January 2, 2011
With Responses From
Jan 2, 2011
4 Min read time
Robert Pollin convincingly demonstrates that full employment has huge social benefits and can plausibly be attained and maintained by sound policymaking. And he rightly ends his essay with a question: is there the political will to focus on this goal?
It seems there is not, and for several reasons. Start with public opinion. The goal of full employment is not the problem—Americans like the idea of jobs, and lots of them. But support for the means to get there is weak.
Any sustainable full-employment program would necessarily involve high levels of public investment. Keynes stressed government’s role in such a project, and Pollin makes federal policy central to his proposal. But big public investment means big government spending, and there you start to lose voters.
64 percent of Americans have little or no confidence in the government’s ability to solve any problem.
The problem is not that the public is opposed to the idea of more government spending. In fact, voters typically favor such spending, particularly in the two areas Pollin emphasizes: education and clean energy. Rather, people are skeptical as to whether additional funds committed to these areas would be well spent. Today’s public assumes that waste, inefficiency, and ineffectiveness are built into the federal government’s way of doing things. According to a recent poll I helped to conduct for the Center for American Progress and its “Doing What Works” government-reform project, 66 percent of the public believes federal programs and agencies waste “a lot” of taxpayer’s money, and 64 percent have little or no confidence that the government in Washington will actually solve a problem once it decides to do so. There are many similar examples of this lack of faith. Results from recent surveys tend to be particularly negative.
In addition to public ambivalence, there is the problem of political leadership. Without sturdy popular support, political leaders cannot easily embrace the public investment necessary to achieve and sustain full employment, much less the increased taxes likely needed to pay for it.
Moreover, many center-left political leaders do not believe that a Keynesian, public-investment program is necessary. They trust that businesses and the market can achieve something like full employment and sustain it with less government intervention than a Keynesian program would require. While the market fundamentalism of the last several decades, including its macroeconomic expression as New Classical economics, has been considerably discredited, it has not yet been replaced by a coherent alternative that could motivate the public investment we need.
We are caught in a decidedly incoherent middle ground, which grudgingly acknowledges a role for government but accepts as its guiding principle deference to business and the market. How else to explain the strange resurgence of what Keynes called the “Treasury view”—the idea that cutting budget deficits in the midst of a sputtering recovery will lead to healthy growth through the restoration of business confidence?
This bizarre, empirically bankrupt concept is alive and well in U.S. politics today. It certainly has more influence than a robust Keynesian commitment to full employment. And not just among Republican lawmakers. Many Democrats appear to subscribe to this view, especially Blue Dog House members and conservative Senate Democrats. The Simpson-Bowles deficit commission’s plan is a testament to the Treasury view. The mainstream media, of course, including the editorial pages of our most distinguished papers, are awash in magical thinking about the economic benefits of rapid deficit reduction.
For many politicians and pundits, the Treasury view is supported by a profound misreading of the 2010 election results and of public opinion: only immediate action to cut spending and reduce the deficit will show the public that they “get it.” Deficit-hawk Democrats fear that the independent voters who defeated their party’s candidates in 2010 will turn them out of office in 2012.
This view is catastrophically wrong, and if Obama actually follows it, his chances of being reelected will plummet. Discontented voters were primarily driven by the state of the economy and the government’s perceived failure to improve it. This is particularly true of independents, who are true swing voters, not disguised partisans of one party or the other. These mostly white, working-class voters are inclined to punish whichever party is in power during lean times. Enhanced concern about the budget deficit and government spending flow from wider economic frustrations. In these voters’ eyes, deficits and spending are symptoms of the underlying failure of government to improve the economy. But the latter is the fundamental problem, not the former.
Post-election polls show that the public’s true concern lies not with deficits, but with the weakness of the economy. In a CBS/New York Times poll, a miniscule 4 percent of respondents thought Congress should concentrate first on the deficit/debt problem, while 56 percent thought jobs and the economy should come first. In a Gallup poll, 9 percent thought the budget deficit was the most important problem facing the country, compared to 64 percent who selected jobs, unemployment, and the economy as the key problem.
So Obama is unlikely to get much love from the voters if progress is made on the deficit in the upcoming period, but economic improvement remains marginal. Conversely, if the economy improves, voters won’t care about the size of the deficit.
What should progressives do? Certainly, they must argue against any and all versions of the Treasury view and assert the necessity of a public-investment path to full employment. Yes, there is underlying public skepticism about government and government spending, but that skepticism will not be alleviated by deficit-reduction moves that are of low political salience and likely will slow economic recovery.
The best way to address negative public views of government, therefore, is to get the economy moving again and onto a path toward full employment. Pollin’s essay provides a number of useful suggestions for doing so. None of them will be easy to implement, but given the alternative—the politics of austerity and high unemployment—it is critical that we try.
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January 02, 2011
4 Min read time