Crossposted from DemocraticDiva.com
When we think of conservatives and economics we tend to focus on things like their opposition to taxes (on the wealthy, not necessarily everyone else) and social safety net programs. We tend, however, to take right wingers at their word when they say that they want people to work. I mean, come on, that’s the reason they hate “welfare” so much! “I don’t want to pay for people to sit around and do nothing!” has been the constant refrain of 99% of the discussions I’ve ever had with people about their “economic” reasons for voting GOP (really, it’s not more deep than that). On several occasions I have proposed – in naive honesty at first and later with resigned cynicism – to such people that the government should embrace a policy goal of full-employment and do whatever is necessary to attain that, including simply giving government jobs to everyone who wants them. There’s certainly plenty that needs to be done in the country and job-seekers could be paid while they train for those tasks.
The response I get to that suggestion falls into roughly two categories:
1. Crickets (from most of them since, to be fair, the concept of ambitious public works projects is beyond many Americans’ comprehension these days).
2. Argle-bargle about “inflation” and/or “crowding out the private sector” (from the ones who know just enough economic rhetoric to be dangerous). I have some anecdotal experience of getting the latter response from affluent people, conservatives mostly (but also from some moderates and even liberals).
But don’t take my word for it on the rich people, as the Russell Sage Foundation did a meta-analysis of opinion polls on several economic topics. (H/t to DailyKos diarist Auriandra).
Note the chasm-like disparity in the responses to the two statements having to do with employment – “The government in Washington ought to see to it that everyone who wants to work can find a job.” “The federal government should provide jobs for everyone willing to work who cannot find a job in private employment.” It appears that the wealthiest Americans are uninterested, if not downright hostile, to the notion of the government promoting full employment.
You’ve probably figured out that I find the cavalier attitude of our most well-heeled citizens toward their more economically precarious fellows to be unconscionable. But they have had the consensus of many economists at their back. It has long been an article of faith that the unemployment rate should be kept at somewhere north of 5% so as to maintain good order in the markets and tranquility across the land. Not all economists agree, however, that general stability requires throwing millions of Americans into instability. Dean Baker and Jared Bernstein have been making that case for a few years, while addressing the overblown fear of inflation:
For economists, the question we’re asking is this: What is the lowest unemployment rate consistent with stable inflation, otherwise known as the nonaccelerating inflation rate of unemployment, or Nairu?
Most economists place the rate in the range of 5 to 5.5 percent, though some estimates go as high as 6 percent. The Congressional Budget Office‘s latest projections have it at 5.5 percent.
We think we can do better. Our work suggests that 4 percent — the average unemployment rate for 2000, the last time we were at full employment — is a reasonable target, one worth shooting for…
…That said, let’s be clear. Compared with the current situation, we’d gladly welcome 5.5 percent unemployment, though frankly, not as much as the tens of millions of un- and underemployed people who depend on tight labor markets to give them a fair shot at claiming their fair share of the economy’s growth. But for the following four reasons, we do think the full-employment target should be lower than do most of our colleagues:
1. The estimates of the Nairu in the past have been extremely unreliable.
2. The low unemployment rates in the 1990s boom were not associated with any notable uptick in inflation, implying that the economy was not below the Nairu.
3. As noted, the benefits associated with low unemployment are asymmetric, with the gains from lower unemployment rates far outweighing any potential costs from a rise in the inflation rate.
4. The statistical relationship between unemployment and inflation, known as the Phillips Curve, appears to have flattened in the last two decades, meaning that we would pay a lower price in terms of higher inflation from below Nairu unemployment than would have been the case in the 1970s or 1980s.
Baker and Bernstein go into a further explanation about inflation in that NYT article so be sure to read it. Yet I doubt such evidence would matter to most of the one percenters since I suspect that the resistance to full employment has never been about inflation or anything else as much as it is a desire to keep the workforce in a constant state of fear and docility. The aim is not for “jobs, jobs, jobs” as has been the ubiquitous chant of practically every GOP campaign lately but rather “make you desperate for any job, job, job you can get”.