A history of economic Whac-a-Mole

BERKELEY – THE big lesson of the past 60 years of US economic policy, according to former vice chair of the US Federal Reserve and current Princeton University economist Alan S Blinder’s new book, A Monetary and Fiscal History of the United States, 1961-2021, is that there is no big lesson.

There has been neither linear development nor much “progress” in figuring out how to manage modern economies in the interest of macroeconomic stability. Instead, Blinder describes “wheels within wheels, spinning endlessly in time and space … (with) certain themes … waxing and waning … monetary versus fiscal … the intellectual realm … the world of practical policy making … the repeated ascendance and descendance of Keynesianism ….”

The underlying story is driven, ultimately, by historical contingency. Problems appear and are either solved or not solved. Either way, the response sets the stage for a new and different problem to emerge, because the actions taken in the recent past left the economy more vulnerable in some way. But by the end of the story, one gets the sense that some of the problems were quite similar to one another, and that economic policymakers have been playing a never-ending game of Whac-A-Mole.