Why We Need Full Employment
Capitalism is in a code-blue emergency in 2009 because the essential balance between consumers and producers has been broken. Consumers lack the purchasing power -- income and savings -- to purchase what they produce. As in the Great Depression of the 1930s, as described by the Chairman of the Federal Reserve during that time, a “giant suction pump” has sucked the profit out of the system. “But by taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants.” (1)
Now, once again, we need to stimulate the economy at the the lowest level of the workforce, the less affluent. Our economy provides the lower 50% of U.S. households
with 15% of the annual national income, and
2.5% of the national wealth. (2)
This should indicate to any sensible human a gross imbalance of resources and amenities। It should grate against our humanity. Inequality was not this great in 1929.
Hourly wages have risen by 14% in 30 years, while the economy, the per capita Gross Domestic Product, has expanded by 77.5%, and worker productivity has increased by 62%. (3) Family income with only one bread winner has risen 0.4% in 25 years. Eighty percent of the U.S. households receive just 40% of the national income. (4) The book Hardships in America states that 28.9% of families with children younger than 12 cannot afford four essentials: food, medical care, housing, and childcare. Eighty percent of these families work. (5) The U.S. has double the child poverty rate among developed nations. (6) Thirty percent of our workforce, 40.6 million adult workers, are either working for poverty-level wages, working part-time, or are unemployed. (7)
All these statistics are shocking and shameful.
Government must provide jobs to less affluent Americans in projects that will directly improve their lives, and enrich the entire nation. Unlike 1983 when Reagan stimulated the economy with a 2% of GDP public jobs program, mostly directed at military spending, we should enlarge our vision to provide Full Employment as envisioned by Franklin Roosevelt. (8) This will rescue our economy. The less affluent will spend their new income; they will not transfer their government bailout into exorbitant executive pay, golden parachutes, inflated stock markets that resemble gambling casinos, tax havens abroad, or into foreign investment opportunities.
We spend $1.1 trillion annually in defense, more than half the discretionary federal budget. (9) Our military spending is twice what the combined world spends: U.S. -- $1.1 trillion, world -- $500 billion. Therefore we must not enlarge the defense budget.
A good place to begin a sensible search for spending ideas is at sharedprosperity.org and National Jobs for All Coalition (njfac.org) (10) The nation has a new lease on life and hope, let’s not squander it on what we really do not need.
Let’s create Full Employment.
Yours, Ben Leet, San Leandro, CA, http://benL8.blogspot.com
1. Marriner Eccles, Beckoning Horizons, posted on wikipedia/Great Depression and posted on Robert Reich blogspot, July 26, 2008.
2. State of Working America, 2006/2007, Mishel, Bernstein, Allegretto, page 79, (an Economic Policy Institute Book, Ithaca, N.Y., Cornell University Press, 2007) about income from an Urban/Brookings Institute study. Currents and Undercurrents, a Federal Reserve report, U.S. Treasury, 2006, Arthur Kennickel, about wealth.
3. SWA, 2006/2007, pages 115, 55; and Comparative Real Gross Domestic Product per capita and per employed person, 1960-2007, Bureau of Labor Statistics, 2008
4. SWA, 2006/2007, pages 79, 55.
5. Bouchey, Heather, Hardships in America (an Economic Policy Institute Book).
80% work--- Making Work Pay Enough, Gregory Acs, Margery Austin Turner, Urban Institute and Brookings institution, Tax Policy Center, July 2008.
6. SWA, page 351, double child poverty rate
7. njfac.org/unemployment, data sourced from BLS, U.S. Department of Labor
8. A 2% of GDP stimulus, Robert Pollin, The Nation magazine, November 4, 2008.
Franklin Roosevelt, State of the Union Speech, 1944, http://teachingamericanhistory.org/library/index.asp?document=463, and cited in
Cass Sunstein’s FDR’s Unfinished Revolution.
9. Chalmers Johnson, Zcommunications.org, Going Bankrupt, January 24, 2008
10. Sharedprosperity.org, and njfac.org/shared prosperity