Some Preliminary Thoughts on Civil Society Conservatism

by Reihan Salam

In “The Voluntarism Fantasy,” Mike Konczal of the Roosevelt Institute makes the case against a conservatism that aims to revitalize civil society. Konczal lays out his case as follows:

(1) Conservatives, including Ronald Reagan, Paul Ryan, and Mike Lee, embrace the idea, as articulated by Marvin Olasky, that “a purely private nineteenth-century system of charitable and voluntary organizations did a better job providing for the common good than the twentieth-century welfare state.” According to Mike, this idea forms the basis of Paul Ryan’s budget proposals and Mike Lee’s contention that the “alternative to big government is not small government” but rather a “voluntary civil society.” This is Mike’s central claim, and I believe that it is incorrect.

(2) Mike argues that conservatives ignore “the complex interaction between public and private social insurance that has always existed in the United States,” yet in a series of speeches, Lee has explicitly celebrated nineteenth-century government programs that emphasized broadening access to opportunity, and he has cited them as an inspiration for new reforms.

(3) Apart from criticizing conservatives, Mike urges liberals to offer a new vision of charity “based on the equality that can thrive when the public manages the risks we face, rather than the inequality that’s bred by a private form of dependency.” Given that Ryan and Lee have both embraced the idea of a government-sponsored safety net as a hedge against risk, it is not obvious that they reject this idea in its entirety. Rather, they object to the notion that the “dependency” fostered by reliance on social networks is necessarily a bad thing, and that the goal of government ought to be to emancipate people from the obligations of family and associational life.

Mike begins by observing, correctly, that throughout U.S. history, the public sector has (a) invested in building communication and transportation networks (the public post office, canals, the continental railroad system), (b) promoted education and basic and applied research (land-grant schools), (c) encouraged economic and industrial development (tariff walls, the limited liability corporation, bankruptcy protections), and (d) provided social insurance, chiefly through decentralized means and in tandem with a wide array of civil society organizations. As we’ll see, the conservatives Mike criticizes associate themselves with almost all of these ideas. Indeed, they embrace the New Deal consensus as well. Where they part company with Mike is on whether or not the post-1960s expansion of the public sector has been well-suited to the task of addressing the problem of entrenched, multigenerational poverty. While Mike believes that we ought to further centralize and expand public insurance, conservative champions of civil society have been emphasizing the importance of addressing the cultural and economic marginalization of the multigenerational poor.

The heart of Mike’s historical narrative is a recounting of the retreat of informal networks  during the Progressive Era and their ultimate failure in the face of the Great Depression. While the Hoover administration aimed to shore up voluntary relief efforts, the agencies themselves resisted taking on a more expansive role, and so the expansion of public social insurance was widely embraced by charitable organizations:

Rather than simply crowding out private charity, the welfare state allowed it to evolve and become more targeted. There would be a new arrangement between the public and the private sector, with the public taking on the heavy weight that the private sector could no longer bear.

Mike goes on to offer an analysis of the interaction between the Great Recession, charitable giving, and automatic stabilizers. He observes that charitable giving declined at the start of the Great Recession, and he suggests that this undermines the position of those who believe voluntary civil society ought to play a larger role in U.S. society. Given that the conservatives that Mike has in mind are all comfortable with the idea of automatic stabilizers, it is not clear that this is true.

Mike’s history of the expansion of the welfare state assumes that the fraternal societies were doomed. I think he is probably right. That said, it is at least worth thinking through the counterfactual. There is a broad consensus that one of the precipitating factors in the Great Depression was the “great contraction” of the money supply; in the absence of this “great contraction,” fraternal societies and other insurance providers might have adapted to the changing circumstances of an urbanizing, industrializing, and increasingly diverse society. Mike takes it for granted that “philanthropic insufficiency” is an inevitable condition of an advanced industrial society rather than a product of historical contingency.

But social institutions evolve alongside each other. The advent of new rules, regulations, and norms will change the shape of existing social institutions. Some social entrepreneurs will find the new landscape propitious, as it will allow them to specialize in new ways. Others will find that formal institutions are no longer the best means to channel their energies. Nancy DiTomaso’s important work on racial inequality without racism emphasizes the central importance of “in-group favoritism,” or informal networks through which people transmit valuable information about economic and other opportunities. As “soft” or noncognitive skills grow more important, one could argue that invisible civil society institutions that foster upward mobility are as important as ever. The investments we make in these informal networks don’t take the form of charitable contributions that will yield a charitable tax deduction. Rather, they take the form of time and energy.

When Mike observes that the welfare state allowed private charity to evolve and to become more targeted, he neglects the possibility that while ethnic benefit societies were rooted in minority (usually white ethnic) cultural communities, the private charities that have come to the fore since tend not to be embedded in the communities they serve in quite the same way. Large foundations financed by wealthy individuals have devoted considerable resources to serving disadvantaged communities, yet it is relatively rare that these organizations are perceived to be rooted in disadvantaged communities, which limits their legitimacy and their ability to make claims on behalf of either community. This is why foundations often work through smaller organizations with an activist sensibility, as this activist sensibility is treated as a proxy for legitimacy. Charitable organizations rooted in, and at least partially financed by, the communities they serve might be better aligned with the goals of community members.

Maurice Lim Miller, founder of the Family Independence Initiative, has argued that one of the most important factors differentiating affluent and middle-income Americans from those who find themselves cycling just above and just blow the poverty level is a difference in the way they make use of their social networks. Upwardly mobile families are more likely to see friends and relatives as potential sources of information about economic opportunities; in contrast, while native-born poor families will often rely on those close to them in a crisis, they are less likely to pool resources (economic or otherwise) to achieve various economic or educational goals. Miller’s thesis is that networks of poor families have considerable resources to draw on. It takes a great deal of intelligence, know-how, and effort to survive under straitened circumstances. Yet these networks could benefit from a greater sense of their collective potential to achieve collective goals. If Miller is right, the shift from voluntary associations with members to what some have called associations without members might have had deleterious consequences. And though Miller is a firm believer in the importance of safety net programs, his work raises the possibility that we need to rethink them. The problem could be that while the evolution of the public sector has not stymied the continued development of elite social networks, which are now more underground than above-ground, it has stymied the development of mutual aid networks among the poor. If this differential impact on the capacity for generating and transmitting social and cultural capital is real, you can see why conservatives like Ryan and Lee would want to address it.

When we consider the contemporary charitable sector, we are looking at a set of institutions that have been shaped by several decades during which the public sector has taken a leading role in meeting the needs of low-income households, and charitable dollars have flowed towards advocacy for the expansion of the public sector, empire-building on the part of elite research universities, and a wide range of other causes. In “Facing Up to Big Government,” an essay on the true size of what he calls “BIG PAP,” or Big Inter-Government Private Administrative Proxies, and John DiIulio Jr. describes how non-profit organizations have been transformed by the growth of the public sector:

In 2009, the organizations recognized as non-profits by the Internal Revenue Service reported nearly $1.9 trillion in spending while holding $4.3 trillion in total assets (for comparison, the total assets of state and local governments were about $4.6 trillion). In total, the non-profit sector employed about 13.5 million people (roughly a tenth of the American work force) and accounted for about 5.5% of GDP.

About three-quarters of non-profit organizations, including most faith-based ones, spend under a half a million dollars a year and receive little or no government grant or contract money. But the quarter of the sector’s organizations that boast its biggest annual budgets are highly dependent on direct government funding, meaning that one-third of all non-profit dollars are from government, paid through grants or contracts. For instance, in 2009, Catholic Charities USA alone spent $4.2 billion — and about two-thirds of those expenditures were funded by government grants and contracts.

Over the past quarter-century, government grants to non-profit organizations have nearly tripled (in inflation-adjusted dollars). And just as businesses lobby to keep government contracts flowing, non-profit organizations lobby to preserve government grants and to block measures to limit itemized deductions in the federal tax code. For instance, in November 2011, Independent Sector — an umbrella advocacy organization that represents hundreds of non-profit leaders — rallied members to send a message to Pennsylvania’s Republican senator Pat Toomey, who was then a member of the super committee and pushing for deep spending cuts. Their message: More than 650,000 Pennsylvanians are employed by non-profit organizations.

When all of this is taken into account, BIG PAP looks staggeringly immense. It represents some $7 trillion a year (and counting) in spending, more than 20 million public workers, and millions more de facto government employees in the business and non-profit sectors. It consumes more than 40% of GDP, and is on track to push the national debt above $20 trillion by the year 2020.

In 2009, the organizations recognized as non-profits by the Internal Revenue Service reported nearly $1.9 trillion in spending while holding $4.3 trillion in total assets (for comparison, the total assets of state and local governments were about $4.6 trillion). In total, the non-profit sector employed about 13.5 million people (roughly a tenth of the American work force) and accounted for about 5.5% of GDP.

About three-quarters of non-profit organizations, including most faith-based ones, spend under a half a million dollars a year and receive little or no government grant or contract money. But the quarter of the sector’s organizations that boast its biggest annual budgets are highly dependent on direct government funding, meaning that one-third of all non-profit dollars are from government, paid through grants or contracts. For instance, in 2009, Catholic Charities USA alone spent $4.2 billion — and about two-thirds of those expenditures were funded by government grants and contracts.

Over the past quarter-century, government grants to non-profit organizations have nearly tripled (in inflation-adjusted dollars). And just as businesses lobby to keep government contracts flowing, non-profit organizations lobby to preserve government grants and to block measures to limit itemized deductions in the federal tax code. For instance, in November 2011, Independent Sector — an umbrella advocacy organization that represents hundreds of non-profit leaders — rallied members to send a message to Pennsylvania’s Republican senator Pat Toomey, who was then a member of the super committee and pushing for deep spending cuts. Their message: More than 650,000 Pennsylvanians are employed by non-profit organizations.

It shouldn’t be too surprising that donations to non-profit organizations were depressed during this period. What is interesting is that some forms of giving did increase. Mike cites the increase in donations to food banks, which are, for obvious reasons, quite different from the kind of large non-profit organizations identified by DiIulio.

Rather than discuss the Ryan-Lee perspective on civil society in detail, I’ll share a passage from Sen. Lee’s November address to the Heritage Foundation:

Since the dawn of time, rich and powerful men, and friends of the king, always had access to opportunity. What made America different is that here, everyone did, and government’s job was to make sure of it.

This is an important point, for progressives to learn and conservatives to remember: the constitutionally limited but indispensable role that government played in America’s original war on poverty. That role was best expressed by a president who understood poverty better than most.

In 1861, Abraham Lincoln told Congress that the “leading object” of American government was:

“to elevate the condition of men – to lift artificial weights from all shoulders, to clear the paths of laudable pursuit for all, to afford all an unfettered start and a fair chance, in the race of life.”

In a single sentence, Lincoln explains precisely what poverty is, and what government ought to do about it. As Lincoln knew first hand, true poverty was not for most people an absence of money, but an absence of opportunity – a lack of access to those social and economic networks where human opportunities are created. Then, as now, people were not isolated because they were poor – they were poor mostly because they were isolated.

And so, in America’s original war on poverty, government did not give the poor other people’s money. It gave them access to other people.

In Lincoln’s era – even during a cataclysmic war that was itself a struggle for human freedom and opportunity – that meant dredging rivers, building canals and cutting roads. It meant the Homestead Act and land-grant universities. These public goods weren’t designed to make poverty more tolerable – but to make it more temporary. They reduced the time it took to get products to market, increased access to banks and land, and increased the speed at which knowledge could be developed and shared.

Poor farmers and trappers in Lincoln’s Mid-West were no worse at their trades than their more affluent counterparts back east. They just didn’t enjoy the same access to networks of human, social, and economic capital.

In the same way, poor children today do not lack the ability to acquire the knowledge and skills necessary to flourish in our market economy and civil society. But they absolutely lack the same access to the networks of human opportunity where that knowledge and those skills are acquired.

Properly considered, then, the war on poverty is not so much about lifting people up. It’s about bringing people in. And so the challenge to conservatives today is to rethink the war on poverty along these lines, to bring into our economy and society the individuals, families, and communities that have for five decades been unfairly locked out.

Nineteen-sixty-four wasn’t the year Americans started fighting poverty; it was the year we started losing that fight. To start winning again, conservatives are going to have to lead the way – not simply by offering criticism, but alternatives. Our job is to identify the obstructions that impede Americans’ access to our market economy and civil society and clear them. And if we’re looking for impediments to mobility and opportunity, we’ve certainly come to the right place!

Today, many of those obstructions are themselves government policies. These policies unintentionally discourage almost every positive step underprivileged families can take toward social mobility and economic security.

Today’s government-centric system penalizes marriage, which a mountain of evidence now shows is the single most empowering social and economic opportunity there is. It also penalizes low-income workers for making more money by drastically reducing benefits at arbitrary points along the income-scale. Because of these poverty traps, single mothers near the poverty line, for instance, can face effective marginal tax rates of 80 or even 90 percent.

Thus, in poor communities, government dependence often atrophies community interdependence, fraying the bonds between moms and dads and neighbors and friends and pastors and teachers, old and young, native and immigrant.

Meanwhile, education policies leave low-income parents and children trapped in failing schools. Policies ranging from welfare to health care to criminal justice are only exacerbating the explosion of fatherlessness plaguing lower-income communities.

And so conservatives need a new, comprehensive anti-poverty agenda that not only corrects – but transcends – existing policies.

Lee’s speech is about encouraging inclusion — about reducing the isolation of those living on the margins of the economy. In some cases, promoting inclusion will mean easing the burden of labor market regulations that keep some workers locked out of the formal sector, but it might also mean increases in the childless EITC to encourage labor force participation. Reform conservatives don’t oppose social insurance. Arch-conservatives led by Oklahoma Sen. Tom Coburn have backed health reform legislation that would greatly expand access to health insurance coverage through subsidies aimed at low- to moderate-income households. But the reform conservative thesis is that the federal government should build platforms to allow a wide range of actors, including but not limited to state and local governments, voluntary organizations, for-profit firms, etc., to solve social problems, which they assume are dynamic in nature and not fixed.

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.