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Spinning the poor into gold: how corporations seek to profit from welfare reform.

Hndsm CEO sks woman who needs a caring but v. strict influence to help her and teach her to lead an orderly and disciplined life.

--personal ad, The Village Voice, 4/1/97

The registration fee for corporate participants at the conference on "welfare privatization" held in Washington, D.C., in late March was $1,295--an amount almost equal to a year of welfare benefits for a Mississippi family of three. Not that a Mississippi family on welfare was likely to venture into the hotel where the conference was held, which rents rooms for somewhere between $300 and $400 a night, discounted to $185 for conference participants. With its muted modernist decor and cavernous lounge spaces, the Park Hyatt presents itself as a setting in which the affluent can gather discreetly, over topics of mutual interest, undisturbed by any low-income people except for those wearing uniforms and available to perform small acts of personal service.

I first reamed of the conference from a welfare advocate who faxed me, indignantly, the conference brochure, with its promise that the gather ing would be an ideal setting for companies seeking to: Capitalize on the massive growth potential of the new world of welfare reform/Gain a leading edge in the market while it is in its early stage/Profit from the opportunities available. Until that time, my only acquaintance with the concept of welfare privatization came from a September New York Times article in which the sharp-eyed Nina Bernstein revealed that Lockheed Martin, Electronic Data Systems (EDS), Andersen Consulting, Unisys, and a host of smaller companies were proposing to take over the states' and counties' burden of processing and rehabilitating the poorest of the poor. "We're approaching this marketplace the way we approach all other marketplaces," the article quoted Lockheed senior vice president Holli Ploog. And why not? Government at all levels currently spends $28 billion a year administering welfare programs, a tempting prize for a company facing the prospect of long-term declines in defense spending. The "peace dividend" liberals have awaited with the patience of a cargo cult, since the end of the Cold War in 1989 won't be spending on social programs after all but welfare transmogrified into corporate welfare.

According to conference organizer Suzana (pronounced Susan-uh) Bacvanovic, an expensively dressed young woman who patrolled the gathering with a flight attendant's air of reluctent helpfulness, it was this same article in the New York Times that had inspired her colleagues at the World Research Group with the notion that welfare privatization might be an appealing conference theme. This New York-based, for-profit firm shares Lockheed's lofty indifference to the actual content of the task at hand; it specializes in the staging of conferences--on anything that might attract well-heeled participants and, in the odd syntax of its Web site, "handles all aspects associated with the superior implementation of our events," from "topic research" to "hotel contracting." In addition to welfare privatization, the World Research Group has held, or will soon hold, conferences on airport management, music and technology, satellite services in India, mining in Mexico, and "interactive sports." Privatization is a favorite theme for the group's productions--privatization of power in Brazil, for example, or of prisons in the United States. The brochure for the group's December 1996 conference on prison privatization exults, "While arrests and convictions are steadily on the rise, profits are to be made--profits from crime. Get in on the ground floor of this booming industry now!"

So this was, in all its superficial markings and accoutrements, the generic corporate conference. One morning I accidentally wandered into another business-oriented conference being held on the same floor of the Hyatt, and it took a close reading of the name tags to determine that I was in the wrong place. There was the same spread of coffee and croissants in the corridor, the same windowless ballroom containing the same long tables set primly with notepads, pencils, and ice water. For despite the occasional opulence of their venues, the culture of corporate conferences is a deeply ascetic one. At the Hyatt, the proceedings began each morning well before nine and stretched to five-thirty or six, nearly nine hours of continuous lectures and panels enlivened by few pleasantries or anything that could be construed as a joke. The exceptions were Mayor Bruce Todd of Austin, Texas, who attempted to lead the seventy or so conferees in a chorus of"Good morning's," and Dean Curtis of Curtis & Associates, a firm that runs motivational sessions to prepare welfare recipients for the work world, who had members of the audience stand and hold up signs referring to "Child Care," "Housing Subsidies," and other forms of government help that presumably block the recipient's path to successful employment. Other than that, the only respite from sensory deprivation was the handsome color slides favored by the corporate presenters. Most of these merely displayed an outline of whatever the speaker was saying ("Asset Sales and Divestitures/Long-Term Franchise/Outsourcing. . ."), though a few approached the level of surreal calendar art, such as the one offered by Robert D. Tyre of Andersen Consulting, which showed the sun rising or setting over a vast landscape of undulating hills, above which the words "New Realities" were stamped.

But the very blandness of the conference may have been a mercy. Better to feel you were in a group that could have been discussing anything--Indian satellite service or new opportunities on the Internet--than to let your imagination wander for one moment to the human actualities portended by one suited speaker after another. As it happened, in the weeks leading up to the conference there had been a series of news reports on the likely effects of Clinton's welfare-reform bill, which, among other dire measures, ends the federal government's sixty-one-year-old obligation to the poor, sets a five-year lifetime limit on welfare for any individual, requires adult recipients to find work, and otherwise turns what remains of welfare over to the states in the form of unspecified block grants. While the conferees were settling into their spacious rooms, Peter Edelman, the former Health and Human Services official who resigned last September to protest the bill, was traveling around the country, arguing that shoving millions of the welfare poor into sub-subsistence-wage jobs--often without child care or health insurance--will result in rising homelessness, malnutrition, infant mortality, family violence, and crime: "new realities" that are perhaps best contemplated against a remote and mythical landscape.

Monday morning began with a "Welcoming Address" delivered by William D. Eggers of the Los Angeles-based Reason Foundation, a libertarian think tank that exists to promote the privatization of government services and that, according to its report "Privatization '96," is happy to stock conferences with keynote speakers. A youthful fellow, with hair stylishly long on top, Eggers seemed both eager to please and confident that what he had to say was of such an intrinsically pleasing nature as to require no oratorical effort on his part. Announcing that welfare privatization is now "probably the hottest area [of privatization] in the country," he promised three days of solid information on such matters as "performance contracts" and "capitated services." Plus there was good news for the public-sector representatives in the audience: Texas state officials, he told us, expect to cut their welfare costs 30 to 40 percent by contracting them out to private vendors such as Lockheed and EDS.

But the atmosphere of bureaucratic rationality was soon punctured by the perorations of the third speaker, Robert Rector of the Heritage Foundation. A thin, slightly hunched-over fellow with the gray buzz cut and thick glasses of a wonkish monk, Rector has built his career on the argument that poverty is not so bad after all, and what there is of it is the result of misguided government generosity. In 1990, for example, when the U.S. Census Bureau issued a report stating that 13 percent of the population, or 32 million Americans, were below the poverty line, Rector had responded with an op-ed piece in the Wall Street Journal arguing that 22,000 of the supposed poor actually owned heated swimming pools or Jacuzzis--an extrapolation appreciated chiefly by connoisseurs of statistical sophistry.

Described in the conference program as an author of the welfare-reform provisions in the Contract with America, Rector was there to remind us that the purpose of welfare reform was not simply to redirect government aid from the poor to the corporate elite but to save the nation from sin--the sins, in particular, of sloth, lust, and the resulting epidemic of "illegitimacy." Drawing on the kind of analysis made famous in the 1980s by such right-wing intellectuals as George Gilder and Charles Murray, Rector explained that welfare does not help the poor; it is, in fact, what makes them poor, or at least what makes them demoralized and dependent, criminal and addicted, and, worst of all, pregnant. This view permeated the conference unquestioned, as if no one, including the representative of the Clinton Administration who spoke briefly on Monday afternoon, had ever heard of the numerous studies--some by former Clinton welfare official Mary Jo Bane (who resigned in protest along with Edelman)--showing that there is no correlation at all between the amount a state provides welfare mothers per child and its rate of out-of-wedlock births. But no irritating counter-evidence intruded on Rector's presentation, from which it would have been easy to conclude that welfare functions, semen-like, to impregnate the poor single-handedly. Welfare, he told us, "rewards dysfunctional behavior" such as out-of-wedlock childbearing, whereas welfare reform will somehow "encourage marriage" by withdrawing the fertilizing flow of benefits. (Later, the conference's other ideological heavy hitter, the Cato Institute's Michael Tanner, ratcheted up the sexual imagery, telling us that black men have been "cuckolded" by the welfare state.)

Rector had only one slide: a colorless graph showing the caseload carried by Aid to Families with Dependent Children, the nation's erstwhile primary welfare program, declining over the last few years in the United States as a whole and declining even faster in the state of Wisconsin, where Governor Tommy Thompson effectively ended welfare about three years before the federal welfare-reform bill was passed. Commenting that "even a Harvard Ph.D. could see the difference" between the two lines on the graph, he explained that Wisconsin's "success" was due largely to "application dissuasion," or the imposition of work requirements so strict that "people never even walk in the door in the first place." When asked what had happened to the almost 40,000 families shed by the Wisconsin welfare system--whether they had found jobs, for example, or had simply sunk into deeper destitution(1)--he answered that "poverty isn't bad for kids. Most of us had grandparents who were poor." The real problem is illegitimacy, which has "a decisive bad effect on kids," and which will end when we no longer have welfare to discourage the poor from marrying. For a child, perhaps even a legitimate child (though this was not specified), thirteen years on AFDC was "thirteen years of child abuse." The one problem with the welfare-as-semen theory is that, so far, the absence of welfare-as-anyone-knew-it has not produced the hoped-for decline in Wisconsin's rates of teen pregnancy or out-of-wedlock births--a result that Rector could only term "a paradox."

Sensing another paradox, or at least an apparent contradiction, at lunch I made my way over to an empty seat next to the Reason Foundation's William Eggers. How, I wanted to know, did he reconcile his libertarianism with the ambient demands to regulate the reproductive behavior of the poor? As the baked-salmon entree was cleared to make way for a five-inch-high structure of ice cream and chocolate, he explained, first, that he wasn't a 100 percent libertarian, and, second, that the receipt of government aid seemed to him to justify the consequent loss of freedom. What about mortgage-interest deductions for the middle class and the affluent, I asked (which average $6,600 per household per year, $2,100 more than the average AFDC grant for a family of three)7 Should these deductions entitle the government to dictate the lifestyles of wealthy home owners? Eggers, whose conference bio describes him as the author of the book that made "the greatest contribution to the understanding of the free economy during the last two years," smiled and nodded at this novel perspective. He had heard such an argument once before, from a fellow in California, or maybe it was Oregon, he confided vaguely before turning his attention back to the dessert tower, now dribbling promiscuously into a brown and white pool.

Assuming that welfare leads to moral decay and that the only goal of reform is "caseload reduction," as speaker after speaker suggested, why bother with privatization' Surely the public sector could turn away supplicants every bit as efficiently as any profit-making firm and has, in fact, been known to "chum" welfare recipients, or hassle them off the rolls, as state and local budgets require. According to Rector, though, this is "the last thing in the world they [the public sector] know how to do"--a theme repeated by other speakers. Public-sector welfare suffers from a "culture of permissiveness" to the point of apologizing to clients, we were told, for the newly imposed work requirements. Furthermore, it was manifestly clear to the conference speakers that the "attributes of personal behavior," in the words of Austin's affable Mayor Todd, welfare recipients need to acquire are best instilled by the private businesspeople who will become their employers. Punctuality, appropriate dress, and an agreeable demeanor were all mentioned at one time or another, either by the speakers or in the slides and videos they presented.

In fact, privatization was already under way, in a scattershot fashion, well before the advent of Clinton's welfare reform. The defense contractor BDM International Inc. won a contract to automate New Mexico's welfare system as early as 1988; Lockheed was in the business of collecting child support and fingerprinting (or "finger-imaging," as the euphemism goes) recipients in various states; Curtis & Associates and the job-brokerage firm America Works were propelling recipients into the workforce in Buffalo, San Francisco, and other cities.

But with the Personal Responsibility and Work Opportunity Act signed by Clinton in August 1996, the way was cleared for private takeover of even the most intimate and fateful act of state-sponsored welfare--the determination of eligibility, a process that has always involved a measure of subjective judgment. Under the old welfare law, only government entities could distinguish the poor from the not quite so poor, the deserving from the undeserving; but this requirement vanished when the federal government block-granted welfare off to the states. The states will still set eligibility levels, but it will be up to the private contractors to determine which individuals fit them. To highlight the new flexibility, the 1,229-page welfare-reform act stipulates that a state may administer its welfare program "through contracts with charitable, religious, or private organizations"--a Mormon temple, for example, or an underemployed weapons manufacturer.(2)

The calls I made before the conference uncovered no evidence that private companies had actually lobbied to make the welfare-reform bill so congenial to themselves. More likely, privatization was always a gleam in the eyes of at least some of the proponents of welfare re form, sinGe those who see the poor as objects for moral uplift tend also to see corporate America as the embodiment of efficiency and Protestant virtue. Florida Representative E. Clay Shaw Jr., the millionaire Republican who sponsored the welfare-reform bill in Congress, has stated that privatization is "exactly what has to happen for welfare reform to work." If the corporations lobbied for anything--and representatives of the welfare arms of EDS and Lockheed were observed hanging around Capitol Hill at critical times in the summer of 1996--it was for the bill to contain more funds for "information technology," a specialty of high-tech, defense-oriented firms. Although the amounts allocated were disappointing, according to EDS's Richard Ferreira, more money may yet be freed up for this purpose. One of the key provisions of the bill is its five-year lifetime limit on welfare, the enforcement of which will require a vast investment in technology to track individuals, through name changes and geographical moves, for decades on end--creating a veritable Foucaultian panopticon of surveillance and a growth industry for the finger--imagists and information technologists.

However privatization managed to attach itself to the goal of "reform," the conference aimed at serving a matchmaking function between the thousands of state and county agencies entrusted with providing welfare and the scores of companies lining up to relieve them of some part or other of this task. The conference brought together about a hundred representatives of the public sector, generally at the "deputy director" level, with a rotating crew of about a dozen of their corporate suitors. In a strict sociological sense, the two parties to the potential "partnership"--public-sector "directors" and private-sector executives--are occupants of the same professional-managerial social class. Both groups spend their normal working lives at desks or meeting tables--monitoring, managing, deal making, and coming up with ideas that people paid less than themselves will be assigned to implement. If the abstract connection between the two groups was not clear enough, the list of conference speakers was replete with individuals who had made or were about to make the transition from one to the other: Lockheed's Holli Ploog, for example, is a former welfare administrator for the state of Alaska. Jason A. Turner, Wisconsin's director of capacity building; Richard J. Schwartz, the "architect" of New York City's welfare reform; and Mayor Todd of Austin have all jumped ship for more lucrative careers either as independent "consultants" or as corporate administrators of welfare.

But at the Hyatt you didn't need an accountant to tell the difference between the public and private sectors. The corporate executives present, who were overwhelmingly male, wore expensive gray suits subtly indented at the waist; their faces were tanned, or at least buffed and peeled to a hearty glow; and they seemed, on average, actually taller than their potential partners in the public sector. The representatives of state and county governments, on the other hand, were in some cases overweight, often bearded, and given to such fashion solecisms as navy suits, heavy gold cufflinks, or even (this from my home state of Montana) a pink checked skirt worn with a matching pink embroidered sweater. To underscore their evident superiority, the corporate participants tended to sit not at the tables provided but along the wall at the very back of the room, in case their beepers should rouse them to more urgent business outside. And while the public sector bent over its legal pads, none of the corporate people took notes, at least none that I could observe--notetaking being, in the modern institutional context, a well-known gesture of submission.

For the public-sector people, the conference was in every way a punishing experience. First, there was the problem of sheer subsistence on the kind of miserly expense accounts provided by most state and county agencies: a participant from Suffolk County, Long Island, had made the five-hour drive to Washington rather than pay for airfare; several stayed in cheaper hotels from which they walked every day to the conference. John Grexa, from New York's Westchester County social services department, shared with me his rueful discovery that a single whiskey at the hotel bar goes for six dollars and change. But these were minor indignities compared with the relentless message from the podium: That the public sector, in its "permissiveness," had screwed up, fuming welfare into something that "destroyed the lives" of the poor and created a shiftless underclass. This message, delivered most forcefully by Rector and the Cato Institute's Tanner, was further reinforced by the presence of the public-sector defectors, whose "tough love" approaches to welfare were now being rewarded with corporate jobs. When I playfully asked Grexa whether any of the corporations had tried to recruit him yet, I got something between a deathly hollow laugh and a snort.

It was a scene that the cognoscenti of the far right would have savored: public-sector "welfare statists" writhing under the assault of their corporate and think-tank betters. If there is any social group that the American right despises more than the welfare poor, it is what they term the "new class," consisting of professionals and managers in the nonprofit sector-foundation executives, university professors, journalists, and, of course, government bureaucrats. According to neoconservatives, this new class is bent on ruling the United States much as their counterparts in the nomenklatura once ruled the Soviet Union. Key to this takeover is the new class's exploitation of the poor as a rationale for government expansionism, as explained, for example, in the pungent verbiage of The American Spectator's editor, R. Emmett Tyrrell Jr.:

The welfare state . . . ruined many heretofore toiling

Americans into parasites, and this new class of busy'

bodies live[s] as superparasites, deriving nourishment

from the dependence of the welfare clients.

It is this sinister symbiosis between the newclass welfare statists and the hapless poor that welfare privatization promises to end once and for all. Henceforth, the corporations themselves will manage the poor, while the erstwhile newclass cadre will have the choice of scrambling to win corporate jobs for themselves or, if all else fails, joining their former clients at corporate-run "job readiness" programs.

A few of the public-sector participants rolled their eyes during the fire-breathing lectures from Rector and Tanner; several muttered over lunch about the infomercial-like quality of the corporate presentations. New York's Richard Schwartz, for example, brazenly promoted his fledgling company by beginning his talk with the announcement that "there are only two words you need to know for welfare reform--`Opportunity America.'" But no one from the public sector rose to defend either welfare statism or, sadly, even the much-slandered welfare recipients, perhaps because it was so evident in every presentation that the future belongs to the privatizers: men like EDS's Robert G. Stauffer, who had just resumed from an international welfare-privatization conference held in New Zealand, and Andersen Consulting's Robert D. Tyre, who spoke of "surfing the [privatization] wave" as it sweeps the world. Compared with these torchbearers of international capitalism, proudly unrooted in any particular issue or locality, a deputy social service director from, say, Allegheny County, Pennsylvania, is a remnant of a dying culture.

I had been looking forward to the Monday afternoon presentation by Lockheed's Holli Ploog, if only because she was one of just three women on the program and the only female speaker from the corporate sector. But she fumed out to be not the fearsome Sigourney Weaver figure of my expectations, just a mousy presence in black and brown whose theme--"Virginia Child Support Privatization: Applying the Success to Other Human Service Areas"--sent a handful of the audience sneaking out to refresh their blood caffeine levels. It was a good moment to catch up on the free literature available to conferees, such as the March issue of Governing magazine, featuring corporate ads that seemed to encapsulate the conference itself. "Beginning to feel the effects of welfare reform?" demanded a two-page offering from Unisys. "You're caught in the middle of a welfare revolution. . . . It's a tough spot to be in. But Unisys EIS (Efficiency, Integrity and Self-Sufficiency) offers a way out." There was a full-page ad for a conference on "Marketing to State Governments," to be held in Las Vegas for a mere $450 a person, which gave me the odd feeling that I wasn't at a distinct event at all but suspended in some airless continuum of interconnecting hotel ballrooms, decorated only with spreadsheets. But then Ploog wound to an end, people wriggled in their seats, and we could congratulate ourselves on another orderly succession from speaker to speaker, without dissension or even much applause.

The transformation of welfare is, as was clear by the end of Monday's session, a revolution without soul or solidarity, a matter of smelling money and drifting closer to it, the way an amoeba is driven, chemotactically, toward the molecular emanations of its prey. There is money in welfare, obviously, even in "reformed" welfare, and this attracts the corporations, which have reamed from EDS's experience with Medicare in the 1960s that whenever government money flows from one point to another, it is generally possible to siphon some off. There also is money in advising corporations or public agencies, and this in turn draws the think tanks, such as Heritage and Cato and Reason. "If you ask me," a woman representing an independent, for-profit consulting firm whispered to me subversively during a coffee break, "welfare privatization means full employment for consultants." And there is, of course, money to be made in holding conferences that bring all these parties together. In addition to collecting the registration fees, the World Research Group offers corporations, for undisclosed prices, an "official lead-platinum" level of conference sponsorship, which includes a "guaranteed . . . speaking engagement," and an "official co-lead-gold" level of sponsorship, which carries with it "a confidential copy of the delegate list for your own marketing purposes."

But once you have accepted the idea that there is money to be made in anything, even ostensible acts of charity, the only socially responsible question is: Can the corporations, and private "vendors" in general, do a better job than government at finding employment for the welfare population? This question was not raised at the conference, where the speakers unanimously assumed that, as one of them put it, the business community is "the genius in America . . . and the Western world." Even so, fragments of dissenting data surfaced disconcertingly here and there. In the course of making the point that government is "deadly efficient" at what it does--though what it does in the realm of welfare is clearly evil--Rector allowed that administrative overhead in government welfare agencies averages an admirably slim 10 to 15 percent; and it's hard to imagine firms such as Lockheed, which has fattened for so long on cost-plus defense contracts, improving on that. Later, Andersen Consulting's Tyre mentioned a General Accounting Office study showing, as he put it, that "government agencies that aren't working well now won't succeed at privatization," which would seem to pose another "paradox": the agencies that arguably most need to privatize won't do a good job at it, and those agencies that have the capacity to do a good job of privatizing might be better off using that capacity to deliver the service themselves.

Clearly privatization involves more, on the part of government, than handing welfare management over to some public-spirited corporation and walking away. As officials of the unions that currently represent public-sector welfare workers were eager to inform me before the conference, the progress of welfare privatization to date has been blemished by a number of near-scandals and disappointments, unmentioned by the speakers at the Hyatt. For example, GTech Corporation, which is the nation's largest operator of state lotteries and is the parent company of a firm under contract to administer food stamps in Texas, has been accused of bid rigging and influence peddling. Andersen Consulting's cost overruns led the Nebraska Department of Social Services to temporarily withhold its payments last January. America Works, which earns an average of $5,000 for every welfare recipient it places in a job, has been repeatedly accused of "creaming" the caseload for relatively high-skilled recipients who would have readily found jobs on their own. Maximus Inc. allegedly paid a West Virginia welfare administrator to provide the company with inside information that would have helped it win a child-welfare-services contract. And when Orange County, California, set up a competition to see whether Maximus or the county welfare department could move the most welfare recipients into jobs, it was the welfare department that won.

The question of how welfare privatization will work, though, hinges ultimately on that great mathematical mystery: Where will the profits come from? According to privatization's cheerleaders, corporations will not only extract healthy profits from welfare for themselves but will gamer sizable savings (as much as 40 percent, as Reason's Eggers suggested) for government: a potential miracle on the scale of the loaves and the fishes. There were three or four representatives of public-sector unions on spy duty at the conference, dressed indistinguishably from most of the other participants in public-sector grunge, and it was their hands that shot up at Q&A time to query, very politely, the source of the anticipated largesse. No one offered a clear answer: EDS's Robert Stauffer, for example, responded that the source of profits was "undefined at this point of time." One possibility is that the firms will take their profits out of the services and allotments intended for the poor; this will be especially tempting if--as forcefully recommended by Rector--the companies are paid solely for "caseload reduction," as opposed to being paid for finding long-term, decent-paying jobs for welfare recipients. It is no great trick to achieve effective levels of "application dissuasion"--by, for example, locating a welfare office several bus rides out of town and opening it at odd and erratic hours.

The other likely source of profits lies in the wages currently paid to the nation's tens of thousands of public-sector welfare employees--caseworkers, administrators, and clerical workers, most of them unionized, many of them (thanks to the public sector's history of relatively nondiscriminatory hiring practices) female and/or black. Once privatization takes off, unknown numbers of these people will be displaced by lower-paid, nonunion corporate employees or even by machines. One of the privatizers' favorite innovations--and the theme of a World Research Group conference held in late April--is "electronic benefit transfer," through which welfare grants and food stamps are distributed via "smart cards" and dispensed at the equivalent of ATMs.(3)

We may never know enough, though, to judge the private sector's performance in helping the poor to post-welfare-reform self-sufficiency. Clinton's welfare-reform bill has smashed that central moral bond, which linked the destitute to the rest of us, into thousands of fragments, and these in turn will be buried in contracts and, most likely, subcontracts, inaccessible to public view. Private firms are not subject to the same rules of financial disclosure as are the public agencies they will take over from, nor are they, given the threat of competition, particularly forthcoming about their operations. The potential for abuse or at least flagrant nonaccountability mounts when the contracts are drawn up and monitored, as they often will be, by public-sector managers eager to make the leap to the other side of the table. When Texas recently requested proposals from would-be vendors, for example, even those requests were not made available to the public. If secret deals and diffused responsibility are frustrating to journalists, imagine their effect on a welfare recipient who has been indentured by a local welfare department into a "work-readiness" program run by, say, Curtis when she goes to her Lockheed-operated ATM, presents a fingertip for identification, and finds herself rejected. Whom is she going to call?

There is, finally, the question of whether privatization can succeed in the terms set by the moralists who brought us welfare reform. The goal of reform, as set forth by Rector and Tanner at the conference, is to stop welfare--and all forms of government aid to the poor--before they drag another victim into the quicksand of "dependency." By comparison, the corporate speakers often sounded positively liberal--respectful of the public sector with which they would soon be "partnering" and even vaguely aware that larger issues of social stability may be at stake. EDS's Stauffer fretted briefly about whether we are unwittingly "creating classes of society," with one of them "earning $6 an hour who'll never get beyond that." He reported that at the New Zealand conference he had just attended they're "really worried" about what he called the "social and income gap," although, he said, trailing off, "I'm not sure we should [be]." But it's not hard to see how the profit motive alone could seduce the private vendors of welfare-related services into becoming a permanent constituency for continued government spending on the poor, much as companies like Lockheed serve as permanent constituencies for the Pentagon and some operators of privatized prisons have become lobbyists for prison construction. In his talk, Tanner had offhandedly denounced even the nonprofit Catholic Charities as a "pig at the trough" for its reliance on government funding, so I wondered how he felt about having Lockheed et al. become similarly habituated to public welfare spending--to the point, perhaps, of lobbying for more of it. When I cornered him with this possibility at a phone bank outside the ballroom, he gave me a momentary look of alarm and acknowledged that this would be a "perverse" outcome indeed.

The difference between, say, a moralist such as Tanner and a corporate privatizer such as Stauffer mirrors a larger ambivalence in American conservative politics. With one hand, the right pounds the pulpit convulsively for balanced budgets and a federal government shrunk to the size of a flyspeck on the Washington Monument. The other hand, however, is firmly extended for whatever handouts--in the form of subsidies, tax breaks, or straight-out corporate welfare--can be coaxed or extorted from the public sector. There is, of course, no rule that a social movement has to be logically coherent: European fascists managed an unlikely blend of technological modernism and agrarian romanticism for much of the twentieth century; Gingrich slams "big government" even as he solicits the defense contracts that so richly nourish his congressional district in Cobb County, Georgia. Neither, for that matter, do a movement's activists and apparatchiks even have to know where they're going or the name of the landscape around them. On the last evening of the conference, I approached Bacvanovic, who was still manning the registration table, to ask why there were no liberals on the program. Her fairy-tale-princess face lit up in triumph as she retorted, "We have Michael Tanner from the Cato Institute--that's very liberal." It seemed pedantic, and probably irrelevant to her career, to explain that libertarian is not the same as liberal.

In the case of post-reform welfare, things may turn out nicely both for those who want to end welfare and for those who want to feed on what's left of it. What the moralists desire above all is that welfare recipients who are now supposedly lying about in drugged stupors drag themselves out to low-paying but redemptive labor. This outcome can only please a business community irritated by the minimum wage, the sanctions against hiring illegal immigrants, and the occasional victories of union organizers. If nothing else, the reform and privatization of welfare will create a huge pool of American workers who will have no choice but to shape up for whatever jobs the employers have to offer: First there will be all the welfare recipients who have exhausted their time on the dole and no longer have the option of returning to welfare if the boss is abusive or the children get sick. Add to these recruits the one third of the workforce that constitutes the working poor, who, in states where reform has begun, are already seeing their jobs lost and wages decline as former welfare recipients tumble into the labor market. According to the Economic Policy Institute, the working poor will see their wages drop by 11.9 percent as welfare recipients are ejected into the workforce. Surely, in this emerging dystopia, Lockheed et al. will have a valued role to play--providing what's left of welfare to the temporarily jobless, prepping the inexperienced, disciplining the discouraged, channeling people from one job to another, and generally trading in the desperation and helplessness of the post-welfare-reform poor.

I checked out of the Hyatt amid a sycophantic swarm of bellhops, doormen, and clerks eager to open doors, call a cab, or book me for a second visit. It was a ten-minute walk to the Dupont Circle Metro stop, where I encountered my first nonuniformed low-income person in more than three days--a young woman in greasy layers of clothing who challenged me to give her some change. This, it occurred to me, was precisely the evil the conference aimed to save us from: poor people, outdoors with no definite errand, surly and free. More likely, though, in the reformed and privatized future, there will be thousands more like her milling at subway stops and maybe, eventually, even pressing up against the huge glass doors of the Hyatt itself.

(1) Milwaukee saw sharp increases in homelessness and the use of soup kitchens last winter, as well as a small increase in reported cases of child abuse and neglect.

(2) Eligibility for Medicaid and food stamps must, by law, still be determined by government employees, and, if enforced, this requirement may stymie Texas's ambitious plan to privatize the administration of all benefits for the poor--welfare (now called Temporary Assistance for Neely Families) Medicaid, and food stamps. In May the federal Health and Human Services Administration warned Texas not to flout the law. But Texas congressional representatives have introduced federal legislation to remove the restrictions. Alternatively, Texas may decide to utilize the loophole offered the state by HHS and begin the privatization of food stamps and Medicaid with "pilot programs" at the county level.

(3) According to a GTech spokesperson, some of the "core technology" used in machines that issue lottery tickets is now being applied to the electronic transfer of welfare benefits operated by GTech's Texas subsidiary, Transactive. The spokesperson insists, however, that there is no plan at this time to design a multipurpose ATM that will allow welfare recipients to purchase their lottery tickets at the same time they collect their welfare benefits.

Barbara Ehrenreich is the author of Fear of Falling: The Inner Life of the Middle Class, among order books. Her latest, Blood Rites: Origins and History of the Passions of War, was published in May by Metropolitan Books.
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Author:Ehrenreich, Barbara
Publication:Harper's Magazine
Date:Aug 1, 1997
Words:6323
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