J. Bradford DeLong has a scorching critique of the Bush administration's economic policy failures--chief of which is a failure to have a coherent economic policy--that riffs on the firing of economic adviser Larry Lindsey.
Today we know that it never crosses the minds of the powers-that-be in the Bush White House that good economic policies might be worth pursuing because good economic policies lead to a stronger economy. To the powers-that-be in the Bush White House, economic policies are way to reward favored groups of constituents. And their effect on the economy? They don't need to think about no stinking effect of policy on the economy.
Attempts to get the White House to understand the seriousness of the threat to America's capital markets from the corporate oversight crisis were doomed from the beginning. In his previous career the President had been a director of a company that used off-balance sheet vehicles to hide big losses. In his previous career the Vice President had been CEO of a company that had failed to report material accounting changes and so fudged its numbers. In such a context, what would happen to anyone in the White House to say that such practices seriously degrade the quality of financial information and keep financial markets from doing a good job of allocating investment funds where they ought to go?
As best as I can tell, Larry Lindsey batted .000 in his two years in the George W. Bush administration. For it turned out that the people who understand economics were not back in charge. As former White House insider John DiIulio wrote, the Clinton administration "[had] a leader with a genuine interest in the policy process who encouraged information-rich decision-making… teemed with knowledgeable people interested in making government work… substantive policy debate… a premium on policy knowledge…. The Bush West Wing is very nearly at the other end of this Clinton policy-making continuum." Or, to put it more pithily, the people who matter in the Bush White House--from the President on down--don't know what the government does or how what the government does affects the country, and don't care.
If you listen closely, you can hear what the assistants to the press secretary told the reporters as they informed them of what the White House story was: "they didn't quit, they were fired." ...Admittedly, it doesn't make much sense to anyone who isn't a spin-doctor. They are obviously failures in their jobs, and yet you let them hang around for two full years? You fire them without having any replacements set up, so you demonstrate that you are in control of the economy by creating large holes in your table of organization where the people who prepare your briefings and present you with your options should be? The message is: "I wouldn't listen to them. So they were associated with the biggest failure area in my administration. So they must be fired!"
But the spin-doctors do know the Washington press corps well. Half of the Washington press corps is sufficiently partisan that they will buy the administration line, and the other half of the Washington press corps is too lazy and too cowardly to challenge what the White House spin-doctors say. So the media consensus will be that Larry Lindsey did a bad job in the George W. Bush White House, and was deservedly fired, and George W. Bush showed that he has too soft a heart in keeping him on for so long. Far better had Larry bitten the bullet, and resigned earlier on principle--over the steel tariff, or over the host of other substantive issues where the good guys lost inside the White House, for the people who understand economics are definitely not in control.
(via the always-notable and just-permalinked CalPundit, which has an amazing summary of Keynesian economics.