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Working Poor Need Mutual Aid

Michael Lind’s new book recalls the best of the Hamilton-Lincoln-FDR-Eisenhower tradition of political economy.

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(FDR Library)

Hell to Pay: How the Suppression of Wages Is Destroying America, Michael Lind, Penguin Random House, 240 pages

“Keep your government hands off my Medicare!”


It was the war cry of an Obamacare foe, uttered during a debate on the law convened by South Carolina Republican Rep. Robert Inglis in 2009. In response, Inglis politely informed his constituent that his Medicare services were actually “provided by the government.” Others weren’t so gentle. For progressives, the slogan became an emblem of the invincible ignorance of the poor who revolt against the very government largesse that sustains them; the libertarian right soon piled on.

Except, as author and The American Conservative contributor Michael Lind argues in Hell to Pay, his incisive new book on the bipartisan plot to suppress American wages, the mockers were wrong. The “government hands” guy voiced a deep wisdom about the nature of Medicare and other midcentury mutual-aid programs. Both progressives and conservatives think of such programs as a form of cash aid or state charity, with the left celebrating this and the right decrying it.

Yet the New Deal generation conceived of these programs not as public assistance, but as earned benefits that accumulate as workers make payroll contributions—an extension of earlier mutual-aid groups created by workers to protect each other from the topsy-turvy of life under industrial capitalism. True, with programs like Medicare and Social Security, government came to administer the mutual aid to ensure widespread participation. But the funds by right belonged to labor.

Why was this distinction important to New Dealers? As FDR told one of his advisers, “we put those pay roll contributions there so as to give the contributors a legal, moral, and political right to collect their…benefits. With those taxes there, no damn politician can ever scrap my social security program.” Conversely, unconditional handouts funded by general taxes (as championed by today’s progressives) would be vulnerable to the whims of the political class. Thus, as Lind writes with his characteristic disdain for elite certainties, “far from mocking the individual who said, ‘Keep your government hands off my Medicare,’ FDR would have been delighted.”

Mutual-aid programs like Medicare and Social Security—you should never call them “entitlements”—went hand-in-hand with a robust degree of working-class economic and political power to create mass prosperity in the immediate decades after World War II. More recently, neoliberal capitalism—characterized by deregulation, financialization, and, above all, the ruthless demolition of barriers to the free movement of capital, goods, services, and people—has steadily eroded labor’s power. It has yielded what Lind describes as a low-wage/high-welfare model whose harms ramify far beyond the economy.


Ours is an economy that generates working poor people: millions of Americans whose wages don’t suffice for survival without government assistance. The reality of poverty wages is evidenced in numerous statistical snapshots. Such as the fact that four out of five families on food stamps include at least one worker, while half of married families on food stamps have two workers. Or that a quarter of all workers and half of fast-food workers must turn to public welfare to survive. Or my go to (a statistic not cited by Lind): Nearly half of American adults would struggle to come up with $400 in cash to pay for an emergency expense, according to the Federal Reserve.

Which brings us to the high-welfare half of the current model. As Lind makes clear, by “high welfare” isn’t meant here that the United States has a generous welfare net. On the contrary, these programs are means-tested and miserly. Rather, “high welfare” means that public assistance forms a large share of the incomes of the working poor (typically half, by Lind’s estimation).

The fact that taxpayers pay for the programs in question puts the lie to the notion that the working poor are the “natural” result of market forces magically finding the right wage-price for each worker according to his marginal productivity. No, wages, as Lind shows, are an index of relative bargaining power, which in turn is deeply contoured by public policy. On the lower rungs of the labor market, current public policy subsidizes the low-wage, high-welfare economy. Or as Lind writes with righteous fury:

Lacking representation by organized labor, the poorest workers cannot live on their below-poverty wages. They must rely on means-tested public assistance or welfare, as a condition of which they must take any job available — including jobs that pay poverty wages. Thus the low-wage job creates welfare dependency, and the welfare state encourages more low-wage work.... Some workers can be trapped for their entire lives under the joint control of exploitative employers and punitive welfare bureaucrats, and their serf-like status — incompatible with the pride and self-reliance of the citizen of a republic, even a wage earner’s republic — can be passed along to their descendants.

Nor was the evisceration of private-economy unions the inevitable endpoint of globalization and automation. As Lind has documented in his previous book, The New Class War, and reiterates here, there was nothing inevitable about a free-trade and immigration regime that allows corporations to squeeze arbitrage out of differences in wage, tax, and regulatory regimes between states and countries. American elites chose this nightmarish order, often over and against the preferences of voters of both parties.

Yet Lind admirably refuses to give into despair. It’s what sets him apart from both the deterministic gloomy socialist and the wistful nostalgics of the right. Hell to Pay is bursting with fresh but realistic ideas for how to restore working-class power in the 21st century, from a prudent diversification of how we think about free trade (rather than the current one-size-fits-all universalism) to the restoration of wage boards and tripartite corporatism between government, labor, and capital. His cheery practical-mindedness recalls the best of the Hamilton-Lincoln-FDR-Eisenhower tradition of political economy, to which Lind has devoted a career. That he keeps the flame of that honorable tradition makes Michael Lind a national hero.

Dear readers: I’m taking the next four weeks off from this column to finish my next book proposal. Meanwhile, if you haven’t already, please consider ordering my current upcoming bookTyranny, Inc., due out from Penguin Random House on August 15. It is a book, in short, about the coercion that pervades our supposedly non-coercive society, in our lives as workers and consumers. 

Drawing on original reporting, I document the rise of such privatized tyranny: from wage and scheduling precarity, to Wall Street’s corrosive takeover of the real economy, to the gaming of corporate bankruptcy to deny justice to harmed consumers. And I show how Americans fight back, by restoring the midcentury tradition of class compromise and countervailing power. Many of the themes were developed in embryonic form in this column, and your support thus means all the more to me. Pre-order here.


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