Introduction
The topic of this essay is the “topic of the day” in the United States as we write down these words. In this short paper, we will try to assess why welfare has become such an important topic in this country, especially after the attacks of September 11, 2001, and the subsequent American-led wars in Afghanistan and Iraq. It is not a simple topic to discuss. To have a proper explanation of the topic we need to thoroughly understand the conditions that brought about this situation.
It is important to make a combination of the economical and social picture of the United States society this last decade. The combination of the analysis of both these aspects will make us better understand why in the psychology of the people and the actual public discourse, welfare is one of the most discussed.
Let us briefly sketch the structure of this essay. First, we will begin by explaining what welfare is and the role government has in this issue. After that, we will assess the costs associated with the war in Iraq, in particular, and the war on terror, in general, for the United States. What has been the influence of these costs on American society and the fiscal weight it had on the government expenditures. After that, we will turn to the cost of living in the country and the present income situation for different groups and classes of society. We have to analyze the employment market. Another situation we have to consider is income distribution among the population, different status groups of the society.
We will show particular attention to the health care costs in the United States and the credit crisis which is related to the income (and income distribution) analysis. At the end of the above-mentioned analyses the connection between the present social-economical situation and the rise of the public discourse about welfare and the role of government in it.
Welfare and the cost of war
A simple question to be made is what is welfare? But that has no simple answer. According to the Encyclopaedia Britannica On-Line (2008) welfare refers to:
- Health, happiness, and good fortune; well-being.
- Prosperity.
It is something that every human being would agree upon and would like to have. The end of the article of the encyclopaedia shows its connection with the social world. This is due to the fact that welfare is a sort of “Financial or other aid provided, especially by the government, to people in need” (“Welfare”, pg. 1).
As we can see by the definition given in the encyclopaedia welfare (as a concept) practically influences the daily lives of every individual in society. In a more social way of speaking it is the help that government can give its citizens to achieve a good level of well-being, prosperity and wealth. Since the times of President Reagan, based on the ideas of Smith, free trade and economic liberalism were the dominant ideology in American society. The role of government was that of creating the conditions for markets to function and nothing more.
The government did not have the duty of actively trying to increase its citizens’ wealth, well-being and prosperity; i.e. welfare. This was the role of markets and would come as a result of the free interaction between markets and individuals of the society (Buchholtz, pg. 16).
In the first decade of this century president, Bush revived the policies of late President Reagan and unleashed the market forces once again in full throat. Everything seemed to function well and the dream of a welfare system in the United States sparked by some policies tried by President Clinton seemed to be far away (Buchholtz, pg. 8). But the events of September 11, 2001, came up and the subsequent wars of Afghanistan and Iraq increased governmental spending. According to the National Priority Project, the cost of war, combined in Iraq and Afghanistan, for the fiscal year of 2008 alone was $187.5 billion (“Cost of War”, par. 1). If we have to mention the total cost of the wars in Afghanistan and Iraq, including military and non-military spending, we have to admit that:
“To date, the total cost of war that has been allocated by Congress is $830.2 billion, with $657.3 to Iraq and $172.9 to Afghanistan. In addition, on April 9, 2009, the new administration requested, in a final emergency supplemental, an additional $77.1 billion in war spending. We estimate that approximately $52.7 billion of that will be for Iraq and the remaining $24.4 billion for Afghanistan.” (“Cost of War”, par. 2)
But seeing the number alone does not tell you anything more than this combined war has had and still has, a tremendous cost. To understand the problem we have raised in this essay we have to add that this combined war was the first not to be funded with taxes from the American people. The huge sum of money shown above is completely borrowed from the federal government. So, basically, this is a war funded by loans (Bonner & Wiggin, pg. 13). The impact of this huge bill to be paid continuously has been devastating. But it is not just only this factor alone that caused the country to have financial difficulties. In the next section, we will deal in detail with the gap between different groups of society.
But, turning to the cost of the war, it can be said that this huge amount of money was concentrated mostly in the hands of a few corporations that dealt with military technology or military-related services. This money could have been invested in other public services, or public infrastructure, etc. by the government to boost markets in particular areas or promote specific products and services for the benefit of the public.
If we have to turn to basic economic theory, we would find that huge governmental spending would influence negatively the economy of a country. Huge spending would negatively affect the financial sector of that country by disrupting the equilibrium within the market. The effects would be a weakening of the currency and an increase in prices with higher rates than what people could earn. In more simple words the cost of products and services would increase at a higher price than monthly revenues for much of the population, which is exactly what happened during the first five years of this decade (Bonner & Wiggin, pg. 19).
In turn, this would make the income distribution among the public become increasingly polarized. This polarization means that some social groups or social classes would earn much more than would the rest of the society (Bonner & Wiggin, pg. 20). Now let us pass to the second part of the “equation” and assess the social consequences of the neo-liberal politics of laizess faire.
Wealth distribution
The main factor that influences people’s daily lives is the distribution of wealth. Here we enter into the real not only of politics and economics but of ethics and morals also. This is because wealth distribution has a lot to do with justice, at least a public perception of economical and social justice.
Poverty is the first thing to come to mind when one talks about social and economical justice.
For many of us, when we hear the word “poverty” we understand basically “an inability to provide a family with nutritious food, clothing, and reasonable shelter. For example, the “Poverty Pulse” poll taken by the Catholic Campaign for Human Development in 2002 asked the general public the question: “How would you describe being poor in the U.S.?” The overwhelming majority of responses focused on homelessness, hunger or not being able to eat properly, and not being able to meet basic needs” (Bruch et al, pg. 4).
So, the general public perceives poverty as being lacking nutritious food, adequate warm housing, and clothing for a family. If this is the case then according to the Census Bureau relatively there could be only a few of 35 million people identified as being “in poverty” could be characterized as poor. While material hardship does exist in the United States, it is quite restricted in scope and severity. The average “poor” person, as defined by the government, has a living standard far higher than another person living at the other corner of the planet has. But this does not mean that everything is functioning as it should.
Now scholars have turned their attention to another concept as important as the first: the so-called relative poverty. This concept does not measure the ability to proper nutrition or clothing that a person has but the comparison being made in possibilities that this person, or social group, has in comparison to other persons or social groups within the same society.
In fact, the issue of understating poverty is especially pressing in states with both a high cost of living and a high poverty rate such as California where the median home price in May 2006 was determined to be $564,430 (Bruch et al, pg. 43). With half of all homes being priced above the half-million-dollar mark and prices in urban areas such as San Francisco, San Jose or Los Angeles being higher than the state average, it is almost impossible for not just the poor but also lower-middle-class worker to afford decent housing and no possibility of homeownership (Bruch et al, pg. 43). Let us further continue the example.
In the Monterey area, where the low-pay industry of agriculture is the largest sector in the economy and the majority of the population lacks a college education the median home price was determined to be $723,790 requiring an upper middle-class income which only roughly 20% of all households in the county boast (Bruch et al, pg. 43). Such fluctuations in local markets are however not considered in the Federal Government poverty threshold. By doing so it leaves many who live in poverty like conditions out of the total number of households classified as poor.
Let us spend a few words on another important problem mentioned frequently during the last Presidential campaign by both parties and that relates to poverty and income distribution: health care.
“Health care in the United States is provided by many separate legal entities. Including private and public spending, more is spent per person on health care in the United States than in any other nation in the world. A study of international health care spending levels published in the health policy journal Health Affairs in the year 2000, found that while the United States spends more on health care than other countries in the Organisation for Economic Co-operation and Development (OECD), the use of health care services in the U.S. is below the OECD median by most measures. The authors of the study conclude that the prices paid for health care services are much higher in the United States” (Anderson et al., pg. 2)
If we combine this quotation with what we mentioned above we would begin to understand the psychology of the people and the consequent articulation that comes out in the public discourse area. During this decade the income and wealth distribution gap between individuals and social groups of society has been increasing year by year.
Conclusion: why welfare has become a political and economical problem
The combination of increasing the cost of many products and services and the not congruent increase in monthly revenues for many Americans made their life more difficult day after day. Another factor to be mentioned here is the cost of the combined war in Iraq and Afghanistan, or the so-called “war on terror”. This money could have definitely been used differently.
As I mentioned above the government could have influenced the market by promoting certain products and services for the benefit of the general public. Another form would have been that of what the actual president is trying to do with a sort of public works that help create jobs for many people. But since the philosophy of the previous administration was that of neoliberalism, that government does not intervene in the market but “leaves it alone”, then that money was used to finance a war in hope that markets would respond positively and this way the prosperity of society would be guaranteed.
Unfortunately, since the markets have responded positively only for certain, particular, groups of society, then the majority of the public has “suffered” the non-possibility of earning the same and have responded by raising a public discourse for welfare, which is perceived by the public as a sort of “salvation” from this income and wealth distribution gap among groups of society.
References:
Bonner, W., Wiggin, A. Empire of Debt: The Rise of an Epic Financial Crisis. Wiley & Sons Inc: New Jersey, 2006.
Buchholtz, T. New ideas from dead economists: An introduction to modern economic thought. Plume: New York, 2007.
“Cost of War”. National priority Project Website. 2009. Web.
“Welfare”. Encyclopaedia Britannica On-Line, 2008. Web.
Sarah K. Bruch, Myra Marx Ferree, and Joe Soss. From Policy to Polity: Democracy, Paternalism, and the Incorporation of Disadvantaged Citizens. Institute for Research on Poverty, 2009. Web.
Gerard F. Anderson, Uwe E. Reinhardt, Peter S. Hussey and Varduhi Petrosyan, “It’s The Prices, Stupid: Why The United States Is So Different From Other Countries”. Health Affairs, Volume 22, Nr. 3. 2003.