Hyman Minsky Really Did Oppose the Dole on Principle


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In yesterday’s piece, I detailed the antipathy economist Hyman Minsky had toward the War on Poverty, transfer payments, and the welfare state more generally. Because the nature of his antipathy is now out of fashion, various individuals who have an affinity of Minsky (often for his unrelated writings on the financial system) have popped up to claim my presentation of Minsky was incorrect. But it was not incorrect.

The most prominent counterargument came from Zach Carter, who said my piece was “just bad work” and claimed instead that: “Minsky did take issue with a lot of transfer payments. He believed they were inflationary. And in the 1960s and 1970s, inflation was a big problem for transfer payment recipients. It eroded the value of their benefits.” We’ll call this the inflation-carer interpretation.

A less prominent counterargument, best exemplified by The Minskys, claims that “Minsky did not believe that in the US a system with no strings attached welfare payments that were generous enough to actually lift people out of poverty was a feasible idea.” We’ll call this the feasibility-carer interpretation.

The inflation-carer and feasibility-carer interpretations are meant to paper over the less savory aspects of Minsky’s anti-welfare advocacy. But Minsky clearly opposes welfare on principle in many instances in his writing and makes arguments against it (and for jobs) that clearly have nothing to do with inflation or feasibility.

To help facilitate the realization of this undeniable fact, I have provided a numbered list of just a handful of these instances below.

1. Earned Success

Minsky frequently talks about the inherent importance of earning income as opposed to receiving welfare benefits. His discussion of this is based in abstract philosophical principles, not inflation and feasibility, and is placed in direct opposition to the “transfer payment mess,” which is a term he uses to refer to the welfare state.

He writes:

The transfer payment mess cannot be handled by piecemeal changes. Thoroughgoing reform, based upon an understanding of how our economy works and principles consistent with human dignity and independence, is needed. The principles that should underlie the reform are an affirmation of both the dignity of labor and the social value of receiving income as a right because it is earned. Thus, thoroughgoing reform requires the manipulation of the economy so that there are jobs for all — the young, able-bodied adults, the handicapped, and the aged. Very few should be excluded by principle from the dignity which comes from a realization of their worth through doing a job.

Dignity, social value, receiving income as a right because it is earned, and a realization of worth through doing a job have nothing to do with inflation or feasibility.

If that passage is not clear enough for you, consider this one from an op-ed penned by Minsky titled “A proposal to eliminate welfare.”

A major virtue of the [JG] is that it guarantees jobs, it is not a transfer payment scheme. It reestablishes the principle that was central to Roosevelt’s New Deal: one must earn one’s keep.

The inflation-carer and feasibility-carer interpretations clearly do not have anything to do with the sentiment “one must earn one’s keep.”

2. Dependency

In (1) above, we already see Minsky talk about “independence” by which he clearly means surviving on labor income rather than welfare income. But, by the time Minsky reaches the 1990s, he is coming right out and saying welfare programs like AFDC create cycles of dependency and misery and must be undone.

Another problem of the welfare state in the United States is with what is there called “welfare.” This system—Aid to Families with Dependent Children (AFDC)—provides cash and in-kind support (medical care, housing, and food subsidies) to families with children, if income from work or assets is not available to support the children. In practice, a significant part of the population that is welfare-dependent is seemingly locked into a pattern of dependency: women who were raised by recipients of AFDC have children who in turn are being raised by a woman on AFDC. This welfare problem is increasingly viewed as a disaster in terms of the well-being of the recipients. However, the alternative to welfare is work for the mother and child care for the children.

Once again, no inflation and no feasibility. He just thinks the welfare state is destructive to well-being.

Notice how the paragraph begins with “another problem of the welfare state.” This is how he transitions from the prior paragraph where he explains that Social Security is in crisis and the retirement age must be increased. If that’s about inflation or political feasibility, he certainly does not say so.

Minsky also seemed to have bought into another trope about AFDC, which is that the parents on it were irresponsible. Here he is the op-ed again:

Another pillar of a package of welfare reform, and the only part of the package that may apply mainly to welfare, is parental responsibility. The Simon program can be constructed so as to guarantee income from work to all over 17. With income from jobs guaranteed, some of the excuses for irresponsibility vanish.

3. Employ School Kids

Minsky claims that “raising the school-leaving age and improving retirement benefits [while lowering the eligibility age]” are an element of “the anti-employment thrust to policy” and means that literally, as seen in his call to employ school kids:

If 40,000 young men and women who do not want to be in school and who are unemployed with no immediate job prospects were removed from the New York City school system and streets, the task for the schools and the public order authorities would be eased.

This argument does not seem to rest on the claim that the economy is inflating because kids are in high school. Nor does it seem to rest on the claim that putting kids in high schools is politically (or otherwise) infeasible. Indeed, that the kids were already in high school seems to prove that the policy of having kids attend high school was feasible.

4. Employ Elderly People

Minsky writes:

Social Security is another transfer payment scheme that has to be brought under control. Basically, I would eliminate the 62 optional and the 65 “mandatory” retirement ages. I would also eliminate the ceiling on earned income. I would give each person the option of beginning to receive Social Security benefits at the age of 65 or to delay receiving benefits until later, allowing the death benefit and the retirement income to increase on an actuarially sound basis with the age of actual retirement. Such a combination of a right to work (including full or half-time on the WPA) and the ability to schedule Social Security benefits to conform to the wishes and needs of the retiree should enable us to end the pressure for ever-escalating benefits.

Minsky might be concerned about inflation here, though unlike in the food stamps case, he doesn’t say he is. What he does say however is that he thinks allowing elderly into the job guarantee would “end the pressure for ever-escalating [Social Security] benefits.” He is not arguing here that Social Security benefit hikes are politically infeasible. He’s saying that they need to be prevented and that the job guarantee would do that by easing the political pressure for such hikes.

And as noted in (2) above, Minsky goes on to argue in the 1990s that the retirement age for Social Security must be lifted, with no hint of any sort that he was concerned about inflation or feasibility.

5. The dole is a betrayal of the New Deal

One of the major themes of all of Minsky’s writing on this topic is a somewhat strange view that LBJ’s Great Society and War on Poverty were a betrayal of the New Deal, which he seems to think was about work rather than welfare. One quote saying such is contained in (1) above, but there are more.

Here is Minsky from the op-ed:

Senator Simon’s [welfare reform] proposal is honest, tough minded, and doable. It harks back to the successful New Deal trio of WPA, NYA, and CCC. The Simon proposal reflects a Rooseveltian rejection of the dole.

There’s no need to rely upon my interpretation of Minsky on this front either. Minsky scholar Stephanie Kelton reaches the same conclusion about Minsky’s thoughts. She writes that Minsky “lamented the growth of transfer payments for welfare, pensions and social security” and that Minsky “called the trend a ‘perversion of Roosevelt’s New Deal and Truman’s Fair Deal.'” This is not about inflation. It’s not about feasibility. He just doesn’t like welfare benefits. And this is not my idiosyncratic read of it.

What’s so bizarre about Minsky’s hatred for the War on Poverty and frequent insistence that it was a betrayal of the New Deal is that most of the programs he railed against were New Deal programs. He criticized, at various points, AFDC, unemployment insurance, and Social Security, all of which came from the New Deal. Yet, in the stuff I have read, Minsky never really criticizes the big welfare stuff Johnson did, such as Medicare and Medicaid, though he does criticize the relatively small food stamp program. His posturing as the New-Deal-lover and Great-Society-hater is thus completely inconsistent with his actual welfare program grievances.

Sanitizing Views

The reaction against this obviously correct interpretation of Minsky, which his own sympathetic disciples have offered up in the recent past, is obviously motivated by the desire to cleanse him for modern debates. This is an impulse that a lot of people have for a lot of thinkers. For instance, given where I am on the political spectrum, I’ve seen lots of attempts over the years by various sorts to say that Marx did not have anti-semitic beliefs. That claim is clearly untrue as is the claim that Minsky did not have anti-welfare attitudes.

Of course, there is a difference in the Minsky situation, which is that his anti-welfare views are closely tied up with his job guarantee views and that, oddly, modern advocates of the job guarantee publish these anti-welfare writings (most of the quotes from above come from a collection published by the Levy Institute in 2013) and insist that you read them to understand the job guarantee. This does not mean all job guarantee views have to be tied up with these anti-welfare sentiments or an anti-welfare agenda of course. But clearly for Minsky, the job guarantee and opposition to welfare were two sides of the same coin: “The guarantee of an income through a job is the first step toward the elimination of the welfare mess.”