To Promote the General Welfare: Market Processes vs. Political Transfers

10
Book Reviews 581 concerned with some aspect of financing elections or the broader activities of parties. If it did nothing else but present case studies of the campaign finance institutions of advanced democracies, the book would be invaluable, for as the editor notes, virtually nothing has been published on this topic since Arnold Heidenheimer’s Comparative Political Finance in 1970.But much more is accomplished, and Alexander, his associated at the Citizens’ Research Foundation, and the Research Committee on Political Finance and Political Corruption of the International Political Science Association are to be con- gratulated for their respective contributions to this excellent book. The volume begins and ends with essays emphasizing the comparative theme the project sought to illuminate. In between are nine case studies dealing with British, Canadian, Australian, American, Israeli, Italian, Span- ish, Dutch, German, and (briefly) Swedish campaign finance. Interestingly, as Alexander notes in his introduction, “Though the broader theme of compar- ative political finance is the intended subject of this volume, the particular issue of the role of public funding has emerged as a salient feature.” When the authors began to do their respective case studies of campaign finance in Western democracies, they were driven to focus on moves toward public financing. Comparisons among nations are then based largely on the form and extent of public financing they choose. Alexander makes clear that the existence of public financing is not a sufficient condition for having achieved a system either more advanced or fair than a private system. Instead, analysts must focus on the mechanisms by which money is raised and accumulated, who should receive the subsidy, how much, and how and when it should be made. The conclusion is that the correct balance between private and public funding depends on the institutions of the particular nation; but the balance is rarely tipped toward public funding alone, because such an arrangement reduces private participation more than it does the participation of organized groups. This approach is particularly satisfying for the volume of essays, because each is a genuine case study of the choices one nation has made in balancing public and private participation. MICHAEL C. MUNGER is Assistant Professor o f Political Science at the Univer- sity of North Carolina in Chapel Hill. Mark Alan Hughes Starting Even: An Equal Opportunity Program to Combat the Nation’s Nay Poverty, by Robert Havemen. New York: Simon and Schuster, 1988,287 pp. Price: $19.95 cloth. Welfare Policy for the I99Os, edited by Phoebe H. Cottingham and David T. Ellwood. Cambridge, MA: Harvard University Press, 1989, 349 pp. Price: $30.00 cloth. To Promote the General Welfare: Market Processes vs. Political Transfers, by Richard E. Wagner. San Francisco: Pacific Research Institute for Public Pol- icy, 1989, 260 pp. Price $29.95 cloth, $12.95 paper. I will not begin this review with a sentence like “Poverty is back on the American agenda.” Those interested in poverty research have read such open-

Transcript of To Promote the General Welfare: Market Processes vs. Political Transfers

Book Reviews 581

concerned with some aspect of financing elections or the broader activities of parties. If it did nothing else but present case studies of the campaign finance institutions of advanced democracies, the book would be invaluable, for as the editor notes, virtually nothing has been published on this topic since Arnold Heidenheimer’s Comparative Political Finance in 1970. But much more is accomplished, and Alexander, his associated at the Citizens’ Research Foundation, and the Research Committee on Political Finance and Political Corruption of the International Political Science Association are to be con- gratulated for their respective contributions to this excellent book.

The volume begins and ends with essays emphasizing the comparative theme the project sought to illuminate. In between are nine case studies dealing with British, Canadian, Australian, American, Israeli, Italian, Span- ish, Dutch, German, and (briefly) Swedish campaign finance. Interestingly, as Alexander notes in his introduction, “Though the broader theme of compar- ative political finance is the intended subject of this volume, the particular issue of the role of public funding has emerged as a salient feature.” When the authors began to do their respective case studies of campaign finance in Western democracies, they were driven to focus on moves toward public financing. Comparisons among nations are then based largely on the form and extent of public financing they choose. Alexander makes clear that the existence of public financing is not a sufficient condition for having achieved a system either more advanced or fair than a private system. Instead, analysts must focus on the mechanisms by which money is raised and accumulated, who should receive the subsidy, how much, and how and when it should be made.

The conclusion is that the correct balance between private and public funding depends on the institutions of the particular nation; but the balance is rarely tipped toward public funding alone, because such an arrangement reduces private participation more than it does the participation of organized groups. This approach is particularly satisfying for the volume of essays, because each is a genuine case study of the choices one nation has made in balancing public and private participation.

MICHAEL C. MUNGER is Assistant Professor o f Political Science at the Univer- sity of North Carolina in Chapel Hill.

Mark Alan Hughes

Starting Even: An Equal Opportunity Program to Combat the Nation’s N a y Poverty, by Robert Havemen. New York: Simon and Schuster, 1988,287 pp. Price: $19.95 cloth. Welfare Policy for the I99Os, edited by Phoebe H. Cottingham and David T. Ellwood. Cambridge, MA: Harvard University Press, 1989, 349 pp. Price: $30.00 cloth. To Promote the General Welfare: Market Processes vs. Political Transfers, by Richard E. Wagner. San Francisco: Pacific Research Institute for Public Pol- icy, 1989, 260 pp. Price $29.95 cloth, $12.95 paper.

I will not begin this review with a sentence like “Poverty is back on the American agenda.” Those interested in poverty research have read such open-

502 I Book Reviews

ing sentences many, many times in the past few years. Thankfully, all the agenda-setting is beginning to yield some information and even a little wis- dom about poverty and the poor. One of these books provides much of both. The joys of the other two books are to be had in their polemic, not their evidence.

Cottingham and Ellwood’s Welfare Policy for the 1990s is a very good collec- tion of nine papers-ten papers really, because Ellwood’s conclusion is a thoughtful synthesis of both the book’s chapters and the conference for which the chapters were written. Robert D. Reischauer begins the book with a discussion of future directions for welfare reform. He suggests three unre- solved issues that will “bedevil” future debates on welfare reform. First, should benefits be increased and be made more uniform across states? Second, should work be framed as an opportunity offered to or an obligation required of welfare recipients? Finally, should states be allowed much or little latitude to devise innovative programs? Reischauer wisely treats these as open ques- tions in the sense that their answers are dependent on “liberal” versus “con- servative’’ values regarding the deservingness of the poor, the virtues of federalism, the existence and worth of regional diversity, and so on. Reischauer is even-handed and informative on these open questions and his chapter will undoubtedly be reread when welfare reform resurfaces as a legislative issue.

The second chapter, by Sheldon Danziger, “Fighting Poverty and Reducing Welfare Dependency,” raises one of the major themes of the volume: the relationship between poverty and dependency. Danziger distills the findings of many studies to produce several very potent tables. Let me offer just two related findings about poor children. First, more than one-fifth of all American children in 1985 were poor AND received either no government assistance (cash transfers plus food stamps and energy help) or assistance insufficient for them to escape poverty. Second, from the late 1960s through the early 1980s, almost one-third of all black children were persistently poor, and as many as one-quarter of all black children were persistently dependent on welfare.

These numbers are shocking on their face. They also highlight the relation- ship between poverty and dependency that I believe Danziger wants to em- phasize. Namely, most current welfare reforms focus on moving long-term recipients from welfare rolls to payrolls. However, without nonwelfare bene- fits to support the working poor and short-term welfare recipients (who to- gether constitute four-fifths of the total poor), these reforms reduce depen- dency but not poverty. But just as moving people from the nonworking poor to the working poor would be a less than satisfying outcome, so would be moving people in the opposite direction. Danziger argues that one can accept the intrinsic value of work and still fight poverty, particularly among families with children. For him, this means identifying ways to reduce poverty without increasing dependency. He provides two examples. First, increase transfers to the poor through refundable tax credits. Second, assure support of all children in single-parent families by taxing absent parents and supplement- ing payments that fall below a fixed minimum.

Several of the contributors focus on the poverty of families with children. Douglas J. Besharov’s chapter on “Targeting Long-Term Welfare Recipients” illustrates one of the most important features of current poverty research: He distinguishes between types of welfare recipients. Besharov rightly targets

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female-headed families with children as one the most troubling components of the poverty population. The poverty rate of such families is three times that of other families with children: Nearly half of all female-headed families with children live in poverty. But within the aggregate statistics, we should distinguish two kinds of female-headed families with children. The first group is divorced mothers of children under eighteen; the second group consists of mothers who have never been married, Besharov considers this latter group more troubling for two reasons. First, unwed mothers and their children are much poorer than families headed by divorced women. The median family income in 1985 of divorced women with children was $1 1,149, while it was only $4,623 for never-married women with chiklren. Second, Besharov re- ports that unwed mothers are more likely to be on welfare than divorced mothers, and they are more likely to stay on welfare for a long duration. Children of never-married mothers are three times more likely to be on welfare than the children of divorced mothers. Also, the average duration of welfare recipiency for unmarried women is 9.3 years, while for divorced women the average duration is 4.9 years.

Although Besharov states that the inequities and hardship caused by di- vorce are important, ultimately he is more concerned about births to unmar- ried women because of the effects of illegitimacy on poverty. “Family break- down-and the poverty it causes-gives every indication of worsening . . . much more than a divorce, an out-of-wedlock birth to a young mother is a direct path to long-term poverty and welfare dependency” (pp. 150-2). This is very much the conventional wisdom regarding the consequences of teenage- childbearing, and it is reasonable on its face.

These statistics leave open the possibility that the origins of the poverty among young unwed mothers precede their decision to have children. That is, are unmarried mothers any poorer than childless women similarly situated in disadvantaged environments? This kind of question has been raised re- cently by Arlene T. Geronimus on the subject of neonatal mortality. She finds that the children of teenage mothers fare no worse in terms of neonatal mortality than the children of older first-time mothers from similar back- grounds [Geronimus, 19871. Research by Geronimus and Sanders Korenman asks similar questions about interpreting the relationship between poverty, teenage-childbearing, and the health and welfare of mothers and children [Geronimus and Korenman, 19881. Just as Besharov cautions us to “distin- guish between the two types of female-headed families and the problems they face” (p. 164), the research of Geronimus and Korenman cautions us not to understand the poverty among families headed by never-married women simply as a function of family structure.

Robert I. Lerman continues the discussion of family-oriented antipoverty policy. He focuses on the apple-pie issue of child-support policies. Lerman shows us, however, that even such noncontroversial issues are not without complexity, and he blends politics and economics with a solid understanding that characterizes all the contributions to this volume. He situates his presen- tation of alternative approaches to child support by examining the potential and actual payments for child support. Three components of child support are identified: (1) the percentage of custodial parents with awards, (2) the amount of awards (as a function of the percentage of noncustodial parent’s income awarded to child support), and (3) the percentage of awards actually paid. Using studies that estimate the incomes of absent fathers, Lerman

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calculates that if all mothers had awards, if awards averaged 25 percent of income, and if all fathers paid the full amount of their obligation, then AFDC mothers would receive annual child support payments of about $3000. In 1984, acutal payments averaged $225 per year.

Lerman describes the features of the new child support strategies known as the Child Support Assurance System (CSAS). The two most important of these features are the requirement that judges use formulas to determine support obligations, and the use of government payments to assure that custodial parents receive some minimum level of support. Income-related formulas are useful because they would index support to inflation, reduce arbitrary inequities, and probably lower administrative costs. The state as- surance of support would mean that mothers would no longer bear the entire risk of noncollection or incomplete collection from absent fathers.

The best known ongoing experiment on assured child support, the Wiscon- sin Child-Support Demonstration, includes awards based on a progressive proportion of absent parent’s income; improved collection methods, includ- ing automatic withholding from paychecks; a “high-benefit” award schedule assured by the state; a surtax on the earnings of custodial parents levied against CSAS payments: and a wage subsidy to AFDC recipients phased out gradually. By “high-benefit’’ award, Lerman refers to the fact that the assured level ($3000 to $4500 annually) is higher that what most fathers would owe (even under the higher award formula). The surtax provides a form of income- testing to the program. Lerman is critical of these two features of the Wiscon- sin plan because they change the CSAS program from a universal, nonwelfare approach to poverty into a more traditional welfare approach. The high- benefit awards would qualify custodial parents for payments exceeding the support obligations of absent parents and act more like transfers based on income deficiencies. The surtax on custodial parents income would disqualify middle-income parents.

To maintain the nonwelfare approach to antipoverty policy, Lerman pro- poses an alternative to high-benefit CSAS that combines a low-benefit CSAS with the replacement of the personal income tax exemption of $2000 by a revenue-neutral refundable tax credit of $350. Low-benefit awards would be set at levels low enough that states could realistically escape most of their contribution through enforcement of absent fathers’ support. In comparing the Wisconsin plan with his a1ternative;Lerman acknowledges that the for- mer is better targeted to poor families than the low-benefit, tax-credit ap- proach. But that is Lerman’s point. He is very pessimistic about the prospects of welfare-like programs that seek to transfer money to the poor. He greatly favors approaches like the low-benefit CSAS and the refundable tax credit, which have the incidental effect of aiding the poor within a universal program. In general, I agree with this assessment. However, an assured minimum level of support for poor children probably represents the most politically feasible form of targeting. Perhaps we should not abandon too easily the opportunity to conceal, albeit incompletely, aid to poor children in the guise of child support enforcement.

The chapter by Gary Burtless reviews the evidence on the effects of employ- ment and training programs on the earnings of AFDC recipients. The news is that the effects are quite small, but they can be achieved in cost-effective ways. CETA, public service employment programs, Supported Work, and the AFDC Homemaker-Home Health Aide projects had the largest effects on

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earnings, raising. participants’ annual earnings by as much as $1500 shortly after program completion. Burtless notes that this effect is not nearly enough to raise most participants above the poverty line, but he insists that even modest decreases in poverty among families with children is money well- spent. Given the child-poverty numbers presented by Danziger, and given the fact that all the programs reviewed by Burtless train people for work, it seems hard to argue with his assessment.

Denise F. Polit and Joseph J. O’Hara take on the extraordinarily difficult task of understanding the role played by support services in moving people from welfare dependency to self-sufficiency. The evidence is scarce and indi- rect. They discuss many types of support services, but they focus on three: child care, medical assistance, and family planning. They are able to draw three tentative conclusions about the child-care needs of welfare recipients. First, women on AFDC say they need child care in order to work, and when the costs of child care are lower, a larger percentage of these women do work. Second, as many as half of AFDC mothers have access to free or low-cost care provided by relatives, although the reliability of such arrangements is unclear. Third, although available resources sometimes go unused because of a lack of information, current mechanisms to offset the costs of child care to AFDC mothers are probably inadequate to meet even existing demand.

There is very little evidence on the effect of medical assistance or family planning as support services. The medical assistance issue is not a question of health care: Medicaid is categorically available to all AFDC recipients. The question is the effect of terminating Medicaid (four months after leaving welfare) on the decision of recipients to go to work. There is no experimental evidence on this issue since Medicaid is a universal program. Similarly, we know little about the benefits of family planning, although there is some slim evidence that such services might reduce repeat pregnancies.

“Institutional Effects of Reform” by Demetra Smith Nightingale is my favorite chapter in the collection. Read these twenty pages, and you will never again forget that “management” joins “policy analysis” in the title of this journal. Nightingale deftly shows just how complex the intergovernmental, interagency, interprogram network of welfare has become. She identifies nine distinct “systems” in this network.

The precise character of the broader welfare network varies by state and by community within states, and may vary by policy issue. Each system has its own set of programs, target populations, mandates, objectives, and incentives. Some systems interact exten- sively with others, some operate more autonomously, but each defines and addresses a given problem from its own perspective. Various programs operate under the direct authority of cities or states, while others are authorized by the federal government and subject to primarily federal regulations. Overlap inevitably exists among some systems and programs, in terms of the types of clients served (for example, welfare as well as nonwelfare population) or types of services provided, and coordination across related programs has become a major institutional activity. (p. 202)

Nightingale’s example of the steps involved when an unmarried woman with a child applies for AFDC and Medicaid is stunningly complicated. But the author resists, characterizing this complexity as necessarily undesirable, as I would be tempted to do. At the very most, Nightingale suggests that those interested in reform understand this complexity as an institutional reality and improve implementation within this realistic constraint. She also demon-

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strates the likely costs of failing to understand these institutional realities. “Complexity should not necessarily be construed as negative or counterpro- ductive, but it makes interprogram coordination more difficult to achieve. . . . It would be naive to expect that national legislative provisions in welfare reform would improve interprogram coordination” (p. 2 18). Indeed, Nightin- gale could have titled her chapter, “Institutional Effects on Reform.”

Craig Thornton contributes a straightforward and useful discussion of cost measurement in welfare reform. He discuss the many pitfalls of cost measure- ment and then earns his keep by presenting estimates of the annual costs of AFDC, Food Stamps, Medicaid, a variety of education, training, and employ- ment programs, and several nonwelfare programs such as the Earned Income Tax Credit. This is pretty thankless work. But when it comes to reforms, most social policy analysts spend more time on the benefit side of the benefit-cost ratio. This sobering chapter reminds us of the other side.

The chapter by Loic J. D. Wacquant and William Julius Wilson is more broadly conceived than the other contributions. The authors attempt to docu- ment the emergence of a place more distressed and isolated than anything we’ve seen before. Although their data analysis misses some important changes in the geography of the ghetto, they sketch a vivid picture. The most striking finding is the difference in the concentration of poor whites and poor blacks. Concentration here means the proportion of poor people who live in neighborhoods (census tracts) with poverty rates of 40 percent or more. Wacquant and Wilson report that in the ten largest cities, nearly 22 percent of all poor blacks lived in these extreme poverty areas in 1980, while less than 3 percent of poor whites were concentrated in poor neighborhoods. Looking at the other end of the neighborhood scale, well over half of all poor whites lived in nonpoor neighborhoods (census tracts with poverty rates of less than 20 percent) in 1980, while only 1 in 6 poor blacks lived in nonpoor tracts.

These findings are limited by the authors’ focus on the ten largest cities. They state that over half of the big-city poor live in these ten largest cities. I’m not sure what this statement means since, while it is true that these ten cities contain 56 percent of the poor people living in the 50 largest cities, they also contain 53 percent of all the people living in the 50 largest cities. The ten largest cities contain large numbers of everything. At any rate, much more informative studies of poverty concentration are available. One of the first and probably still the best is Bane and Jargowsky [1989]. Also, there are better ways to document the deterioration of the ghetto than by identifying the number of 40-percent-poverty tracts.

Indeed, finding that poor blacks live with other poor people more often than do poor whites becomes interesting only in the larger context of Wilson’s writings about the “underclass.” As Wacquant and Wilson write, “Poor blacks are thus six times more likely to live in severely depressed neighborhoods than are poor non-Hispanic whites.This fact is crucial for understanding the formation of a black ghetto underclass” (p. 75). The authors go on to describe changing conditions in several inner-city neighborhoods in Chicago. Here, they are at their best in portraying the shift from “institutional ghetto to physical ghetto.” For Wacquant and Wilson, this dismal portrait makes a prima facie case for the socieconomic basis, rather than a cultural or moral basis, of welfare dependency in the ghetto.

Wacquant and Wilson are concerned about the magnitude and increase in concentrated poverty among poor blacks because of their maintained hypoth-

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esis about the effect of such neighborhoods on individuals: “Thus it is the local social setting and its associated structure of opportunities which explain the behavior, aspirations, and hopes of inner-city residents” (p. 97). That hypothesis regarding neighborhood effects is probably the most influential research impact of Wilson’s book, The Truly Disadvantaged [ 19871, and it is perhaps the most important open question in contemporary poverty research. And it’s still wide open.

Volumes emerging from conferences often reflect only dimly the debates and themes of the meeting itself. The conclusion by David T. Ellwood provides some of that context. He also identifies the volume’s central question and the various resolutions offered by the contributors. The question is, is the policy goal the reduction of poverty or the reduction of dependency? We could eliminate poverty by transferring sufficient income to the poor through larger welfare payments. Such a policy would decrease poverty, but it would likely increase dependency. We could eliminate dependency by dismantling all transfers to the poor. Such a policy would decrease dependency, but it would likely increase poverty. Operating in the reasonable range between these two extremes, one confronts what Ellwood calls the adequacyldependency dilemma.

Of course, the best resolution of this dilemma is a world in which employ- ment is available and earnings are high enough to sustain self-sufficient households. Ellwood identifies three approaches toward that goal among the contributors. First are those who would fix the welfare system itself. These fixes include better case-management methods, increased training and search services, and mixing work and welfare. Second, there are the authors oriented to improving nonwelfare programs. These include the child-support pro- grams, the change from a personal exemption to a refundable per capita tax credit, and an expanded Earned Income Tax Credit. Third, Wacquant and Wilson call for “a comprehensive, social-democratic agenda of reform.” The latter would include job creation, universal child and health care, and rebuild- ing public education.

These approaches are distinguished by a trade-off-between political feasi- bility and effectiveness in reducing poverty through economic opportunity. The advantage of welfare-system reforms is that they tend to be incremental, directly salient to the problems of those on welfare, and politically palatable. Their disadvantage is that they are surely insufficient to raise out of poverty all or even most of the erstwhile welfare recipients benefiting from them. This is, again, the dilemma of succeeded at welfare reform by expanding the ranks of the working poor. And this is essentially the argument of those advocating nonwelfare approaches to reform. It is the point made by Danziger and reiter- ated by Ellwood: “Indeed, I am absolutely convinced that [welfare reforms] will never work very well until [nonwelfare reforms] are in place . . . A far more appealing agenda [than welfare reform] would be to convert the welfare poor into the working nonpoor” (p. 285).

Indeed, how can policy obligate the welfare poor to work when policy does not also assure that work raises people out of poverty? The intrinsic value of work is something one enjoys on a full stomach under a warm dry roof. What kind of community demands of its poorest citizens a willingness to work in vain? Certainly, all citizens can expect their fellows to be self-sufficient. But policy that reasonably obligates the poor to work faces a prior obligation just as reasonable: that work represent a credible opportunity for self-sufficiency.

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That is the focus of the nonwelfare reforms discussed in this collection. These include expanding the Earned Income Tax Credit, increasing the minimum wage, creating wage subsidies for lower-wage workers, making refundable tax credits €or child care and substituting a refundable tax credit for the personal exemption, and assuring the minimum support of children.

The third approach identified by Ellwood is that taken by Wacquant and Wilson. Theirs is a call for fundamental reform in social and economic poli- cies. This is really less a third approach than an extension of the nonwelfare approach: “Our analysis thus leads us to strongly favor the nonwelfare ap- proach to welfare reform, that is to move beyond workfare programs in favor of a comprehensive package of policies anchored in economic measures designed to attack the structural roots of the problem, rather than treat its more apparent symptoms at the level of individuals” (p. 100). The first and foremost item in this package would be a full employment program. It seems to me that this kind of call, though moving, is fruitless. Just as it is easy to speak of abstract problems like “structural roots,” so it is easy to call for abstract solutions like “full employment.” At some point, trading off political feasibility for sweeping solutions means that nothing really changes for the truly disadvantaged.

What would such a comprehensive package look like? In Starting Even: An Equal Opportunity Program to Combat the Nation’s N e w Poverty, Robert Haveman proposes fundamental reforms for American social policy. He moves beyond the simple “stick figures” of “fundamental reforms” and begins to outline the specific features of a radically different antipoverty policy. In this, he offers a sweeping and noble vision. But one finishes Starting Even without really knowing how or why his program would work, what political coalition would support this package, or how would-be reformers might go about starting, even.

This book is two things: a collection of analyses of the current status of income inequality in the U.S. and government policies to alleviate poverty, and Haveman’s five plank proposal to change the welfare system. The pro- posal is the book’s drawing card-simple but provocative, it focuses the reader and the debate on central issues in the design of redistribution policies. The proposal is designed to reduce poverty, which Haveman correctly ob- serves arises because people are unemployed, or employed but paid too little, or because children grow up in families that are poor.

Starting Even proposes that the current welfare system be replaced by a negative income tax (“universal demogrant”), that the social security system make needs-adjusted (reduced) benefit payments, that the government and absent parents assume fixed financial responsibility for child support in one- parent families, that the government subsidize wages of low-income workers, and that the government establish $20,000 in capital funds for the education, training, and health of every 18-year-old. These proposals are interesting and appealing, and some version of them (they are not described in detail) might well serve the nation better than the current system.

The book’s central image is its rejection of Arthur Okun’s leaky bucket metaphor. In the Godkin Lectures of 1974, Okun argued that redistribution, while immensely desirable, is unavoidably costly: In transferring money from the rich to the p.oor, the inefficiencies created by the tax system and the welfare system jointly conspire to reduce overall income and welfare (as in utility, not dependency). The bucket used to transfer the money leaks. A t some

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point (Okun himself would settle for an efficiency loss of sixty cents for every dollar of redistribution from the richest 5 percent of families to the poorest 20 percent), the leaks become so pronounced that further redistribution is too costly to be worthwhile. [Okun 1975, pp. 91-94]

Throughout the book, Haveman claims that we can resolve the “big trade- off” between efficiency and equality by focusing our efforts on equal opportu- nity. His proposals are intended to level the field and allow everyone to start even. It seems to me that Haveman is not resolving the dilemma, but rather manuevering within the constraints that the dilemma defines. Okun himself argued that the way to increase equality without incurring efficiency losses is to identify inefficiencies within the system. These are the “free” gains in equality that Haveman wants. And sure enough, Haveman’s program is funded precisely by the great looming inefficiency of U.S. social policy. He takes money away from affluent social security recipients and puts it into a negative income tax, wage subsidies, and youth capital funds.

Good work if you can get it. Sure, I’d applaud means-testing in the distribu- tion of social security benefits. But identifying inefficiencies is not a suffucient condition for removing them. One must ask what creates and sustains those inefficiencies. The answer is the large and increasing political power of the elderly. The difficult task is confronting (or accommodating) the politics of the inefficiency. There is certainly no evidence from the 1980s that suggests that the elderly are willing or the non-elderly are able to reallocate social security funds.

Starting Even is a heartfelt polemic, but it is a sermon to the converted. For those who prefer their sermons in another liturgy, I suggest Richard E. Wagner’s To Promote the General Welfare: Market Processes vs. Political Trans- fers. This is a mildly engaging work of libertarian political philosophy, but one of very little use for those trying to think their way through the poverty and welfare debates of the 1980s and 90s. The book is about “democratic institutions themselves instead of the particular policy outcomes that consti- tute the present-day welfare state” (p. 17). One can reread the anti-Federalists for many reasons; they don’t have to speak directly to the expansion of the Earned Income Tax Credit.

But Wagner violates the boundaries he sets up for himself when he strays into recent social research on the particular policy outcomes that are welfare today. The evidence regarding dependency and minimum wages and so on is not nearly so one-sided as Wagner presents. Nor does Wagner respect his boundaries (or play to his strengths) when he discusses the policy options generated by his arguments: “If the goal of social policy is one of fostering dependence and servility, the present form of the welfare state works in that direction. But if what is desired is the promotion of autonomy and independence, an alternative approach is required, one similar in its central foundation to the English Poor Law of 1834. This approach would largely amount to an abandonment of the welfare state or perhaps, equivalently, the privatization of welfare” (p. 196).

These three books certainly define the spectrum of the debate regarding welfare reform in the 1990s. What is encouraging about Cottingham and Ellwood is that it demonstrates the ability of many poverty researchers to learn. In Welfare Policy for the I99Os, we can read smart, pragmatic research into the problems of the poor and of poverty policy. The contributors get beyond the debates of the 1780s and the 1970s, and develop the positions that

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will define the debates of, the 1990s. There remains much to be debated, but Cottingham and Ellwood have given us a collection that assures the debaters will be well-briefed.

REFERENCES

Bane, M. J. and P. Jargowsky (1989), “Urban Poverty Areas: Basic Questions Concern- ing Prevalence, Growth, and Dynamics,” in M. McGeary and L. Lynn (eds.), Concen- trated Poverty in America (Washington, DC: National Academy Press).

Danziger, S. and D. Weinberg, eds. (1986), Fighting Poverty: What Works and What Doesn’t (Cambridge, MA: Harvard University Press).

Geronimus, A. T. (1987), “On Teenage Childbearing and Neonatal Mortality in the United States,” Population and Development Review 13, pp. 245-279.

Geronimus, A. T. and S. Korenman (1988), “Comment on Pampel and Pillai,” Demogra- phy 25, pp. 155-158.

Murray, C. (1984), Losing Ground: American Social Policy 1950-1980 (New York: Basic Books).

Okun, A. M. (1975), Equality and Eficiency: The Big Tradeoff (Washington, DC: The Brookings Institution).

Wilson, W. J. (1987), The Truly Disadvantaged: The InnerCity, the Underclass, and Public Policy (Chicago: University of Chicago Press).

MARKALAN HUGHES is Assistant Professor ofpublic Affairs, Woodrow Wilson School, Princeton University.

Michael 1. Luger

America’s New Market Geography: Nation, Region and Metropolis, edited by George Sternlieb and James W. Hughes. New Brunswick, NJ: Center for Urban and Regional Policy, Rutgers University, 1988, 371 pp. NPA cloth.

George Sternlieb and James Hughes have long been among our best chroni- clers of the urban and regional economic landscape. Their 1975 collection of articles, Post-Industrial America: Metropolitan Decline and Inter-regional Job Shifts,’ served for many years as a standard reference about what they termed

new realities”: suburbanization, Sun Belt migration, and the growth of non-metropolitan America. Their most recent edited volume, America’s N e w Market Geography, is likely to be as widely read and cited, because it too profiles “new realities.” These “new realities” have changed markedly in the past fifteen years, in ways that must be understood by policy analysts, policy academics, and policy makers. They include new demographics, the emer- gence of new sectors, new industrial relations, new spatial development pat- terns, and a dramatic internationalization of the U S . economy. These, of course, are interrelated. Each has important implications for policy research and public policymaking.

America’s N e w Market Geography is interesting reading, as well, because its

, d

’ George S. Sternlieb and James W. Hughes, eds. (1975), Post-Industrial America: Metropolitan Decline and Infer-regional lob Shifts (New Brunswick, NJ: Rutgers University, Center for Urban and Regional Policy).