Fantasizing About Full Employment

Originally published at IntellectualCapital.com
By K. Daniel Glover

Once upon a time, conventional American economic theory held that low unemployment and low inflation were mutually exclusive. Low unemployment necessarily meant a high rate of inflation; low inflation likewise all but guaranteed high unemployment. And the decline in one of those economic indicators presaged an increase in the other. The only question for policymakers back then seemed to be this: Which rate do the politics of the day demand that we address?

That theory has been losing favor throughout the 1990s, and with good reason. In only three years out of the nine this decade have the two economic indicators followed their traditional inverse relationship. What’s more, the inflation rate (as measured by the Consumer Price Index) has declined seven out of nine years while the unemployment rate also has dropped in six different years. In July, inflation was 2.1%, and unemployment held steady at a mere 4.3 percent.

But in the 1970s, the Phillips Curve was such a popular theory that even when Congress set goals of “full employment” and zero inflation, lawmakers and the president wrote so many escape hatches into the 1978 act that no one took it seriously. The law was symbolic at best, utter fantasy at worst. Few truly believed the nation could realize the dream of low employment and low inflation perhaps taken for granted today.

A liberal reading of ‘the right to work’
The debate about full employment — broadly defined as meaning the economy provides jobs for as many adults as want them, typically an unemployment rate of 3 percent to 4 percent — began during the 1940s. That decade’s wartime economy saw unemployment decline to a record low 1.2 percent in 1944, but a nation not far removed from the record high unemployment of more than 20% during the Great Depression longed for reassurance.

As early as January 1942, according to the first volume of Congressional Quarterly’s Congress and the Nation, the National Resources Planning Board outlined as an imperative “a positive program of postwar economic expansion and full employment, boldly conceived and vigorously pursued.” British author Sir William Beveridge even argued for a national budget to assure full employment. And early in 1944, President Franklin D. Roosevelt lent his voice to the cause by listing “the right to a useful and remunerative job” at the top of his economic bill of rights.

Republicans lambasted the idea of a full-employment budget and a government guarantee of jobs for all who wanted them as one of “planned deficits” that virtually assured astronomical inflation and financial ruin, and their opposition led to the 1943 dissolution of the NRPB. Democrats dominated the political scene, though, so the push for a full-employment law was inevitable.
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How Rude!

Originally published at IntellectualCapital.com
By K. Daniel Glover

Two-and-a-half centuries ago, a schoolboy destined to become a great man was tasked with copying a list of more than 100 “Rules of Civility and Decent Behaviour in Company and Conversation”. The list started with an admonition that said, “Every action done in company ought to be with some sign of respect to those that are present.”

Later came the commands to “let your countenance be pleasant but in serious matters somewhat grave,” and to “strive not with your superiors in argument, but always submit your judgment to others with modesty.” The lad also made note of how men should “let your conversation be without malice or envy” and should “never express anything unbecoming.” And then finally came this decree: “Labour to keep alive in your breast that little spark of celestial fire called conscience.”

To the young George Washington of the mid-1740s, a man who became a revolutionary general and the first U.S. president, those long-held maxims of civility became guiding principles of life. But to Americans today, the schoolwork of a man honored as the father of their country seems to be at best a forgotten relic stored somewhere within the Library of Congress and at worst an anachronism in an impolite age.

Incivility in word and deed
That American attitudes about manners, morals and other manifestations of a concept broadly defined as civility have changed in the centuries since Washington was a teenager is hard to deny. In fact, those attitudes have changed noticeably in an even shorter timeframe.

A quarter-century ago, for instance, Americans were appalled by the frequency of the phrase “expletive deleted” in transcripts of the Watergate tapes released by President Richard M. Nixon. Last year, young and old, men and women alike barely blushed at the sordid detail of the Starr report. Rather, the titillating tales of unconventional sex between President Clinton and former White House intern Monica Lewinsky became fodder for office chatter, dinnertime conversation, and uncensored special media reports and books.

As for swearing, the line between words best uttered in private (if at all) and public disappeared long ago. From average-Joe canoeists who curse without shame and presidential candidates who reportedly use the f-word freely, the lack of decorum in speech abounds.
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