Treating Citizens as Consumers Results in One-Sided Fed DecisionsRoundup
tags: inflation, Federal Reserve, consumerism
Suzanne Kahn is the managing director of research and policy at the Roosevelt Institute and author of, Divorce, American Style.
After almost a year of concerns over inflation and a hot economy, the Federal Reserve’s repeated interest rate hikes have slowed the economy and raised recession concerns. That was the point: The Fed’s actions were rooted in the decision that lower prices are more important than continued job growth.
This prioritization is the result of decades of choices that have pushed policymakers to see constituents primarily as consumers — with prices and market choice as their foremost concerns — and government as responsible primarily for maintaining consumer markets. These choices shifted both understandings of American citizenship and the very operations of the state over the past 80 years.
Since the 1940s, the federal government has been charged with promoting economic stability through “maximum employment, production, and purchasing power.” But, over the latter half of the 20th century, the Fed increasingly prioritized stable prices over maximum employment. This shift was not natural, but rather the result of decades of work by neoliberal theorists and conservative policymakers to prioritize stable prices and markets for corporations and investors rather than tight labor markets that empower workers.
In 1937, the Federal Reserve argued explicitly that “price stability should not be the sole or principal objective of monetary policy.” Rather, it defined economic stability as “full employment of labor and of the productive capacity of the country as can be continuously sustained.” The Board of Governors believed that goal might, in some instances, mean accepting inflation as a price of, not threat to, stability.
In early 1945, as World War II and the wartime full-employment economy both came to a close, Congress began to debate a full employment bill that proposed all men had a right to a job, and that the government take responsibility for creating those jobs where the private sector failed. This commitment proved a sticking point for many in Congress who believed the private sector, not the federal government, should create jobs. As a compromise, the final version of the bill, the Employment Act of 1946, encouraged consumption to drive employment and vice versa. The idea of a “consumer” moved one step closer to being at the very center of the American government’s management of the economy.
comments powered by Disqus
- The Debt Ceiling Law is now a Tool of Partisan Political Power; Abolish It
- Amitai Etzioni, Theorist of Communitarianism, Dies at 94
- Kagan, Sotomayor Join SCOTUS Cons in Sticking it to Unions
- New Evidence: Rehnquist Pretty Much OK with Plessy v. Ferguson
- Ohio Unions Link Academic Freedom and the Freedom to Strike
- First Round of Obama Administration Oral Histories Focus on Political Fault Lines and Policy Tradeoffs
- The Tulsa Race Massacre was an Attack on Black People; Rebuilding Policies were an Attack on Black Wealth
- British Universities are Researching Ties to Slavery. Conservative Alumni Say "Enough"
- Martha Hodes Reconstructs Her Memory of a 1970 Hijacking
- Jeremi Suri: Texas Higher Ed Conflict "Doesn't Have to Be This Way"
- New transcript of Ayn Rand at West Point in 1974 shows she claimed “savage" Indians had no right to live here just because they were born here
- The Mexican War Suggests Ukraine May End Up Conceding Crimea. World War I Suggests the Price May Be Tragic if it Doesn't
- The Vietnam War Crimes You Never Heard Of