Does Libertarianism Kill Non-Profits?

That's basically the thesis of this Thomas Frank column, in which he shows up at an America's Future Foundation panel on the dilemma of working as activists versus selling out to the Man, and waxes eloquent about the irony of seeing young libertarians, subsidized by the very not-for-profit concerns they (supposedly) disdain, being pushed out of their cozy idealistic lives by the remorseless logic of the free-market ideology they champion. He wraps the whole thing up with a flourish:

To their credit, the nonprofit libertarians I watched the other night did not ask for sympathy. Their own doctrine won't permit it. Having spent years urging lawmakers to wreck the social order that once made occupations like theirs tenable, they will cling stubbornly to their free-market idol all the way down.

The trouble, as Peter Suderman points out, is that life in the nonprofit sector is in many ways more tenable than its ever been before. Indeed, as Doron Taussig noted in his Washington Monthly review of Daniel Brooks' The Trap: Selling Out to Stay Afloat in Winner-Take-All America (cited favorably, of course, in Frank's column), "the number of Americans employed by nonprofits doubled between 1977 and 2001, a much faster growth rate than both the government and for-profit sectors." In other words, all those Reagan-Gingrich-Bush years of free-market idolatry have been awfully good to the viability of occupations untainted by the profit motive.

What they haven't been good to, necessarily, is the category of well-educated people who want to work in the non-profit sector and earn incomes comparable to their peers at law firms and investment banks and sundry other for-profit concerns. This is the "status-income disequilibrium" that David Brooks made famous, and it's by no means an unimportant phenomenon: Just ask Michelle Obama, or (a bit closer to home) any late-twentysomething journalist who knows that he's about to start envying the paychecks, if not the lifestyle, of his JD and MBA-sporting friends. But of course the economic trends - toward a mass upper class, and an astonishingly wealthy top one percent - that breed "keeping up with the Joneses" stress and paycheck envy among not-for-profit toilers are also the trends that have made the non-profit industry (which depends, after all, on mass-upper-class largesse) more viable and successful than its ever been before, and it's by no means clear that you can have the one without the other. There are ironies here, in other words, but they aren't exactly the ones that Thomas Frank has in mind.

Comments

Lots of loose talk about non-profits here. Shouldn't a pretty clear line be (re)drawn here, between those non-profits that serve some corporate interest and those that don't?

Posted by berger | May 23, 2008 2:32 PM

I used to work for a non-profit. It provided mental health services in a community setting after the state mental health hospital shut down and discharged nearly everyone. We made a couple bucks an hour above minimum wage. I don't know that the emergence of this part of the non-profit industry in my area was a good thing or a bad thing, but I think Ross' argument hinges on not differentiating between the vast range of services provided by non-profits. Saying that more Americans are employed by non-profits doesn't say anything if the range of services provided by non-profits has also increased.

Posted by Sefrankel | May 23, 2008 2:43 PM

Some good points that resonate with this late-twentysomething journalist who already suffers from occasional fits of lifestyle envy. But the more acute problem with Frank's column is its implied assumptions about libertarians. Somin has the goods: http://volokh.com/posts/1211478459.shtml

Posted by Anon | May 23, 2008 2:46 PM

Maybe a lot more people went into non-profit work (which isn't especially lucrative) in those years (1977-2001) because conservatives were busy attempting to downsize the government?

Along those lines, I think Sefrankel and berger are onto something. I think some line has to be drawn about what kind of non-profits we're talking about. I work for a non-profit (but it's the alumni association of a major university). My value add to society is minimal vs that of the kind of work Sefrankel did.

Posted by Mike P | May 23, 2008 3:26 PM

The other commenters make a good point: what kind of non-profit are we discussing? And what positions? I've worked at non-profits my entire professional career: a mental health halfway house, a children's shelter, a non-public school for special needs children, and now a social service agency. This latter is actually in a unique situation, as it was created by legislation and is chartered and funded solely by the state. The other jobs were, for a college graduate, rather piddly: I made $10/hour with a bachelor's as a the supervisor for a children's shelter.

A lot of municipal and state agencies (Child Protective Services, say) will only work with non-profits. But these agencies can only pay by certain rates (via legislative limits). These non-profits, which are necessary, are not ALLOWED to use simple supply and demand to charge for services. For a non-profit like mine, which is funded and reimbursed at state-capped rates but is responsible for administering state contracts for entitlement services, this creates quite a crunch, and so operations dollars (i.e. pay and benefits) suffer in favor of service dollars.

Consequently, these non-profits deliver state services in lieu of state agencies, but their personnel are not remunerated at state or for-profit pay grades. Many of their workers are only part-time, or work more than one job -- often at sister non-profits. I'd be curious as to how many of these non-profit expansions were spin-offs, and how many of these jobs are full-time employment for people working only one job.

This is quite different from someone working for, say, a non-profit think-tank, with small overhead and small staff.

Posted by James F. Elliott | May 27, 2008 2:05 PM