In the parable of the “Good Samaritan,” the founding Christian teacher encourages us to “love your neighbor as yourself,” and throughout all of the Jewish-Christian-Muslim scriptures, we are taught to care for the poor. The concept of helping others in our community is not new, but we may often question “who is my neighbor”? A fellow community leader asked Jesus the same question, to which he replied with the well-known story of a person who goes out of his way to help a “neighbor”—not his next-door neighbor, but a stranger from a neighboring region in which there was historically significant animosity, sacrificing his own welfare in the process.
As U.S. citizens, we continue to wrestle with similar questions. Most recently, our representatives in Congress, and here in Indiana, have been debating about government spending—ways to cut the mounting debt, ways to reduce our taxes, and ways to restructure our safety net programs, like Social Security, Medicare and family assistance. As with most intractable social problems, we face a tension between two important social values. First, we believe we have a right to keep what we have earned, pushing us to demand low taxes, which sociologists call “meritocracy.” On the other hand, our cultural generosity wants to ensure housing and food security for the truly needy, meaning increased social benefits, which can only mean higher taxes.
The problem is that meritocracy rests on several false assumptions. First, meritocracy assumes the pioneering, individualistic spirit, that we rise or fall of our own accord, by our own bootstraps. However, this isn’t the case at all. We are born into families which are poor or wealthy, which have a variety of social networks, and a variety of skill sets. Studies converge on the fact that our life chances are heavily dependent on the social status of our family, primarily its wealth base. Certainly the American Dream exists, and we have isolated parables of rags-to-riches success. But as a sociologist, our job is to look at population statistics—not what extraordinary individuals accomplish, but what do the majority of people experience in our everyday reality? In fact, the vast majority of children born into wealthy families stay wealthy, and children born into poor families remain poor. In our culture, we agree that in any game there will be winners and losers, but only if all players start out on a level playing field. The problem is that we don’t all start out the same, and decades of ignoring this has created a nation where our levels of poverty and inequality are greater than in any other industrialized country. Our fiscal policy based on meritocracy is the primary cause for this change.
A second false assumption about meritocracy is the belief that welfare increases poverty by incentivizing laziness. However, the data tells a different story. First, work itself is incentivizing. Except for sensationalizations on Jerry Springer, people want to work if jobs were available. But when the latest measure of full unemployment for Indiana (U6) is almost 17%, and a full-time worker at minimum wage makes just over the poverty line ($15k), the assumption of a fully employed, self-sustaining workforce is illusory. Second, we have accepted the mythology that hordes of welfare recipients are “welfare cheats,” living off our hard work. In fact, the combined food and housing assistance from the 2010 federal budget was 5% providing poor families with financial support equivalent to 1/3 the poverty line, and the best studies indicate that only 5-10% of welfare recipients can be classified as “cheats” (much of which is for accepting unreported food and financial assistance from family). The average rate of child poverty in the U.S is 21%, while the combined rate in the rest of the industrialized world is 10%. Cutting safety net programs only creates impoverished families, while those countries that invest in social goods (healthcare, education, jobs retraining, family assistance), tend to rank highest in health, democracy, and economic growth.
A third false assumption about meritocracy is that taxes “punish success.” This concern may sound reasonable when we hear that the top 50% of workers pay 93% of U.S. income tax (excluding sales tax and FICA). However, it becomes less reasonable when one realizes that the top 50% of workers earn 90% of U.S. income, and the bottom 40% of U.S. citizens have an average net wealth of $0 (that’s “zero”). Such beliefs forget that under Eisenhower, our top tax rates on the wealthy were above 90%, and our economy was doing great (6.1% GDP growth!), while, since Reagan, there has been a predictable correlation between low taxes and low growth. Real wages for the bottom 40% of workers have actually declined since Nixon, while the income of the top 20% has skyrocketed. Thirty years of the neoliberal experiment has not produced a stronger society, but instead, has ushered in the worst economy and job loss since the Great Depression. Economically speaking, neoliberalism was rooted in the belief that income tax rates of 30% produce an optimally efficient economy, based on a unique interpretation of the Laffer Curve. However, macroeconomists who are willing to make a guess about Laffer Curve optimality reject the 30% estimates, since the data simply doesn’t support it, instead putting the number closer to 50-70% for top marginal income tax rates.
We don’t like to hear any of this, because it violates the important social value of meritocracy. We have adopted a vision of the social contract that abandons our sense of shared sacrifice. After the victories of WWI and WWII, our country was on board for shared sacrifice, and we pulled together as a nation for large projects, like the WPA to build infrastructure, and top 90% tax rates. However, since then, our culture has shifted to a radical individualism with an emphasis on consumerism. From the end of the draft in the early 1970s, the tax revolt that brought Reagan to power, the evisceration of social help for poor children under Clinton, and finally the radical tax cuts under Bush, our society has cascaded into social policy that has abandoned the idea that we are a country united. Instead, we have created a country divided along class lines, and the poor have been left to fend for themselves, forgetting that the social contract is made up of everybody, not just those born into financially stable families. The larger issue is whether it reasonable to facilitate a political-economic system where half of our citizens have insecure food and housing, while transnational corporations outsource our jobs, do a poor job self-regulating the safety of their products and workers, and have widely publicized records of paying relatively little into the system of public goods (i.e., taxes). This brings us back to the same question raised 2,000 years ago—“Who is my neighbor”?