The Overton Window
This article is a part of my Best Reads of the Month section on my website www.mikegorlon.com. Each month I pick one or two articles or blog posts that I find on the internet which I thought were really insightful, interesting or moving. Then I share them with you. You can view the previous month’s articles by going to: https://www.mikegorlon.com/best-reads-of-the-month
November 2020: The Overton Window
I’ve never heard the term Overton Window mentioned before until I was listening to an episode of the All In Podcast a month ago but now I am hearing it a lot more often.
As defined by Sean Stannard-Stockton of Ensemble Capital in this article, “the Overton Window is a concept named for Joseph Overton [where] Overton argued that the range of political policy possibilities was not directly related to any politician’s individual preferences, but rather by the range of options that are politically acceptable to mainstream voters. This range of politically acceptable outcomes changes over time, but at any given moment, only policy options that fall within the Overton Window have any hope of becoming reality.”
Here is an image that Sean uses to demonstrate the Overton Window which shows a range of outcomes for policies that include sensible, popular and policy in the Overton window and acceptable right on the edge.
There are so many policies that have shifted recently and Sean does a fabulous job in this article discussing the Overton Window and some of the big policy changes that have happened recently that would have been thought of as almost impossible last year.
One of those policy shifts he discusses is a meeting he had on March 9th when it was still at the time thought of as not thinkable to cancel a client meeting until only one week later when San Francisco locked down the state in response to the coronavirus pandemic and canceled all in person meetings.
Ever since then, the Overton Window has shifted and not meeting clients in person has been deemed acceptable and policy.
Another shift in Overton Window is the Fed’s decision to seek an average of 2% inflation and to allow inflation to run above 2% for a period of time if necessary.
Here is Sean on inflation:
“The fed no longer views any inflation of over 2% as a signal that they must reduce their support for the economy. Rather they see getting inflation over 2% as a sign that they are succeeding and do not plan to start tightening monetary support unless evidence builds that inflation is shifting towards a persistent 2%+ level.”
Just one year ago, allowing inflation to run above 2% wasn’t their policy or allowable but with so much struggle to generate inflation in the U.S. economy and with the backdrop of the pandemic creating deflation in many areas including travel, entertainment, real estate and retail the Fed decided to shift their policy.
Sean discusses other shifts occurring today in the Overton Window such as working from home, modern monetary theory and unemployment insurance.
Here is the link: https://intrinsicinvesting.com/2020/11/11/the-overton-window-understanding-what-is-possible/
