UNDERSTANDING THE RIOTS PART 5 : THE PATH TO RECOVERY : ECONOMIC RENEWAL : Bolster the ‘Other’ America--Rethink the Great Society

Thirty years ago, a small book exposed widespread poverty in America--an “underdeveloped nation in our midst”--shaming a nation satisfied with its new affluence. Michael Harrington’s “The Other America” inspired as well as shamed, moving two Presidents to take action. The result was the War on Poverty, part of the third great wave of 20th-Century social reform we know as the Great Society.

In the wake of the Los Angeles riots, we see a different kind of national leadership. White House Press Secretary Marlin Fitzwater and others in the Administration tried to lay the blame for the violence at the feet of that same Great Society. Many have expressed appropriate outrage at this cynical scapegoating; Sen. Daniel Patrick Moynihan (D-N.Y.), himself a cogent critic of Great Society shortcomings, called it “depraved.”

The outrage, however, is less significant than the far more widespread response: ridicule. A Republican senator was moved to comment, “Next, Marlin will blame the savings-and-loan crisis on Woodrow Wilson.” One can forgive poor Marlin for not predicting this response--after all, he was just recycling the conservatives’ favorite argument: Social programs make problems worse. But this time it was found by nearly everyone to be, quite literally, incredible.

Maybe enough time has elapsed; maybe it’s the obvious failures of the conservative strategy of malign neglect. Whatever the cause, there has been a subtle but significant shift in the moral and intellectual balance of power. The War on the War on Poverty is over.

Maybe now we can move beyond the old battles to seriously reassess, to see what succeeded and--yes--what failed. If we do, we will see that neither Lyndon B. Johnson nor Ronald Reagan “caused” today’s urban problems; that what the approach of the 1960s and of the 1980s have in common is as important as the differences, and, finally, that we, in fact, know a great deal more about fighting poverty than is usually acknowledged.

One thing we know--conservative dogma notwithstanding--is that poverty programs do not cause poverty. All studies examining differences among states have found no evidence that generous welfare systems increase poverty or dependency. Moreover, welfare has become more stingy over the past decade, with no impact other than increasing the misery of the poor.

In fact, anti-poverty programs have, by and large, worked. We know poverty declined sharply in the decade following the War on Poverty, and that government programs did the job. We know Medicaid has reduced infant mortality, while Medicare has extended life at the other end of the life cycle. We know food stamps and nutrition programs have improved the nutrition level of poor Americans. We know that WIC, Head Start and the Jobs Corps all work so well they actually save the government money.

Yet everyone also “knows” that the Great Society failed--64% agreed in a national survey just this week. And after the Los Angeles riots, who would claim the War on Poverty ended in victory? We can square these conflicting assessments if we understand that success or failure depends on who you are talking about. The country made tremendous progress in combatting poverty among the disabled and the elderly. But among poorly educated and unskilled urban youth--the poverty we saw on the streets in Los Angeles--we failed. And this is what most people mean when they say poverty programs have failed.

We call this failure, clearly, because we expect young healthy people to work. A dependent poor population offends America’s dearest value: the work ethic.

Why did this half of the war fail? It failed, ironically, not because liberals had too much faith in government programs, but because they had too much faith in the U.S. economy. In the mid-1960s, economic growth was assumed. Ours was a future of improving job opportunities and wages--the only remaining task was to let the last groups climb aboard, by fighting racial discrimination and improving educational opportunity.

It didn’t work out that way. Starting in the early 1970s, the United States entered an extended period of stagnant wages (actually declining at the lower end); historically high levels of unemployment, and generally increased inequality. In 1968, government programs lifted from poverty fewer than half of those who would otherwise be poor; in 1980 the rate had climbed to better than 70%. Yet we actually lost ground, because the economy was generating much more poverty.

In the 1980s, we managed the neat trick of increasing inequality despite overall economic growth--a dubious historical first. After-tax income for the poorest fifth of families declined 5.2% over the decade, while climbing 32.5% for the top fifth. Numerous factors were at work, but most important was the internationalization of the economy. As the movement of both goods and capital grew dramatically, less-skilled Americans--and workers in other industrial countries as well--found themselves in effective competition with Third World labor forces. The effect was not just high unemployment, but downward pressure on all wages. That’s what lies behind one of America’s dirtiest little secrets: Over half of poor adults work. Harrington’s “underdeveloped nation” was no longer limited to backwaters; increasingly, it was all America.

Blaming government policies--of the 1960s or, for that matter, the 1980s--misses the point. We haven’t given government nearly enough power to create a catastrophe on the scale of our inner cities; in America, only the market could have such an impact. In the face of this transformation, the government--now controlled by conservatives--abdicated. There was thus never any real effort, by liberals or conservatives, to provide the possibility of economic self-sufficiency for the urban poor. But the American public, reasonably enough, assumed that the goal of social policy was its own (i.e. decent jobs for everyone), and therefore concluded it had failed.

They were encouraged in this belief by conservatives who waged attacks on the welfare system’s anti-work and anti-family incentives, and on the evils of dependency. Yet it was they who wanted, in the ‘60s, to write off the poor, to “cash out” programs and pay poor people to be quiet. It was they who insisted that welfare be cut off to those who worked or married. And it was they who resisted efforts to create the decent-paying jobs necessary to create opportunity.

But now the conservative bluff is being called. A younger generation of anti-poverty analysts--Robert Greenstein, William Julius Wilson, Mary Jo Bane, David T. Ellwood and others--have developed a new agenda for attacking poverty. They understand that permanent dependence is politically and morally unacceptable. They realize the anti-poverty agenda must be an economic agenda.

Their fundamental notion is “Making work pay.” They suggest a simple principle: If you work full time in America, you shouldn’t be poor. We can begin by increasing the earned-income tax credit for poor working families. We should restore the minimum wage to a level that guarantees a minimally decent living. And we must guarantee health care to all, removing the perverse incentives to stay poor enough for Medicaid.

We also need genuinely “pro-family” programs that will direct resources to children, who bear the greatest brunt of poverty today. The child-care tax credit is of almost no help to the working poor--who pay no taxes. It should be made refundable so the better-off are not its only beneficiaries. Similarly, the personal exemption for children should become a refundable child tax credit, increasing the tax code’s progressivity. Finally, the government should take responsibility for enforcing child-support payments, to encourage parental responsibility while helping poor children.

Even this agenda, however, will not be enough to end poverty. For that we have to return to an old idea: full employment. Nothing will do more to make America whole again than an old-fashioned labor shortage. It enlists the most powerful force in our society--the private sector--and gives it the incentive to develop jobs and training that make employable the “unemployable.” It worked during World War II, and recent research shows substantial improvement in employment among poor youth, especially minorities, in cities that had near-full employment conditions in the mid-1980s.

That will require, to say the least, big changes. Public works is part of the answer, but we will also need a more aggressive approach to international trade and the increasing exportation of jobs. Most fundamentally, we must decide, as a society, that we are serious about bringing everyone into the mainstream economy. Other societies are willing to carry dependent populations at a reasonable standard of living--one possible response to periods of economic transition. Ironically, our conservative values--especially the work ethic--require us to pursue a more radical solution.

The tragedy in Los Angeles may actually open up new possibilities for progress. If so, we must use that opportunity to finally make this an economy with room for everyone. Let us make the next War on Poverty the last one.