Volcker: We’ve got a Problem in Governing in this Country

This is from a long Q&A the Financial Times held with Paul Volcker (covering a variety of topics, but focused on a discussion of the “Volcker rule”):

FT: Is there a next area you’re going to focus on?

PV: Well, we’ve got a problem in governing in this country…, our inability to deal with very large evident problems is apparent. I spent half of my career worrying about public service and the efficiency and effectiveness error. I must say I’ve gotten a little cynical. I headed two commissions on this subject and I kind of feel what am I here for? Nothing’s happened. It’s gotten worse; not better.

Somebody quoted … there is a questionnaire – one of these things that they ask the same question every year or every two years for decades and try to get the trend of thinking.

One of the standard questions … said, ‘Do you trust your government to do the right thing most of the time?’ That doesn’t sound like the toughest question in the world, but when I was in government way back in the Kennedy years, the answer to that question would be – I don’t know – 60-70 per cent…

You ask that question now and you’re down in the twenties. Somebody quoted a survey the other day. I don’t know if it’s the same survey. It was some politician that said the latest figure was 17 per cent. Now you’ve got a problem in running a democracy and running a government if the amount of trust in the government in general and trust in individual institutions and trust in the Congress, trust in the administration is not there.

It used to be one of the advantages of the Federal Reserve was I thought that was an institution that was generally considered to be competent, professional, independent and trusted. Not unanimously, but more than 20 per cent. I think some of that’s been lost. It’s a big challenge right now. That’s one of our most important institutions.

So we have a real rebuilding job to do…

I can remember thinking during the Bush administration that, for the first time in my life, I wasn’t sure if the government was operating in a way that put the interests of “we the people” first. There had been many, many times when I disagreed strongly with what the government was doing, but for the most part I didn’t feel as though the government was operating in bad faith. But the Bush administration changed that, or at least led me to question the motivations behind those in power, and it’s a legacy that does not get enough attention.

At the time I had these thoughts, I wondered if things had always been this way, if age had simply opened my eyes to obvious truths that were there all along. I think that’s partly true, I feel dumb for not realizing things earlier in my life all the time. But I don’t think it’s the main thing that was going on. The Bush administration did change the perception of government, and not for the better. Volcker is right that there is a “real rebuilding job” ahead of us, a job that will be made more difficult by those who, guided by their ideological beliefs, helped to bring the present state of government about. This group doesn’t see much of a problem when government does not work.

A good place to start would be the broken Senate, both the rules and the extent to which it is beholden to big piles of money need to be fixed, and then we can move on from there.

About Mark Thoma 243 Articles

Affiliation: University of Oregon

Mark Thoma is a member of the Economics Department at the University of Oregon. He joined the UO faculty in 1987 and served as head of the Economics Department for five years. His research examines the effects that changes in monetary policy have on inflation, output, unemployment, interest rates and other macroeconomic variables with a focus on asymmetries in the response of these variables to policy changes, and on changes in the relationship between policy and the economy over time. He has also conducted research in other areas such as the relationship between the political party in power, and macroeconomic outcomes and using macroeconomic tools to predict transportation flows. He received his doctorate from Washington State University.

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