Friday, October 6, 2017

Cue the Policy Actors

"Give him the heat and announce my presence with authority!"

I haven't written anything in a while, and that may be a good thing. Then I saw a paragraph in Ben Casselman's New York Times column:
Jared Bernstein, a former economic adviser to Vice President Joseph R. Biden Jr. who is now with the liberal Center on Budget and Policy Priorities, said Mr. Yagan’s research could be read as an indictment of economic policy after the recession. If Congress and the administration had been willing to act more aggressively, they might have avoided some of the long-lasting damage that has been done.
There's been a lot of discussion and hand wringing over when and if the Federal Reserve should raise interest rates, and probably equal amounts of huffing and puffing over deficit-financed tax cuts. All of this got me thinking.

What drives policy makers – fiscal and monetary – to action or inaction? Or, since it's football season, when do they get in the game and when to they sit on the sideline? I like this metaphor because it suggests that I'm going all out or I'm waiting for my number to be called.

Within the past month I read something (which, of course, I now can't find) that suggested that fiscal stimulus and monetary easing are best applied to faltering economies quickly and with great force, and that spreading that same stimulus over time greatly diminishes it effectiveness . The willingness or hesitance (and the ability or inability) to do so come from both the history and structures of the institutions wielding fiscal and monetary powers.

Congress – as a large collection of tribal representatives – moves slowly to establish consensus; without consensus, it may not move at all. The Fed – a small independent group of economic and finance types – can decide and act quickly. Each institution has its own history; each is somewhat cloistered.

For Congress the fiscal specter is poor budgetary choices made over time that result in ever-growing government debt. (post) For the Fed there's the pull of its dual mandate – price and employment stability – and a political uneasiness (and maybe envy) of its independence.

As I said at the top, this is my first post in a while and I don't have any solutions to these dilemmas. But each institutional actor in this economic play must do its job without overacting, entering the stage on cue and – as Mr. Bernstein suggests – making it a grand entrance.

Wednesday, April 26, 2017

A Tale of Two Curves

The difference between government revenue and personal remittance

Friday, April 21, 2017

Tuesday, March 28, 2017

Sing a Song of Six Picks

Do citizens have a "right" to many competitive products and services?

Thursday, March 16, 2017