CHAPTER 7: THE SOCIAL CONTRACT IN A DIGNITARIAN SOCIETY
Poverty is the new slavery. –Reverend Jim Wallis, God's Politics
The exclusion of one group of people or another has been the rule through most of history. Men without property could be denied the vote in revolutionary America. Quotas were placed on Jews in many universities and professions until the mid-twentieth century. Women were denied the vote in many countries well into the last century, and still are in some. Likewise, the segregation of African Americans was widely sanctioned in the United States until the 1960s. At one time or another, most societies have rationalized relegating certain subgroups to second-class citizenship.
Institutional Rankism and a Permanent Underclass
As racism disadvantaged blacks and sexism restricted women, so rankism marginalizes the working poor, keeping them in their place while their low salaries effectively make goods and services available to society at subsidized prices. This process, whereby the most indigent Americans have become the benefactors of those better off, is vividly described by Barbara Ehrenreich in her book, Nickel and Dimed. In The Working Poor: Invisible in America, author David Shipler depicts the less fortunate as disappearing into a "black hole" from which there is no exit. As class membranes become ever less permeable, resignation, cynicism, and hostility mount.
Exposing the institutional rankism that consigns millions to an underclass is a Herculean political task, but the theoretical groundwork is already being laid. In addition to the volumes already mentioned, there is Shortchanged: Life and Debt in the Fringe Economy, by Howard Karger, which shows how the working poor and also many in the middle class become mired in a netherworld of high interest rates and ever-mounting debt. Except for the absence of debtors' prisons today, their situation is redolent of nineteenth-century Dickensian England.
Some marginalized groups have managed to end their exclusion and win for themselves a measure of social justice. But many are still trapped in Nobodyland—often less because they bear traits that in the past were used to sanction discrimination than that they are mired in poverty.
How can a dignity movement aimed at overcoming rankism provide a way out for the underclass?
The Myth of Meritocracy
The rank-based strategy of the movement to equalize dignity stands in sharp contrast to the class-based Marxist strategy committed to equalizing wealth. As practiced, communism created a rankist elite that usurped riches and power for itself. In contrast, a dignitarian society aims to eliminate the "dignity gaps" created and perpetuated by rankism. Today the working poor are typically devoid of savings and utterly dependent on regular weekly wages. A medical emergency, the loss of a job, even a car repair can force them—including many in the middle class—into an untenable level of credit card debt or even homelessness.
Increasingly, low social rank, or class, poses an all but impassable barrier to social mobility. Accepting such an arrangement is tantamount to giving up on democracy's promise of liberty and justice for all. To the extent that social mobility is a myth, so is meritocracy.
One does not need as much money or as high an income as one's neighbors or co-workers to live a life of dignity. But one must be free to compete on equal terms with those who currently hold higher rank. To vie for rank on a level playing field and lose is neither cause for, nor is it experienced as, indignity. But to be denied even the chance to do so is a preemptory form of exclusion. Few, if any, meritocracies, though they offer more social mobility than the aristocracies of past centuries, qualify as dignitarian.
People who have money know that it's the foundation on which their personal freedom rests. Even modest savings allow them to leave a job that ill suits them, opt out of a bad school, or see a dentist or doctor. While a dignitarian society would not compensate everyone equally, everyone would be paid enough to afford such choices.
Where would the money come from? The price increases that paying a living wage to all would necessitate would ultimately be borne by consumers, who, of course, include the working poor themselves. But under the present system, their under-compensated labor functions as a hidden subsidy to everyone. As long as a majority of voters are comfortable with that, it will continue. But when awareness dawns that "poverty is the new slavery," growing numbers of people are likely to become intolerant of this situation.
I was surprised when, in 1971, a student at Oberlin College petitioned the investment committee of the school's board of trustees to divest itself of its stock in companies that operated in apartheid South Africa. But within a few years, a worldwide divestiture movement was putting pressure on that country to abandon its policy of apartheid.
Today, working conditions in the overseas plants of global corporations are coming under similar scrutiny. It's not much of a stretch to imagine this kind of awareness being focused on the plight of the "nickel and dimed" in the United States. Once it is widely understood that the working poor are involuntary benefactors of society, acceptance of this injustice could change just as the world's tolerance for apartheid did. Feeling indebted to people who are less well off is not something that many are comfortable with.
In addition to having an equitable system of compensation, a dignitarian society would be one in which most people owned property. On the face of it, this would seem to require some redistribution of assets, and historically this has led to social unrest if not violence. But if instead of attempting any kind of wholesale reallocation of wealth we limit ourselves to tax policies that gradually effect a marginal shift, we may be able to chart a nonviolent democratic path to a society in which everyone has an honest chance to realize the proverbial American dream.
One thing is certain: inclusion works, exclusion doesn't. Equal opportunity is the path to inclusion while rankism is an instrument of exclusion. Systematically removing the rankist barriers that imprison the underclass is the counterpart of removing the segregationist laws that for so long kept people of color out of the mainstream.
Models of "Democratic Capitalism"
Following in the footsteps of Thomas Paine, who was among the first to advocate that society had an obligation to address material inequality and poverty through a system of public welfare, many political thinkers have suggested mechanisms of economic inclusion. The following paragraphs present several such possibilities. But more important than the details of any particular plan is the commitment to finding and implementing one. As Paine argued in Agrarian Justice, written in 1797, societies in which it is virtually impossible to escape from poverty forfeit not only social cohesiveness but also moral leadership.
It is wrong to say God made both rich and poor. He made only male and female; and He gave them the earth for their inheritance. Payments [from the national fund are to] be made to every person, rich or poor. It is best to make it so, to prevent invidious distinctions…[Those who] do not choose to receive it can throw it into the common fund.
In his forthcoming book Re-Birth of a Nation: American Identity and the Culture Wars, Richard Baldwin gives new impetus to the idea that political independence has to be rooted in economic independence. Baldwin's proposal, which incorporates aspects of several other plans, calls for the establishment of Individual Capital Endowments (ICEs) for the young. In his vision, every child is taught money management--perhaps even to run a model business—as part of primary and secondary school education. (Finally, a compelling reason to learn arithmetic!)
On reaching adulthood at age eighteen, everyone is provided with enough capital resources to pay for a college education or start a business and to make a down payment on a home. Baldwin's basic thesis is that the way to end de facto segregation under which the poor suffer is to train all young people to be capitalists.
Baldwin's ICEs are modeled on Michael Sherraden's Individual Development Accounts (IDAs), which in turn are based on the now ubiquitous IRAs. IDAs grow over time with the goal of ensuring that every household has a stake in society and a cushion against unemployment or illness. In the same spirit, Bruce Ackerman and Ann Alstott, in their book The Stakeholder Society, have proposed that as Americans reach adulthood they receive a onetime grant of $80,000 financed by a tax on the nation's accumulated assets.
All these plans give expression to the dignitarian principle that everyone's success is dependent on contributions from untold others and that accordingly, everyone is obligated to contribute to a fair starting point for everyone else. This idea is analogous to the principle of revenue sharing in professional sports, which levels the playing field by offsetting the advantages that accrue to wealthier teams.
The major issue that any such program must confront is funding. I include an excerpt from Richard Baldwin's proposal not because it's the answer (there cannot be any definitive answer absent a dignitarian process), but rather to suggest that economically feasible solutions do exist and to start a conversation that can lead to one that is politically acceptable. Baldwin calls his plan democratic capitalism.
What distinguished America as a very young nation was the almost universal possession of capital assets by immigrants of European origin. The primary domestic function of the federal government before the Civil War was to provide sufficient capital, in the form of land, to underwrite the economic independence of families. Subsequent examples of governmental transfer of capital to individuals are the Homestead Act and the GI Bill.
A modern proposal along these lines is Individual Capital Endowments, which would be allotted to each child at birth. A reasonable sum might be the cost of tuition for a four-year postsecondary education at a state university plus the equivalent of a 10 percent down payment on a median-priced home. Under present conditions, that would require about $200 billion annually—a substantial investment but manageable for the American economy.
One source of funding for the program would be estate taxes, which at current levels provide about $30 billion a year, 15 percent of the total needed. Estate taxes are out of fashion but if we seriously want to create a dignitarian society, we need to reconsider them. No matter how brilliant and hard-working an individual effort is, capital accumulation is always to some degree a public creation built in part on contributions from others. It is therefore appropriate that a portion of it be shared with society. This applies to any accumulation of assets, no matter how large or small. In particular, there is no reason that a progressive reform of the estate tax could not yield 25 percent of the annual funding needed for [Individual] Capital Endowments.
Approximately 50 percent could come from non-tax dollars. Every corporation with publicly traded stock would annually contribute 1 percent of its total outstanding shares at the end of the prior year. The final 25 percent would come from taxes levied on privately held productive capital assets such as closely held companies and real estate—a "wealth tax" rather like that proposed in Ackerman and Alstott's The Stakeholder Society.
This mode of financing the program would produce a gradual, systematic, and broadly based redistribution of assets without punitive taxation or serious disruption of financial markets. Over a period of 20 to 30 years, the cumulative shift of assets would reach socially significant proportions.
The resources involved would be held initially by a National Endowment Mutual Fund—a quasi-public corporation similar to Fannie Mae. The fund would function like TIAA-CREF, dividing its assets into mutual funds of diversified investments. Endowment funds would not be available to parents and would become fully vested when a person reached the age of 30. Assets held by any individual who dies before the full vesting would be returned to the general pool to help finance the following year's new endowments.
The great promise of a "democratic capitalism" is its potential to heal a society riven with dignity gaps. A hand-to-mouth existence is as incompatible with dignity as is lack of access to health care and education. Without a living wage the American dream is a mirage. An inclusive economics affirms every citizen's inherent dignity. Equal opportunity is sometimes confused with equal outcomes.
Obviously, it is no such thing. In a fair race, all the runners at the starting line have an equal opportunity to win, but only one of them gets the gold medal. However, this is all right. Our dignity does not depend on winning or even tying. It depends on doing our best in a fair contest and not facing humiliation or degradation if we lose. It depends on having an honest chance and then finding a niche from which we can contribute something commensurate with our particular talents and abilities.
Dignity also depends on being acknowledged for making this contribution and on being compensated well enough so that we (and our dependents) can continue to play the game.
Besting others in a contest that has been fixed may bring us loot or glory but it carries no lasting satisfaction. Instead, it sows doubts about our achievement that leave us feeling insecure and guilty. Heaven forbid that we should lose a later competition and expose ourselves to the indignities now visited upon those we've vanquished in an unfair match! A dignitarian society promises what we all really need: not necessarily a win, but an honest chance at winning that brings out the best in us.
Given the certainty that some fraction of the population will suffer failure and even catastrophe, plans like Baldwin's do not permit the dismantling of the social safety net. But as rankism is eliminated and equal opportunity becomes a reality, we can expect welfare programs to diminish in scope and size. Funds spent ensuring a fair chance for everyone are more productive than funds spent trying to correct the effects of chronic malrecognition.
Second-class citizenship is incompatible with dignity—not only the dignity of those consigned to it, but the collective dignity of the society that tolerates the discrimination. Creating pathways out of poverty is essential to the integrity of any dignity movement. A dignitarian society will finally deliver on Jefferson's promise that "all are created equal."
This is the twelfth part of the serialization of All Rise: Somebodies, Nobodies, and the Politics of Dignity (Berrett-Koehler, 2006). The ideas in this book are further developed in my recent novel The Rowan Tree.
[Robert W. Fuller is a former president of Oberlin College, and the author of Belonging: A Memoir and The Rowan Tree: A Novel, which explore the role of dignity in interpersonal and institutional relationships. The Rowan Tree is currently free on Kindle.]