I understand that sometime soon President Obama will name a new Fed Chair. Or to refer to it in an official manner, a new Chairman of the Board of Governors of the Federal Reserve System. It’s a pretty big deal. I wish at this point I were one of the learned who could understand and explain why it was a big deal, but alas I am not. The workings of the Federal Reserve System remain to me, like to most Americans, an enigmatic, ineffable sort of black magic. Though while it’s particulars are clouded in the obscuring mists of heady jargon, we get the idea that the whole business is very important for the economy.
And because it is a big deal, there is no shortage of pundits and journalists speculating on who the next Fed Chair will be, and/or giving advice on how to make the choice. Take blogger and economist Brad DeLong for instance. In a piece that argues, though not strenuously, for Larry Summers to get the Fed job, DeLong advises a three test approach:
To be good choices for Federal Reserve chair, candidates must pass three tests. They must have experience at a similar job: this is not something to throw somebody into and expect them to swim. They must fear high inflation as they fear a tornado, and feel in their bones the pain of the unemployed. And they must understand and properly weight the different models of how the economy might behave. Right now, this third means that a good Federal Reserve chair must give a relatively high weight to the Keynesian model, which has been so successful at describing and forecasting the economy over the last six years.
Sometimes I wonder about why people write things. This is one of those times. Tests one and three seem to me to be fairly reasonable at least on the surface, but I find test two strange. Particularly the second clause about feeling the pain of the unemployed “in their bones”. What does that even mean, really? An empathy for the unemployed I guess, but the whole bones thing suggests a rather strong emotional reaction to unemployment. What does it mean in practice? An uptick in unemployment by 1% will result in a fit of weeping? Will bad unemployment numbers result in the Fed Chair going home and doing this?
If that’s what it means it is even clear that such an emotional attachment would be a good thing? I’m not in a position to know but I doubt that surgeons are trained to develop a deep personal attachment to the person on their table. To see them as the nexus of a huge web of emotional attachments that will transmit devastating psychological pain if they fail in their job. I can see how it might be better to view the person as an impersonal collection of complex biological systems.
But I tend to doubt that DeLong takes that clause particularly seriously, nor expects others to. It strikes me as more a throwaway line that demonstrates his humanitarian bona fides. If he thinks empathy for the unemployed is a critical characteristic for the next Fed Chair, well it stands to reason that he probably has that strong empathy himself, and has it in spite of having the low character and poor taste to become an economist.
So a small, pandering, and self serving bit of text there perhaps. Writers have been known to pander. Maybe not incredibly interesting. But what is interesting is the endorsement of Larry Summers. The same Larry Summers that played a key role in the neoliberal deregulation fad that led to the recent global financial meltdown. Go ahead and do some Googling. Better yet start with this piece at Naked Capitalism. I think one of the last impressions you’ll get is that Larry Summers feels the plight of the unemployed in his bones.