Lost in the Debt Ceiling Debate: The Legal Duty to Create Jobs

Reference: OpEd News

August 12, 2011

By Jeanne Mirer and Marjorie Cohn

The debate about the debt ceiling should have been a conversation about how to create jobs. It is time for progressives to remind the government that it has a legal duty to create jobs, and must act immediately — if not through Congress, then through the Federal Reserve.

With official unemployment reaching over 9%, the unofficial rate in double digits, and the unemployment rate for people of color more than double that of whites, it is nerve wracking to hear right wing political pundits say the government cannot create jobs. Do people really believe this canard? On “Real Time with Bill Maher” a few weeks ago, Chris Hayes of The Nation stated that the government should create and has in the past created jobs, but he was put down by that intellectual giant Ann Coulter who said, “but they (WPA jobs) were only temporary jobs.” No one challenged her.

Most of the jobs created under the Works Progress Administration (WPA) — and there were millions of them — lasted for many years, or until those employed found other gainful employment. They provided a high enough income to allow the worker’s family to meet basic needs, and they created demand for goods in an economy that was suffering, like today’s economy, from lack of demand. The WPA program succeeded in sustaining and creating many more jobs in the private sector due to the demand for goods that more people with incomes generated.

The most galling thing about pundits stating with such certainty that the government cannot create jobs is the implication that the government has no business employing people. In actuality, however, the law requires the government, in particular the President and the Federal Reserve, to create jobs. This legal duty comes from three sources: (1) full employment legislation including the Humphrey Hawkins Full Employment Act of 1978, (2) the 1977 Federal Reserve Act, and (3) the global consensus based on customary international law that all people have a right to a job with favorable remuneration to provide an adequate standard of living.

1. Full Employment Legislation

The first full employment law in the United States was passed in 1946. It required the country to make its goal one of full employment. It was motivated in part by the fear that after World War II, returning veterans would not find work, and this would provoke further economic dislocation. With the Keynesian consensus that government spending was necessary to stimulate the economy and the depression still fresh in the nation’s mind, this legislation contained a firm statement that full employment was the policy of the country.

As originally written, the bill required the federal government do everything in its authority to achieve full employment, which was established as a right guaranteed to the American people. Pushback by conservative business interests, however, watered down the bill. While it created the Council of Economic Advisers to the President and the Joint Economic Committee as a Congressional standing committee to advise the government on economic policy, the guarantee of full employment was removed from the bill.

In the aftermath of the rise in unemployment which followed the “oil crisis” of 1975, Congress addressed the weaknesses of the 1946 act through the passage of the Humphrey-Hawkins Full Employment Act of 1978.

* * *

2. Federal Reserve

The Federal Reserve has among its mandates to “promote maximum employment.” The origin of this mandate is the Full Employment Act of 1946, which committed the federal government to pursue the goals of “maximum employment, production and purchasing power.” This mandate was reinforced in the 1977 reforms which called on the Fed to conduct monetary policy so as to “promote effectively the goals of maximum employment, stable prices and moderate long term interest rates.” These goals are substantially equivalent to the long-standing goals contained in the 1946 Full Employment Act. The goals of the 1977 act were further affirmed in the Humphrey-Hawkins Act the following year.

* * *

3. The global consensus based on customary international law that all people have a right to a job with favorable remuneration and an adequate standard of living

In the aftermath of World War II, and for the short time between the end of the war and the beginning of the Cold War, there was an international consensus that one of the causes of the Second World War was the failure of governments to address the major unemployment crisis in the late 20’s and early 30’s, and that massive worldwide unemployment led to the rise of Nazism/facism. The United Nations Charter was created specifically to “save succeeding generations from the scourge of war.”

* * *

The conspiracy of silence

With the duty to create jobs required by U.S. legislation, monetary policy and customary law, why has the government allowed pundits to reframe the debate and state with certainty the government cannot do what it has a legal obligation to do?

We allow it because of the conspiracy of silence which has prevented most people from knowing that the full employment laws exist, that the Federal Reserve has a job-creating mandate, and that economic human rights law has become binding on the United States as customary international law.

* * *

Jeanne Mirer practices labor and employment law in New York and is president of the International Association of Democratic Lawyers. Marjorie Cohn is a professor at Thomas Jefferson School of Law and immediate past president of the National Lawyers Guild.

To read the full article, click here.