Ben is on to something. Is anyone listening?
In his annual Jackson Hole speech last Friday Ben Bernanke, monetary policy czar, elevated the threat level to orange by asserting that the government itself is perhaps the greatest threat to our nation’s economic recovery.
Fed Chairman Bernanke declared that “[t]he country would be well served by a better process for making fiscal decisions.” Undoubtedly, there isn’t an American alive whose memory has not been seared by the partisan debacle euphemistically called the” debate” over the debt ceiling. That “debate” elevated the level of angst in the world to new heights; pushed a frail financial market psychology over the edge and ratcheted up our second largest federal budget expenditure item, interest on the national debt, through a S&P downgraded. And for what, the sake of "hostage" tea?
But perhaps Ben’s not quite right. Perhaps, it’s not the process but rather the personnel involved in making fiscal decisions that need remediation. According to an Employment Policies Institute survey, thirty-five percent of degree holding members of Congress majored in government or law, while only 8.4 percent majored in economics and 13.8 in business or accounting. The remainder are scattered among the humanities, science and technology and other majors. For me this begs the question: how many of those making fiscal policy decisions are truly knowledgeable about the inner workings of the macro economy? If given an open note, open book exam, could they manage a passing grade on questions relevant to the current economy? Questions such as, how do we best jump-start the economy to alleviate the pain for households? What is the long-term effect of budget deficits on the economy? Is this a great recession or great debt contraction? Is there a difference? What is the future opportunity cost of a defense budget that eats three-quarters of the nation’s discretionary budget?
[By the way, if you’re a little fuzzy on the answers and googling isn’t doing it for you, then, please, allow me to reserve a front row seat in my macro economics course for you. It’s usually vacant anyway :)]
Now, as much as I appreciate the poli-sci majors among us, it is high time to recognize that maximizing the interest of the minority at the expense of the majority is no longer tenable. The only way to bring the threat level of government itself down is to operate as if every decision is WAIT-T. If we do, then we will improve the quality of economic policy making in the United States and this, in turn, will favorably improve our nation’s long-term prospects.
Kay Strong, Ph.D., Southern Illinois University, M.T., University of Houston, M.A., Ohio University; Associate Professor at Baldwin-Wallace College; Areas of expertise: international economics, contemporary social-economic issues, complexity and futures-based perspectives in economics. E-mail: firstname.lastname@example.org