Private Affluence and Public Poverty

n.a. Not available. *Unavailable on comparable basis but minor.+ Includes returns of estates and trusts which numbered less than one per cent of individual returns in 1940 and 1957. Includes public and private schools from elementary to university level.

SOURCES: Figures are taken from U.S. Census Bureau’s Surveys of Governmental Finances in the United States; U.S. Department of Health, Education and Welfare’s Health, Education and Welfare Trends; and other official publications.

If we are headed for a “new anarchy,” symptoms might be ex­pected to appear in refusals of people to pay what they might re­gard as unconscionable tax levies. It is true there has been talk that some $8 billion of income is not reported for tax purposes; never­theless, the fact remains that, with voluntary filing and report­ing by tens of millions of indi­viduals and hundreds of thousands of employers, the federal govern­ment is enjoying a bigger flow of cash income than any other gov­ernment on earth, a cool $100 bil­lion a year. If the federal govern­ment is indeed impoverished, the cause must be profligacy of expen­diture rather than stinginess of the citizen. The amazing thing is how so much money can be dis­posed of so fast.

No Stinginess Here

How generous the citizen has been with government, compared with what he has kept for himself, is shown in the chart. There has been a 20 times multiplication of the federal government’s cash in­take in the past generation. Per­sonal disposable income—the money people have left after in­come taxes to support themselves and pay other taxes—is not much more than four times the level of 1927. The rise for corporate prof­its (after taxes) would parallel the retarded gain for personal dis­posable income.

One excuse given for enlarging programs of financial assistance from the federal government to states and municipalities is that people cannot or will not provide the latter with enough money. No doubt the weight of federal in­come taxation leads many people to vote against costly state and local government projects involv­ing still more taxes; nevertheless, state and local government income has risen to more than five times the level of 1927.

The Santa Claus School

It is difficult to see in any fig­ures such as these support for the idea that government is poverty stricken. Nevertheless, it is a fact of record that the federal govern­ment has had a lot of trouble keep­ing its budget balanced. The rea­son emerges when one looks around at the bewildering variety of spending programs. Washing­ton is the natural destination of people and local communities want­ing money, as it has been since the advent of what the late Jesse Jones, former RFC chairman, characterized as the “free-spending, Santa Claus school of govern­ment reformers.” Meanwhile, the purposes for which funds are sought have come a long way from the emergency relief programs of the 1930′s. Encouraged by federal help and example, the states open their purse strings. Only a few months ago, a New York State Supreme Court decision held that public housing projects open to individuals and families with an­nual incomes of as much as $6,200 to $14,000 were legally entitled to

be built under New York State’s low-income housing program.

It might be asked on what prin­ciple government should subsidize normal living expenses for people with incomes double the national average. Who but themselves will pay the bill—with freight charges to and from Washington tacked on? A good deal of manpower gets wasted, collecting taxes and dol­ing out benefits in the paradoxi­cally poverty-stricken affluent so­ciety.

The truth seems to be that we are caught in a vicious circle in which people’s abilities to take care of their own needs are ham­pered by the burden of taxes. Pay­ing so much in taxes, the citizen is tempted to think it only right to get something back. Hence the “needs” government sees for more and bigger subsidy programs which in turn require to be fi­nanced by still higher taxes or inflation. And inflation, hitting the weak and helpless hardest, creates still more “needs.”

Matter of Tail-Fins

The preachers of the affluent so­ciety doctrine are fond of using tail-fins on automobiles as the ul­timate symbol of unnecessary pri­vate extravagance. They are not so apt to mention the wheat bins holding surplus grain for which taxpayers have put up more than $3 billion and which, converted in­to bread, would provide 450 loaves for every man, woman, and child in this country. They say nothing about misconceived public works projects and the common abuses of social welfare programs. On May 16, Budget Director Maurice H. Stans found it necessary to revise federal travel regulations to en­courage more flying by coach or tourist class instead of first class by government employees:

“These revisions are issued to call attention to the fact that the use of first-class air travel by government employees far exceeds in proportion its use by the gen­eral public, and to urge greater consideration of less costly facili­ties.”

Tail-fins on automobiles are sup­posed to prove that people are foolish in their spending decisions and cannot be trusted with their own money. There are two schools of thought about tail-fins but it is quite clear that millions of people have preferred them; otherwise the finned vehicle would not be so common. Perhaps the surrey with the fringe on top was similarly condemned in the Gay Nineties, as a symbol of “conspicuous consump­tion.”

Yet it is one of the proud dis­tinguishing marks of a classless democratic society that any citizen with enough money or credit can have a car, suit, dress, or home with some seemingly useless orna­mentation; he does not have to be somebody in an official sense. Peo­ple work hard so that they can enjoy these things and be indi­viduals rather than the drones of a master state.

The New York World-Telegram & Sun, on May 23, commented edi­torially on the subject:

There is much scornful talk of “luxury living,” the implication be­ing that people are so stupid they throw their money away on gadgets instead of essentials. Actually, this national growth has been widely spread. The significant effect has been to raise millions in America from a level of bare subsistence to modest comfort that remains far short of luxury.

Older citizens can remember when the “full dinner pail” was an effec­tive political slogan, meaning the worker should have enough to eat. Today’s trade unionist is no “simple working man” to be patronized with a few beers at election time. He’s a substantial citizen who probably owns his own home, auto and TV set, with children in college.

It seems obvious to us that it would be the height of national irres­ponsibility to trade a system which has worked so well for a Socialist-in­spired experiment, especially at a time when the early European spon­sors of socialism are abandoning it for free enterprise.

The author of The Affluent So­ciety has been characterized as an iconoclast although nothing has become more common and conven­tional than asking government to take over more powers and respon­sibilities from the citizen. It is notable that another member of this school of thought, Mr. Adlai Stevenson, does pause to recognize that:

Without individual decision and in­ventiveness, without widely dispersed centers of authority and respon­sibility, the social order grows rigidand centralized. Spontaneity wither:- before the killing frost of public con­formity. Individual citizens with all their varied relationships, as parents, neighbors, churchgoers, workers, businessmen, are reduced to the single loyalties of party and state.

The School Problem

Perhaps the most widely used illustration of alleged “public pov­erty” is our school system. We are told that while the American people drive around in “mauve and cerise, air-conditioned, power-steered, and power-braked” auto­mobiles, their children’s schools are “old and overcrowded.” The charge is that the states and local communities, which in the United States are responsible for educa­tion, just haven’t been doing their job. What is needed, the critics say, is federal money for educa­tion, with some proposals running to $4 billion a year. As a speaker at the convention of the American Association of School Administra­tors put it: “The federal govern­ment, that’s where the money is. And that’s where the money must come from.”

No country comes close to rival­ing American spending on educa­tion. Total public and private ex­penditures for education in the U.S. reached $22 billion in 1959, almost triple their level 10 years earlier.

To say that the nation’s schools are “old and overcrowded” collides with the fact that the states and local communities have built 680,­000 classrooms since World War II, more than half the 1,330,000 now in use. The “classroom short­age,” supposed to justify federal intervention, has been shrinking steadily. Back in 1955 predictions were heard that we would be 600,­000 classrooms short by 1958. When 1958 arrived, the U.S. Office of Education estimated the short­age at 141,900. Although the peak demands for high school and col­lege facilities lie ahead, we have passed over the hump of elemen­tary school enrollments. The job of building to make up for the de­ferral of school construction dur­ing the war, and the bulge in births immediately after the war, is largely past.

Some educators suggest that the trouble with U.S. education is ex­cess emphasis on money and too little emphasis on what we are getting for the money; excess em­phasis on elaborate new plant and too many idle hours for existing plant; excess emphasis on quan­tity of education and too little on quality. Schools which slight sub­jects with intellectual content in favor of “life adjustment” type courses are not going to be im­proved by more money. The prob­lem is one of purpose, as Dr. Gray­son Kirk, president of Columbia

University, indicated in January: “Our public schools and far too many of our colleges have virtu­ally abdicated their functions in society because they are content to give their students little more than an opportunity to have pleasur­able social experiences.” Professor Richard M. Weaver of the Univer­sity of Chicago has put the same point even more strongly:

Education here today suffers from an unprecedented amount of aimless­ness and confusion. This is not to suggest that education in the United States, as compared with other coun­tries, fails to command attention and support. In our laws we have en­dorsed it without qualification, and our provision for it, despite some claims to the contrary, has been on a lavish scale. But we behold a situa­tion in which, as the educational plants become larger and more finely appointed, what goes on in them be­comes more diluted, less serious, less effective in training mind and char­acter; and correspondingly what comes out of them becomes less equipped for the rigorous tasks of carrying forward an advanced civili­zation.

Some Fundamental Issues

One trouble with the idea of turning our affairs over to the dictates of wise men sitting in government offices is that it clashes with the traditional beliefs of our people. The right to be different, the right to live according to our own lights is rooted too deeply in the American soil to be passively given up. The citizen has no reason to believe that pub­lic officials are exempt from hu­man frailities. As Mr. Stans, speaking before the U.S. Chamber of Commerce, said last May: “We must not be charmed by the notion that government is a wiser mana­ger of our economic fortunes than is private enterprise.”

It is hard to see how political freedom can survive if economic freedom is denied. When people spend their money, they are cast­ing ballots for what ought to be produced. They all make mistakes, as government does in its procure­ment, but they may be a bit more careful because, after all, the money they are spending is their own. Moreover, the mistakes of individuals are small mistakes, never the billion-dollar variety.