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Impressions from Treasury
I will enumerate a few (you can trace other accounts here):
1. Tim Geithner is very smart and he was conceptually stronger than one might have expected.
2. I believe that the long, L-shaped hallways encourage "visits to offices" rather than hallway conversations; this is a speculation and perhaps some reader can confirm or deny it.
3. The quality of the painted portraits of Treasury Secretaries declines as time passes.
4. The free cookies were good and fresh, with a warm, fluid chocolate interior. There was water to drink, but no mineral water.
5. For all their talk about outreach, etc. I believe at least a few of them wanted to hear from an outside source whether we think they are totally ****ed or not. They heard.
6. I worry less than did some of the other bloggers about the Treasury awareness of major economic problems going forward. As governmental institutions go, Treasury has a real incentive to a) worry about the fiscal future, and b) worry about worst-case scenarios, including for financial institutions. Their daily interaction with the bond market gives them a longer time horizon and a more economics-friendly perspective than most of their bureaucratic counterparts. The problem is Congress. For instance if someone at Treasury had a Yves Smith view of the banking system, they could not much act on it.
7. "You guys are a welcome change of pace," or something like that, remarked one senior Treasury official. Although this was flattery, I believe it was meant sincerely. They were also a welcome change of pace.
8. I asked one senior Treasury official which book, thinker, or economic theorist had most shaped his thinking about the financial crisis. In the ensuing discussion the book Lords of Finance was recommended, though I could not say whether it was intended as a totally direct answer to the question as stated.
Posted by Tyler Cowen on November 6, 2009 at 06:57 AM in Economics, Political Science | Permalink
Comments
You were there to be flattered, mon frere, and to consider these guys a "welcome change of pace".
Posted by: josh at Nov 6, 2009 7:59:33 AM
Free cookies? SOCIALISM!
I kid, I kid.
re: 6. If the problem is Congress, would a more independent civil service improve matters? Where Congress sets broad directions and goals, but devolves decisions in certain areas (where a bureaucracy would have "real incentives", so to speak) to said bureaucracy.
Posted by: david at Nov 6, 2009 8:11:22 AM
but don't you wish you could visit the Paulson treasury?
Posted by: babar at Nov 6, 2009 8:27:42 AM
The biggest problem in economics today is the monolithic discrepancy between how people behave and how they say they behave.
This is a fancy way of saying that I agree with josh.
Posted by: Ryan at Nov 6, 2009 8:46:36 AM
I assume that by "conceptually stronger than one might have expected" you mean "didn't literally hand bags of cash to his friends right in front of us."
Posted by: Joseph Lawler at Nov 6, 2009 9:27:31 AM
There is no such thing as free cookies.
Posted by: Dave at Nov 6, 2009 9:33:47 AM
I think it is more about "free cookies...I looooooooove you!"
It seems people will never understand it is about what the money is spent on. Finance is just the method to make funneling the money to stupid projects more efficient.
Did anyone tell them, "Just tax the mess out of us." I'm not a big fan of letting rapists think they had my permission.
Oh, and those of us who said there was nothing special about banks being insolvent were right. It's not a matter of whether the stress tests were stressful enough. It is that they were pointless. "But, but, but (breathless panting) banks in a downturn might have impaired capital!" Yeah, and?
My only question is whether or not the government does this on purpose to accentuate the ratchet effect, or is it just a pleasant by-product.
Posted by: Andrew at Nov 6, 2009 10:02:23 AM
How were the bloggers selected, anyway? Would they go for a group that is most extremely opposed to maximize the effectiveness of their capture (would be hilariously ironic if they consciously employed a capture strategy) or sympathetic ears to minimize potential harsh critique?
As always, probably something in between? (anyone else hate the ubiquity of that conclusion?).
Posted by: DW at Nov 6, 2009 10:35:54 AM
Having an especially smart fox guarding the hen house may not be a plus.
Posted by: Andrew at Nov 6, 2009 10:41:04 AM
Hope you all got pictures for your bragging/ego wall.
If cookies and water only you were a very very very cheap, er, inexpensive, date.
Q: Re: 6. If the problem is Congress, would a more independent civil service improve matters? Where Congress sets broad directions and goals, but devolves decisions in certain areas (where a bureaucracy would have "real incentives", so to speak) to said bureaucracy.
A 1: Having an especially smart fox guarding the hen house may not be a plus.
A 2: Having a dumb fox guarding the hen house is not a plus.
A 3: Having any kind of fox guard the hen house is a bad idea. A very bad idea.
A 4: Congress may not be filled with the sharpest tacks on the board, but we at least have the capability of pulling them off the board (i.e., throwing the rascals out).
Posted by: anon at Nov 6, 2009 10:51:30 AM
@anon
Yes, because throwing the rascals out has worked so well in the past.
Meet the new boss, same as the old boss...
Posted by: david at Nov 6, 2009 11:06:05 AM
I think America's tendency to believe "they have no choice" but to vote either Dem or Rep is a rather stark demonstration if rational irrationality. In other words, it generates a higher utility believe your cause is hopeless than it does to get up and do something about it.
Fatalism is why people can't lose weight, can't succeed in the workforce, can't succeed with women, can't improve politics, etc.
Sometimes just believing that it's possible to push a thumbtack into Geitner's nose would yield great results.
BOTTOM LINE: Whatever happened to optimism?
Posted by: Ryan at Nov 6, 2009 11:28:49 AM
"Lords of Finance" was the final answer or the only answer?
Posted by: keysh at Nov 6, 2009 11:44:45 AM
"1. Tim Geithner is very smart and he was conceptually stronger than one might have expected."
wow Tyler... I expect you might get more free cookies soon!...good boy Tyler.
Thanks for the informative update.
Posted by: Gabe at Nov 6, 2009 11:52:13 AM
The first thing you learn working in a place like Treasury is that you never give a direct answer about anything to an outsider.
Posted by: Paul Johnson at Nov 6, 2009 12:02:03 PM
"How were the bloggers selected, anyway?"
I bet I know.
And give him a break, he now has to feign warm fuzzies, and it may not be all bad.
Posted by: Andrew at Nov 6, 2009 12:37:43 PM
Wow, a special visit to the treasury, in the midst of once in a generation Recession, and your first 7 "impressions" concern who is patting who on the back, and cookies. .... sounds a lot like what Homer Simpson would be thinking when he goes into the board meetings at the plant.
Posted by: Brian at Nov 6, 2009 12:40:14 PM
"The problem is Congress. For instance if someone at Treasury had a Yves Smith view of the banking system, they could not much act on it."
The real question: Did anyone there come out and admit that? Did they say, "look, even if you guys were right about X, Y, and Z, we couldn't do much about it, given our institutional constraints." I prefer that my bureaucrats have that kind of self-awareness, and make it explicit to outsiders. Otherwise, the bureaucrats going to be captured, either through cognitive capture or through "let's ignore the elephant in the room" kind of social-norm-based capture, and they're not likely to do very much good.
Bottom line, we need Randian bureaucrats.
Posted by: Keith at Nov 6, 2009 12:48:28 PM
Keith:
Is that like having honest crooks?
Posted by: Right Wing-nut at Nov 6, 2009 1:13:52 PM
Nothing easier than stroking an economist's ego. Tyler should have asked for some moolah.
Posted by: Yancey Ward at Nov 6, 2009 1:31:35 PM
I'm glad Geithner was conceptually stronger than (you) might have anticipated. I'm still concerned about his motivations. As an example, his boss gives off the aura of being conceptually very strong, but often seems to be motivated to do the wrong thing.
Posted by: Andrew Berman at Nov 6, 2009 2:08:18 PM
Geithner...if your reading this, your web 2.0 propaganda strategy is a FAIL...we know your a thief....and just because some suckups are flattered by being close to power doesn't mean the pitchforks won't get you when the dollar collapses.
Posted by: Gabe at Nov 6, 2009 3:03:21 PM
re: #8
if someone has read an economic history piece that better details the confluence of politics, power, and orthodoxy on economic decision making i would purchase it on the spot. that's one heckuva book.
Posted by: djt at Nov 6, 2009 4:13:51 PM
Yes, because throwing the rascals out has worked so well in the past. Meet the new boss, same as the old boss...
Uh huh. That's why, if you want to be a political pundit who has a very high accuracy rate for predicting congressional winners, all you have to do is predict that all incumbents will win. And you'd be right, what, about 90% of the time?
Throw the rascals out. Every election.
Of course, with gerrymandered districts for the House, the voters don't "elect" their Representative. The Representive selects the voters. So insist to your state legislature that you want competitive congressional districts, not districts drawn to protect incumbents.
And until that happens, which will be approximately the same time as hell freezes over, vote against the incumbent party candidate. Every time.
Posted by: anon at Nov 6, 2009 6:56:59 PM
The meeting sounds like some meetings I was involved with when in sales support situations; I was one of the technical people talking with good customers without knowing exactly what the salesman was trying to sell them, nor exactly what problem they needed to solve, but I was one of a bunch of engineers trying to connect with them to make them like us, and buy more stuff.
I would listen to the back and forth, and offer comments that were vague, but substantial enough to what I thought they were asking or say, trying to clarify or correct what my peers were saying. I also had to mind what I said because I didn't know the NDA status.
Occasionally I'd get to have drinks with the sales tech or even the customer tech guys, and get a chance to connect and to offer more info, but that was rare. Sometimes, it was a waste of time. Generally, I'd get the deal afterward, and it would make me appreciate what I did as mattering to both my employer and the customers.
After all, the IBM or Google wants to know its customers, serve them, and be liked by customers. Perception matters a lot more than it should, perhaps. I bet you have two feelings about IBM and google, and while I would expect both would be positive, IBM is likely button down and google a bit cuddly in comparison.
The term some would use for this is transparency.
Posted by: mulp at Nov 7, 2009 1:53:07 AM
