The Freedom Budget at 45: Functional Finance and Full Employment

Levy Economics Institute Working Paper No. 668

20 Pages Posted: 4 May 2011

See all articles by Mathew Forstater

Mathew Forstater

Bard College - The Levy Economics Institute

Date Written: May 3, 2011

Abstract

Forty-five years ago, the A. Philip Randolph Institute issued “The Freedom Budget,” in which a program for economic transformation was proposed that included a job guarantee for everyone ready and willing to work, a guaranteed income for those unable to work or those who should not be working, and a living wage to lift the working poor out of poverty. Such policies were supported by a host of scholars, civic leaders, and institutions, including the Rev. Dr. Martin Luther King Jr.; indeed, they provided the cornerstones for King’s “Poor Peoples’ Campaign” and “economic bill of rights.” This paper proposes a “New Freedom Budget” for full employment based on the principles of functional finance. To counter a major obstacle to such a policy program, the paper includes a “primer” on three paradigms for understanding government budget deficits and the national debt: the deficit hawk, deficit dove, and functional finance perspectives. Finally, some of the benefits of the job guarantee are outlined, including the ways in which the program may serve as a vehicle for a variety of social policies.

Keywords: Unemployment, Full Employment, Budget Deficits, National Debt, Public Policy

JEL Classification: B500, E240, E610, H600, P160

Suggested Citation

Forstater, Mathew, The Freedom Budget at 45: Functional Finance and Full Employment (May 3, 2011). Levy Economics Institute Working Paper No. 668, Available at SSRN: https://ssrn.com/abstract=1830263 or http://dx.doi.org/10.2139/ssrn.1830263

Mathew Forstater (Contact Author)

Bard College - The Levy Economics Institute ( email )

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