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Getting Back to Full Employment: A Better Bargain for Working People
While most people intuitively know that low unemployment is important to job seekers, they may not realize that high levels of employment actually would make an enormous difference in the lives of large segments of the workforce who already have jobs. Particularly in an era of historically high wage and income inequality, many in the workforce depend on full employment labor markets, and the bargaining power it provides, to secure a fair share of the economy's growth. For the bottom third or even half of the wage distribution, high levels of employment are a necessary condition for improving wages, higher incomes, and better working conditions.
This book is a follow-up to a book written a decade ago by the authors, The Benefits of Full Employment (Economic Policy Institute, 2003). It builds on the evidence presented in that book, showing that real wage growth for workers in the bottom half of the income scale is highly dependent on the overall rate of unemployment. In the late 1990s, when the United States saw its first sustained period of low unemployment in more than a quarter century, workers at the middle and bottom of the wage distribution were able to secure substantial gains in real wages. When unemployment rose in the 2001 recession, and again following the collapse of the housing bubble, most workers no longer had the bargaining power to share in the benefits of growth. The book also documents another critical yet often overlooked side effect of full improved fiscal conditions (without mindless budget policies like the current sequestration). Finally, in this volume, unlike the earlier one, the authors present a broad set of policies designed to boost growth and get the unemployment rate down to a level where far more workers have a fighting chance of getting ahead.
This book is a follow-up to a book written a decade ago by the authors, The Benefits of Full Employment (Economic Policy Institute, 2003). It builds on the evidence presented in that book, showing that real wage growth for workers in the bottom half of the income scale is highly dependent on the overall rate of unemployment. In the late 1990s, when the United States saw its first sustained period of low unemployment in more than a quarter century, workers at the middle and bottom of the wage distribution were able to secure substantial gains in real wages. When unemployment rose in the 2001 recession, and again following the collapse of the housing bubble, most workers no longer had the bargaining power to share in the benefits of growth. The book also documents another critical yet often overlooked side effect of full improved fiscal conditions (without mindless budget policies like the current sequestration). Finally, in this volume, unlike the earlier one, the authors present a broad set of policies designed to boost growth and get the unemployment rate down to a level where far more workers have a fighting chance of getting ahead.
116 pages, Kindle Edition
First published November 14, 2013
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About the author
Dean Baker
61 books140 followershttps://deanbakerpoetryandsongs.com
"Dean is a combination of thought and torment that has made him write more than a baker's dozen of fine poems.. he might produce a collection that could astound us all." - Irving Layton
Irving Layton is one of Canada's foremost poets, nominated twice for the Nobel Prize for Literature; teacher, friend and mentor to Leonard Cohen, and the man to whom Leonard dedicated his latest book.
My poetry has appeared in hundreds of literature magazines world wide, recorded, and online.
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December 5, 2013
In a perfect world, all popular economics writing would be as clear, fact-based, and useful as this short work. Few things are as important to society as sound macroeconomic policies, but the subject suffers from the twin disadvantages of being deadly boring to outsiders and needlessly contentious among insiders. Baker and Bernstein are both first-rate economists of a liberal bent who have devoted much of the past several years to advocating policies to combat high unemployment, which, more than high inflation or the federal budget deficit, they see as the main economic problem confronting the US. They offer a brief diagnosis of the causes of high unemployment, as well as several detailed suggestions for reducing it; this is one of those rare economic policy works where the solutions section is as long as the problems section!
In popular media, complaints about the Federal Reserve usually focus on some imagined hyperinflation just around the corner as a result of the various rounds of Quantitative Easing. In reality, the Federal Reserve's sins have less to do with supposedly raising inflation, which has been well below target for years now, and more to do with their failure to keep unemployment down, which is the second half of their official mandate. As Baker and Bernstein point out, full employment is "essential for reducing the income stagnation that has beset the middle class, reducing poverty rates among working-age families, pushing back against economic inequality, and improving our fiscal outlook." They take a look at the current unemployment rate and why it's so high, finding that there's really not much wrong with the US labor market aside from persistent weak demand - i.e. "structural unemployment" is much less of a big deal than is assumed.
There's an interesting section on full employment during the Clinton boom, which in their view was driven not so much by fiscal policy as by the Fed's loose monetary policy and the stock market bubble. This should worry people, as it implies not only that the much weaker "Bush boom" was driven by the housing bubble, which may mean deeper troubles in the economy, but also that fiscal policy might need much more help from the Fed than it's getting to restore full employment. The important conclusion is that American workers did not suddenly become less skilled or less productive in 2008, we're suffering from weak demand, and spending time worrying about nonexistent high inflation ("Crying 'Fire! Fire!' in Noah's Flood", in Hawtrey's famous phrase) instead of actual high unemployment is a waste. Getting back to full employment would not only be a boon to the unemployed, since after all the single least productive job you can have is none at all, but would be about the single best way to restore balance to the budget. More jobs means more tax revenue.
After determining that the current high unemployment rate is essentially a deliberate policy choice rather than some mysterious affliction, they propose two broad packages of solutions: trade policy and jobs policy. Baker and Bernstein suggest that the current US trade imbalance is a big problem, artificially raising the value of the dollar and hurting our exports. Periodically the US complains at China for artificially keeping its currency devalued, which increases our trade deficit. While currency and trade wars often take a misleadingly zero-sum approach to the world, it's undeniable that in a situation of slack demand, imbalances cost jobs (one need only read Paul Krugman's work on the internal imbalances within the Eurozone to get the gist of this model). There are powerful interest groups calling for a high-valued dollar, but we should try to think of workers as a whole and not specific industries.
As far as direct jobs policies are concerned, they recommend three distinct packages: greater public investment, more public jobs, and a greater focus on work sharing. For the first item, more infrastructure of the sort that was in the stimulus would be great (check out Michael Grunwald's superb The New New Deal for more on the lasting benefits we'll be seeing from that much-maligned bill). For the second, they hold the little-known TANF jobs program funded by the stimulus as a model, but merely rolling back the immense job losses of state and local governments after the recession would be useful as well. For the third item, they praise Germany's Kurzarbeit work-sharing program, since by cutting hours instead of cutting jobs, workers still receive paychecks, still develop skills, and still stay in the labor force, all of which are tremendously important.
This is an excellent contribution to the debate that will be sadly overlooked, since our current national conversation revolves around dealing with the latest absurd Republican spasm of pique. However, there's a lot that policymakers could take from this work, and use to craft a set of programs that would truly lift us out of this historically weak recovery. Baker's previous book, The End of Loser Liberalism, is of similarly high quality and is also worth a look.
In popular media, complaints about the Federal Reserve usually focus on some imagined hyperinflation just around the corner as a result of the various rounds of Quantitative Easing. In reality, the Federal Reserve's sins have less to do with supposedly raising inflation, which has been well below target for years now, and more to do with their failure to keep unemployment down, which is the second half of their official mandate. As Baker and Bernstein point out, full employment is "essential for reducing the income stagnation that has beset the middle class, reducing poverty rates among working-age families, pushing back against economic inequality, and improving our fiscal outlook." They take a look at the current unemployment rate and why it's so high, finding that there's really not much wrong with the US labor market aside from persistent weak demand - i.e. "structural unemployment" is much less of a big deal than is assumed.
There's an interesting section on full employment during the Clinton boom, which in their view was driven not so much by fiscal policy as by the Fed's loose monetary policy and the stock market bubble. This should worry people, as it implies not only that the much weaker "Bush boom" was driven by the housing bubble, which may mean deeper troubles in the economy, but also that fiscal policy might need much more help from the Fed than it's getting to restore full employment. The important conclusion is that American workers did not suddenly become less skilled or less productive in 2008, we're suffering from weak demand, and spending time worrying about nonexistent high inflation ("Crying 'Fire! Fire!' in Noah's Flood", in Hawtrey's famous phrase) instead of actual high unemployment is a waste. Getting back to full employment would not only be a boon to the unemployed, since after all the single least productive job you can have is none at all, but would be about the single best way to restore balance to the budget. More jobs means more tax revenue.
After determining that the current high unemployment rate is essentially a deliberate policy choice rather than some mysterious affliction, they propose two broad packages of solutions: trade policy and jobs policy. Baker and Bernstein suggest that the current US trade imbalance is a big problem, artificially raising the value of the dollar and hurting our exports. Periodically the US complains at China for artificially keeping its currency devalued, which increases our trade deficit. While currency and trade wars often take a misleadingly zero-sum approach to the world, it's undeniable that in a situation of slack demand, imbalances cost jobs (one need only read Paul Krugman's work on the internal imbalances within the Eurozone to get the gist of this model). There are powerful interest groups calling for a high-valued dollar, but we should try to think of workers as a whole and not specific industries.
As far as direct jobs policies are concerned, they recommend three distinct packages: greater public investment, more public jobs, and a greater focus on work sharing. For the first item, more infrastructure of the sort that was in the stimulus would be great (check out Michael Grunwald's superb The New New Deal for more on the lasting benefits we'll be seeing from that much-maligned bill). For the second, they hold the little-known TANF jobs program funded by the stimulus as a model, but merely rolling back the immense job losses of state and local governments after the recession would be useful as well. For the third item, they praise Germany's Kurzarbeit work-sharing program, since by cutting hours instead of cutting jobs, workers still receive paychecks, still develop skills, and still stay in the labor force, all of which are tremendously important.
This is an excellent contribution to the debate that will be sadly overlooked, since our current national conversation revolves around dealing with the latest absurd Republican spasm of pique. However, there's a lot that policymakers could take from this work, and use to craft a set of programs that would truly lift us out of this historically weak recovery. Baker's previous book, The End of Loser Liberalism, is of similarly high quality and is also worth a look.
November 15, 2024
It is ironic that in order to alleviate a colossal amount of ongoing human suffering, nothing radical like "ending capitalism" needs to be done (which is not to say that this should not be one's ultimate aim). Rather, it would suffice if the governments of the United States, and the West generally, could simply decide to start implementing some minimally rational macroeconomic policies, as they have often done in the past. A detailed discussion of just what such policies would entail is featured in this nifty volume by two of America's finest progressive economists, Dean Baker and Jared Bernstein. The book is in fact a re-written version of a 2003 book by the same authors with the same name. To the authors' great credit, they have chosen to publish the book through a Creative Commons license, making it, like several of Baker's previous works, legally available for free through the Internet for any interested reader. Having this substantial treasure trove of deeply informed progressive economic discussion freely available cannot be valued highly enough in these awful times.
Getting Back to Full Employment, as the title suggests, is a carefully argued case for pursuing policies aimed at lowering employment to the point where "all workers who seek a job have one, they are working for as many hours as they want to or can and they are receiving a wage that is broadly consistent with their productivity" (9). This state is what is meant by "full employment", and the authors believe that "there are few if any economic policy issues as important" (6) as attaining it. At first thought it seems odd that it would even be necessary to make the argument. Why wouldn't we want to attain full employment? The typical excuse given is the "conventional view" in the economics profession that having full employment would cause an escalating "wage-price spiral" (2). The authors hold that the evidence refutes that notion. Note that if this is true, the implications are highly revealing regarding the corruptness of the mainstream economics profession.
Baker and Bernstein observe that in the pre-1980 period, prior to the neoliberal onslaught under which we presently live, labor markets were a lot "tighter". This corresponded with income growth that was very similar among high- and low-income earners. By contrast, the post-1980 period has been characterized by "slack" labor markets and considerably less egalitarian wage growth. The authors next review statistics confirming that higher unemployment hurts the 20th percentile, i.e. the bottom fifth of the population by income level, far more than the median. African-American family income also suffers more from high unemployment than that of Whites. Furthermore, when unemployment goes down the number of hours worked as well as real wages rises far more for the 20th percentile than for higher earners, demonstrating that "the less well-off you are, the more full employment helps you" (17). For progressively-minded types, this issue is thus of supreme importance -- a point often forgotten.
Baker and Bernstein contend that the unemployment that the US suffered from in 2011-12 was "cyclical", i.e., the kind of unemployment that you would want to intervene to lower, rather than "structural". To demonstrate this point, they note the fact that there does not appear to be any general "skills mismatch", as some claim. Furthermore, unemployment can appear structural in a weak labor market like the present, but in reality turn out to be cyclical in a strong labor market, which provides a further reason to focus primarily on cyclical unemployment. The lowest unemployment level that can be reached without adversely impacting the general economy (or so the theory goes) is known as the NAIRU. The authors point out that economists have a poor record of correctly identifying the NAIRU and they cite studies that suggest that the cost of going slightly below the NAIRU are negligible -- thus it is prudent, as far as monetary policy goes, to "err on the side of" (31) low unemployment rather than the opposite. The present religious commitment of central banks to keep inflation below 2% is criticized on two grounds. First of all, having inflation above 2% is clearly not incompatible with strong growth. Secondly, as the authors show in a long technical discussion, the studies purporting to show that inflation negatively impacts growth are empirically rather tenuous and problematic in other respects too. They reference the IMF economist Olivier Blanchard's recommendation to raise the inflation target to 3-4%, which would make it a lot easier to use monetary policy to overcome large downturns in the economy, like the enormously destructive 2007 US downturn. Such intervention requires sharply reducing real interest rates, which in turn requires a higher inflation target. Because of its central importance for the issue of employment, monetary policy ought to be subject to prominent political debate, the authors conclude.
Next, the authors discuss the connection between low unemployment and a balanced budget. The standard Beltway story is that thanks to Clinton's deficit-hawkishness in the 1990s, the US ended up with a budget surplus and lowered interest rates. The authors show that the story flies in the face of the facts: what actually happened was that a budget surplus was attained thanks to high growth and low unemployment (fueled by an unsustainable stock bubble). It is also false that Clinton's austerity significantly lowered interest rates: real interest rates actually changed little over the period in question. Baker and Bernstein note the two primary reasons why low unemployment is good for the budget: first, "as unemployment falls tax revenue can rise faster than growth" and, secondly, there is "less need for spending on a range of social benefits" (50) in times of low unemployment. Numbers are provided to establish the point empirically. In other words, anyone seriously concerned with balancing the budget (a commitment solemnly professed by all in the Beltway), would pursue policies aimed at boosting employment above all. This begs the question: are these "balanced-budget" people insane or simply corrupt, since the actual policies they currently pursue are the opposite!? It is furthermore shown that reducing unemployment is also a highly effective, probably the most effective way of reducing poverty.
The question of which policies (apart from monetary intervention) are the most effective in boosting employment is also discussed extensively. The primary barrier to overcome is the current lack of demand in the US economy following the collapse of the housing bubble. This demand needs to be strengthened. One way to do this is through trade policy: not through "agreements" like the planned Transpacific Partnership (which actually have little to do with trade), but rather through measures aimed at boosting US net exports, thus lowering the huge trade deficit, which was largely caused by the 1997 Asian financial crisis. The way to achieve this would be to simply lower the dollar (measures proposed by others, like educating workers or upgrading infrastructure, are likely to be less effective, the authors hold). The dollar can be lowered through negotiation with countries like China, who need to be persuaded to raise their currencies relative to the dollar, and can be induced to do so in exchange for US concessions on other matters. The only thing missing is the political will to push for this.
Apart from trade, a number of fiscal measures could be highly effective in boosting employment. The US could run a higher budget deficit. The authors propose that the money be spent on infrastructure as well as a public jobs program "that can ramp up and down, expand and contract, as needed, in tandem with the business cycle" (72). The authors discuss how, contrary to received wisdom, budget deficits aren't particularly problematic since, unlike individuals, governments are normally able to borrow indefinitely. They also rightly emphasize that governments (again, unlike individuals) have a responsibility for the health of the overall national economy, which means that they have the "duty" to borrow in bad times. The authors further point out that the proper way to measure the weight of public indebtedness (and one scrupulously avoided by "balanced budget"-types) is to look at interest payments relative to the economy. By that measure, the US debt situation is actually perfectly sustainable. Furthermore, insofar as debt can be expected to be a future problem, it is important to stress, as the authors do, that this is not a spending problem -- rather, it is attributable to the hugely dysfunctional US healthcare system (although the ACA is likely to ameliorate the problem somewhat). When it comes to a public jobs program, the authors cite research suggesting that such a program can indeed be carried out in an effective manner, contrary to prevailing dogma. Another approach to boosting employment, this one requiring no fiscal stimulus, would be by promoting work-sharing, i.e. opting for reduced working hours for all rather than layoffs for some. This has been done in Germany, with the result that they have done quite well in terms of employment throughout the downturn. Work-sharing would save the government money through reduced spending on unemployment insurance. It is also a good cure for the social ill known as long-term unemployment. The common claim these days that there will be lower demand for labor in the future is also discussed by the authors. They point out that, if this is true, it doesn't have to be a bad thing for workers, as long as they receive their fair share of productivity growth. Productivity gains can be taken in the form of leisure, which would be good for curbing climate change, among other things. In terms of leisure time the US lags behind many other OECD countries. The authors also recommend incentivizing employers to provide not just jobs, but good jobs (Costco rather than Walmart). One way to do this is by mandating severance payments.
As Baker and Bernstein summarize their case: "The argument for full employment is obvious, noncontroversial, and even nonpartisan: People need jobs to support themselves, and a shortage of jobs hurts them and the nation" (94). To repeat, boosting employment is particularly important for those lowest on the income scale. The claim made by many economists that these things simply ought to be left to "the market" is countered by the observation that, in the real world, "[t]he market is just a metaphor" and "[g]overnment policies are always at play" (95) -- something we need to honestly face up to while discussing these issues. Political pressure is what is needed to get where we want.
The book's arguments are powerful, persuasive and well grounded in empirically verifiable fact. They constitute a devastating indictment of the status quo and a sensible agenda for those wishing to effect some badly needed progressive change.
Getting Back to Full Employment, as the title suggests, is a carefully argued case for pursuing policies aimed at lowering employment to the point where "all workers who seek a job have one, they are working for as many hours as they want to or can and they are receiving a wage that is broadly consistent with their productivity" (9). This state is what is meant by "full employment", and the authors believe that "there are few if any economic policy issues as important" (6) as attaining it. At first thought it seems odd that it would even be necessary to make the argument. Why wouldn't we want to attain full employment? The typical excuse given is the "conventional view" in the economics profession that having full employment would cause an escalating "wage-price spiral" (2). The authors hold that the evidence refutes that notion. Note that if this is true, the implications are highly revealing regarding the corruptness of the mainstream economics profession.
Baker and Bernstein observe that in the pre-1980 period, prior to the neoliberal onslaught under which we presently live, labor markets were a lot "tighter". This corresponded with income growth that was very similar among high- and low-income earners. By contrast, the post-1980 period has been characterized by "slack" labor markets and considerably less egalitarian wage growth. The authors next review statistics confirming that higher unemployment hurts the 20th percentile, i.e. the bottom fifth of the population by income level, far more than the median. African-American family income also suffers more from high unemployment than that of Whites. Furthermore, when unemployment goes down the number of hours worked as well as real wages rises far more for the 20th percentile than for higher earners, demonstrating that "the less well-off you are, the more full employment helps you" (17). For progressively-minded types, this issue is thus of supreme importance -- a point often forgotten.
Baker and Bernstein contend that the unemployment that the US suffered from in 2011-12 was "cyclical", i.e., the kind of unemployment that you would want to intervene to lower, rather than "structural". To demonstrate this point, they note the fact that there does not appear to be any general "skills mismatch", as some claim. Furthermore, unemployment can appear structural in a weak labor market like the present, but in reality turn out to be cyclical in a strong labor market, which provides a further reason to focus primarily on cyclical unemployment. The lowest unemployment level that can be reached without adversely impacting the general economy (or so the theory goes) is known as the NAIRU. The authors point out that economists have a poor record of correctly identifying the NAIRU and they cite studies that suggest that the cost of going slightly below the NAIRU are negligible -- thus it is prudent, as far as monetary policy goes, to "err on the side of" (31) low unemployment rather than the opposite. The present religious commitment of central banks to keep inflation below 2% is criticized on two grounds. First of all, having inflation above 2% is clearly not incompatible with strong growth. Secondly, as the authors show in a long technical discussion, the studies purporting to show that inflation negatively impacts growth are empirically rather tenuous and problematic in other respects too. They reference the IMF economist Olivier Blanchard's recommendation to raise the inflation target to 3-4%, which would make it a lot easier to use monetary policy to overcome large downturns in the economy, like the enormously destructive 2007 US downturn. Such intervention requires sharply reducing real interest rates, which in turn requires a higher inflation target. Because of its central importance for the issue of employment, monetary policy ought to be subject to prominent political debate, the authors conclude.
Next, the authors discuss the connection between low unemployment and a balanced budget. The standard Beltway story is that thanks to Clinton's deficit-hawkishness in the 1990s, the US ended up with a budget surplus and lowered interest rates. The authors show that the story flies in the face of the facts: what actually happened was that a budget surplus was attained thanks to high growth and low unemployment (fueled by an unsustainable stock bubble). It is also false that Clinton's austerity significantly lowered interest rates: real interest rates actually changed little over the period in question. Baker and Bernstein note the two primary reasons why low unemployment is good for the budget: first, "as unemployment falls tax revenue can rise faster than growth" and, secondly, there is "less need for spending on a range of social benefits" (50) in times of low unemployment. Numbers are provided to establish the point empirically. In other words, anyone seriously concerned with balancing the budget (a commitment solemnly professed by all in the Beltway), would pursue policies aimed at boosting employment above all. This begs the question: are these "balanced-budget" people insane or simply corrupt, since the actual policies they currently pursue are the opposite!? It is furthermore shown that reducing unemployment is also a highly effective, probably the most effective way of reducing poverty.
The question of which policies (apart from monetary intervention) are the most effective in boosting employment is also discussed extensively. The primary barrier to overcome is the current lack of demand in the US economy following the collapse of the housing bubble. This demand needs to be strengthened. One way to do this is through trade policy: not through "agreements" like the planned Transpacific Partnership (which actually have little to do with trade), but rather through measures aimed at boosting US net exports, thus lowering the huge trade deficit, which was largely caused by the 1997 Asian financial crisis. The way to achieve this would be to simply lower the dollar (measures proposed by others, like educating workers or upgrading infrastructure, are likely to be less effective, the authors hold). The dollar can be lowered through negotiation with countries like China, who need to be persuaded to raise their currencies relative to the dollar, and can be induced to do so in exchange for US concessions on other matters. The only thing missing is the political will to push for this.
Apart from trade, a number of fiscal measures could be highly effective in boosting employment. The US could run a higher budget deficit. The authors propose that the money be spent on infrastructure as well as a public jobs program "that can ramp up and down, expand and contract, as needed, in tandem with the business cycle" (72). The authors discuss how, contrary to received wisdom, budget deficits aren't particularly problematic since, unlike individuals, governments are normally able to borrow indefinitely. They also rightly emphasize that governments (again, unlike individuals) have a responsibility for the health of the overall national economy, which means that they have the "duty" to borrow in bad times. The authors further point out that the proper way to measure the weight of public indebtedness (and one scrupulously avoided by "balanced budget"-types) is to look at interest payments relative to the economy. By that measure, the US debt situation is actually perfectly sustainable. Furthermore, insofar as debt can be expected to be a future problem, it is important to stress, as the authors do, that this is not a spending problem -- rather, it is attributable to the hugely dysfunctional US healthcare system (although the ACA is likely to ameliorate the problem somewhat). When it comes to a public jobs program, the authors cite research suggesting that such a program can indeed be carried out in an effective manner, contrary to prevailing dogma. Another approach to boosting employment, this one requiring no fiscal stimulus, would be by promoting work-sharing, i.e. opting for reduced working hours for all rather than layoffs for some. This has been done in Germany, with the result that they have done quite well in terms of employment throughout the downturn. Work-sharing would save the government money through reduced spending on unemployment insurance. It is also a good cure for the social ill known as long-term unemployment. The common claim these days that there will be lower demand for labor in the future is also discussed by the authors. They point out that, if this is true, it doesn't have to be a bad thing for workers, as long as they receive their fair share of productivity growth. Productivity gains can be taken in the form of leisure, which would be good for curbing climate change, among other things. In terms of leisure time the US lags behind many other OECD countries. The authors also recommend incentivizing employers to provide not just jobs, but good jobs (Costco rather than Walmart). One way to do this is by mandating severance payments.
As Baker and Bernstein summarize their case: "The argument for full employment is obvious, noncontroversial, and even nonpartisan: People need jobs to support themselves, and a shortage of jobs hurts them and the nation" (94). To repeat, boosting employment is particularly important for those lowest on the income scale. The claim made by many economists that these things simply ought to be left to "the market" is countered by the observation that, in the real world, "[t]he market is just a metaphor" and "[g]overnment policies are always at play" (95) -- something we need to honestly face up to while discussing these issues. Political pressure is what is needed to get where we want.
The book's arguments are powerful, persuasive and well grounded in empirically verifiable fact. They constitute a devastating indictment of the status quo and a sensible agenda for those wishing to effect some badly needed progressive change.
December 24, 2023
Amazing book, was easy to understand but still went deep on the topic
June 25, 2014
There are certainly more thorough discussions of the current state of the American and global economy (Capital in the 21st century), and there are certainly books that are more nuanced in their discussions of possible government programs (Social Democratic America). Regardless, Getting Back to Full Employment is one of the best books on political economy that I've ever read.
The book's strength is its clarity and simplicity. The authors assert that in the end, economic policy has only one meaningful goal: full employment. More than any other factor, full employment provides the greatest number of benefits to the greatest number of people. Wages rise during full employment, since labor markets are tight. Health care coverage and pension contributions are highest during full employment, since these are often job tied. Homelessness and poverty decline, and there are a variety of social benefits as well, like decreasing crime rates.
Full employment has become an increasingly rare standard over the last 15 years, and many of the economic challenges facing average Americans can be attributed back to this fact. This has led many to assume that full employment is no longer an attainable standard. But Baker and Bernstein are emphatic that this is not true. Full employment is a policy a choice, since the government can simply choose to hire everyone if it so wanted. Slack in the labor markets has been the result of policy, and we need Washington to fix that.
The economic program they support is broad and covers both domestic and international policies. They are especially assertive when arguing for a weaker dollar, as the trade deficit has proven devastating for exporting businesses.
In the end, the specifics are less important than the general message. America needs a JOBS party. It's an incredibly powerful message, that is somehow lost in all of the Washington dysfunction. Full employment should always be the goal. It's time to go get it back!
The book's strength is its clarity and simplicity. The authors assert that in the end, economic policy has only one meaningful goal: full employment. More than any other factor, full employment provides the greatest number of benefits to the greatest number of people. Wages rise during full employment, since labor markets are tight. Health care coverage and pension contributions are highest during full employment, since these are often job tied. Homelessness and poverty decline, and there are a variety of social benefits as well, like decreasing crime rates.
Full employment has become an increasingly rare standard over the last 15 years, and many of the economic challenges facing average Americans can be attributed back to this fact. This has led many to assume that full employment is no longer an attainable standard. But Baker and Bernstein are emphatic that this is not true. Full employment is a policy a choice, since the government can simply choose to hire everyone if it so wanted. Slack in the labor markets has been the result of policy, and we need Washington to fix that.
The economic program they support is broad and covers both domestic and international policies. They are especially assertive when arguing for a weaker dollar, as the trade deficit has proven devastating for exporting businesses.
In the end, the specifics are less important than the general message. America needs a JOBS party. It's an incredibly powerful message, that is somehow lost in all of the Washington dysfunction. Full employment should always be the goal. It's time to go get it back!
January 19, 2014
This is a short and surprisingly comprehensive case for full employment. It shows how full employment is important for people, companies and the economy as a whole and that it is possible to design policies to get more people employed. While Larry Summers thinks about how to realize negative interest rates to finally get investment up again - thus basically forcing savers to subsidize corporate investments that may even destroy capital - the authors of this book discuss a topic that really matters to people and offer and support several solutions.
They provide a very good overview to how unemployment and full employment are related to the economy in general: inflation, consumption, growth, bubbles, skill development, but also remember to consider why it is important for each individual and their families to be employed.
They provide a very good overview to how unemployment and full employment are related to the economy in general: inflation, consumption, growth, bubbles, skill development, but also remember to consider why it is important for each individual and their families to be employed.
May 10, 2014
If you're looking for a book that explains Keynesian economics in easy to understand language this is your book. I find personally didn't find it all that technical but I've studied a lot of economics. Did like the added information regarding monetary devaluation and inflation, felt it was covered very well. I'll note that you probably won't like it if you're Conservative, you've been been warned. Personally, Milton Friedman should read this book.
March 31, 2015
Another post Keynesian attempt to demonstrate "how little we know about what we think dealing."
Displaying 1 - 8 of 8 reviews