Why We Need More, Not Less, Government

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We Can Do Better at Fighting Poverty

Let’s consider just one particular policy area, poverty, where we lag far behind other democracies. We have an abysmal record in reducing the level of poverty in this country. It went down in the 1960s, but for the last 40 years it has hovered stubbornly at around 11-13%. Today, over 43 million Americans continue to suffer severe economic hardship. Conservatives consider our failure to reduce poverty as evidence of the inherent limitations of government. They conclude (wrongly) that since our current anti-poverty policies have failed, that there is nothing the government can do and that it should get out of the business of trying to eliminate poverty. It is this attitude that has animated Republican attempts to cut back on programs for the poor, such as welfare and job training. For them, our failures in poverty policy only contribute to the case they are making for a more limited government.

But the record of fighting poverty in Europe clearly demonstrates that governments are quite capable of addressing poverty much more effectively. Anti-poverty policies in the U.S. only lift 36% of people out of poverty, while government policies reduce poverty in Germany by 76%, by 83% in the Netherlands, and by 89% in Sweden.2 Not surprisingly, all of these other countries end up with much lower rates of poverty. While our poverty rate continues to hover around 12%, Germany, the Netherlands, and Sweden have reduced their poverty rates to 4%, 4% and 2% respectively.

These are very impressive differences. And it is not a mystery how these other countries have been more successful in addressing poverty. First, these countries simply spend more on helping people out of poverty – welfare payments are higher, unemployment benefits are more generous and last longer, and so on. Spending more money helps lift more people out of poverty. In addition, social welfare policies in these other countries are much more universal – they include everyone, not just limited groups. Everyone has national health insurance; everyone qualifies for day care subsidies, and so on. Because of this, the social safety net is much more complete and effective than in the U.S., and this means that fewer people are likely to slip into poverty because of personal disasters such as a serious illness, a divorce, or the loss of a job. Most other democracies also pursue policies that help to raise wages. They encourage rather than discourage the formation of unions and they set a much higher minimum wage – both of which help to lower the number of the working poor in these countries.

As Bok found, poverty is just one of dozens of areas in which the U.S. lags behind other Western democracies. Clearly our government could be doing much more to address a wide variety of problems and could make even greater strides in improving the lives of Americans. This fact by itself is a powerful argument in favor of more government in the U.S.

Things are Getting Worse

The case for more government is strengthened even more if it can be shown that some of our current problems are worsening and/or that we face significant new threats to our quality of life. In the wake of the 9/11 attacks, few Americans disagreed with the idea that we needed major new government initiatives to deal with the growing menace of terrorism. Likewise, it also makes sense that we would need more government if we are facing other worsening problems. And in fact we are. Let’s just consider a few of them.

  • Growing Economic Insecurity. The effects of the deep recession continue to linger for many families. Long-term unemployment has become chronic and is at its highest rate since the Great Depression in the 1930s. Add to this the millions who can only find part-time work, and we have more than 40% of Americans who want a full-time job but cannot find one. A Rockefeller Foundation report found that over 20% of Americans have experienced a drop of more than 25% in income. The bottom line is that more and more families are facing economic disaster: out of a job, their savings gone, and nowhere to turn for help.
  • Unsafe Food. The last decade saw increasing threats to our food system. Problems have ranged from e. coli infected beef and peanut butter to tainted spinach and botulism-laced chili sauce. Every year seems to bring new instances of Americans getting sick and dying from the food they eat.
  • Financial System Breakdown. Deregulation and lax enforcement allowed the financial industry to operate with little public oversight. One disastrous result was the mortgage loan crisis that eventually wiped out billions of dollars of investors' assets and brought on a severe recession. The 2010 financial reform bill addressed some of these issues, but many crucial proposed regulations were blocked by the fierce lobbying of the financial industry. The bill left in place two of the main causes of the financial crisis: the ability of banks to engage in high-risk speculation, and the use of dangerous derivatives like the credit-default swaps that led to the collapse of AIG. The financial system is still at risk.
  • Health Care Crisis. There is almost universal agreement that the U.S. health care system is increasingly in crisis. Tens of millions have been uninsured and costs have been spiraling out of control. Amazingly, the elderly must spend a larger proportion of their income on their medical expenses today than they did in the early 1960s before the passage of Medicare.3  The 2010 health care reform bill did address the issue of lack of access for many Americans. But whether this bill will rein in the growth of health care costs is very doubtful. Many experts believe that new significant policy changes are necessary to address this cost issue.
  • Growing Environmental Problems. A number of environmental problems are getting worse. The most obvious one is global warming, which will bring with it extensive coastal flooding, agriculture crop declines, rising danger from tropical diseases, increasingly severe weather, and so on. But there are also other environmental issues that are getting worse rather than better. Consider the plight of U.S. fisheries. Over-fishing has resulted in disastrous declines in fish stocks off New England, the Gulf of Mexico, and other areas. Increasing toxic waste from discarded computers and other electronics is another emerging problem.
  • Increasing Economic Inequality. The rich are getting richer and the poor are getting poorer and the middle class is shrinking – all threatening to further divide American society along class lines. Income inequality is getting worse. Between 1979 and 2009, the incomes for the richest 5% of families grew by a whopping 73%; and incomes for the richest 20% by an impressive 49%. But the increases for the bottom 60% of families have been pitiful in comparison – their gains were a meager 7%. Today over half of all income in this country (50.3%) goes to the top fifth income class of families. The income going to the top 5% of richest families is actually more than the combined income of the bottom 40% – the 110 million Americans living on low and moderate incomes. The inequalities in wealth are even larger – with the top fifth richest families owning a staggering 84.7% of all the wealth of the country, the next 40% owning only 15.1%, and the poorest 40% owning less than 1%. Most other Western democracies have a much fairer distribution of income and wealth. In Sweden, for example, the poorest 40% own 32% of the wealth.
  • Crumbling Infrastructure. Around the country, crucial infrastructure facilities – roads, bridges, sewers, etc. – are rapidly deteriorating. For example, 27.5% of the nation's bridges (162,000) are structurally deficient or functionally obsolete. In addition, the nation's 16,000 wastewater systems face enormous needs. Some sewer systems are 100 years old and many treatment facilities are past their recommended life expectancy. Currently, there is a $12 billion annual shortfall in funding for these infrastructure needs. Also, airport capacity increased only 1% from 1991 to 2001, yet air traffic increased 35% during that same period. The American Society of Civil Engineers argues that we must dramatically increase funding to solve these and other infrastructure problems – and it estimates that it will take at least $1.6 trillion to bring these facilities into an acceptable state.4
  • New Disease Threats. A whole host of new and evolving diseases now threaten public health in the United States. They range from the Hantavirus to new drug-resistant strains of microorganisms. Globalization and tourism mean that new diseases are more easily finding their way into this country. The West Nile virus and eastern equine encephalitis have already arrived. The main concern now is that a more virulent and deadly form of swine-flu or bird-flu is going to eventually come to the United States, with potentially devastating results.
  • Cyber Security Threats. Threats in cyberspace have risen dramatically in the last 15 years. Individuals are vulnerable to viruses, worms, financial scams, and identity theft. Embezzlement, fraud and other cyber crimes cost businesses billions of dollars a year. More importantly, key parts of the economic infrastructure are vulnerable to cyber attack, including the banking system, the telecommunications system, and the electricity grid. Cyber-attack tools are spreading rapidly worldwide and are being employed by foreign nationals and foreign intelligence services. Cyber warfare and cyber terrorism are very real threats to our national security.
  • Looming Retirement Crisis. Social Security is in good shape at least for the foreseeable future. But the other two forms of support that retirees hope to rely on – private pensions and private savings – are in terrible shape for most people. Fewer and fewer companies are offering fixed benefit pension plans, and it is estimated that U.S. companies are underfunding current pension plans to the tune of $350 billion – a disaster waiting to happen. Stagnant wages have made it difficult for many workers to save any money for retirement: 36% of workers contribute nothing to their retirement and 43% have less than $10,000 saved for their "golden years." As a result, many Americans will be facing poverty – or at least a much lower standard of living – when they retire.
  • Deteriorating Public Education System. Many local public school budgets are in crisis, with teachers being laid off and textbooks in short supply. There is a growing divide between the quality of public education offered in rich communities and that in poor communities. Due to either aging, outdated facilities, severe overcrowding, or new mandated class sizes, 75% of our nation's school buildings remain inadequate to meet the needs of school children. State colleges and universities -- which produce three quarters of all degrees in the United States – are also in trouble. Class sizes are spiraling, and needed maintenance is being neglected. In addition, states have been raising their tuitions and cutting financial aid. A study by the National Center for Public Policy and Higher Education gave the public college and university systems in 43 states a grade of “F” for affordability.5 This means that many low- and middle-income students simply cannot afford college anymore – a half million were turned away for lack of money in 2004 alone.

The existence of these and other growing problems clearly justifies the expansion of public sector efforts to deal with them. And increasingly, many Americans have realized that more government action is necessary in many of these areas. A 2010 poll found that when people look ahead 10 to 20 years, they say by 42% to 18% that the federal government will become more rather than less important in terms of improving the lives of the American people.

 

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