Powell accused of mismanaging budget for Fed renovation

Homo economicus, or the “economic man,” is an idea that depicts humans as rational beings. This assumption has been used to construct models of the economy and, more broadly, society.

The great flaw in that theory is the supposition of logic in humans. We know, on an everyday basis, how flimsy that notion is. We need to keep our blood cholesterol in check, but the crunch of that fried chicken is irresistible.

On Thursday, the U.S. Office of Management and Budget Director Russell Vought accused Federal Reserve Chair Jerome Powell of shooting over the budget to renovate the central bank’s headquarters by roughly $700 million.

In the same breath, he also questioned why there weren’t any “rooftop terrace gardens, VIP private dining rooms and elevators, water features, premium marble, and much more” constructed, as was originally planned.

To be fair, if all the allegations are true — that the promised luxury features factored into the budget had been omitted while costs have busted expectations — that would constitute mismanagement. At this point, however, either the budget or the fountain’s got to give.

The accusation, more fundamentally, raises the question of whether U.S. President Donald Trump — who has engaged in multiple tirades against Powell — will use this incident to boot the Fed chair.

The idea of “homo economicus” was widely criticized in the late 20th century. Through psychological experiments, economists have proven no human is fully rational. But, really, did they have to go to such lengths?

— Dan Mangan contributed to this report.

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