Supply-side policy makers should consider Professor John Taylor’s new book on restoring prosperity. Prof Taylor is esteemed among free market economists (and on Capitol Hill), and, for example, won the prestigious Hayek Prize for 2012.
Professor Taylor’s book is a well grounded and lucid representation of the center-right prescription for getting economic growth going strongly again and an intelligent critique of the policies that have led to persistent 8%+ unemployment.
Professor Taylor, of Stanford University, recently published First Principles: Five Keys to Restoring America’s Prosperity. This book convincingly argues against federal interference in the economy. It effectively demonstrates how the economic interventionism which did so much damage in the 1960’s and 1970’s is recurring now.
In First Principles Professor Taylor contends that there is a need for a rules-based monetary policy, and he proposes a consistent-rule system. There is a strong consensus among Republicans and Conservatives that the current discretionary activism of the Federal Reserve System, described by Lehrman Institute founder and chairman Lewis E. Lehrman as “arbitrary,” needs to be replaced by a rule-based monetary system.
Professor Taylor’s eponymous rule is the most famous of the candidates being propounded by respected professional economists. Within the conservative base, the movement activists, the libertarians, the supply side, and the tea partiers tend to lean more toward a more established rule: that of the classical gold standard. With an emerging pro-rule consensus emerging, Washington seems poised for a very interesting, and civil, discussion about which of the proposed monetary rules presents as most promising to restore prosperity with security, stability, and social equity.
Professor Taylor’s latest book is an excellent place for thoughtful monetary policy observers, with or without formal economic training, to consider the growth-retarding effects of discretionary activism. Highly recommended.