Great Society history lesson II

Now that at least 80 million Americans are on what used to be called “welfare” (see “Pandemic Swells Medicaid Enrollment to 80 Million People, a ‘High-Water Mark’”), perhaps it is time to revisit Great Society: A New History which describes the origin of the no-longer-called-welfare program on which nearly 25 percent of Americans now rely. (Previous post: Bitcoin has plenty of runway if we look back to the 1960s and 70s and the Great Society)

What’s the history of the program?

The costs of the previous legislation Johnson had pushed Mills into had already far outrun the projections. Budget officials had predicted that Medicaid, for example, would cost less than $ 400 million in fiscal 1967. Instead it had cost $ 1.1 billion.

Compare to $613 billion in Medicaid spending in 2019 (cms.gov). which presumably is now closer to $800

Why do Californians love bigger government so much?

The value of the private sector’s relationship with the government seemed especially obvious in the Western state that Americans regarded as the land of the future, California. For many Californians, the government was their job. More active-duty military and civilian Defense Department employees were stationed in California than in any other state. The presence of Pentagon money in California wasn’t merely large, it was overwhelming. 4 In one year, 1959, the Defense Department was awarding more than $ 3 billion in contracts to four aerospace firms in Los Angeles.

The author reminds us of the good old days of computing, before we got everything from Taiwan chip fabs:

In the mid-1950s, GE was a far richer company than IBM. General Electric had the resources necessary to get into computers, the computer fans reckoned, whatever Cordiner said. A clutch of engineers did manage to land a successful contract with the Bank of America for an innovative check sorter, the first computer system for banking applications, a testimony to the gumption of GE professionals and, ironically, to Cordiner’s own culture of department autonomy. California was the home of Bank of America, and also the home of the GE group that won the contract. The machines would serve the Sacramento, Fresno, Los Angeles, and San Diego areas. But California was a state where GE could endure the same troubles with organized labor as it did out East. GE internal reports noted that the company was looking to avoid the Golden State’s “punitive labor legislation.” GE based production of the project’s computer, weight 23,000 pounds, in Phoenix.

Unions can play an important role in expanding government for all:

Building a union that could beat the automakers at the negotiation table sounded like enough work, but Reuther also, early on, decided he wanted more. Reuther was falling in love with Northern Europe’s social democracies, countries where democratic government supplied health care and good schools, and even, Reuther noticed, funded time at worker spas for workers to recover from strenuous labor. It seemed to Reuther there was no reason America could not replicate the Scandinavian model. In the 1940s, Lem Boulware spoke at a graduation at Harvard University, making an early case for Boulwarism. During the same years Reuther gave the commencement address at Howard University, the historically black college in Washington. At Howard, Reuther said that U.S. unions needed to deliver better housing and medical aid to all Americans, not just union members. Otherwise, unions weren’t worth much. “The test of democratic trade unionism in a democratic society,” Reuther said, “is its willingness to lead the fight for the welfare of the whole community.”

The unions did beat the Detroit automakers, of course, but Detroit didn’t end up quite as prosperous as President Lyndon Johnson expected.

It was Detroit in particular that was, Johnson said [in May 1964], “the herald of hope in America. Prosperity in America must begin here in Detroit.” … If labor and industry would stick by his side, the president said, “the sky is the limit, and the sky is bright today.”

In the past, presidents had striven for abundance, Johnson noted. Now the country had abundance. The challenge of the next half century was proving “whether we have the wisdom to use that wealth to enrich and elevate our national life.” Some corners of the country were still poor. The Great Society, therefore, required, as Johnson had said before, an “end to poverty.”

See also Decline of Detroit (Wikipedia): “The population of the city has fallen from a high of 1,850,000 in 1950 to 680,000 in 2015 … Local crime rates are among the highest in the United States … and vast areas of the city are in a state of severe urban decay.” And Detroit bankruptcy (Wikipedia): “The city of Detroit, Michigan, filed for Chapter 9 bankruptcy on July 18, 2013. It is the largest municipal bankruptcy filing in U.S. history by debt, estimated at $18–20 billion…”

The central planners didn’t do a great job after World War II, but we can rely on them today…

Harrington took a frank position on the shame of urban renewal, in which unions had been complicit. After World War II, the unions had joined the federal government in a great plan to rebuild the cities. The bulldozers obliterated the slums, but also evicted entire black communities like Paradise Valley. This was not “urban renewal,” it was “Negro removal,” as the writer James Baldwin said. Two-thirds of the families displaced by urban renewal were black. Harrington argued that when the heavy equipment, whether Dwight Eisenhower’s in the past or new presidents’ in the 1960s, arrived at so-called slum neighborhoods, it crushed untold value. Old slums hadn’t merely been slums; they had been starting points: “there was community, there was aspiration.” New communities did not come to life in the new projects. The projects were cages that became graveyards. Harrington noted that the new housing that supplanted old tenements created “a new type of slum,” which isolated black families in ghettos. Harrington had seen the new type of slum firsthand in his hometown, St. Louis, where black families had been moved out of the Mill Creek areas to one of the largest of the urban renewal public housing projects in the country, Pruitt-Igoe.

Presidents Biden and Harris might be highly successful at transforming the U.S. via legislation:

And Johnson also could count some advantages of his own. First, there was his long record in the Senate, which gave him unparalleled experience as the shepherd of legislation. Roosevelt, a mere governor with a famous name, had had nothing like that. There was also the aching advantage of tragedy: Kennedy’s death would make Congress eager to pass Kennedy’s tax law and Kennedy’s languishing civil rights bill.

What are the parallels to today? Biden was in the Senate for decades and the U.S. is only now beginning to recover from the tragedy of rule by Donald Trump. Another parallel to today:

Moynihan noticed an irony. Whether a program’s beneficiaries were black or white, its planners were white. Blacks were scarcely present in all the work undertaken for the disadvantaged. Indeed, Moynihan later wrote, “at no time did any Negro have any role of any consequence in the drafting of the poverty program.”

The Great Society programs were supposed to get cheaper over time, as Americans realized that it was far better to work than to consume entitlement benefits:

At the August 20 signing ceremony, Johnson took further pains. The president told the public that the Economic Opportunity Act did not represent a “a handout or a dole.” He continued: “We know—we learned long ago—that answer is no answer. The measure before me this morning for signature offers the answer that its title implies. The answer is opportunity.” Spending now would bring savings later. Johnson promised the voters that this law would reduce the costs of “crime, welfare, of health and of police protection.” The act would yield a new era, and “the days of the dole in our country are numbered.” America would remember the 20 percent in poverty, the “forgotten fifth.”

Even today’s haters at the WSJ loved these ideas:

The Wall Street Journal characterized the law as “an opportunity to eradicate poverty, not opiate it.”

(Can we give them credit for prescience regarding opioids?)

Was President Johnson right about increased spending on government handouts cutting the cost of the police? Urban Institute: “From 1977 to 2018, in 2018 inflation-adjusted dollars, state and local government spending on police increased from $43 billion to $119 billion, an increase of 175 percent. Over the same period, real corrections expenditures increased from $18 billion to $81 billion, an increase of 350 percent.”

Ronald Reagan tried to talk Americans out of the idea that the path to salvation started with a much bigger government.

Reagan targeted the Office of Economic Opportunity. “Now do they honestly expect us to believe that if we add $ 1 billion to the $ 45 billion we’re spending . . . do they believe that poverty is suddenly going to disappear by magic?” Reagan also assailed the new camps being built for young workers. Room and board for each young person cost $ 4,700. Harvard tuition at $ 2,700 was less than that. Reagan took his jab at the college, and at Johnson’s misty affection for a humanities education: “I’m not suggesting Harvard is the answer to juvenile delinquency.” … America, Reagan said, was at a key moment—the country must choose whether it was a collectivist nation or a free one. The title of Reagan’s speech was “A Time for Choosing.” In early November the nation chose. It elected Johnson with an overwhelming majority.

We had faith then and have faith now!

To be continued…

More: Read Great Society: A New History