Constant Full Employment Growth: The Economic Analysis and Policies of Leon Hirsch Keyserling,Council of Economic Advisors – The Truman Era and Beyond

Introduction

This article provides an overview and evaluation of Leon Hirsch Keyserling’s long-term economic policy recommendations during and after the Presidency of Harry S. Truman. Necessarily, this will briefly include examining the background of Keyserling in relation to Rexford Guy Tugwell of Columbia College. The “Background: Keyserling and Tugwell” section deals specifically with Keyserling and Tugwell who later introduced Keyserling to many of the social scientists in Washington at that time (the “Brain-Trust”). During the early Franklin Delano Roosevelt presidency, Keyserling therein began the development of his own economic analysis inspired by Tugwell and others. Keyserling, along with Senator Robert Wagner (D, New York), was responsible for the development of the Employment Act of 1946 (Gates, 1968). He was also a member of the first Council of Economic Advisors created by the Employment Act, and the second chair of the Council. The “Full Employment Growth” section contains the basics of Keyserling’s analysis via the introduction of the concept of “Constant Full Employment Growth” and the policies which followed. The “The ‘Accord’” section deals with the “Accord of 1951” which Keyserling believed to be a crucial error (Brazelton, 2001). The “Wages and Consumption” section deals with wages, consumption, and policy tools in brief in relation to Keyserling’s vision of “Constant Full Employment Growth.” The “Wages/Employment/Consumption” section deals with more recent economic analysis concerning the concept of wage-led versus profit-led growth, which tends to substantiate the growth analysis of “Constant Full Employment Growth” introduced in the previous section. The “The Specifics a la Keyserling” section concerns the specifics of 16 policy choices important to Keyserling and to long-term growth. Finally, the “Conclusion” section concludes the analysis.

Background: Keyserling and Tugwell

Leon H. Keyserling was born in Charleston, South Carolina, January 28, 1908. His family lived and “plantationed” (his term) on St. Helena Island off the coast of Beaufort, South Carolina. In 1928, he graduated from Columbia College (now Columbia University) where he met and took classes from Professor Rexford Guy Tugwell of the Economics Department. Keyserling graduated at the age of 20 and proceeded to obtain a law degree from Harvard University in 1931. After 1931, he returned to Columbia where he continued his previous mentorship with Professor Tugwell. Tugwell was a prominent “Institutionalist” economist for whom Keyserling had both respect and lasting memories (Brazelton, 2001, pp. 9-16).

Tugwell himself is a person of interest in understanding Keyserling’s economic views. During the Roosevelt Administration, Tugwell was part of the so-called Roosevelt “brain-trust” during 1932. The next year, he became Assistant Secretary and later Under-Secretary of Agriculture, where he and Keyserling were responsible for many Agricultural, Labor, and Housing Acts during the depression years of the 1930s. Later, Tugwell was appointed by Roosevelt as the last non-Puerto Rican Governor of Puerto Rico (1941-1946) where Tugwell inaugurated the so-called “bootstrap policy” which began the growth of the Puerto Rican economy (Brazelton, 2001, p. 9). He died in 1979 at the age of 88.

Tugwell was a liberal and an Institutionalist whose views on government policy involved a strong belief that the federal government should have large-scale plans to move the economy out of the Great Depression because private enterprise was too “frozen” in place to do the job (Wikipedia, 2017). Thus, he believed more extensive economic planning was necessary during and after the Depression itself.

The beliefs of Tugwell are more specifically expressed in the March 1932 Supplement of the American Economic Review. Therein, Tugwell (1932) articulated his policy recommendations in liberal and strongly emphasized terms. He stressed that (a) central planning and conflict resolution between nations were both necessary to prevent international conflicts that would follow if disagreements were not resolved, (b) abandoning laissez-faire for extensive planning would be “practically” the end of “business” as practiced at that time, and (c) “business as usual” brought about the separation of ownership and control, over capacity, and a maldistribution of income and power. Thus, in Tugwell’s perspective, profits persuaded businesses to speculate—effecting long-term returns, income distribution, et alius, but such profits were necessary for business and the internal flow of funds. Keyserling himself never adopted Tugwell’s extreme positions. As chair of the Council of Economic Advisors, Keyserling continually met with business leaders to increase their understanding of economic problems and policies, and explained to them the “whys” and “therefores” of economic policy (Brazelton, 2001, 169f). Thus, Keyserling stood for cooperation and mutual understanding between government and business but not control of business by the government. Cooperation and understanding were the keys—not control.

More specifically, in relation to Tugwell’s analysis concerning the Depression in the 1930s and economic planning, Tugwell’s student—Keyserling himself—later wrote that the victory in the war against poverty

will necessarily involve success in all the other undertakings which now engage us: the restoration and maintenance of maximum employment and economic growth; the working-out of fundamental causes for racial tensions; the provision of full educational opportunities, adequate health services and satisfactory housing for all the people, the renewal of all our cities and the improvement of rural living; the conservation and employment of our natural resources, the solution of the thorny financial problems which now bear down on government at all levels . . . to allow for all persons to be . . . free to devote themselves to the higher purposes of human development. (Keyserling, 1964, p. 1)

From the above, one can see similarities between Tugwell and Keyserling. Tugwell was a “liberal” as was Keyserling, and as was his economist wife, Mary Dublin Keyserling (Wehmeyer, 1999). Although Tugwell was an eminent Institutionalist, Keyserling never claimed to be either an Institutionalist or a Keynesian despite his use of monetary and fiscal policies for constant full employment growth. In interviews, he always referred to himself as a “pragmatist” in that “you do what works . . .” (Brazelton, oral interview, 1999-2000; Brazelton, 2001, p. 141). However, this author believes that Keyserling was basically Keynesian in terms of overall economic policies, and an Institutionalist in terms of how he viewed the actual structure of the economy—“big business, big labor, big government!” Furthermore, Keyserling always considered it ironic that we expect big business to make plans and to follow the plans, but ironically we do not expect (or want) big government—the biggest business of all—to make plans and follow them. Thus, Keyserling believed strongly in the private enterprise system and met with many industrial leaders to discuss economic policy to develop and coordinate the policies of the private sectors and the public sectors of the economy (Brazelton, 2001). Keyserling also believed in planning at some level, especially concerning priorities—If there was a choice between building a school or a casino, build the school first for the purpose of long-term growth via education, skills for the development of future workers and future leaders (Brazelton & Wehmeyer, 1989). The casino can come later—after the school! It is now time to consider his constant full employment growth policies more specifically.

Full Employment Growth

In his Council days and late in his Conference for Economic Progress days (see the appendix), full employment growth to Keyserling meant just that—the constant full employment growth of the American economy with a balanced federal budget only at full employment, but with a budget deficit until full employment had been reached—the deficit necessary to drive the economy toward full employment (Brazelton, 2001, 2003; Keyserling, 1957, 1958a, 1962, 1963). But what rate of economic growth should the nation aim for? In an oral interview, Keyserling stressed that if at one time the economy grows at 2%, at another time 3%, and at another time 4%, the average would be 3%. But to Keyserling, 3% was not to be aimed at, but 4% was—The economy should grow at the best rate it could, not merely the average. Given that rate of growth, the budget deficit should be zero (balanced budget), but only at full employment (Brazelton, 2001, 2003a, 2003b, p. 88). If the budget is balanced prior to full employment, that to Keyserling was not full employment! The question arises as to how to obtain and maintain such a rate of growth. This is a matter of economic policy.

First, consider the area of monetary policy; there should be an increase in the money supply sufficient for the purpose of financing the targeted growth rate and to produce and purchase the goods and services necessary for that rate of growth (Brazelton, 2001, 2003, 2008; Keyserling, 1954, 1955, 1957, 1962, 1963, 1975). Keyserling was a strong proponent for increasing the money supply over time to finance and continue a rate of growth consistent with full employment. However, Keyserling was not an advocate of Milton Friedman, who had a somewhat similar argument. Put simply, Friedman (1970) called for the average rate of growth in the money supply to the rate of growth of the economy over time. Thus, if the average rate of growth of the economy over time was 4.0%, a constant rate of growth of the money supply over time should be sufficient to maintain that rate of growth. Keyserling disagreed. To Keyserling, the average rate of growth of the economy over time may not be the best rate of growth to reach and maintain full employment. For example, in any economy, there are periods of slower than the normal rate of growth (recession) and faster than the normal rate of growth (inflation) in relation to the business cycle and other factors. If the economy is growing slower than the normal, the money supply should grow faster so as to reduce interest rates to increase investment via the lower interest rate (a cost) on borrowed funds for investment purposes so as to increase the rate of growth of the depressed economy. If the economy is growing faster over time than its normal rate of growth to maintain full employment (inflation), monetary growth must slow down so as to increase interest rates to diminish investment growth to slow down the inflated economy. Thus, a constant money supply growth to Keyserling was necessary but not sufficient. Monetary policy and interest rate policy must fit the needs of the time to maintain his conception of a constant full employment growth.

Monetary policy, of course, was to be carried out by the Federal Reserve in the United States, and whatever national or regional central bank which serves a similar role such as in the United Kingdom or the European Union. In addition to monetary policy, there is fiscal policy. Countercyclical fiscal policy calls for deficit financing when necessary both for the avoidance of recession and for full employment growth. If we fall into a recession, the result is slower than constant full employment growth. The result is unemployment of labor, resources, and finances. Thus, federal expenditures should increase. From the flow of such expenditures (E) through the economic system over time, tax revenues (T) will increase as well. The difference (E – T) is the deficit, which, times the multiplier, is the change in GDP and economic growth. To Keyserling (1975),

Under the Employment Act, full employment means more than jobs. It means full utilization of our national resources, our technology and science, our farms and factories, our business brains, and our labor skills . . . Full employment means maximum opportunity under the American system of responsible freedom . . . and it is a concept which must grow as our capabilities grow. Full employment tomorrow is different than full employment today. (p. 7)

The above calls for an expansive fiscal policy and the cooperation of the Federal Reserve to finance such an expansion as Keyserling needed for full employment growth. This had been the general policy of the Federal Reserve since the beginning of World War II, which continued until just after the beginning of the Korean War. But, as the Korean War began to call for an increase in wartime expenditures, increased fears of inflation became prevalent. Thus, the policy of the Federal Reserve to buy government bonds at low interest rates (pegging the interest rate) was seen as a possible contribution of future wartime inflation. Thus, the “Accord” of 1951 between the Treasury and the Federal Reserve—which Keyserling believed to be a vital mistake—limited the constant full employment growth potential (Brazelton, 2001; Keyserling, 1964, 1980), as discussed below.

The “Accord”

The “Accord” of 1951 was actually a “disaccord.” Prior to 1951, the Federal Reserve agreed to purchase federal bonds at a low interest rate. The reasons were that during World War II, the government needed large amounts of money to finance the war at the lowest possible costs. They intended to keep interest rates (a cost) low on Federal bonds to make possible the financing of the war as cheaply as possible. Also, this made the market value of the bonds relatively high and relatively constant; the purchases of bonds incurred little risk of falling market prices. This policy continued after World War II until 1951, even though the war was over in 1945. However, after 1945, there were large domestic investments to be made such as continued military expenditures of the Cold War, the development of the Interstate Highway System, the Housing Act as discussed below, the Farm Acts, and the reinstitution of the economy for peacetime uses which had to be financed at the lowest possible costs (thus the desire to keep interest rates low), and due to fears that the postwar period would return to the depression of the 1930s. But, by 1951 to 1952, there were renewed fears of inflation. Thus, the Federal Reserve’s and Treasury’s policies to keep interest rates low would be counterproductive if inflation were to occur as feared. Thus, an “Accord” was struck which allowed interest rates on federal bonds to rise as the Federal Reserve no longer purchased bonds for the purpose to guarantee lower interest rates. To Keyserling (1960, 1964a, 1980), this was a mistake because it weakened the possibility of constant full employment growth, as higher interest rates would discourage borrowing for investment purposes.

Keyserling pointed out that high interest rates would decrease not only full employment growth potential but also transfer wealth to the upper financial classes via higher interest rates on Federal bonds, and also threaten to decrease the present market value of past bonds (but, of course at redemption, they would trade or exchange at par). This meant that instead of a constant growth policy, the government would follow a policy to prevent inflation and/or recession—a countercyclical policy. But to Keyserling, this was insufficient for long-term growth. He believed in a constant increase in the money supply to further growth (as would Friedman), but Keyserling would keep interest rates low whereas Friedman would not. Thus, to Keyserling, the “Accord” on the part of the Federal Reserve “took a permanent turn for the worst . . .” as such,

the amount of goods and services available to meet national needs . . . has averaged far below our potential need . . . Consequently, there has been and still is in the process a large chronic increase in unemployment of men, women, and teenagers with its incidences and burdens occurring on a tremendously unequal and unjust basis. (Keyserling, 1980, p. 3)

Also, to Keyserling, decreased growth diminished public revenues which resulted in an increase in the very budget deficits so feared by many as a cause of inflation. Deficits do not a priori cause inflation, but inadequate growth of goods and services do as shortages of goods cause increased prices (Keyserling, 1980). As Keyserling (1978) believed in constant full employment growth,

It is not nearly good enough that the American economy should stop moving downward . . . it is not nearly good enough in the economy of today to become resigned or complacent and to let nature take its course . . . It is not sufficient to merely offset recessions or inflations . . . it is sufficient only to maintain full employment growth through public investment and priorities. (pp. 5-6)

Such a policy involved both high investment and high consumption which—as a result of the “Accord”—was not happening. But as high investment/production also requires high consumption, it is now time to turn to Keyserling’s concerns in terms of wages and incomes, the source of high consumption and a key to full employment growth (Keyserling, 1957).

Wages and Consumption

Keyserling was a strong proponent of high wages (w) for the continued purpose of full employment growth (y). The reason was simple, high wages and a high marginal propensity to consume (MPC) coupled with the multiplier (k) meant high income. High income (y) meant high consumption (c) and higher profits (p), so that in essence Δp = f(Δc). Let us look at the simple mathematics of such a model to indicate the point as discussed by Keyserling (1957).

If we have a wage of US$10.00 per hour and the worker works 8 hr a day for 5 days for 52 weeks (a year), we have a daily income of US$80.00. This is a weekly income of US$400.00 and a yearly income of US$20,800.00. If we increase the hourly income to US$15.00, this is US$120.00 per day, US$600.00 per week, or US$31,200.00 per year. If we have 1,000 workers, they are earning US$20,800.00 which translates to a total via the 1,000 workers of an overall income level of US$20,800,000.00. At the higher level of wages, the overall level of earnings is US$31,200,00.00. This is a change of total income from wages from the lower level to the higher level of US$10,400,000.00. This change in income (Δy) times the multiplier (k) of 2 (herein) is the potential change of US$20,800,000.00. Thus, the increase in wages (w) has increased total income (y), and such a change in income (y) will increase consumption (c) from which profits (p) can be derived. Therefore, an increase in wages is a stimulant to the economy and to profit potential—especially if a full employment fiscal and monetary policy is being followed and advances in technology are being implemented. Profits (p) is a f(w) as indicated above and was a key component for Keyserling in terms of long-term economic policy designed to result in a constant full employment growth.

The above is, of course, a macroeconomic model of the economy as a whole. The microeconomics model would indicate that the increase in wages would decrease employment due to the slope of the demand for labor curve vis-à-vis wages. Higher wages, ceteris paribus, lowers employment, thus a possible flaw in the macroargument. Let us examine that possibility.

Let us assume that the increase in the wage from US$10.00 per hour to US$15.00 per hour decreased employment by 10%—a rather high figure. If so, due to the microeconomic argument, at the high wage only 900 workers remained of the original 1,000 workers. That means that the original 1,000 workers at US$10.00 per hour were receiving a total of wages from the above US$28,080,000.00. However, if we assume at the US$15.00 wage, only 900 workers were left at the higher wage of US$15.00. This means that the total wages received by the 900 workers left at US$15.00 was US$28,080,000.00, not US$31,200,000.00—or a decrease of US$3,120,000.00. However, still in the macro world, income for the purpose of consumption has still risen by US$28,800,000.00. This, via the multiplier, is substantial and offsets via the rise in consumption/income—the micro effect. Thus, the macro seems to outweigh the micro. This analysis has been earlier handled in studies by Card and Krugman (1994), Chapman and Thompson (2006), and Pessao and Van Reenan (2013). The study by Card and Krugman, using data from New Jersey and Pennsylvania, found that in one food chain, profits often increased as wages rose; the Chapman and Thompson study found that the increase in unemployment after a wage increase was very small and that the measured costs in wages were often overestimated. Furthermore, they found that there was often an increase in productivity after a wage increase, thereby decreasing potential losses to the firms. Also, the Passeao and Van Reenan study indicates that the gap between the growth of productivity and wages is widening in the United Kingdom and in the United States, leading to slow rates of growth in both countries, but especially in the United States. Also, there are some institutional realities, which also limit the microeconomic arguments discussed above.

The microargument depends upon the elasticity of the demand for labor being such that an increase in wages would decrease employment. The macroargument indicated herein dispels that microconclusion due to the rise in wages increasing national income (given increased wages) giving due consideration to the multiplier (k). Thus, the argument concerning unemployment being caused a priori by the increase in wages is weakened as indicated mathematically above in the macromodel. But there are other more institutional processes at work. If, for example, it is untrue that an unemployed person is without income, then the economy will be less affected by any potential rise in unemployment as indicated above. Let us fully analyze that possibility.

First, the unemployed (if any) may continue to receive income in some form. He or she may receive income from unemployment insurance via the government—This is below the previous income, but it is income and, thus, consumption therefrom. Second, he or she may have a secondary part-time job which may give an income above zero. Third, there may be a welfare payment above or other than unemployment insurance alone. This means that even if there is micro-unemployment, income of the unemployed person does not automatically go to zero and, thus, neither will his or her consumption. Thus, the lesser the effect of unemployment in the “mathematical” model above, reinforces the Keyserling argument that wages are the basis for high growth, production, incomes, and consumption—even if there is some increase in actual unemployment.

Keyserling’s view of full employment growth involves a thorough view of economic potential, economic balance, and the balance between the sectors of the economy—consumption and production—the former involving adequate demand via wages, the latter involving adequate production via profits and technology, and the rate of growth of both production and consumption being proportional to each other. Many years later, Walter Heller of the Council of Economic Advisors under President Kennedy developed what was called a “full employment model” for the Council of Economic Advisors. However, Heller gave the credit to Keyserling by the statement:

The concept of full employment potential and the gap closing were not brand new; they take us back to the bold and innovative Truman Councils under the leadership of Leon Keyserling. (Quoted in: Brazelton, 2003, p. 100; Pechman & Simler, 1982, p. 218)

However, the above does not get to the basics: Can an economy be wage-led in terms of constant full employment economic growth—the constant goal of Keyserling? This question is addressed next.

Wages/Employment/Consumption

The Keyserling high wage policy meant high incomes would result in high consumption and, thus, higher profits and national income in the long run. It could be argued that such would not, in fact, be the case. It could be argued that higher wages would decrease profits and decrease exports via higher prices caused by the increased wage costs. These are logical arguments, but are they a priori true? To investigate these macroarguments, Volumes IV and V of the Review of Keynesian Economics present a series of articles on the “a priori-ness” (my term) of the above arguments.

For example, the series begins by Blecker (2016) who pointed out,

Even if demand is wage-led, economic growth (capital accumulation) can either be wage—or profit-led, depending on whether the positive effect of a higher wage share on capacity utilization is strong enough to outweigh the direct negative impact of lower profitability on investment. (p. 373f)

Later, Blecker (2016) noted, “. . . the demand regime is more likely to be profit-led (or more weakly wage-led) in the short-run and wage-led (or more strongly wage-led) in the longer term” (p. 386). Indeed, “. . . a sustained higher profit share of income will not lead to higher investment or growth in the longer term—as we have seen, for example, in the sluggish U.S. recovery since the Great Recession of 2008-2009” (Blecker, 2016, p. 387). In fact, “. . . the more the profit share increases, the more wage-led the economy becomes, and vice versa” (Nikiforos, 2016, p. 405). This, of course, hints that the worker may consume more and more and be a “net-borrower” rather than a “net saver” so that the propensity to consume is influenced upward (Satterfield & Kim, 2017, pp. 43-55). This means to Satterfield and Kim (2017) that “the less affluent worker households, who both save and borrow to finance consumption expenditures, are inclined to emulate the consumption function of more affluent households (managers and capitalists)” (pp. 55-56). This reminds us of previous works by Duesenberry (1949) and means that “. . . borrowing and emulation transform the relationship between distribution and growth” (Keppler & Schütz, 2015). This gives rise to the possibility of a “consumption-driven profit-led regime” (Satterfield & Kim, 2017, p. 43) and indicates that (a) growth may be either wage- or profit-led, rather than a single growth process, and (b) the wage- or profit-led character of the growth process is partly related to past policy choices (Satterfield & Kim, 2017, p. 55) as Keyserling would agree. It also means (c) that wage- or profit-led growth “may characterize discrete stages/regimes/episodes of growth in the same economy at different points of time, and that such observance is (at least in part) a matter of public choice” (Satterfield & Kim, 2017, p. 56). Thus, an economy can be wage-led, profit-led, and/or both, and at different times during the growth process. Blecker (2016) can again be summarized in relation to Satterfield and Kim in that “. . . the demand regime is more likely to be profit-led (or more weakly wage-led) in the short-run and more wage-led (or more strongly wage-led) in the longer term” (p. 378) as postulated above. It is both high profits and wages, and consumption therefrom, that seem to be the key to continued growth (Blecker, 2016). It is now time to return to Keyserling himself in terms of his constant full employment growth philosophy and policies.

The Specifics a la Keyserling

The 1975 version of Keyserling’s “Conference in Economic Progress Papers” (see the appendix; Brazelton, 2001, 2008) sets forth 16 specific policies to achieve and maintain continued economic growth (Keyserling, 1975, pp. 32-44).

First, under the Employment Act (1946), there should be (1) “an immediate long-range program comprehensive in nature, and directed towards restoration of maximum employment, production, and productivity . . .” (Keyserling, 1975, p. 32); as (2) lower than full employment growth brings economic and social evils (via massive unemployment and massive production forfeitures . . .)” (Keyserling, 1975, p. 33). To emphasize the “specifics” of his policies based upon the above, the following proposals (3-16) will be introduced and briefly discussed.

Keyserling believed there should be (3) an immediate stress in home building. Such would increase employment of workers, the stock of housing, the employment of labor, and, in terms of resources needed for such a building project, also an increase in the production of furniture, bank lending to finance the housing, the generation of utilities for them, and, of course, realtors to market and sell the new housing. This is a concept of the multiplier and several sectors of the economy simultaneously. In addition, (4) there should be employment in “public service” for those not employed elsewhere in terms of public service jobs. Next, (5) the Federal Reserve should keep interest rates relatively low to finance the housing, the jobs, the suppliers, and so on. This was—again—an attack upon the “Accord” discussed above.

In addition, there should be a tax reduction and increased federal spending for constant full employment growth as long as such fiscal policies increase jobs and economic activity. A tax cut should (6) reduce the tax burden on the middle- or lower-income class. These policies were based upon Keyserling’s view of social justice and the proper functions of fiscal and monetary policies. As such, (7) the federal spending increases should “be directed towards meeting the priorities of our national needs, and towards overcoming current and prospective shortages such as those in energy, food, and housing” (Keyserling, 1975, p. 36). These relate back to (3) and (4) above.

He (8) did not rule out a balanced federal budget instead of a deficit as discussed above, but “reckless cuts or even repression of adequate growth in the wrong parts of the economy are both inflationary and hurtful to production and employment” (Keyserling, 1975, p. 38, emphasis added). In the long term, reducing the federal deficits requires “a rigorous movement towards and the achievement of full utilization of our ever growing and now socially under-utilized economic capabilities” (Keyserling, 1978, p. 38).

Keyserling also addressed the problem of national defense (9) (Keyserling, 1978). Keyserling favored expenditures for national defense to counter the Soviet Union’s threats and for fiscal reasons, but he did recognize that national defense should not impose upon domestic priorities discussed above. Domestic priorities, to him, had been inadequately served in the intervening years even before the military buildup due to the Vietnam War. They could be financed without drastic cuts in Vietnam military expenditures as the economy expanded via the economic policies he prescribed. He hoped for lower military/GDP ratios in the future (Keyserling, 1975). Keyserling did speak in terms of some bigger income supports. For example (10), there should be unemployment insurance, more adequate social security benefits, and we must be “mindful of the need for and cost of income support plans for those unable to work” (Keyserling, 1975, p. 40). Next (11),

The long overdue and promised effort to substitute properly defined and limited income support for the “ragbag” (his term) of costly and grossly inadequate “welfare” programs should be commenced at once. This would be a true economy and very humane. (Keyserling, 1975, p. 40)

Later (12), he called for a manpower training program to train for jobs, but for the jobs that are available which returns us to the full employment growth policies and the priorities.

With respect to agriculture (13), Keyserling advocated for national farm policies. There should be enough farm output (a) to properly feed the entire population, (b) to eliminate the disparages of income and services to farms and other rural areas, and (c) to reduce the “spread” between what the farmer was paid for his crops and the final market price for those products to the consumer. The reason for this “spread” was that the farmer sold his food output in a competitive market, but the final agricultural sector sold it in a more oligopolistic market and, when, at a higher noncompetitive oligopolistic market price the final seller receives the increased profits therefrom, not the farmers. In terms of that, Keyserling would have preferred an “income support” policy for farmers instead of the minimum price system. This referred back to the views of Charles Brannon, Secretary of Agriculture under President Truman, but never implemented despite the efforts of Brannon, Keyserling, and others. In terms of monopoly and restrictive practices (14), including noncompetitive price increases, the federal government should investigate and provide the means to prevent such practices. However, such policies should not impose upon “useful and protective measures, such as minimum wage standards” (Keyserling, 1975, p. 41). In terms of the above, such would do much (15) in terms of reducing inflation (administered pricing from 14 above) and, thus, benefit the economy and the public via lower prices. However, he did not have much hope for such more complex pricing policies (Keyserling, 1975) as a realistic possibility.

Last, in terms of “Energy Expansion and Conservation” (16), Keyserling was both insightful and ahead of his time. He stressed energy conservation and price controls if needed in terms of public utilities, and the need for public funds to increase the supply of energy in the future and (in 1975) his desire to “reduce our oil importation and promote conservation,” but he did not have much faith in such measures in terms of forthcoming public policies (Keyserling, 1975, p. 44).

Conclusion

This discussion has primarily concerned the major aspects of the constant full employment growth concept of Leon Hirsch Keyserling, the second chair of the Council of Economic Advisors to the President under President Truman, and a major author of other important legislative acts, including the Employment Act of 1946 (Brazelton, 2001; Pickens, 2009). Keyserling constantly called for a full employment growth model with zero deficits at full employment, not for fiscal responsibility but for full employment! A future chairman of the Council under President Kennedy praised him for this, as quoted above. But as Keyserling put it succinctly,

Maximum employment means full time jobs for all willing and able to work, allowing for minimal or “frictional” unemployment with growth in the number seeking employment not inhibited by scarce job opportunities. It means programs to qualify for employment those now handicapped by inadequate education or training, or debilitated by bad housing or inadequate healthcare. It means that those on the job should not be underutilized and should have a chance to upgrade their skills and earning power. By definition, maximum employment is incompatible with unemployment or inferior employment or pay—based upon color, race or sex. (Keyserling, 1964, 87f)

Furthermore, he added,

Under the Employment Act, full employment means more than jobs. It means full employment of our natural resources, our technology and science, our farms, and other factories, our business brains, and our labor skills . . . full employment means maximum opportunity under the American system of responsible freedom . . . a concept which must grow as our capabilities grow. Full employment tomorrow is different from full employment today. (Keyserling, 1975, p. 7)

The problems of one era and its resources and technology will be different tomorrow than today.

To this author, Keyserling was both a man for his time and is also a man for our time. To him, the basic need was permanent growth for all! In a speech at the memorial service for Leon Hirsch Keyserling upon his death, John Kenneth Galbraith summed him up and I agreed. Galbraith stated,

We remember at this meeting this afternoon one of the truly committed and effective leaders in modern policy and beyond that in all compassionate economic actions and reform. I decline to believe that men like Leon Keyserling are of the past. I believe or assuredly I hope that they are also of the future. (Galbraith, 1987, pp. 14-16, Memorial Services, Leon Hirsch Keyserling)

As such, he remains a man for then and for those times but, also, meaningful for us in our time as “constant full employment growth” is for all—both then and now. This means that possible policies may have changed, but the aim for constant growth for all and for all time must remain a goal. He was, then, a man of his time as well as for our own. Thus, Keyserling’s constant full employment growth is a goal for all time—our own and, hopefully, the future.