A Serious Policy Analysis of House of Cards’ “America Works” Program
by Benjamin Studebaker
I am a huge fan of Netflix’s House of Cards, which stars Kevin Spacey as Frank Underwood, a ruthless political anti-hero. Here’s the trailer, if you haven’t seen it. It’s really good:
I launched into the 3rd season yesterday and was fascinated by Underwood’s “America Works” proposal. Very minor spoilers here–Underwood plans to eliminate or restructure America’s entitlement programs, using the money saved to create 10 million jobs, which will apparently cost $500 billion. Now, this is a television show. There are no CBO reports to look at, no detailed policy analyses or public policy research, but I want to dig into this and take the opportunity to explore some of the issues with entitlement programs.
Underwood argues that entitlement programs, particularly Social Security and Medicare, redistribute resources from the young to the old and thereby cripple the young in their pursuit of the American dream. On his view, the elderly are parasites and entitlement programs facilitate parasitism.
Now, this isn’t how these programs were sold to voters when they were enacted by FDR and LBJ. Originally, the idea was that there was something of an inter-generational understanding. Young, healthy people paid into the programs and old, unhealthy people consumed the benefits, but the premise was that one day, the young and healthy people would become old and unhealthy and switch from being contributors to recipients.
Initially, the population of young and healthy people was much larger than the population of old and unhealthy people. The baby boom ensured a strong worker population that was more than capable of supporting the needs of the elderly. As a result, Social Security and Medicare ran large surpluses and created trust funds. These trust funds are meant to allow the entitlement programs to survive without further funding when the demographics turn against them and the old, sick population grows larger. And indeed, in recent decades, America has gotten older and sicker:
Consequently, expenditures on Social Security and Medicare are increasing:
The trust funds are still growing and will continue to grow until 2022, but after that they will start draining. Once the trust funds start draining, it’s estimated that they will empty fairly quickly. The Social Security Administration thinks the funds will last until some time in the early 2030’s, depending on how the economy performs and the demographics shift. At that point, the government would need to either increase taxes to supplement the revenue, borrow the money, reduce benefits, or some combination thereof. It is by no means obvious that it would have to cut the programs–it could very well choose to find the funding elsewhere, and there have even been proposals to expand the programs alongside a funding increase.
But back to House of Cards. Underwood wants $500 billion for a jobs program, and he wants it from entitlements. Could the government do that if it wanted to? Absolutely. Social Security and Medicare cost a combined 8.4% of GDP in 2013, which means their combined cost is somewhere in the neighborhood of $1.4 trillion, enough to do Underwood’s jobs program nearly three times over. Social Security alone accounted for 4.9% of GDP, more than $800 billion. So let’s say Underwood cuts $500 billion from entitlements and leaves them otherwise intact. There are two key problems:
- What happens to the old people? Old people would have $500 billion less to spend, and most of them are by definition too old to take advantage of Underwood’s jobs program. Even now, 10% of America’s 0ver-65’s are under the poverty line. We’d get a humanitarian crisis.
- Jobs are increasingly old-think. The internet and robots are continually raising productivity. As the economy grows and our society continues to technologically develop, it will require fewer workers, not more. What we will need is a stronger consumer base to provide the demand necessary to keep our automated economy thriving. As time goes on, attempting to create jobs for each and every consumer will increasingly be sailing against the wind. Consumers will need money, but they won’t necessarily need jobs.
And this is why Underwood’s claim that “you are entitled to nothing” is so out of date. We are building a world in which we can be entitled to quite a bit. As the economy automates, more and more wealth will be generated with less and less labor. Instead of having everyone work, pay into a retirement scheme, and retire off of that money, it will increasingly make sense to just pay people to consume the goods and services the robots provide from the very start.
So what does 21st century entitlement reform really look like? Increasingly, we’re hearing whispers from both the left and the right about the possibility of creating a universal basic income. A universal basic income is exactly what it sounds like–it entitles every citizen to a subsistence income. Unlike traditional welfare, you don’t lose your benefits when you get a job. Any work you do just supplements your basic income. It creates strong incentives for businesses to innovate and automate the jobs people don’t want to do or pay high enough wages to persuade people to do them. Instead of working to live, people would freely choose for themselves how to spend their time. That kind of freedom has only been possible for a small minority throughout history. A universal basic income would make that freedom universal.
The cost of this program would depend on how big we think the basic income needs to be. If we gave every adult in America $20,000 (roughly double the poverty line), the cost would run about $4.8 trillion. That’s quite a bit, but when we consider how much welfare spending the state already does, quite a bit of it could be redistributed to the basic income program with no further revenue needs. Non-medical old age spending accounts for $1 trillion at the federal, state, and local levels. Welfare spending adds another half a trillion. So there’s about $1.5 trillion that could be transitioned over to this program, enough to get everyone to $6,000, which is a little more than halfway to the poverty line. That’s right now, with no further revenue, without the robots or automation we know we’re going to see over the next few decades. So it’s certainly possible to imagine a distant future in which we transition from a retirement system to a basic income system. We’re not there yet, but we will be there soon, possibly within our lifetimes.
As much as I like House of Cards, “America Works” doesn’t work. But it does provide us with a fun and interesting opportunity to talk about where our economy and our welfare state might be going. The irony is that we’re probably headed in the opposite direction from the one Underwood illustrates. Instead of fewer entitlements and more jobs, the future probably holds fewer jobs and more entitlements. The age of working to make a living ought to be slowly consigned to the past by robots and computers, as Bertrand Russell and John Maynard Keynes once anticipated, albeit prematurely.
I’ve never seen ‘House of Cards’, but that Frank Underwood sounds like a real son of a Margaret Thatcher. 🙂 I’ve been promoting the idea of a basic income for years (and have got used to being declared insane for doing so), but had always thought of it as very much a left-wing concept. It’s good to know that there are also people on the right who can appreciate the idea. Maybe it will now finally become mainstream – it’s certainly about time! BTW, that Bertrand Russell essay ‘In Praise of Idleness’ is a small masterpiece. Also very much worth reading, on the same subject, is Bob Black’s ‘The Abolition of Work’.
Interestingly, Underwood is meant to be a democrat. I’m glad you were able to enjoy this post without having seen the show. It will probably be a while yet before UBI gets serious policy consideration, but things are slowly trending in the right direction for it. If and when the robots show up, the logic of the position should become more self-evident.
I was wondering what the practical realities of America Works could amount to. I think the only time I’ve ever heard the idea of a universal basic income was in a college class on marxist theory. I never thought much about how the relation of labor to capital has been fundamentally altered by technology except in very broad terms, although Marx himself mentions it for the same reason, that labor should become increasingly unnecessary as the source of value. I’m not a Marxist or anything. In fact, what your comments kind of reinforced to me the idea that work (and the “protestant ethic” that supposedly comes with it) has a value in itself. Let’s say we got to a point in history when a universal basic income was possible at a significant level and people could live well on it alone without any need to supplement this sole source of income. Would that be a good thing? The obvious answer is: YES! Sounds good to me. But then I thought, maybe a universal basic income could be introduced along with something like what William James describes in terms of the “war on poverty.” His idea, as I recall, is that we should sublimate our war-like instincts by declaring war on something other than other nations, like poverty. He thought that there should be a required service of a few years for all American citizens – not military service, but something like the Peace Corps applied to problems at home. So maybe the deal would be a universal basic income in exchange for an agreement to serve the country for a certain number of years. What job you do would be based on your skills and your aspirations. That way, people could still “work” but the motivations would be national service, patriotism, humanitarianism, and the like instead of self-interest driven by consumption for its own sake. I like that better than the idea of “idleness” although I admit to the person who cited the Russell essay that I haven’t read that essay but I have a deep respect for Russell and I’m sure his use of the term “idleness” is at least partially ironic. What do you think?
You should read that Russell essay. It’s a quick and easy read, and very much worthwhile. On the other hand, if you just want some representative quotes, look here. I think you’ll find that Bertrand Russell found work and the “protestant ethic” to be highly overrated!
I checked out the cliff notes. Very interesting, I’ll read the whole essay soon. Studebaker said without citation that there are now “whispers” from the Left and Right of moving in the direction of a universal basic income. If anyone can document that, I’d be very interested to learn who has been whispering this. Maybe it’s too much to expect this issue to surface in the upcoming election year, but if there is a trail of discussions in Washington about it, it might be useful to know about it, publicize it, and keep it in mind as candidates make arguments about long-term economy policy.
Here are a few of the “whispers” I’ve seen recently:
I think it depends what kind of work we’re talking about. The way I see it, there are two kinds of work:
1. Work that is necessitated by conditions of scarcity if the species is to survive and progress.
2. Post-scarcity work that is freely chosen by individuals in accordance with their tastes and temperaments.
For nearly all of human history, most people have had to do the first kind of work, and the popular work ethic has been instrumental in socializing people to do this work and to believe that it must be done.
In the hypothetical robot economy, scarcity becomes much less constraining. In that scenario, it becomes possible to allow people to do the second kind of work. The key difference between #1 and #2 is that #2 is freely chosen by the individual rather than mandated by the market, the state, or some other organizational force. The only way for this to be possible is if the individual’s subsistence income is otherwise provided for and there are no economic or political forces compelling the individual to do one specific kind of work over another. For that freedom to be truly possible, individuals must even be allowed to choose idleness, if that is what their freedom means to them.
Interestingly, when UBI has been tested, we find that most people still choose to work. UBI was tested for 5 years in a Canadian town in the 1970’s. They saw a decrease in labor of only 1% for men, 3% for married women, and 5% for unmarried women:
Click to access hum.pdf
So I’d say that in most cases, UBI is a move not toward universal idleness but toward the second type of work and away from the first. But we must allow the possibility of idleness if people are really going to freely choose their work. Once we have robots, we can do that without seriously compromising our living standards for the first time in history.
Also, if you’re interested, the Russell piece is available online:
Interesting to know that most people still chose to work. Not surprising. Maybe work might not seem so onerous to people who know that they don’t have to do it. Attitudes toward work would probably change in concrete ways. There’d be far less willingness to tolerate unreasonable managers and bosses, I’d imagine.
I mention the Protestant work ethic for sociological, not economic or philosophical reasons. I’m thinking of Weber’s analysis of its function in early-capitalist societies as a point of reference to the question of whether or not that function has been or will be rendered obsolete by technological enhancements of productivity. For Weber, one function of work in the modern sense is to form recognizably modern identities and the normative constraints that make subjectivity possible: private and public citizenship especially. I didn’t mean to imply that people should suffer for their right to exist. I meant to suggest that processes of socialization and individuation, if they’re not to occur through obligatory participation in labor markets, would require a surrogate form of social-civil support. That’s why I thought James’ idea of national service, or something like it, might be implied as a functional prerequisite of a universal basic income that would be adequate to provide the full range of an individual’s economic needs.
Another example of a functional prerequisite would be the knowledge of arts. This is a central concern from Aristotle’s Politics to contemporary sources. Just because machines could replace human labor in performing many tasks doesn’t mean we wouldn’t still want and need humans to learn the sciences and the arts that are necessary for humans to learn those tasks. Medicine is moving swiftly in the direction of automation, but of course we still want to train doctors. I’d say the same thing about carpentry, construction, farming, and many other professions. I just saw the Robocop remake, which sucked, but it gets to the difficult question of the limits of technology in law enforcement.
I’m sure there are many examples of this kind that could be debated. My underlying point is that “idleness” has a negative connotation we would want to avoid. Think of all of the fat humans on the spaceship in WALL-E who do nothing all day but watch soap operas and commercials in a state of obliviousness to the historical context of their interstellar situation. I guess that’s what happened in the Matrix story, too: humans built AI, got lazy, felt “entitled” to enslave their thinking machines, and a few centuries later, Neo is flying around a CGI world with his leather-clad girlfriend. The issue had a different connotation on last night’s episode of Walking Dead. The band of characters made it to an apparently safe location, which is what they were desperately searching for, but almost immediately, some of the characters started worrying about getting “weak” and complacent. That example is quite a stretch given what we’re discussing here, but y’all take the point. Bottom line, Marx envisioned a post-capitalist world where people could develop their potential however they wanted, an ethic of self-determination free from compulsion that’s presented in the Star Trek universe. What he didn’t envision was a thoroughly commercialized society in which people would continue to consume/fetishize objects just as they always had but without limits. That would be kind of freakish, no?
This is a great blog by the way. I’ve read a few posts. Good issues, well-articulated. I’ll keep an eye on your work.
(P.S., I know I watch too much TV and movies. Apologies to anyone who doesn’t and can’t follow the references!)
I’m glad you like my blog! You make a good point that there needs to be space for humans to exercise creativity and other higher mental faculties. My hope is that this can be done on a voluntary basis, that people will seek meaning and social roles out for themselves without needing any external coercive forces. The Wall-E life would (I hope) strike nearly everyone as vacuous. But you’re right that if human beings do not have sufficient internal motivation to create and achieve, it would be in our own interest to coerce it out of ourselves via some other kind of program (e.g. national service). Otherwise we’d get stagnation and might inadvertently become servants of the robot economy rather than its beneficiaries.
What about rolling Welfare and similar programs into America Works? No free lunch — everyone works in some way for their lunch. Infrastructure, tutoring, cleaning parks, teaching, daycare, etc. The same fictional lines about work having value and providing self-worth could work in the real world.
The US does not spend enough money on welfare to cover the $500 billion cost of America Works. Total welfare spending at all levels amounts to $450 billion–federal welfare spending alone accounts for merely $375 billion. Source:
Additionally, the number of people currently receiving welfare benefits is far larger than 10 million (the number of jobs America Works is meant to create):
[…] A Serious Policy Analysis of House of Cards’ “America Works” Program. […]
Ahhhhh Kevin Spacey- Frank Underwood: The man you love to hate!
You have a really slick-nerdy way of looking at House of Cards and I totally enjoyed reading it. Do you mind if I repost this on our website? (Surely, we’ll credit you in the acknowledgements). Contact me – email – if you feel like it. (We have a readership of 4 million, mostly concerned young professionals)
Thank you–I’ll e-mail you about that.
[…] This is originally written by Benjamin Studebaker and posted on his personal blog. […]
I am italian and I came up here just googling “you are entitled to nothing”…
So, first of all congrats for the blog, it’s really interesting!
Some days ago our Supreme Court decided that retired people with an allowance higher than a certain amount (roughly 1800 $ / month gross) are “entitled” to have their paychecks yearly increased by the inflation rate. Those paychecks have been blocked to 2011 year rate by a decision of Italian government while facing the worst moment of the italian sovereign debt crisis in fall of 2011, just at a stone’s throw away from default. Now, 4 years later, Supreme Court decided that the block was somehow “illegal” and forced italian government to refund a big portion of retired people with an overall public spending of ~18 Billions $. So, instead of spending money in lowering taxes, promoting jobs (unemployment rate for young people is almost 50% in italy) or even cut the huge national debt (~2 trillions $, 130% on GDP), we are giving back money to the elderlies, hoping that they will afterwards give us younger (i.e < 65 yo) a little pocket money for the cinema.
So, as it seems, there are places in which AmWorks strategy by President Underwood would be not the worst one to be applied 🙂
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So basically, what you are saying is that we are to become communists?
No, there’s nothing inherently communist about universal basic income. It’s very possible to have a universal basic income alongside a capitalist system.
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