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Al-Ahram Weekly 19 - 25 August 1999 Issue No. 443 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 19 - 25 August 1999 Issue No. 443
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Features Profile Travel Living Sports Time Out Chronicles Cartoons Letters The right thing to do?
By Dominic Coldwell
In somewhat jaw-shattering prose, the American civil rights leader Rev. Jesse Jackson sanctimoniously praised US President Bill Clinton's recent four-day tour of the country's poorest regions. "With politicians," Jackson said, "we see them often when they need votes. But [Clinton] is not running for office. Every now and again, politicians at their highest and best do things just because it's right. Leaving no one behind, making all of us feel good about ourselves and our nation. It's just the right thing to do." Jackson ought to be forgiven for preaching. It is, after all, his profession. But how good America's poor feel is an altogether different question.
When Clinton began zigzagging across the country last month, he unveiled brave new plans for emptying what his administration euphemistically labels "pockets of poverty". The president promised a 25 per cent tax credit for companies investing in poor areas and the creation of an "American Private Investment Corporation", in the hope of generating some $15 billion worth of aid for underdeveloped areas.
The focus on investment is a far cry from earlier, mostly stillborn initiatives to channel commercial loans into pauperised regions. The administration reasons that the current economic boom provides the right climate for trickle-down effects, and argues that investors should tap cheap labour pools at home rather than abroad. By putting employment in private hands, Clinton also plans to widen the base of consumption in order to sustain the current economic recovery without inflation.
But there are concerns that in the end Clinton's proposals will leave America's poor empty-handed. Notwithstanding Jackson's encomium, there is a slightly more prosaic explanation for Clinton's latest initiative. It is true that he may seek to gloss a presidency otherwise flecked with the DNA traces on Monica Lewinsky's dress. But poverty relief also means big bucks. Cathy Bessant, of the Bank of America, thus beamed that "in the community development banking business we are generating double-digit returns. Part of the reason I am willing to be here [in the sweltering heat of the Mississippi delta], is we think we can be even more successful when we create economic markets that work in these areas." Andrew Cuomo, head of the Department of Housing and Urban Development, agreed that Clinton's ideas are not "an act of charity, but [of] smart business."
So by putting the interests of investors before those of the needy, is Clinton still doing the right thing for the wrong reasons? Unfortunately, it hardly seems so. More often than not, the trickle-down paradigm has proven ineffective in poor relief. But even assuming it works, the projected volume of investment will be skeletal. Banks are still reluctant to supply minority businesses with loans. Nor is Clinton's plan to create more "empowerment zones", which give tax breaks to companies doing business in poor regions, very promising. A year after the creation of such an area in Los Angeles, city authorities had not attracted one single investment. On average, foreign ventures yield more returns. Most investors also shy away from hiring untrained labour. A recent survey in California found that 35 per cent of former welfare recipients were at pains to locate a place on a street map, while 41 per cent were unable to compute a 10 per cent discount on a calculator. So why does Clinton not spend more money to raise the standard of education and promote vocational training?
Some observers, both left- and right-wing, reply that the president has long since put his liberal ideals into cold storage. Examples of crossing party lines for bipartisan agreement are of course frequent in American politics. But some critics consider Clinton's penchant for veering to the right conspicuously habitual.
Although he had two years with a friendly Democratic Congress to enact welfare reform after his accession in 1993, the president tarried because, in the words of Robert Reich, Clinton's first term secretary of labour, "being tough on welfare was more important than being correct about welfare." During the same period, Clinton diluted his campaign promise for comprehensive health care reform, because it did not satisfy America's big insurance companies. These had previously secured the president's blessing for a "managed competition" scheme calculated to push smaller rivals out of business. Egged on by Richard Morris, his long-time Republican adviser, the president delivered his promise "to end welfare as we know it" in 1996. In spite of enjoying a twenty per cent lead in opinion polls at the time, he cut a sixty-year-old federal insurance to children in poverty and delegated the matter to the budget-minded states. Not surprisingly, an unnamed source close to the president once disclosed to journalist Bob Woodward that he remembered hearing Clinton tell his team, "We are fighting with Reagan Republicans. We stand for lower deficits and free trade and the bond market. Isn't that great?"
The left-wing British journalist Christopher Hitchens has, therefore, argued that Clinton is a populist, who has waspishly steamrollered a Republican agenda and has survived on the argument that he represents the "lesser evil" compared to neo-conservatives. Hitchens agrees with the Republican David Frum that, "since 1994... Clinton has... assuaged the Left by continually proposing bold, new programmes... And he has placated the Right by dropping every one of these programmes as soon as he proposed it. Clinton makes speeches, [the former Treasury Secretary Robert] Rubin and [the Chairman of the US Federal Reserve, Alan] Greenspan make policy; the Left get words, the Right gets deeds; and everybody is content."
But a look across America shows that fewer people have reason to be happy. Although US unemployment rates are stable, consumer spending is strong and inflation is low, disparities in wealth are also growing. The number of poor trying to eke out an existence on an income of less than half the poverty line, set at $6,750 a year for a family of three, actually rose from 13.9 million people in 1995 to 14.6 million in 1997. The welfare reform of 1996 means that people can be deprived of social benefits for showing up late to work or being ill. Nor does the removal of people from welfare rolls say much about the true extent of poverty. On average, former welfare recipients are worse off than before. Depending on the state, 30 to 50 per cent of those shorn of social security do not find employment. In America, one child out of every five is today ranked as "poor", even though the states' coffers are brimming over with surpluses.
Peter Edelman, the former assistant secretary for planning and evaluation at the Department of Health and Human Services, believes that destitution in the US "is not just a matter of pockets. Persistent poverty is endemic in cities and rural areas and is increasingly present, if less visibly so, in suburbs. The president cannot admit the extent of the problem because his administration has a vested interest in the notion that welfare reform has been a success."
But the president's negligence ensures that disparities will continue to grow. If the earnings of those at the bottom of the social ladder have fallen by more than a quarter in real terms between 1980 and 1995, this is partly because labour markets are demanding qualified workers to service the information industry, while many low-skill manufacturing jobs have moved overseas. A recent survey by the Commerce Department found that blacks and Hispanics in America are least likely to have access to information technology, prompting one official to lament that "America's digital divide is fast becoming a racial ravine". Minorities today constitute 26 per cent of the US population. By the year 2050, they are expected to form one half.
Clinton's decision to boost investment at the expense of education ensures that the poor are stripped of the necessary knowledge for improving their lot. Opportunities will increasingly be a privilege of the wealthy. Under these circumstances, Jesse Jackson is perhaps well advised to think twice about whether Clinton's proposals are "just the right thing to do".
