NEWS RELEASE, 4/7/99 UC Berkeley's dean of social welfare buries liberal notions of the welfare state; proposes a new paradigm

By Patricia McBroom, Public Affairs

BERKELEY--What does society owe its most vulnerable members? Liberals and conservatives have debated this question for decades. At one extreme, "abolitionists" want to eliminate all social welfare programs including social security and food stamps. On the other side, liberals believe it's the public's duty to take care of the needy with transfers of money collected and redistributed through taxes. Now, James Midgley, dean of the School of Social Welfare at the University of California, Berkeley, is articulating a third way. In a lead article in the current issue of social welfare's foremost journal, Social Service Review, Midgley provides a new rationale for helping the poor that relies on the notion of "social investments" and demands a clear economic return for government programs. The article moves beyond liberal notions that have prevailed since the New Deal. His thesis, "Growth, Redistribution and Welfare: Toward Social Investment," outlines a new progressive agenda for social welfare. Various components of this agenda are in play around the country, but Midgley's article is the first to bring the elements together into an integrated model for economic development. "People want to help the poor," said Midgley. "But advocates of the old welfare model have been thrown into disarray because the electorate no longer supports the idea of a welfare state based on income transfers. "If we don't articulate a new vision, we are likely to see further retrenchments in government programs designed to meet social needs." The heart of Midgley's thesis is to integrate economic development with social policies so that welfare programs rely not on cash benefits but on investments that make people independent. It also calls into question liberal ideas of humanizing capitalism with a simple redistribution of wealth. "We need a social welfare system that returns resources back into the economy," said Midgley. "That means we must really invest in people through education, miccroenterprise, credit plans, cooperatives, community development and other approaches with measurable payoffs." The government would still be spending money no longer to maintain people in poverty, but rather to get them out of it, he said. One example is to create profitable sheltered workplaces for people who are physically or mentally disabled, said Midgley. Such a shop has been set up in California's San Mateo County, where a mixed group of clients - some from general assistance rolls; others disabled or referred by mental health and drug abuse agencies - turn out packaged earphones for the airline industry. At the beginning, the clients would arrive for work, collect their lunch and go home. Then, administrators brought in a businessman, but his methods failed to increase productivity. Finally, facing a delivery deadline, the businessman hired outside employees to work alongside the clients, and the mix created a competitive feeling. The original group sped up production and now boasts a profit margin, or at least breaks even, said Maureen Borland, director of the San Mateo County Human Service Agency. In another example, individual savings accounts for low income families are being implemented at the federal level and in several states. These programs increase assets for the poor by providing matching funds for those who save money. For every dollar saved, four are given. The result, said Midgley, is that people who never had a bank account before have become credit worthy. Such programs integrate the two great polarities of American life - the economy and a system of caring for people. "Economics is about markets, profit and business. Welfare is about caring, altruism and concern," said Midgley. "We need to bring these two together." A native of South Africa, Midgley worked as a young social worker in shanty towns where he became disillusioned with the welfare model. "It was obvious to me that social deprivation at this level could not be dealt with by a social worker," he said. He also observed that government handouts were keeping the poor in a dependent position and maintaining them in abject poverty. At the London School of Economics where he later created a program in international social development, Midgley was a student of Richard Titmuss, an architect of the welfare state. "Titmuss believed it was our duty to take care of the vulnerable. Social welfare is the gift freely given to the stranger in need and he believed that public services should play that role. At the same time, Titmuss was hostile to the idea of linking benefits to economic productivity and work performance," said Midgley. In the post-New Deal era, this idea - that a welfare system should be separated from the economy and linked only through taxes that redistributed wealth - held sway until welfare critics turned the tide in the 1980s. Next on the scene were people Midgley calls the "new paternalists" who think people receiving welfare are too lazy to work and should be forced to choose between working and starving. Once employed, they believe, former welfare recipients learn how to work and their habits change. "This just stigmatizes people but does nothing to solve the problem of poverty," said Midgley, who feels the country's serious social problems currently are being masked by a buoyant economy. "Everybody is claiming that welfare-to-work is a great success. But I am skeptical of these claims," said Midgley. "Once the economy changes for the worse, we will see these problems, and we will see them first in the children." Midgley's seven-point plan for social investment is as follows: (1) Make sure that welfare programs are cost-effective. (2) Invest in human capital, such as education, health and nutrition. An example is using day-care centers to provide child and maternal health. (3) Invest in social capital. One way is to refocus community development toward economic growth. (4) Create assets among low-income people. (5) Expand job training and placement to include not just welfare recipients but the disabled, the mentally ill and those who abuse drugs. (6) Encourage self-employment through microenterprise loans and the creation of cooperatives. (7) Remove barriers to economic participation by dealing with such problems as discrimination and inadequate public transportation and child care. "We can no longer defend a system of social welfare that has been rejected by the electorate," said Midgley. "If we don't come up with an alternative, we will have to stand by and watch even further destruction of the nation's safety net - for the elderly, the disabled and the mentally ill." ###