by Bill McBride on 10/07/2015 05:01:00 PM
Wednesday, October 07, 2015
A personal comment ...
Over the last several years, I noted on several occasions that Congress has been a disaster. They've opposed economic policies normally supported by both parties - and by Milton Friedman and Ronald Reagan - and this has hurt the economy. Former Fed Chairman Ben Bernanke noted in his book: “I also felt frustrated that fiscal policy makers, far from helping the economy, appeared to be actively working to hinder it.”
I agree with Bernanke.
This seems to part of a defeatists theme of the current Congress - an overwhelming pessimism about several policies -"Nothing can be done" could be their slogan (or worse when they "actively work to hinder" the economy).
Former Fed Chairman Ben Bernanke also wrote in this book that he “lost patience with Republicans’ susceptibility to the know-nothing-ism of the far right." He went on to write: “I often said that monetary policy was not a panacea — we needed Congress to do its part. After the crisis calmed, that help was not forthcoming.”
And here is another excerpt from Bernanke's book via the WSJ, Bernanke on Congress:
"They blamed the crisis on the Fed and on Fannie (Mae) and Freddie (Mac), with little regard for the manifest failings of the private sector, other regulators, or, most especially, Congress itself. They condemned bailouts as giveaways of taxpayer money without considering the broader economic consequences of the collapse of systemically important firms. They saw inflation where it did not exist and, when the official data did not bear out their predictions, invoked conspiracy theories. They denied that monetary or fiscal policy could support job growth, while still working to direct federal spending to their own districts. They advocated discredited monetary systems, like the gold standards.This defeatist view - and pessimistic outlook - applies to other policies too. As an example, during the recent debate, GOP presidential hopefuls Marco Rubio and Carly Fiorina acknowledged the dangers of climate change (a positive step compared to the deniers), but both said Nothing Can be Done. How sadly pessimistic and contrary to the optimism of Presidents Kennedy and Reagan.
I believe steps can be taken to address climate change with minimal impact on the economy - people are resourceful. In the '70s, when it was discovered that chlorofluorocarbons were damaging the ozone, the "do nothing" crowd claimed action would damage the economy, and cars would no longer have air conditioning. Action was taken, and the economy was fine (and the AC in my car still works).
On a personal note, one of my college professors, Sherwood Rowland, won the Nobel prize for discovering the role of chlorofluorocarbons in ozone depletion. I chatted with Professor Rowland in 2008, and we discussed the science of climate change (My undergraduate degree is in Chemistry). Dr. Rowland was extremely concerned about the impacts of climate change, and clearly frustrated with the politics of the deniers.
And we also hear "nothing can be done" about the ongoing mass shooting in the U.S., even though most Americans support stricter background checks, longer waiting periods, and restricting certain types of weapons. Reagan supported gun control, but not this Congress. Something can be done - and will be done eventually. Hopefully "Before some ol' fool come around here, Wanna shoot either you or me".
I'm optimistic about the future and I share Bernanke's view that"the United States [is] one of the most attractive places to live, work and invest over the next few decades". But we need better policymakers in Congress.