In Case You Missed It: The Jacked Up Safety Net System

In Case You Missed It

In this issue, a look at the draconian side of the safety net system, why "the sharing economy" is stingy, and the new pressures on old-school capitalism.

The Jacked Up Safety Net System

Let's start with a cartoon:

Dear Medicaid and Food Stamp programs, strangling the poor, the disabled and the elderly with your crazy rules is not in fact helpful. Let's examine: In this poignant story over at Vox, Andrea Loise Campbell recounts the plight of her sister who while pregnant was in a car accident that left her a quadriplegic (the baby was fine). But the parents' woes just kept getting worse--the culprit Medi-Cal:

American public social programs run on two tracks: social insurance for workers and social assistance for the poor. Marcella isn't eligible for the programs of the "upper" social insurance track. She hadn't worked enough quarters before going back to school to be an insured worker. She hadn't paid into Social Security long enough to be eligible for Social Security Disability Insurance, the monthly cash benefit for the permanently disabled. Nor had she paid into Medicare long enough to be eligible for that form of public health insurance. As a nonworker, she is eligible only for the means-tested programs — Medicaid/Medi-Cal for health insurance and SSI for cash assistance...

I thought her ineligibility was a disaster. And it is: Dave and Marcella will have to stay on the social assistance track forever for her to get health insurance. But as it turns out, even if she had another source of health insurance, the social assistance track is inevitable for her: There's no other source for the lifelong services the disabled need, especially for personal care assistants. Medicare doesn't cover long-term care. Private health insurance doesn't cover it. There is a tiny market of private long-term care insurance, but it's a highly flawed insurance product, almost no one Marcella's age has it, and it won't cover a lifetime of need. Thus, well beyond Marcella's health insurance needs are her long-term personal assistance needs. For those, Medicaid is essentially the only alternative. And so, the poverty track it is.

Meanwhile over at USA Today, this in-depth story looks at the Medicaid debate from a broader and yet still tragic lens as the program passes the half century mark:

As Medicaid turns 50 years old this month, it's racked with cost over-runs, bitter politics and never-ending controversies that have left millions of people around the country like Parks without health care coverage they desperately need, unable to afford everything from open heart surgery to prescriptions to prevent life-threatening seizures.

More than 70 million Americans still are benefiting from the program to some degree. And millions more began to qualify for coverage in the 29 states that expanded Medicaid since the passage of the Affordable Care Act in 2010. But 19 states have refused to extend benefits to the poorest of the poor, citing lean budgets and competing, high-cost priorities; one is awaiting federal approval; and two states are still deciding what to do...

There are at least 10 studies in medical journals showing that Medicaid patients fare better than those who are uninsured. But there are just as many studies showing they do the same or even worse.

Researchers say that's because patients often can't get in quickly — if at all — to see doctors who accept Medicaid.

So for some good news, we have this TIME story showing that seniors who often have significant physical issues, may now be able to use food stamps for grocery delivery programs such as Meals on Wheels. But sadly in other news, we have this New York Times story on navigating the rules of the program in New York City. Also since we essentially create criminals for life unless you do white collar stuff, felons convicted for drugs trying to do right by themselves are restricted from safety nets like food stamps--but states are rethinking, reports the Norwalk Reflector:

Johnny Waller Jr.’s 1998 felony drug conviction has haunted him since the day he left a Nebraska prison in 2001.

Waller, now 38, applied for 175 jobs without getting one. He had trouble getting a federal loan for college because of his drug conviction, so he started his own janitorial business, in Kansas City, Mo. And when his toddler son, Jordyn, was diagnosed with stomach cancer and needed full-time care, Waller’s record disqualified him from receiving food stamps...

Hundreds of thousands of Americans are serving time for drug offenses — nearly a half-million according to the latest numbers available, from 2013. For many like Waller, leaving prison with a felony conviction on their record adds to the hurdles they face re-entering society. A 1996 federal law blocks felons with drug convictions from receiving welfare or food stamps unless states choose to waive the restrictions.

The bans, which don’t apply to convictions for any other crimes, were put in place as part of a sweeping reform of the nation’s welfare system, and at the height of the war on drugs. Now many states are rethinking how to help felons become productive citizens and reduce the likelihood they will return to prison.

Are well meaning nonprofits also keeping folks poor? Melissa Chadburn in Jezebel has this to say about one "resilience" program she worked for in Los Angeles:

The story the campaign told was a story of lost resilience. The narrative they preached was how to get it back. This is a common theme in community work. Over the years the term “resilience” has been applied more and more frequently to people in distressed communities to mean their capacity to bounce back from dysfunction or breakdown. Increasing community resilience becomes a solution to chronic barriers such as poverty, trauma, and class inequity. Dozens of programs that encourage resiliency have been introduced in schools and low-income neighborhoods all over the world in an effort to help children recover from trauma and also cope better with their day-to-day stresses.

The real story looks more like this she says:

Once upon a time, there was a wealthy community. Just to the south was a poor community. Between the two ran a freeway. People from the poor community were always sneaking over, trying to partake of the wealth of the wealthy community. The people in the wealthy community resented this. Or some did. Some seemed fine with it, and even helped them once they got there. Some said it was a crisis. Others said: What crisis? It’s been going on for years, plus they work so cheap. The local nonprofits, city and county efforts seized on the situation and, as always, screwed it up: reduced it to pithy ideologies, politicized it, and injected it with faux urgency, until I was confused, and we all were confused and there was nothing much left to do but to throw some good wholesome foundation money at it.


The Stingy 'Sharing' Economy

And speaking of safety nets, a recent piece in Triple Pundit highlights why "the sharing economy" might need a safety net of its own:

Although flexibility is at the heart of the sharing economy, this increasingly popular business model introduces new concerns. Contractors are often responsible for their own assets, training, and personal and customer safety and benefits.

The distinct gap between corporate and contractor responsibility creates a distinct divide between a well-informed and safety-focused company and a potentially naïve contractor workforce. This gap could create a divide in company culture fueling a damaging relationships among contractor, company and customer. The end result can be a segmented workforce lacking an inclusive and effective safety culture. Contractors may feel exposed and at risk by employers forgetting to protect them, and customers may see the end result without understanding the shared responsibilities between the employer and the contractor.

The term "the sharing economy" might not be around for long, though—at least, not according to Fortune, which published this chart on the phases likely to replace the sharing economy:


Today, objections to “sharing economy” appear to be mounting because the term is inaccurate (as Wilson pointed out, no one is sharing anything), and also because companies like Uber and Airbnb regularly employ it as PR tactic in their ongoing fights with regulators. The companies’ hope, it seems, is for the word “sharing” to impart a gloss of altruism on what are otherwise business demands...

As for what will replace “sharing economy,” the chart above suggests “gig economy” is one of the leading candidates. The drawback is that it [doesn't] account for companies like Airbnb, which involve rentals rather than wage arrangements.

Meanwhile, Uber, a key player in the gig economy, is still in hot water with politicians and consumers across the country. Earlier this month, New York Mayor Bill de Blasio pushed to cap the number of Uber drivers permitted in the city; later, he redacted, saying instead the city would conduct extensive traffic studies to gauge Uber’s impact.

Still the Uberized economy provides significant concerns in the loss of safety nets for its workers, suggests a piece in the Boston Review:

Corporate America is increasingly relying on these non-regular type of workers as a core part of its new business model to cut costs and maximize profits. One new economy booster clarified employers’ new strategy: "Companies need a workforce they can switch on and off as needed"—like a faucet or a radio…

The accelerated use by employers of the independent contractor loophole is causing a rapid erosion of the safety net for workers and families, one that was forged over many decades. Because of their worker classification, more and more American workers are no longer covered by the laws and regulations that underlie the safety net. Under the current system, employers actually have an incentive to fire their entire workforce if they can get away with it, and use all 1099 workers. This sounds extreme, but it actually happens. The pharmaceutical company Merck reportedly sold its factory in Philadelphia and the new owner fired all 400 Merck employees and rehired them as independent contractors—Merck then contracted with the company to continue making the same antibiotics for them.

These perverse incentives are threatening to destroy the U.S. labor force and turn tens of millions of workers into little more than day laborers.



What's Up Capitalism?

My man David Brooks is back in the NY Times with this piece on the evolution of the capitalism debate:

We are clearly heading toward another great debate about the nature of capitalism. Contemporary capitalism’s critics are becoming both bolder and more intellectually rigorous. Protests and discussions are sprouting up all over the place...

The coming debate about capitalism will be between those who want to restructure the underlying system and those who want to help people take advantage of its rough intensity. It will be between people who think you need strong government to defeat oligarchy and those who think you need open competition.

Over at the New Yorker, Katy Lederer looks at how climate change is changing the way we think about investing:

In a time of accelerating climate change, an increasingly volatile reality will eventually come up against the limits of modern portfolio theory. The definition of fiduciary duty is therefore starting to expand, to include not only traditional and largely passive investment policy but also active stewardship of global average temperature. This is an extraordinary paradigm shift in institutional investing. Last year, a coalition of larger and more forward-looking funds, including BlackRock, CalPERS, PensionDanmark, and Cathay Financial Holdings, representing twenty-four trillion dollars in assets, issued a statement calling on government leaders to provide “stable, reliable and economically meaningful carbon pricing that helps redirect investment commensurate with the scale of the climate change challenge,” as well as develop a plan “to phase out subsidies for fossil fuels.” This begs the question: Why do we need these leviathan institutional investors—historically the most passive and conservative players in the global economy—to tell us to take action that we know is both imperative and dangerously belated?

And finally, is Silicon Valley saving the world or just making a boat load of money? You can go over to the NY Times' Room for Debate and check out six experts have to say.  Stanford University's Susie Cagle had this to say for example:

The Internet's broad distribution networks were supposed to allow a much greater proportion of people to access global wealth and abundance, but it has truly done far more to concentrate that power and global wealth. While technology has provided underlying infrastructure to spark and support new peer-to-peer network behavior, it hasn't really changed anything about how those networks are built and owned...

We have the tools and ability to build convenient, widely accessible platforms without centralized profit motives — but we don't have the prevailing economics to do it. For all its supposed disruption, the tech industry has not challenged much about the global economy. After all, that very economy nurtured the world of "tech," and widened the gap between those who drive for Uber and use Facebook, and those who build and own Uber and Facebook.




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