Part One: Why End Poverty?

Chapter One: A Vision of a New Economy

On January 11, 1944, when President Roosevelt presented his State of the Union address to Congress, the United States was riding a wave of optimism. The Allies were winning the war abroad and the economy was booming. Following the Great Depression and prior to the outbreak of war, Roosevelt's New Deal restored economic growth and cut unemployment in half. With a major boost from war-time spending, Roosevelt's Administration produced unprecedented prosperity during World War II. From 1933 to 1944, adjusted for inflation, the size of the economy increased two-and-a-half times, the number of people employed increased by 42 percent, and another eleven million adults were in the armed forces. Homelessness and unemployment had virtually disappeared.

During this period of economic recovery, the country experienced a relief from the host of social problems associated with poverty. The homicide rate, for example, after having climbed to a record high of 9.7 per 100,000 people in 1933, fell steadily as the economy improved, to 5.0 by 1944 - almost half the prior rate. And the annual suicide rate, which also set a record of 17.4 during the Depression, dropped to a record-low 10.0 by 1944.

Given these conditions, President Roosevelt looked to the future with confidence and opened his speech with a compelling vision of a new economy. "I do not think that any of us Americans can be content with mere survival," he said. "The one supreme objective for the future ... can be summed up in one word: Security." Roosevelt argued that the American people should hold the federal government responsible for providing two things: economic security and protection from physical attack. Calling for "a decent standard of living for all individual men and women and children," he said, "Freedom from fear is eternally linked with freedom from want."

At the end of his speech, Roosevelt returned to this theme of economic security. "True individual freedom cannot exist without economic security and independence," he argued. After describing the political rights that are embraced by the Bill of Rights, he said these rights are "inadequate to ensure us equality in the pursuit of happiness." He then called for "a second Bill of Rights under which a new basis of security and prosperity can be established for all - regardless of station, race or creed."

During his hard-fought campaign for re-election later that year, Roosevelt continued to argue for this economic Bill of Rights. On October 28, 1944, for example, Roosevelt received an enthusiastic response from 100,000 people at Soldier's Field in Chicago when he quoted from his State of the Union Address and commented:

Some people have sneered at these ideals as well as the ideal of the Atlantic Charter and the Four Freedoms - saying they were the dreams of starry-eyed New Dealers - that it is silly to talk of them because we cannot attain these ideals tomorrow or the next day.

Roosevelt responded to these criticisms forcefully:

The American people have greater faith than that. I know that they agree with those objectives - that they demand them - that they are determined to get them - and that they are going to get them. The American people have a habit of going right ahead and accomplishing the impossible.

Roosevelt proceeded to buttress his case by describing the progress the New Deal had achieved and reminded his audience:

And if anyone feels that my faith in our ability to provide sixty million peacetime jobs is fantastic, let him remember that some people said the same thing about my demand in 1940 for fifty thousand airplanes.

Less than six months later, after winning re-election, Roosevelt died without having seen Congress implement his dream of a second Bill of Rights. But by 1952, his goal of 60 million civilian jobs had been achieved and unemployment was still under three percent. For the next thirty years, the United States made steady progress toward establishing economic security for all. With programs such as the GI bill, low-interest home loans, and the Marshall Plan to rebuild Europe, the federal government ushered the economy forward. The rising tide of economic growth lifted all boats: economic opportunity expanded for rich and poor.

In the mid-1970s, however, this progress ground to a halt. Ever since, most Americans have suffered a gradual decline in their living standards. Average wages have declined. Unemployment has worsened. Poverty and homelessness have increased. Greater numbers of workers have been forced to work part-time, to accept temporary jobs without benefits, or to resort to self-employment. More families have been compelled to hold down two or three jobs. Most people have less leisure time. Roosevelt's dream of economic security for all is rapidly fading. For many, it is only a faint memory.

But we must not lose Roosevelt's vision, or his faith. If we mobilize enough pressure, we can reverse the decline of the last twenty years and realize his dream. The economic resources needed to enact Roosevelt's economic Bill of Rights are at hand - more so now than in 1944. All that is lacking is the political will.

Toward this end, it will help to flesh out Roosevelt's vision by imagining a world founded on the principles he articulated. Elaborating on his vision in this way can help us understand its value and help foster the commitment that is needed to make it real. Toward this end, consider the following two scenarios: the first from the perspective of an individual, the second from that of society-at-large.


Imagine the life of a more-or-less typical American - Joan Smith - born and raised at some time in the near future in a world that has firmly established Roosevelt's second Bill of Rights as the foundation of its economic policy.

Joan is six months old. Since her father does not earn enough to cover basic expenses, Joan's mother receives an in-home caregiver's grant, administered by the neighborhood health clinic, to care for Joan. This grant makes it possible for the family to make ends meet while Joan's mother takes a leave from her regular job. At the clinic, Joan's mother participates in a support group and a parenting class with other new mothers, some of whom also receive in-home caregiver's grants. When Joan becomes two, her mother returns to work and Joan enters a child-care program.

The child-care center is fully-staffed. All of the workers earn enough to live decently, so most of the same staff work there from year-to-year. Federal revenue-sharing helps insure that the center is fully-equipped and safe; the money comes from the federal government and is distributed and monitored by local governments. At the center, Joan enjoys playing with children her own age and she steadily develops her social, physical and intellectual skills.

At night and on weekends, her parents are usually home with her and her brother. Neither parent feels compelled to hold down a second job in order to pay for basic necessities. They play with their children, read books, watch movies, and carry on a positive family life together. Often neighbors or other friends come over for dinner or to visit, or Joan and her family go to one of their houses. On occasion, the adults take turns baby-sitting for one another. Altogether, a sort of "extended family" forms among this network of relatives, friends, and neighbors.

Twice a week, her father takes a class at the local community college so he can get a better-paying job. Her mother belongs to a political club and on Saturdays usually goes door-to-door in the neighborhood to register voters and discuss political issues. On Sunday, the family often goes to church, where her mother sings in the choir. Each summer, both parents take four-weeks paid vacation, during which the family travels, driving to different areas of the country to camp out and visit with friends and relatives.

The family has a stable and comfortable life. They are not worried about the future and have considerable leisure time for recreational and creative endeavors. With this foundation of security, they are able to plan for the future with the confidence that sudden hardship will not undermine their effort.

When Joan is four years old, however, her father loses his job and is unable to find another one. He collects unemployment insurance for a while, but it's less than what he was earning and the family is squeezed financially. So he goes to the state unemployment office and gets a referral to a job at a nearby neighborhood center. The job only pays enough for a single person to make ends meet (the minimum wage), but together with his wife's income, it gives the family enough to live decently. And it's a good job. He helps to develop and organize a community garden and plants trees along city streets, which he enjoys. Six months later, sales pick up at his old workplace and he goes back to work there, where he can earn more money.

The next year, at the age of five, Joan enters kindergarten. She does well and enjoys her new classmates. Her parents sometimes talk about how when they were children, their friends would often come to school hungry because their parents didn't have enough food at home. And others hardly knew how to read or write because their parents had so little time to help them learn. But that is not the case now. All of the children are well-fed and almost all of them have been prepared for kindergarten by good pre-school programs and supportive parents.

When Joan is nine, her parents decide to get divorced. Her mother moves out and she and her brother continue to live in the same house with their father. The change is difficult for everyone. At first her father is worried that he will be unable to pay all the bills. His wife helps with child-support payments, but she is unable to contribute as much to the family's household expenses as she did before because living alone is more expensive than living with others.

Then Joan's father discovers that he qualifies for an "earned income tax credit," which provides a regular cash rebate that enables the family to meet basic expenses. They go out to movies less than they did when Joan's parents were married, but they still keep their head above water. Two years later, her father re-marries and they are once again able to get some of those "extras" that they had enjoyed before.

During her junior year of high school, after her brother has gone to college, Joan's grandfather, a widower, becomes frail and is unable to take care of himself. Instead of being placed in a nursing home, he moves into Joan's house. Joan's father switches to half-time at work and gets an in-home caregiver's grant to take care of his father until he dies two years later.

Joan goes to college, develops a career of her own, gets married, has children, and in most respects lives what appears to be an ordinary life. But below the surface, of course, like all lives, it is not ordinary at all, but totally unique. In Joan's case, she never loses her love of painting, writes poetry regularly, teaches Sunday School at church, and is active in the political party of her choice. She frequently writes letters to the President and occasionally calls talk-radio stations.

Confident of always having enough money, Joan uses her leisure time to pursue all of these interests. She doesn't feel pressured to work extra-long hours or take two jobs to save up for her old age, because she knows that when she retires, social security will insure that she has a decent retirement income. Nor does she worry about her children, for she knows that they too will always be able to find a living-wage job. She has peace of mind and lives life to the full.


With this one example in mind, envision the United States organized to provide economic security for all. Every citizen who wants to work can find a good job. The minimum wage enables adults without children to avoid poverty. Tax credits assure working parents enough income to provide their families with basic necessities. Quality child care is available to everyone. Comprehensive health insurance protects people from being thrown into poverty by illness. The supply of decent, affordable housing equals the demand.

In addition, in-home caregiving and other support services make it possible for most disabled people to work productively. Social security payments guarantee disabled people who are unable to work enough income to live decently. When senior citizens choose to retire, social security enables them to make ends meet.

The linchpin to economic security is guaranteed living-wage employment. Anyone looking for work can find a job through the state employment office. A living-wage job is always available because the federal government gives local governments enough money to hire anyone who needs an entry-level job. Depending on the worker, it might be working as an assistant in a child-care center, a classroom, or the neighborhood recreation center. Or it might be cleaning the streets, restoring wetlands, providing counseling in a drug program, or helping a nonprofit housing corporation to restore a rundown building. Or, with parents of infants and toddlers, it might be working in an in-home caregivers' program, including parenting classes and support groups, to help insure that children receive top-quality care. But one way or the other, every adult citizen is guaranteed the opportunity to work at a meaningful job that pays a living wage.

These public service jobs (some of which are part-time) are regular, permanent jobs that meet a real need. Most often they are civil-service positions, though on occasion, they are with private nonprofit corporations that contract with the government. In either case, they are ordinary jobs open to all applicants.

Most people prefer to work in private business where they can earn more than the minimum wage. In fact, the economy, stimulated by the increase in public-sector employment, has produced an increase in higher-paying private-sector jobs. But all workers know that if they are laid off and can't find another private-sector job, they can join the staff of a public-service program that is able to take on more workers and pay a living wage.

Most public services can always use more staff to improve the quality of their work. When the economy slows down, they hire the unemployed. When the economy picks up, they manage with less staff when some of their workers move to other jobs. In this way, the number of these jobs expands and contracts, serving as a cushion for the labor market. These entry-level jobs particularly benefit younger, less-skilled workers who would most likely be excluded if there weren't enough jobs. Many people, however, prefer these public-service jobs even though they make less money than they could in private business, for they find more satisfaction in public service.

Employment agencies refer people to jobs for which they are already qualified or can quickly become qualified with minimal on-the-job training. In many cases, people who are new to the job market get support services from peer counselors. Many workers go to night school to increase their skills. Others develop skills through work experience itself and are able to advance to higher pay levels over time.

Most workers are highly motivated to make a positive contribution. This motivation is generated in part by wanting to be promoted to higher-paying positions. The growing use of profit-sharing plans in the private sector serves to encourage workers to help make their enterprise successful. And with most workers, a natural desire to be competent leads them to do their best at work. In this way, positive rewards, rather than the threat of poverty, are used to help motivate workers.

Managers are held accountable for their workers' productivity and all workers are required to be reliable and productive or else be fired. After repeated firings, workers lose their right to a guaranteed public-service job and are required to complete a job-training program to demonstrate their reliability prior to being hired in another public-service job.

People with disabling drug and alcohol problems are able to enter publicly-funded social-rehabilitation programs. Everyone who wants help with a drug or alcohol problem is able to find assistance. The same applies to people with emotional or spiritual problems: a network of small residential centers, self-help centers, and counseling programs offer people key support.

Compared to when poverty was widespread, these programs are much more effective because participants in these programs know that a living-wage job is waiting for them when they overcome their personal problems. These human-service programs are also better able to help people because programs are no longer swamped with stressed-out jobless people. Though residential centers are comfortable and supportive, they are less desirable than independent living, so residents prefer to conquer their problems and move out. In addition to these public programs, private charities operate emergency shelters, soup kitchens, and other programs for those few people who are unable or unwilling to either hold down a job or to use one of the publicly funded centers.

For most workers, compared to previous periods of high unemployment, wages are higher now that everyone is guaranteed the opportunity to work. Employers who previously had to offer seven dollars an hour to attract qualified workers now have to pay eight or nine dollars an hour, and employers who before paid nine dollars an hour now pay ten or eleven.

Increased wages have led to a major expansion in the private economy. Money from higher wages multiplies as it circulates through the economy. Families increase their spending with the local grocer, who buys more from the warehouse, who buys more from the food processor, who buys more from farmers. By the end of the year, each dollar spent at the corner grocer might change hands four times, boosting the sales of all four businesses. All income groups benefit from this economic growth. The stronger economy also expands governmental revenues, which enables the government to lower tax rates and decrease the deficit.

A foundation of economic security has also resulted in better working conditions throughout society. Employers know that their employees can find work elsewhere, so they treat their workers with respect. Since workers are less likely to work under dangerous conditions, employers are pressured to maintain a safe workplace. All workers receive at least four weeks of paid vacation annually. Employees can more easily take time off for personal reasons without being afraid that they will be unable to find another job. Most workers belong to unions or other associations, workplace democracy has expanded, and employee ownership is widespread.

The new economy has also led to an improved social and physical environment. Violent crime has fallen considerably. Almost no one is homeless. Panhandling is rare. Troublesome individuals are less likely to disturb the peace. City streets are cleaner and more attractive. Public-service workers have helped to clean up and protect the natural environment.

With more leisure time and less anxiety about the future, people are better able to develop themselves both personally and spiritually. Proper prenatal care reduces the frequency of costly health-care complications that interfere with the normal development of children. Since fewer adults are forced to work two jobs, they spend more time with their children. More optimistic about the future, young students are motivated to learn at school. Fewer teenagers have children, for they can now more easily find satisfaction through living-wage employment. Partnerships are less prone to dissolve because one partner is unable to find work. Universal health care enables everyone to minimize disabling conditions.

Within this context of economic security, people are better able to explore their personal interests and discover those activities that are most deeply gratifying. More people have time to engage in self-directed learning: they study at home at their own pace or they go to adult-education classes. Others engage in various forms of creative expression, such as writing, dance classes, community theater, and political action. In general, people have confidence in the future, a positive attitude toward other people, and a feeling of well-being.

Social relationships are more often fulfilling than was the case when economic insecurity was widespread. Domestic violence, child abuse, racism, sexism, homophobia, and hate crimes have declined, especially in terms of their intensity, as the frustrations and resentments that fuel these problems have diminished. The general public is less divided. There is a greater sense of shared commitment to the common good. More people have become involved with religious communities to pursue spiritual concerns. The love of money and the urge to "get rich quick" have lessened, as more people have come to trust that they will always at least have the means to live decently. Many people have become less self-centered and are more caring about others.

Establishing economic security has also produced improved living conditions. No one is forced to live in overcrowded or substandard housing. Children no longer go hungry. People rarely die due to poverty-induced conditions, including stress, exposure to toxins, and lack of health care. Individuals are under less pressure to provide financial assistance to relatives and friends. Everyone knows that when they retire or become disabled, they will at least be able to live decently.

In addition, the adoption of new economic priorities has produced other social and economic improvements. With a return to the price-support policies that were implemented from the 1930s to the 1950s, family farming has experienced a rebirth. Crop prices are stable and above the cost of production, which enables farmers to stay on the land or return to it to make a living, within production limits that prevent environmentally destructive over-production. Sustainable agriculture has blossomed, with care given to the long-term health of the environment. Throughout the economy, the pressure to sacrifice the environment for the sake of jobs has evaporated. Society pays greater attention to the quality of economic growth, rather than automatically accepting any kind of growth that is profitable. And a less-divided population is able to push politically for public policies that promote the general welfare and preserve the environment.

The renewed commitment to basic human needs at home has also led to more harmonious relations abroad. More secure about the future, the citizens of industrialized countries are less motivated to exploit developing countries. This new approach strengthens the economies of the less-developed world, which enables them to increase purchases from more-developed countries. In this way, world poverty is steadily reduced by enhancing the self-sufficiency of impoverished countries.

The United States draws upon its openness to new ideas and its enormous financial resources to provide an example of how to provide both prosperity and social justice. A greater commitment to peacekeeping through the United Nations has enabled the United States to invest more of its resources in human needs rather than the military-industrial complex. The entire world embraces the principle that each country must guarantee its people a decent standard of living and learns to solve problems in a more cooperative manner.


This vision of a new economy is not science fiction. History has shown that economic security is feasible within a free-market economic system. For decades, the capitalist Scandinavian countries of Sweden, Norway, and Denmark achieved most of these goals, as did the United States during World War II. This book aims to help make economic security a reality once again - in part by proposing a specific, updated program based upon the principles President Roosevelt advocated in 1944. The New Deal and the Scandinavian social democracies are not perfect models; we need to improve upon their achievements. But they do point a direction and prove that economic security is not utopian. To clarify the need for this approach, the next chapter examines more fully how economic security will benefit the entire society.