October 14, 2004
THE LOGICAL CONTINUANCE OF THE TRANSFORMATION:
If America Is Richer, Why Are Its Families So Much Less Secure?: For 25 years, government and business have forced workers to take on mounting risk. A Times analysis shows ever-larger swings in household incomes. (Peter G. Gosselin, October 10, 2004, LA Times)
In their own ways, the problems encountered by Fredo and Burtless can be traced to the same source — a set of economic policies shaped by government officials and corporate executives intent on creating a more prosperous America.Starting in the late 1970s, the nation's leaders sought to break a corrosive cycle of rising inflation and stagnating output by remaking the U.S. economy in the image of its frontier predecessor — deregulating industries, shrinking social programs and promoting a free-market ideal in which everyone must forge his or her own path, free to rise or fall on merit or luck. On the whole, their effort to transform the economy has succeeded.
But the economy's makeover has come at a large and largely unnoticed price: a measurable increase in the risks that Americans must bear as they provide for their families, pay for their houses, save for their retirements and grab for the good life.
A broad array of protections that families once depended on to shield them from economic turmoil — stable jobs, widely available health coverage, guaranteed pensions, short unemployment spells, long-lasting unemployment benefits and well-funded job training programs — have been scaled back or have vanished altogether.
"Working Americans are on a financial tightrope," said Yale University political scientist Jacob S. Hacker, who is writing a book called "The Great Risk Shift." "Business and government used to see it as their duty to provide safety nets against the worst economic threats we face. But more and more, they're yanking them away."
The yanking may be far from finished.
On the campaign trail this year, President Bush has made the case that people are better off relying on themselves, rather than on business or government, in case of trouble. Under the banner of the "Ownership Society," the president has proposed a series of new, tax-break-heavy accounts to let families pay for their own retirements, healthcare and job training. He also has called for partially replacing the biggest of the government's protective programs — Social Security — with privately held stock and bond accounts.
Such arrangements might help people build up their personal assets. But the approach also would expose them to even more economic risk than they've already taken on.
Their very unreliability is why we should each own our own safety net. Posted by Orrin Judd at October 14, 2004 3:00 PM
Yeah. How?
Last night, Bush was asked how he would respond to an individual who had lost his job to overseas competition. Bush ducked that one, for obvious reasons, suggesting the man could "go to community college."
Well, let's humanize that a little. Let's make the man 43 years old, formerly employed at $21/hr in a fairly steady job offering 1,800 hrs/yr.
Let's also say he has a modest home he's been paying for for about 10 years, monthly payment around $750.
And he has three children, 18, 15 and 9.
So, off he goes to junior college, and two years later, he gets another job.
Meanwhile, what happened to his house?
Well, it got repossessed, that's what.
Posted by: Harry Eagar at October 14, 2004 5:15 PMYes, too bad he didn't have a lifetime savings account to tide him over. But he can start over again now.
Posted by: oj at October 14, 2004 6:11 PMFunny, Harry. Your hypothetical guy sounds a lot like my father a couple years ago. So, let me tell you exactly what that guy would do.
Having little money, his kids will have access to obscene amounts of grants, scholarships and loans, so college for them is not a problem. His wife will find other ways to bring in money. Meanwhile, if he has enough training, he'll work crappy jobs until a better one comes along. If he doesn't, he'll work crappy jobs and take night classes--or work crappy night jobs and take day classes. They'll refinance the house, lowering their payments and getting some extra money. They'll scrimp and they'll save and they'll work lousy hours. And then they'll vote for Bush.
Posted by: Anonymous at October 14, 2004 9:27 PMIn Harry's world he would become an aggrieved victim who blames the system and evil corporate capitalists for his woes. Given his salary history he collects generous unemployment compensation. He goes on Medicaid and gets a better health plan than from his old employer. Refusing to train himself for a new job or do anything productive he lounges around the house. His wife and kids leave him for being such a schmuck. He moves downtown to the warehouse district, grows a pony tail and subscribes to Mother Jones magazine. He then goes to work full time on the Kerry campaign.
Posted by: Gideon at October 15, 2004 12:07 AMGod bless the child that's got his own.
Posted by: Robert Schwartz at October 15, 2004 1:41 AMI have some experience here.
Avoiding debt like the plague, and living well within my means allowed me, over the years, to build up sufficient reserves to go without income for at least two years without suffering significant dislocation.
So when I lost my high paying job and the only thing on offer at the time was at a quarter the salary, with some belt-tightening my family was able to make it through unscathed.
OJ is right--their is no safety net comparable to your own.
The experience also taught my kids some valuable lessons.
Posted by: Jeff Guinn at October 15, 2004 7:37 AMThat's some reward for my guy's 20 (or 43) years of being a solid citizen.
If that's what's on offer, he might as well be a slacker from the start.
I have some experience of being unable to sell my labor into a down market. I didn't lose my house, but it was close.
Posted by: Harry Eagar at October 15, 2004 3:55 PMYes, the point is to change what's offered.
Posted by: oj at October 15, 2004 4:17 PMGideon's post will serve to demonstrate the inanity of the 'ownership society.'
None of you guys appear to know anything about how the real world works. My guy does not 'go on Medicaid,' Gideon. At least, not till after he's lost his house and traded down to a car worth under $2,000 and emptied every bank account. (The exact numbers vary from state to state, but bottom line: you have to be destitute)
Posted by: Harry Eagar at October 16, 2004 3:46 AM