Posts Tagged ‘social safety net’
“The only corporate social responsibility a company has is to maximize its profits”*…
Congressman Fred Hartley and Senator Robert Taft, namesake co-sponsors of the 1947 Taft-Hartley Act (which figures in the tale referenced below)
… Happily that wasn’t always the accepted belief, and may some day recede. The redoubtable Bill Janeway explains– and laments– the passing of corporations that felt a duty to constituents other than their shareholders…
In his new book Slouching towards Utopia, the economist J. Bradford DeLong points out, correctly, that the “industrial research laboratory and the modern corporation” were the keys to unleashing a radical increase in the rate of scientific and technological innovation, and thus economic growth, from 1870 onward. DeLong also identifies the Treaty of Detroit, a landmark 1950 settlement between General Motors and the United Auto Workers, as a linchpin of American-style post-World War II social democracy. But what ever happened to the behemoth corporations that unlocked decades of growth while sponsoring health insurance and pensions for their employees?…
The rise of the neoliberal order in the 1970s and 1980s coincided with the demise of companies that served their societies and employees as well as their shareholders. Since then, the US federal government and other institutions have managed to offset the loss of only part of the broader contributions that big business once made. The fascinating, sad story at “The Rise and Fall of the Socially Beneficial Corporation,” from @billjaneway in @ProSyn.
* Milton Friedman, intellectual leader– and avatar– of the neoliberal order
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As we learn from the past, we might send inclusively-calculated birthday greetings to a Cambridge University faculty colleague of Bill’s, Sir Partha Sarathi Dasgupta; he was born on this date in 1946. An Anglo-Indian economist, Dasgupta’s contributions have been broad, covering welfare and development economics; the economics of technological change; population, environmental, and resource economics; social capital; the theory of games; ecological economics; and the economics of malnutrition. His deepest interest has been in ecological economics, more particularly in the nexus of population, consumption, and the natural environment and in the economics of biodiversity. With the late Karl-Goran Maler, he developed the concept of “inclusive wealth” as a measure of human well-being.
“Bureaucracies… are not themselves forms of stupidity so much as they are ways of organizing stupidity”*…
Jumping through hoops for the sake of the hoops…
Not long ago, a New York City data analyst who had been laid off shortly after the pandemic hit told me she had filed for unemployment-insurance payments and then spent the next six months calling, emailing, and using social media to try to figure out why the state’s Labor Department would not send her the money she was owed.
A mother in Philadelphia living below the poverty line told me about her struggle to maintain government aid. Disabled herself and caring for a disabled daughter, she had not gotten all of her stimulus checks and, because she does not regularly file taxes or use a computer, needed help from a legal-aid group to make sure she would get the newly expanded child-tax-credit payments.
A Colorado systems administrator with a chronic medical condition told me that switching jobs had caused an accidental lapse in his health coverage, which led to a cascade of paperwork over responsibility for a medical bill. He estimated that he had spent 100 hours resolving the issue…
In my decade-plus of social-policy reporting, I have mostly understood these stories as facts of life. Government programs exist. People have to navigate those programs. That is how it goes. But at some point, I started thinking about these kinds of administrative burdens as the “time tax”—a levy of paperwork, aggravation, and mental effort imposed on citizens in exchange for benefits that putatively exist to help them. This time tax is a public-policy cancer, mediating every American’s relationship with the government and wasting countless precious hours of people’s time.
The issue is not that modern life comes with paperwork hassles. The issue is that American benefit programs are, as a whole, difficult and sometimes impossible for everyday citizens to use. Our public policy is crafted from red tape, entangling millions of people who are struggling to find a job, failing to feed their kids, sliding into poverty, or managing a disabling health condition.
The United States government—whether controlled by Democrats, with their love of too-complicated-by-half, means-tested policy solutions; or Republicans, with their love of paperwork-as-punishment; or both, with their collective neglect of the implementation and maintenance of government programs—has not just given up on making benefits easy to understand and easy to receive. It has in many cases purposefully made the system difficult, shifting the burden of public administration onto individuals and discouraging millions of Americans from seeking aid. The government rations public services through perplexing, unfair bureaucratic friction. And when people do not get help designed for them, well, that is their own fault.
The time tax is worse for individuals who are struggling than for the rich; larger for Black families than for white families; harder on the sick than on the healthy. It is a regressive filter undercutting every progressive policy we have. In America, losing a job means making a hundred phone calls to a state unemployment-insurance system. Getting hit by a car means becoming your own hospital-billing expert. Having a disability means launching into a Jarndyce v. Jarndyce–type legal battle. Needing help to feed a toddler means filling out a novel-length application for aid.
The Biden administration is expanding the welfare state, through the new child tax credit and other initiatives. Congressional Democrats are crafting a new New Deal. But little attention is being paid to making things work, rather than making them exist. And very little attention is being paid to making things work for the neediest—people short on time, money, and mental bandwidth.
The time tax needs to be measured. It needs to be managed. And it needs to end…
Why is so much American bureaucracy left to average citizens? Annie Lowrey (@AnnieLowrey) explains the enormous cost and points to the remedy: “The Time Tax.”
* David Graeber, The Utopia of Rules: On Technology, Stupidity, and the Secret Joys of Bureaucracy
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As we sign on to streamlining, we might recall that this date in 1970 was “Black Tot Day,” the last day on which the British Royal Navy issued sailors with a daily rum ration (the daily tot). In the 17th century, the ration had been beer– one gallon per day– but the the switch was meade the following century to rum in order to cut down on the weight and volume necessary to carry to meet that requirement. The daily allowance was steadily reduced thereafter, until finally it was eliminated.
And so, on July 31, 1970, the last tot was poured as usual at 6 bells in the forenoon watch (11am) after the pipe of “up spirits.” Some sailors wore black armbands, tots were “buried at sea,” and in one navy training camp, HMS Collingwood, the Royal Naval Electrical College at Fareham in Hampshire, there was a mock funeral procession complete with black coffin and accompanying drummers and piper. The move was not popular with the ratings (enlisted personnel), despite an extra can of beer being added to their daily rations in compensation.
“The combination of economic inequality and economic segregation is deadly”*…
When we think of a social safety net, we tend to think about things like health care and environmental protection, social security, child care; lately here’s been lots of talk of Universal Basic Income. All of them are surely part of an answer. But if we want a social infrastructure that not only protects against personal and family challenges, but also creates personal and family opportunities, we need to look further– we need to look to something we might call Universal Basic Assets. The always-illuminating Rana Foroohar explains…
If American states are, as former US Supreme Court Justice Louis Brandeis once put it, the “laboratories of democracy,” then it’s worth watching closely what’s happening in California right now.
The threat of rising taxes and a “soak the rich” political atmosphere has led some wealthy Golden State residents, including a number of technology entrepreneurs, to leave for cheaper pastures such as Austin or Miami. This has, in turn, prompted worries of a larger migration that would have an impact not only on the state’s tax base, but on the growth and innovation that have made California the world’s fifth-largest economy.
It is an exceptionally fraught situation. While nobody these days has much sympathy for wealthy individuals or companies (witness the recent justified fury about the ProPublica leaks showing how little tax the wealthiest Americans pay), or really believes in trickle-down economics, the threat of tax and regulatory arbitrage by other states is real.
The good news is that California is applying some typically creative thinking to the problem. What if there was another way to harness company and citizen wealth for the benefit of all?
One such idea gaining popularity is what has been called “pre-distribution.” Unlike traditional methods of redistribution, in which the state taxes existing wealth and then uses it to bolster various projects and constituents, pre-distribution is all about harnessing capital the same way investors do, and then using the proceeds of the capital growth (which as we know far outpaces income growth) to fund the public sector…
It could help better align public and private incentives and rewards. The massive wealth accrued by leading companies is in part down to the strength of the public commons — good schools, decent infrastructure, basic research, and so on. As economists like Mariana Mazzucato frequently note, why should taxpayers pick up the bill for, say, laying high speed fibre without getting any of the commercial upside?
California Senate majority leader Robert Hertzberg, a Democrat… along with some very rich Californians like former Google chief executive Eric Schmidt and Snap founder Evan Spiegel, have proposed… something called “universal basic capital”. The idea is that seed contributions of equity from companies or philanthropists could be invested into a fund that would then be used by individual Californians for things like retirement security, healthcare and so on…
If pre-distribution works in the laboratory of California, I expect it will be adopted in some way at the federal level. The Obama administration actually tried to implement its own version of the CalSavers programme for the country as a whole, called myRA, but it failed in part because the funds were invested only in super safe low yielding Treasury bills at a time when the market as a whole was rising far faster. Even at this politically polarised moment, it’s an idea whose time may have come. Pre-distribution is supported by such unlikely bedfellows as hedge funder Ray Dalio and leftwing economist Joseph Stiglitz. Perhaps that’s because while it doesn’t fundamentally alter the market system, it does broaden share ownership: a mix of capitalism and socialism that is right for our time…
“Capital for the people — an idea whose time has come“: @RanaForoohar explains how California’s nascent experiments in Universal Basic Assets could be a model for the nation.
In thinking about national possibilities, your correspondent’s favorite rationale/approach is Cornell economic historian Louis Hyman‘s formulation (toward the end of) this post.
* “The combination of economic inequality and economic segregation is deadly. It reinforces the advantages of those at the top while exacerbating and perpetuating the disadvantages of those at the bottom. Taken together, they shape not just inequality of economic resources, but also a more permanent and dysfunctional inequality of opportunity.” – Richard Florida
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As we share and share alike, we might send grateful birthday greetings to the Electronic Frontier Foundation; it was founded by John Gilmore, John Perry Barlow, and Mitch Kapor on this date in 1990. Over the last 30 years, EFF has become the leading nonprofit defending digital privacy, free speech, and innovation.
Happy Birthday– and many more!
“Not with a bang, but a whimper”*…
What actually happens to workers when a company deploys automation? The common assumption seems to be that the employee simply disappears wholesale, replaced one-for-one with an AI interface or an array of mechanized arms.
Yet given the extensive punditeering, handwringing, and stump-speeching around the “robots are coming for our jobs” phenomenon—which I will never miss an opportunity to point out is falsely represented—research into what happens to the individual worker remains relatively thin. Studies have attempted to monitor the impact of automation on wages on aggregate or to correlate employment to levels of robotization.
But few in-depth investigations have been made into what happens to each worker after their companies roll out automation initiatives. Earlier this year, though, a paper authored by economists James Bessen, Maarten Goos, Anna Salomons, and Wiljan Van den Berge set out to do exactly that…
What emerges is a portrait of workplace automation that is ominous in a less dramatic manner than we’re typically made to understand. For one thing, there is no ‘robot apocalypse’, even after a major corporate automation event. Unlike mass layoffs, automation does not appear to immediately and directly send workers packing en masse.
Instead, automation increases the likelihood that workers will be driven away from their previous jobs at the companies—whether they’re fired, or moved to less rewarding tasks, or quit—and causes a long-term loss of wages for the employee.
The report finds that “firm-level automation increases the probability of workers separating from their employers and decreases days worked, leading to a 5-year cumulative wage income loss of 11 percent of one year’s earnings.” That’s a pretty significant loss.
Worse still, the study found that even in the Netherlands, which has a comparatively generous social safety net to, say, the United States, workers were only able to offset a fraction of those losses with benefits provided by the state. Older workers, meanwhile, were more likely to retire early—deprived of years of income they may have been counting on.
Interestingly, the effects of automation were felt similarly through all manner of company—small, large, industrial, services-oriented, and so on. The study covered all non-finance sector firms, and found that worker separation and income loss were “quite pervasive across worker types, firm sizes and sectors.”
Automation, in other words, forces a more pervasive, slower-acting and much less visible phenomenon than the robots-are-eating-our-jobs talk is preparing us for…
The result, Bessen says, is an added strain on the social safety net that it is currently woefully unprepared to handle. As more and more firms join the automation goldrush—a 2018 McKinsey survey of 1,300 companies worldwide found that three-quarters of them had either begun to automate business processes or planned to do so next year—the number of workers forced out of firms seems likely to tick up, or at least hold steady. What is unlikely to happen, per this research, is an automation-driven mass exodus of jobs.
This is a double-edged sword: While it’s obviously good that thousands of workers are unlikely to be fired in one fell swoop when a process is automated at a corporation, it also means the pain of automation is distributed in smaller, more personalized doses, and thus less likely to prompt any sort of urgent public response. If an entire Amazon warehouse were suddenly automated, it might spur policymakers to try to address the issue; if automation has been slowly hurting us for years, it’s harder to rally support for stemming the pain…
Brian Merchant on the ironic challenge of addressing the slow-motion, trickle-down social, economic, and cultural threats of automation– that they will accrue gradually, like erosion, not catastrophically… making it harder to generate a sense of urgency around creating a response: “There’s an Automation Crisis Underway Right Now, It’s Just Mostly Invisible.”
* T. S. Eliot, “The Hollow Men”
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As we think systemically, we might recall that it was on this date in 1994 that Ken McCarthy, Marc Andreessen, and Mark Graham held the first conference to focus on the commercial potential of the World Wide Web.
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