A Note on Economics and Policy

I’ve been reading lots of John Taylor recently. But a couple of issues come to mind in some of his recent post that perplex me, as we’ve been talking a lot in my writing course about standards of evaluation and evidence. In this post on renewing principles, he writes:

With strong economic growth and control of government spending the budget moved into balance. As the 21st century began many hoped that applying these same principles to education and health care would create greater opportunities and better lives for all Americans.

But economic policy went in a different direction. Some public officials found the limited government approach to be a disadvantage; they wanted to do more—whether to tame further the business cycle or increase homeownership.

There are a couple of gaps that need development here: who are the “many” who were hoping, and the same issues goes to “public officials,” which seems to over-simplify. Where do recents wars factor into economics here? What other factors are at play in Taylor’s analysis?

In another post on effectiveness of the stimulus, Taylor writes:

As early as the summer of 2009 it was clear that ARRA was not working as intended, as John Cogan, Volker Wieland and I reported. Research since then has uncovered the reasons why. One reason is that very large stimulus grants to the states did not go to infrastructure spending as intended, and that’s what Ned Gramlich found out about Keynesian stimulus packages thirty years ago. (links in original)

So why not try a stimulus with requirements that the money go to effective application. This doesn’t seem to be a critique of ARRA, but a problem with application. I’m interested in clarification.