Economic risk has shifted from the government and corporations to workers and their families, by Jacob S. Hacker, published in the Sept./Oct. 2005-Issue of The Boston Review:
(2 excerpts:) Why are so many Americans mired in debt, going bankrupt, and worried about the economy? To many observers, the answer is simple: middle-class families have embarked on a reckless spending spree, confident that they will be bailed out by the government when the day of reckoning arrives.
Warren and Tyagi throw cold water on this condescending chorus. As they convincingly demonstrate, middle-class complaints have a solid basis: even as women’scontributions to family income have risen, the basics of middle-classlife have become much more expensive. Others have noted thatwomen’s entrance into the work force was necessary for midle-classfamilies to advance in the 1980s and 1990s. But Warren and Tyagi takethis observation a giant leap further. Families haven’t advanced.They have been running to stay still.
Warren and Tyagi have set a high hurdle for the “over-consumption” argument, and forthis they deserve great credit. Yet because they focus so heavily onthe consumption side of the picture, Warren and Tyagi say less aboutwhat is arguably the core economic experience of today’s workingfamilies: increased insecurity …
… Some of this shift has been deliberate. Witness the steady cutbacks inworkplace health insurance, and corporations’ movements away fromoffering traditional guaranteed pensions in favor of offering“defined-contribution plans” that place the investment risk onworkers. Yet a good deal of the Great Risk Shift results not fromaction, but from inaction—from the failure of the government andthe corporate sector to accommodate new social and economicrealities, leaving families to bear the resulting risks on theirown.
This inaction, grounded in part in the misconceptionsthat Warren and Tyagi so effectively dispel, must end. At the veryleast, we should look with considerable skepticism at PresidentBush’s proposals for an “ownership society,” in whichcooperative protections like Social Security are replaced withgovernment-subsidized accounts that families are supposed to use tomanage key risks on their own. All of us, after all, are living in anincreasingly uncertain world of work and family, and in thisuncertain world, all of us need a solid foundation of basic riskprotection in order to pursue the American dream.
Warrenand Tyagi have issued a clarion call: The middle class needs help. And they have shown that an agenda to help the middle class can befirmly grounded in what Alexis de Tocqueville once called“self-interest rightly understood”—in our common interest in astrong economy that serves ordinary Americans, rather than in thereluctant obligations of the advantaged toward those who have less.In my view, guaranteeing broad social insurance for Americans whowork hard and do right by their families is the place to begin. Butwherever we begin, we must begin now.
Jacob S. Hacker is the Peter Strauss Family Associate Professor of Political Science at Yale University, a fellow at the New America Foundation, and the author (with Paul Pierson) of ‘Off Center: The Republican Revolution and the Erosion of American Democracy’. (full long text).