I'm half certain there's been a slight overkill in the whole "Next-Fed-Chair" frenzy and it's still continuing. You have people defending Summers, people defending Yellen, a lot of people attacking Summers and even a few ushering in the issue of gender. So here's a short two-cent bit not on who should be the next Fed Chair, but why it shouldn't be Summers.
It's just near-impossible to quantify the impact of Fed statements. And when appointing the leader, consensus-builder and in many ways, the most important economic figurehead for the entire world, you need to check off a gazillion boxes before making such a decision.
It's hard to argue against Summer technically, but then again, this is the Chairman of the Federal Reserve!
I guarantee you - if someone released an audio-less 10 second clip on Vine of Bernanke mouthing a few words that looked anything like "pinterest's fate", lip-readers would pile onto it and that thing would go Gangnam viral.
But here's why the technical aspect matters. The more you know, the more you appreciate how little you know. And in the past decade, nothing holds truer. One of Bernanke's greatest strengths, apart from his demeanor and rigorous analytic way of thinking is his latent humility. He understands how little we still know about business cycles and capital flows, how data still lacks, how little conventional monetary policy can accomplish in extraordinary circumstances.
This is where Summers might fail. Here, try this little exercise, close your eyes and imagine a voice shouting "LARRY SUMMERS!" in your head. Then list what comes to mind.
By all accounts, here's what I came up with (in no particular order):
1) Bleeds blue - (Samuelson and Arrow)
2) Came off as an arrogant jerk in 'The Social Network' as Harvard President
3) Harvard era (Women in science + Schleifer (Russia) + Cornel West + bad interest rate gamble for Harvard's endowment)
4) Smiley-Face on the Committee to Save the World :)
5) Glass-Steagall
6) BROOKSLEY BORN
7) World Bank
8) Ill-timed "Luddite" barb directed at current RBI governor
9) General consensus-based impression of arrogance, abrasiveness and aptitude - a deadly combination for someone in power.
Now to be fair, those are negatives. There's no denying the fact that Summers has held influential positions (Treasury Secretary anyone?) and is aware of how to conduct himself, manage relationships and delegate responsibility. But being a Treasury Secretary, or a Harvard President or a World Bank Chief Economist is DIFFERENT from being the Fed Chair.
You have to:
1) bite your tongue a million times,
2) swallow your pride even more,
3) measure your words by the letter,
4) build consensus,
and above all,
5) bask in the humility of your position and its limits, and understand and appreciate that there are things you don't know and things you won't understand.
Somehow, I have a hard time imagining Summers fitting this bill. Accomplished economist, suitable for anything and everything, but Chairman of the Federal Reserve?
They play a different game there.
It's just near-impossible to quantify the impact of Fed statements. And when appointing the leader, consensus-builder and in many ways, the most important economic figurehead for the entire world, you need to check off a gazillion boxes before making such a decision.
It's hard to argue against Summer technically, but then again, this is the Chairman of the Federal Reserve!
I guarantee you - if someone released an audio-less 10 second clip on Vine of Bernanke mouthing a few words that looked anything like "pinterest's fate", lip-readers would pile onto it and that thing would go Gangnam viral.
But here's why the technical aspect matters. The more you know, the more you appreciate how little you know. And in the past decade, nothing holds truer. One of Bernanke's greatest strengths, apart from his demeanor and rigorous analytic way of thinking is his latent humility. He understands how little we still know about business cycles and capital flows, how data still lacks, how little conventional monetary policy can accomplish in extraordinary circumstances.
This is where Summers might fail. Here, try this little exercise, close your eyes and imagine a voice shouting "LARRY SUMMERS!" in your head. Then list what comes to mind.
By all accounts, here's what I came up with (in no particular order):
1) Bleeds blue - (Samuelson and Arrow)
2) Came off as an arrogant jerk in 'The Social Network' as Harvard President
3) Harvard era (Women in science + Schleifer (Russia) + Cornel West + bad interest rate gamble for Harvard's endowment)
4) Smiley-Face on the Committee to Save the World :)
5) Glass-Steagall
6) BROOKSLEY BORN
7) World Bank
8) Ill-timed "Luddite" barb directed at current RBI governor
9) General consensus-based impression of arrogance, abrasiveness and aptitude - a deadly combination for someone in power.
Now to be fair, those are negatives. There's no denying the fact that Summers has held influential positions (Treasury Secretary anyone?) and is aware of how to conduct himself, manage relationships and delegate responsibility. But being a Treasury Secretary, or a Harvard President or a World Bank Chief Economist is DIFFERENT from being the Fed Chair.
You have to:
1) bite your tongue a million times,
2) swallow your pride even more,
3) measure your words by the letter,
4) build consensus,
and above all,
5) bask in the humility of your position and its limits, and understand and appreciate that there are things you don't know and things you won't understand.
Somehow, I have a hard time imagining Summers fitting this bill. Accomplished economist, suitable for anything and everything, but Chairman of the Federal Reserve?
They play a different game there.
