Memo to the Punditocracy: Public Sector Jobs Are Real Jobs!
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In 1976 at a time when economists thought more about unemployment, the US economist Charles C. Killingsworth wrote a paper entitled “ Should full employment be a major national goal”. He was a long-time advocate of public employment programs and understood how deficient the economics profession was when it came to caring about people.
I thought about this paper recently upon reading an article in the Daily Beast by the always insightful Michael Tomasky, “The Real Obama Needs to Fight Five GOP Myths About the Imaginary Obama” . Tomasky discusses the myths that Obama needs to dispel during his party’s upcoming convention. One in particular caught my attention: the idea that the President needed to confront the myth that he allegedly believes that jobs comes from government.
What’s wrong about that? In one sense, it is a myth: to the extent that jobs are an outgrowth of sales, which are a function of aggregate demand, it is wrong to say that the public sector per se creates jobs. But demand (and, by extension, sales) is more robust when employment rates are higher and, in that sense, it matters not to the restaurant owner, or the engineering firm, whether the source of that demand comes from a private or public sector job. The teacher’s cash is just as good at the cash register as the accountant’s.
So why does the president even need to disparage the notion that good jobs and vocations cannot come from public employment in order to prove to American voters that he’s not some kind of radical Marxist?
The USA used to value the idea of public service. Remember, “Ask not what your country can do for you – ask what you can do for your country”? That was the essence of much of the idealism underlying the Kennedy era. Peace Corps, not leveraged buy-outs; public works, instead of credit default swaps. This was before the beginning of the neo-liberal onslaught that evolved in the late 1970s into the vapid and rabid belief that self-regulating markets would deliver the highest wealth to all of us. The privatisation and deregulation accompanied that mantra, much of which is the source of our present misery and income inequality, as public goods have rapidly become converted into private rents.
Over the past 30 years, any notion that the government might use fiscal policy for direct job creation has been attacked with arguments that it would cause spiraling inflation and, eventually hyperinflation, or that interest rates would soar as bond markets lost faith in government debt issues. This propaganda has become so extreme that it has now got to the point where even a sympathetic liberal columnist like Michael Tomasky suggests that it is good electoral strategy for Obama to trumpet the fact that public sector hiring has shrunk by 3% since the start of his Administration! This at a time when overall unemployment is still above 8% and combined with underemployment takes us to something closer to 15%.
By contrast, Charles Killingsworth unapologetically asserted that the US definitely should make full employment a major national policy. He said that:
“[T]oo many of us have been intimidated for too long by the many prestigious economists and others who have been telling us that manpower programs don’t work; that the only way to reduce unemployment is to cut taxes; and that if you cut taxes enough to approach full employment, you will have an inflation and destroy the country.”
As Killingsworth argued, the economics establishment was wrong about this diagnosis, as it has been wrong so many times before in the last several years. But given the current love affair with “fiscal sustainability”, and the threatened arrival of the “fiscal cliff”, it is easy to envisage how the country could slip further into a Third World type of fortress society, where the wealthy live in high class ghettoes manned by private security forces, and drive around in bullet-proof limousines to protect their offspring from being kidnapped from an increasingly desperate, bitter, dangerous underclass outside. Certainly, we’re not that far away from the horrifying images evoked in H.G. Wells’s late 19th century classic, “ The Time Machine”, whose protagonist ventures forward in time to a place where we have the brutish Morlocks, who live in darkness underground and surface only at night, whilst the leisured classes have become the Eloi, an ostensibly elegant people, who reside in communitarian comfort in the light above, but live off the labor of the downtrodden Moorlocks on whom they depend for their prosperity.