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Via Workers World News Service
Reprinted from the Aug. 1, 1996
issue of Workers World newspaper
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Lawbreakers & Liars

The Fed & Full Employment

By Jerry Goldberg

On July 18, Federal Reserve Bank Chairperson Alan Greenspan presented his biannual report to Congress.

Greenspan hinted at the likelihood that the Federal Reserve Bank would raise interest rates in the near future--in order to slow the economy, boost unemployment, and reduce inflation by keeping wages down.

Ironically, Greenspan's report to Congress was mandated by the Full Employment and Balanced Growth Act of 1978. Under the terms of this law, the Fed chair must report to Congress on the relationship of monetary policy to fulfilling the law's objectives.

What are the law's objectives? It states in part, "The Congress establishes as a national goal the fulfillment of the right to full opportunities for useful paid employment at fair rates of compensation of all individuals able, willing and seeking to work."

The law specifically mandated the president and Congress

to take action to reduce the unemployment rate to 4 percent within five years of its passage, and then to move to achieving full employment.

Of course, that never happened.

This law also discusses reducing the rate of inflation. However, it specifies that the goal of achieving full employment must take precedence.

Today, the official unemployment rate is 5.3 percent. It's much higher when you factor in discouraged workers who have given up looking for work and part-time workers who want to work full-time.

Clearly, the Full Employment and Balanced Growth Act has been grossly violated. The violation is even greater when you consider the tremendously higher unemployment rate in the oppressed communities and for young people.

The act specifically delineates the responsibility of the government to adopt policies to reduce such inequality. Yet on July 18, when Greenspan addressed Congress under terms of the Full Employment and Balanced Growth Act, he certainly did not address reducing unemployment to comply with the law. Instead, he flouted it by saying keeping inflation down is primary.

The way to do that, he said, is to raise unemployment in order to keep wages down. He implied that he was about to raise interest rates to insure that this happens.

Did any member of Congress present--Democrat or Republican--challenge Greenspan or call for his removal or indictment? No. They all tripped over themselves to praise the chief banker.

President Clinton recently appointed Greenspan to another 10-year term as head of the Federal Reserve.

Could Workers Enforce The Law?

Greenspan's remarks to Congress were subjected to a great deal of analysis in the media, including CNN, CNBC and the New York Times. However, although he was testifying under terms of a law that was passed because of pressure by unions and community organizations, you'd be hard-pressed to find one working-class representative quoted.

It's not that the politicians are unaware of the terms of the Full Employment and Balanced Growth Act.

Sen. Connie Mack of Florida chairs the Joint Economic Committee--the Congressional committee mandated under the law to monitor its enforcement. Last year Mack introduced legislation to eliminate the bill's full-employment provisions.

Mack recognized that the law as written could be a tool used by working-class organizations to mobilize a challenge to the economic policies of big business, the banks and the government.

In fact, the law provides for convening a National Employment Conference in Washington to discuss enforcement. That never happened, either.

Today, this law is being ignored by the very officials who are legally mandated to enforce it.

What if the labor movement--in coordination with community organizations, welfare-rights groups and representatives of the oppressed communities and youths--convened such a conference? What if workers and the oppressed got together to discuss how to enforce the law and build a struggle to guarantee the right to a job at a living wage for all?

The AFL-CIO leadership has already held "living wage" hearings across the United States. In some locales, the unions have been instrumental in winning a small raise in the minimum wage.

Convening a conference would take it further. It would mean breaking with both capitalist parties--which are equally responsible for violating the Full Employment and Balanced Growth Act and for enacting a wave of programs informed by the principle that corporate profits are everything and working people are nothing.

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