In Case You Missed It: The 'Gathering Storm' of Inequality

In Case You Missed It

In this issue, inequality and geopolitical trends, debating elitism, the culture of the American Dream, wealthy-nonprofit hospitals and philanthropy's generation gap.

In this issue, inequality and geopolitical trends, debating elitism, the culture of the American Dream, wealthy-nonprofit hospitals and philanthropy's generation gap.

The 'Gathering Storm' of Economic Inequality

Let's start with a cartoon:

Over at the Guardian Anne Holpuch reports on an Oxfam Report that contends that a new GOP tax proposal would leave the United States behind in inequality measures:

According to the Commitment to Reducing Inequality (CRI) index, developed by researchers at Oxfam and Development Finance International, the US already distinguishes itself among wealthy countries by doing “very badly” at addressing inequality.

But it would fall a further six places from its ranking of 23rd overall if Trump’s tax reform effort is successful, with the US’s specific rating on tax policies plummeting 33 places from 26th to 59th – just below Peru, Chile and Sri Lanka.

“When you already have countries like Portugal and Slovenia ranking higher than the United States on the overall index, we think that’s a concern considering the wealth of the US,” Paul O’Brien, Oxfam America’s vice-president for policy and campaigns, told the Guardian.

This long and dark essay in Foreign Policy looks at whether current economic and geopolitical conditions could lead to the rise of authoritarian regimes similar to the 1930s:

Within the United States, the Great Depression had caused vicious economic insecurity and trauma for many Americans, and protectionism and populism — often of a quasi-authoritarian variety — were on the rise. Disillusion with U.S. engagement overseas was rampant, given that America’s participation in World War I had failed to produce a peace that matched the soaring rhetoric and expectations that accompanied that crusade. There was a growing perception that a conspiracy of coastal elite — the “globalists” of today — had purposefully drawn the country into that conflict in order to advance their own economic interests. As the international security environment darkened in the late 1930s, many Americans favored pulling back from a dangerous world, with isolationist sentiments sometimes reinforced by nativist or even anti-Semitic themes. And yet American abstention from the global order simply exacerbated the brewing chaos, as aggressive dictators suppressed democracy, carved out spheres of influence, and ultimately took the world to war.

It can be hard not to hear these echoes of the 1930s in today’s events. Democracy is again under strain in many countries, and aggressive authoritarian powers are again advancing; many of the key democratic powers are demoralized and internally divided. A raging civil war, this time in Syria, has again become an arena for great-power competition; doubts about America’s commitment to maintaining a stable global system are again severe. As Robert Kagan and others have compellingly observed, the 1930s analogy certainly captures a widespread contemporary sense of dread about the state of the international order and the destabilizing uncertainty created by an apparent American turn away from internationalism. Whatever the limits of the comparison, the 1930s still stand as an apt warning about how quickly things can spin out of control — and what happens when the defenders of international peace and stability retreat from that task.

Author Linda Tirado is back, this time in TalkPoverty to discuss why elitism is real and we should pay closer attention to what it looks like:

To be an elite is to be listened to and respected, to have autonomy, to think that your life and your work might be remembered by history. For me, it was obvious when I tipped over that line: I count national politicians in three countries amongst my friends, and if I am curious about something I can simply dial up an expert and know that my call will be taken...My complaint isn’t that elitism exists. It’s that we’re pretending it doesn’t, and defending the instances that we can’t ignore as meritocratic. People tell me that I am an embodiment of the American Dream, having been discovered one day and elevated to success beyond my imagining. But a world in which an average bright young person has to wait for a book deal to access social capital or a promising career is more like a nightmare, and our democracy can’t afford it much longer.

Over at the Daily Signal, author J.D. Vance is back to discuss why the American Dream is in crisis and argues that culture is as significant as opportunities:

When our politics jolted many into curiosity, a veritable army of journalists descended on Ohio, Pennsylvania, West Virginia, and many other places to study what some have called “the forgotten voters.”

What they found was communities in crisis: main street businesses largely vacant and unoccupied; enormous factories with shattered glass and empty parking lots; addiction and poverty where only a generation earlier middle-class life flourished; cash-for-gold stores and women so consumed by their desire for opioids that they are willing to sell their bodies to access them; a troublingly low labor force participation rate, especially among able-bodied men; and—most of all—good people, some poor, some middle class, who feel especially uncertain about a future in which their children are unlikely to live a life better than the lives of past generations...

The charge of “blaming the victim” is sometimes unfair, but it is sometimes the consequence of the way we talk about culture.  Recognizing the importance of culture is not the same as moral condemnation. We should not glance quickly at the poor and suggest that their problems derive entirely from their own bad decisions before moving on to other matters.

Rather, we should consider the very intuitive fact that the way we grow up shapes us. It molds our attitudes, our habits, and our decisions. It sets boundaries for how we perceive possibilities in our own lives. Culture, in other words, must serve as the beginning of a conversation, not the end of one.

Vance also weighs in on the healthcare reform debate in the New York Times: "It is true, as Republicans argue, that health care costs too much. And it is also true that Obamacare has failed to take care of this problem. But if Republicans fail to accept some baseline provision of care, we’ll find ourselves mired in internal contradictions — arguing, for instance, that a bill that cuts subsidies for the poor somehow makes care more accessible." 

The Un-unified Safety Net Debate

Speaking of health care, this Politico story from Dan Diamond looks at why nonprofit hospitals have experienced a windfall since the Affordable Care Act but may be failing their community benefit requirements:

The result, POLITICO’s investigation shows, is that the nation’s top seven hospitals as ranked by U.S. News & World Report collected more than $33.9 billion in total operating revenue in 2015, the last year for which data was available, up from $29.4 billion in 2013, before the ACA took full effect, according to their own financial statements and state reports. But their spending on direct charity care — the free treatment for low-income patients — dwindled from $414 million in 2013 to $272 million in 2015.

To put that another way: The top seven hospitals’ combined revenue went up by $4.5 billion per year after the ACA’s coverage expansions kicked in, a 15 percent jump in two years. Meanwhile, their charity care — already less than 2 percent of revenue — fell by almost $150 million per year, a 35 percent plunge over the same period.

Hospitals justify the billions of dollars they receive in federal and state tax breaks through a nearly 50-year-old federal regulation that simply asks them to prove they’re serving the community. (Some states have taken a stricter approach for their tax breaks.) And while hospitals acknowledge that their charity care spending has fallen — pointing to the fact that a record number of Americans are now insured under the ACA — some leaders say the trend could reverse itself if the ACA is repealed. 

Hospitals also defend their tax-exempt status by pointing to their total community benefit spending, a roll-up number that can include free screenings and local investments but also less direct contributions, like staff education or hospitals’ internal metrics for when they say there is a gap between what they charge for services and what Medicare or Medicaid pays them.

In the Pacific Standard, poverty researcher Scott Allard discusses why poverty is growing in American suburbs:

The loss of good-paying manufacturing or industrial-type jobs that were in cities maybe 50 to 60 years ago and then left—there were some of those jobs in suburbs, and they have started to leave in many places. And the labor market places a premium on education and returns to education, so that also matters if you don't have a college degree, it's much harder, no matter where you live, to find a good-paying job...

The most important reason to think about the shifting geography of poverty goes back to our popular narratives and imagery around poverty. We typically conceive of poverty as being largely an urban phenomenon in our country. And within that we also think of poverty as being a problem that is experienced primarily by people of color, and you see this in our political rhetoric of the day. You see it in the imagery that we associate with poverty, the stereotypes that we have about poor people, and what that translates into is diminished support for the safety net. Because we often think of poverty as the problem of somebody else. It's the problem of others, others who don't live in our community.

Are work more requirements for the SNAP program a sham or do they lead to better employment outcomes--the Huffington Post's Arthur Delaney weighs in with this report. And we have two entrants into the universal basic income sweepstakes. First, Vox's Dylan Matthews offers up some lengthy analysis on its faulty nonpartisan appeal:

[W]hen you take a look under the hood of major plans from basic income advocates, the politics begin to look daunting. The coalition between left and right evaporates, the idea’s economic inevitability looks fanciful, and the promise that the plan could end poverty forever looks more dependent on technical details than you might think.

In part that’s due to disagreement about what basic income is for. I think it’s a useful tool for eliminating or dramatically reducing poverty in both poor and rich countries. But a lot of basic income advocates embrace it for other reasons, like responding to automation’s threat to jobs, or dismantling the welfare state. These purposes are often confused and contradictory, and lead to plans that differ widely and won’t get the same kind of bipartisan buy-in that the general concept does.

Second, we have Scientific American's David Noonan on insights from current UBI experiments

Whereas UBI is traditionally seen as an antidote to widespread job loss, some of today’s proponents view it in a different, somewhat counterintuitive light as well: as a way to encourage self-sufficiency and innovation. One goal of the [Finland's] Kela experiment is to assess UBI’s effectiveness as an incentive to find work—which is ironic, because one of the most common criticisms of UBI is that it discourages job-seeking. As Kangas points out, however, traditional unemployment compensation may actually be more of a disincentive than UBI. “People calculate that it’s not beneficial in economic terms to take a low-paying or short-term job,” he says. After all, the thinking goes, why give up your free time and a benefits package—that in Finland lasts two years and can include housing subsidies—for a marginal increase in your income?

But with UBI the money keeps coming whether a person works or not, so taking even a minimum wage job can mean a significant bump in the bank balance. One of the keys to a successful UBI program, Kangas says, is to set the monthly payment high enough to meet some basic needs but low enough to motivate recipients to seek extra income.

The Charity Question

Over at Quartz, Olivia Goldhill reports on Rob Reich's argument that philanthropists do not deserve our gratitude:

By offering philanthropists nothing but gratitude, we allow a huge amount of power to go unchecked. “Philanthropy, if you define it as the deployment of private wealth for some public influence, is an exercise of power. In a democratic society, power deserves scrutiny,” he adds...In extreme situations, such as a major disaster, Reich is supportive of donations from philanthropic organizations. But he’s strongly against private donors providing public goods on a longer-term basis, which he says contributes to a cycle whereby the state expects to provide less and philanthropists are relied on to pay for more and more. And a democratically elected government should be a far better provider of long-term services than wealthy individuals.

In the New York Times, Joanne Kaufman looks at philanthropy's generation gap:

The leaders of family foundations who have spent a lifetime funding things dear to their hearts — the symphony, the botanical garden, arts education, the United Way — often learn that their children and grandchildren have their own ideas and pet causes. And the younger generation may feel that the family patriarch and matriarch are set in their ways and turn a deaf ear to other input...Frequently, the differences in giving are more about style than substance. The next generation may be as dedicated as their parents about contributing to their alma mater. “But the older generation may write a check and have a building named after them,” Professor Moody said.

The younger generation, which tends to be more hands-on, “will want to write a check to create a scholarship for minority students and then become a mentor and engage with the student who is receiving the scholarship,” he said.




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