A Summers Lament
So Larry Summers has withdrawn from consideration as the next Federal Reserve chairman when Ben Bernanke steps down. Those who have vociferously championed Janet Yellen, who is now odds-on favourite to take the job, will no doubt greet this news with cheers. Yet I can’t help thinking that the manner in which the discussion has been conducted has rather sullied the process and focussed attention away from substantive debates about policy.
Now I know from painful experience that articles about monetary policy aren’t exactly link-bait. It can be hard to get all but the devoted few enthusiastic about base rates, quantitative easing and overnight reverse repurchase agreement facilities. As such it’s understandable that personalities are almost always a more appealing talking point than the intricacies of policymaking.
That said, the vitriol of the anti-Summers campaign both in the press and by Democrats in the Senate has been unprecedented. In many cases (though not all) it was little more than character assassination dressed up as analysis. Summers was accused variously of being cantankerous, arrogant, an architect of the crisis, rampantly anti bank regulation and a squanderer of college endowments. In all this precious little was said of his obvious qualifications for the job and the respect (if not affection) that he enjoys in policymaking and academic circles alike.
Perhaps in less interesting times ignoring these would be fine. As Adam Posen notably put it, during normal growth cycles monetary policymakers can expect to enjoy “well-deserved technocratic obscurity”. Except that the intricacies of policy are extremely important right now both for the US recovery and beyond as the Fed looks to begin its long exit strategy from unconventional measures. And one of the best qualified candidates to lead that effort felt compelled to pull out of the race. As he wrote in a letter to the president explaining his decision:
"Any possible confirmation process for me would be acrimonious and would not serve the interests of the Federal Reserve, the administration, or ultimately, the interests of the nation’s ongoing recovery."
It is my sincere hope that Summers’ withdrawal allows people to get back to discussing policy again as the Fed faces one of its most challenging moments since the onset of the crisis. As for its next leader I have no doubt that whoever is finally picked will be eminently qualified – but it is to be lamented that future candidates may now be less willing to step into the fray as a consequence of the treatment that he received.
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