has attracted enough criticism since the crisis that its independence has been threatened. And fourth, the Fed’s extremely low interest rates have enabled the government to run whopping deficits (though they have begun to come down).
“I lost that argument,” he continued. “But incidentally, I wasn’t alone. I’m not allowed to speak for others, but there were others at the table—and as we go through time, there are more—who agree, who question the efficacy of this.”
It seemed to me that it’s one thing to question the efficacy of a policy and another to say that the policy’s consequences, like enabling the government to run huge deficits, will be negative. Efficacy can be assessed. Future consequences are undetermined and also somewhat subjective.
“Well, the costs we knew going in,” said Fisher. “Hardworking people who had saved their money and done the right thing were going to get hammered, because interest rates went to zilch.” Baby boomers about to retire, for example, wouldn’t see the returns they had been expecting in their retirement accounts. “And then we knew there would be some outright screaming benefits. Warren Buffett gets infinitely richer. Why? Because money is free and he has access to it.”
The contention that it’s not good for wealth to be increasingly concentrated among fewer and fewer Americans is one that people might expect to hear from an Occupy protester rather than from a millionaire banker who raises Longhorns, but Fisher has made it before. “We made it easy for the rich and the quick, the very sophisticated,” he told me. “What have we done for those two middle-income quartiles, for the men and women who work?” The Fed’s actions, he continued, have helped companies, particularly large companies, restructure their balance sheets and refinance their debts on better terms, but the companies have not resumed hiring in the way that policy makers hoped.
Every few months, Fisher calls a couple dozen CEOs to ask them how things are going. He told me that when he asks this informal focus group why they haven’t been hiring more quickly, they tell him that they want more clarity from Washington, about what their tax rates will be, about what federal spending will look like, and about what it will cost to implement new laws like the Affordable Care Act. And so the problem, in Fisher’s view, is with Congress and the president, who haven’t done enough to mitigate the uncertainty constraining the private sector.
“I never get into the specific recommendations, because I’m not an elected representative, but I would like to see [job creation] as the principal guideline,” he said. “And I don’t care if they’re union jobs, nonunion jobs—I don’t care. All I care is that business be taxed and federal spending be conducted and regulation be crafted so that it incentivizes businesswomen and men to go out and hire.”
This is, Fisher had said a few moments before, why Texas has done so well. “We have been more pro-business than the rest of the United States.”
“You just said you don’t want to give policy recommendations,” I told him, “but when you cite Texas as a good example, a certain set of policies comes to mind.”
“Here’s the way I’d put it,” said Fisher. “I’d rather see the Texification of the United States than the Californification. California’s a beautiful place. I was born there, and I go out there often. It’s a stunningly physically beautiful place. But it’s an unhappy place. It sort of went past whatever that point is of balance. We’re the opposite extreme.” It’s true, he acknowledged, that Texas produces more low-income jobs than most states. But it also produces more middle-income jobs than most states, and more high-income jobs too. “The reality is, people come here to work,” he said. “Why else would they come here? We have crappy social services.” He went on. “Yes, there are drawbacks. We have more teenage pregnancies, et cetera. But again, I believe that jobs are the route to dignity, because I grew up in a family where we didn’t have that security.”
Fisher seemed to anticipate the next question. “There is a role for government, and there is a role for regulation, and where Texas showed that was in the regulation governing how much you could borrow against your home. That saved us.” He sat forward in his chair. “Now,” he said, with the polite tone of a man who has logged some time in tea party territory, “some people would say that interfered with a person’s right to borrow infinitely against their household. But it was wise. So, I’m not against government. What I want is—” He sighed. “I want prudent government that encourages job creation.”
The comment raised a final question: Would that be Fisher’s advice in general, or is it specifically because the country is still struggling to recover from the crisis? “I think in general,” Fisher said, after a pause. “We’re in a different world than we were before. We’re not the only player on the globe.” He explained that the crisis had commanded public attention in a way that globalization—the liberalization of markets around the world after the fall of the Soviet Union and the emergence of new competitors—hadn’t. Yet globalization would continue its inexorable march regardless of the economy’s recovery. “It’s a special point in time, but that’s not just postcrisis, it’s post–changing the world,” said Fisher. “It requires a new mind-set.”
I had the feeling he didn’t think that would be too hard to come by. Just one hundred years ago, Fisher’s father was an Australian urchin and Dallas was doing its best to win one of the newly created Federal Reserve banks. The city had fewer people than New Orleans, but it was, its boosters bragged, an international center of saddlery. What’s happened since—the billions of dollars in the basement, the fourteenth-floor views of a bustling downtown—surely seemed improbable then too.