FDR’s vision revisited

Eric Carrell

FDR addresses the nation.
FDR addresses the nation.

Last Thursday, the College Democrats and the Jobs Now! Coalition, among others, sponsored an event titled “Jobs Now! MLK’s Dream and FDR’s Vision.” This event included presentations from four UMKC Economics professors: Linwood Tauheed, John Henry, Stephanie Kelton and Mathew Forstater.

“We wanted to increase awareness about the economic principles that underlie how we achieve full employment,” said Lauren Gepford, president of the College Democrats. “Economics may be misunderstood and it’s important for soon-to-be graduates to understand the changes in the national work -force during this recession and the different options the government and private sector has to offer.”

In a time when economic peril and high unemployment rates fill the media, this event painted a lucid picture of the argument of government intervention in the job market. Seemingly, this argument has become increasingly controversial. However, there is still a high unemployment rate and public opinion would agree something needs to be done about it. “As a result of inaction we are living below our means,” said Kelton, assistant professor of economics.

“Job creation is good for everybody, nobody disagrees that job creation is a good thing … the discussion is how and what’s the cost,” said Forstater, professor of economics. All four professors advocate the creation of a second Works Progress Administration (WPA) or similar programs. The WPA was created in 1935 as a part of Franklin D. Roosevelt’s “New Deal.” The WPA was designed to put people back to work during the Great Depression through government-funded projects such as building or renovating roads, bridges, courthouses, schools, stadiums, housing projects, parks, hospitals and libraries. Through the WPA, the government was able to employ a total of around 3 million people on a monthly average and the program contributed about 2 percent of the GDP.

Advocates of free market economics, which is contrary to the four professors’ stances, would say that government has tried job assistance programs such as the American Recovery and Reinvestment Act or “stimulus package,” as it’s commonly known, and it failed to create a substantial amount of jobs while costing billions of dollars.

“The stimulus package was too small, much of it was misdirected, and much of it went to technology which is labor saving,” Henry said. “We overemphasize the private sector. If the private sector isn’t producing sufficient jobs, government can step in and provide those jobs.”

Kelton’s presentation backed Henry on the stimulus package.

“It should have been $1.3 trillion not $787 billion,” she said. “The government is not limited by how much it can spend.”

With the recent deficit debates and debt ceiling debacles, this claim may be puzzling to the average Washington spectator. The theme during these talks revolved around spending cuts, not increases. However, Kelton said the government can print as much money as it would like. As long as the funds are used, it can create jobs while not leading to inflation.

“Every spending cut becomes an income cut to somebody … spending cuts cause income to go down and sales to go down and the result is unemployment,” she said.

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