One of the strange features of the period we are living in is that discussions of fiscal and monetary policy have pretty much preempted a more direct examination of structural problems in the American economy. These topics have become our obsession, precluding direct debate about what sort of economy we want to be.
Perhaps because Americans are phobic about the idea of having a larger economic vision, we do not talk about how we would like the various parts of our economy to function together for our greatest well-being. Instead, we talk about monetary policy (the Fed and the money supply) and fiscal policy (the role of government as a taxing and spending agent), as though getting these two parts of the equation right will, in themselves, produce a national economy that is prosperous and serves the various needs of the citizenry.
Perhaps it’s inevitable, because these are the two parts of our vast economic system over which officialdom can hope to exert control. Almost occluded is the whole world of work—the whole world of enterprise—, the aggregate shape of which should always be our main point of reference. Anti-statists though we are, we focus on government action more than on what American workers and companies are actually doing, or on the cultural and practical developments that could help them continue more happily, successfully, and harmoniously.
Instead, all roads lead back to the government, the federal government, which, as the economy has grown, so too has it, grown to be a huge economic agent, one so huge and complex that citizens can scarcely apprehend its many functions. The government’s role as an employer—as a regulator—as a consumer—is massive.
Readers of this website have noted already that, while public discussion of government spending often focuses on social benefits distributed to the ill, the poor, and elderly, the government gives mightily to other economic actors, whether in the form of tax breaks, farm subsidies, employment, military spending, or other government contracts, forming a great gift-cycle that is myriad and so circular! Because, of course, we pay our part for all of these things. It’s all so different from the days, long long ago, when there were no income taxes, and the government’s main functions were running the P.O. and sending farmers experimental seeds!
Notwithstanding the benefits that might follow from keeping our sights trained on creating opportunities for American labor and improving the character of our own economic activities, we are entering a period when fiscal policy will remain at the center of public consciousness, where more and more attention will be trained on issues of taxation, and on tax reform itself, of all things.
Image: from this source
The Map of Federal Benefits
Help Understanding the Federal Budget
Eduardo Porter, “A Nation With Too Many Tax Breaks,” New York Times, 14 March 2012.
GRAPHIC: “Who Gets the Breaks and Benefits,” New York Times, 14 March 2012.
Tracy Gordon, “What States Can, And Can’t, Teach the Federal Government About Budgets,” Brookings, March 2012.
GRAPHIC: “Government Spending by Level, as a Percentage of GDP,” Brookings.