Vested Interests and the Common Man as Seen Through Monetary and Fiscal Policy: Flooding Wall Street or Main Street?

• Published in: Journal of economic issues Vol. 51; no. 2; pp. 440 - 445
• Main Authors: Vidal, Gregorio, Marshall, Wesley C.
• Format: Journal Article
• Language: English
• Published: Abingdon Routledge 03.04.2017; Taylor & Francis, Ltd; Taylor & Francis Ltd
• Subjects: Banking; Capitalism; crisis management; Economic activity; Economics; Economists; Employment; Experiments; Finance; Fiscal policy; Floods; International finance; Macroeconomics; Monetary policy; Wall Street
• ISSN: 0021-3624; 1946-326X
• DOI: 10.1080/00213624.2017.1321391

There are many angles through which a critical observer can analyze the divergent class interests in most aspects of macroeconomic management. We examine the insistence of financial authorities of all major economies on reviving economic activity through monetary - and not fiscal - policy as a particularly clear example of favoring vested interests over the interests of the common man. Nearly a century after Thorstein Veblen wrote on the subject, one can find many parallel elements to the political landscape of the times. Today, the common man is often expressed by the "99%," and many accept that the dominant vested interest is that of global banks. Unlike in Veblen's times, economists today have many historical experiments in economic management that they can consult. By employing logic, historical experience, and an understanding of our current global finance-led capitalism, we offer a preliminary institutionalist analysis of the mechanisms of current monetary policy that "flood" Wall Street, while leaving employment, production, and investment - Main Street - all but forgotten. We then explain how vested interests have abandoned fiscal policy and left a deflationary macroeconomic environment.