Friday, July 31, 2009

Wise Muddling Through

Op-Ed Columnist - Wise Muddling Through -

Nice-- and a nice allusion to "The Science of Muddling Through" article you read.


  1. Not only does this article make an allusion to "The Science of Muddling Through," but I think that much of what is discussed in this article is directly relevant to the Anthony King article "The Vulnerable American Politician." Perhaps the strongest example of this is at the end of the article, in which the author describes the pressures of the media on the politicians as well as the constant dilemma which congressman face in deciding to follow their ideology or personal beliefs, or to listen to their constituency. As King argues, in our "agency democracy," often times re-election pressures are too high for legislators to "take decisions in [their] constituents interests rather than what their constituents believe is in their interests." The article also demonstrates notions which we learned about earlier in the class such as cue-taking and pre-disposition communication which manifest themselves within the discussion of the response team and how a small group was used in order to reduce information costs and come to a informed decision under the contraints of time (cue-taking) and when the author describes Paulson's dislike for bailouts and how this affected his decision making (pre-disposition-communication).

  2. I think the article could be called, "In Praise of Pragmatism." In other words, rather than going into this economic crisis with the idea they knew all the answers, or that they would follow a certain ideological response (conservatives would be laissez faire -- socialists would nationalize everything in sight) our economic leaders essentially tried things they thought would work, without regard to ideology. Some of them have worked; a few other things they tried didn't work. Historically, this was how FDR proceeded. Some of the moneyed interests thought he was a socialist -- just like now some people call Obama a socialist because he is expanding government. But both groups were/are wrong: neither FDR nor Obama (nor Obama's economists) proceeded to try to have the government "take over the means of production." Both just tried to find something that would work -- to save capitalism, not to destroy it or change it (except to the extent we obviously need more regulation of banks and Wall Street).

    Bernanke, of course, is not an Obama appointee. The president appoints the Fed Reserve Board and the chairman of the Federal Reserve. And Bernanke was appointed by Bush to replace Greenspan. His appointment is up in another year or so, and there has been speculation that Obama may keep him on because, while he hasn't been a great spellbinding orator or anything, he has been "steady at the helm." That is probably what we need in all of government.
    -Sarah K.

  3. This "muddling through" described in the economic crisis is also applicable in the healthcare reform and cap and trade. Many leaders ran their campaigns on these issues, yet the policies are not getting passed as many expected. Congress is predominately blue yet substantial legislation is slowly failing to be passed once again. I think that Sarah's observation that expected ideologies are often times failing to fit to what people expect is true. I am, however, not sure if Congress is truly trying to find something that works for healthcare and cap and trade, or if no one is willing to attach their names to these big policy changes. I am inclined to go with the latter...

    - Luke D

  4. I strongly agree with Kurt on his notion of underestimation of the scope of the economic problem by Bernanke, Paulson, and Geithner. Paulson and Geithner specifically I feel were and are trying to please their bosses by releasing more positive or more sugar-coated information to protect the integrity of their respective administrations. An article I read in an early June addition of Newsweek Magazine described Bernake of being very calmed and controlled during this whole crisis. He seemed to guide an ecstatic Paulson (remember the pleading episode on the floor of the House?) and take most of the necessary steps to avert a total collapse. The Times article I believe confirms this. While choosing not to bailout Lehman Brothers may have been a poor idea, it is now seemingly a small mistake in a much bigger problem that Bernake seems to be handling the best he can.

    On a final note that is described briefly at the end of the article, it is astounding to me the power that the Federal Reserve now has in our government. Although I knew much debate goes on behind the scenes, the Reserve seems to effortlessly push though billions of dollars worth of money to wherever they want. It is amazing, as the article describes, that the White House and Congress are barely involved. Is this because one organization is more effective than hundreds of Congressmen and a huge Administration? Has our Congress and President simply lost the ability to deal with crises? I believe the fact that these two branches have lost the ability to muddle through in dire times and situations and instead become intrenched in political bickering is extremely troubling.

  5. This article gives a really interesting insight into the decision-making process behind three of the most powerful actors in government dealing with a true financial crisis. It shows that our leaders in government are not perfect, and cannot instantly produce the best solution to any problem simply by crunching the numbers and using their leadership skills. Instead, a crisis as wide-ranging and potentially devestating as this one needs to be dealt with in a pragmatic way.

    It is not possible to weigh every single variable and vet all possible alternatives before making any action. That is the job of the academic, who can look back at an event and take every factor into consideration when judging a leader's actions. In a real-time situation, leaders must do the best with the information they have, and Bernanke and Geithner seem to have done that.

    While Brooks is right to praise these men for their role in managing this crisis, it is a bit unsettling that these men have so much control over the state of the economy. He emphasizes their independence and small group of decision-makers, and how effective they have been in this crisis without having to deal with large agencies or the White House/Congress machinery. Perhaps their independence is necessary to operate effectively, much as Supreme Court justices are insulated from the democratic process; however, they ultimately do not have to answer to the public, and we can only hope they have the best interests of the populace in mind.

  6. I have to agree with Luke on the subject. When politicians are not willing to put their names on legislation regarding these issues it signifies that they are afraid that public opinion of them may be negatively effected and therefore do not truly believe in what they are proposing. It is not a new trend for politicians to run on the basis of changing policies and not follow through, and so I am not surprised that promises that were made have not been followed through on. I cannot completely fault individuals though, as our congress works together as a unit to pass or vote down such legislation.

    -Kris G

  7. I feel like Brooks is setting the bar fairly low for how to measure the success of these men. He wrote:

    "they did avert disaster and committed only a few big blunders. In the real world, that counts as a job well done."

    I don't expect them to be perfect, but to call it a job well done at this point seems to be a stretch. If the legislators that we all intern for were to commit a few big blunders, I don't know that we'd be able to write it off as a success. These leaders do have to absorb massive amounts of information and make the best decisions based on that knowledge. But as Eric noted, they aren't held accountable to the voting public. Therefore, their decision-making process would be different from that of an elected official. While I do believe that they are doing the best they can to right the ship, I think it's too early to proclaim their work a success.

    -Paul L.

  8. There will always be a struggle for power. Money is everything these days, am I wrong? I agree with Paul that to call this a success is a stretch. Now, to comment on the King article, politicians have to respond to immense pressure and not always with all the marbles. That being said, it could be worse. Nonetheless, like Stephen said, I also cannot believe the power that the Fed Reserve has. Those who are not held accountable by the public voters. Can that be a dangerous process? Would a vote on who should watch the money help?
    Sarah commented about the ideology of government and she may be right! Most of what seems to be the worst is the organization of the politics right now. Split second or drug-out ineffective policies is what seems to be corrupting the process, and a new ideology followed by a re-organizing may be helpful as well.
    Regardless, the article was short and sweet, and really helped to illustrate par tof what was and is going on.

  9. I also agree with Paul, I think calling it a "success" at this point is pushing it. Just because they avoided disaster and only made a few big mistakes does not mean we successfully worked our way through this situation. Although considering the circumstances I think they're doing their best, or at least trying their best. We didn't actually think that this economic problem was going to just disappear within a few months. These men are probably some of the most stressed out people in our country right now because all eyes are on them, with people begging them to fix our problems. I think our expectations were too high of them, we assumed they'd be able to get us out of any economic problem and we quickly realized they aren't magic, they're people like us and it's going to take time and a lot of hard work. I think Americans learned a valuable lesson, and that is we are not invincible. Also, like Paul said, if our legislatures made a few big mistakes they'd be in big trouble with their constituents, nobody would be praising them. But it is different, because legislatures are elected and held accountable for their actions. Legislatures feel a little more pressure to succeed because re-election is always right around the corner. Maybe there needs to be a little more incentive in government for non-elected officials to get on the ball.

  10. I strongly agree with Kurt's argument that "The Science of Muddling Through" is similar to that of "The Vulnerable American Politician." Especially during a time of extreme economic crisis, the blame always goes to the leadership, even though it was inherited by President Obama and cheif economic advisors. But that small fact is irrelevant to a public struggling to pay their bills.

    In the article, I felt that David Brooks (who always give a great, clear cut analysis) really spelled out the true economic problems plaguing our country today. We cannot predict what is going to happen one day or even one year from now. Why is bailing out one company like A.I.G. more crucial then helping the Lehman Brothers? It is a game of risk and educated guessing. Maybe the nation will reap the benefits of such decisions down the road, but like all economic ventures, true profit and true change is not seen instantaneously.

    Unfortunately for those in D.C., they do not have time to watch the economy turn around when the midterm elections are just around the corner. It will be extremely interesting to see if such politicians and leaders will be able to "muddle through" these tough times and make it out on the other side.

    Gena W.

  11. In general, I agree with Brooks' perspective--but with a little different slant: the financial crisis resulted from so many different factors (many of which were interrelated). These include a worldwide surge in savings, central banks cut in interest rates, spiking US home prices, securitization of mortgages, just to name a few. In short—NO ONE saw it coming (at least not the severity of the crisis). So not even those (like Bernanke, Paulson, and Geithner) with knowledge of history and great expertise in one area were able to "see" what was happening until it was too late. Also, due to this complexity, when they tried to "solve" one problem, it created another.

    This points to a couple of ideas that are worth thinking about: one is that government meddling in free markets almost always leads to bad results. Another is thinking that "government action" is the key to solving economic problems is a little goofy when consumer spending drives 2/3rds of our economy.

    So sure, “muddling through” may have been our only (or at least best) option. But who’s to say that it has worked. Perhaps you can claim that it hasn’t fully played out yet. Either way will be interesting to see whether an expenditure of over $700 billion and the massive ensuing national deficit really can save our economy. Personally I can’t reconcile a stimulus of that size with the concept of a “constant and gradual” adjustment.

    Sam E

  12. This article is interesting in the different topics it touches on, including those discussed in the articles read for this class. I agree with some of the other comments above in that there was some failing to "muddle through" during this economic crisis in a manner that would have yielded more favorable outcomes. Though Bernanke attempted to foresee a portion of what the losses the crisis would lend, it is clear (as stated in the article) that there was a failure to predict just how devastating the financial situation in the U.S. would become. With the dramatic changes in the housing market and interest rates around the country, for instance, it was clear that something was about to blow. However, I believe that some causes for this massive miscalculation may have been 1) no one wanted to believe the absolute worse would happen to a country so much on the forefront of the world stage 2) no one wanted to be the one to deliver such devastating news. I am willing to bet that it was a mixture of both. I fail to see that there was not an understanding by some within the Federal Reserve that did not see the results of this crisis being a long time coming, and so I agree with one of the earlier comments that perhaps no one wanted to attach their name to this. However, I would like to believe that Bernanke tried to deal with this situation as best he could, but this time, his "muddling through" did not take the U.S. anywhere near a favorable outcome.
    Taking this a bit further with what some of the others have touched on, although the article aludes to the fact that this may have been all they could do and we should be happy that this crisis was not a more devastating crisis (I write this with a bit of sarcasm), I agree that this article shocked me into actually thinking how much control was in the hands of so few. Although I am willing to be that these are such important/tough issues and material that we must rely on those familiar with the field/how to cope with these kinds of problems, maybe it's time that our elected government officials learn a little more about these issues so that the "muddling through" can be left to a larger numbers of government individuals and less to a selected few, although I know this is most likely unrealistic. On the otherhand, the result of this concentrated power could also be due to the fact, again, that few would want to have to take blame for issues such as this and that it is easier to just sit back and let someone else do the work and take the blame. These financial decisions, in my opinion, could, to say the least, be dealt with with much more care and deliberation.
    Although issues such as this financial crisis will always offer 20/20 hidesight, is it possible to learn from this? Or are we as a democracy doomed to repeat the same mistakes over again? Although it is a stretch, could we compare the current economic situation with the Great Depression? Is so, why didn't we see this coming? Is it because the U.S. has gotten too comfortable with everything,or perhaps because no matter how much we learn from the past, circumstances are always going to be different in an unrelatable way?


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