Posts Tagged ‘Poverty’

The Moynihan Report, Then and Now
William Chafe

For the 50th Anniversary of the Moynihan Report, this briefing paper was prepared as part of an online symposium Moynihan+50: Family Structure Still not the Problem for the Council on Contemporary Families, and jointly published by CCF and the Institute for Women’s Policy Research (IWPR).

Few research documents in recent history have made as smashing an impact as Daniel Patrick Moynihan’s study of the black family fifty years ago. The report, The Negro Family: The Case for National Action, was written by Moynihan, then Assistant Secretary of Labor, as a fast-track shortcut to force the Johnson Administration to take immediate action to improve the plight of poor black Americans through federally financed anti-poverty programs. Dismayed by the fact that more than a third of African-Americans lived in poverty, Moynihan intended the report to stimulate efforts to achieve economic and social equality.

Yet by framing the report as a description of the breakdown of the black family, Moynihan ended up fueling a bitter controversy about family forms and gender roles instead of contributing to a constructive discussion of how to address the need for more black jobs. He argued that “at the heart of the deterioration of the fabric of Negro society is the deterioration of the Negro family,” which he described as a “tangle of pathology.” Tragically, the main impact of the report was to initiate a huge debate about family life in black America, while doing little to strengthen anti-poverty programs.

Moynihan made two errors of analysis. First, he traced the prevalence of single-parent households in the black community to the experience of slavery, which, he contended, resulted in the absence of strong family traditions on plantations. Not only did white masters discourage or forbid marriages; they also split up couples by selling one partner into slavery elsewhere. Their actions demeaned the status and stature of black men, creating a disorganized “matriarchal” culture of fragmented families.

In the first instance, Moynihan ignored history when he traced the prevalence of unmarried families in Northern ghettoes back to the ongoing legacy of slavery. As soon as Emancipation occurred, millions of black couples flocked to churches to get married. The ways that children, aunts and uncles and husbands and wives worked to piece together a living, the collective struggle to build houses, farm the land, get an education – all these have been noted by scholars as one of the signal strengths of black life once freedom was achieved. By placing all the blame for black family issues in the 1960s on the institution of slavery, Moynihan ignored the specific conditions that created growing numbers of single-parent families in northern black neighborhoods in the mid-20th century.

Second, the report’s claim that “broken” families were the central cause of black poverty massively oversimplified the complex relationships between socioeconomic trends and changing family forms, as outlined in the accompanying report by sociologist Philip Cohen and economist Heidi Hartmann and her colleagues. By attributing black poverty to the dearth of married-couple, male-headed families in northern ghettoes, Moynihan seemed to suggest that if blacks would only get and stay married they would cease to be poor, an absurdity that paved the way for later attempts to substitute marriage promotion for job creation.

Tragically, Moynihan’s ignorance of history and confusion of cause and correlation deflected attention from the real issue Moynihan was concerned with – focusing federal monies on urban jobs for blacks – and fanned instead a rancorous, racially-charged dispute over family values that continues to deform our discussion of poverty policy.

Since the 1960s, we have witnessed the growth of a much more sizeable black middle and professional class – largely a function of the 500 per cent increase in black college graduates that occurred after enactment of the 1964 Civil Rights Act and the 1965 Voting rights Act. But a huge proportion of black people remain in poverty, and as the accompany essay by Cohen et al. shows, inequality of socio-economic opportunity has also been rising among all racial-ethnic groups and family forms.

It is time for us to get back to the original intent of the Moynihan report: to answer the question of how we should act as a people and a government to address the problems of poverty and inequality. Moynihan himself answered that question in a speech he wrote for President Lyndon Johnson to deliver in June 1965 as a commencement address for Howard University:

“Jobs are part of the answer….Decent homes in decent surroundings and a chance to learn–an equal chance to learn–are part of the answer. Welfare and social programs better designed to hold families together are part of the answer. Care for the sick is part of the answer. An understanding heart by all Americans is another big part of the answer.”

It is a sad irony that Moynihan’s report has provided so many politicians with an excuse to avoid implementing the solutions that Moynihan himself supported.

William H. Chafe, Alice Mary Baldwin Professor of History, Duke University, emeritus; former Dean of the Faculty, Duke University; former president, Organization of American Historians. For more information contact Dr. Chafe at william.chafe@gmail.com

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The right’s food stamp embarrassment: A history lesson for the haters

Caitlin Rathe

Salon.com   September 1, 2014

The right's food stamp embarrassment: A history lesson for the haters

Franklin D. Roosevelt (Credit: AP)

Food stamps became part of American life 50 years ago this Sunday when President Lyndon B. Johnson signed the Food Stamp Act into law on Aug. 31, 1964. The program has been a whipping boy almost ever since, especially from conservatives who call the Supplemental Nutrition Assistance Program (SNAP, the contemporary name for food stamps) a costly and demoralizing example of government overreach.

But SNAP was not an idea first created by liberal do-gooders of the 1960s. Food stamps emerged three decades earlier with active participation of businessmen, the heroes of the exact group of people who want to see the program dissolved today.

The early Great Depression was marked by a “paradox of poverty amidst plenty.” Massive crop surpluses led to low prices for farmers. At first, President Franklin D. Roosevelt’s administration tried paying farmers to plow under surplus crops and kill livestock. In theory, decreasing the supply would raise farm prices incentivizing farmers to get their crops to market. But the plan was met with outrage from hungry citizens who said they could have put the destroyed “surplus” food to good use.

After this failed start, Roosevelt tried another plan. Government purchased excess crops at a set price and distributed them at little or no cost to poor Americans. But this system was also met with criticism, this time from the sellers of food goods. Wholesalers and retailers were upset that government distribution bypassed “the regular commercial system,” undercutting their profits.

The Roosevelt administration started the first pilot food stamp program in 1939 to integrate businesses in getting food to the hungry. However, there were concerns about the food stamp program’s success. A news magazine at the time reported, “there was no difficulty in selling the idea to grocers,” but some feared that the “real beneficiaries” wouldn’t cooperate. Unlike the image conjured up today of the poor clamoring for government aid, in the time of perhaps the greatest need in the past century, businesses were more excited about the federal assistance than the hungry individuals who were to benefit.

And it turns out businessmen had good reason for their glee; in the first months of the pilot program, grocery receipts were up 15 percent in the dozen “stamp towns.” Conservatives appreciated people “going through the regular channels of trade” and not relying on “government machinery” to bring food to people. The program proved to be so successful that it expanded to half of the counties in the nation by 1943. But the conditions that led to the program’s creation, high unemployment and large agricultural surpluses, disappeared in the WWII economy and the pilot program was shelved.

Twenty years later, the 1960 CBS documentary “Harvest of Shame” demonstrated hunger and poverty remained a reality for far too many Americans. Newly inaugurated President John F. Kennedy found it unconscionable that in the wealthiest nation on the planet, close to one-quarter lived in poverty without access to enough nutritious food to lead productive lives. He used his first executive order in office to reinstate the food stamp pilot program.

After JFK’s assassination, President Johnson reflected on the continued existence of hunger in America. However, the Texan was adamant that any government help would provide people with “a hand up, not a hand out.” Food stamps provided the perfect way to do this. JFK’s pilot program had proven that food stamps improved low-income families’ diets “while strengthening markets for the farmer and immeasurably improving the volume of retail food sales.” And importantly, the poor purchased more food “using their own dollars.” Based on this assessment, LBJ made the Food Stamp Program a permanent part of the welfare state.

Much like grocers in the stamp towns of the late 1930s, grocery chains today continue to bring in increased sales from SNAP receipts during recessions. Remember last winter when stimulus funds expired and Wal-Mart disclosed lower than expected fourth quarter profits? While Wal-Mart refuses to disclose its total revenues from SNAP, it is estimated they took in 18 percent of total SNAP benefits in 2013, or close to $13 billion in sales. They publicly reported lower earnings per share as “the sales impact from the reduction in SNAP benefits that went into effect Nov. 1 is greater than we expected.”

SNAP recipients, then, are not the program’s only beneficiaries. Businesses profit handsomely from them, too. How ironic that in today’s concentrated grocery-retail market, the chains most ideologically opposed to welfare spending benefit the most from this welfare program. Even more ironic is the fact that the idea behind SNAP originated with grocery men in the 1930s who saw a way to route welfare spending through their businesses. When will today’s conservatives claim as their own these daring and entrepreneurial businessmen who, in part, made the Food Stamp Program possible?

Caitlin Rathe is a graduate student at University of California, Santa Barbara.


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American Finance Grew on the Back of Slaves

By Edward E. Baptist and Louis Hyman 

Chicago Sun-Times.com March 7, 2014 

Last weekend we watched the Oscars and, like most people, were pleased that “Twelve Years a Slave” won Best Picture. No previous film has so accurately captured the reality of enslaved people’s lives. Yet though Twelve Years shows us the labor of slavery, it omits the financial system — asset securitization — that made slavery possible.

Most people can see how slave labor, like the cotton-picking in “Twelve Years A Slave,” was pure exploitation. Few recognize that a financial system nearly as sophisticated as ours today helped Solomon Northup’s enslavers steal him, buy him, and market the cotton he made. The key patterns of that financial history continue to repeat themselves in our history. Again and again, African-American individuals and families have worked hard to produce wealth, but American finance, whether in the antebellum period or today, has snatched black wealth through bonds backed by asset securitization.

Recently, the assets behind these bonds were houses. In the antebellum period, the assets were slaves themselves.

Every year or two, somebody discovers that a famous bank on Wall Street profited from slavery. This discovery is always treated as if the relationship between slavery and the American financial system were some kind of odd accident, disconnected from the present. But it was not an accident. The cotton and slave trades were the biggest businesses in antebellum America, and then as now, American finance developed its most innovative products to finance the biggest businesses.

In the 1830s, powerful Southern slaveowners wanted to import capital into their states so they could buy more slaves. They came up with a new, two-part idea: mortgaging slaves; and then turning the mortgages into bonds that could be marketed all over the world.

First, American planters organized new banks, usually in new states like Mississippi and Louisiana. Drawing up lists of slaves for collateral, the planters then mortgaged them to the banks they had created, enabling themselves to buy additional slaves to expand cotton production. To provide capital for those loans, the banks sold bonds to investors from around the globe — London, New York, Amsterdam, Paris. The bond buyers, many of whom lived in countries where slavery was illegal, didn’t own individual slaves — just bonds backed by their value. Planters’ mortgage payments paid the interest and the principle on these bond payments. Enslaved human beings had been, in modern financial lingo, “securitized.”

As slave-backed mortgages became paper bonds, everybody profited — except, obviously, enslaved African Americans whose forced labor repaid owners’ mortgages. But investors owed a piece of slave-earned income. Older slave states such as Maryland and Virginia sold slaves to the new cotton states, at securitization-inflated prices, resulting in slave asset bubble. Cotton factor firms like the now-defunct Lehman Brothers — founded in Alabama — became wildly successful. Lehman moved to Wall Street, and for all these firms, every transaction in slave-earned money flowing in and out of the U.S. earned Wall Street firms a fee.

The infant American financial industry nourished itself on profits taken from financing slave traders, cotton brokers and underwriting slave-backed bonds. But though slavery ended in 1865, in the years after the Civil War, black entrepreneurs would find themselves excluded from a financial system originally built on their bodies. As we remind our students in our new online course American Capitalism: A History, African-Americans — unable to borrow either to buy property or start businesses — lived in a capitalist economy that allowed them to work, but not to benefit.

More recently, history repeated itself — or more accurately, continued. The antebellum world eerily prefigured the recent financial crisis, in which Wall Street securitization once again stepped in to strip black families of their wealth.

In the 1990s red-lining began to end and black homeownership rates began to rise, increasing the typical family’s wealth to $12,100 by 2005 — or one-twelfth that of white households. In those years, African-American family incomes were also rising about as rapidly as white family incomes. And yet, African-American buyers, playing catch-up after centuries of exclusion from the benefits of credit, still typically had lower net worth and credit ratings. They paid higher interest rates and fees to join the housing bubble, and so securitizing their mortgages brought enormous profits to lenders and investors.

Then the crash of 2008 came. By 2010, median African-American household wealth had plunged by 60 percent — all those years of hard work lost in fees, interest, and falling prices. For whites, the decline was only 23 percent, and those losses were short-lived. Lenders resumed lending to white borrowers, restoring the value of their assets. But African-American borrowers have had a much harder time getting new loans, much less holding on to property bought at securitization-inflated prices. Median white household wealth is now back up to 22 times that of blacks — erasing African-Americans’ asset gains over the preceding 20 years.

Recent foreclosures represent another transfer of wealth from African-Americans to the investors of the world. For the past 200 years, the success of American finance has been built on the impoverishment of African-American families. We should remember the heroic struggles of African Americans to get political equality, but to forget their exclusion from our financial system, except as a source of exploitation, is to miss a basic truth of not only black history but financial history.

Edward E. Baptist and Louis Hyman teach history at Cornell University.

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En su primer año en la presidencia, Lyndon B. Johnson (LBJ) inició un programa de reformas sociales que en su conjunto son conocidas como la Gran Sociedad y que estaba basado en dos objetivos centrales: acabar con la pobreza y con la injusticia racial. El Presidente buscó trasformar al país por medio de una serie de importantes reformas. En 1964, Johnson logró que el Congreso aprobara la Ley de Derechos Civiles  y una reducción en los impuestos de unos $10 mil millones, que produjo un aumento en el capital de inversión y en el consumo personal.  Como resultado, la economía creció y el déficit presupuestario se redujo.

Johnson también le declaró la guerra a la pobreza. La prosperidad de la década de 1950 no acabó con la pobreza en los Estados Unidos. En su clásica obra The Other America (1962), el activista político Michael Harrington alegaba que 40 millones de estadounidenses no tenían una dieta apropiada y vivían en pésimas condiciones. Con muy poca o ninguna ayuda estatal, los pobres estaban atrapados en círculo vicioso que no les permitía salir de la  cultura de la pobreza.  La falta de educación, cuidado médico y empleo les condenaban, según Harrington, a ser “extranjeros” en su propio país. Para enfrentar esta situación, LBJ propuso la creación de programas de entrenamiento que permitieran que los pobres se integraran a la economía norteamericana. En 1964 fue aprobada la Ley de Oportunidades Económicas creando una entidad federal –la Oficina de Oportunidades Económicas–  encargada de combatir la pobreza. El arsenal de la administración Johnson contra la pobreza incluyó los creación de los “Job Corps”, una especie de Cuerpos de Paz locales, y la creación del programa de Head Star para niños preescolares, entre otros.

Los programas de la Gran Sociedad causaron revuelo entre los conservadores, entre ellos, el Senador por Arizona Barry Goldwater. Goldwater se oponía  al crecimiento del gobierno a través de la creación de programas de asistencia social y del gasto deficitario. El Senador también se opuso a las medidas a favor de la integración ración racial de la sociedad norteamericana. Para las elecciones de 1964, los conservadores, con Goldwater a la cabeza, tomaron el control del Partido Republicano y adoptaron un plataforma completamente opuesta a la Gran Sociedad.  Durante la campaña presidencial, Goldwater criticó la Ley de Derechos Civiles, la guerra contra la pobreza, la política exterior de Johnson, etc.  Sin embargo, ello no fue suficiente para evitar una gran victoria Demócrata, pues Johnson fue electo con el 61.1% de los votos populares (43,127,041 votos). Goldwater sólo recibió el 38.5% de los votos populares (27,175,754 votos) y sólo ganó 6 de los 50 estados de la Unión.

Fortalecido por una victoria aplastante, LBJ impulsó su programa de reformas. En 1965 fueron creados el Medicare y el Medicaid para proveer de servicios médicos gratuitos a los ancianos y los recipientes de ayuda social o welfare, respectivamente. También fueron aprobadas leyes proveyendo mil millones de dólares para la educación elemental y secundaria, suspendiendo las pruebas de alfabetismo como requisito electoral, asignando $8 mil millones a programas de vivienda, asignando $650 millones para becas y préstamos a bajo interés para estudiantes universitarios, creando la National Endowment for the Arts para promover la producción artística y el desarrollo cultural, y aboliendo el sistema de cuotas migratorias creado en 1924, abriendo nuevamente las puertas de los Estados Unidos a los inmigrantes.

Fuente: CARPE DIEM Professor Mark J. Perry's Blog for Economics and Finance (http://mjperry.blogspot.com/2010/09/us-poverty-rate-1959-to-2009.html)

Fuente: CARPE DIEM Professor Mark J. Perry’s Blog for Economics and Finance (http://mjperry.blogspot.com/2010/09/us-poverty-rate-1959-to-2009.html)

En términos generales, la Gran Sociedad tuvo un impacto positivo en las vidas de millones de estadounidenses. Prueba de ello es que la proporción de pobres bajó de 22% en 1960 a 13% en 1969, la mortalidad infantil bajó un tercio, los Head Star atendieron a 2 millones de niños y el ingreso de las familias afroamericanas aumento de un 54% a 61% del ingreso de sus homologas  blancas. El porcentaje de ciudadanos negros en la pobreza bajó de 40 a 20%. En sus primeros diez años de existencia, el Medicare y el Medicare proveyeron asistencia médica a 47 millones de norteamericanos a un costo de $28 mil millones. Sin embargo, la participación de los Estados Unidos en la guerra de Vietnam comprometió el programa liberal. Para 1966, el gobierno federal gastaba 20 veces más en el conflicto indochino, que en la lucha contra la pobreza. Además, no todos los estadounidenses estaban felices con el liberalismo de LBJ. Muchos rechazaban la regulación de los negocios y la intervención del gobierno federal en la educación pública.  Otros, veían con recelo el crecimiento del gobierno federal y su intervención de la vida de los norteamericanos. Las elecciones legislativas de 1966 sirvieron de barómetro nacional, pues los demócratas perdieron 47 representantes, lo que selló el destino del reformismo de Johnson.

Norberto Barreto Velázquez, PhD

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