Give a man a fish and you feed him for a day.
Teach a man to fish and you feed him for a lifetime.
Long term, it makes sense to learn how to become self-supporting; short term, individuals must survive before reaching that point. Americans, though a charitable people, have been somewhat wary of “giving.” Charitable organizations, for example, over the years have often declared their intention to assist only the “deserving poor.” Furthermore, many people will defend not giving “hand-outs,” explaining that those on the receiving end risk becoming dependent. Besides, there’s no guarantee they will make appropriate use of the money. “They’ll just waste it on drugs, liquor or cigarettes.” In a society that celebrates independence and individualism, accepting government money, “going on welfare” has not been viewed favorably.
Such discussions have assumed greater relevance in recent times as various proposals have been advanced to dispense money directly to people undeniably needy. Before tackling this issue some historical perspective may be useful. In the past there’ve been occasional efforts to inflate the currency, put more money in circulation, hopefully to benefit those suffering economic hardship. The Federal Government, for example, issued paper greenbacks during the Civil War and some years later the Populist Party campaigned for coinage based on silver (in addition to gold) in order to augment the supply of money. In recent years the Federal Reserve has poured billions into the economic mainstream.
Still, it was not until the Great Depression of the 1930’s that direct, distributive proposals were advanced and championed by leaders able to generate considerable enthusiasm behind such ideas. They found fertile ground, given the massive levels of distress across the society, the inability of private charities and local governments to provide ongoing relief and the general belief that the American economy could no longer expand much beyond existing levels. It would, in fact, shrink because people without money could not become consumers of goods and services. Furthermore, amidst this widespread misery, American communists were busy recruiting and preaching their anti-capitalist gospel, pointing out the obvious – the private enterprise system had failed.
Such was the context in which strident voices began calling for giving money directly to people. Surprisingly it was the Federal Government that first responded via the Agricultural Adjustment Act (AAA) of 1933, which called upon farmers to take land out of production and, in return, receive government money. In other words, stop cultivating a portion of land and get paid to do it. Out in California sixty-six year old physician Dr. Francis Townsend, referring to this AAA Program, went even further, calling for payments of $200 a month to all persons over 60 years old, if they agreed to retire and spend that bounty in the month it was received. Though economists quickly exposed the flaws and calculated the enormous costs of such a scheme, thousands of Townsend’s clubs sprouted across the nation, and millions more signed petitions in favor of cash payments.
At about the same time, another peoples’ “champion” arose, Huey Long from Louisiana. Inveighing against the Money Power and the entrenched Eastern elites he positioned himself as spokesman for the common man, publishing an autobiography entitled Every Man a King and calling for a “Share the Wealth Society.” “Let no one tell you,” he thundered, “that it is difficult to redistribute the wealth of this land. It is simple.” He called for giving a “household estate” of $5,000 to every American family while also guaranteeing every family a minimum annual income of $2,500 per year (nearly double the median family income then). Americans of the time couldn’t be blamed for hoping that Long’s formula could come to their rescue.
President Franklin Roosevelt, the consummate politician, was not unmindful of the various economic nostrums being peddled and how bombastic populist leaders were attracting millions upon millions of supporters. He was also keenly aware of the devastating impact of the Depression on Americans and the immediate need for remedial action. And he responded. Billions of dollars went forth for emergency relief and job creation. The Social Security Act of 1935 would commit the Federal Government to dispense money to retired seniors. But it would not be a handout since they would, first, to have worked and contributed money to fund the program. That same legislation mandated that, at the state level, unemployment insurance programs be enacted with money distributed to those who lost jobs and were not working. Overall, Roosevelt’s New Deal laid the foundation for America’s first serious and reasonably comprehensive effort to establish the rudiments of a social safety net. There were “holes” galore and opposition aplenty to this unprecedented activism on the part of Washington, but the naysayers would, in the years ahead, be unable to dismantle much of what had been put in place.
Even before the Pandemic hit, the reality of vast wealth inequality in America,and the general stagnation of middle class wages provoked discussions about ways of getting money out to people. The earned income tax credit, which distributed funds to workers earning sub-standard incomes, most considered to be a real boon to the working poor. Reports from overseas commented favorably about programs of money distributions (as well as cash child benefits). Stockton, California, has been experimenting with distributing sums of money directly to people; and in the 2020 Democratic primary, candidate Andrew Yang, energetically promoted the idea of giving everyone $1,000 a month (concerned that an accelerating Artificial Intelligence revolution will throw millions of Americans out of work – perhaps permanently).
Just as the great depression exposed how precarious were the lives of a majority of Americans, the Coronavirus has revealed the inadequacy of the support system available to people in this crisis. Tens of millions have no health insurance, or have policies altogether inadequate and overly expensive. Child care services are both costly and not easily available. Provisions for sick leave and paid family leave fall well short of peoples’ needs. Housing costs and rental expenses are seriously straining family budgets. Homeless populations continue to grow. The costs of college education, considered the key to social mobility, are on the rise. A majority of retirees acknowledge they have scant resources available at this stage of their lives. A 63% workforce participation rate suggests that large number of Americans will never go back to work.
The relatively good economic times that preceded the Coronavirus outbreak tended to conceal some of these problems; Coronavirus has exposed them. So can we expect to see a repeat of the1930’s, when dire circumstances resulted in the creation of at least a rudimentary safety net? Already billions of dollars are being distributed directly to individuals, with even more money likely on the way. Will our present crisis generate the kind of pressure and result in an innovative “new” New Deal, similar to that which burst forth in the 1930’s? If it does, we can at least take comfort in the fact that something fundamentally valuable and enduring has emerged from the wreckage that currently surrounds us – a measurable triumph out of a destructive tragedy.