I am not competent to offer an opinion on macroeconomic policy. But I can, with some confidence, say this about Becker's proposal that the Federal Reserve Board adopt a rule approach to adjusting the money supply to limit inflations and recessions: there is no way in the existing legal regime to make such a rule enforceable. The Board is a creature of Congress. If it resists strong political pressures, Congress can retaliate. Unlike the Supreme Court, the Board has no constitutional standing. And even the Supreme Court, which Congress could not abolish without a constitutional amendment, is not immune from political pressures, because Congress can limit the Court's jurisdiction and controls the Court's budget. Moreover, political pressures influence who is appointed to the Court--and to the Fed as well. And Congress can pass laws that would impede or even nullify Fed policy, as by raising or lowering taxes or running deficits or surpluses in the federal budget.
Therefore, it might well be a mistake for the Fed to surrender discretion in favor of a rule approach. Discretion enables the Fed to bend in the face of political pressure; rigid adherence to rules might cause the Fed to break in the face of particularly intense such pressure. I understand that some central banks do follow a rule approach, but they may operate in a political context different from ours--I do not know.
The larger question is whether any public official can be totally nonpolitical in a democratic (perhaps in any) system. I suspect not.
On the broader issue of rules versus discretion, I doubt that generalization is possible. Rules have great virtues, but they are limited because they are necessarily based on information possessed by the rulemaker when the rule was made. No rulemaker is omniscient. After the rule is promulgated, unforeseen circumstances are likely to arise to which the rule will be maladapted. The inflexibility of rules has to be traded off against the benefits in simplicity, clarity, and ease of compliance and application that rules confer. The tradeoff will not always favor rules.
There are three alternatives to rules. One is standards. A fixed speed limit is a rule; negligence is a standard. A standard is less definite than a rule, which is a minus, but it is more flexible, which is a plus. It would be impossible to anticipate every possible cause of an accident (driving above 60 m.p.h. at night, in snow, in heavy traffic, on a divided highway, or in an SUV, etc.) and make a rule that would declare each cause to be either culpable or excusable. The negligence standard enables a court to determine liability as cases arise, on the basis of a weighing of the costs and benefits of measures that would have avoided the particular accident.
One way to state the difference between rules and standards is that standards enable information obtained after promulgation to be incorporated into the law without need for formal rulemaking. When for example Congress passes a vague statute, thus leaving it to the judges enforcing the statute to fill in the details, in effect the judges are enlisted in the legislative process. An example is the per se rules of antitrust laws, which are judge-made rules supplementing the general directives in the antitrust statutes.
Another alternative to rules is discretion, which differs from a standard in not being enforceable in court. For example, prosecutors in our system have discretion whether or not to prosecute a particular person for a particular crime. Unless a prosecutor bases an exercise of his discretion on an invidious ground, such as race or religion, a court will not review that exercise. Discretion in the criminal law is a way of introducing needed flexibility without creating loopholes through which criminals could escape the law. Criminal laws tend as a result to be overinclusive. People are constantly cutting corners of various sorts, often not realizing that by doing so they actually are violating a criminal statute. Prosecutors are, quite wisely, not given sufficient resources to prosecute every crime, but instead are given discretion to allocate their limited resources as they see fit. They can overlook the minor crimes without worrying that the criminal law contains loopholes that may enable a major criminal to elude justice.
Similarly, no driver actually obeys all the driving laws, but police rarely bother to ticket anyone who exceeds the posted speed limit by less than 5 or 10 m.p.h. Suppose the posted speed limit is 60 m.p.h., but the de facto speed limit is 70. If the posted speed limit were raised to the "realistic" speed limit of 70, many drivers would drive faster because the police would not have enough resources to catch all the speeders, so the realistic speed limit would rise. Moreover, police would lack flexibility to ticket the occasional driver who was driving above the posted but below the de facto speed limit but who the police believed should be ticketed anyway because he was driving erratically--weaving, tailgating, etc. Of course they could ticket him for these activities, but it would be harder to determine and prove them, compared to detecting speed with a radar gun.
The third alternative is presumptions or guidelines, which have the structure of rules--that is, are simple and definite--but which allow discretion in enforcement. An example is the federal sentencing guidelines, which enable a defendant, a judge, and probation officers to determine a definite range for a sentence for a particular crime committed by a person having particular characteristics (such as criminal history), but allow the judge to sentence outside the range if he can give a good reason for doing so based on sentencing factors set forth by Congress. This approach makes sense when there is a need for guidance but strict rules would be too inflexible.
The merger guidelines used by the Justice Department and the Federal Trade Commission are a further illustration of the presumption/guideline approach. They enable firms contemplating mergers to have a pretty good idea in advance of whether the merger will provoke a challenge from one of the enforcement agencies. The firms can go to the agency assigned to their proposed merger before the merger is consummated and get a definitive determination of whether it will be challenged. This procedure enables the lawyers and economists at the agency to decide whether the proposal is consistent with the spirit as well as the letter of the guideline.