Psychology of Public Policy – Social Insurance

In Budget Politics, Democratic Governance, Economic Planning, Economics, Full Employment, History and Politics, Housing, Inequality, Liberalism, New Deal, Political Ideology, Politics, Politics of Policy, Poverty, Progressivism, Public Policy, Public Sector, Regulation, Social Democracy, Social Policy, Social Security, Taxes, Welfare State, Youth Policy on February 14, 2011 at 6:05 am

Introduction:

The current state of American public policy can best be described as a stalemate: progressives have been stalled on further stimulus efforts; at the same time, conservatives came into power pledging opposition against any cut to a single-payer government health insurance program, and there’s little public stomach for virtually all spending cuts.

As I’ve discussed before, a major reason for this stalemate is ultimately due to how people think about public policy. In reality, neither progressive or conservative ideologies are hegemonic within the American electorate. Instead, public opinion is very much a mix of contradictory and paradoxical tendencies – we want to spend more money on the poor, but are opposed to welfare; we think foreign aid should be cut to a level that’s several times larger than current spending.

In this situation, policy victory goes to finding narratives that present our policies in a way that aligns favorably with public thinking, and in designing policies that lend themselves to narratives that flow with, not against the grain of public opinion.

Social Welfare:

Historically, one of the problems that progressives have had with maintaining support for social welfare policies is that it’s a policy area where public opinion has the sharpest cross-currents. As Martin Gilens points out in the aptly-titled Why Americans Hate Welfare, American voters (largely driven by the racialization of poverty) have simultaneously opposed welfare and preferred increased spending on the poor; believed in individual responsibility and government responsibility for providing economic security; and so on.

However, there are certain coherent themes in popular attitudes to social welfare. As I’ve discussed before (and this has been studied by any number of political scientists, including Theda Skocpol and Robert Lieberman), American popular opinion tends to strongly favor contributory programs over non-contributory programs, universal programs against targeted programs, and programs that are viewed as recognizing work in some way versus those that are viewed as rewarding the able-bodied non-worker.

It’s important to notice the nuance here. Americans don’t buy into the so-called “Poor Law” theory of social welfare wholesale – they reject the idea that relief should only be available to the “worthy poor” in favor of universalism; they generally believe in paying taxes necessary for adequate benefits as long as they think they are also included within the circle of protection. This isn’t a Social Democratic framework either (there’s certainly no conception that citizenship entitles you to benefit, for example), but there is something of the old ideal of the commonweal here.

What this means is that  the form matters. And as forms go, social insurance – whether we’re talking about Old Age Insurance or Medicare or Unemployment Insurance – is something that is still nigh-universally understood and accepted by virtually all Americans. Social insurance fits into all the subconscious preferences within public opinion – it’s contributory and thus feeds into a commonweal rhetoric about “earned” rights; it’s universal and thus diffuses any separation between “us” and “them”; and since it’s tied to premiums taken out of paychecks, it bases itself on work (although not perfectly, since it also embraces dependents and the disabled).

Applying the Theory to the Policy:

However, even then we can work within those forms that American opinion is attuned to, to accomplish the same goals that a broader social welfare program would seek to achieve.

Contributions can be designed to be progressive, and even nominal for the poorest. Virtually no system of social insurance is self-supporting on the individual level; there’s always some form of cross-subsidization and General Fund subsidization is quite common, as long as the principle remains. In this fashion, the contributory principle can operate not to exclude but rather to shift public thinking to view the poor as part of the group.

Similarly, as scholars like William Julius Wilson and Theda Skocpol have noted, targeting within universal programs can provide the redistribution of income and the protection of the entire population that social welfare programs normally provide without the political division. As popular support for the progressive income tax demonstrates, the public is perfectly comfortable with redistribution (indeed, surveys show that the public is comfortable with a much higher level of redistribution than currently exists) as long as the system of redistribution is seen as including everyone.

Finally, definitions of work can and have been extended beyond restrictive definitions. For example, broadening the definition of work to include the part-time, temporary, and self-employed when it comes to policies like Unemployment Insurance captures a broader segment of the population. Likewise, extending benefits to those seeking work, or in a family with one working member, or expanding the definition of seeking work to include those undergoing training and higher education allows movement toward universalism while maintaining the connection to values that be mobilized in a progressive direction, for a change.

In fact, this strategy isn’t that new.

We’ve already done this is many areas. Social Security was explicitly designed to create certain psychological impressions of solidarity. From the beginning, Franklin Delano Roosevelt’s arguments that Social Security was an insurance system in which people earned their benefits was a means of adapting to public opinion. As he said:

“We put those pay roll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program.”

This creation of a psychological sense of entitlement by right has allowed an enormous amount of flexibility within Social Security. Within Old Age Insurance, there’s an enormous amount of welfare-like redistribution and cross-subsidization from wealthier to poorer beneficiaries, and many Social Security recipients never contributed anything close to their lifetime benefit. Supplemental Security Income is basically a welfare program for poor seniors set inside a social insurance program, and it’s survived 37 years basically untouched because of that.

Even the progressive call for Medicare for All (cite) is a rhetorical strategy aimed at presenting single-payer health care in the publicly-acceptable language of social insurance as opposed to in the context of conservative ghost stories about the evils of the NHS.

What hasn’t been done before, and what needs to be done now is to move from fragmented and incidental uses of this strategy to a comprehensive strategy of expanding existing and establishing new forms of social insurance as a means of achieving our objectives as a movement, instead of beating our heads against the wall of public suspicion of “government spending.”

There are many areas of social welfare policy where we haven’t applied this lesson to our advantage:

  • Jobs: any reader of The Realignment Project is by this point familiar with my running argument that we should establish a system of direct job creation, similar to the New Deal’s Works Progress Administration, as a form of social insurance. In many installments of my Job Insurance series, I’ve described what I see as the advantages of using the structure and language of social insurance to push for direct creation of jobs as opposed to the language of economic stimulus.
    • Running throughout this series is the larger point that social insurance has the capacity to subvert the reflexive “Us/Them Response” that I’ve discussed above. Similar to the “Program/Government Blindspot,” the “Us/Them Response” cannot ultimately be overcome by empirical demonstrations that middle-class taxpayers receive many forms of benefit that working-class and poor taxpayers do not. Instead, we have to look for psychological shortcuts that get people thinking in different narrative terms.
  • Child Care: The U.S has never had a comprehensive national system to provide for children; AFDC was always limited to the unemployed poor without a presumed-male breadwinner, and none of the patchwork of programs that succeeded its abolition are capable of dealing with the reality that “21% of American children live in families below the poverty line; another 22% of children live in “near poor” families within 100-200% of the poverty line, where a sudden illness or job loss or other crisis can
    easily send the family into the ranks of the destitute.”
    A universalized Head Start or family allowance program could easily be structured as a social insurance system, providing both political viability and greater resources to the prevention of child poverty.
  • Housing: perhaps the most puzzling omission in the Obama Administration’s approach to the economic crisis has been so minimalist. Certainly nothing on the scale of HOLC has been attempted. But in a broader sense, our approach to the problems of housing have been really mono-maniacally focused on promoting mortgage-based home ownership and less about the broader problems of housing as a fixed cost that can be both a constant barrier to economic mobility and a sudden crisis when income drops. A universal housing assistance program, as envisioned by the original draft of the Housing and Urban Development Act of 1965, established as a social insurance program could allow us to move past a divided policy that no longer works for renters or mortgage-payers.

Conclusion:

The biggest mistake that the American left tends to make following a political set-back is that we assume that the American people universally loathe us and our ideas. We did this after the 1968 and 1972 elections, and we over-reacted during the Carter Administration by shifting to deregulation and capital gains tax cuts, establishing a pattern well before the rise of Reagan; we did it after our defeats in 1980, 1984, and 1988 by shifting toward the DLC model of corporate-friendly politics with the election of Bill Clinton, and then again in 1994 choosing triangulation following the Gingrich Revolution.

Let’s not make this mistake again following 2010. Instead, let’s use the lessons of psychology to fight smarter instead.

  1. […] As I’ve discussed before, the mass psychology of public policy doesn’t always follow the expected straight lines of the rational self-interested homo economicus who appears in economics and many political science introductory courses. This was especially in the case of the stimulus bill. […]

  2. […] the past, I’ve argued that expanding social insurance into new areas of public policy is one way to make the public’s expectations about wage labor […]

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