Amplifying Kevin Drum's remarks, Ezra Klein points out:
You hear a lot about "countercyclical policy" amidst deep recessions. You don't hear much about it amidst periods of joyously fast growth. Instead, our thumb is always on the same side of the scale: We have counter-recessionary policy and pro-expansionary policy.This is all true. It's worth noting, though, that during the 1980s, when Greenspan was doing exactly what Drum calls for, his strongest critics were on the left. I remember William Greider arguing that wages at the bottom of the income distribution only start to rise when the economy's really booming and we're close to full employment. By cutting off the highs, as Greenspan did by raising interest rates when things got too hot, he eliminated the part of the cycle when the poor get theirs.The problem, as Kevin puts it, is both human and political. "How do you ensure that [countercyclical policy] happens not just during downturns, when everyone is eager for it, but also during upturns?" he asks.... "After all, no one wants to spoil a party when everyone is having a good time."
The answer to this, in part, was supposed to be that the Federal Reserve chairman is insulated from congressional meddling and popular opprobrium. He can do what must be done. But that didn't work out in the latter years of Greenspan's tenure and he was, in part, considered a hero for permitting such an awesome economy.
So why have the sides switched, to the point where it's now progressives like Drum and Klein who are calling for counter-expansionary monetary policy? Perhaps it's the economic history of the Bush years, in which economic growth was decoupled from rising income not just for the poor but for the middle class too: liberals just don't root for robust growth in the way they used to.
