Full Employment and Easy Money

Over the weekend, Matt Yglesias was nice enough to respond to my post on full employment; Elias Isquith has since offered a riposte to Yglesias.


“Yglesias isn’t wrong to focus so much on full employment. Any left-of-center person should consider it a paramount goal. Where he (seemingly) missteps is in his explanation of why America had a generation of full employment era and how it can do it again. Monetary policy is no doubt important, as is infrastructure, education, and so on. But none of these universally beneficial ends can be reached simply through journalists, experts, and professional do-gooders begging through their respective media platforms. You need muscle to steer the ship of state. You need unions.”

This is a common critique* of wonky liberals, of which Yglesias is an exemplar. They can throw graph after graph at you, but they draw a blank when you ask them how they’ll get their shiny, unimpeachable policy proposals passed. Instead you’re offered statements of action like this: “Full employment policies are great and we ought to be demanding them from our macroeconomic stabilization policymakers rather than accepting excuses about how it’s hard.”

Alright, agreed.

But what are the constituencies, the interest groups that will mobilize and fight for the enactment and maintenance of full employment? As Elias says, you need groups with leverage to pull off something like that. If inflation begins to creep up and creditors are apoplectic, importunately demanding that wage growth be suppressed, you need constituencies to assemble inside and outside the halls of power, pressuring and demanding that full employment policies continue. You need power.

Or maybe you don’t. Perhaps it’s no accidental that Yglesias prefers monetary measures to fiscal measures. Fiscal policy is complex and, to a large degree, the province of the elite. But it’s a paragon of democracy compared to the rarefied Federal Reserve Open Market Committee, an impregnable cadre that issues edicts from on high. If you advocate the Fed route, as Yglesias does, you can more or less circumvent the pesky politics that fiscal policy entails, the need to build coalitions and power. You just have to convince the elites who run the show to be a little more benevolent.

I give Yglesias credit for trying to get progressives excited about monetary policy. The decisions of the Fed are enormously consequential, and he does want to make the Fed more accountable than it is now. But the question remains: For the purposes of full employment, why should we choose monetary over fiscal policy? I argued in my original post that expansionary monetary policy just fuels the engine of consumer capitalism; a public jobs program designed to address other social needs is thus superior. Doug Henwood raises the same concerns: “[T]he best that loose money can give us is more of the same; jobs programs and infrastructure spending can give us child care and high-speed rail, and not just more consumer goods and carbon dioxide emissions.”

I’m glad Yglesias loves full employment. I do, too. But why isn’t a jobs program—preferably paired with reduced work hours and a GMI—the way to go here?


*Last summer, as the sporadically abeyant left-neoliberal conflict flared up again, Peter Frase had an astute take on the “submerged state” and center-left wonks. I highly recommend it.

Shawn Gude

Shawn Gude is a writer, graduate student, activist, and assistant editor at Jacobin. His intellectual influences include Chantal Mouffe, Michael Harrington, and Ella Baker. Contact him at shawn.gude@gmail.com or on Twitter @shawngude.


  1. But why isn’t a jobs program—preferably paired with reduced work hours and a GMI—the way to go there?

    You make a big assumption about the value of the things produced by the jobs program. While it’s true that some goods are publicly produced because they aren’t priced well in the market (transactions costs may be too high, or there may be too much potential for free riders), it’s more often true that the market doesn’t produce something because it’s not actually as valuable as some folks think. That is, those folks who think it’s valuable obviously value it, but not enough of their fellow citizens do, so in the aggregate the good is not socially efficient.

    In replacing (partially, obviously not wholly) consumerism with public works, you are substituting in place of the desires of the aggregate populace the desires of a politically influential set who can successfully demand that what they want be produced largely at others’ costs.

    As an example, Eugene, Oregon, has a lovely little publicly owned performing arts center. I saw several shows when I lived there, that in its absence probably would never have come to Eugene. I valued the place, and so did lots of the other academic crowd of Eugene. But they failed multiple times at ballot measures to approve the funds for building it, until they organized to support a ballot measure in an off-year election that was guaranteed to have very lower turnout. Strategically, they were very savvy. But they forced lots of people who didn’t want the place, and who don’t benefit from it, to subsidize it for them.

    Is that really the kind of polity you want?

    And isn’t that really consumerism, too? The academics/intelligentsia of Eugene wanted to consume more artistic production. And consumerism, after all, gave us Harry Potter, Citizen Kaine, triple-paned argon-filled windows, seat belts and air bags in cars, Ipads that allow us to blog from Starbucks, Warhorse and Wicked, vegetarian cookbooks, microbreweries and specialty bakeries, and the beautiful goldenrod colored paint that transformed my kitchen from a dull depressing hole to a bright cheery place on a gray winter morning. I think your dichotomy between consumerism and public works is much too thin, and not very reflective of the real world of human wants and needs.

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