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its sustained orientation toward support for full employment is the critical task. While other matters are important and the major work of reconstructing economic policy institutions sustainably committed to full employment and stable prices lies ahead, these matters are all secondary, for the simple reason that those with the power to disrupt the macro-economy control the supply of the unemployed and the direction of movement of inequality. Unless that power remains harnessed to the pursuit of full employment, as it was during the 1940s and in the 1960s, Americans will not see a return of anything resembling a middle class wage structure. With effective pursuit of full employment, other useful measures become possible, economically and politically, including a higher minimum wage, stronger social security protections, universal health care, and programs of investment in shared public amenities. All of these steps would reinforce a trend toward greater equality in the private wage structure. We must therefore once again consider the possibility of a politics of sustained full employment, low and stable interest rates, stronger economic growth, higher minimum wages, and declining inequality. The way to restore the prosperity of the American middle class is the way that prosperity and those hopes were created in the first place. We need not an unfettered and enfeebled private economy, but a concerted partnership between a strong and determined government and an energetic private sector, better regulated but also much more vigorous than we have had. It has been done before. It can be done again. Success is not precluded by laws of economics. This is no paradox, no contradiction. The failures after 1970 and again after 1980 in the United States came because government divested, deregulated, destabilized, and left private institutions to fend for themselves. The successes in the 1940s and in the 1960s came because government took a firm leading hand at the highest levels of macroeconomic policy. In the 1990s, a weaker but still substantially pro-growth American monetary policy has made some progress in the right direction, but not enough. No dreadful loss of efficiency will now follow a concerted political program of solidarity and full employment. Quite to the contrary. We will discover that efficiency improves when a larger number of people feel they have a fair shot at being middle class, and when “middle class values” come again to define our broader culture. We will find that people work harder under those conditions, that they are happier, that families are more stable, and that patterns of investment, consumption and even technological change will accommodate themselves to more equality in the society at large. These would be vast benefits, and they will not be easily won. But the first step is surely to begin to understand clearly where the way forward toward a more equal society lies. Author’s note: this, year’s Federal Reserve conference of the world’s central bankers and their friends, which took place in late August in Jackson Hole, Wyoming, was devoted to inequality. But there were no sessions on the role that the Federal Reserve itself has played in the inequality crisis. The above is an edited selection from Created Unequal: The Crisis in American Pay, a Twentieth Century Fund Book published by The Free Press \(reprinted fessor at the LBJ School of Public Affairs, U.T.-Austin, and Senior Scholar at the Jerome Levy Economics Institute. James Galbraith will be signing copies of Created Unequal in Austin at Book People on Wednesday, September 23, at 7 p.m. CLASSIFIEDS ORGANIZATIONS WORK for single-payer National Health Care. 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