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Why the Tension Between Socialism and Capitalism Will Intensify

By Rick Newman

 

December 6, 2012 RSS Feed Print 

 

Real-life Communists protest budget cuts in Greece. In the U.S., the meanings of "socialism" and "capitalism" have blurred.

It's encouraging that Americans spent 2012 looking up the meaning of "socialism" and "capitalism," since both concepts are largely misunderstood. This newfound knowledge is going to come in handy over the next several years, because the battle the two economic extremes may only be getting started.
Merriam-Webster announced recently that "socialism" was the word with the most online lookups in 2012, with "capitalism" coming in right behind. Searches for "socialism" spiked around the time of the Supreme Court ruling on President Barack Obama's healthcare reform law, no doubt because critics derided it as the government takeover of healthcare. "Capitalism" was often the next word people looked up after investigating socialism.

This year's presidential election included many bastardized references to both economic systems, which have been broadly mischaracterized for a long time. Many defenders of capitalism argue that the nation's economic system was more pure a decade ago (or two, or three), but America hasn't had pure capitalism in well over a century. And when it did have a raw form of capitalism, the consequences were often disastrous for significant chunks of the population, which is why public support grew for the kind of regulated capitalism we have now.

[ENJOY: Political Cartoons on the Republican Party]

In the 1800s, the federal government largely stayed out of the economy, with nothing like the regulatory apparatus we have now. That's one reason people like Andrew Carnegie, John Jacob Astor, John D. Rockefeller, Cornelius Vanderbilt, and J.P. Morgan built vast fortunes — often from monopolies or cartels--that still exist in various forms today. But unregulated capitalism also generated speculative bubbles, financial panics and destitution much more frequently than those things have occurred over the last 70 years.

Public pressure led to a long series of reforms that morphed into the regulated free-market economy we have today. In the early 1900s, Teddy Roosevelt started to break up some of the all-powerful monopolies that enriched a few while overcharging the masses. Congress created the Federal Reserve and the income tax in 1913. A slew of regulatory agencies grew out of the Great Depression. During the 20th century, presidents of both parties signed legislation creating new agencies to oversee food, medicine, the environment and Wall Street (ahem). We still have a capitalist system centered on private ownership and prices set by the free market, but it's layered with rules meant to prevent abuses.

[NEWMAN: Prosperity Will Be Elusive in 2013]

Some Americans obviously feel there are too many rules, with a vocal set of critics claiming that Obama in particular has ushered in a system that's more like socialism than capitalism. That's hyperbole. Obama's new healthcare plan obviously will involve a lot more government involvement in the delivery of health care. But that happened because the prior system (which was itself governed by a dense thicket of insurance-company rules) failed to keep medical costs at affordable levels or make healthcare available to everybody. As in the past, public pressure for something better led to government intervention.

Anybody familiar with real socialism ought to know that it's not what we have in America today. If it were, the government would control most industries and own most of the property, and most Americans would be paid similar wages determined by government bureaucrats. In reality, 84 percent of American workers are employed in the private sector, with just 16 percent employed in government. Most people's pay is determined by what they're able to convince a company or a group of customers to pay them, with no upper limit. Anybody who has the money to buy private property can. More than 60 percent of American families own the home they live in.

[FLASHBACK: When Americans Took Pride in Paying Taxes]

Still, the ideological battle between the forces of socialism and capitalism is far from over, and probably likely to intensify in coming years. For much of the time following World War II, the United States was characterized by "an economy of abundance and a psychology of scarcity," as the historian Barbara Dafoe Whitehead has noted. In general, a booming economy provided more than relatively humble Americans expected. But now, thanks to globalization, declining U.S. competitiveness and a swollen social-safety net, we may have an economy of scarcity and a psychology of abundance. Many Americans expect a better standard of living than they're likely to get.

During the next decade or two, the U.S. government is going to have to stop living on borrowed money. The mushrooming cost of entitlement programs like Medicare, Medicaid and Social Security is going to force some tough choices: Either working Americans will have to pay way more than prior generations to support seniors and the underprivileged, or those dependent upon government will get much thinner benefits. One approach is socialistic, transferring an increasing amount of wealth from one group to another. The other is capitalistic, in that it requires far greater self-reliance and provides less of a safety net for those who can't fend for themselves.

The ultimate outcome will be somewhere between pure capitalism and true socialism, which is where the U.S. economy always has always ended up. But it could be much closer to either extreme than it is now. Keep your dictionary handy.

Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.

Top 6 MUST DO Policies to Help the Middle Class that Won’t Cost Taxpayers a Penny

Top 6 Policies to Help the Middle Class that Won’t Cost Taxpayers a Penny

SOURCE: AP/M. Spencer Green

President Barack Obama gestures as he speaks at Argonne National Laboratory in Argonne, Illinois, Friday, March 15, 2013. Policymakers can take steps to strengthen the middle class that won't cost taxpayers any money.

By David Madland and Karla Walter | April 24, 2013

Unfortunately, reducing the deficit has distracted our political leaders from this pressing challenge and has made it seem like little can be done, as Congress blocked or failed to act on important legislation to help the middle class. In reality, however, there are many things that the federal government can do to help the middle class.

Rather than make excessive short-term budget cuts as we are currently doing, we can and should make needed investments in the middle class, such as expanding access to preschool and child care, as part of a package that reduces the deficit over the longer term, as CAP has proposed on many occasions. Furthermore, there are a number of things that policymakers can do that won’t require any additional expenditures.

To help remind politicians that they have lots of room to act, we have compiled a list of the top six policies that would help the middle class without costing taxpayers a penny. Together, these policies will boost the incomes of millions of hardworking Americans; put families on a path to a sustainable retirement; ensure that workers don’t have to choose between staying home while sick or losing their job; allow struggling homeowners to stay in their homes; and empower students with valuable information on college quality.

While these policies would not address all of the challenges faced by the middle class, they would make a meaningful difference in the lives of millions of working Americans.

1. Increase the minimum wage

Over the past four decades, workers have become much more productive and our country has become much richer, but the value of the minimum wage has declined significantly. Since 1968 the inflation-adjusted value of the minimum wage has declined by 31 percent.[1] The minimum wage would be more than $10.50 per hour today if it had kept up with inflation. This decrease has occurred even as workers have become more productive. Over the same period of time, productivity—the measure of output per hour of work—increased by 124 percent.[2] (see Figure 1)

Raising the minimum wage would not only help boost incomes for those struggling to reach the middle class, but it would also cause employers to raise wages through “spillover effects” for even those more solidly in the middle class. After increasing wages for low-wage workers, employers feel the need to increase the wages of workers near the minimum wage in order to preserve their relative position. Studies have estimated that this spillover effect can increase the share of the workforce affected by the hike by 5 to 10 percentage points.

Furthermore, raising the minimum wage is good for the economy because it boosts workers’ purchasing power, providing needed demand in the economy.
The minimum wage should also be indexed to prevent congressional inaction from reducing its value. Indexing to inflation is good, but indexing to one-half of the average wage would be better because it would help ensure that workers reap some of the economic gains they help create. It would also raise living standards as the country becomes richer.

2. Make saving for retirement easier, cheaper, and more secure

Social Security provides retirees an essential baseline of income, but middle-class Americans depend upon accumulations in private retirement accounts to maintain their standard of living in retirement. Because of flaws in our private retirement system, however, many Americans do not have enough retirement savings to maintain their current standard of living. Ernst and Young estimates that 59 percent of new middle-class retirees will outlive their retirement savings, while Boston College’s National Retirement Risk Index estimates that 53 percent of all households are at risk of having an insecure retirement. (see Figure 2)

In order to help the middle class retire with dignity, we need to expand retirement coverage and improve the quality of retirement plans available. We can achieve these goals and improve the current retirement system by creating a new hybrid retirement plan type—the Secure, Accessible, Flexible, and Efficient Retirement Plan, or SAFE Retirement Plan, a hybrid between a traditional pension and a 401(k) plan—and opening the federal Thrift Savings Plan, the 401(k) for federal employees, to the public.

Under this proposal, workers would be automatically enrolled in a retirement plan—their choice of the SAFE Retirement Plan, the Thrift Savings Plan, or their current workplace plan, if they have one. Furthermore, both of these new plans, especially the SAFE Retirement plan, would boost retirement savings and security compared to a typical 401(k) plan. The SAFE Retirement Plan is estimated to cost roughly half as much as a 401(k) to provide the same level of benefit, and savers in the plan would be more secure because risk is spread across all workers. The TSP would provide much lower fees and more suitable investment options than a typical 401(k).

These plans wouldn’t cost the government money because they are not government programs but rather sensible retirement plans facilitated by government action.

3. Lower monthly housing costs by providing homeowners with principal forgiveness

Although housing markets are beginning to recover from the collapse of the housing bubble, more than one in five homeowners are still “underwater” on their loans, meaning that they owe more on their mortgages than their loans are worth. (see Figure 3) Not only does this threaten individual homeowners, but the more than $600 billion in negative equity also significantly hampers economic recovery. Barring an ill-advised effort to reinflate the housing bubble, we will likely need to deal with the unique problems of underwater mortgages for some time to come.

Owing more on a home than it is worth is a significant threat to middle-class families that have long relied on homeownership as a means to build wealth. Home equity accounts for 40 percent to 50 percent of total wealth for middle-class families with incomes falling between $30,000 and $70,000.
Providing troubled underwater homeowners with principal forgiveness, which means permanently reducing the outstanding principal balance of an underwater loan to reflect current market value as part of a loan modification, can accomplish three important goals:

1. Help ensure the long-term success of mortgage modifications.
2. Stabilize the nation’s hardest-hit housing markets.
3. Remove a major barrier to consumer confidence and spending.

Some investors are already forgiving principal balances in their modifications, either through the Home Affordable Modification Program, or HAMP, Principal Reduction Alternative or as part of the National Mortgage Settlement. Using HAMP is optional for investors, however, even when reducing principal returns more value than simply forbearing principal. The U.S. Treasury Department should require that HAMP participants reduce principal in those cases.

Moreover, Fannie Mae and Freddie Mac are still barred from participating in the HAMP principal reduction program by their regulator, the Federal Housing Finance Agency, even though the agency’s own analytics demonstrate that allowing principal forgiveness with these incentives would save Fannie Mae and Freddie Mac $3.6 billion in total. Permitting the two mortgage giants to do principal forgiveness would be a significant step toward helping homeowners, the housing market, and the larger economy.

For all investors—including Fannie and Freddie as well as private investors—one option for reducing principal without taking the full loss is to offer “shared appreciation” loan modifications, in which the investor writes down principal in exchange for the borrower pledging to share with the investor a portion of any future appreciation when the home is ultimately sold or refinanced.

4. Let all workers earn paid sick days

Paid sick days should be available to all U.S. workers. Implementing this policy would provide greater job security to millions of Americans, reduce worker turnover, and ultimately strengthen the middle class.

There are currently no federal laws guaranteeing workers the right to earn paid sick days. Nearly 40 percent of workers in middle-income families and more than 55 percent of workers in low-income families do not have access to paid sick days.[3] Twenty-three percent of adults report either being threatened with losing a job or being fired for taking time off when they or a family member have been sick. (see Figure 4)

What’s more, adults that do not have access to paid sick days are 1.5 times more likely to go to work sick with a contagious infection or illness. The cost of “presenteeism,” or the decreased productivity of a worker who works when sick, costs the U.S. economy $160 billion each year, surpassing even the cost of absenteeism, when a worker doesn’t show up at all.

Policymakers should guarantee workers the ability to accrue up to seven job-protected, paid sick days per year to recover from their own short-term illnesses or care for an ill family member. The Healthy Families Act would implement paid sick days.

5. Ensure that workers who want to form a union are able to do so

Unions help strengthen the middle class by enabling workers to negotiate for fair wages and benefits and helping ordinary citizens get involved in the political process.

But as unions became weaker over the past four decades—due in part to an unfair union election process—they became less able to perform these functions. The middle class has withered as a result, with the share of income going to the middle class falling alongside the percentage of workers in unions. (see Figure 5)

Indeed, according to Harvard University’s Bruce Western and the University of Washington’s Jake Rosenfeld, “Union decline explains one-third of the growth in inequality—an effect equal to the growing stratification of earnings by education.” If unionization rates increased by 10 percentage points—to roughly the level that they were in 1980—the typical middle-class household, unionized or not, would earn $1,501 more per year, according to research conducted by the Center for American Progress Action Fund.

Unfortunately, the current union election process is stacked against workers who want to form a union. One study by Stanford University’s John-Paul Ferguson finds that 35 percent of the time that workers file a petition for an election, the election does not happen.

To ensure that workers who want to form a union are able to do so, the following should occur:

• The National Labor Relations Board should help put an end to needless election delays and modernize the union election process.
• Congress should pass comprehensive labor-law reform that establishes a fair process for workers to decide on union representation that expands coverage so that more workers are provided the right to organize; establishes meaningful penalties and remedies for workers who are fired or discriminated against for exercising their right to organize; and includes measures to promote productive bargaining between workers and companies.
• Congress should also make the right to join a union a civil right. This would give workers who are discriminated against in exercising their right to organize a private right to sue, just as workers have a right to sue if they face other forms of workplace discrimination.

6. Require colleges to provide consumer information via college scorecards

Two-thirds of students with four-year bachelor’s degrees finish their studies with student-loan debt, and the average amount of debt per student is nearly $25,000. (see Figure 6) Yet average debt loads at schools can range from $950 or less to $55,250, and graduation rates range from 0 percent to 91 percent. Many students, however, are unaware of these differences.

The federal government should require colleges and universities to do a better job of providing pertinent information to prospective students concerning their likelihood of graduating, finding employment, and paying off student debt. Schools should be required to direct students to this information on all promotional materials to allow students to easily compare schools.

Expanding access to college education is a key mechanism for building a strong middle class. The college wage premium—the percent increase that a college graduate earns compared to a similar worker without a college degree—is approximately 45 percent, according to data from the Economic Policy Institute. Furthermore, the overall middle class has shrunk as the supply of highly skilled workers hasn’t kept up with the demand for those skills. Approximately one-third of the rise in income inequality since the late 1970s is due to the rising college premium.

Despite the increasing return on investment in a college degree, many students still have a difficult time figuring out the costs and benefits of different schools. This is especially difficult for those who are the first college students in their families, as they lack guidance from family members who attended college and went through the process of choosing a school to attend.

The Obama administration has developed an important new tool in helping prospective students and their families access this information: a college scorecard, which provides a standardized, easy to read one-page summary of the cost, debt, and graduation rates of degree-granting colleges in the United States. The scorecard should be improved, however, in order to help more middle-class families access the information that they need to make an informed decision.

The college scorecard, for example, is currently only available on government websites. The federal government should require institutions to include information about the availability of the college scorecard on college websites, enrollment forms, financial-aid paperwork, and other promotional materials in order to make it visible enough to grab the attention of applicants. Moreover, the scorecard should include other important data such as the average earnings for recent graduates. Ideally, some critical data—graduation rates and earnings, for example—should be available at the degree and program level. Finally, comparison tools should be provided that allow for easy comparisons among institutions and, ultimately, degree and program levels.

Conclusion

The American middle class is in trouble. Hard work has less power to lift families into the ranks of the middle class. And even when working families achieve a middle-class lifestyle, unstable work environments, the rising cost of obtaining a college education, and the inability to save for a secure retirement make it difficult to remain in the middle class.

There are many things that the federal government can do to help secure the American promise that hard work can lead to a better future. Some measures will require additional investment in the middle class, and they can be part of a package that reduces the deficit over the longer term. Still other policies that Congress and the Obama administration can adopt would help the middle class without costing taxpayers a penny. The top six policies in this column provide a good place to start.


David Madland is the Director of the American Worker Project at American Progress. Karla Walter is the Associate Director of the American Worker Project.

Endnotes

[1] Authors’ analysis of data from the U.S. Bureau of Labor Statistics and the U.S. Department of Labor, Wage and Hour Division.
[2] Authors’ analysis of data from the U.S. Bureau of Labor Statistics.
[3] The family income categories used in this analysis are based on the categories first laid out in the 2010 Center for American Progress and Center for WorkLife Law report, “The Three Faces of Work-Family Conflict.” They are modified for the data available through the American Time Use Survey. The universe is families with a currently employed worker over the age of 18. Families are divided into three groups:

1. Low-income families, who make up approximately the bottom one-third—37.68 percent—of families by income
2. Middle-income families, who include those families not falling within the low-income and the professional-class families groups
3. Professional families, who make up approximately the top 20 percent of families—24.07 percent—in which the worker has at least a college degree

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How the Trailer Park Could Save Us All

PACIFIC STANDARD

How the Trailer Park Could Save Us All

A healthy, inexpensive, environmentally friendly solution for housing millions of retiring baby boomers is staring us in the face. We just know it by a dirty name.

The smooth streets of Pismo Dunes Senior Park on the Central Coast of California. (PHOTO: ARNALDO ABBA)

April 22, 2013 • By Lisa Margonelli •

One of the biggest questions facing the nation with regard to aging boomers is: Where are they going to live? The options amount to a tangle of euphemisms and politically correct titles: independent living, nursing homes, aging-in-place, naturally occurring retirement communities (NORCs). Among seniors’ living options, there is one we overlook: mobile homes. Time-tested, inhabited by no fewer than three million seniors already, but notoriously underloved, manufactured-homes can provide organic communities and a lifestyle that is healthy, affordable, and green, and not incidentally, fun. But in order to really see their charms, we need to change a mix of bad policies and prejudice.

Residents call life at Pismo Dunes Senior Park “Pismodise.” Park manager Louise Payne calls it “a holding tank for the great beyond.” Louise has short hair and blunt bleached bangs that give her the air of a preteen skateboarder, but at 72 she’s often found rolling by the park’s 333 trailers in her electric golf cart, alternating between her roles as mother hen and whip-cracker. California is a notoriously youthful culture, but eventually the perpetually young get very old. If they’re lucky enough to live in Pismodise, which is on the Central Coast, they can exit its palm-lined entrance, cross the road, amble across the capacious sand of Pismo State Beach, and dip their toes in the Pacific Ocean while contemplating eternity (or a cocktail).

To move into Pismodise you must meet four conditions: Be 55 or older, keep your dog under 20 pounds, be present when guests stay at your home, and be comfortable with what most Americans consider a very small house. “If you need more than 800 square feet I can’t help you,” says Louise with a shrug. There seems to be some leeway on the dog’s weight. The unofficial rules are no less definite: If you are attending the late-afternoon cocktail session on the porch of Space 329, bring your own can, bottle, or box to drink. If you are fighting with other residents, you still have to greet them when you run into them. Make your peace with the word “trailer trash.”

“I have very wealthy people here. They think it’s the coolest thing there is.”

 

No one in California aspires to be old or to live in a trailer, but we need to be more open to the possibilities inherent in both. Every day since January 1, 2011, some 10,000 American baby boomers have retired, and that will continue until 2030, when people over 65 will make up 19 percent of the population (up from 13 percent today). Old is the new boom and it is changing the culture and the conversation. (Have you seen all the sexy talk in Betty White’s reality show?) In Washington, D.C., anxiety about the decreasing proportion of workers to retirees underlies the frenzied discussion of “entitlement reform.”

Baby boomers aren’t going to retire the way their parents did. They are poorer and more likely to live alone. They can’t depend on pensions, and the real-estate bubble destroyed almost 50 percent of their wealth. Today one in six seniors lives in poverty, and that proportion is rising; the generation of Americans now facing retirement is so financially ill prepared that half of them have less than $10,000 in the bank. The coming swell of retirees will strain our current system to its limits—in terms of not only health care, but also incidental things like road signs, which are hard for drivers over 65 to read in a majority of American cities and towns.

Emily Greenfield, an assistant professor at the Rutgers School of Social Work, who researchers elder-care networks, says a change is occurring under our feet, whether we see it or not: “Baby boomers have critical mass—they’re covertly revolutionizing society again” as they retire.

One of the biggest questions facing the nation with regard to aging boomers is: Where are they going to live? The options amount to a tangle of euphemisms and politically correct titles: independent living, nursing homes, aging-in-place, naturally occurring retirement communities (NORCs), retirement village, memory-care units, age-restricted communities. All this complexity disguises a simple fact about money, happiness, and aging: Seniors who can live on their own cost the country relatively little—they even contribute to the economy. But those who move into nursing homes start to run up a significant tab—starting at $52,000 a year. People who are isolated and lonely end up in nursing homes sooner. Hence, finding ways to keep people living on their own, socially engaged, healthy, happy, and out of care isn’t just a personal or family goal—it’s a national priority. Among seniors’ living options, there is one we overlook: mobile homes. Time-tested, inhabited by no fewer than three million seniors already, but notoriously underloved, manufactured-homes can provide organic communities and a lifestyle that is healthy, affordable, and green, and not incidentally, fun. But in order to really see their charms, we need to change a mix of bad policies and prejudice.

LOUISE AND I GET in her golf cart and zip down the street in front of a row of homes, each one six feet from the next, most decorated differently and elaborately: There are rocks, nautical themes, many angels, some pelicans, some sunflowers. There are lots of signs: every day is a gift, old farts at play. One house, near the little grassy dog run at one end of the park, is surrounded by potted plants. Nearby is a fence, followed by a railroad track and a view of the Los Padres mountains. All is orderly, quiet, and attractive. The streets are a smooth ribbon of black asphalt—perfect for pushing a walker.

Louise has lived in the park for 12 years and managed it with brusque efficiency for the last seven. After raising a family and owning houses in the Central Valley, she found a “cute” unit in the park, bought it, and fixed it up with the sort of attention people give to tricking out their cars. She sees Pismo Dunes as a community, and as we move along, she points out the units where retired firefighters live, and then takes me to visit Ferne, a bright 92-year-old who recently rode on a zip line during a visit to a winery.

As we wind through the park’s little streets, I realize Louise is not just managing relationships with the living. She points out a unit where the owner is ailing, and another where the owner’s husband had recently died; park employees had sat with the woman until the coroner arrived. As for retirement, it’s not in Louise’s future, and neither is leaving Pismo Dunes: “They’ll carry me out of here in a box.”

TRAILER PARKS HAVE REPUTATIONS: they’re considered havens of crime, perches for transients; they’re flimsy rusting structures, dangerous during disasters—”blight” that brings down neighborhood property values. Legally and financially, manufactured homes have a second-class existence. They are not treated as real estate, but as chattel or personal property. Owners don’t get the same rights or financial benefits as do other homeowners. For this reason, sociologists have described trailer parks as “quasi-homelessness” and “a kind of serfdom.” Among the few recent pieces of research about parks is a paper describing the strategies residents use to “manage” the “stigma” of living in a trailer park. Included: dressing well, not telling people where they live, and disparaging other trailer parks as worse than theirs. We all have an ugly prejudice when it comes to the trailer park. “Trailer trash jokes are still acceptable in polite circles where other prejudicial humor wouldn’t be considered funny,” says Paul Bradley, the president of New Hampshire’s ROC USA, a non-profit that helps residents buy their parks and turn them into co-ops.
This prejudice prevents us from seeing a modest but otherwise pleasant house. Travel-trailers evolved into mobile homes, which eventually lost their wheels and became manufactured housing. By any name, they are the largest source of unsubsidized affordable housing in the country. There are seven million manufactured homes housing 18 million people. In some counties they make up 60 percent of dwellings. Approximately one out of every 12 Floridians lives in a manufactured home. Units built since 1976, when the Department of Housing and Urban Development started regulating their construction, can last as long as site-built homes when they’re well built and maintained. Yet they cost far less: $41 per square foot versus $85 per square foot and up. At least one study, from the University of Illinois-Chicago, on trailer parks in Omaha, Nebraska, found that crime rates in mobile-home parks are the same as the rest of the community; the parks do not cause crime nearby; and that the parks appear to depress crime levels because residents own their homes. In one survey, nine out of 10 owners of manufactured homes said they were satisfied with their dwellings. They’ve found a housing option that suited their budget and needs.
Like a number of trailer parks, Pismo Dunes started as a camper park in the 1970s. Some of those campers stayed in place, and concrete blocks surrounded their wheels as they became layered with porches, awnings, sunrooms, and carports. Some have been replaced with new factory-built homes that resemble townhouses—but still have wheels hidden underneath, because Pismo Dunes is still technically an RV park. Though the home have changed dramatically from the trailers they once were, the business model has not: Residents own their homes but not the land under them. If you want to buy here you can go through Louise (who has a license to sell RVs) or buy directly from the owner, but you can’t buy or sell using a realtor. Louise is advertising units that start at $6,500 (for an old camper) to $185,000 (for a nearly new, splashy vinyl-sided Chariot Eagle one-bedroom manufactured house with a loft). Everyone also pays rent to Louise’s employer, the park owner, of between $400 and $700 a month, depending on the space and how long they’ve occupied it. The homes are taxed as automobiles, and fees are paid to the DMV. The park still has community showers and bathrooms, a remnant of earlier days, but most folks use the ones in their homes. Residents can hobnob at a clubhouse that hosts games every night and serves lunch twice a week.

Louise and Ernie laugh about the time she thought she had found him dead in his trailer. Turns out he just wasn’t wearing his hearing aid. (PHOTO: LISA MARGONELLI)

ERNIE LINK, 93, IS sitting in front of his trailer wearing shades and trying to flirt with whoever will play along. “I get slapped a lot, but what the hell,” he tells me. Ernie’s yard is a happy jumble of plants, a flag, and a sun catcher. His house was originally a small travel trailer but he’s added a sunroom and a carport, now occupied by an electric golf cart. In 1990, after 40 years as a railroad conductor based in Pocatello, Idaho, and several years of nursing his wife through a brutal and losing battle with breast cancer, he moved to Pismodise. His daughter lives nearby, but he still wants to live alone. His biggest worry is falling, which is how his best friend and drinking buddy ended up in a nursing home. “He didn’t lift his feet,” Ernie explains. But his neighbors check on him a few times a day. And every day he sets out for an excursion down the park’s streets to the mail room, slowly lifting his feet behind his walker, greeted by everyone he passes. “I don’t think I could have it any better,” he says. “I got a little trailer, but if I fall it’s not far.”

Ernie’s trailer gives him physical and financial independence. Pismo Beach’s residents are 36 percent seniors, a third of whom live in mobile-home parks. In 2010, a city survey found seniors in mobile homes spent a smaller percentage of their income on housing than renters or homeowners, even though their incomes were lower. The Department of Housing and Urban Development found that mobile-home dwellers “do substantially better,” nationally, than owners and renters at keeping housing costs below 30 percent of their income.
What surprises me is the wide range of incomes in the park—more than in subsidized housing, for example, or a retirement community. Little trailers like Ernie’s nestle next to much more impressive house-like units with bay windows, fancy porches, and nice cars in the drive. Louise tells me that some residents of Pismo Dunes survive on less than $900 a month, while others have monthly incomes of $15,000. For half of the residents, this is their second home. This is not a fluke: Farmers Insurance surveyed seniors in mobile homes in 2012 and found that while 30 percent have assets under $25,000, nine percent had more than $250,000 and some had more than $500,000. “When you consider we’re called trailer trash, it’s a joke,” says Louise. “I have very wealthy people here. They think it’s the coolest thing there is.” Lunches at the clubhouse are priced at $5 so that those who would never ask for help can bring home leftovers, those who are better off can put a little extra in the jar. One resident likens the diverse incomes and classes in the park to the old canard about nudist camps—everybody’s naked so you can’t see the differences. “In here we’re all equal. Some can hardly afford food. It’s all over the playing field. There’s no tension because some of the trailers are run-down. Who cares? It’s their home.”

Deenah: “Carolyn saves the crossword puzzles and brings them to me at seven every morning.” (PHOTO: LUCAS AZNAR MILES)

JUST BEFORE SUNSET, LOUISE and I make our way to the evening’s “therapy session” at Space 329, at the junction of the two biggest streets in the park. Deenah and Ronnie Stockton have an elevated porch that allows them to see everyone coming and going. They also own another house in Bakersfield, California. The evening was peppered with their own brand of banter, well-worn and most often directed at their 50-year marriage. (“I tried but the gun jammed!”) Today’s conversation meanders from topic to topic: a neighbor’s overweight King Charles spaniel, the ambulance that came to the park earlier in the day, a neighbor’s renovation that includes a Jimmy Buffett-inspired sign that says “it’s five o’clock somewhere.” Someone tells a story about noticing the park’s flag was at half-mast and asking Louise if it was in memory of someone who died in the park. “Are you kidding? That would be down all the time,” she replied, to much laughter. Deenah tells a story about the time Carolyn Kolthoff, a 90-year-old neighbor, called to ask for a cup of coffee. Deenah made the coffee and dutifully took it across the street, only to discover that Carolyn had fallen. Turns out she felt better asking for a cup of coffee than a hand to get up. Around 7 p.m. or so, the group drifts off after making plans for their morning walk.
“Therapy” in these circles is meant as a joke, except it happens to be true. One of the longest-running studies of aging, conducted over a period of 34 years in Alameda County, California, found that among the predictors of healthy aging are: not smoking, moderate drinking, having five or more friends, avoiding depression, and walking for exercise. Older people who do two out of the three last activities (friends, avoiding depression, and walking) are more likely to spend their next six years in a sort of golden old age, without becoming dependent upon others—or, god forbid, nursing homes—for the basics of daily living. In other words, sitting on the porch, drinking and yakking, is exactly what the doctor suggests. (It’s also good for all that residents can drink without driving.)

When I come back to the park just before 7 a.m. the next day, seven women are waiting for me. We set off at a brisk pace, walking all the roads of the park and waving to anyone who’s looking out the window or is on the porch. Walking—on the smooth and safe streets, to the beach, and to the market in town—is a big part of the culture of Pismo Dunes. This makes park residents exceptional: less than 25 percent of older adults say they walk regularly.

Most places in America make it hard to grow old. Older people in neighborhoods with high crime, lots of traffic, and poor lighting have been found to “lose functioning” (in other words, need nursing homes) earlier than those who live where they can walk. Those who live in the suburbs lose their social networks when they stop driving and become isolated. Loneliness is a killer: Over a six-year period, lonely seniors are 45 percent more likely to die and 59 percent more likely to decline than those who aren’t lonely, according to a University of California-San Francisco study. Pismo provides no formal services to elders, no health care, no exercise room. To the extent there’s a safety net here, it’s made by residents themselves.

Carolyn: “Louise is tops as a person and a manager; you know where you stand and she doesn’t pull any punches.” (PHOTO: LUCAS AZNAR MILES)

ONE AFTERNOON, I GO to meet Deenah’s neighbor Carolyn, who moved into the park 23 years ago because her mother lived here. Carolyn has vivid eyes and an impish sense of humor. She laughs about her reason for choosing her unit: “My husband was a talker, and this corner is a good location—you can see everything. Louise says I’m nosy.”  Her old trailer was cold and expensive to heat, so last year Carolyn bought a “park model.” Her home is small and spotless. A loft contains a few dolls, nothing much else. Clutter, she says, is not possible here. Most days, Carolyn gives Deenah crossword puzzles she’s cut from her paper in the morning and babysits Louise’s dachshund, Sadie. Sadie happens to be lying on the carpet, dressed in a small lavender coat, and her eyes follow Carolyn’s slow movements around the home. For four years, Carolyn walked the dachshund to town every day. Recently, though, she’s felt unsteady so she’s started getting around in a golf cart that Louise brought her.

Rutgers researcher Emily Greenfield is working with a team to examine community-based initiatives such as “villages” that are designed to make it possible for older people to live longer on their own. The work is in its early stages, but Greenfield says it’s hard to quantify the clinical impact of Carolyn’s relationship with Louise, or Deenah’s willingness to run over with a cup of coffee and give her a hand up, or Sadie. “Dog sitting! How could an agency track that kind of interaction?” asks Greenfield.

We don’t do a great job of stitching people together through families or institutions in the United States, and that shows up in how we treat elders. U.C. Berkeley social welfare professor Andrew Scharlach, who is studying how to create communities as people age at home, says that in the U.S. aging is seen as an “individual problem,” rather than a societal one. He tells me that in this country, a third of elderly people who are disabled don’t have adequate help dressing, but in Sweden, where policies and communities are more integrated, less than five percent lack such basic care. Scharlach says American negligence is an embarrassment: “Swedes look at me like, What’s wrong with you people?” Pismodise—a for-profit, down-market entity without a professional staff—pretty much organically fills some of the smaller holes in the American system.
I don’t have any hard numbers on aging in the Pismo Dunes, or even more than a dozen interviews over a couple of two-day-long visits, but I can say that sitting on Deenah and Ronnie’s porch, drinking rosé, I felt better about getting old. I wanted to find out more about what made the place tick. What made this miniature trailer park more than just a cheap and funky place to live, more than a nice environment to push a walker? Everyone asked if I’d talked to Charlie and Margaret.

Charlie and Margaret: “We look at each other and say ‘Can you believe this happened?’ When I lost my husband I thought it would be like that forever.” (PHOTO: LUCAS AZNAR MILES)

CHARLIE HENSON STARTED COMING to the park for vacations with his wife in the 1970s. He moved in full time after he retired in 1985 from maintenance work at a refinery in Taft, California. In his sunroom, a stuffed panda sits under a painting of an oil derrick. He’s been fixing something with a cold chisel, which he’s left on the kitchen table. Charlie is active on the residents’ committee, cajoling management to improve the park. He makes the rounds, checking on people. (He’s found several people who had passed away in their homes.) And residents check on him. When his wife was ill with cancer, neighbors dropped by all the time. In the mornings Charlie likes to dance to Nat King Cole, with a broom. One morning his neighbors knocked, making sure he was okay. “Since we’ve been here all these years we help each other.” Even with inevitable tensions in the park, he says, hardly anyone locks their doors.
Margaret Julkowski walks in, tallish and luminous in Charlie’s dark house.
Margaret and Charlie fell in love a year ago, and they still glow. Margaret was a social worker in California’s Central Valley. She moved to the park five years ago with her husband, who died six months later. “People were good to me even though they didn’t know me,” she says. One woman convinced her to come to clubhouse, where she played cards with Charlie and his wife. When Charlie’s wife passed away, he and Margaret started taking sandwiches out to where they could look at the ocean. They told me they were amazed to find out they were in love. And then word traveled fast. Residents gossiped that they’d seen Charlie kiss Margaret good night. “It’s a small Peyton Place,” Margaret says. In her golf cart, she whispers to me that now she kisses Charlie anytime she wants to.

Gossip is the currency of the kind of community that doesn’t form on Facebook. Here people watch each other, and they know they’re being watched: bad behavior is noted, people who “do the right thing” are admired. Pismo Dunes, with its little streets, is a virtuous circle where you can bank social capital. Margaret has a serious respiratory condition, and she’d ended up in the hospital for weeks at a time. Her daughter had qualms about letting Margaret move back to the park, but when she saw the parade of visitors, some carrying food, she realized Margaret was likely in the best hands here.

And another thing that unites Pismodise is death. Outside, dying is essentially a taboo topic. Here, people bring it up, in one way or another, every 15 minutes. Margaret and Charlie shared the deaths of their spouses, as well as their current lives. I’ve never been in such a vibrant, deathly place. “We’re living to the fullest because we know mortality is close,” Margaret tells me.

“Therapy session:” The term is used in jest for the daily late-afternoon porch party at Pismo Dunes, but studies show that having friends, moderate drinking, avoiding depression, and walking are predictors of a happy, independent old age. (PHOTO: ARNALDO ABBA)

WHEN PORTLAND STATE UNIVERSITY professor Andrée Tremoulet held focus groups with seniors in mobile-home parks, she was surprised that so many said they’d do it all over again. In a paper published in the Journal of Housing for the Elderly, Tremoulet speculates that mobile-home parks can, for some seniors, do a better job of meeting needs than more-traditional arrangements in apartment buildings or in the suburbs. The design of the community allows seniors to own and modify their homes, have dogs, and putter around with hobbies like gardening in a way they couldn’t in an apartment building. Meanwhile, because parks have boundaries and streets, they function a bit like a gated community, where residents feel safe and have an easier time making friends than in either an apartment or a suburb. Mobile-home parks give residents a lot of control over their desire to be alone or to be social, Tremoulet found.

But buyer beware, all is not right in the mobile-home park: Residents have to contend with a parallel world of second-class legal rights and financing that needs to be changed before manufactured homes are a really good investment. The legal problems start with the parks themselves. Because most residents own their homes but not the land under them, they have the rights of neither renters nor homeowners. Rent control is rare in mobile-home parks. (Pismo Dunes’ owner managed to fight rent control in 2002 because of the park’s designation as an RV park.) But residents don’t really have the ability to move if landlords raise rents because moving a full-size manufactured home can cost as much as $25,000. Sometimes park owners can raise rates indiscriminately and even take over homes or sell the land under the park for another purpose. “A park in the hands of the wrong owner can be milked for income. The power is primarily in the hands of the landowner,” Tremoulet says.

The financial system, meanwhile, treats manufactured homes more like cars than houses—which means they depreciate like cars rather than gaining value the way houses do. New manufactured homes are sold by dealers on lots, similar to cars, with similar high-pressure sales tactics. In most states, buyers can’t get a real-estate mortgage for a mobile home. Rather, they have to get a personal loan for “chattel,” with higher interest rates than a mortgage’s. Even though manufactured homes last as long as conventional site-built houses, they start losing value as soon as the buyer moves in. Likewise, in some areas, manufactured homes have been excluded from projects that weatherize low-income homes. (Some homes at Pismo Dunes, however, have received government assistant for weatherizing and disability access.) Insurance can also be a struggle; in hurricane-prone areas like Florida it is impossible to insure some mobile homes.

Bradley, who runs the non-profit ROC USA, calls manufactured housing finance and regulation “sick.” Conventional real-estate markets—with their systematized regulation and finance—build wealth, he says, but excluding this permanent form of housing from that conventional system depletes capital from people who live in manufactured homes. Bradley sees the current market structure as a holdover from the days when trailers were really trailers. The homes have changed; regulations have not kept up.

ROC USA has leveraged money from banks and foundations to help more than 100 groups of mobile-home owners organize to buy the trailer parks under their houses. The non-profit essentially provides the guarantee on the capital, while residents make payments on the loan just as they would pay rent on their spaces. Also, in some parts of the country there are parks that work more like condominiums, where buyers own their houses and a share of the land. (One version of this is the Blue Skies Village that Bing Crosby started in Palm Springs, California.) Seattle non-profit developer HomeSight literally stacked sections of manufactured homes together to build a complex of affordable two-story duplexes named Noji Gardens, and made it possible for 75 families to buy their own homes. Still, Bradley doesn’t see baby boomers flocking to manufactured housing until the business model and the regulations are updated to reduce the risks.

And that’s too bad, because in many cases, new manufactured houses can solve another problem: they offer greener housing than other options. An elaborate 2012 report published by ROC USA and underwritten by HUD found that mobile homes use, on average, far less energy and water than conventional homes or condos (the mobile homes in the study were 940 square feet, larger than those at Pismo Dunes). While models built before 1976, when federal regulations kicked in, sometimes have exorbitant utility bills, newer models made to Energy-Star efficiency standards can reduce the combined costs of electricity, gas, and water to well below $1,000 a year, even in the hottest and coldest parts of the country. And manufacturing the homes in factories cuts construction waste by 30 percent. The efficient layout of a mobile-home park helps conserve water and reduces storm runoff. And in some locations, residents are able to share vehicles, or get around without them, which saves money.

Jennifer Siegal, a Los Angeles-based architect who is working to create communities of cheap and green manufactured homes, reminds me that in a generation we’ve gone from storing our memories in boxes in the attic to keeping them on hard drives. Our houses can catch up with our lifestyle, but until the marketing, financing, and regulations are changed, home manufacturers can’t reach new customers. ROC’s Bradley says manufacturers are caught between innovating faster to provide a better product, and innovating to provide an even cheaper house that fits with the current market structure. It turns out a prejudicial market—a stigma—dooms manufactured homes to stay as trailer parks.

At Pismo Dunes, the gang walks at 7 a.m. every day; only 25 percent of American retirees walk regularly. (PHOTO: ARNALDO ABBA)

THE U.S. HAS AN impressive crowd of people working to provide affordable housing through infrastructure bonds, HUD loans, and IRS tax credits.

Ironically, a lot of effort and money are put into federally-funded programs that have created a few hundred thousand units, while manufactured homes provide housing to almost three million seniors. “The problem is there’s a huge stigma,” says Rodney Harrell, a senior strategic policy advisor for AARP. “As a housing person myself, I had to learn a lot to appreciate that manufactured homes could be a good choice.” The image of the trailer as a rusting hulk, a blight on the landscape, and a scam-laden investment aimed at poor people make activists and policy makers shy away from changing the very policies that could make it a better investment. Tremoulet thinks some of the prejudice is the result of HUD incentives themselves, which offer carrots to builders of low-income housing but not of manufactured housing. And then there are the residents, often stereotyped as blue-collar whites, who may be “less interesting” to foundations and non-profits looking to help marginalized communities like the homeless, Tremoulet says. “The whole culture has a spiraling effect,” says Harrell, which perpetuates a cycle of bad policies.

Harrell believes that if policies were dramatically changed, manufactured-home parks could offer low-cost housing while serving as hubs that provide health care, recreation, and other services. “But getting over that stigma is step one—before the policies and the financing can change, you have to convince policy makers that there’s something good there.”

As I got off the phone with Harrell, it crossed my mind that, as Mayberry RFD was to small towns in the ’60s, Pismo Dunes Senior Park it to mobile-home parks. Call it Mayberry NORC if you like—Louise and her staff may be closer to the mythically benevolent Sheriff Andy Taylor than the usual park managers and staff. And the diminutive size of its RV-derived manufactured homes, and its sunny California beach location just add to its charmed air. The owners of Pismo Dunes, who have kept the park in their family for more than a generation, seem to be in no hurry to cash out, which is the opposite of the national trend. Pismo Dunes is the mobile-home park as it could be.
I returned to Pismo Dunes for another visit last November. Experts had warned me against using the term “trailer park.” One sociologist published a paper saying that in 45 ethnographic interviews, she never heard anyone reclaim the word trailer trash the way the words queer and redneck have almost become badges of pride.

They hadn’t met Louise, who threw a “trailer trash” party a few years ago. “We had bras hanging from clotheslines in the clubhouse. Fried potatoes! Fried Spam! Pickled eggs and okra! We even got an outhouse for the decorations.” Guests ate out of pie tines and drank out of pint jars. By addressing the prejudice head on, the park has embraced the word, even enjoys it. When I met up with Louise in November, she was at a storage area examining the park’s 350 electric Christmas trees, dozens of inflatable Santa installations (including one of Santa in a trailer), and many, many electric reindeer. “That’s my 11-foot reindeer,” she said, pointing at one of the multitude of decorations hanging from the ceiling. Louise spent the month installing most of what was in storage. Already the clubhouse lawn was studded with pink pigs carrying presents on their backs, white bears, angels, a mechanical “crane” bearing presents, a troop of leaping dolphins in Santa hats, and a constellation of pink and purple Christmas trees, some upside down. They shimmered against the green grass. It was a boisterous show of community, pride, and one-upmanship: The park has won the Pismo Beach Clam award for decorations so many times that Louise says the town had to create another award so someone else could win something too.

When I went back to visit with Charlie and Margaret, she was thin and weak, preparing to go back to the hospital. Margaret told me that they were blessed to have found each other and, “We always say how blessed we are to have reasonable rent of $400 to $450 a month this close to the ocean,” she added. “I don’t know where we could live for that much unless it was subsidized senior housing. And as someone who worked for the welfare department, I never wanted to live in one of those places.”

At Ronnie and Deenah’s, the therapy session is well under way and the rosé is flowing. The park’s security officer, a gregarious woman in her 40s, gets teased for “stopping crime by being too sexy.” The friends sit around discussing their grandkids, holiday plans, soup night at the clubhouse, depression, cancer, and Christmas lights, as the gloaming settles in and the plastic icicles on the edge of the roof wink on.

More like this: Cover Story, Health, May-June 2013
Tags: Aging, Baby Boomer, California, Economy, Generation, Manufactured Home, Nursing Home, Pismodise, Real Estate, Retired, Senior Citizen, Trailer Park

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About Lisa Margonelli

Lisa Margonelli, contributing editor, writes about energy, the environment, science, and policy for such publications as Forbes, Slate, Politico, The Atlantic, The Nation, and The New York Times, and many others. She is a research fellow at the New America Foundation. Her book Oil On the Brain: Petroleum’s Long, Strange Trip to Your Tank won the Northern California Book Award for nonfiction and was named one of the 25 notable books of 2007 by the American Library Association. She has received two excellence in journalism awards from the Society of Professional Journalists. She works in Oakland, California.

A Well Regulated Society: The Creation of Law in a Democratic Society

Info USA

Department of State

The Creation of Law in a Democratic Society

By Gordon Morris Bakken

"The substance of the law at any given time pretty nearly corresponds, so far as it goes, with what is then understood to be convenient; but its form and machinery, and the degree to which it is able to work out desired results, depend very much upon its past."
                                            -- Oliver Wendell Holmes, Jr.
                                               The Common Law (1881)

Americans have gathered to make law since our colonial period and continue to make law to maintain a well-regulated society. Although specific procedures for creating law have developed over the centuries, democratic law-making remains marked by a need to have the consent of the people, a system of checks and balances, and a public policy flexibility suited to the problems of time and place.

In the 17th and 18th centuries, Americans sent delegates to colonial assemblies to make needful rules for the regulation of daily economic and social relations. Where a road should course or what constituted a public nuisance could be debated and decided. Roads facilitated commerce, and the disposal of agricultural waste was more than a matter of aesthetics; both issues touched upon the health of a well-regulated community.

In the 19th century, Americans gathered in Missouri to make rules for the governance of wagon trains. These "rules of the road" were intended to safeguard their survival on the trek of thousands of miles to the Pacific Coast. Gold rush miners when they arrived in the California gold fields departed their wagon trains and gathered again to write local mining district rules. These miners wanted a well-regulated society protecting their enterprise and enabling its prosperity.

In 21st-century California, neighbors still gather to make rule changes, within a recorded declaration of covenants, conditions, and restrictions, on what property alterations are permissible for those living within a housing tract. These property owners have the authority to make needful rules for a well-regulated society. Whether in township halls, capitol buildings, frontier settlements, or up-scale living rooms in urban America, property owners, citizens, and claimants of the American dream have gathered to make law for the regulation of social and economic relations. That heritage resonates in our local, state, and national law-making institutions.

Origins of U.S. legal traditions

This everyday law-making process is part of an historical process that is English in origin. When English colonists in colonial America put into practice the law-making heritage that they brought with them, they made certain alterations to suit their new environment. The King of England granted charters to individual proprietors and joint stock companies of entrepreneurs for the various colonies affording varying degrees of law-making authority, but all English colonists had law without current charters and colonial statutes. They had their ancient constitution, the largely unwritten law of England known as the "English common law," which prevented government from abusing the rights of Englishmen. Included in this common law was Magna Charta -- the charter signed by King John in 1215, which guaranteed due process of law, the protection of property rights, and access to a jury. The critical center of the ancient English law was the relationship between private property and liberty. Private property in landholdings had received favored legal protection and definition since the 14th century, but English history and the American colonial experience created a clear sense in American minds that only with the consent of a sovereign people could rights in property and the exercise of personal liberty be altered.

The idea that governments derived legitimacy from the consent of the governed had ancient origins in Greek and Roman history, and early modern European political theorists had added substantially to the concept of sovereignty as residing in the people. American colonists of the Revolutionary War era advanced this concept by increasing the rights specifically reserved to the people and further limiting government's reach. These reserved rights would find their way into state and national bills of rights that were written down. 

Grappling with how to prevent governments from trampling on rights by exceeding the power delegated to them by the sovereign people, U.S. constitutional convention delegates, state and national, created systems of internal checks and balances within a separation of law-making powers. Each branch of government would have independence in the law-making scheme, but these powers would overlap, thus constraining institutional reach within a system providing for broad popular participation.

Extending the reach of law

The extent of broad popular participation in government has varied with America's history. At the nation's founding, only white and male property owners constituted the participating element at the polls and in law-making offices. In the 19th century, the property-holding requirements for suffrage and office-holding broke down. But for many years, the law-making excluded women, African slaves, American Indians, and Asians. The campaign for equality grew during the 19th century and triumphed in the 20th century. Women organized on the local level to pressure legislators for rights. They joined anti-slavery societies, declared for equality at Seneca Falls in 1848, and moved west where they found far more fertile political soil for rights. In the Wyoming and Utah Territories women won the right to vote in 1869 and 1870. Women gained community property rights via Spanish-Mexican legal practice in California in 1849, but not the vote until 1911. Women would have to inspire an amendment to the U.S. Constitution in 1920 to gain a national right to cast their votes.

African-Americans won citizenship under the 14th Amendment of the Constitution in 1868 and African-American males the right to vote under the 15th Amendment in 1870, but American Indians would not have citizenship or the vote until 1924, while Asian immigrants would not win access to citizenship until World War II. The children of Asians and other immigrant groups born in the United States were citizens by virtue of birth in the United States, but their parents did not have access to naturalization. For Chinese immigrants excluded from citizenship by statute since 1870, Congress extended naturalization rights in 1943 as part of the war effort against Japan. For Japanese immigrants, the McCarran-Walter Act of 1952 provided such access. Yet regardless of whether they had the right to vote, Americans have petitioned their law-making bodies seeking change. Women and African-Americans, even before they had the vote, actively participated in the public, political process of petition, protest, and advocacy. The fact that law-making institutions were open to such democratic participation enabled the public policy formation process to be inclusive, albeit at a pace unsatisfactory to many of the participants at the time.

Universal suffrage

One reason for this hesitancy to make suffrage universal was the prevailing political philosophy of the 18th century. The English model, like those prevailing in other countries at the time, generally had a male king, Parliament, and judges buoyed by theories of mixed government and rights derivative from land mostly owned by men. Yet much political theory and rhetoric in its discussion of rights and liberties seemed to imply that these values were universal. The rights of Englishmen, then, as interpreted by Americans in America, formed the constitutional basis for a revolution in 1776 to save the ancient constitution of England from tyranny and preserve its promise for Americans. How that goal would be worked out in practice was the job of delegates assembled in state and federal constitutional conventions.

In state constitutional conventions of the late 18th century, delegates wrote documents that in a variety of ways fleshed out and expanded the rights of American colonists. Maryland did relax the property qualification in the election of delegates to its constitutional convention. Georgia created a petition mechanism that led to new constitutions in 1789, 1794, and 1797. The 1797 version contained an amendment process rather than a convention vehicle for change.

Massachusetts started a process in motion in 1776 that resulted in increased authority in the people to make constitutional change. The Massachusetts legislature (called the General Court) asked the state's towns to authorize it to write a constitution in its next session. Towns, rather than a majority of voters, controlled the fate of that proposal, and Boston and eight other towns rejected the authority of the legislature to write fundamental law for the state. In the ensuing years, the towns authorized the General Court to act with the authority of the towns to ratify a constitution. Eventually, however, the towns, their citizens voting without normal property restrictions, rejected this document. In 1779 the General Court conceded the authority of the people voting in their towns to elect delegates to a convention. The Massachusetts Constitution of 1780, based on such a convention, eventually won ratification and its history established several principles. First, conventions of elected delegates were required for the writing of constitutions. Second, the people must be guaranteed access to the process through elections and the amendment process. Finally, the people must have the final authority in the ballot box to ratify the constitution.

Liberty and property

The Massachusetts Constitution was part of the context for the delegates who assembled in 1787 in Philadelphia to write a federal constitution. Another key part of the context was the developing relationship between liberty and property in the law-making equation. The 17th-century English philosopher John Locke's political philosophy had great influence in American thinking on this relationship. Locke had argued that people agreed to live in a commonwealth so that government would enforce natural law and rights. The rights of man in nature included possessing liberty and property. Americans took this idea so closely to heart that their political and constitutional rhetoric used property law concepts when referring to personal liberty: Americans could own liberty. Locke too thought life and liberty dependent upon property, but individual use of property must not include waste or the exclusion of other people from nature and its bounties. Thus, one question for the delegates of the 1787 constitutional convention was how best to protect both the fruits of liberty expressed in holding private property and the access of the people to the bounties of the land.

In the U.S. Constitution, these delegates created a republican form of government balancing interests and containing the elements of mixed government. The concept of mixed government fuses historical elements of monarchy, aristocracy, and popular government. Each of these three forms of government had the tendency to favor itself; if left unchecked constitutionally, each would result in an extreme form of tyranny, oligarchy, and democracy. Each of these tendencies toward power could also threaten the liberty of the people in their private property, yet each interest needed representation to maintain a well-regulated society. The solution put to practice by the constitutional convention delegates provided for a separation of the powers among the branches of government, yet an overlapping of the institutional functions. Importantly, this overlapping created a kind of institutional parity, with each branch retaining enough power to balance the other branches.

Law-making at the national level

In its 18th-century form, the national legislative body was made up of two branches, the House of Representatives and the Senate. Voters within districts within states elected members of the House in direct popular elections. Initially, state legislatures elected U.S. senators. The wish to balance the interests of less affluent people against the interests of the propertied classes caused federal constitutional convention delegates to opt for election of senators by state legislatures at that time, in order to assure the representation of propertied interests in the U.S. Senate. It was not until 1913 that the 17th Amendment to the U.S. Constitution put the election of U.S. senators directly in the hands of the people.

Under the Constitution, the House and Senate constituted a congress that had the authority to create and approve statutes. The president of the United States had authority to execute those statutes. While it is not spelled out in the Constitution, the president may also initiate law-making by having members of his party introduce bills in Congress. The federal judiciary had authority to interpret those statutes, and the U.S. Supreme Court soon claimed the implied power to declare such statutes -- laws -- unconstitutional. The president could veto a statute, but the Congress could override that veto. Laws declared unconstitutional could be changed to deal with the objections of the courts, but Congress also could initiate a constitutional amendment if it wanted to overturn a decision of the U.S. Supreme Court. The overlapping system tends to be both conservative of individual rights and protective of private property.

Law-making at the state level

As the U.S. law-making system has developed at the state level, each state has a similar structure of government, yet different traditions of making law. State legislatures in some states meet annually and spend most of the year in law-making. Other states have legislative sessions that meet biennially for very short terms. The authority of these legislatures to make law in the form of statutes is similar to the authority of Congress to make needful laws for the country as a whole. Some states have state constitutional provisions for the direct popular amendment of the state constitution or the creation of law by way of initiative and referendum, processes that allow ordinary citizens to propose laws and regulations and put them up for popular vote on state ballots.

Law-making: separation of powers

Whether legislation or constitutional amendment is by means of direct popular action or legislative process, these actions are subject to judicial review. In both state and federal traditions, courts have the authority to review legislation to determine whether it is in accord with the constitution. Yet, following the concept of checks and balances, courts are not entirely independent of the rest of the political system. State court judges are often elected periodically. Federal judges are appointed for life, yet both state and federal judges are subject to impeachment for misconduct by the legislative branch of government. Under certain circumstances, state governors have the authority to appoint judges. Today it is a commonplace that American courts make law in a sense -- through deciding cases. The critical difference between legislative law-making and judicial lawmaking is that courts can only decide cases that are brought before them by litigants. Legislatures have far more breadth, yet they too are constrained by the constitution as well as English common law tradition. Courts, in deciding cases, consider the clear wording of constitutions, prior case law, common-law traditions, and public policy.

In sum, the American system of law-making rests on a foundation of overlapping authority. States and state constitutions exist within a federal system governed by a congress, president, and federal court system constrained by the U. S. Constitution.

For example, the commerce clause of the federal Constitution gives the U.S. Congress the power "to regulate Commerce with foreign Nations, and among the several States." The U.S. Supreme Court has interpreted this wording to constrain the states from regulating interstate commerce and intrastate commerce in ways that hamper interstate commerce. In 1964, this interpretation of the commerce clause extended congressional authority to regulate public accommodations under the Civil Rights Act of 1964, which prevented discrimination in renting hotel rooms.

How this overlap and interplay between state and federal interests works out in practice depends upon myriad circumstances. The following example will illustrate this. Congress, for example, has no explicit power to tell the states how to set speed limits on their roads. This decision resides in the hands of state lawmakers, county boards, and city councils, depending upon the allocation of authority under state constitutions and statutes. In the 20th century, some states had highway speed limits set at 65 miles per hour for automobiles, and 55 miles per hour for semi-trailer trucks. Other states thought 75 miles per hour on multi-lane freeways made more sense. Sparsely populated states with vast distances between cities set speed limits at "reasonable" under the circumstances. Driving in Montana at 70 miles per hour or 120 miles per hour depended upon the road and driving conditions. It was not very different from driving on Germany's autobahn. Yet when America faced an energy crisis in the 1970s and many in Congress believed that conservation required a national speed limit of 55 miles per hour, Congress used the power of the purse to persuade state legislators to change state law. Simply put, Congress told the states that if they did not change their speed laws to comply with the 55 miles per hour limit, federal highway dollars in the millions would not be forthcoming. Americans were soon driving 55 miles per hour across the nation. State legislators had a choice and they followed the federal dollars.

Fence law and federalism

The cattle on Montana roads today is another example of the diversity of law-making that has developed within the federal system. The issue of whether cattle should run at large without restraint is as old as America. Colonial legislators had to decide whether cattle owners should fence their beasts to protect farmers' crops and gardens. To fence would impose an expense upon cattle owners; to allow cattle to run free would create a crop-damage expense upon farmers. Yet farmers had common-law remedies against the cattle owners if the farmer could catch the cow in the act, restrain the beast, determine its owner, and haul him or her into a trial court.

Lawmakers soon chose to create statutes requiring livestock owners to build fences, and these statutes contained the definition of a legal fence. This tradition continued across America until settlement reached the Great Plains, the relatively dry region west of the 100th meridian, in the 19th century. In the wooded eastern states, livestock owners built fences, township fence viewers determined whether they complied with law, and aggrieved farmers still hauled livestock owners into court. Yet livestock owners with legal fences now had a defense against their liability for damaged crops. On the Great Plains, the range cattle industry of the 19th century and its interests sought cost containment in the legislative declaration of open range law and managed to revise the principle of fencing requirements. Under these laws, the owners of crops and gardens had the expense of fencing imposed upon them by statute if they wanted to collect for cattle damages. With the demise of the range cattle industry in the 1880s, the reason for open range law declined over the decades, yet in the 20th century some states, like Montana, retained the law.

Today drivers on interstate highways in states like Montana see them fenced at taxpayer expense, but not because of western open range statutes. Rather, the safety of American motorists is at stake, and federal dollars seek to protect drivers and passengers from harm. On state highways in open range states, fences are few and signs warn motorists that livestock might be on the road. As the complex patchwork of fencing law and highway law makes clear, local, state, and federal law-making bodies in the U.S. system have different authority and roles in maintaining a well-regulated society.

Administrative agencies

In the United States, there is an additional law-making institution with legislative, executive, and judicial functions. That is the administrative agency, a creation of the 19th century. The pioneer was the New York Metropolitan Board of Health of 1866, but the railway commissions of the 1870s and 1880s pushed the concept of administrative agencies -- usually appointed boards of experts who made public policy independent of legislatures -- into public view and judicial scrutiny.

After decades of judicial concern regarding the undue delegation of legislative authority to administrative agencies, these institutions gained substantial administrative and constitutional authority in the early 20th century. The focus of regulation was public welfare, whether in defining public hygiene, a reasonable railroad rate, or the "bag limit" -- legal take -- for white-tailed deer. The concept that legislators applied was that experts with authority to regulate were best equipped to make needful rules for the operation of some complex economic and social systems. Railroad, electrical utility, natural gas, or freight rates were matters of complex economic calculation. To set those rates, experts gathered to hear the business side of the rate question and the consumer view of the issues. These commissioners hired staff experts who analyzed the evidence presented. With all of the evidence in hand, the commission issued rules for the business in the public interest. These rules were subject to judicial review, and a body of law called administrative law evolved.

Administrative law consists of constitutional, statutory, agency, and common law. 

Administrative agencies are creatures of statute, constitutional provision, or executive orders based on statute. The bulk of administrative law is judge-made case law on rulings and regulations by various administrative agencies. Historically, until the early 1930s, courts focused upon constitutional issues inherent in establishing administrative agencies, such as whether a legislature had the authority to delegate power to an agency. Since the 1930s, courts have scrutinized the procedural issues surrounding the rule-making function and the discretion of agency officials. Agencies have had to keep records regarding the evidence received in the rule-making process and how they considered that evidence in arriving at a decision. Whether an agency was setting telephone rates or writing environmental rules, the judiciary stood as an arbiter of whether the rules of procedure had been complied with in the process of making the rule. Today the Interstate Commerce Commission and the Environmental Protection Agency make many of the rules necessary for the conduct of business on a national scale.

When an administrative agency makes a rule that in effect has the power of law, it maintains the access of the people to the lawmakers. Rule-making procedure requires public notice of the beginning of the process, public hearings on the questions at issue, public opportunity to comment on proposed rules, and public notice of rules. A governor or the president of the United States usually appoints the administrator of the administrative agency, subject to legislative confirmation. The people have access to this confirmation process, and in the case of the federal government, the confirmation process is frequently televised and the subject matter of media attention. Public interest organizations frequently testify at the public hearings and publicize their positions via the media. The significance of these appointments is clear -- as well as the overlap of the executive and legislative branches.

Democratic decision-making

The American people have a history of abiding by the law of the land. In part, this voluntary compliance results from a tradition of offering citizens opportunities to be involved in the lawmaking process at many points. Despite the diversity of population and culture in the United States, the political system of democratic elections, representative law-making bodies, and public access to the process have given the American people a stake in the law as well as confidence in the stability of personal and property rights. How personal and property rights have been defined and protected over the centuries has varied, but today, neighbors gathered in an urban condominium complex or living room, or in a township hall in rural America, continue to make law, knowing that maintaining a well-regulated society requires personal attention in democratic decision-making.

Although the American experience may not be applicable everywhere, the basic principles of ensuring democratically created law are these: the consent of the governed; the involvement of the people at all levels of lawmaking; open access to the process of making law whether through voting, petitioning, or filing lawsuits, or through judicial review of statutes, administrative rules and regulations, and executive office actions; and reliance on fundamental principles of government. These fundamentals include checks and balances within the institutions of government, the republican form of government, and democratic elections. The federal and state governments operating under constitutions have overlapping powers based in the tradition that government is of, by and for the people.

For Additional Reading

Gordon Morris Bakken, Law in the Western United States (University of Oklahoma Press, 2000)

Douglas W. Kmiec, and Stephen B. Presser, The History, Philosophy and Structure of the American Constitution (Anderson Publishing Co., 1998)

William J. Novak, The People's Welfare: Law and Regulation in Nineteenth-Century America (University of North Carolina Press, 1996)

John Phillip Reid, Constitutional History of the American Revolution (4 vols., University of Wisconsin Press, 1986, 1987, 1991, 1993)

Melvin I. Urofsky, and Paul Finkelman, A March of Liberty: A Constitutional History of the United States (2 vols., Oxford University Press, 2001) 

About the Author:
Gordon Morris Bakken is professor of history at California State University, Fullerton. He holds B.S., M.S., Ph.D., and J.D. degrees from the University of Wisconsin and is author of 14 books and 38 articles and reviews.