Chapter Six - Instruments for a Systemic Economic Policy

Summary

“Although pressures to use the government's tools of economic management to achieve one or another short-term aim are always present, the tools of government are, in fact, most appropriately used to create an environment in which private economic activity can flourish over the longer run.”

Alan Greenspan, chairman of the US Federal Reserve, October 26, 2005

Introduction

Economic policy is a science and an art. Its success lies both on a scientific process founded on the consideration of established laws and rationalities, particularly concerning the behavior of economic agents, and on a pragmatic process made of creativity, inventions, innovations and adaptations to particular and the ever-changing situations to which the officials must adapt. In the foregoing chapters, I examined the first component of what, in my opinion, falls under the scientific component of economic policy – that is, choosing the final, intermediate and operating goals of economic policy. These goals serve as guideposts on the long, winding and complex road that any good economic policy must necessarily take. These goals determine the overall orientation of economic policy and inspire the specific measures which will eventually be taken to implement it. Without a clear, stable and sustainable vision of these goals in the minds of economic policy officials at all times, they run the risk of reducing themselves to a simple visual navigation, a simple manipulation without conviction and coherence of instruments, lacking motivation, failing to mobilize the key actors, and consequently, failing to achieve the successes on which the lives and well-being of millions of citizens rely.