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Report on; "the failed welfare revolution"
by Brian Steensland

published 2008, isbn# 13-978-0-691-12714-9

by Tim Rourke

Brian Steensland has just put out a book on the history of the attempt to create a Guaranteed Annual Income (GAI) in the United States during the 1960s and 1970s. It has many lessons for Canadians who would like to develop such a scheme in canada. But clearly, Canada has very different problems that the U.S. does, and a different culture.

Steensland's book is much needed, because there has been little study of why the GAI failed. He looks at the way the American culture and existing institutions, especially the existing welfare systems, forced the debate into a particular frame. He shows how the different stake holders influenced the debate. Especially, he looks at the policy making machinery in government, and the public debate as shaped by the mass media.

How GAI started

In Europe and North America, industrialisation destroyed traditional means of social security, giving rise to the modern welfare state. But in Europe this went the way of solidarity, equality, and social stability. In North America, it conformed to free market and individualism.

In the the mid 60's the Arden House commission was appointed by president Johnson to examine the welfare system in the states. This was in response to urban unrest and a perception that the welfare system in the country, established as part of the 1930s Roosevelt 'new deal' was a mess.

In 1966 it issued a report finding that the existing welfare system was founded on the untenable premise that good jobs at good wages were available to all. It criticised the existing system for sorting people into different programs according to their perceived ability to work. They recommended replacing the system with a GAI based solely on economic need.

At this time, experiments were begun in which test populations were given an NIT and compared with control populations.

The Arden house group proposed a system that treated the unemployed and the working poor in the same way. They would receive cash benefits which would raise their incomes up to an annual minimum. They adopted a Negative Income Tax model (NIT) for administering this; the benefits would come as a refundable tax credit.

what happened

Today it seems bizarre, but then it was heralded as an "idea whose time has come". It had strong support from left and right. It almost passed into law. Then it mysteriously disappeared from political discourse for two decades while the problems it was meant to solve got much worse.

It had three things against it. One was the old idea, rooted in American culture, of deserving and undeserving poor; those who really could not work and those who refused to work. This was incompatible with the idea of the 'working poor', who were poor despite working hard, which meant that people's incomes should not come solely from work.

Second, everybody had their own idea of GAI. They wanted to use it to solve various problems only tangentially related to poverty. This helped push the idea forward initially, then impaired it as these different attitudes fought over administering a GAI.

Third, the debates did not come from only perceptions about poverty; the way they were framed shaped the perceptions. This helped to cause the anti-welfare backlash of the 1970s. For example, arguing for GAI as a right of individuals led to seeing poverty as an individual rather than a social problem. This was turned against GAI.

Social movements were a great force in the debate. Labour unions were not. There was no strong Socialist party.

The weakness and decentralised nature of the American state worked against GAI. It is hard to achieve any major reform within the American system; a minority who really do not like something can block it. Such a minority were the southern senators, who thought it was going to upset the racial balance in the southern states.

four perspectives

Thinking about social issues in the states tends to follow four perspectives. One comes from Marxism, the social movement perspective. This holds that the poor create progress for themselves by social disruption. There was a lot of social unrest during the 1960's and the fear of it was a motivator for GAI. There was a stronger welfare rights movement than there was in later decades.

But GAI continued to be considered all through the 1970s even though social unrest had died down and welfare rights groups were disabled.

The second perspective came from business. Business is assumed to want a compliant and low wage labour force. But much of business class supported GAI. Business opposition came almost exclusively from the national office of the US chamber of commerce. The National Federation of Independent Business supported GAI.

There is a third perspective, often ignored; the role of policy making elites within government. In the states, GAI was really pushed by civil servants with some money to develop the idea.

A forth perspective is institutionalism. The structure of the American government, committee systems of the congress, the differences between the south and the rest of the country, and the way local governments are given much control over administering cost shared social programs, greatly influenced the GAI debate.

The problem with institutional approaches is that they ignore interpretative and feedback mechanisms. In other words, the effect of what already exists on people's perceptions and actions. For example, in Canada existing social programs served as a natural bridge to the Canada Assistance Plan (CAP) of the 1960's, while in the US, existing programs often got in the way of welfare reform.

culture

There is resistance to the idea that a society's culture influences the kind of social policies it has. In the US, classical liberalism has a great effect. Critics say that national values are too vague. What values held by who exactly? And about what exactly?

People do not just have interests, they have ideas about their interests. So, interpretative feed backs are important. That is, how different interest groups define what is going on. These interpretations become institutionalised and shape further policy proposals. Critics of this say that policy design becomes 'dead culture'. Or a 'dead hand of culture'.

For this reason, Johnson, Nixon and Carter failed to implement a GAI because they failed to redefine basic concepts. They tried to use the language of the old welfare system and its detractors instead of creating an alternative basis for individual worth.

The big problems for GAI were in the distinctions drawn between categories of poor people in the states; the "deserving" and undeserving" poor. This served the functional requirements of capitalism for a supply of cheap and compliant labour.

But these ideas do not come solely from business. It is part of the nations broader culture. The development of the welfare state in the 1930s actually reinforced this deserving-undeserving distinction. The deserving were the mothers with children, the elderly, and the disabled. They got help. Those whom society thought should be working, regardless of the availability of work, got no help.

The orthodoxy of the post war period was that poverty would be reduced by growth and progress. However, displacement of workers by automation debunked this. Some people were better off, others who were displaced or left behind were worse off.

This is what led government economists to start looking at a GAI as a solution for poverty. They challenged the categories on which existing programs were based, and recognised the working poor. GAI was based on people's need, not their work, and thus put all categories into one.

But this did not make sense culturally.

This caused what was sometimes called 'symbolic pollution'. The working poor did not want to be considered as welfare recipients. This was a big problem for GAI proponents. It influenced how people perceived GAI. It was still viewed as a 'welfare' plan.

stigmas and categories

Symbolic pollution contaminated people's perception, over ruling their self interest. Business leaders thought stigmatising the working poor would reduce their work ethic. Never mind it could provide them cheaper, more stable labour. The working poor did not understand it as being in their interests, they did not want to be classed as welfare recipients, and so opposed GAI or failed to lobby for it.

The opponents of GAI used the categorisation of the poor to attack the proposal, creating a frame of moral contamination between the categories. They started talking about a 'welfare ethic' versus a 'work ethic'.

Nixon tried to use this rhetoric to support GAI, but it backfired on him. His language was categorical even if his plan was not. He did not dare to challenge the orthodoxy that a strong economy would provide a living to every able bodied person.

The opponents of GAI came up with earned income tax credit, EITC, in 1975, which gave a tax refund to workers. It thus split the working and non working poor. It was like Nixon's plan, NIT, but gave tax credits only to people who were working.

At the same time, the people categorised as the deserving poor kept shrinking as more people were forced onto the labour market. This closed off opportunity to create support for a GAI.

For example, beginning in 1967, women began to be pushed off welfare and into the labour market, even when their children were quite young. The normative expectation of mothers changed, they were no longer deserving poor. Being mothers and 'home makers' was no longer 'worthy', they had to be workers.

By the time Carter arrived, the boundaries between the working and non working poor were solidly put in place, Carter could not overcome them.

support and opposition

Steensland explains well why the GAI had so much support at the start,and why so much of that support eventually turned against it. It was not inevitable that it would fail. It failed because its supporters kept trying to get consensus, universal support, instead of accepting that some factors in society were simply not going to buy into it but they could be overcome.

Mayors and governors wanted Nixon's plan because their welfare costs were climbing. It would have been a full cost take-over by the federal government.

Business leaders supported it because it eased urban unrest and removed work disincentives. It also streamlined welfare administration.

But it ran up against cultural categories of worth; if you get public money, you are a less worthy being. Conservative supporters backed away.

Nixon's attempt to co-opt the opposition's language, casting welfare recipients as lazy and degenerate, infuriated welfare rights activists, even though what he was actually proposing was quite progressive. Then the conservative opposition were given ammunition when the GAI experiments showed a high rate of marital dissolution. This ended defence of GAI on the family stability angle.

Also, women in the test GAI populations tended to work less. But GAI opponents ignored results showing that it had little effect on men's working hours. Their earned income went up slightly because they could hold out for better wages.

the media

As the debate progressed in the 60s and 70s media coverage changed with it and largely shaped the debate. In the 60s poverty was seen as mainly a white problem. Somehow racism entered into it, and it gradually became a problem of black people. Distorted media presentations made 'black' and 'welfare' synonymous.

At first there had been a variety of viewpoints. As time went on, newspaper and other media ignored the poverty elimination frame and focussed more on the paternalism/rehabilitation frame. This turned public opinion against welfare recipients and the GAI program.

By the 1970's the media was only telling the causal story behind the rehabilitation frame; the labour market was a force of nature beyond human correction. People who could not adapt to it were unfit for survival, and so welfare should be about rehabilitating the unemployed where possible, to make them fit for work.

That GAI was a response to structural unemployment and low wages disappeared from the media, even though that remained the focus of discussion in government. There were two debates. the real one, about the real issues, and a fantasy one in the media, which could only have been intended to create opposition.

causal stories, paradigms, order changes.

Some describe the pro and anti-GAI fight as being between two causal stories, leading to two different policy prescriptions.

There were four antipoverty paradigms; the pro GAI causal story came out of the first three, the anti-GAI came out of the last.

There was the economic citizenship paradigm; that the economic system was the source of poverty

The family stability paradigm identified the social system as source of poverty, especially among blacks.

The laissez faire, or libertarian, paradigm granted the poor greater freedom and said that the welfare system and its perverse incentives were creating poverty.

The rehabilitation paradigm; this was the main opposition, holding that the poor are morally defective and needed to be rehabilitated.

Then order changes happened. A first order change is a change to the philosophy behind a program. A second order change is change to the policy proposals, with the definition of the problem staying constant.

Two subtle first order changes happened. The welfare system itself became the cause the cause, and not the labour market. The other change was among conservatives who discarded the libertarian/laissez faire critique.

This led to two second order changes, especially after defeat of the Nixon plan. Liberals shifted to job creation schemes. Conservatives turned to the 'California style' reforms pioneered by governor Ronald Reagan; forced rehabilitation and strict work requirements.

time ran out

The chronology of the GAI debate ran from president Kennedy, who rejected the idea of a GAI, to Johnson who was much more sympathetic. It fit well with his "war on poverty" program. But he became tied up in the Vietnam war.

As the war wound down Nixon surprised everyone by becoming a GAI supporter, but as said, blew it by alienating the welfare rights lobby with his rhetoric. And he could not over come the problem of the southern states, where it was seen as a threat to the caste system, a way of giving blacks political power. In the end Nixon's NIT bill was stalled in the senate by some southern democrats who controlled a key committee. Then Nixon got into trouble with Watergate and dropped it.

Carter also had a go at it. The same government staff people who had pushed for the GAI all this time were still around, still insisting that GAI be given for need alone. Carter was dubious about the idea. He favoured it because it promised a comprehensive reform, a 'cleanup of the welfare mess'. His proposal was sandbagged in congress.

With the Reagan administration, all hope died. The old group who had been with it from the Arden house report and Johnson's Office of Economic Opportunity went out and got drunk and then found other jobs.

GAI now

The prospects for a GAI in the US remain difficult today. The U.S. has the highest rate of poverty in the industrialised world. This is because it devotes the smallest percentage of its GDP to social welfare programs. But the cultural threat implicit in it is still there.

Yet culture is not the only factor. Group pressures can act powerfully upon them. But it cannot be underestimated politically. You cannot dismiss the idea of deserving and undeserving poor as simply illegitimate. You must make them illegitimate in the eyes of a majority and that is hard.

Increasing social stress is reviving the debate about a guaranteed income among academics. Ideas similar to the Basic Economic Security Plan proposed by Robert Theobald in his book "free men and free markets' in 1963,are now becoming prominent This meant a demogrant; giving every body a monthly allowance.

The Arden house report went with a negative income tax at the time, but that is falling in popularity. Those who continue to put it forward claim that because of the earned income credit, tax rebates are now in the 'gene pool' and they might as well go with it; extend their rebates down to the part time workers and then the unemployed.

Of course, an EITC is not in Canada's gene pool and we do not want it there, thanks very much.

A third idea is coming forward, the 'stake holder grant' proposed by Allstot and Ackerman which would provide a lump sum payment to all upon reaching adulthood. This seems to be an 'at wits end' attempt to devise some poverty reduction measure that will be acceptable to the paternalist and 'rehabilitating' attitudes toward social welfare, and to libertarians.

But when you look at the provenance of the NIT and demogrant, it is clear that demogrant is about human rights. NIT was proposed by Milton Freidman and George Stigler. Their discussions show that for them the idea was to maintain consumer demand and prevent too much social disorder, and to keep people in the labour force. They thought there would be a disincentive problem, but it could be overcome.

This was all before the right wing developed their system of managing public opinion to the point where they could turn it away from welfare recipients. That was what all the propaganda about welfare queens and young black men was all about.

concluding observations relevant to Canada

From this experience, we see that it will take both insider and outsider groups to get a GAI on the public agenda again. There have to be scholars and politicians interested, but there have to be political action groups pushing from the outside as well. But it is difficult to have a debate about GAI when you do not have the details of an actual plan that is being put forward by government.

It is clear that conservative opposition was not based on an economic threat, but a cultural one. Their subjective understanding of their interests was that the workers had to have a work ethic drilled into them, and a GAI might erode that. In other words, they feared loss of social control.