The Political Economy of Activist Government Policy
By Tom Gallagher
Tom Gallagher is a senior
managing director of
International Strategy and
Investment Group Inc. (ISI).
ISI is an institutional
brokerage firm specializing in
economic and political
research. He runs ISI’s
Washington, DC office, which
analyzes the implications of global political developments for financial markets. He
has been ranked in the Institutional Investor’s
Washington research category for the past nine years. He
is also a regular panelist on “Louis Rukeyser’s Wall
Street.” Prior to joining ISI, he was managing director
and political economist for Lehman Brothers. He spent
eight years in economic policy-related jobs in the federal
government. He graduated from the University of South
Dakota in 1976 and from the Kennedy School of
Government at Harvard University in 1978. He is also a
Chartered Financial Analyst.
For most of the past twenty years there has been a trend
toward smaller government, but now it appears that the
trend has reversed. Such trends and their reversals appear
to have more to do with society’s perceived needs than
with electoral politics. Although there might appear to be
a political cycle that drives periods of greater and lesser
government activism, it is more likely that a dominant
trend toward relatively little government activism is periodically
countered by periods of crisis. The dominant
contemporary “crises” are the war on terrorism and the
collapse of the stock market bubble. Also, although not a crisis, the aging of America is an emerging structural
problem that poses challenges for expenditure and regulation.
This paper describes these issues and their likely
long-term implications.
By Tom Gallagher