TCS Daily


The Contest Between Taxeaters and Taxpayers

By Orrin C. Judd - July 20, 2005 12:00 AM

Editors note: Steven Malanga is a contributing editor of City Journal and a senior fellow at the Manhattan Institute, specializing in urban economies, business communities, and public policy. His book The New New Left : How American Politics Works Today describes an emerging political dynamic that pits those who benefit from an ever-expanding public sector against those who pay for this bigger government, a contest between taxeaters and taxpayers. Mr. Malanga recently sat for an interview with Orrin Judd.

JUDD: The title of your book refers to the New New Left -- who comprises this group and what's "New" about them?

 

MALANGA: The New New Left, which I also sometimes call the public sector economy, consists of those taxeaters who live off government, either through transfer payments, public sector employment, or employment in sectors like private social services or health care which are increasingly funded by government. These groups began acquiring political power 40 years ago, largely with the help of the vast expansion of government that began during the War on Poverty.

 

I call the movement "new" because about 10 years ago members of these various groups began recognizing that they had the same interest in an ever-expanding government and started working together in coalitions that support bigger government and government solutions to our problems. In many states and cities the coalition has now gathered so much power that it is in control of the political agenda.

 

JUDD: To what extent do you see the creation of this system you depict here as intentional and premeditated?

 

MALANGA: I don't think it was intentional in the beginning. The original framers of the War on Poverty were well-intentioned if naive and ultimately wrongheaded. Sargent Shriver declared back then that we could end poverty in a decade and President Johnson declared that massive urban aid would help create "cities of spacious beauty and living promise." But somewhere along the way the War on Poverty got hijacked by a new brand of social service professional just starting to come out of our college and university social service departments at a time in the late 1960s and early 1970s when they were becoming radicalized. These folks were intellectually at war with our free market system and wanted to use the War on Poverty as a means of ramping up government spending which would force taxes higher, thereby helping redistribute income in our country, they believed. They did things like help turn welfare from a program of temporary assistance into a permanent "civil right" for many recipients. They introduced the notion that the poor in our cities were not only suffering economically but that our system had robbed them of their sense of community and inner worth, which could only be revived with the help of government social service programs. Not only did these kinds of changes in attitude, especially about welfare, wreck havoc on the lives of millions and create a new kind of urban, inter-generational dependency, but they created a whole economy of people whose profession revolved around government funding to fix social problems.


JUDD: In your book you write about some of the aims and enemies of this New New Left and at first glance it's not clear why they chose these in particular -- either as goals or as foes -- could you talk a little about each and why it matters so much to them?

 

For example, discuss The "Living Wage".

 

MALANGA: One reason I write an entire chapter about the living wage movement is because it's on this issue that this new coalition first realized it could organize itself in such a way as to circumvent what was happening in Washington and, through lots of local campaigns, impose their ideas. When the Gingrich revolution changed Congress, these groups decided that they could never get national wage legislation passed, but they saw the success of some local so called 'living wage' campaigns and put together a national effort with a coordinated headquarters that would help local activists enact these laws. In 10 years, they've managed to pass living wage legislation in more than 100 cities and counties. These laws not only push up salaries but are often designed in such a way to protect the public sector, for instance by imposing higher costs on outside government contracting so as to discourage cities and counties from privatizing their operations. Whereas privatization was once seen as a way to make government more efficient, it has now become a dirty work to the New New Left. Indeed, to this coalition the whole notion of 'efficient' government is poisonous because it often involves overturning cushy work rules or contracting out services. Whereas in the early 1990s the book Reinventing Government was one of the most popular in public policy circles, even among liberals looking for a way to make government more efficient, now no one talks about it at the municipal level because this coalition has effectively ended the movement for more efficient government.

 

JUDD: Wal-Mart?

 

MAANGA: I was very curious when I started writing about living wage and I saw that the groups running these campaigns were involved in a bunch of other efforts. One of their efforts was against Wal-Mart. It was very strange. Long ago I covered retailing and remembered that the opposition to Wal-Mart back then was from private unions and small merchants. But this new effort included public employee unions and social service activist groups like ACORN. What I realized was that the union movement had changed fundamentally in the U.S., or rather, had been changed by the growth of the public sector. Whereas private sector unionization had declined, public sector unionization was growing--now representing about 37% of that workforce. More importantly, many unions that previously had mostly represented private sector workers saw their future in the growing public sector and came to organize either government workers or workers in industries like health care that are increasingly funded by government and subject to political pressure. This blurring of distinctions has dragged public sector unions increasingly into private sector fights as part of the coalition against Wal-Mart, for instance. Moreover, these quasi public sector unions can rely on more friends in local legislatures and assembly, so that now instead of trying to (fruitlessly) organize Wal-Mart, they are going to their friends and getting anti-Wal-Mart legislation passed around the country.

 

JUDD: Fostering a "Creative Class"?

 

MALANGA: As I said earlier, a decade ago the emphasis in municipal affairs was on reinventing government and making it serve citizens more efficiently. The idea was that government should concentrate on doing the basics well--provide decent schools, good policing that created a sense of public safety, and investment in basic infrastructure. Do those things and tax people reasonably and you will succeed, the idea went. That idea, combined with the notion that we should demand more individual responsibility out of those who were receiving government assistance, helped create the urban reform movement that worked miracles in a place like New York City during the 1990s.

 

But those ideas have largely died in many places thanks to the New New Left. Now instead we are seeing a ramping up again of bigger, more activist government trying to do ever more -- sometimes even at the expense of the basics. Professor Richard Florida's so-called creative class is one manifestation of that. He says quite frankly that the people who matter to cities--his creative class of scientists, artists, bohemians, technology entrepreneurs--don't really care about restraining taxes and aren't that interested in school systems because many of them don't have kids. Instead, cities should be spending money on cultural amenities and other lifestyle enhancements that attract the creative class--including rock festivals, bikepaths, multi-cultural festivals and other things which apparently attract the good professor himself. His ideas have been picked up by some of those who live off government spending to advocate for growing budgets focused on more government spending on lifestyle and cultural amenities and frills. I use this movement to talk a bit about how cities and their politicians today are getting away from the basics again, and the dangers of this. Nothing illustrates this more than the former mayor of Winnipeg, a big creative class fan. This guy railed against those who only wanted cities to be about "pipes, pavement and policing" and instead raised his budget for cultural spending even as he was raising taxes. But while this guy was reciting Florida to his citizens and preaching the creative class philosophy, the most defining characteristic of his tenure was the his city was the murder capital of Canada. Welcome to the creative age!

 

JUDD: Non-Partisan elections?

 

MALANGA: I use New York City Mayor Michael Bloomberg's effort to change his city's electoral process to nonpartisan elections as a way to illustrate and trace the growth of the power of the public sector economy in New York, which I call the new Tammany Hall. The mayor, like most advocates of nonpartisan elections, believes they are the best way to break the grip of 'political bosses.'' And indeed, nonpartisan elections were originally designed with that in mind. But today, I point out, we have new kinds of political machines in cities run by this New New Left, which I also call the new urban machine. I take the opportunity afforded me by the mayor's proposal to write about the decline of old machine politics and the rise of the new public sector machine, and to point out why electoral refinements like nonpartisan elections aren't really effective against them.

 

JUDD: What can be done about the New New Left? What are some reforms that could limit their growing power or even reverse the trends you talk about?

 

MALANGA: I think we are starting to see a new taxpayer revolt emerging in the U.S. based on the huge fiscal stress that the public sector economy has imposed in many places. We're seeing a new round of interest in taxpayer bills of rights which limit the growth of government and force governments to refund surplus taxes. We're also seeing interest in legislation or initiatives which try to restrain the power of public unions, such as the popular (for now) paycheck protection referendum on the California ballot which forces unions to get the approval of their members before using dues for political purposes. Finally, we see growing interest in getting legislative redistricting out of the hands of legislatures themselves and into the hands of nonpartisan commissions, as is done in Iowa. We need to end the widespread gerrymandering of our legislative districts because one thing that gerrymandering does is reduce the number of districts in play politically, allowing narrow interests groups to concentrate their efforts on just a few swing districts.

 

But it won't be easy. Taxpayers have more of a chance in states where voters can vote directly on these things, but even there, taxpayers don't want to be in a constant state of reform. They don't want to have to rise up and perpetually battle the public sector interests. The next few years will be interesting.

 

JUDD: On to some personal questions. What is your background and what in it led you to concentrate on the public-sector movement, urban bureaucracy and New York City in particular?

 

MALANGA: I was for a long time a business editor and reporter here in New York, and it was while reporting on what government did to business that I became interested in the conjunction of public policy, politics, and economics. I covered New York during the worst of times and the best of times, and when I came to City Journal and started expressing my opinions about how politics was changing in the city, readers from around the country starting telling me, "hey, that stuff is going on here, too," so I broadened my reporting horizons. 

 

JUDD: Brian Lamb of Booknotes (C-SPAN) always asks a question that I find interesting. How do you go about the physical task of writing?

 

MALANGA: Having been a reporter and editor subject to deadline pressures for more than 20 years, I like sticking to a schedule, reporting first and then writing, and I couldn't do this anymore without a computer, Excel spreadsheets and the Internet (well, maybe I could, but not nearly as efficiently).

 

JUDD: Are you working on another book now or do you have ideas for one?

 

MALANGA: When you work for a regularly published journal like CJ, you have to feed the editorial beast, so to speak. So I've got enough going on now working on new stories and promoting The New New Left. For the immediate future I'll be following the emerging battle between taxpayers and tax-eaters in City Journal. Maybe it will lead to a new book on the next taxpayer revolt, if indeed there is one.

 

JUDD: Thank you very much for your time and your consideration. Best of luck with the book.


Orrin C. Judd lives in Hanover, NH where he is the writer-in-residence at BrothersJudd.com

 

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