Who Pays For Austerity?

This analyses of our current economic battle by Thomas Edsall gets to the heart of the issue [1]:

The economic collapse of 2008 transformed American politics. In place of shared abundance, battles at every level of government now focus on picking the losers who will bear the costs of deficit reduction and austerity.

Fights in Washington are over inflicting pain on antagonists either through spending cuts or tax increases, a struggle over who will get a smaller piece of a shrinking pie. This hostile climate stands in sharp contrast to the post-World-War II history of economic growth. Worse, current income and employment trends suggest that this is not a temporary shift.

[...]

The new embattled partisan environment allows conservatives to pit taxpayers against tax consumers, those dependent on safety-net programs against those who see such programs as eating away at their personal income and assets.

In a nuanced study, “The Tea Party and the Remaking of Republican Conservatism,” the sociologist and political scientist Theda Skocpol and her colleagues at Harvard found that opposition to government spending was concentrated on resentment of federal government “handouts.” Tea Party activists, they wrote, “define themselves as workers, in opposition to categories of nonworkers they perceive as undeserving of government assistance.”

In a March 15 declaration calling for defunding of most social programs, the New Boston Tea Party was blunt: “The locusts are eating, or should we say devouring, the productive output of the hard working taxpayer.”

The conservative agenda, in a climate of scarcity, racializes policy making, calling for deep cuts in programs for the poor. The beneficiaries of these programs are disproportionately black and Hispanic. In 2009, according to census data, 50.9 percent of black households, 53.3 percent of Hispanic households and 20.5 percent of white households received some form of means-tested government assistance, including food stamps, Medicaid and public housing.

Less obviously, but just as racially charged, is the assault on public employees. “We can no longer live in a society where the public employees are the haves and taxpayers who foot the bills are the have-nots,” declared Scott Walker, the governor of Wisconsin.

For black Americans, government employment is a crucial means of upward mobility. The federal work force is 18.6 percent African-American, compared with 10.9 percent in the private sector. The percentages of African-Americans are highest in just those agencies that are most actively targeted for cuts by Republicans: the Department of Housing and Urban Development, 38.3 percent; the Equal Employment Opportunity Commission, 42.4 percent; and the Education Department, 36.6 percent.

The politics of austerity are inherently favorable to conservatives and inhospitable to liberals. Congressional trench warfare rewards those most willing to risk all. Republicans demonstrated this in last summer’s debt ceiling fight, deploying the threat of a default on Treasury obligations to force spending cuts.

Conservatives are more willing to inflict harm on adversaries and more readily see conflicts in zero-sum terms — the basic framework of the contemporary debate. Once austerity dominates the agenda, the only question is where the ax falls.

From Greg Sargent, Exhibit A [2]:

In a recent interview, a top Ohio Republican defended this in a curiously belligerent way, one that may reverberate in the race’s final days: He claimed lawmakers don’t need to take a pay cut in the spirit of shared sacrifice, because “I earn my pay,” adding: “Republicans earn their money.”

GOP state Rep. Lou Blessing — a prominent Republican voice in this fight, as the Speaker Pro Tempore of the Ohio House of Representatives — made the claim during an interview with Ohio public radio, audio of which is right here [3]. Pressed on why he and some other GOPers wouldn’t agree to labor’s insistence that legislators also accept a pay cut, he said:

“Because it’s not merited. I earn my pay. I think that was just political baloney. So they can say in an ad, `Gee , you know, they didn’t support a pay cut.’ Well, no, I don’t support a pay cut. Republicans earn their money. Apparently Democrats don’t. They feel they should be paid less. That may be true. Maybe we’ll just cut the Democrats’ pay.”

Hmmm. What's he going on about?

Here's an excerpt from one of my stale old posts [4] of yesteryear which has new relevance today:

In this paper Sociologist Nathan Glazer of Harvard answers a related question --- “Why Americans don’t care about income inequality” which may give us some clues. Citing a comprehensive study by economists Alberto Alesina and Edward Glaeser of Harvard and Bruce Sacerdote of Dartmouth called, "Why Doesn't the United States have a European-Style Welfare State?" (Brookings Papers on Economic Activity, 2/2001) he shows that the reluctance of Americans to embrace an egalitarian economic philosophy goes back to the beginning of the republic. But what is interesting is that both he and the economists offer some pretty conclusive evidence that the main reason for American “exceptionalism” in this case is, quite simply, racism.

The AGS [Alesina, Glazear and Sacerdote] report, using the World Values Survey, that "opinions and beliefs about the poor differ sharply between the United States and Europe. In Europe the poor are generally thought to be unfortunate, but not personally responsible for their own condition. For example, according to the World Values Survey, whereas 70 % of West Germans express the belief that people are poor because of imperfections in society, not their own laziness, 70 % of Americans hold the opposite view.... 71 % of Americans but only 40% of Europeans said ...poor people could work their way out of poverty."

[…]

"Racial fragmentation and the disproportionate representation of ethnic minorities among the poor played a major role in limiting redistribution.... Our bottom line is that Americans redistribute less than Europeans for three reasons: because the majority of Americans believe that redistribution favors racial minorities, because Americans believe that they live in an open and fair society, and that if someone is poor it is his or her own fault, and because the political system is geared toward preventing redistribution. In fact the political system is likely to be endogenous to these basic American beliefs."(p. 61)

"Endogenous" is economics-ese for saying we have the political system we do because we prefer the results it gives, such as limiting redistribution to the blacks. Thus the racial factor as well as a wider net of social beliefs play a key role in why Americans don't care about income inequality, and why, not caring, they have no great interest in expanding the welfare state.

Glazer goes on to point out how these attitudes may have come to pass historically by discussing the roles that the various immigrant support systems and the variety of religious institutions provided for the poor:

But initial uniformities were succeeded by a diversity which overwhelmed and replaced state functions by nonstate organizations, and it was within these that many of the services that are the mark of a fully developed welfare state were provided. Where do the blacks fit in? The situation of the blacks was indeed different. No religious or ethnic group had to face anything like the conditions of slavery or the fierce subsequent prejudice and segregation to which they were subjected. But the pre-existing conditions of fractionated social services affected them too. Like other groups, they established their own churches, which provided within the limits set by the prevailing poverty and absence of resources some services. Like other groups, too, they were dependant on pre-existing systems of social service that had been set up by religious and ethnic groups, primarily to serve their own, some of which reached out to serve blacks, as is the case with the religiously based (and now publicly funded) social service agencies of New York City. They were much more dependant, owing to their economic condition, on the poorly developed primitive public services, and they became in time the special ward of the expanded American welfare state's social services. Having become, to a greater extent than other groups, the clients of public services, they also affected, owing to the prevailing racism, the public image of these services.

Glazer notes that there are other factors involved in our attitudes about inequality having to do with our British heritage, religious backround etc, that also play into our attitudes. But, he and the three economists have put their finger on the problem Democrats have with white Southern voters who “vote against their economic self-interest,” and may just explain why populism is so often coupled with nativism and racism --- perhaps it’s always been impossible to make a populist pitch that includes blacks or immigrants without alienating whites.

I think the most important insight Edsall has in the first piece excerpted above is that a whole lot of public employees have been racial minorities (because private firms simply didn't make the effort the government did to seek them out.) This led, of course, to a huge and impressive leap into the middle class for many African Americans and lately, Hispanics. And that, again, is the essence of the problem.

Sure, it's more complicated than that and the whole issue has morphed into an ideological set point fairly divorced from any direct relationship to racism or xenophobia. But if people want to know how America developed the fault lines that are always playing themselves out in one way or another, this is fundamental to understanding it.