DAVID COLANDER AND DEWEY DAANE
Policy works because it has artists pulling the strings. This book is dedicated to one of those true artists, Alan Holmes. Holmes had a thirty-five-year career in public service, culminating in his position as the head of the Federal Reserve operations in both the domestic securities market and the foreign exchange markets. He was a genius at achieving policy consensus among disparate groups within the policy setting, making him both a formulator and an implementor of monetary policy. He understood both the highest level of theory and the most minute operational detail. The need for both policymakers and academic economists who write about policy to have this dual understanding is the central theme of this book.
It is a theme that is nicely illustrated by a story told by one of Holmes's colleagues, Paul Volcker. There was a squirrel in the forest who had a particular taste for fish. The squirrel went to the wise old owl for some guidance and counsel. After listening to his story, the owl advised the squirrel that the way for him to satisfy that desire was to become a kingfisher. So the squirrel happily went away, ran up a tree over a brook, and imagined himself a kingfisher so he could catch some fish. Of course, imagination was not enough. The squirrel discovered he was still a squirrel. After sitting in the tree for a while, he returned to the owl in a state of some agitation and railed, "You told me the way to satisfy my desire to get some fish was to become a kingfisher, but you haven't told me how to do that. I am still a squirrel." The owl replied, "Look, you came to me with a problem. I gave you some sound policy advice. The rest is operational detail."
We begin with this story because it captures the essential message