full employment is here...on Netflix anyway
One of the chapters of A Commercial Republic centers on the federal response to unemployment. The need for jobs became a political issue only in response to the Great Depression. Franklin Roosevelt was elected president in order to respond to that economic crisis and he stated in his first inaugural address that "our greatest primary task is to put people to work." Though FDR tried several different philosophical approaches, the Keynesianism that he eventually landed on came to characterize the New Deal and, eventually, 20th century American liberalism. This approach--roughly understood as stimulating aggregate demand through government intervention--offered one great advantage to American politicians. Under Keynesianism, in the words of historian Alan Brinkley, the "state could manage the economy without managing the institutions of the economy." This sounded very attractive to those were afraid of an angry unemployed electorate and of the specter of socialism. But it also placed limits on the nation's ability to address the perennial problem of joblessness. If a government is seriously committed to ending unemployment, then, one way or another, it will need to provide work to those who cannot find it. Yet liberals, as I argue in the book, "were unable to wrest from the political process a true commitment to that ideal."
Guaranteeing a right to a job by providing a government-created position to anyone who needed one was the original intent of the 1978 Humphrey-Hawkins Act. By the time that bill became law, it had been watered down so badly that it committed only to to "maximum" rather than "full" employment. Additionally, the resources allocated to even that goal were limited to “all practical means consistent with the needs and obligations of national policy.” In other words, fighting unemployment is all well and good as long as it doesn't lead to inflation. Much as unemployment specifically hurts laborers--not only by keeping some people out of work but also by depressing wages--inflation takes a disproportionate toll on the wealthy (whose already saved money is declining in value), financial institutions (who will loan today's money in order to be paid back with tomorrow's less valuable money) and employers (who prefer the lower wages that result from unemployed workers). Federal employment policy, mandated with addressing ever-competing needs, has never embraced a real commitment to full employment.
(For a more in-depth analysis of many of these issues, see liberal economist Thomas Palley's report "The Federal Reserve and Shared Prosperity" from the Economic Policy Institute. If you prefer a more auditory experience, Palley was interviewed about the report on the history of capitalism podcast Who Makes ¢ents?. And, of course, pretty much every Paul Krugman column these days takes issue with the fact that today inflation presents much less of a threat than do stagnating wages.)
Yet I am happy to say that in 2015 there is finally a Democratic politician who has put serious political muscle behind such a program. His name is Frank Underwood and he is the president of the United States. Unfortunately, he is also a fictional character, played by Kevin Spacey, on the Netflix series House of Cards. (Minor spoilers will follow.) The name of the program is "America Works." Since the focus of the series is generally Underwood's Machiavellian scheming rather than public policy, the details of the program are a little unclear. But the gist of it is that unemployed people register with America Works, and the government gets them a position. Private employers get up to $45,000 from the government for hiring people on the program. With everyone working, there is no need for entitlement programs, which will be scaled back (or cut entirely?). The savings from these program will fund America Works.
The program sounds, quite frankly, ludicrous. In the Washington Post, Hunter Schwarz investigated its real-life possibilities. He quoted a scholar at the conservative American Enterprise Institute who said that it would have effects "similar to raising the minimum wage to stratospheric levels" and would lead to--there it is--"wage-driven inflation." Yet even one who hailed from a right-learning think tank also expressed concern that a real-life America Works could "push people out of Social Security and back into the workforce."
Nonetheless, it is exciting to see someone talking about an actual full-employment policy, even it it is too bad that this person isn't real. It would be great if House of Cards could put the ideal of full employment back into circulation, prompting politicians to propose and consider real-life versions of America Works.