A few weeks ago, Ezra Klein wrote about the “subtle, sexist whispering campaign” against Janet Yellen, and I didn’t really believe it. (Hey, I’m a white guy). Yellen, the current Fed number two, is so obviously qualified and respected that I thought it was pretty much a given that she’d get nominated for Fed Chair. It’s not. And it’s getting harder not to think that doesn’t have something to do with gender.
Here’s the Cliffs Notes case for Yellen. She’s been at the Fed for much of the past 20 years, and she’s been on the right side of almost every debate during that time. She talked Alan Greenspan out of an ill-conceived zero percent inflation target in the mid-1990s, raised concerns about the housing bubble in the mid-2000s, and highlighted the danger of a credit crunch in 2007. Not only that, but the Wall Street Journal calculates that she has the best forecasting record of any Fed member going back to 2009. Oh, and she’s been the architect of the Fed’s unconventional policies.
But that isn’t good enough for some reason. And that reason sounds pretty sexist. Indeed, as Klein notes, one of the criticisms he’s heard of her is that she lacks a certain … “gravitas” (or is it a Y chromosome?) to be Fed Chair. It’s an interesting word choice that’s come up again. Here’s what Albert Hunt of Bloomberg View says he’s heard about who Obama might pick to lead the Fed:
The president, according to people familiar with his thinking, believes Summers has the experience and expertise to succeed Ben Bernanke. No one doubts Yellen’s credentials as an economist, but questions have been raised, mainly by those in the Summers camp, about whether she has the gravitas to manage a financial crisis.
I’m going to put this as politely as I know how: This is bullshit. Yes, there have been more absurd attacks on Yellen — that she’d be a PC-pick or usher in the era a “gender-backed dollar,” whatever that means — but this is plenty absurd too. Offensively so. Look, Ben Bernanke was also a soft-spoken academic with no Wall Street experience before he became Fed Chair, but that didn’t stop him managing the financial crisis about as well as anybody could have. (At least the actual panic, not the run-up to it). Did Bernanke, who hired a public speaking coach to help conquer his voice quaver, have gravitas? I don’t know. That judgment probably depends on how much you like his beard.
The idea that Yellen somehow wouldn’t be good in a crisis smacks of sexism. It’s the implicit idea that leadership is shouting down your opponents, and that the markets need an alpha male to tame them. Like I said, it’s bullshit. And it’s bullshit that ignores the most relevant point: Yellen was at the Fed during the crisis. She knows what to do. She was one of the few warning about the shadow banking system right before its crunch turned into a crash that almost ended the financial world as we knew it. I think she could manage just fine in another crisis.
Now, I’m not saying Yellen is the perfect candidate. Just close to it. And closer than any of the alternatives being mentioned. Larry Summers is an incredibly smart economist, but contra President Obama, he doesn’t have any central banking experience nor has he done much relevant research. In fact, Summers has barely written about unconventional monetary policy, ever. And Tim Geithner, who Hunt has said might be the pick for months now, would be awful. For one, he clearly doesn’t get how the economy works when interest rates fall to zero. Just look at how he continually worried more about nonexistent bond vigilantes than actually-existing unemployed people all the way back to 2009. For another, he’s one of the last people you’d want with any kind of say over regulation. The last time he did, things didn’t turn out so well — and he was pretty blasé about it. Remember when he told Congress that he’d “never been a regulator” when that was supposed to be part of his job description as New York Fed chief? And, as Noam Scheiber of The New Republic reports, he took this non-regulating streak so seriously that he tried to weaken Dodd-Frank behind the scenes back when he was Treasury Secretary.
It says something that the best the anti-Yellenites can come up with is that someone with experience fighting a crisis wouldn’t be good fighting a crisis. And it doesn’t say anything good.