Wednesday Jul 18

The ACORN brand stood for something. It spoke of actions, aggressive pursuit, and success in voter registration, housing, and community improvements, which attracted members and their fervent loyalty, and opponents and their continuing antipathy.

The very power of the brand is also the conundrum for the ACORN successor organizations in the United States and why I would maintain that ACORN must and will (should and might?) rise again. Even years after ACORN pulled the plug in the states, the former ACORN organizations are still on any list of groups on the Congressional defunding amendments. Other funders, regardless of how shortsighted their advice might have been at the time, need to come to grips with the reality and not continue to be cowed by the right wing “optics,” as many spoke of the problem. The rest is legal quibbling. The left and right are in perfect agreement that these state organizations are simply ACORN with another name, and that either brings joy or hate to the heart depending on your perspective. It is equally clear that simply operating on the state level or past that as national networks by any name, such federations, even PICO and Gamaliel, as good as they are, along with others that have developed, cannot hope to build the kind of brand and discipline that ACORN was able to create as one unitary organization.

More importantly, friends and foes, as well as ACORN’s own work for forty years in some cities and communities around the country, created an evergreen legacy with our constituency that is more powerful than any opponents or a federal or state funding ban. Whether me or someone and something else, it is just a matter of time, before ACORN is revived to build again from that base and brand, the devil take the hindmost. Actions and tactics have to communicate, and as long as ACORN continues to communicate in such a dramatic, hardwired, visceral way to the heart and soul of America, it is just a matter of time before its banner is picked up again to rally the troops.

Among the most famous ACORN tactics were squatting and street blocking. In the case of squatting or physically occupying abandoned homes in order to link houses that needed families with families that needed homes, the tactic was expressly tailored to fit the needs of the housing campaign which it did spectacularly. The squatting tactic also had a range of subsidiary options. The squatting could be symbolic with an “opening” of the house, a taking of possession, posting a sign, and demanding title, or depending on the campaign, family, and circumstance, we could physically break in, forcibly turn on water and electric, and physically occupy the home with the full neighborhood part of the defense of the property and the squatter. At this level the tactic ratcheted up the pressure many levels especially when the property was controlled by the city or its housing authority and we were trying to win a broader program of homesteading or a $1 purchase program. At that end of the tactical scale it might also involve being willing and able to take arrests for trespassing, which were sometimes provoked by long extended occupation or in the case of federal Housing Urban Development (HUD) owned houses, squatting insured virtually immediate arrest at the point we entered the home. In one day of action HUD arrested around twenty-five people from Columbus, Ohio to Fort Worth, Texas for our demanding that they should move the houses back to people.

Physically squatting was very effective in the cities where we were able to build sympathy for the squatters and their families against the grisly backdrop of an abandoned house. Even though we were breaking the cardinal principle of the United States, the protection of private property, it was so clear that an abandoned and decaying house was in no one’s public or private interest so the support was often very strong for the morality of our position as opposed to the technicality of the law, which is an excellent tactical position. Infrequently there was a backfire; the most notorious for us was the case of the charismatic Lisa Redd in Detroit, where after several days of escalating support and sympathy for her, putting incredible pressure on then mayor, Coleman Young, the papers broke the fact that Redd was guilty of so-called welfare fraud. We ended up winning a program in Detroit, but it took us years to do so after that setback. We learned a hard lesson about vetting the public faces and leaders of our campaigns.

Street blocking worked well in winning neighborhood issues particularly when the tactic followed an immediate traffic accident involving any kind of injury, real or perceived, to a child, such as speeding or no signs in a school zone. There the rage and the rationale fit the tactic to the strategy like a hand to a glove.

Street blocking also works well as a general purpose tactical alternative in an escalating strategic situation where we needed to force a governmental target to have to respond on an issue by triangulating an issue for our constituency with critical disruption to a constituency
that the city or other governmental entity valued more highly. Not infrequently, in city after city, when push came to shove, ACORN would block traffic at central arteries and times for business commuters to the central business districts in major cities, and it would be hell to pay. Interestingly, there were few tactics that got more attention and less press than street blocking. The tactic was the equivalent of a citizen strike and could be exercised in hit-and-run fashion by relatively few people in certain situations. Twenty folks could create virtual gridlock at a four-way interchange, if they were willing to endure the horn blaring and cursing of the commuters until the police show up, make their point, then dissipate, and turn up again with the same folks or another group at a similar intersection then blocks or ten miles away. Over the years we took relatively few arrests on this tactic, but the message almost invariable got delivered forcibly.

Blocking interstates or flyways was a more dangerous escalation and one that I do not believe we ever tried anywhere more than a handful of times. The speed of the cars and the logistics on expressways were daunting.

Dropping a sign or acting on interchanges for entry or exit were easier, and more likely to still engage local police rather than state police, so were more practicable.

Bridges were choke points that were easier to access and more dramatic of course and very frustrating to city forces. The overreaction of the police in New York City to the bridge march by Occupy Wall Street was a turning point in that movement given the initial indifference to the
encampment, and their ability to not only take the police rage, but skillfully get the videos out on YouTube and pictures out on other social media, introduced a flagging movement to a larger audience that resonated powerfully.

Washington, DC is another city where bridges are a huge choke point. It was fascinating to hear the parry and thrust of internal debate at the AFL-CIO convention during its historic election between John Sweeney and Tom Donahue over the issue of whether or not it was tactically appropriate for labor to block bridges. This debate and Sweeney’s initial embrace of more effective and militant tactics seemed to speak to a new strategy for labor and a new tactical period of innovation at the time, though it turned out hope was not a plan.

Unfortunately more imaginative and aggressive tactics have not evolved independently by labor, although many of the tactics of community organizations have been adopted by labor campaigns increasingly. Additionally some of the more effective corporate campaign tactics for labor continue to be under legal and political attack. On the eve of Obama’s first election the successful plant closing sit-in at the Chicago door and frame company seemed to herald the prospects of tactical workplace seizures reminiscent of the activity of many workers during the Argentine financial crisis, but this proved to be more flicker than flame.[95]

Strikes which were the tactical nuclear weapon for unions have been falling in number and size almost annually for several decades. More recently a faux strike by a few Walmart and fast food workers has proven a widely effective tactic for bringing attention and publicity to the
plight of these lower waged workers and their demands for significant pay increases and living wages, though these are not strikes in the classic sense of actions designed to inflict economic loss to a firm’s bottom line. These are what we might call in light of the previous conversation “branding strikes” or “publicity” strikes or perhaps symbolic strikes,[96] designed to harm the corporate image more than the real balance sheet of McDonalds or certainly Walmart. Whether these tactics are strategic in the sense of achieving unionization or simply advancing the longstanding campaign for living wages will be closely watched.

The United Farm Workers boycott of grapes and lettuce during the late 1960s and 1970’s accompanying the spate of successful organization in California and Arizona seemed to herald a tactical breakthrough there, as did the de facto embargo internationally of South Africa around the persistence of apartheid and the Nestle boycott, but boycotts though frequently threatened have not had as impressive a record in recent decades or as ready a weapon in the 21st century arsenal, despite the media effectiveness of the Color of Change and Sleeping Giants. Partially the law has not evolved to favor the tactic. The penalties for damages can be organizational death sentences. Injunctions have rained like summer showers on unions and others. Even in the best of situations they involve a huge burden of moral rectitude, vast organizational marketplace reach, especially for national and international firms or targets, and significant staffing and financial resources able to be expended over an indeterminate period of time. The checklist before engaging in such boycotts is daunting.

Organizers reading Trampling out the Vintage might raise questions about even the effectiveness of many of the UFW boycotts other than the initial ones and whether even in that case we also find a situation where the tactic overwhelmed the strategy, at least if the strategy was to build a union. Although indisputably Chavez and his colleagues built something that has lasted even if what they have is an amalgamation of
nonprofits rather than a collective bargaining, dues paying membership-based institution. Reading Trampling also makes it impossible to ignore the fact that the success of some tactics also rests on the thin line between the pressure and protest of direct action and gloves-off, no holds barred violence.

It is common knowledge and well documented whether in cinematic form in John Sayles’s, Matawan, Barbara Koppel’s Harlan County documentary, or numerous other accounts that in mineworker strikes bullets were often blazing. Entering the Service Employees from the United Labor Unions, we often listened with mouths gaping wide to stories of the janitors’ strikes in big cities that featured bombs blowing
up toilets, as well as receiving fascinating advice in our orientation about where in Manhattan we could buy skunk oil, but it was still something of a surprise to read behind the public persona of Cesar Chavez, the hard fisted, violent “wet works” and pitched, dangerous battles and destruction in the fields. For example I know Chava Bustamente well, and always found him a sweet and gentle man, who would kid me about the time I got him to visit an avian museum with me in Saltillo, Mexico during an Enlace meeting in order to see the bird habitat dioramas, but to read about he and a team of folks chopping down 80 acres of lettuce one night and then getting caught trying to break a scab herder’s car window to incinerate his vehicle, says to me that such activity must have been epidemic in the constant strikes in the California fields.

Violence is not only as “American as apple pie” as Baton Rouge born civil rights organizer Rap Brown claimed, but is also lingua franca around the world. There are now generations of Palestinians who have been arrested and served time for rock throwing, no matter how ineffective, simply because it was a tactic that defined resistance, even if futile. Say what one may about the failure of the Muslim Brotherhood in governance in Egypt, their willingness to fight military power in the name of whatever definition they hold for democracy and suffer 2000 injuries and 700 deaths is either a profile in courage or something unnameable that few other organizations can even imagine. The willingness of many, whether in China or Prague or Hungary, to face tanks with their own bodies is also past most of our understanding of political action.

Wade Rathke is the Chief Organizer of ACORN International, Founder and Chief Organizer of ACORN (1970-2008), and Founder and Chief Organizer of Local 100, United Labor Unions (ULU). Nuts & Bolts: ACORN Fundamentals of Organizing is available from Social Policy Press at www.socialpolicy.org

“The Wallace Breeze” in Burlington

By the time [presidential] candidate [Henry] Wallace made an appearance in Burlington [Vermont] in June 1948, it was apparent that his presidential campaign was in trouble, both nationally and statewide. Inexperience and lack of organization led to difficulty in selling tickets to Wallace’s Memorial Auditorium rally. In addition, many people were clearly reluctant to be associated with the campaign. Curtis MacDougall reports in Gideon’s Army that it took many phone calls to find a farmer willing to allow a noon picnic lunch on his property and it took fourteen calls to obtain an accompanist for Bob Penn, one of the stars of the Broadway musical Oklahoma, who was slated to sing at the rally.

By this time, the tone of the Free Press and Daily News editorials had moved from outright alarm into condescending dismissal. A few days before Wallace’s personal appearance, the Daily News editorialized, with prescience as it happened: “He is being very naïve, indeed, if he expects to pick up many supporters hereabouts. Henry, a persistent fellow if ever there was one, said his third-party group would take away votes from both Republicans and Democrats. We have a sneaking suspicion that Henry should be getting ready, about now, for an awful surprise.”

Describing Wallace’s sparsely attended speech at Memorial Auditorium, the Free Press mocked his campaign slogan of bringing “a fresh breeze to American politics” and editorialized, “The kindest explanation of Wallace the candidate is that much learning has made him mad. The Wallace breeze, we are sorry to say, seems like a zephyr that has become balmy.” However, this bemused attitude did not prevent the Free Press from publishing the names of everyone at the rally who gave money, with their identifying towns and the donation amounts. “Several Well-Known Persons Give Checks of $100 or More” read a headline. Among those “well-known persons” were two state officers of the Wallace campaign, Charles Zimmerman of Brattleboro and Una Buxenbaum of Putney; two professors, Lucien Hanks of Bennington College and Waldo Heinrichs of Middlebury; and Rockwell Kent.

The Daily News also treated Wallace’s speech with bemused condescension: “During his appearance in Burlington this weekend, Henry Wallace impressed observers as a rather pathetic figure, a man who has been misdirected in his efforts, probably sincere, to gain world peace.” That editorial also pointed out that “however sincere he may be, his tie-in with Communists, whether direct or indirect, will be his final undoing.”

In this, William Loeb was correct, for as Wallace biographers John Culver and John Hyde write: “Each new chapter in the Red Scare only further isolated Wallace and his party…By the time of the election, his credibility as a political figure was destroyed and his party removed to the fringe of public life.”

The Vermont delegation to the Progressive Party convention played an unexpected role in the further erosion of that credibility. James Hayford, a farmer and poet, was a strong Wallace supporter who attended the Progressive Party convention in July 1948, yet was leery of
the pro-Soviet slant of many Wallace supporters. Together with delegate Frank Gentile of St. Johnsbury, Hayford crafted what became
known as the “Vermont Resolution,” which read, “Although we are critical of the present foreign policy of the United States, it is not our intention to give blanket endorsement to the foreign policy of any nation.”

The famed journalist H.L. Mencken described what happened next: “When an honest but humorless Yankee tried to get in a plank disclaiming any intention to support the Russian assassins in any eventuality, it was first given a hard parliamentary squeeze by the Moscow fuglemen on the platform, and then bawled to death on the floor.” As Hayford wrote in his memoir, “Back in Vermont I was regarded with even more suspicion than I had been before the convention. The Vermont press reasoned that the defeat of our resolution had proven beyond any doubt that the convention was Communist-controlled.”

The Vermont Progressive Party soldiered on, holding a state convention in Brattleboro in early October. Its platform included abolishing farm taxes, bolstering workers’ compensation funds, creating a fair employment practices law, establishing farmer-consumer cooperatives, and developing a Connecticut Valley Authority modeled on the Tennessee Valley Authority. These proposals were not mentioned in the Brattleboro
Reformer editorial the next day; instead, the paper admonished the Progressives for being “another drum corps in Henry Wallace’s parade” and for not fielding any statewide candidates.

A month later, on Election Day, the national tally for Wallace was just over one million votes and a fourth-place finish behind South Carolina Senator Strom Thurmond and the segregationist States Rights Party. In a development that must have been especially dispiriting to Vermont
supporters, Wallace fared worse in Vermont than he did nationally, garnering 1,679 votes for only 1.04 percent of the total count.

After the election, an embittered and disillusioned Wallace pulled back from party-building efforts. As he watched his position in Washington
sink from respect to derision, he began to recant his attachment to left-wing politics, drawing further away from hard-line ideologues and adding criticism of the USSR to his speeches. The Progressive Party’s opposition to American involvement in the Korean War precipitated a final break, and in 1950 he left the party that he had helped to found.

In Vermont, the Progressive Party maintained a presence through the 1952 presidential election, largely due to untiring efforts by Helen McMartin of Burlington (the chair of the 1948 Vermonters for Wallace Committee), and then withered away. Some Progressive Party stalwarts like McMartin and Martha Kennedy remained active in the peace movement, working with the American Friends Service Committee and other groups; others, like James Hayford, withdrew from activism. But many shared a bitterness at how they and other Wallace supporters were treated. In 1989, Hayford reflected on the Wallace campaign in a letter to the Burlington Free Press: “All of us Vermonters who publicly worked for Henry Wallace were named in your columns as suspicious characters who ought to be deported to Moscow—or words to that effect. All we Progressives wanted to do was help Wallace come to some understanding with the Soviets…Our platform called for international agreements under which both nations would be spared from living forever under the threat of sudden nuclear annihilation.”

It was noted by some commentators in early 2016 that Bernie Sanders, like Wallace, was treated by the media and the Democratic Party establishment with a similar hostility and disdain. But Wallace, running a marginal campaign before the days of widespread television, never got the exposure that Sanders did. Alexander Heffner, one of many contemporary observers drawing the comparison between the two campaigns, noted, “In choosing to run as a Democrat, Sanders has clearly learned a lesson from Henry Wallace’s unsuccessful 1948 third-party presidential campaign.” Along with the many accomplishments of the Sanders campaign, a small but significant one might be that the
figure of Henry Wallace and the story of the 1948 presidential campaign have enjoyed renewed attention.

Rick Winston has lived in Vermont since 1970. He is currently teaching film history in several places, including Community College of Vermont. His long-standing interest in the Red Scare era led him to become one of the organizers of the 1998 Montpelier conference, “Vermont in the McCarthy Era.” Red Scare in the Green Mountains: Vermont in the McCarthy Era 1946-1960 is available at www.rootstockpublishing.com.

 

Universal Basic Income

It’s hard to fathom now, but the idea of a guaranteed annual income was mainstream political wisdom in the United States in the late 1960s and early 1970s. Medicare and Medicaid had just been passed in 1965, and the country had an appetite for solutions for social problems. In May 1968, over 1,000 university economists signed a letter supporting a guaranteed annual income. In 1969, President Nixon proposed the Family Assistance Plan, which would provide cash benefits of about $10,000 per family and serve as a guaranteed annual income with some eligibility requirements; this bill was supported by 79 percent of respondents polled at the time. The Family Assistance Plan passed the House of Representatives by a wide margin—243 to 155—but then stalled in the Senate due to, of all things, Democrats who wanted an even more robust plan. A Democratic congressman, William Ryan from New York, instead proposed an income floor equivalent to $33,000 today, and the original bill would be argued and re-proposed for years thereafter.

The U.S. government funded a number of studies between 1968 and 1975 to gain insight into how guaranteed income would impact individual families. The primary agenda was to see whether people would keep working if they were getting money from the government with no strings attached. The New Jersey Graduated Work Incentive Experiment gave cash payments to more than 1,300 families between 1968 and 1971 to get above the poverty line. Researchers found minimal impact on work— men worked one hour less per week, while women reduced their work weeks by five hours. Mothers spent more time with their children, whose performance at school improved. High school graduation rates rose substantially over the period, by as much as 30 percent.

Similar studies were rolled out in North Carolina, Iowa, Indiana, Colorado, and Washington. Most of these studies showed results similar to the initial New Jersey population. However, the most rigorous and generous study in Denver and Seattle found work- hour decreases of about 9 percent for men, 20 percent for wives, and 14 percent for single mothers. The Denver study also showed an increase in marriage dissolution, which surprised a lot of people and helped arm opponents of the legislation, who defeated it for good in 1978. In 1988, scholars at the University of Wisconsin went through the data and found that the effect on marriage was dramatically overstated based on an erroneous model. Other scholars later questioned the work decrease as based on self-reported hours. But by that time, the debate had passed.

The U.S. studies involved individual families and never tried to measure communal impact. Canada tried it all in one small town. In February 1974, Canada spent the equivalent of $56 million to get everyone in the town of Dauphin, a 13,000-person town northwest of Winnipeg, above the poverty line. One thousand families got a check each month of different amounts with no restrictions. They called it “Mincome,” short for minimum income. It lasted for four years, before a conservative government won control of the government and discontinued payments.

Many years later, in 2005, Evelyn Forget, an economist at the University of Manitoba, tracked down and analyzed the results. “Politically, there was a concern that if you began a guaranteed annual income, people would stop working and start having large families,” recalls Forget. Instead, she found minimal effect on work. The only groups who worked substantially less were new mothers and teenagers, with the latter spending more time in school. Birth rates for women under 25 dropped. High school graduation rates went up. Perhaps most dramatically, Forget found that hospital visits went down 8.5 percent, with reductions in workplace injuries and emergency room visits. Domestic violence went down as did mental illness-related appointments and treatments. Basically, life got significantly better in a town without poverty.

It may be hard to believe, but one state in the United States has had something resembling a Universal Basic Income (UBI) for decades. In Alaska in 1976, the state started receiving billions in oil revenue from state-owned land. Governor Jay Hammond, a Republican, had an innovative plan—he pushed to place the revenue in a fund that would then pay out part of its earnings to state residents each year. He insisted that this fund had “a conservative political purpose” by putting a brake on government spending and distributing more of the money directly to people.

The Alaska Permanent Fund accrued earnings and started paying dividends in 1982. Each Alaskan now receives a petroleum dividend of between $1,000 and $2,000 per person per year; a family of four received more than $8,000 in 2015. The dividend reduces poverty by one-quarter and is one reason that Alaska has the second lowest income inequality in the country. Studies have shown that the dividend has increased average infant birthweight and helped keep rural Alaskans solvent. It has also created at least 7,000 jobs due to the increased economic activity each year. The program, now in its 36th year despite numerous changes in government, is overwhelmingly popular. Sixty-four percent of respondents even said that they would accept higher taxes if necessary to fund the dividend.

In 1995, a group of researchers began tracking the personalities of 1,420 low-income children in North Carolina. Then, something unexpected happened—25 percent of their families started receiving $4,000 per person. They were Cherokee Indians, and a casino had just been built nearby, with earnings flowing to tribal members. This development turned into a research treasure trove. “It would be almost impossible to replicate this kind of longitudinal study,” said Randall Akee, an economics professor at UCLA. Akee found that the impact of the extra cash actually affected the children’s personalities over the years. Behavioral and emotional disorders went down. Two personality traits became more pronounced—conscientiousness and agreeableness. Both correlate strongly with holding a job and maintaining a steady relationship. These changes were most significant among children who started out the most deficient.

Akee surmised that the impact was due in part to less stressful environments. Relationships between spouses improved. Alcohol consumption went down. “We know that the thing poor couples fight about the most is money,” said Akee. Removing that source of conflict resulted in “a more harmonious home environment.” “There is a lot of literature that shows in order to change outcomes among children you are best off treating the parents first,” said Emilia Simeonova, an economics professor from Johns Hopkins who studied the same families. “[The money produced] clear changes in the parents.” She concluded, “Now we have a sense of what even just a little money can do to change these things, to change their lives.”

Most recently, a small trial launched in the United States. Starting in early 2017 in Oakland, California, Sam Altman, the head of the technology firm Y Combinator, is giving 100 households in Oakland approximately $1,000 to $2,000 per month for about a year to measure the impacts on recipients. The goal is to roll out a larger five-year trial afterward. Sam and his friends are giving away $2 million and hiring researchers just to see what will happen. I love the fact that Sam is putting up the resources to study this problem. He’s demonstrating the kind of leadership and vision that, in an ideal world, our government would be capable of.

Enthusiasm is building for a UBI based on both its intellectual and moral appeal and its real-world success thus far. The main counterarguments generally go something like this:

“We can’t afford it.”

Money has to come from somewhere. We’re used to the government spending billions wastefully to no great effect. Trying to raise taxes is a tough assignment in any climate.

What’s fascinating is that a UBI doesn’t actually grow the government. It’s almost cost-free to administer. It doesn’t build a new bureaucracy. It is less an expenditure and more a transfer to citizens so they can use it to improve their lives, pay each other, patronize local businesses, and support the consumer economy. Instead of hiring a new army of government employees, every dollar will be put into the hands of an American citizen and then largely spent within the American economy.

By definition, none of the money would be wasted because it goes to citizens. It’s analogous to a company giving dividends or moneys to its shareholders. No one regards that as a waste of money, because the shareholders theoretically are the owners of the company.

Are we not, as the citizens of the United States, the owners of this country?

As a country, we are easily wealthy enough to manage even a full UBI. Our economy has grown by more than $4 trillion in the past 10 years alone. The U.S. dollar remains the global reserve currency. We are the most technologically advanced society in human history, and increased automation will allow our economy to continue to grow well past its current level. Not only that, but we will get a lot of the money back through new businesses and economic activity, better educational outcomes, improved health and preventative care, better mental health, reduced crime and incarceration, reduced services for homelessness, and many other social benefits.

You know what’s really expensive? Dysfunction. Revolution. Keeping people and families functional will largely pay for itself.

“It will destroy people’s incentives to work.”

All of the available data shows that work hours stay stable or at most decrease modestly with a basic income.

To the extent that people spend less time working, they tend to be young mothers and teenagers, whom we might not mind working a little less if they’re taking care of their kids or going to school.

There are two completely oppositional ideas that many people seem to hold simultaneously: work is vital and the core of the human experience; and no one will want to work if they don’t have to.

These two ideas are at complete odds with each other. Either work is a core of the human experience and we’ll do it even if we don’t necessarily have to, or work is something we have no interest in doing and we do it only to survive.

Setting a Freedom Dividend of $12,000 a year would enable one to barely scrape by. Anyone who wants to accomplish anything, buy something nice, or build a better life for their children will still have to work.

Twelve thousand dollars a year is the equivalent of having $300,000 in savings and then living off the passive income at 4 percent a year. Have you ever heard of someone who gathered $300,000 and then just stopped working? I haven’t. I have seen many people who saved some money and then wanted to save more.

Andy Stern jokes that most of the upper-middleclass children he knows have something called “parental basic income”: their lives are partially subsidized by their parents. Cell phone bills, rent guarantees, family trips and vacations, and so on all come out of the Bank of Mom and Dad. This is the norm in most of the wealthy families I’ve seen. And most of their kids turn out fine in terms of work ethic.

Replacing work is going to be a generational challenge. It will require the great minds and hearts of this era. But getting money to live is an independent question. Getting money to live independent of work will enable us to figure out what work we actually want to do, even if that work is not necessarily in an office or store. This is a much deeper and more fundamental question than how one survives month to month.

Andrew Yang has been active in a number of tech companies and in early 2018 announced his candidacy for president in 2020 on a platform of universal basic income. He is the founder of Venture for America and a graduate of Columbia Law and Brown University. “The War on Normal People: The Truth about America’s Disappearing Jobs and Why Universal Basic Income is Our Future” is available at www.hatchettebooks.com.

Payment for Success

Early pioneers started exploring the use of Payment for Success (PFS) as early as 2011. Support from the Harvard Kennedy School Government Performance Lab was integral to most early projects. The Government Performance Lab offers a technical assistance model that embeds a full-time staff member within government to provide expertise on the PFS model as well as added capacity for data analysis, project design and evaluation, fidelity monitoring, and performance management. Government Performance Lab fellows also act as liaisons and coordinators for day-to-day activity throughout all stages of the project, providing critical support in the capacity-constrained environment of government, where competing political priorities can make it difficult for staff to devote time to PFS. The work of the Government Performance Lab and its fellows has been supported by philanthropy since its inception, and more recently by the federal Social Innovation Fund (SIF), and has acted as an in-kind contribution to early projects.

After a flurry of activity near the end of 2014, the following year, 2015, was a slow year for new PFS programs, with only one new project launched. Catalytic investments in project feasibility assessment and transaction structuring by the federal Social Innovation Pay for Success program in late 2014 helped to create an invigorated pace of project launches. The SIF is a program of the Corporation for National and Community Service, a federal agency that engages millions of Americans in service through its AmeriCorps, Senior Corps and Volunteer Generation Fund programs, and leads the nation’s volunteer and service efforts. The SIF positions the federal government as a catalyst for impact – using public and private resources to find and grow community-based nonprofits with evidence of results.

Evaluation Approaches

Evaluation is a central component of PFS. Program evaluation, whether interim or final, triggers repayment of the initial PFS investment, and any additional payments tied to higher levels of impact or success. Evaluations can be paid for by funds raised either through the PFS financing process, or separately by philanthropy or government. In either scenario, payment for the evaluation must not be tied to the achievement of the outcomes; nor can the evaluator have a financial interest or stake in the project.

In the U.S. the majority of projects to date have used a randomized control trial (RCT), considered the gold standard of evaluation design. An RCT relies on comparison to a group of individuals randomly assigned to a control group that does not receive the services being evaluated. For government, an RCT is usually viewed as the best way to ensure that it is paying for outcomes that would not have been achieved otherwise; likewise, some investors and stakeholders in the PFS market feel strongly that the use of an RCT is critical in order to establish the rigor of the PFS model.

Payment outcomes tend to be ones that can be most easily tied to available administrative data from government, though in some cases data is collected by the service providers. Projects define outcomes with different metrics and methods of measurement. Despite differences in projects, only a handful of outcomes have been used namely, utilization of jail or prison beds, academic readiness and achievement, and stable tenancy in housing. However, many projects are tracking multiple indicators and outcomes beyond success payments to build knowledge about population wellness and look for additional ways to improve social service delivery.

Financial Models

The original conception of the PFS model included attracting private capital to help fund the social good. However, with expected returns often below required returns given the risk of the project, philanthropic funds were typically embedded in the deal, acting as an insurer against non-payment of a contract or a subordinate position to attract commercial capital. Community development financial institutions have also been involved in filling a number of roles in the project development and implementation phases, as transaction coordinators, project managers, and technical assistance providers, as well as acting as senior and subordinate investors.

In the initial 10 PFS projects, senior positions comprised the majority of the capital stock, while the second round has seen an increasing role for subordinate and grant capital. Some argue that the early hope that PFS models could be funded by private equity dollars is partially a failure of the model. Rangan and Chase (2015) note that the second round of PFS projects in the US was mostly funded by philanthropic dollar, and that private equity largely retreated from the SIB approach because investors were being asked to take on an equity risk and receive only bond returns. However, the launch of new funds – such as those managed by Maycomb Capital and the Reinvestment Fund – seeking senior positions in PFS projects shows a continued interest in the model if sufficient subordinate capital can be accessed to mitigate the risk. Further, this next phase also saw projects exploring other financing options beyond the traditional capital stack. Notably, Denver created tranches of senior capital based on issue area. In Santa Clara the first project was launched without commercial capital and the second had no outside investment at all. In Illinois a Social Impact Guarantee structure has government funding a majority of the program up front, while letters of credit secure the project should it not succeed.

Recent projects have also used different outcomes to trigger repayments to senior and subordinate investor groups, or tranches of investors in the case of the Denver Housing to Health Initiative. This reflects differences in risk tolerance and is only possible for interventions where short-term proxy measures exist that can linked by strong evidence to longer-term measures of success. For example, in housing projects, housing stability for one year with minimum interruptions is considered a strong indicator of longer term stability and retention in housing, with the associated positive benefits of improved health, and reduced use of emergency services and criminal justice systems. Similarly, for early childhood education programs, measures such as kindergarten readiness can be correlated to great rates of academic achievement continuing through primary and secondary school, based on existing longitudinal studies.

Santa Clara’s PFS initiatives demonstrate the county’s commitment to moving towards outcomes and use of PFS as a tool to further that transition. Project Welcome Home was constructed on the county’s willingness to pay for outcomes in excess of the estimated ROI (return on investment) and was also the first project to be constructed using CDFIs in the senior position instead of commercial capital. The county further invested in PFS, launching Partners in Wellness, the first mental health PFS project. The project does not involve outside investors, but rather operates as a risk-sharing agreement between the county and the service provider, Telecare Corporation. This structure has allowed for a deep partnership between Telecare and the county, as they jointly bear the financial risk of the project.

Towards a Conclusion

Since PFS was first introduced to the United States in 2010, the PFS market has established itself as a small but rapidly growing and evolving feature of the social sector landscape. To date 20 projects have gone from concept to implementation, and there are dozens more in development. When PFS was first introduced it was defined narrowly as a tool for upscaling proven interventions that could demonstrate cost savings. While the use of evidence and the potential for cost savings remain two powerful motivators, they are not the only reasons why PFS is used. Early projects demonstrate that practitioners have applied the tool creatively, and in ways that depart from the initial construct of PFS, to help advance solutions to persistent community issues and needs.

It is worth noting that while the initial foray into PFS programs was motivated by increasing the speed of social innovation and determining the scope for redistributing from the public sector for social experimentation, a number of ancillary have occurred that have impacted public management. These ancillary benefits often include encouraging delivery organizations to prioritize investment in the infrastructure necessary to track data and measure the outcomes of social programs, as well as shifting cultural attitudes around measuring whether service programs were truly making a difference in people’s lives. For example, the City and County of San Francisco’s recent feasibility analysis helped transform the way it plans to serve homeless people in the city, even though it determined that it was not feasible to pursue a PFS contract at the time. It found that it lacked the necessary infrastructure and staff capacity to track how clients fared after using its services or to conduct effective evaluations to learn whether families served in its shelters were later able to secure stable housing. However, the feasibility study fueled the City and County’s decision to invest considerable funding into services for homeless families, and it has announced plans to create a new department to oversee, align and coordinate these efforts. It is also updating and adding systems, processes and capacity to collect and use more robust outcomes data.

PFS is but one front in a movement towards an outcomes-oriented social sector that better delivers highquality, effective services to communities in need, with these 20 PFS projects demonstrating the potential that PFS has to spark innovation in delivery, evaluation, contracting and financing. The proliferation of interest in PFS from service providers, foundations and governments at all levels and in all corners of the United States speaks to the potential of the PFS model as one tool to further much larger, and far-reaching, changes in how social services are provided and funded in this country. A central challenge– and opportunity – in the next phase of the shift towards outcomes-based approaches is not to advance a particular financial innovation, but to collectively improve our ability to deliver better results.

Kevin Albertson is a Professor of Economics at Manchester Metropolitan University, Kimberly Bailey is a Senior Associate at Nonprofit Finance Fund, Chris Fox is Professor of Evaluation and Policy Analysis at Manchester Metropolitan, Jessica LaBarbera is VP, Strategic Innovations at Nonprofit Finance Fund, Chris O’Leary is Deputy Director of the Policy Evaluation at Manchester Metropolitan University, and Gary Painter is a Professor in the Sol Price School of Public Policy at the University of Southern California. This excerpt is printed with permission of Policy Press, University of Bristol and available form them at www.policypress.co.uk.

At the start of the recession of 2008, Kelley Williams-Bolar’s daughters had been attending Copley-Fairlawn schools in suburban Ohio for two years already. Williams-Bolar worked as a classroom aide with Akron Public Schools and lived in Akron, but she had grown worried about her daughters’ safety walking home from the Akron schools when she was at work. She listed her father’s address on the enrollment forms for Copley-Fairlawn, which allowed them to attend Copley schools as residents without the out-of-district tuition fee. In 2008, Copley-Fairlawn hired private investigators to track parents’ addresses and began offering a hundred-dollar bounty to anyone who turned in another family “illegally” obtaining education. By 2008, a private investigator hired by the district had been watching Williams-Bolar’s home in Akron for months, keeping track of the time her family spent away from her father’s home in Copley.

Though the case was picked up by the national media, defenders of the school district remained convinced that local taxes could, should, and did define the rights of citizenship not only for Williams-Bolar but also for her children. Copley resident and Akron Beacon-Journal editorialist Bob Dyer argued that the case had nothing to do with race and blamed Williams-Bolar for her predicament, saying “I pay a lot of money in property taxes, 53 percent of which go to the schools, and I want the money to go to the people who live in the district.” In January 2011, Williams-Bolar was found guilty of felony record-tampering and sentenced to five years in prison (later reduced to ten days with time served). That felony conviction — falsifying records to attend a different school — was a first for Ohio. Since that conviction, which endangered her special education career plans, Governor John Kasich has reduced such convictions to misdemeanors, stating that the original punishment was “too harsh.” Williams-Bolar has since organized an Ohio “parents’ union” as an intended counterweight to teachers’ unions. In organizing this parents’ union, Williams-Bolar now works with a self-described “free market think tank”

Another African-American mother, Tanya McDowell, was arrested and charged with first-degree larceny for the “theft” of educational services from the Norwalk, Connecticut, school district in April 2011. McDowell, who was homeless at the time of the arrest, was accused of living outside Norwalk since she rotated between a Norwalk homeless shelter and a friend’s house in Bridgeport, Connecticut, where she could sometimes stay the night (but wasn’t allowed to be during the day). Though the city, rather than the school district, brought the charges against McDowell in the case, Norwalk school board president Jack Chiaramonte told a local newspaper that “there has to be a penalty for stealing our services.” McDowell was sentenced in March 2012 to five years in prison for felony larceny of $15,686 of “free” education services from Norwalk and four counts of sale of narcotics. As the language of these cases indicates, the notion that some people are “taxpaying citizens” who have “paid” for the public schools and that some (poor, black, female) people are “stealing” services is not only still pervasive but perhaps better organized than ever.

In East Baton Rouge Parish, Louisiana, wealthy and middle-class residents have sought to create their own new city, school district, and property tax system in the name of local control. The reported impetus for this move is that the current East Baton Rouge school district of forty-two thousand students encompasses a number of high-poverty neighborhoods along with the wealthy, high-value property neighborhoods pursuing separation. One mother of two students in the district, Tania Nyman, said that the plan would “devastate us,” because “they’re not only going to take the richer white kids out of the district, they are going to take their money out of it.”

Other cities, including Birmingham, Alabama, have pursued similar plans to split districts between wealthy and poor neighborhoods. But Alabama also has the distinction of the lowest per capita property taxes in the nation. In 2012, in Lynch v. Alabama, poor school-children and their representatives brought suit against the state arguing a rare historical argument – they claimed that the property tax system created in the 1901 constitution was intended to protect wealthy landowners from high property taxes and prevent black schools from accessing funds and was therefore discriminatory.

Added to this, in the 1970s, state constitutional amendments ensured that certain types of land, specifically timberland and farmland, would be taxed at levels as low as possible. This left rural school districts in Alabama’s Black Belt unable to raise enough funds for basic educational
needs. Plaintiff Stella Anderson, a mother of two who lives in rural Sumter County, stated that “if things continue the way they are with farmland and timberland not being taxed properly, then what we’re going to see is more declining of educational resources within rural communities especially but the entire state…This is not about trying to increase anyone’s taxes. It’s about doing the right thing.” In 2011 district court judge Lynwood Smith penned an 854-page opinion denouncing the history of racial discrimination in Alabama’s educational system but dismissing the claim that the property tax laws were enacted with racially discriminatory intent, and in early 2014 the ruling was upheld by a federal appeals court.

While only a handful of such challenges to property tax based, racialized school finances have survived litigation, taxpayer -rights agendas and tax politics have grown more deafening in recent years. And the attention and anger of these movements is frequently focused on the poor, immigrants, or perceived recipients of government payments. A minor media outcry emerged in 2010 when it was claimed – through a partial use of statistical information – that nearly half of all households do not pay federal income tax. By 2012 the notion that almost half of US households were “shirking” their tax responsibilities had become a conservative standard. While Mitt Romney faced a great deal of criticism when he made remarks about the “47% of the people …who are dependent upon government, who believe that they are victims,” it is perhaps most telling that he linked each of these negative stereotypes specifically with the notion that “these are people who pay no income tax.” The rhetorical connection between the amount and type of tax payments (since there does not seem to be any serious analysis that claims that these families pay on taxes of any kind) and the degree of citizenship and rights has never been more opening embraced than in the past two years. Simultaneously, movements explicitly centered on tax-based anger, like the Tea Party, have focused their ire on the Department of Education and tax-based public education funding in particular as “blatantly unconstitutional.” The secretary of education under the Donald J. Trump administration, Betsy DeVos, formerly ran a campaign in Detroit under the hashtag #endDPS (end Detroit Public Schools), and she is a vocal advocate of “school choice,” even once describing historically black colleges and universities that emerged in part from the roots of segregation as “real pioneers” of school choice.

At the same time, recipients of the earned income tax credit are often described in derogatory terms as welfare recipients or “takers” including by members of Congress, and they are among the groups most heavily targeted for audits. In fact, comparative analysis of state tax systems illustrates that many states’ taxation schemes force the lowest-income residents to pay up to six times more of their income in taxes that the wealthy pay. Meanwhile, racialized economic disparities continue to seriously affect education funding. And there are calls for more progressive taxes to fund education – in California, Proposition 30 was passed in November 2012, temporarily raising the income tax rates on the wealthiest residents while increasing the sales tax by a quarter of a cent, while Proposition 38, which would have temporarily raised taxes on all incomes over $50,000 failed.

Exempting pure subsistence income from taxes is inherent in our graduated income tax structure – the Tax Policy Center has illustrated convincingly that for most households with no federal income tax liability, the “zeroing out” results from low levels of income rather than any particular tax breaks. Ironically, it was the George W. Bush tax cuts, lowering marginal tax rates across the board and granting a huge windfall to the wealthiest Americans, that bumped millions of lower-income families into that “47%” by eliminating their modest federal income tax liabilities. That signature Republican policy has now created a quite explicitly class-based argument that nearly half the nation is made up of half citizens, people who cannot be fully brought into conversation or consideration since their federal income tax liability zeroed out in one or more years. These half citizens, viewed as such due to an inextricable combination of their (tax-based) class and (class-imputed) race, are particularly vulnerable to attacks on basic common goods like public education.

The organization EdBuild developed a map in the summer of 2015 that illustrates the nature of the inequities in school financing in spatial terms. This map exposes the way that the children of, for example, Camden, New Jersey, are “fenced off from their more affluent peers –
in effect, sacrificed to keep the poverty of the city from dragging down the property wealth of its neighbors.” [Jonathan] Kozol, in his discussion of economically and racially segregated school districts, points out that most citizens never have to acknowledge the denial of equal opportunities to other people’s children because “inequality is mediated for us by a taxing system that most people do not fully understand and seldom scrutinize.” The power of tax systems is their ability to hide in plain sight, even as they enact great injustices.

Drawing Conclusions

Popular US history and legal mythology about public education understandably focus on the importance of Brown v. Board of Education. Backlashes, court battles, and Cold War cynicism aside, it represents what many Americans see as the best of the nation in the last fifty-plus years. Brown, however, cannot make sense of the ongoing racial and economic segregation that continues in U.S. schools. The problem of racially segregated, economically unequal school expenditures predates and has long outlasted formal Jim Crow segregation laws and their overturning in Brown. The techniques of separate taxation structures facilitating segregation and inequality may have been pioneered in the South in the nineteenth century, but they have been perfected in the North and West.

Hidden behind the seeming innocuousness (and impenetrability) of tax law and “local control,” these racially separate property tax bases have created dramatic disparities in the funding of white and black schools since the Civil War that Brown did little to change. In Rodriguez the court ruled that there was no constitutional right to education and that property tax-based school financing did not discriminate on the basis of wealth, despite the 96 percent minority student population and the fraction of funding they received compared to overwhelmingly white, wealthy school districts. In doing so, the court reflected a legal consciousness of taxpayer citizenship rights that had briefly appeared a hundred years prior to offer equity and protection for poor families. But in Rodriguez they pushed it to its logical end to argue that those who were too poor to pay high enough taxes or live in a wealthy enough area to fund their schools adequately were simply enjoying the “equality” of the marketplace.

The story of racial segregation in public schools and the legal battle to overcome it has been told many times before as a battle over race and rights. That legal battle was also strongly connected to a racial consciousness of “taxpayer” rights that had an earlier legacy in aspirational equality litigation that would have an important effect on later possibilities for demanding educational equality in the courtroom. Ultimately, though newly freed slaves, school board attorneys, segregationists, and NAACP activists would seem to have little in common as a group, they shared an emphasis on the perceived taxpayer status for claiming the right to education. Just as many African Americans who wrote to the NAACP identified their legal rights through the lens of broad “taxpayer citizenship,” segregations who wrote to the Supreme Court after Brown demanded the maintenance of their separate and unequal schools in a similar, but more exclusionary, language of “taxpayer rights.” The category of “taxpaying citizen” does not have a legally important meaning by itself that could win most of these cases – legal standing as parents or direct constitutional rights violations were virtually always the basis for judicial decisions – yet it was powerfully important in the legal consciousness of citizenship for people on each side of the racial divide. But because of its deep historical linkage to the idea of whiteness and exclusion, the identity of taxpayer bent toward inequality far more often than justice. This act of claiming citizenship and rights through a rubric that is so easily defined in terms of wealth, in terms of who pays “more” and who “doesn’t pay,” continued to haunt the struggle for equal education.

Education is the sine qua non of the democratic experiment. Without education, freedom of speech loses its function, the franchise loses its effectiveness, and the law loses its meaning. The fight for integrated and equal education continues, but it has also continued to be deflected by a legal system unwilling to see the connections between economic and racial inequality, local taxation, and widespread segregation. A wrong that was given shape and form in the law, nurtured and built up by precedent and legal classification, has yet to find a remedy, but it survives as a rhetoric. In part because of the opaqueness, almost mysteriousness of the deep structure of tax codes and tax policy, the system of racialized school financing and the equally racialized language of taxpayer status have resisted virtually every other social movement transformation of the twentieth century. When we say government funds for schools or roads or parks belong to “the taxpayers,” it has a different connotation than if we say the funds belong simply to “the people.” Though an identity as a “taxpayer” may have inspired momentary coalitions and sometimes prompted bursts of pride and patriotism, ultimately the division between “taxpayers” and “taxeaters” grew from the roots of racial segregation, white entitlement, and unequal taxation, and its use continues to enable and facilitate those structures today.

Camille Walsh is assistant professor of American and Ethnic studies and law, economics, and public policy at the University of Washington Bothell. Racial Taxation: Schools, Segregation, and Taxpayer Citizenship, 1869-1973 is available from the University of North Carolina Press at www.uncpress.org.

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