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Wilmot Proviso

The Wilmot Proviso was an unsuccessful 1846 proposal in the United States Congress to ban slavery in territory acquired from Mexico in the Mexican–American War. The conflict over the Wilmot Proviso was one of the major events leading to the American Civil War.

Congressman David Wilmot of Pennsylvania first introduced the proviso in the House of Representatives on August 8, 1846, as a rider on a $2,000,000 appropriations bill intended for the final negotiations to resolve the Mexican–American War (this was only three months into the two-year war). It passed the House largely on sectional lines between a generally anti-slavery North in favor and a pro-slavery South against, foreshadowing coming conflicts. It failed in the Senate, where the South had greater representation. The proviso was reintroduced in February 1847 and again passed the House and failed in the Senate. In 1848, an attempt to make it part of the Treaty of Guadalupe Hidalgo also failed. Sectional political disputes over slavery in the Southwest continued through the Compromise of 1850.

Background
After an earlier attempt to acquire Texas by treaty had failed to receive the necessary two-thirds approval of the Senate, the United States annexed the Republic of Texas by a joint resolution of Congress that required simply a majority vote in each house of Congress. President John Tyler signed the bill on March 1, 1845, a few days before his term ended. As many expected, the annexation led to war with Mexico. After the Capture of New Mexico and California in the first phases of the war, the political focus shifted to how much territory would be acquired from Mexico. The key to this was the determination of the future status of slavery in any new territory.

Both major political parties had labored long to keep divisive slavery issues out of national politics. The Democrats had generally been successful in portraying those within their party attempting to push a purely sectional issue as extremists that were well outside the normal scope of traditional politics. However, midway through Polk's term, Democratic dissatisfaction with the administration was growing within the Martin Van Buren, or Barnburner, wing of the Democratic Party over other issues. Many felt that Van Buren had been unfairly denied the party's nomination in 1844 when southern delegates resurrected a convention rule, last used in 1832, requiring that the nominee had to receive two-thirds of the delegate votes. Many in the North were also upset with the Walker tariff which reduced the tariff rates; others were opposed to Polk's veto of a popular river and harbor improvements bill, and still others were upset over the Oregon settlement with Great Britain where it appeared that Polk did not pursue the northern territory with the same vigor he used to acquire Texas. Polk was seen more and more as enforcing strict party loyalty primarily to serve southern interests.

The Whigs faced a different scenario. The narrow victory of James K. Polk (Democrat) over Henry Clay (Whig) in the 1844 presidential election had caught the Southern Whigs by surprise. The key element of this defeat, which carried over into the congressional and local races in 1845 and 1846 throughout the South, was the party's failure to take a strong stand favoring Texas annexation. Southern Whigs were reluctant to repeat their mistakes on Texas, but, at the same time, Whigs from both sections realized that victory and territorial acquisition would again bring out the issue of slavery and the territories. In the South in particular, there was already the realization, or perhaps fear, that the old economic issues that had defined the Second Party System were already dead. Their political goal was to avoid any sectional debate over slavery which would expose the sectional divisions within the party.

The Mexican–American War was seen by many as an effort to gain more territory for the establishment of slave states. It was popular in the South, and much less so in the North, where opposition took many forms. For example, Henry David Thoreau refused to pay his poll tax, arguing that the money would be used to prosecute the war and gain slave territory.

Introduction and debate on the proviso
On Saturday, August 8, 1846, President Polk submitted to Congress a request for $2,000,000 (~$ in ) in order to facilitate negotiations with Mexico over the final settlement of the war. The request came with no public warning after Polk had failed to arrange for approval of the bill with no Congressional debate. With Congress scheduled to adjourn that Monday, Democratic leadership arranged for the bill to be immediately considered in a special night session. The debate was to be limited to two hours with no individual speech to last more than ten minutes.

David Wilmot, a Democratic congressman from Pennsylvania, and a group of other Barnburner Democrats including Preston King and Timothy Jenkins of New York, Hannibal Hamlin of Maine, Gideon Welles of Connecticut, and Jacob Brinkerhoff of Ohio, had already been meeting in early August strategy meetings. Wilmot had a strong record of supporting the Polk Administration and was close to many Southerners. With the likelihood that Wilmot would have no trouble gaining the floor in the House debate, he was chosen to present the amendment to the appropriations bill that would carry his name. Wilmot offered the following to the House in language modeled after the Northwest Ordinance of 1787:

"Provided, That, as an express and fundamental condition to the acquisition of any territory from the Republic of Mexico by the United States, by virtue of any treaty which may be negotiated between them, and to the use by the Executive of the moneys herein appropriated, neither slavery nor involuntary servitude shall ever exist in any part of said territory, except for crime, whereof the party shall first be duly convicted." William W. Wick, Democrat of Indiana, attempted to eliminate total restriction of slavery by proposing an amendment that the Missouri Compromise line of latitude 36°30' simply be extended west to the Pacific. This was voted down 89–54. The vote to add the proviso to the bill was then called, and it passed by 83–64. A last-ditch effort by southerners to table the entire bill was defeated by 94–78, and then the entire bill was approved 85–80. These votes fell overwhelmingly along sectional rather than party lines.

The Senate took up the bill late in its Monday session. Southern Democrats hoped to reject the Wilmot Proviso and send the bill back to the House for a quick approval of the bill without the restrictions on slavery. Whig John Davis of Massachusetts attempted to forestall this effort by holding the floor until it would be too late to return the bill to the House, forcing the Senate to accept or reject the appropriation with the proviso intact. However, before he could call the vote, due to an eight-minute difference in the official House and Senate clocks, the House had adjourned and the Congress was officially out of session.

The issue resurfaced at the end of the year when Polk, in his annual message to Congress, renewed his request with the amount needed increasing to three million dollars. Polk argued that, while the original intent of the war had never been to acquire territory (a view hotly contested by his opponents), an honorable peace required territorial compensation to the United States. The Three Million Dollar Bill, as it was called, was the sole item of business in the House from February 8, 1847, until February 15. Preston King reintroduced the Wilmot Proviso, but this time the exclusion of slavery was expanded beyond merely the Mexican territory to include "any territory on the continent of America which shall hereafter be acquired". This time Representative Stephen Douglas, Democrat of Illinois, reintroduced the proposal to simply extend the Missouri Compromise line to the west coast, and this was again defeated 109–82. The Three Million Dollar Bill with the proviso was then passed by the House 115–106. In the Senate, led by Thomas Hart Benton (Democrat), the bill was passed without the proviso. When the bill was returned to the House the Senate bill prevailed; every Northern Whig still supported the proviso, but 22 Northern Democrats voted with the South.

In 1848, the Treaty of Guadalupe Hidalgo ending the war was submitted to the Senate for approval. Douglas, now in the Senate, was among those who joined with the South to defeat an effort to attach the Wilmot Proviso to the treaty. In the prior year's debate in the House, Douglas had argued that all of the debate over slavery in the territories was premature; the time to deal with that issue was when the territory was actually organized by Congress. Lewis Cass (Democrat) in December 1847, in his famous letter to A. O. P. Nicholson in Tennessee, further underlined the principle of appealing to popular sovereignty which would soon evolve as the mainstream Democratic alternative to the Wilmot Proviso:

"Leave it to the people, who will be affected by this question to adjust it upon their own responsibility, and in their own manner, and we shall render another tribute to the original principles of our government, and furnish another for its permanence and prosperity."

Aftermath

With the approval of the treaty, the issue moved from one of abstraction to one involving practical matters. The nature of the Constitution, slavery, the value of free labor, political power, and ultimately political realignment were all involved in the debate. Historian Michael Morrison argues that from 1820 to 1846 a combination of "racism and veneration of the Union" had prevented a direct Northern attack on slavery. While the original Southern response to the Wilmot Proviso was measured, it soon became clear to the South that this long postponed attack on slavery had finally occurred. Rather than simply discuss the politics of the issue, historian William Freehling noted, "Most Southerners raged primarily because David Wilmot's holier-than-thou stance was so insulting."

In the North, the most immediate repercussions involved Martin Van Buren and the state of New York. The Barnburners were successfully opposed by their conservative opposition, the Hunkers, in their efforts to send a pro-proviso batch of delegates to the 1848 Democratic National Convention. The Barnburners held their own separate convention and sent their own slate of delegates to the convention in Baltimore. Both delegations were seated with the state's total votes split between them. When the convention rejected a pro-proviso plank and selected Lewis Cass as the nominee, the Barnburners again bolted and were the nucleus of forming the Free Soil Party. Historian Leonard Richards writes of these disaffected Democrats:

"Overall, then, Southern Democrats during the 1840s lost the hard core of their original doughface support. No longer could they count on New England and New York Democrats to provide them with winning margins in the House. ... To them [Free Soil Democrats] the movement to acquire Texas, and the fight over the Wilmot Proviso, marked the turning point, when aggressive slavemasters stole the heart and soul of the Democratic Party and began dictating the course of the nation's destiny."

Historian William Cooper presents the exactly opposite Southern perspective:

"Southern Democrats, for whom slavery had always been central, had little difficulty in perceiving exactly what the proviso meant for them and their party. In the first place the mere existence of the proviso meant the sectional strains that had plagued the Whigs on Texas now beset the Democrats on expansion, the issue the Democrats themselves had chosen as their own. The proviso also announced to southerners that they had to face the challenge of certain northern Democrats who indicated their unwillingness to follow any longer the southern lead on slavery.  That circumstance struck at the very roots of the southern conception of party.  The southerners had always felt that their Northern colleagues must toe the southern line on all slavery-related issues."

In Alabama, with no available candidate sufficiently opposed to the proviso, William L. Yancey secured the adoption by the state Democratic convention of the so-called "Alabama Platform", which was endorsed by the legislatures of Alabama and Georgia and by Democratic state conventions in Florida and Virginia. The platform called for no federal restrictions of slavery in the territories, no restrictions on slavery by territorial governments until the point where they were drafting a state constitution in order to petition Congress for statehood, opposition to any candidates supporting either the proviso or popular sovereignty, and positive federal legislation overruling Mexican anti-slavery laws in the Mexican Cession. However, the same Democratic Convention that had refused to endorse the proviso also rejected incorporating the Yancey proposal into the national platform by a 216–36 vote. Unlike the Barnburner walkout, however, only Yancey and one other Alabama delegate left the convention. Yancey's efforts to stir up a third party movement in the state failed.

Southerner Whigs looked hopefully to slaveholder and war hero General Zachary Taylor as the solution to the widening sectional divide even though he took no public stance on the Wilmot Proviso. However, Taylor, once nominated and elected, showed that he had his own plans. Taylor hoped to create a new non-partisan coalition that would once again remove slavery from the national stage. He expected to be able to accomplish this by freezing slavery at its 1849 boundaries and by immediately bypassing the territory stage and creating two new states out of the Mexican Cession.

The opening salvo in a new level of sectional conflict occurred on December 13, 1848, when John G. Palfrey (Whig) of Massachusetts introduced a bill to abolish slavery in the District of Columbia. Throughout 1849 in the South "the rhetoric of resistance to the North escalated and spread". The potentially secessionist Nashville Convention was scheduled for June 1850. When President Taylor in his December 1849 message to Congress urged the admission of California as a free state, a state of crisis was further aggravated. Historian Allan Nevins sums up the situation which had been created by the Wilmot Proviso:

"Thus the contest was joined on the central issue which was to dominate all American history for the next dozen years, the disposition of the Territories. Two sets of extremists had arisen: Northerners who demanded no new slave territories under any circumstances, and Southerners who demanded free entry for slavery into all territories, the penalty for denial to be secession. For the time being, moderates who hoped to find a way of compromise and to repress the underlying issue of slavery itself – its toleration or non-toleration by a great free Christian state – were overwhelmingly in the majority.  But history showed that in crises of this sort the two sets of extremists were almost certain to grow in power, swallowing up more and more members of the conciliatory center."

Combined with other slavery-related issues, the Wilmot Proviso led to the Compromise of 1850, which helped buy another uncertain decade of peace. Radical secessionists were temporarily at bay as the Nashville Convention failed to endorse secession. Moderates rallied around the Compromise as the final solution to the sectional issues involving slavery and the territories. At the same time, however, the language of the Georgia Platform, widely accepted throughout the South, made it clear that the South's commitment to Union was not unqualified; they fully expected the North to adhere to their part of the agreement.

In regard to the territory the Proviso would have covered, California had a brief period of slavery due to slave owning settlers arriving during the 1848 California Gold Rush. Since there were no slave patrols or laws protecting slavery in the territory, slave escapes were quite common. Ultimately, California decided to ban slavery in their 1849 constitution and was admitted to the Union as a free state in 1850. Nevada would never have legal slavery and was admitted to the Union as a free state in 1864. The territories of Utah and New Mexico would have slavery from the time they were acquired by America in 1848 until July 1862, when the United States banned slavery in all federal territories. However, Utah had just 29 slaves (0.07% of the total population) and New Mexico had no slaves in the 1860 census.

title: Wilmot Proviso


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To do:

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Full employment

Full employment is an economic situation in which there is no cyclical or deficient-demand unemployment. Full employment does not entail the disappearance of all unemployment, as other kinds of unemployment, namely structural and frictional, may remain. For instance, workers who are "between jobs" for short periods of time as they search for better employment are not counted against full employment, as such unemployment is frictional rather than cyclical. An economy with full employment might also have unemployment or underemployment where part-time workers cannot find jobs appropriate to their skill level, as such unemployment is considered structural rather than cyclical. Full employment marks the point past which expansionary fiscal and/or monetary policy cannot reduce unemployment any further without causing inflation.

Some economists define full employment somewhat differently, as the unemployment rate at which inflation does not continuously increase. Advocacy of avoiding accelerating inflation is based on a theory centered on the concept of the Non-Accelerating Inflation Rate of Unemployment (NAIRU) and those who hold it usually mean NAIRU when speaking of full employment. The NAIRU has also been described by Milton Friedman, among others, as the "natural" rate of unemployment. Such views tend to emphasize sustainability, noting that a government cannot sustain unemployment rates below the NAIRU forever: inflation will continue to grow so long as unemployment lies below the NAIRU.

For the United States, economist William T. Dickens found that full-employment unemployment rate varied a lot over time but equaled about 5.5 percent of the civilian labor force during the 2000s. Recently, economists have emphasized the idea that full employment represents a "range" of possible unemployment rates. For example, in 1999, in the United States, the Organisation for Economic Co-operation and Development (OECD) gives an estimate of the "full-employment unemployment rate" of 4 to 6.4%. This is the estimated unemployment rate at full employment, plus or minus the standard error of the estimate.

The concept of full employment of labor corresponds to the concept of potential output or potential real GDP and the long run aggregate supply (LRAS) curve. In neoclassical macroeconomics, the highest sustainable level of aggregate real GDP or "potential" is seen as corresponding to a vertical LRAS curve: any increase in the demand for real GDP can only lead to rising prices in the long run, while any increase in output is temporary.

Economic concept
What most neoclassical economists mean by "full" employment is a rate somewhat less than 100% employment. Others, such as the late James Tobin, have been accused of disagreeing, considering full employment as 0% unemployment. However, this was not Tobin's perspective in his later work.

Some see John Maynard Keynes as attacking the existence of rates of unemployment substantially above 0%:
 * "The Conservative belief that there is some law of nature which prevents men from being employed, that it is 'rash' to employ men, and that it is financially 'sound' to maintain a tenth of the population in idleness for an indefinite period, is crazily improbable - the sort of thing which no man could believe who had not had his head fuddled with nonsense for years and years. The objections which are raised are mostly not the objections of experience or of practical men. They are based on highly abstract theories – venerable, academic inventions, half misunderstood by those who are applying them today, and based on assumptions which are contrary to the facts… Our main task, therefore, will be to confirm the reader's instinct that what seems sensible is sensible, and what seems nonsense is nonsense." – J. M. Keynes and H. D. Henderson in a pamphlet to support Lloyd George in the 1929 election.

Most readers would interpret this statement as referring to only cyclical, deficient-demand, or "involuntary unemployment" (discussed below) but not to unemployment existing as "full employment" (mismatch and frictional unemployment). This is because, writing in 1929, Keynes was discussing a period in which the unemployment rate had been persistently above most conceptions of what corresponds to full employment. That is, a situation where a tenth of the population (and thus a larger percentage of the labor force) is unemployed involves a disaster.

One major difference between Keynes and the Classical economists was that while the latter saw "full employment" as the normal state of affairs with a free-market economy (except for short periods of adjustment), Keynes saw the possibility of persistent aggregate-demand failure causing unemployment rates to exceed those corresponding to full employment. Put differently, while Classical economists saw all unemployment as "voluntary", Keynes saw the possibility that involuntary unemployment can exist when the demand for final products is low compared to potential output. This can be seen in his later and more serious work. In his General Theory of Employment, Interest, and Money, chapter 2, he used a definition that should be familiar to modern macroeconomics:
 * This state of affairs we shall describe as "full" employment, both "frictional" and "voluntary" unemployment being consistent with "full" employment thus defined.

The only difference from the usual definitions is that, as discussed below, most economists would add skill/location mismatch or structural unemployment as existing at full employment. More theoretically, Keynes had two main definitions of full employment, which he saw as equivalent. His first main definition of full employment involves the absence of "involuntary" unemployment:

 * the equality of the real wage to the marginal disutility of employment ... realistically interpreted, corresponds to the absence of "involuntary" unemployment.

Put another way, the full employment and the absence of involuntary unemployment correspond to the case where the real wage equals the marginal cost to workers of supplying labor for hire on the market (the "marginal disutility of employment"). That is, the real wage rate and the amount of employment correspond to a point on the aggregate supply curve of labor that is assumed to exist. In contrast, a situation with less than full employment and thus involuntary unemployment would have the real wage above the supply price of labor. That is, the employment situation corresponds to a point above and to the left of the aggregate supply curve of labor: the real wage would be above the point on the aggregate supply curve of labor at the current level of employment; alternatively, the level of employment would be below the point on that supply curve at the current real wage.

Second, in chapter 3, Keynes saw full employment as a situation where "a further increase in the value of the effective demand will no longer be accompanied by any increase in output."
 * In the previous chapter we have given a definition of full employment in terms of the behavior of labor. An alternative, though equivalent, criterion is that at which we have now arrived, namely a situation, in which aggregate employment is inelastic in response to an increase in the effective demand for its output.

This means that at and above full employment, any increase in aggregate demand and employment corresponds primarily to increases in prices rather than output. Thus, full employment of labor corresponds to potential output.

Whilst full employment is often an aim for an economy, most economists see it as more beneficial to have some level of unemployment, especially of the frictional sort. In theory, this keeps the labor market flexible, allowing room for new innovations and investment. As in the NAIRU theory, the existence of some unemployment is required to avoid accelerating inflation.

Historical measurement and discussion
For the United Kingdom, the OECD estimated the NAIRU (or structural unemployment) rate as being equal to 8.5% on average between 1988 and 1997, 5.9% between 1998 and 2007, 6.2%, 6.6%, and 6.7 in 2008, 2009, and 2010, then staying at 6.9% in 2011–2013. For the United States, they estimate it as being 5.8% on average between 1988 and 1997, 5.5% between 1998 and 2007, 5.8% in 2008, 6.0% in 2009, and then staying at 6.1% from 2010 to 2013. They also estimate the NAIRU for other countries. These calculations have been criticised as lacking any foundation in evidence.

The era after the 2007-2009 Great Recession shows the relevance of this concept, for example as seen in the United States. On the one hand, in 2013 Keynesian economists such as Paul Krugman of Princeton University see unemployment rates as too high relative to full employment and the NAIRU and thus favor increasing the aggregate demand for goods and services and thus labor in order to reduce unemployment. On the other hand, pointing to shortages of some skilled workers, some businesspeople and Classical economists suggest that the U.S. economy is already at full employment, so that any demand stimulus will lead to nothing but rising inflation rates. One example was Narayana Kocherlakota, President of the Minneapolis Federal Reserve Bank, who has since changed his mind.

Unemployment at Beveridge Full Employment
William Beveridge defined "full employment" as where the number of unemployed workers equaled the number of job vacancies available (while preferring that the economy be kept above that full employment level in order to allow maximum economic production).

This definition allows for certain kinds of unemployment, where the number of unemployed workers equals the number of vacancies. Unemployment of this kind can take two forms: frictional and structural. Frictional unemployment is where the unemployed are searching for the best possible jobs whilst employers are also searching for the best possible employees to fulfil those jobs. Structural unemployment exists when the skills and geographical locations of the unemployed workers do not correspond to the skill requirements and locations of the vacancies. In either case, there exists a job for every worker, and a worker for every job.

An economy with less than full employment in Beveridge's sense will have either classical unemployment, cyclical unemployment, or both. Classical unemployment results from the actual real wage rising above the equilibrium real wage, so that the quantity of labor demanded (and the number of vacancies) is less than the quantity of labor supplied (and the number of unemployed workers). This might occur because of inefficient interference in the market; for example, a minimum wage set above the equilibrium wage; but also because of market failure, such as that caused by cartels.

Under classical unemployment, the ways by which a return to Beveridge full employment can occur depend on the nature of the rise in wages- if it is only "nominal" wages that are rigid (failing to return to equilibrium), then real wages can decrease if prices rise relative to the rigid nominal wages. If nominal wages track price levels, however, then changes to prices will not affect the real wage- and thus employment will remain below Beveridge full employment.

Cyclical, deficient-demand, or Keynesian unemployment occurs when there is not enough aggregate demand in the economy to provide jobs for everyone who wants to work. If demand for most goods and services falls, less production is needed and consequently fewer workers are needed: if wages are sticky and do not fall to meet the new equilibrium level, unemployment results, because (as with classical unemployment) there are more prospective workers than there are vacancies.

The Phillips curve
The theories behind the Phillips curve pointed to the inflationary costs of lowering the unemployment rate. That is, as unemployment rates fell and the economy approached full employment, the inflation rate would rise. But this theory also says that there is no single unemployment number that one can point to as the "full employment" rate. Instead, there is a trade-off between unemployment and inflation: a government might choose to attain a lower unemployment rate but would pay for it with higher inflation rates. In essence, in this view, the meaning of “full employment” is really nothing but a matter of opinion based on how the benefits of lowering the unemployment rate compare to the costs of raising the inflation rate.

Though their theory had been proposed by the Keynesian economist Abba Lerner several years before, it was the work of Milton Friedman, leader of the monetarist school of economics, and Edmund Phelps that ended the popularity of this concept of full employment. In 1968, Friedman posited the theory that full employment rate of unemployment was unique at any given time. He called it the "natural" rate of unemployment. Instead of being a matter of opinion and normative judgment, it is something we are stuck with, even if it is unknown. As discussed further, below, inflation/unemployment trade-offs cannot be relied upon. Further, rather than trying to attain full employment, Friedman argues that policy-makers should try to keep prices stable (meaning a low or even a zero inflation rate). If this policy is sustained, he suggests that a free-market economy will gravitate to the "natural" rate of unemployment automatically.

The NAIRU

In an effort to avoid the normative connotations of the word "natural," James Tobin (following the lead of Franco Modigliani), introduced the term the “Non-Accelerating Inflation Rate of Unemployment” (NAIRU), which corresponds to the situation where the real gross domestic product equals potential output. It has been called the "inflation threshold" unemployment rate or the inflation barrier. This concept is identical to Milton Friedman’s concept of the "natural" rate but reflects the fact that there is nothing "natural" about an economy. The level of the NAIRU depends on the degree of "supply side" unemployment, i.e., joblessness that can't be abolished by high demand. This includes frictional, mismatch, and Classical unemployment. When the actual unemployment rate equals the NAIRU, there is no cyclical or deficient-demand unemployment. That is, Keynes’ involuntary unemployment does not exist.

To understand this concept, start with the actual unemployment equal to the NAIRU. Then, assume that a country's government and its central bank use demand-side policy to reduce the unemployment rate and then attempt to keep the rate at a specific low level: rising budget deficits or falling interest rates increase aggregate demand and raise employment of labor. Thus, the actual unemployment rate falls, as going from point A to B in the nearby graph. Unemployment then stays below the NAIRU for years or more, as at point B. In this situation, the theory behind the NAIRU posits that inflation will accelerate, i.e. get worse and worse (in the absence of wage and price controls). As the short-run Phillips curve theory indicates, higher inflation rate results from low unemployment. That is, in terms of the "trade-off" theory, low unemployment can be "bought," paid for by suffering from higher inflation. But the NAIRU theory says that this is not the whole story, so that the trade-off breaks down: a persistently higher inflation rate is eventually incorporated as higher inflationary expectations. Then, if workers and employers expect higher inflation, it results in higher inflation, as higher money wages are passed on to consumers as higher prices. This causes the short run Phillips curve to shift to the right and upward, worsening the trade-off between inflation and unemployment. At a given unemployment rate, inflation accelerates. But if the unemployment rate rises to equal the NAIRU, we see higher inflation than before the expansionary policies, as at point C in the nearby diagram. The fall of the unemployment rate was temporary because it could not be sustained. In sum, the trade-off between inflation and unemployment cannot be relied upon to be stable: taking advantage of it causes it to disappear. This story fits the experience of the United States during the late 1960s, during which unemployment rates stayed low (below 4% of the civilian labor force) and inflation rates rose significantly.

Second, examine the other main case. Again start with the unemployment rate equal to the NAIRU. Then, either shrinking government budget deficits (or rising government surpluses) or rising real interest rates encourage higher unemployment. In this situation, the NAIRU theory says that inflation will get better (decelerate) if unemployment rates exceed the NAIRU for a long time. High unemployment leads to lower inflation, which in turn causes lower inflationary expectations and a further round of lower inflation. High unemployment causes the short-run inflation/unemployment trade-off to improve. This story fits the experience of the United States during the early 1980s (Paul Volcker's war against inflation), during which unemployment rates stayed high (at about 10% of the civilian labor force) and inflation rates fell significantly.

Finally, the NAIRU theory says that the inflation rate does not rise or fall when the unemployment equals the "natural" rate. This is where the term NAIRU is derived. In macroeconomics, the case where the actual unemployment rate equals the NAIRU is seen as the long-run equilibrium because there are no forces inside the normal workings of the economy that cause the inflation rate to rise or fall. The NAIRU corresponds to the long-run Phillips curve. While the short-run Phillips curve is based on a constant rate of inflationary expectations, the long-run Phillips curve reflects full adjustment of inflationary expectations to the actual experience of inflation in the economy.

As mentioned above, Abba Lerner had developed a version of the NAIRU before the modern "natural" rate or NAIRU theories were developed. Unlike the currently dominant view, Lerner saw a range of "full employment" unemployment rates. Crucially, the unemployment rate depended on the economy's institution. Lerner distinguished between "high" full employment, which was the lowest sustainable unemployment under incomes policies, and "low" full employment, i.e., the lowest sustainable unemployment rate without these policies.

Further, it is possible that the value of the NAIRU depends on government policy, rather than being "natural" and unvarying. A government can attempt to make people "employable" by both positive means (e.g. using training courses) and negative means (e.g. cuts in unemployment insurance benefits). These policies do not necessarily create full employment. Instead, the point is to reduces the amount of mismatch unemployment by facilitating the linking of unemployed workers with the available jobs by training them and or subsidizing their moving to the geographic location of the jobs.

In addition, the hysteresis hypothesis says that the NAIRU does not stay the same over time—and can change due to economic policy. A persistently low unemployment rate makes it easier for those workers who are unemployed for "mismatch" reasons to move to where the jobs are and/or to attain the training necessary for the available vacancies (often by getting those jobs and receiving on-the-job training). On the other hand, high unemployment makes it more difficult for those workers to adjust, while hurting their morale, job-seeking skills, and the value of their work skills. Thus, some economists argue that British Prime Minister Margaret Thatcher's anti-inflation policies using persistently high unemployment led to higher mismatch or structural unemployment and a higher NAIRU.

Uncertainty
Whatever the definition of full employment, it is difficult to discover exactly what unemployment rate it corresponds to. In the United States, for example, the economy saw stable inflation despite low unemployment during the late 1990s, contradicting most economists' estimates of the NAIRU.

The idea that the full-employment unemployment rate (NAIRU) is not a unique number has been seen in recent empirical research. Staiger, Stock, and Watson found that the range of possible values of the NAIRU (from 4.3 to 7.3% unemployment) was too large to be useful to macroeconomic policy-makers. Robert Eisner suggested that for 1956-95 there was a zone from about 5% to about 10% unemployment between the low-unemployment realm of accelerating inflation and the high-unemployment realm of disinflation. In between, he found that inflation falls with falling unemployment.

Policy
The active pursuit of national full employment through interventionist government policies is associated with Keynesian economics and marked the postwar agenda of many Western nations, until the stagflation of the 1970s. Interventionist full employment policies, targeted especially at young people, remain in place in the Nordic countries. A commitment to full employment was also restored in the United Kingdom under New Labour (1997–2010), which manifested in the New Deal which lasted from 1998 until 2010.

Australia
In 1945, the government of Australian Labor Party Prime Minister John Curtin submitted to the Parliament of Australia the white paper Full Employment in Australia; full employment remained the government's policy until 1975.

United States
The United States is, as a statutory matter, committed to full employment; the government is empowered to effect this goal. The relevant legislation is the Employment Act (1946), initially the "Full Employment Act," later amended in the Full Employment and Balanced Growth Act (1978). The 1946 act was passed in the aftermath of World War II, when it was feared that demobilization would result in a depression, as it had following World War I in the Depression of 1920–21, while the 1978 act was passed following the 1973–75 recession and in the midst of continuing high inflation.

The law states that full employment is one of four economic goals, in concert with growth in production, price stability, balance of trade, and budget, and that the US shall rely primarily on private enterprise to achieve these goals. Specifically, the Act is committed to an unemployment rate of no more than 3% for persons aged 20 or over, and not more than 4% for persons aged 16 or over (from 1983 onwards), and the Act expressly allows (but does not require) the government to create a "reservoir of public employment" to affect this level of employment. These jobs are required to be in the lower ranges of skill and pay so as to not draw the workforce away from the private sector.

However, since the passage of this Act in 1978, the US has,, only briefly achieved this level of employment on the national level in the late 1990s, though some states have neared it or met it, nor has such a reservoir of public employment been created.

Job guarantee
Post-Keynesian economists have suggested ensuring full employment via a job guarantee program, where those who are unable to find work in the private sector are employed by the government, the stock of thus employed public sector workers fulfilling the same function as the unemployed do in controlling inflation, without the human costs of unemployment.

External sources

 * The OECD on measuring the NAIRU
 * Devine, James. 2004. The "Natural" Rate of Unemployment. In Edward Fullbrook, ed., A Guide to What's Wrong with Economics, London, UK: Anthem Press, 126–32.
 * Eisner, Robert. 1997. A New View of the NAIRU. In Paul Davidson and Jan A. Kregel, eds. Improving the Global Economy. Cheltenham, UK: Edgar Elgar, 1997.
 * Friedman, Milton. 1968. The Role of Monetary Policy. American Economic Review. 58(1) March: 1-21.
 * McConnell, Brue, and Flynn. Microeconomics 19th edition. 2012.
 * Staiger, Douglas, James H. Stock, and Mark W. Watson. 1997. The NAIRU, Unemployment and Monetary Policy. Journal of Economic Perspectives. 11(1) Winter: 33–49.

title: Full employment


text:
MAD (programming language)

MAD (Michigan Algorithm Decoder) is a programming language and compiler for the IBM 704 and later the IBM 709, IBM 7090, IBM 7040, UNIVAC 1107, UNIVAC 1108, Philco 210-211, and eventually IBM System/370 mainframe computers. Developed in 1959 at the University of Michigan by Bernard Galler, Bruce Arden and Robert M. Graham, MAD is a variant of the ALGOL language. It was widely used to teach programming at colleges and universities during the 1960s and played a minor role in the development of Compatible Time-Sharing System (CTSS), Multics, and the Michigan Terminal System computer operating systems. The original version of the chatbot ELIZA was written in MAD-SLIP.

The archives at the Bentley Historical Library of the University of Michigan contain reference materials on the development of MAD and MAD/I, including three linear feet of printouts with hand-written notations and original printed manuals.

MAD, MAD/I, and GOM
Three MAD compilers exist:
 * 1) Original MAD, the compiler developed in 1959 at the University of Michigan for the IBM 704 and later the IBM 709 and IBM 7090 mainframe computers running the University of Michigan Executive System (UMES) and the Compatible Time-Sharing System (CTSS) operating systems.  In the mid-1960s MAD was ported at the University of Maryland to the UNIVAC 1108. Versions of MAD were also available for the Philco 210-211 and UNIVAC 1107.
 * 2) MAD/I, an "extended" version of MAD for the IBM System/360 series of computers running under the Michigan Terminal System (MTS). Work on the new compiler started in 1965 as part of the ARPA sponsored CONCOMP project at the University of Michigan. As work progressed it gradually became clear that MAD/I was a new language independent of the original 7090 version of MAD.
 * 3) GOM (Good Old MAD), a reimplementation of the original 7090 MAD for the IBM System/370 series of mainframe computers running the Michigan Terminal System (MTS). GOM was created in the early 1980s by Don Boettner at the University of Michigan Computing Center.

History
While MAD was motivated by ALGOL 58, it does not resemble ALGOL 58 in any significant way.

Programs written in MAD included MAIL, RUNOFF, one of the first text processing systems, and several other utilities all under Compatible Time-Sharing System (CTSS). Work was done on a design for a MAD compiler for Multics, but it was never implemented.

The following is an interesting quote from An Interview with Brian Kernighan when he was asked "What hooked you on programming?":

 * I think that the most fun I had programming was a summer job at Project MAC at MIT in the summer of 1966, where I worked on a program that created a job tape for the brand new GE 645 in the earliest days of Multics. I was writing in MAD, which was much easier and more pleasant than the FORTRAN and COBOL that I had written earlier, and I was using CTSS, the first time-sharing system, which was infinitely easier and more pleasant than punch cards.

MAD was quite fast compared to some of the other compilers of its day. Because a number of people were interested in using the FORTRAN language and yet wanted to obtain the speed of the MAD compiler, a system called MADTRAN (written in MAD) was developed. MADTRAN was simply a translator from FORTRAN to MAD, which then produced machine code. MADTRAN was distributed through SHARE.

MAD/I has a syntactic structure similar to ALGOL 60 together with important features from the original MAD and from PL/I. MAD/I was designed as an extensible language. It was available for use under MTS and provided many new ideas which made their way into other languages, but MAD/I compilations were slow and MAD/I never extended itself into widespread use when compared to the original 7090 MAD.

GOM is essentially the 7090 MAD language modified and extended for the 360/370 architecture with some judicious tailoring to better fit current programming practices and problems. The MTS Message System was written in GOM.

MAD, Mad magazine, and Alfred E. Neuman

In a pre-release version of the original MAD, as a reference to MAD's namesake, Mad magazine, when a program contained too many compile time errors the compiler would print a full-page picture of Alfred E. Neuman using ASCII art. The caption read, "See this man about your program--He might want to publish it. He never worries--but from the looks of your program, you should." This feature was not included in the final official version. However, it was included in the production version for the IBM 7040.

And Bernie Galler remembers:
 * By the time we designed the language that we thought would be worth doing and for which we could do a compiler, we couldn't call it Algol anymore; it really was different. That's when we adopted the name MAD, for the Michigan Algorithm Decoder. We had some funny interaction with the Mad magazine people, when we asked for permission to use the name MAD. In a very funny letter, they told us that they would take us to court and everything else, but ended the threat with a P.S. at the bottom - "Sure, go ahead." Unfortunately, that letter is lost.

"Hello, world" example
The "hello, world" example program prints the string "Hello, world" to a terminal or screen display.

PRINT FORMAT HELLOW VECTOR VALUES HELLOW=$13h0Hello, world*$ END OF PROGRAM

The first character of the line is treated as logical carriage control, in this example the character "0" which causes a double-spaced line to be printed.

Alternatively, contractions can be used, and the compiler will expand them in the listing:

P'T HELLOW V'S HELLOW=$13h0Hello, world*$ E'M

Language elements
MAD and GOM, but not MAD/I, are composed of the following elements:

Input format
MAD programs are a series of statements written on punched cards, generally one statement per card, although a statement can be continued to multiple cards. Columns 1-10 contains an optional statement label, comments or remarks are flagged using the letter "R" in column 11, and columns 73-80 are unused and could contain a sequence identifier. Spaces are not significant anywhere other than within character constants. For GOM input is free form with no sequence field and lines may be up to 255 characters long; lines that start with an asterisk (*) are comments; and lines that start with a plus-sign (+) are continuation lines.

Names
Variable names, function names, and statement labels have the same form, a letter followed by zero to five letters or digits. Function names end with a period. All names can be subscripted (the name followed by parentheses, with multiple subscripts separated by commas). For GOM names may be up to 24 characters long and may include the underscore (_) character.

Few keywords in the language are reserved words since most are longer than six letters or are surrounded by periods. There is a standard set of abbreviations which can be used to replace the longer words. These consist of the first and last letters of the keywords with an apostrophe between them, such as W'R for WHENEVER and D'N for DIMENSION.

Data types
MAD uses the term "mode" for its data types. Five basic modes are supported:
 * Integer written with or without a scale factor or as octal constants (to );
 * Floating Point written with or without an exponent ;
 * Boolean ( for true and for false);
 * Statement Label, and
 * Function Name written as a name followed by a period.

The mode of a constant can be redefined by adding the character M followed by a single digit at the end of the constant, where 0 indicates floating point, 1 integer, 2 boolean, 3 function name, and 4 statement label.

For GOM six additional modes are added:, and.

Alphabetic or character constants are stored as integers and written using the dollar sign as a delimiter with double dollar-signs used to enter a true dollar sign ( is 56 cents). Strings longer than six characters are represented using arrays.

Arrays and matrices

 * There is no limit on the number of dimensions.
 * Negative and zero as well as floating-point subscripts are allowed.
 * Matrices are storied in consecutive memory locations in the order determined by varying the rightmost subscript first.
 * Matrices may be referenced using a subscript for each dimension, NAME(s1,s2,s3), or using a single subscript, NAME(s1).
 * Input-output lists, VECTOR VALUES statements, and some subroutines allow the use of block notation, which has the form A,...,B or A...B, which is a reference to the entire region from A to B. inclusive. In terms of a vector, A(1)...A(N) would be A(1), A(2), A(3), ..., A(N).
 * There are facilities that allow changing dimensions at run-time; permitting the programmer to vary the location of the initial element in an array within the overall block which has been set aside for the array; and allowing an arbitrary storage mapping to be specified.

Arithmetic operators

 * .ABS. (unary absolute value)
 * + (unary identity)
 * - (unary negation)
 * + (addition)
 * - (subtraction)
 * * (multiplication)
 * / (division)
 * .P. (exponentiation)
 * .N. (bitwise negation)
 * .A. (bitwise and)
 * .V. (bitwise or)
 * .EV. (bitwise exclusive or)
 * .LS. (left shift)
 * .RS. (right shift)
 * .REM. (remainder, GOM only)

Pointer operators (GOM only)

 * : (selection)
 * .LOC. (location)
 * .IND. (indirection)

Relational operators

 * .L. (less than)
 * .LE. (less than or equal)
 * .E. (equal)
 * .NE. (not equal)
 * .G. (greater than)
 * .GE. (greater than or equal)

Boolean operators

 * .NOT. (unary logical not)
 * .OR. (logical or)
 * .EXOR. (logical exclusive or)
 * .AND. (logical and)
 * .THEN. (implies)
 * .EQV. (equivalence)

Bit operators (GOM only)

 * .SETBIT. (set bit to 1)
 * .RESETBIT. (reset bit to 0)
 * .BIT. (test bit)

Declaration statements
Variables may be implicitly or explicitly declared. By default all implicitly declared variables are assumed to be floating point. The NORMAL MODE IS statement may be used to change this default.

 * FLOATING POINT var1, var2, ... (may include dimension information)
 * INTEGER var1, var2, ... (may include dimension information)
 * BOOLEAN var1, var2, ... (may include dimension information)
 * FUNCTION NAME name1, name2, ... (may include dimension information)
 * STATEMENT LABEL label1, label2, ... (may include dimension information)
 * MODE NUMBER n, var1, var2, ... (may include dimension information)
 * NORMAL MODE IS type-name (INTEGER, BOOLEAN, FLOATING POINT, STATEMENT LABEL, or FUNCTION NAME)
 * NORMAL MODE IS MODE NUMBER n
 * DIMENSION variable(max-dimension) (declares an array from 0...max-dimension)
 * DIMENSION variable(from...to)
 * DIMENSION variable(subscript1, subscript2, ..., subscriptn) (declares a multidimensional array)

 * VECTOR VALUES array(n) = c1, c2, c3, ...
 * VECTOR VALUES array(m) ... array(n) = constant
 * DOUBLE STORAGE MODE mode-list (doubles the amount of storage allocated for the modes listed)
 * EQUIVALENCE (a1, a2, ..., am), ...
 * PROGRAM COMMON a, b, c, ... (may include dimension information)
 * ERASABLE a, b, c, ... (may include dimension information)
 * PARAMETER A1(B1), A2(B2), ..., An(Bn)
 * SYMBOL TABLE VECTOR variable
 * FULL SYMBOL TABLE VECTOR variable
 * LISTING ON (the default)
 * LISTING OFF
 * REFERENCES ON
 * REFERENCES OFF (the default)

Executable statements

 * variable = expression (assignment)
 * TRANSFER TO statement-label
 * WHENEVER boolean-expression, executable-statement (simple conditional)
 * WHENEVER boolean-expression (compound conditional)
 * OR WHENEVER boolean-expression
 * OTHERWISE
 * END OF CONDITIONAL
 * CONTINUE (do nothing statement, usually used to carry a statement label)

 * THROUGH statement-label, FOR VALUES OF variable = expression-list (iteration)
 * (where variable may be any mode including floating-point)

 * SET LIST TO array-element, [ expression ]
 * SAVE DATA list
 * RESTORE DATA list
 * PAUSE NO. octal-integer (stop execution, print an octal number on the operators console, allow manual restart)
 * END OF PROGRAM (the last statement in all MAD programs)

Input and output statements

 * READ DATA (reads data using a self-defining format, var1=value1, var2=value2, ..., varN=valueN
 * READ AND PRINT DATA (similar to READ DATA, but data read is echoed to the printer)
 * READ FORMAT format, list
 * READ BCD TAPE n, format, list
 * READ BINARY TAPE n, list
 * PRINT RESULTS list
 * PRINT BCD RESULTS list
 * PRINT OCTAL RESULTS list
 * PRINT COMMENT $string$ (first character of string is carriage control)
 * PRINT FORMAT format, list
 * PRINT ON LINE FORMAT format, list (display a message for the machine operator)
 * WRITE BCD TAPE n, format, list
 * WRITE BINARY TAPE n, list

 * PUNCH FORMAT format, list
 * LOOK AT FORMAT format, list (read data without advancing to next record)
 * REWIND TAPE n
 * END OF FILE TAPE n
 * BACKSPACE RECORD OF TAPE n
 * BACKSPACE RECORD OF TAPE n, IF LOAD POINT TRANSFER TO statement
 * BACKSPACE FILE OF TAPE n
 * BACKSPACE FILE OF TAPE n, IF LOAD POINT TRANSFER TO statement
 * SET LOW DENSITY TAPE n
 * SET HIGH DENSITY TABLE n
 * REWIND TAPE n
 * UNLOAD TAPE n
 * FORMAT VARIABLE list (declaration, may include dimension information)

Functions
Function names end with a period. Internal and external functions are supported. Internal functions are compiled as part of the program in which they are used and share declarations and variables with the main program. External functions are compiled separately and do not share declarations and variables. A one statement definition of internal functions is permitted. Recursive functions are permitted, although the function must do some of the required saving and restoring work itself.

 * INTERNAL FUNCTION function-name.(argument-list) = expression (single statement definition)
 * INTERNAL FUNCTION function-name.(argument-list)
 * EXTERNAL FUNCTION function-name.(argument-list)
 * ENTRY TO NAME name.
 * END OF FUNCTION (last statement in a multiple line definition)
 * FUNCTION RETURN [ expression ]

 * ERROR RETURN (force an error return to a statement or to the operating system, if no error statement is given as last argument of the call)
 * SAVE RETURN
 * RESTORE DATA
 * RESTORE RETURN
 * EXECUTE procedure.(argument-list) (call a non-single valued function)

Operator definition and redefinition
One of the most interesting features in MAD is the ability to extend the language by redefining existing operators, defining new operators, or defining new data types (modes). The definitions are made using MAD declaration statements and assembly language mnemonics included following the declaration up to the END pseudo-instruction that implement the operation.

 * DEFINE BINARY OPERATOR defined-op, PRECEDENCE rank existing-op MODE STRUCTURE mode-options
 * DEFINE UNARY OPERATOR defined-op, PRECEDENCE rank existing-op MODE STRUCTURE mode-options
 * MODE STRUCTURE mode-no = mode-no existing-op mode-no
 * MODE STRUCTURE mode-no = mode-no existing-op mode-no SAME SEQUENCE AS mode-no existing-op mode-no

where:
 * rank is one of SAME AS, LOWER THAN, or HIGHER THAN; and
 * mode-options are the options that appear on the MODE STRUCTURE statement.

Three pre-defined packages of definitions (MATRIX, DOUBLE PRECISION, and COMPLEX) are available for inclusion in MAD source programs using the INCLUDE statement.

 * INCLUDE package

title: MAD (programming language)