WASHINGTON -- Barney Frank, the 14-term Massachusetts congressman who chairs the Financial Services Committee, says it might be useful to "make it a misdemeanor to use metaphors in the discussion of public policy," such as "a rising tide lifts all boats." Against what he considers that too-complacent view of economic growth (the metaphor was John Kennedy's), Frank says: A rising tide is wonderful "if you have a boat."
Frank questions whether market-driven wealth creation is producing more inequality "than is either socially healthy or economically necessary." He favors much more government intervention in the economy to diminish inequality. Sometimes he means equal dependence on government. For example, he wants everyone enrolled in Medicare -- with larger co-payments for higher-income people -- in order to take health care "out of the wage system."
Frank mildly says that Congress should "pay a little more attention" to the seven governors of the Federal Reserve System, all of whom are confirmed by Congress. The Fed, says Frank less mildly, should not be considered "above democracy": "We can debate whether Terri Schiavo's life should be recognized as over" and other fundamental questions of existence, "but God forbid anybody in elected office should talk about whether or not we need a 25-basis point increase" in interest rates. "Somehow that's sacrosanct. No, it isn't. It's public policy."
The late Sen. William Proxmire, a populist Democrat who represented Wisconsin for 32 years, said that all members of Congress should have written on their bathroom mirrors, so it is the first thing they read each day, this: "The Fed is a creature of Congress." Frank says Congress should not intervene in monetary policy ... "unless." By monitoring whether the Fed's governors act as they said they would when they were being confirmed, Congress would be "setting the predicate for intervention if they act otherwise."
He wants the Fed to emphasize full employment as well as protect the currency as a store of value -- restraining inflation. But the Fed's stunning conquest of inflation since the early 1980s is almost a sufficient explanation of subsequent prosperity.