Santa Barbara, during her recent trip to Seattle. O’Connor’s first book, “Poverty Knowledge: Social Science, Social Policy, and the Poor in Twentieth-Century U.S. History” (Princeton University Press, 2002) provided an intellectual history of how social scientists and politicians described poverty in cultural rather than economic terms, and framed solutions to poverty in terms of punitive welfare policies instead of full employment programs. Her current research is on the “origins of the second Gilded Age.”

O’Connor spoke at the University of Washington April 13, and she answered questions in a live interview that day, then followed up via email; the results from both conversations are interwoven here.

What do you mean when you call the last 40 years the “New Gilded Age”?

Essentially it’s just a shorthand way of pointing to the extreme polarization of wealth, not just in the top 20 percent, not just of the top 5 percent, or the 2.5 percent, but of the 0.1 percent. How did we get back to those extremes that we were supposed to be leaving behind after we built the welfare state and the regulatory political economy during the New Deal?

A lot of people seem to blame or praise Reagan for the rise of anti-government politics.

A lot of the stories start in the 1970s and essentially frame this as a turn to the right. That’s really, really important part of the story. But I want to tell a deeper story.

The liberal welfare state and the New Deal welfare state in particular have consistently privileged private wealth ownership throughout the post-war period— especially for whites, for the more established working class. [They] positioned private wealth as the key to any kind of upward mobility and eventually the key to economic security, [thereby diminishing] other forms of public provision.

Some say that home ownership contributed to the explosion of post-WWII prosperity, and that’s something we should return to.

As John Kenneth Galbraith laid out in his wonderful book, “The Affluent Society,” it’s not just about the privileging of private wealth ownership. It’s about the simultaneous undermining and marginalization of public forms of provision. And it’s the juxtaposition of those two things, and this heavily privatized political economy, that sets us up for a period in which the more direct attacks on public provision end up privileging private wealth ownership that much more.

As wages provide less and less of a safety net, it’s owning a home that maintains your sense of not just upward mobility, but your sense of security in the economy. And that lends itself to a certain kind of politics that consistently undermines the sense of public provision for the common good: shared goods, shared prosperity, politics of redistribution.

Home ownership feeds into the politics of private property ownership, government get off my back, low taxes, education because you paid for it as opposed to [education as] a public good.

Thomas Geoghegan recently argued in Harper’s that the lifting of restrictions on consumer debt in the 1970s allowed people to continue to have high levels of consumption even as their wages decreased. This made it easier for Republicans to attack unions and the welfare state, and set us up for the current financial crisis.

I think that’s right, though I don’t think we’ve fully appreciated the degree to which a lot of that consumer debt is about consumer goods such as health care. It’s not entirely about irresponsible spending on a second car or a big flat screen TV. It’s actually about having to borrow at the usurious rates in order to pay your health bill.

When you describe the redistribution of wealth, or a greater sense of a commons, aren’t those things that are currently being attacked as socialist and un-American?

Those charges are ever at the ready. It’s the notion that there’s a hidden welfare state out there and there’s much more public subsidy of all sorts of things than we’ve been willing to recognize. I’m stunned, because it seems so ridiculous to me, and so unlikely to resonate except with a hard core of people who are increasingly a minority in the larger voting populace. Nevertheless, I completely agree that we have to acknowledge that it is a really powerful legacy that couldn’t be more misleading.

How do we respond to those fears?

In terms of how do we get away from this private ownership society compared to the shared and the common goods society, we are at a really interesting moment right now. It is like Obama is actually embracing an ideologically fairly robust progressivism rhetorically some moments, then the next day he will be out there trying to reassure the markets. So it is hard to tell.

But what I would argue is that now is not the time to shy away from ideological commitments. Reality is pushing us in this direction. What you do is mobilize the political might that you have at this extraordinary moment and you work very hard to create certain core pillars of what would be a more shared sensibility. Of course probably the most obvious example of that would be a universalized healthcare program. Once you have that in place, then you build a kind of political culture of shared responsibility around it.

But the crisis isn’t going to naturally push us in a more progressive direction.

I certainly do not mean to suggest that the crisis is automatically going to push us or force us into a more universalized direction. All bets are off right now about what happens. [Progressive] coalitions have been built for years but they have tended to be around particular issues and single issues. I think that part of this has to be about really building a broader agenda.

Does moving beyond single-issue advocacy also mean imagining new roles for non-profits and even the philanthropies that you came from?

Yes. Although I have to say that, with the exception of comparative handful of genuinely progressive philanthropies, the establishment foundation community is not apt to take leadership on these issues. As far as new roles for civil society, the nonprofit sector has always been extraordinarily diverse, but a lot of community based organizations have been hampered by their inability to keep themselves alive without being a service delivery organization. [It is much harder] to get money for organizing. So one can imagine new roles for them, but in that case the political economy has to change in terms of where they draw their resources from.

Your talk today is about going beyond the “poverty paradigm.” What do you mean by that?

By the poverty paradigm, I’m in part talking about the language or label we use to frame a wide range of problems — deep-seated inequities and extreme insecurities, political, economic and social disenfranchisement — produced by the maldistribution of resources, opportunities and power. More importantly, though, I’m talking about a way of thinking about entrenched and systemic inequality that is very much a legacy of the postwar “affluent society” and especially of the War on Poverty in the 1960s.

The poverty paradigm defines “poverty” in terms of the characteristics and behavior of poor people. It is de-contextualized and ahistorical. It is based on appeals to altruism and philanthropy rather than to social/economic justice and shared citizenship rights. It formulates poverty as a “paradox” amidst affluence, rather than as a feature of inequitably distributed affluence. It perpetuates the mythology that poverty can be “fixed” or “ended” without serious political and economic reform — and without the serious, challenging political mobilizations and power struggles real economic reform is going to require.

What role does the poverty paradigm play in the nonprofit world?

It locks them into a kind of rehabilitative one-by-one approach to dealing with low-income groups. This is largely an artifact of the degree to which the poverty paradigm has been built into a wide variety of funding streams, public and private, that nonprofits rely upon.

The fact that nonprofits and church groups are involved in serving the poor has been used by both conservatives and liberals to argue that these groups, and not government, should take the lead in “ending” poverty.

Although “privatization” is often presented as a mere matter of service delivery and/or efficiency, it is a profoundly political move that feeds into the “de-socialization” of social/economic/structural problems I referred to. The causes, costs of inequality, and the responsibility for dealing with them are assumed to be individual, not shared.

In response to changing federal government priorities, cities across the country are creating “10 year plans” to “end homelessness.” Real Change has been critical of these plans for being based in social uplift instead of economic reform, and for not including the voices of the homeless and low-income themselves.

My sense is that 10-year plans to end homelessness are playing out differently in different places. My concern is that they are both conceptualized and carried out as a kind of triage, a way of containing the most obvious and egregious expression of deeper inequities. That said, maybe the emphasis we’ve seen in several places on “housing first” can be used as jumping off point to draw attention to the larger problem of the crisis of affordable housing.

It is certainly something growing numbers of people can identify with. Where the housing crisis comes from, which gets to the heart of our polarized economy and the low wages, are the predatory practices that fueled it for so long as well as our minimalistic system of social provision.

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