John Taylor

More On Economic Freedom and Monetary Policy

My Wall Street Journal article today is quite critical of recent interventionist fiscal and monetary policies in the United States. In my view, they have not only been unhelpful to the American economy, they have also been unhelpful to the world economy. The monetary and fiscal policies I am criticizing go back to before the start of the Obama administration, as I showed in this article on fiscal policy recently published in the Journal of Economic Literature and in this piece on monetary policy published in November 2008 by the Bank of Canada. So I view this criticism as being non-partisan, as has been my historical review of the swings between rules and discretion.

In a long rebuttal to my criticism in today’s Wall Street Journal article, David Glasner argues that I mischaracterized America when I wrote that it was a leader in economic freedom following World War II, when it helped Japan and Europe recover and helped create the GATT and other international financial institutions. It is certainly true that American economic policy was not perfect with its regulations and high marginal tax rates, but comparatively speaking the American model was a far cry from what was being set up in the large areas of the world which were not free either economically or politically.

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