Have you ever stood in front of an elevator and pushed the button a number of times because the elevator didn’t appear as fast as you would like it to? When it didn’t come soon enough for you, did you just take the stairs instead?

We sometimes find irrational actions in economics as well. We intellectually know that if everything is working correctly, then one punch of the button will call the elevator. If the button is broken, then no amount of stabbing is likely to help.

On the other hand, if pushing the button didn’t result in the door opening, then taking the stairs is a rational alternative. If an action is getting no reaction in physics, then the action was ineffectual and some other action needs to be contemplated.

The monetary policy (primarily interest rate manipulation) of the United States is determined by a group of men and women appointed by the Executive Branch of the government but fiscal policy (largely taxes) is determined by the Senate and the House with the concurrence (meaning no veto) of the Executive Branch.

In the past, monetary policy was used for fine tuning the economy while fiscal policy was used for larger changes. For the last eight years the U.S. and pretty much the rest of the world has used monetary policy exclusively. This approach was suggested by Lord Keynes and hasn’t had the desired results since the 1930s.

In the U.S. our leaders have been pushing the monetary button for eight years without creating any real growth. This isn’t too bad by Japanese standards – as Japan has been trying to stimulate its country in the same manner with very lackluster results for about two decades. The European Central Bank has used the same technique but Portugal, Italy and Greece have either burned down or probably will shortly.

Nobody can take the stairs because the political rhetoric says “tax the rich” and redistribute the income. The incredible news flash is that the rich already are paying most of the taxes for two reasons: First, they have the taxable income to tax, and second, the graduated income tax assures they pay more in both real total amount and in percentage paid. It’s very good politics and it gets a guy re-elected.

Fiscal policy is anathema to politicians because they must vote on it, which will cause some loss of support in the next election.

The global economic landscape looks bleak to me. Three of the fast growing BRICS – Brazil, Russia, and South Africa – are in recession or depression. The other two have had their growth rates severely curtailed.

The European Union is in the basement with Great Britain threatening to leave. The nations of the world seem to be intent on moving inflation up a couple of points. Here’s the problem with that course of action.

If your salaries and wages are rising at the rate of inflation, then you are not getting more purchasing power. The general policy of governments is to have 2-3 percent inflation. As a consequence, if your wages are increasing only 2-3 percent, then you are standing still economically.

Many folks in America are doing better than their parents because there may be two breadwinners rather than one, advanced skill levels due to education, or a change of the type of employment. Some didn’t change much from the previous generation and they aren’t doing as well as their parents. America is all about equality of opportunity, not equality of result.

As the worldwide economy slides closer to a global downturn, our political leadership keeps pushing that button marked “monetary policy” and the doors of prosperity don’t open. As this interminable election goes on, watch for some comment about tax policy.

The fiscal policy stairs can take us up to a new level. Jack Kennedy cut taxes and prosperity followed. He explained it by saying “A rising tide raises all boats.” He was a naval war hero and he knew about boats. It turned out he knew about economics too.