American Sociological Association

The Land of Too Much

Monica Prasad  (co-recipient)

The Land of Too Much: American Abundance and the Paradox of Poverty
 

Why does the United States have so much more poverty and inequality than other rich countries? In any way that we can measure these outcomes, the United States fares worse than other rich countries, even if we control for factors such as racial composition and immigration history of the American population. In addition, market inequalities and poverty rates before taxes and transfers, are actually similar in the United States and other countries; only after the intervention of the state through taxes and transfers do we see a marked divergence in poverty and inequality rates. In other words, we know how to solve poverty and inequality, or at least to reduce them to European levels, but we decide against doing so.

Many scholars argue that the explanation is that American culture is committed to the free market, or that American labor is weak while American business is strong, or that racial fragmentation undermines the welfare state, or that globalization was driving neoliberalism. Prasad’s path-breaking book demonstrates that these explanations have both theoretical and empirical shortcomings.

As her book demonstrates, although the United States is often considered a weak state, a strong tradition of government intervention has always existed in the United States, and in one of the ironies of history, this strong tradition of intervention undermined the welfare state. She argues that the American state is not less interventionist in general, but that American state intervention takes a peculiar form: it is agrarian state intervention, a progressive set of interventions driven by Southern and Midwestern farmers that had decidedly non-progressive results. It was American farmers who upheld the tradition of progressive taxation and adversarial regulation, but these interventions ended up weakening the revenue base and the political support for the public welfare state.

The argument begins with the observation that the main difference between Europe and the United States in the late nineteenth century was the historically unprecedented economic growth of the United States compared to the economic difficulties of Europe. When American productivity and the size of the American market caused price declines throughout the world (because of the constraint of the gold standard), particularly in agricultural products, most European countries responded by closing their borders from the American invasion through protectionism. While Americans also turned to protection, tariff barriers were not enough for them, because the problem was the productivity of American farmers themselves.

Consequently, the United States saw a powerful agrarian movement aimed at reordering the political economy. The movement flourished in two phases, the last decades of the nineteenth century and the first decades of the twentieth. A crucial moment in this new economic order was the Great Depression, which at the time many diagnosed as a result of overproduction. “The land of too much” was a phrase Huey Long used in the 1920s as he wondered how an unusually successful harvest could spell catastrophe for farmers when plunging prices left them unable to pay off their debts. How could abundance become crisis? Something seemed to have gone seriously awry with the mechanisms of capitalism. To solve the problem of deflation, the state focused on a paradigm of increasing consumer purchasing power. After the war, this paradigm led to a consumer economy driven by mortgage debt—a kind of “mortgage Keynesianism”—that, combined with the tradition of progressive taxation, undermined the welfare state.