If You Think Only Poor People Need Welfare, Wait Till You See What Really Rich Folks Do With It

Adam Mordecai Curated by

Here's an amazing video that clearly explains why welfare doesn't work how you think it works. At 6:38, we find out the obvious about who the biggest welfare user in the country is.

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Narrator: And all this time I thought the world was round. The world is not round. It has edges we can fall from and faces staring in entirely different directions. And I thought the world was huge, but it is not. It’s in our hands. We can hold it, change it, turn it, shake it. We can solve it, but not by share, luck, or chance. We must be taught the way.
Ananya Roy: Each year, I teach a large class on global poverty at the University of California Berkeley. As is befitting a great public university the students represent a diversity of social class, advantage, and privilege. Some are first generation students. Some are the sons and daughters of working class of global California, others comes from the fortresses of wealth. Yet others belong to that newly precarious social group, the American middle class.
The students also represent a diversity of political opinion. While they all want to enact social justice and be a participant of social change, they have quite different understanding of what this may mean. For some, the quest is for social and economic quality. For some, it is a compassionate of capitalism. For some it is quite simply doing good. [inaudible] also have one more thing in common; they tend to think that global poverty as something that exists elsewhere; in the global south, in the third world, not here, not in the United States of America.

One afternoon last year I listened to a group of my student’s discuses welfare and poverty in America. It was an informal discussion and opinions flowed freely. A student noted that she was as concerned about the behavior of the poor as she was about income inequality.
As a student from a low income family she worked multiple jobs. One of these was at a grocery store. “I see people on welfare come in there all the time trying to buy cigarettes and alcohol with their food stamps, “ she said, “This dependency is a problem. The solution to the poverty cannot be handouts to the poor,” she concluded. Many in the group agreed with her. The students in that conversation belonged to what I would designate as the post-welfare generation.
They grew up during the years that the U.S. welfare state was systematically dismantled. Most of them were four years old when President Clinton, albeit with reluctance, signed into law the bill that slashed welfare for the needy. They did not hear Ronald Reagan running for the republican presidential nomination in 1976 invent the character of the welfare queen. “There’s a woman in Chicago,” Reagan said, “She has 80 names, 30 addresses, 12 social security cards, she’s got Medicaid, getting food stamps and she is collecting welfare under each of her names. Her tax-free cash $150,000. They did not hear any of this, but it was their truth. They had grown up in an era in which welfare, rather than poverty, had become the problem solved.

I realize that afternoon that this post welfare generation was also expressing deep ambivalent about the role of government. They liked nonprofits, they liked market solutions to poverty, they liked community organizations, but they did not like governments.

This is why they fall in love with the ideas of William Easterly, especially, his line, “The rich have markets, the poor have bureaucrats.” The bureaucracies of governments, like welfare dependency, was the problem, but here’s the paradox. My students enjoy a host of hidden government subsidy that buttress opportunity and nobility, but they do not think that such subsidies should be available to the poor. We must rephrase Easterly. The rich have state help, the poor have self-help.
Put another way my students are fretting about the welfare dependency of the poor, but the failed to recognize that they are dependent on welfare. I, too, am dependent on welfare. Let me introduce myself. I’m Ananya Roy, a professor at the University of California Berkeley, but I live in public housing. My career affords me a home in the rolling California hills with the view of the Golden Gate bridge and still I live in public housing. The public housing I live in is not the American stereotype of dilapidated towers, concentrations of poverty, neighborhoods devastated by violence.
But my home is public housing because the tax deduction I enjoy on my mortgage is a more a substantial handout than any money spent by the U.S. government on what has come to be stereotyped and vilified as public housing.

And there are millions of other families who enjoy the same benefits. Here is just one statistic to make this point. In 1999 as the American century came to a close the U.S. government spent $24 billion on public housing and rental subsidies for the poor. But in that same year it spend $72 billion in home ownership subsidies for the middle classes and the wealthy. Subsidies that are never considered to be welfare and there is no stigma attached to this dependency. In fact, it is seen as an entitlement. Why is this so? History matters.

The America welfare stage was setup in the wake of the great depression to create a new deal of social programs. But from the very start it was divided into two channels; social insurance programs made available as entitlements and public assistants programs made available as welfare. Need I point out the race and gender dimensions of this divide? It is time for America to reconsider who is dependent on welfare. Take a listen.

Narrator:In our search for the welfare queen we were looking for actually people when we should have been looking for corporate people. We should have been looking at Walmart. Walmart is the largest private employer and brought in more in 2011 than any other company in the nation. Walmart pocked in a not too shabby $16.4 billion in profit that same year and the six Walmart heirs, the Walton family, own roughly $100 billion in wealth, which is more than the bottom 40% of Americans combined. But despite making all this money, Walmart’s business model hinges on mooching from the government.

It hinges on being the biggest welfare queen in the United States. Because of the everyday low wages that the retail giant pays its employers, our government has to step in and provide public assistance to Walmart employees just so they can survive, which why the Walmart workforce represents the largest recipient of federal aid in the nation.

Ananya Roy: Not since the great depression has American society faced such astoundingly high levels of inequality. America has become the 1% nation with massive economic gains accruing to the top 1% of households. It is this obscene reality that the occupy movement made visible. Such inequality is not natural. It is not the necessary result of the free market. Rather it is produced systematically by the policy, by the welfare that is doled out to Wall Street hedge funds, and supper corporations like Walmart.

This is a plague of what in 1958 economist and diplomat, John Kenneth Galbraith, called the affluent society. In an analysis that was to move American conscious and help launch the war on poverty in the 1960s, Galbraith declared that the management of the modern economy by the affluent for the affluent will fail. Even worse, affluent had the affect Galbraith writes of comfortable disregard for those excluded from its benefits and its culture. One such effect Galbraith noted was resistance to government’s help for the poor, still true in our times. Galbraith argued though that is was from the state alone that effective action against poverty can come.

Today, Galbraith’s conclusion is being taking up again, but not by liberal democracies of North Atlantic. Instead it is in the economic powerhouses of the global south that ambitious state-lead programs of social inclusion and human development are being launch. In Mexico and Brazil, conditional cash transfers supports millions of poor households and have been credited for drops in poverty and improvement in health and education. In India, policy makers are discussing inclusive growth, hoping to integrate the poor into a fast growing economy.

Quite a bit of my academic life is spent critiquing these programs. I can tell you why conditional cash transfers play a great burden of responsibility on already overworked poor mothers. I can tell you why India’s approach to inclusive growth is flawed, but I also want to suggest that a new type of welfare state is in the making in the global south, one that entails a new social contract between the government and to the poor.

Perhaps the best example of this is the ongoing debate in many countries about the need for a guaranteed minimum income. Folks this is radical. A guaranteed minimum income is a citizen’s income earned as an entitlement not received as welfare. It implies that the rights of citizenship far exceed the political rituals of voting and include the right to human dignity and life without poverty. I want to be clear though governments in the global south are not granting this new social contract to the poor. Poor people’s movements are demanding such a social contract.

They are raging against deprivation, disposition, and displacement. They are roaring as they do in Oshman Desu’s of social movements in South Africa. We are the poors. These poor people’s movements know what visionary radical Saul Alinsky knew when he launched community action in the marginalized neighborhood of Chicago. That poverty is not only poverty of economy, but also the poverty of power.

A key part of the poverty of power is to be defined as dependent, dependent on charity, handouts, welfare. To transform dependency into self-determination is the work of poor people’s movements. To demonstrate the dependency of the wealthy on welfare as well of the labor of the poor must be our collective work.

And so that afternoon at U.C. Berkeley, I asked my students to read Maya Angelo’s poem, “Mamma Welfare Roll.” "Mamma Welfare roll, pudgy hands bunched on layered hips, her children stranger to childhood toys, looks barehanded into a den of bureaucrats for her portion. They don’t give me welfare, I take it.”

There may be small errors in this transcript.
About:

An amazing piece of analysis produced by Evolve Media and the #GlobalPOV project at the Blum Center for Developing Economies at the University of California, Berkeley. Since they are a fancy university, they were kind enough to cite all of their sources for us to fact check.

Sources:

Reagan’s Welfare Queen

Krugman, Paul. 2007. "Republicans and Race" New York Times

Levin, Josh. 2013. "The Welfare Queen"

Walmart

Berfield, Susan. 2013. "Fast Food Wages Come With a $7 Billion Side of Public Assistance"

Ritholtz, Barry. 2013. "How McDonald's and Wal-Mart Became Welfare Queens"

Stackpole, Thomas. 2013. "New Report Shows How Walmart Forces Its Employees to Live on the Dole"

U.S. House Committee on Education and the Workforce. 2013. "The Low-Wage Drag on our Economy: Wal-Mart's Low Wages and Their Effect on Taxpayers and Economic Growth"

Mattera, Philip and Anna Purinton. 2004. "Shopping for Subsidies: How Wal-Mart Uses Taxpayer Money to Finance Its Never-Ending Growth (PDF)" Good Jobs First.

For much more on Walmart and tax subsidies, see Wal-Mart Subsidy Watch.

For a recent summary of these issues, see:

Quigley, Bill. 2014. "Ten Examples of Welfare for the Rich and Corporations"

Government Handouts and Welfare Dependency Statistics

Abramovitz, Mimi. 2001. "Everyone Is Still on Welfare: The Role of Redistribution in Social Policy" Social Work 46:4, 297-308.

Easterly, William. "The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good." Oxford University Press.

Fraser, Nancy and Linda Gordon. 1994. "A Genealogy of Dependency: Tracing a Keyword of the U.S. Welfare State" Signs 19:2, 309-336.

Affluent Society

Galbraith, John Kenneth. 1958. "The Affluent Society." Mariner Books.

Guaranteed Minimum Income

Alinsky, Saul. 1971. "Rules for Radicals." Knopf Books.

Desai, Ashwin. 2002. "We are the Poors: Community Struggles in Post-Apartheid South Africa." Monthly Review Press.

Molyneux, Maxine. 2008. "Conditional Cash Transfers: A Pathway to Women's Empowerment?" Pathways Working Paper, IDS, Sussex, UK.

Pateman, Carole. 2004. "Democratizing Citizenship: Some Advantages of a Basic Income." Politics and Society32:1, 89-105.

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