Volcker '49 talks American democracy

Former Chairman of the Federal Reserve Paul Volcker ’49 criticized the current state of democracy in America in a Wilson School lecture on Friday.

Volcker explained that the topic of the lecture would be “Good Governance,” examining the current state of the United States’ governing bodies and whether or not they are meeting the needs of citizens.

“In that context, my speech can be both definitive and exceedingly short,” Volcker said. “Quite simply, [our governing bodies] are not meeting the needs of our citizens. Are there any questions?”

Volcker said that government’s inability to serve its citizens could be attributed to two problems: lack of public confidence in government and lack of proper education in public administration.

“What was healthy skepticism seems to have settled into cynicism and a kind of corrosive distrust. And there, I think we have a problem,” Volcker said, explaining that once citizens have lost confidence in government’s ability to act in their best interests, no government can continue to be effective. Volcker cited a poll that asked citizens, “Do you trust your government to do the right thing most of the time?” and noted that only about 20 percent of people had responded yes.

Volcker noted that government officials are also often at fault, calling Washington an “island of prosperity built on the wealth of lobbyists, law firms and government contracts.”

Rethinking government efficiency, Volcker said, is the purpose of the Volcker Alliance, an initiative he founded in 2013. He added that the Alliance is now working with the Yale School of Management to create new proposals for reforming government at the local, state and federal levels.

Volcker also said that public policy educational institutions such as the Wilson School could help restore government’s ability to represent its citizens.

Public policy education has always had its skeptics, Volcker said, noting that when he was an undergraduate, he once spoke to an economics professor who insisted that public administration was “not an intellectual discipline and science, like economics.” However, he added that the importance of such an education becomes important when government seeks to enact actual change.

“Vision without execution is hallucination,” Volcker said, quoting Thomas Edison. He noted as an example the failures of Obamacare and FEMA’s response to Hurricane Katrina, which he said were the results of “embarrassing failures in implementation.”

“‘Princeton in the Nation’s Service’ could not be more relevant today,” Volcker said, adding that students and legislators are now responsible for rethinking education in public service.

Volcker was the chairman of the Federal Reserve from 1979 to 1987 under presidents Carter and Reagan, and was also chairman of president Obama’s Economic Recovery Advisory Board from 2009 to 2011. He was also responsible for proposing the Volcker Rule of the 2011 Dodd-Frank Wall Street Reform and Consumer Protection Act, which restricts banks from making speculative investments that are not in the interest of the consumer. He now leads the Volcker Alliance.