Kokomo Tribune; Kokomo, Indiana

Breaking News

Columns

August 14, 2013

Hicks: Excellent choices for Bernanke successor

Summers and Yellen top the list

A great debate underway regarding the successor to Federal Reserve Chairman Ben Bernanke seems to come down to economists Lawrence Summers or Janet Yellen. The debate is full of interesting insight but it’s the immediate challenges of the Fed that matter more.

Both Summers and Yellen have remarkable credentials. Both have led the council of economic advisers and are related to Nobel Prize winners. Summers has been secretary of the U.S. Treasury; Yellen was president of the San Francisco Fed. Yellen is a former dean at Cal Berkeley; Summers is a former president of Harvard.

Both are center-left economists whose academic research is foundational to our understanding of many major problems the world faces. Both are fine classroom teachers. It is worth recognizing that both could easily earn 10 times the Fed chairman’s salary in the private sector.

Many in the president’s party are pushing hard for Yellen because of gender and against Summers because he is linked to the financial services sector. Both arguments are silly, of course. To raise Yellen’s gender as a qualification diminishes her astonishing accomplishments. She is as well-qualified as anyone living.

The anti-Summers argument is equally absurd, but for the American left, the financial sector has replaced mining as public enemy No. 1. I don’t know why, for the financial sector — especially Wall Street — has long been a friend of Democrats.

I can only surmise the left’s hatred shifted from mining to finance following the 2008 election. It could be the EPA has so slowed mining that it has dropped off the radar of alleged evildoers, or it could also be that the recession dried up campaign donations from the financial sector.

The absurdity of this is that the Federal Reserve is the largest regulator of the banking system. Intimate familiarity with the financial sector is necessary for the job, but that is not the prime challenge facing the Fed.

The great problem facing the Federal Reserve in the years to come lies in deciding how and when to tighten monetary policy. The next chair must communicate these decision points to a skeptical public and policymakers. This involves explaining the results of complex mathematical models to reporters and members of Congress, which is not a trivial task.

If these were normal times, Summers would have an edge. He is a masterful macroeconomic researcher. However, these are especially abnormal times, and Yellen’s research, including important macroeconomic work, gives her the edge. Whichever economist the president chooses is ready for the job.

Michael Hicks is director of the Center for Business and Economic Research at Ball State University.

1
Text Only | Photo Reprints
Columns
  • STATE SEN. JIM BUCK: Changes pave way to a brighter future In recent legislative sessions, Indiana has enacted substantial policy reforms that resulted in greater economic freedom and stronger economic growth. Economic growth has real implications for Hoosier families: jobs for those unemployed; promotions f

    April 24, 2014

  • JEFFREY McCALL: U.S. networks struggle to cover economic news Network television newsrooms often must cover stories for which they have no internal experts. That's why aeronautic engineers and pilots are put on the air to analyze airplane emergencies. Judges and lawyers are paraded out to discuss whatever sensa

    April 24, 2014

  • Rob Burgess House of Burgess: You've gotta keep 'em separated

    In my career as a journalist I have served my time reporting on city council, county supervisor and state regulatory meetings, to name just a few. Whatever else they might have been, they weren’t holy places. In the many, many hours I spent there I never felt the presence of anything that might be described as transcendent or spiritual.

    April 23, 2014 1 Photo

  • ANDREA NEAL: A committee of 10 picked Ind. capital Editor's note: This is one in a series of essays leading up to the celebration of the Indiana Bicentennial in December 2016. Anyone who's ever served on a committee can relate to the old laugh line: A committee is a group of people who keep minutes a

    April 23, 2014

  • MAUREEN HAYDEN: Judge in gay marriage decision is no activist When U.S. District Judge Richard Young recently ruled in favor of a lesbian couple seeking recognition of their out-of-state marriage, opponents of same-sex unions called him an activist judge who was unilaterally trampling the law. The label didn't

    April 22, 2014

  • TOM LoBIANCO: Turner ethics case tests bounds of 'citizen legislature' When a legislative ethics panel meets this week to review the case of House Speaker Pro Tem Eric Turner, members could have trouble finding clear-cut answers, in large part because of the Indiana General Assembly's status as a "citizen legislature."

    April 22, 2014

  • Cleaning up Indiana could be as easy as a bottle deposit Scan the roadside on a drive through the Wabash Valley, and you might spot an empty pop bottle or two. Or two dozen. Or 200. Drink bottles have become our litter du jour. They compose an estimated 40 to 60 percent of all litter, according to the Mich

    April 21, 2014

  • Wolfsie: High-tech got you down? I love where I bank. It’s a branch inside of a big supermarket. I can make a modest withdrawal and then go and blow every last penny in the cookie aisle. The tellers at the window appreciate me. They know about my obsession with round numbers and und

    April 21, 2014

  • Vasicek: Celebrating Easter I have shared a few bits of Easter humor over the years, so I thought I’d start with a new one. Joseph of Arimathea was the wealthy Pharisee who is famous for helping to bury the body of Jesus. He procured the body, asking Pilate’s permission, and, w

    April 20, 2014

  • DAY: God trusted us with them Well, you heard about my wife and I, and our families from the past, so it is time for me to tell you about two of the prettiest girls I have ever known. They are our daughters Debbie and Patty. They are the greatest gifts from God that we have had i

    April 19, 2014

Latest news
Featured Ads
Only on our website
AP Video
Parade
Magazine

Click HERE to read all your Parade favorites including Hollywood Wire, Celebrity interviews and photo galleries, Food recipes and cooking tips, Games and lots more.
Obituaries
Poll
Kelly Lafferty's video on Tom Miller