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MN2020 - Keeping Humphrey’s Policies Alive
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Keeping Humphrey’s Policies Alive

August 13, 2012 By Lee Egerstrom, Economic Development Fellow

This is the first of a two-part series

As a wide array of dignitaries gathered with ordinary citizens in the early August sun on the State Capitol grounds, they remembered the “Happy Warrior” for his civil rights work and efforts to encourage civility in public debate.

But there is far more to Hubert Humphrey than many people know or remember. Let’s look at two such Humphrey efforts, his jobs policy to benefit companies and workers and farm, food and trade policies to bolster farmers and feed the world’s hungry.

The two are far more closely related than people realized at that time.

The closest thing to a U.S. industrial policy – or full employment policy – ever undertaken in this country was the 1978 Full Employment and Balanced Growth Act commonly known as the Humphrey-Hawkins Full Employment Act.

“It’s still on the books. Some of it expired. But it still offers direction for how we should respond to recessions, unemployment and downturns in the economy,” said Hy Berman, the emeritus University of Minnesota history professor and close friend of the late senator.

“It was a tribute to Humphrey and [former California Rep. Augustus] Hawkins,” he added. “I don’t think Congress was ever serious about it.”
President Jimmy Carter signed the bill on October 27, 1978, nine months after Humphrey died. It was a major expansion of the 1946 Employment Act.

Critics at the time thought the bill was unmanageable and this probably explains why Berman said Congress wasn’t serious about enforcing it. On one hand, it set unemployment rate triggers to signal when the government should become “an employer of last resort” and stimulate jobs like Great Depression measures under FDR’s New Deal. On the other hand, it connected such fiscal policy objectives with monetary policy and required the Federal Reserve governors to set policy for long-term growth, to fight inflation and promote price stability.

The latter directions also required the Fed to send semi-annual monetary reports to Congress, which it continues to this day, and requires presidents to set economic goals for the next fiscal year and recommend policies to achieve those goals. The latter continues as well, with a lot of room to fudge on both numbers and goals.

It wasn’t until the 1980s that most people saw how profoundly monetary policy impacts employment, the direction and flow of trade, and jobs. Humphrey did. Most people still don’t.

I didn’t when I was a Washington correspondent covering Humphrey for the newspaper group that owned publications in St. Paul, Duluth, Grand Forks and other Midwest cities. Humphrey called late one day, mad after meetings with other senators and administration officials. He suggested I use my opportunity to write an op-ed piece for our newspapers on the imbalance of trade and how it was hurting employment.

Japan was then the China of today. As I recall the conversation, he said, “We send them a bushel of soybeans, they send us a television set. We ship a ton of soybean meal, they send over an automobile. That might be a one-to-one ratio, but it’s not balanced trade.”

At some point in 1974, I scheduled a late, after work interview meeting with Humphrey for a story on food aid. The meeting got delayed for nearly an hour. Sitting in his outer office, I could hear Humphrey and his visitor shouting at each other although I couldn’t discern what they were saying.

Betty South, the senator’s hard working press secretary, apologized and said it was Federal Reserve Chairman Arthur F. Burns inside. “I think they kind of like each other even if they don’t agree,” she diplomatically said.

Burns walked out, shook hands with Humphrey, and left. I went into the office for the interview. Humphrey was still steamed. “Let me tell you something,” he said. “When farm prices go up, consumer food prices go up. When farm prices come down, consumer food prices still go up. That’s all you need to know about agricultural economics.”

That wasn’t enough, then or now. Humphrey knew it. But long before most of us, Humphrey knew that monetary policy needed to be in balance with fiscal policy. Fiscal policy is tax and spending legislation set by Congress in tandem, hopefully, with the administration. Monetary policy, which regulates the money supply and impacts inflation and interest rates, is set by the semi-autonomous Federal Reserve.

Central bankers the world over determine who have jobs, and who doesn’t, and who has access to food, and who doesn’t.

The latter cruel reality will be discussed here tomorrow.

Photo credit: Yoichi Okamoto, wikimedia commons

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