We Need to Reverse the Neoliberal Coupon Welfare State

Mike KonczalI finally got around to reading Mike Konczal’s excellent paper (from two years ago), No Discount: Comparing the Public Option to the Coupon Welfare State. It looks at neoliberal policy where rather than providing services directly, the government gives people coupons (generally called “vouchers”) to buy whatever it is on the open market. The most notable recent example of this is Obamacare.

Note that I said these are neoliberal policies. In general, conservatives are for such policies too. But I don’t think it is any secret that conservatives generally want to use such policies as a way to destroy the programs the same way they do with block grants. A good example of this is discussed in Konczal’s paper: unemployment.

The idea would be to create “personal accounts” where part of anyone’s salary would go into an account to be used (until it was exhausted) to cover for unemployed periods. Konczal noted that unemployment insurance has all the common advantages of government provided programs like efficiency[1], as well as none of the disadvantages of vouchers. In particular, the whole “personal accounts” system would create a whole extra layer of private bureaucracy to go along with the government bureaucracy.

But to get an idea of the general idiocy of the neoliberal approach to welfare, you can’t do better than Konczal’s blog post introducing the article, New Paper: Against the Coupon State. Since I have such a great love of libraries, this example really appeals to me:

Imagine if current neoliberal policymakers had to sit down today and invent the idea of a library. What would it look like? They’d likely create a tax credit to subsidize the purchasing and reselling of books, like much of our submerged welfare state. They might require a mandate for people to rent books from approved private libraries run by Amazon or Barnes and Noble, with penalties for those who don’t and vouchers for those who can’t afford it, like the recent health care expansion.

Or maybe they’d create means-tested libraries only accessible to the poor, with a requirement that the patrons document how impoverished they are month after month to keep their library card. Maybe they’d also exempt the cost of private library cards from payroll taxes. Or let any private firm calling itself a library pay nothing in taxes while exempting their bonds from taxation and insuring their losses by, say, paying for books that go missing. You can imagine them going through every possible option rather than the old-fashioned, straightforward, public library, open to all, provided and run by the government, that our country enjoys everyday.

Given this, why do we even consider such neoliberal approaches to problems? I think it has almost nothing to do with solving the direct problems. I think the business community spent many decades salivating at all the money in various welfare programs from Social Security onward. And they started asking themselves, “How can I get a slice of that?” So they began spinning this lie that if the private sector were involved: poof! Suddenly everything would be more efficient. But that not only wasn’t true, it had nothing to do with the impetus of the neoliberal policy.

We all know what the New Democrats brought to us: acceptance of social liberalism and an embrace of economic conservatism. It was libertarianism lite.[2] And that’s why I push against the Clintons and Obamas of the Democratic Party. These policies aren’t effective. What’s more, they aren’t popular. Your average American is just the opposite: socially conservative and economically liberal. But these policies are popular among the big spending donors.

And they are destroying our country—not just by eliminating economic liberalism but also by causing the Republican Party to go off the deep end. The modern Democratic Party is more conservative on economic issues than the 1972 Republican Party. What did the New Democrats think was going to happen when they took this hard right turn on economics? It was predictable that the Republicans would get lost down the rabbit hole of conservative-land.

So we are left with ever decreasing support for coupons like food stamps. But the rich are doing better than ever. This trend needs to reverse.


[1] I often think that conservatives claim so shrilly that the private sector is more efficient than the public sector because they know what a crock it is. Regardless, in these cases, the government has many advantages over the private sector.

[2] The fact that actual libertarians didn’t rush to the Democratic Party after Bill Clinton was elected should tell you all you need to know about the real motivations of that movement.

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

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