The Political Empowerment of the Working Class is the Key to Better Employment Policy

While I search for something fresh to post, here’s a column of mine from June on the lack of adequate effort from Washington on the unemployment problem. The Republicans had almost nothing to offer the unemployed at their convention, and I’ll be curious to see how much atteniton unemployment gets — relative to other things such as the deficit — at the Democrat’s convention this week. I hope to be pleasantly surprised, but expect disappointment:

Why doesn’t the unemployment problem get more attention? Why have other worries such as inflation and debt reduction dominated the conversation instead? As I noted at the end of my last column, the increased concentration of political power at the top of the income distribution provides much of the explanation.

Consider the Federal Reserve. Again and again we hear Federal Reserve officials say that an outbreak of inflation could undermine the Fed’s hard-earned credibility and threaten its independence from Congress. But why is the Fed only worried about inflation? Why aren’t officials at the Fed just as worried about Congress reducing the Fed’s independence because of high and persistent unemployment?

Similar questions can be asked about fiscal policy. Why is most of the discussion in Congress focused on the national debt rather than the unemployed? Is it because the wealthy fear that they will be the ones asked to pay for monetary and fiscal policies that mostly benefit others, and since they have the most political power their interests – keeping inflation low, cutting spending, and lowering tax burdens – dominate policy discussions? There was, of course, a stimulus program at the beginning of Obama’s presidency, but it was much too small and relied far more on tax cuts than most people realize. The need to shape the package in a way that satisfied the politically powerful, especially the interests that have captured the Republican Party, made it far less effective than it might have been. In the end, it had no chance of fully meeting the challenge posed by such a severe recession, and when it became clear that additional help was needed, those same interests stood in the way of doing more.

Republican policymakers give us all sorts of excuses for blocking further action to help the unemployed. We are told the problem is structural – there is a geographical or talent mismatch between labor availability and labor needs – and nothing can be done to help. But something can be done. We can help workers move to where the jobs are, encourage firms to locate in areas where workers are readily available, and help with job retraining. If mismatches are really the problem, why aren’t Republicans leading the charge on these policies? If they care about the unemployed rather than the tax burden of the wealthy, then why are they allowing community colleges – one of the best ways we have of providing job training for new and displaced workers – to be gutted with budget cuts?

We are also told that the deficit is too large already, but there’s still plenty of room to do more for the unemployed so long as we have a plan to address the long-run debt problem. But even if the deficit is a problem, why won’t Republicans support one of the many balanced budget approaches to stimulating the economy? Could it be that these policies invariably require higher income households to give something up so that we can help the less fortunate? Tax cuts for the wealthy are always welcome among Republicans no matter how it impacts the debt, but creating job opportunities through, say, investing in infrastructure? Forget it. Even though the costs of many highly beneficial infrastructure projects are as low as they get, and even though investing in infrastructure now would save us from much larger costs down the road – it’s a budget saver not a budget buster – Republicans leaders in the House are balkingat even modest attempts to provide needed job opportunities for the unemployed.

The imbalance in political power, obstructionism from Republicans designed to improve their election chances, and attempts by Republicans to implement a small government ideology are a large part of the explanation for why the unemployed aren’t getting the help they deserve. But Democrats aren’t completely off the hook either. Centrist Democrats beholden to big money interests are definitely a problem, and Democrats in general have utterly failed to bring enough attention to the unemployment problem. Would these things happen if workers had more political power?

This post was originally published at Economist’s View and is reproduced here with permission.

4 Responses to "The Political Empowerment of the Working Class is the Key to Better Employment Policy"

  1. Emiliano   September 5, 2012 at 10:25 am

    I mean.. seriously? The Working class is by definition the majority, if it doesn't translate its views and needs into proposed policies it means there's no democracy, and in my opinion the US is by far the most democratic country in the world.

    Party politics ruined Italy, are not helping the UK, definitely not helping Germany (sick of short-termism), and are now keeping France stuck too. It's part of human nature, and political power to the Working class sounds like pure Marxist propaganda, relying on a pretty poor and non rigorous analysis.

    Plus, debt is the issue, one doesn't fight debt and unemployment will prevail. The US is a complex country but it's so much ahead compared to the rest of the world that all these pessimistic views genuinely make me laugh.

    Debt and entrepreneurship are critical issues, and I must say chapeaux to the US for how they're quietly becoming energy independent and once again showing to the World who the business leaders are – whoever thinks China makes ma laugh twice..

  2. Vasile   September 5, 2012 at 4:22 pm

    "working class" is a retard communist concept. Have you not heard of the demise of communism? Socialism is also on its way out in EU – its stronghold.

    Social mobility is the republican message – but you are not getting it. Nobody has to be stuck for ever in a "working class" condition.

    Infrastructure "investment" is sadly a 19th century solution to a 21st century problem – we need no bridges to nowhere and cities in the desert. Obama disapproved the Keystone pipeline – so much for infrastructure support – and that would have been with private money.

  3. Vasile   September 5, 2012 at 4:31 pm

    Employment is delicate contract between the employer and employee – the governmental elephant equipped with a sledgehammer has no business getting involved. I guess if you spend $500 Mil on Solyndra, you can "create" 1000 fake jobs.

  4. Ben Leet   September 6, 2012 at 12:09 pm

    Unemployment is at 13% if you assume the labor participation rate of 2000, and there's no reason not to assume it. The private sector has added less than 1% to its total of 111 million jobs since August of 2000. That is, almost zero net new jobs for private enterprise over a 12 year span when the working age population has increased by 14.6%, from 212 million to 243 million. In FDRoosevelt's first four years, 1933-1937, unemployment dropped from 25% to 9.6% with federal job creation — read the article The Real Lesson from the Great Depression, Fiscal Policy Works,… —
    The Green New Deal from the Green Party, Jill Stein for President, is the only platform that has advocated a policy for federal job creation. Many people call it communism, but then millions find re-employment, and the work they accomplish has lasting benefit for all. Robert Lerman at the Urban Institute has a handful of good ideas about re-employment, — my blog, for more employment facts.