The conversation, which streamed on Twitter Live earlier today, explored how Americans’ lack of generosity and empathy for vulnerable citizens has led to a failing public health system, systemic inequalities, and lack of public resources in multicultural communities. Greenlee and Porter broke down the many ways the New Deal’s programs excluded nonwhite Americans from benefits reserved for white people, and the political strategies behind its architecture. They also considered the policies that cut the welfare system in favor of fueling mass incarceration, the attacks on the Affordable Care Act, and the fundamental shift it would take for America to expand the social safety net to include benefits like childcare and paid sick leave.

Drawing attention to the key COVID-19 relief measures set to expire at the end of July, Porter warned of “an immense spike in poverty, deprivation, and destitution” if Congress does not act to renew these measures. “The institutional failures that are produced by this racial hostility are really, really getting in the way of us dealing with this pandemic and getting our society and our economy back on its feet,” he said.

“Quoted” with Eduardo Porter:

The rhetoric around welfare starts revolving around ‘welfare queens’ who are corrupt and undeserving, about single moms who are just taking a check from the government and not taking a job. All that stuff is happening at the same time as this parallel discourse about our streets being under siege, again by people of color mostly. And so the criminal justice system becomes the tool to manage our society. It seems to me like a very, kind of like a crazy conclusion to take—let’s defund the things that improve people’s wellbeing, and fund this thing that locks them away because they’re dangerous.

Watch the full conversation below:

Zócalo Live: How Has Racism Shaped the American Economy? with @portereduardo and @CynthiaGreenlee https://t.co/I5SEZkt9hS

— Zócalo Public Square (@ThePublicSquare) July 21, 2020

The post How Has Racism Shaped the American Economy? appeared first on Zócalo Public Square.

Economic inequality has always been with us, and when you observe a dramatic market compression you can always link it to a disastrous event. These events come in four flavors: intense popular military mobilization, violent and transformative revolutions, state collapse, and catastrophic epidemics. These are very severe episodes that hold true across history. It is very hard, if not impossible, to find any episode of major equalization that is not linked to one of these four types of events.

Just as in many other developed countries at the time, external shocks—in the form of war and the Great Depression—acted as critical catalysts for Sweden’s redistributive fiscal reform and the eventual expansion of the welfare state.

Although Sweden is located at the margins of the European continent, it is adjacent to the major powers involved in both world wars: Germany, Great Britain, and Russia. In World War I, conservative Swedish elites sided with Germany and raked in large profits while food shortages caused by the Entente naval blockade and labor unrest rocked the country. Hunger marches near the end of the war triggered heavy-handed police responses.

Sweden, a nonbelligerent, largely missed out on the World War I surge in top taxation, and continued to lag behind Europe’s liberal democracies until the next war. Military mass mobilization, progressive graduation of tax rates, and the targeting of elite wealth on top of income constituted the three main ingredients of fiscal leveling. Popular discontent paved the way for the country’s first Liberal-Social Democrat coalition government, which started to take tentative steps in a more progressive direction under the growing shadow of the Russian Revolution not far from Sweden’s shores. Once the war had ended, overseas markets collapsed and industrial overcapacity ushered in financial crisis and unemployment. The wealthy, deeply enmeshed in these businesses, suffered disproportionately.

During World War II, when Germany invaded Denmark and Norway, Sweden was completely surrounded by the Nazis and their allies. Once the Nazi war machine had shifted into high gear, as a leading Social Democrat politician in 1940 put it, the Swedes found themselves “living in front of the muzzle of a loaded cannon.” The country was exposed to both German and Allied pressure. At one point Germany threatened to bomb Swedish cities unless granted transit concessions. Later in the war, Germany drew up a contingency plan for an invasion in the event of an Allied incursion into Sweden.

The Swedes had to put virtually everything on a war footing to stand a chance of defending themselves against an invasion. They experienced full mobilization—there was no actual fighting, but they mobilized a very large share of their population. They had to create military industries virtually out of nothing overnight. This crisis transformed what had been a right-wing military force into a people’s army based on mass conscription and volunteerism. Some 400,000 men served out of a population of 6.3 million, and of those, 50,000 soldiers were invalided as the result of injuries, accidents, and harsh service conditions. Strict rationing among the civilian population served as a crucial means of leveling class differences. Shared military and civilian service helped overcome existing distrust and fostered teamwork and mutual dependency.

As John Gilmour puts it in his landmark study of wartime Sweden, the country “experienced significant social, political, and economic disruption as a result of wartime conditions and emerged in 1945 as an altered society in attitude and aspiration.” The country “gained social benefits from war without suffering the same loss of life and property as the belligerents and occupied nations.”

All these things together produced an effect quite similar to what happened in countries that endured actual fighting. People were more willing to go along with it because of the perceived existential threat. This shows that societies did not have to experience this mass violence firsthand. It was enough if it happened next door and there was a serious risk of getting involved, and everyone had to prepare for this.

Sweden’s eightfold military build-up during World War II dramatically boosted income tax rates for top earners and corporations. Whereas fiscal responses to the Great Depression had remained modest, the tax reform of 1939 greatly raised top rates and created a temporary defense tax that became highly progressive only for the highest earners and that was further sharpened in 1940 and 1942. In addition, the statutory corporate tax rate rose to 40 percent. The strengthening of military capacity was the official rationale for all these measures. Thanks to the threat of war, in a telling departure from the fractious politics of the 1920s and 1930s, these reforms were passed with little debate or controversy as an almost unanimous political decision.

In this sense, Sweden did experience a major war mobilization effect that was conducive to the subsequent expansion of the welfare state. In the longer term, the war years left their mark on popular beliefs: The vision of Sweden as a small country that had been saved by a coalition government and societal consensus contributed to the formation of the ideal of a solidaristic society sustained by a redistributive welfare state.

Postwar policy was grounded in the wartime footing of the tax system and the shared war experience of the general population. In 1944, as the war was drawing to a close, the Social Democrats, together with the Trade Union Confederation, developed a policy program meant to equalize income and wealth by means of progressive taxation. This was part of the Social Democrats’ commitment to ensure that, as the Post-War Program put it, “the majority is liberated from dependence upon a few owners of capital, and the social order based on economic classes is replaced by a community of citizens cooperating on the basis of freedom and equality.”

After the war had ended, this program carried the day. The people had sacrificed during the war, and now expected something in return. The shared experience of the war years was the crucial catalyst for the blossoming of the Swedish welfare state.

But this may now, in fact, be changing. The offer of generous welfare for anyone who shows up in Sweden ended last spring when the country restored border controls between Sweden and Denmark for the first time in decades. And this was merely the latest step. Following a severe fiscal crisis in the early 1990s, the government had long been cutting back on welfare provisions and promoted privatization of public services. Thanks to these measures and the impact of globalization and technological change, income inequality before taxes and transfers has been rising for decades.

Sweden’s future, just like that of many other European countries with aging populations, depends on continuing immigration, in no small part from Africa and the Middle East. As Swedish society becomes more and more ethnically, culturally, and religiously diverse, the social consensus on redistribution faces growing pressure. Europe has already shed much of its progressive postwar culture, and we must wonder how well Swedish egalitarianism will stand the test of time.

The post How Deprivation and the Threat of Violence Made Sweden Equal appeared first on Zócalo Public Square.

I know this isn’t true. For the past two years, I have been working with archivists Michael Dolgushkin and Shelby Kendrick, sifting through old files and records on employment from the 1970s and 1980s. The work is part of a California State Library research effort to catalogue employment-training strategies in California. I have worked in and with local job-training projects in California since 1979, and the archival project involved my papers on job training and employment programs and the papers of other practitioners and researchers over the past four decades. For the 1970s and 1980s, we collected hundreds of reports and articles about specific projects aimed at youth illiteracy and unemployment, retraining laid off workers, and welfare-to-work approaches.

That era feels very familiar, since people were worried about the same big issues that we are now—growing wage inequality, the hollowing out of the middle class, chronic unemployment. But it’s also encouraging, since our responses to those big problems back then actually made a difference.

The 1970s and 1980s are a peculiar and urgent time to visit via an archival time machine. Government and academic papers were being written about the elimination of middle-class jobs, particularly manufacturing jobs available to workers without college degrees. Rising teenage pregnancy rates and welfare rolls fueled predictions of increased urban violence and a growing “underclass.” “Deindustrialization” was a popular topic, with essays such as “America’s Changing Economic Landscape” and “The Declining Middle.”

And so was the fear that technology was eliminating a wide swatch of jobs in all sectors, leaving a mismatch of too many workers for not enough jobs. In a 1984 report, “Forecasting the Impact of New Technologies on the Future Job Market,” Stanford researchers Russell Rumberger and Henry Levin warned that the high-tech sector, seen as a font of replacement jobs, was actually creating a relatively small number of jobs, and was unlikely to be a major employer in the future.

None of the specters of those days have materialized, though. To the contrary, we have seen improvements. Welfare rolls have dropped dramatically, as have teen pregnancy rates. Job growth has outpaced job loss due to technology and other forces. The middle class has shrunk by some indicators, but remains robust, and new mid-level jobs are being created.

Where did we go right? There is no one answer. Success came as a result of a complex mix of influences: government, private sector, and volunteer education and training programs; demographic shifts; macro-economic policies. But that’s not enough of an explanation. All the improvements are linked in ways to a dynamic that too rarely gets mentioned in policy discussions: the willingness of people (policymakers, practitioners, and ordinary citizens) to stand up to then-dominant ideologies and refuse to be paralyzed when problems are described as intractable. Below is a very brief sketch of this dynamic in California.

In the 1970s and 1980s, the consensus on welfare held that expanding government benefit programs was inevitable, that entrepreneurship would be replaced by the collaboration of big government and big private-sector companies, and that the country’s employment future lay in a model of big government, big labor, and big private sector companies. It was a consensus adopted by top officials in government, private foundations, large non-profits, and the prominent think tanks of the time. Welfare rights organizations and advocacy agencies, with funding by private foundations and government, opposed any attempts to rethink the welfare system (they sought to expand it), and they and others dictated to the Democratic-controlled state legislature what to do.

How was this consensus broken? Slowly, by people on the left and the right challenging the establishment. Welfare reform only began its first steps when a few elected Democratic officials in Sacramento, such as then-State Senator John Garamendi, were willing to break ranks and join with Republicans, national thinkers such as Lawrence Mead, and local practitioners to establish welfare time limits and redirect welfare agencies to become job placement agencies. Eventually, a different way of approaching welfare took hold—one that aggressively pushed welfare recipients into the work world. Caseloads, which reached a high of more than 900,000 cases by July 1996, started a steady drop over the next eight years to fewer than 500,000 cases by July 2004. (During the Great Recession, the number of cases rose, but has leveled in the past few years, at around 560,000.) Whereas previously welfare caseworkers looked at welfare recipients and asked, “How can we take care of these people?” after the implementation of welfare reform, the caseworkers began to ask, “How can we build on the strengths these people possess and help them become more self-sufficient?”

Welfare reform had many other moving parts, and the case reduction had greater complexity. But at core it was the rejection of a liberal ideology of expanding government benefits.

Similarly, teen pregnancy rates went down sharply. The California teen pregnancy rate, following the nation’s rate, rose through the 1980s until reaching 72.9 births per thousand in 1991. It then began a steady decline down to 45.2 births per thousand in 2001, and further on to a low of under 30 births per thousand today. Part of the teen pregnancy reduction resulted from programs of additional services and opportunities—at my job training agency, San Francisco Renaissance Center, we had a “Parents of Success” program for many years, assisting teen mothers in obtaining GEDs and job placement. But a main driver of reduced teen pregnancy involved breaking a consensus that it was a “cultural norm.”

Regarding job numbers, deindustrialization and technological advances did produce the envisioned job losses in California. But they also produced unexpected job gains that replaced the losses. In September 1980, payroll employment stood at 9,829,000 jobs in California. This September, payroll employment was up to 16,199,000 jobs. California had over 1.2 million manufacturing jobs this year.

The main driver of this job growth has been entrepreneurship, that supposedly disappearing value. Its promotion came not from the federal government or other elites connected with employment strategies, but from outside practitioners and thinkers—again, on both the left and right. Non-profits such as the Corporation for Enterprise Development, minority business development groups, and local community development corporations pushed forward strategies on local levels emphasizing entrepreneurship such as the expansion of inner-city loan funds, and purchasing networks for fledgling businesses. The developing market-oriented think tanks, such as the American Enterprise Institute and the Heritage Foundation, identified the tax changes and culture changes necessary for entrepreneurship to expand. George Gilder’s 1981 best-seller Wealth and Poverty was also crucial in creating an argument and language to explain the value of entrepreneurship.

The history of the past three decades in California shows that in the areas of welfare, teen pregnancy, job growth, and new business generation, improvement is possible. But there is no room for complacency. Today, California’s foundations, social welfare non-profits, and government entities continue to be led by persons who see their role as expanding government benefit programs or adding free community college or other free goods to reduce income inequality or poverty. These approaches, not anchored to employment, business growth, or entrepreneurship, won’t have any more success than similar programs of the 1960s and 1970s.

Today’s job training and anti-poverty practitioners and policymakers rarely study the efforts of previous decades. That’s unfortunate, and the California State Library archival project is aimed at showing how much there is to learn from the past. We will need to keep to true to the values that drove our social and economic successes of the past three decades. If we do so, in another 30 years we’ll be able to revisit our current employment approaches, and see that, once again, we made progress.

The post This Is How We Saved the Middle Class in the 1980s appeared first on Zócalo Public Square.