Wednesday, April 1, 2009

Re-Post Number 4: "WPA or PWA - Which Policy for Progressives?" (Aug 11, 2007)

Note: the following re-post moves from the mechanics of public employment policy to some of the intellectual issues that complicate the question of direct job creation. Here, the issue is whether there is an important difference between "public employment" and "public works;" my argument is that there is an important difference, and that progressives should emphasize the former over the latter as an anti-cyclical economic recovery policy.


The difference between public employment and public works is not an easy one to grasp, and many very smart people (John Maynard Keynes for one, Léon Blum for another) have often missed the difference and advocated for one when they should have been advocating for the other. Many historians of the New Deal have been equally confused – to give a good example, Udo Sauter was particularly split on the issue: "It seems possible to differentiate between public works for relief purposes and work relief, he wrote, since "according to one definition, the former term would designate "needed public improvements," which may have been advanced [in time] to provide employment, but which must have been undertaken in the near future relief, by contrast, would consist of "operations definitively undertaken to provide employment." However, Sauter then argued that this distinction was essentially artificial, since both programs involved building and both were intended to provide for employment. At first glance, this pronouncement seems reasonable: both policies involved the hiring of workers and the production of certain goods, both directed their workers to manufacture similar goods (buildings, roads, bridges and tunnels, and so forth); indeed, both policies drew their funding from the same bills and were carried out by agencies with similar initials.

However, I would argue that public employment and public works have to be seen as contrasting policies that, during the era of the New Deal struggled over funding, political support, and popular prominence, and that should be seen as distinct. Beyond the immediate level of competing bureaucracies, public employment and public works had important policy differences in regards to focus, effect, results, and method of administration.

To begin with, public employment’s focus was on employing people, while public works’ focus was on the end product of their labor; this difference would inform decisions made by administrators seeking to suit limited budgets to their programs focus – would they spend their last $100 for the month on three workers’ salaries or 75 bags of cement? These kinds of decisions would greatly affect how much each program would affect the economy and in what ways. Moreover, focus also became an important influence on how these programs perceived the Great Depression. Administrators of public employment programs tended to see the crisis through the lens of mass unemployment, and concluded that the road to recovery would be to bring unemployment down to "normal" levels. Public works administrators tended to emphasize the shocking decline in production and investment and argued that the best way out of the Depression was to use government dollars to re-invigorate America’s "core industries" – construction, steel, concrete and brick-making, lumber, and tool and machinery production being just a few of these.

This contrast carried over to the programs’ intended effects. Public employment officials believed their programs would impact the economy through its effects on people – first, by preventing outright starvation among the unemployed; second, by reducing the impact of mass unemployment on wages; and third and most importantly, by directing purchasing power into the hands of a population that had been unable to be consumers for some time, expanding demand while redistributing income and goods towards the lowest economic bracket. By contrast, public works officials believed that their programs would aid recovery by addressing the needs of industry. Public works orders would provide a baseline of demand to keep factories open, but even more so, the public works themselves would speed up the process of economic development – dams would bring new energy sources (both water and electricity) into rural areas, kick-starting the modernization of agriculture, and opening up new markets through the extension of modern transportation systems into remote areas.

The two programs’ results were also different. While both emphasized construction, public employment officials favored light construction, which favored large workforces and could be done without the need for heavy machinery or large amounts of materials. Light construction thus tended to produce goods suited to the needs of the urban public – schools, hospitals, libraries, city halls, airports, post offices, city streets, and housing. Public works programs tended to produce goods more suited to improving the nation’s economic infrastructure – electrical power generation, irrigation, national highways, large-scale bridges and tunnels, and so forth. These "public goods" not only had a close connection to the goals and intended effects of the program, but also had an impact on the two programs’ constituency – public employment tended to draw the support of the unemployed and the low-wage working class, while public works tended to draw the support of construction firms, contractors, and skilled workers, especially in the building trades.

Finally, public employment and public works used very different mechanisms to produce their "public goods." To create their light construction projects, public employment officials overwhelmingly used what is known as force account – the direct hiring of workers by the government, in this case with the Federal government as the employer of record. This technique gave public employment officials much more control over how many new jobs were created (and just as important who got them) in which areas, the wages and working conditions of those jobs (which often had serious impacts on local labor markets), but it also meant that the Federal government had to deal with the problems of managing workers with widely varying levels of skills, literacy, and experience. Public works administrators, on the other hand, in no small part because heavier construction required more investment in machinery, tended to build their projects by contracting out to private construction firms. This simplified the process of hiring workers, assured a level of skill and oversight over the construction process, and provided much needed business to a vital American industry. However, it also had its problems – contracts tended to provide work to the already employed, diminishing the potential impact on unemployment. Furthermore, the government had much less say over hiring, the conditions of employment, given the intervening layers of contractors and subcontractors.

As has been suggested, these technical differences tended to have ideological or intellectual consequences, as programs naturally gravitated towards political economies that validated their purpose. Public employment was more suited to, and open to, political economies that emphasized demand-side solutions to the Depression, redistribution of income, and more direct government involvement in the economy. Public works was likewise more attracted to political economies that emphasized growth, economic development, planning, and government stimulation of the private sector.


So what does all of this historical theorizing mean for progressives today?

First, progressives should understand what different policy options should or are suited to do, and approach them as parts of a toolbox, and not one-or-the-other solutions. Public works, like building or repairing or maintaining the massive bridges across the Mississippi that we have seen are in urgent need of renewal, are not the best means of fighting unemployment, economic stagnation among the working class, or poverty. Similarly, public employment functions best when the majority of its funds can go towards payroll instead of towards the expensive machinery, materials, and land that are required for the heavier kinds of construction. However, there shortcomings – or as I would argue, specializations – are just the flip-side of advantages.

The strengths of public works are producing large-scale public goods that work to improve our national infrastructure (bridges, tunnels, and highways), provide important services like electricity, or defend us against natural disasters. The strengths of public employment are reducing unemployment, increasing purchasing power, and creating more real-estate-and services-type public goods – things like housing, schools, libraries, post offices, hospitals, and roads.

The two approaches complement each other, as public works creates the larger institutional frameworks that spur economic growth and economic opportunity and public employment provides the support to workers and consumers to turn that institutional opportunity into prosperity for all.

Second, progressives should think of policies not just as good in and of themselves, but as over-arching and inter-connected processes that shape the society and economy we live in. For the last thirty-odd years, Americans have been taught to be pessimistic about the ability of the government to effect change in our lives – you can see this in editorials that say that presidential policy has little impact on the economy, or pundits who assume that market-based approaches are the only efficient option possible. However, the truth is that the government can and does make a huge difference in our economic and social lives.

The next step towards building an effective progressive agenda is learning to visualize the economy and society we want to have, and seeing different policies as ways to achieve parts of that. Used correctly, public employment can give us a high employment, high wage economy; used correctly, public works can give us faster and cleaner transportation, cleaner and cheaper electricity, and a safe reliable infrastructure.


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