Back to Full Employment (Boston Review Books)

Back to Full Employment (Boston Review Books)

Robert Pollin

Language: English

Pages: 208

ISBN: 0262017571

Format: PDF / Kindle (mobi) / ePub

Full employment used to be an explicit goal of economic policy in most of the industrialized world. Some countries even achieved it. In Back to Full Employment, economist Robert Pollin argues that the United States--today faced with its highest level of unemployment since the Great Depression--should put full employment back on the agenda.

There are good reasons to seek full employment, Pollin writes. Full employment will help individuals, families, and the economy as a whole, while promoting equality and social stability. Equally important, creating a full-employment economy can be joined effectively with two other fundamental policy aims: ending our dependence on fossil fuels and creating an economy powered by clean energy.

Explaining views on full employment in macroeconomic theory from Marx to Keynes to Friedman, Pollin argues that the policy was abandoned in the United States in the 1970s for the wrong reasons, and he shows how it can be achieved today despite the serious challenges of inflation and globalization.

Pollin believes the biggest obstacle to creating a full-employment economy is politics. Putting an end to the prevailing neoliberal opposition to full employment will require nothing less than an epoch-defining reallocation of political power away from the interests of big business and Wall Street and toward the middle class, working people, and the poor, while mounting a strong defense of the environment. In the end, achieving full employment will be a matter of political will: Can the United States make having a decent job a fundamental right?

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economy to its knees in 2008–09, economic policymakers throughout the world—including the United States, the countries of the European Union, Japan, South Korea, China, India, and Brazil—all enacted extraordinary measures to counteract the crisis. In the United States, the first large-scale policy move was the notorious bailouts of the big banks, aimed at preventing them from collapsing altogether and thereby risking a 1930s-style depression. They also included Federal Reserve monetary policies

proprietary trades with huge pools of unregulated money, raising the risk exposure to all parties involved. It was precisely interconnections such as these that fueled the credit market bubble and subsequent crash. Dodd-Frank includes measures that could prove effective in dramatically reducing the risks associated with the banks’ proprietary trading. First, the legislation includes a blanket prohibition against banks engaging in transactions involving material conflicts of interest or highly

Society, 36:2, 169–206. Card, David (2005) “Is the New Immigration Really So Bad?” NBER Working Paper 11547 (August), Cambridge, MA: National Bureau of Economic Research. Congressional Budget Office (2011b) Long Term Budget Outlook, June, Washington, D.C., DeFreitas, Gregory (1998) “Immigration, Inequality, and Policy Alternatives,” in Dean Baker, Gerald Epstein, and Robert Pollin, eds. Globalization and Progressive Economic Policy, New York: Cambridge University

is effectively zero (after allowing for such “frictions” as people moving between jobs and acquiring new skills). The natural rate of involuntary unemployment will become positive only when workers refuse to accept this free market–determined wage or when non-market forces, such as labor unions or minimum wage mandates, prevent wage levels from falling to the level that is consistent with business profitability. Here is how Friedman put it in his 1967 lecture: By using the term ‘natural’ rate of

continuing inflation. Indeed, it was the failure of the advanced capitalist economies—in North America, Western Europe, and Japan—to contain inflation in the 1970s that allowed the full-employment policy goal to be eclipsed by Friedman’s “natural rate of unemployment” theory. Economic policymakers worldwide became convinced that inflation resulting from low unemployment had become severe and uncontrollable. In fact, this global march toward Friedmanite economics misread the primary cause of high

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