The Fed Should Be Meeting In Ferguson, Not Jackson Hole
Finally, residents in Ferguson, Mo., this morning are waking up to a violence-free night, 13 days after the shooting death of Michael Brown sparked days and nights of demonstrations and rage.
Meanwhile, members of the Federal Reserve and other global central bank leaders are also waking up from a peaceful night’s sleep in Jackson Hole, Wyo., where two days of meetings about U.S. and world economic conditions are scheduled to begin.
The central bankers and the Ferguson residents would do well to switch places.
Ferguson is actually a much better place from which to understand the consequences of the past six years of economic policies. If Federal Reserve members were there, they would hear first-hand about the economic desperation that provided some of the kindling for the fires that erupted when a white police officer gunned down an unarmed 18-year-old.
Ferguson residents would tell them that they need, and deserve, to live in a full-employment community like that of the town of Jackson, Wyo., where the unemployment rate is well under 4 percent, compared to the 14 percent unemployment in Ferguson. The median income in Jackson is around $54,000; it’s $37,500 in Ferguson. Twenty percent of families in Ferguson live below the poverty line; 7 percent of families live below poverty in Jackson.
At least when it comes to economic conditions, a lot more Americans live in communities like Ferguson than in communities like Jackson. Yet the major fear that is threatening to dominate the conversation among Federal Reserve members and the U.S. economic experts there is that too much is being done to boost the economy and reduce unemployment, and that the central bankers should turn their focus to keeping inflation in check. That would mean raising interest rates and not making any moves, such as the “quantitative easing” bond-buying program that added billions in liquidity to the market, that would add stimulus to the economy. (Never mind that just two days ago outlets like Bloomberg News reported that “the cost of living in the U.S. in July climbed at the slowest pace in five months” and “inflation continues to run below the Federal Reserve’s target as sluggish global demand limits companies’ ability to charge customers more.”)
A preoccupation now with the phantom of inflation instead of the reality of historic levels of “post-recovery” joblessness would be a disastrous turn by the Fed and a slap in the face for the millions of Americans like those in Ferguson for whom the phrase “economic recovery” is a fantasy.
To send that message, the Campaign for America’s Future has joined more than 70 organizations in signing an open letter to the Federal Reserve urging it to “adopt all policies necessary to rapidly reach a full employment economy that expands the middle class, raises wages, and reduces poverty.”
“Although the stock market has roared back to life and the wealthiest Americans are richer than ever before, too many of us struggle to secure even basic levels of dignity. Our wages are too low and housing is too expensive; we are weighed down by student debt and credit card debt and mortgage debt; and there are simply too few good jobs to be found,” the letter says.
The consequences of a premature turn away from full employment would be especially dire for African Americans and Hispanics, and for people who don’t have a college education. Roughly one in five African Americans and one in six Hispanics are currently unemployed or underemployed, according to a fact sheet by the Economic Policy Institute on “how the Federal Reserve can help or hurt the economy.” The fact sheet adds that “about one in six workers with only a high school degree are unemployed or underemployed.”
Even with a national unemployment rate of 4 percent, communities like Ferguson, which roughly two-thirds African-American, “would still face recessionary levels of unemployment. A full recovery is essential for any possibility of income growth in these communities.”
If the national conversation about race, police violence and the economic struggles of communities like Ferguson isn’t enough, perhaps the economic leaders at Jackson Hole – and the members of Congress now in their congressional districts during the August recess – will be sobered by the confessional this week of French president François Hollande.
Hollande followed the conservative economic playbook of cutting government spending and aid programs with the expectation, as conservative ideology maintains, that private sector investment would be unleashed. He now says he was wrong. “The diagnosis is clear,” Mr. Hollande said in an interview published Wednesday in the French daily Le Monde, as reported by The New York Times. “Due to the austerity policies of the last several years, there is a problem of demand throughout Europe, and a growth rate that is not reducing employment.”
He, of course, is not alone. Germany’s Angela Merkel, a leading champion of austerity in Europe, has also conceded that the strategy has failed and is allowing for more stimulative government policies.
These voices should weigh heavily in the minds of the economic leaders in Jackson Hole. But even more weight should be given to the voices of the residents of Ferguson, and today a group of activists organized by the Center for Popular Democracy will be at Jackson Hole to help make that happen. While a police officer’s bullet was the spark, the agonies and frustrations rooted in a lack of jobs and economic opportunity provided much of the fuel for the flames. Dousing those flames, repairing the damage and eliminating the conditions that would breed more fires in the future means working toward a full employment economy. Neither the Fed nor our political leaders can be allowed to change their focus from ensuring that every person who wants a job can find one.