Meet the most powerful woman in banking

Yellen is a distinguished academic, especially known for her work on unemployment. She has even written about out-of-wedlock child-rearing, gang behaviour and the brain drain; she cares about the real world and her work involves careful analysis of behavi

The nomination of Janet Yellen to be the next chair of the US Federal Reserve is an excellent one, especially with all the uncertainty over the US government shutdown and fears over breaching the debt ceiling. The US economy needs continuity in its monetary policy and Yellen, whom I supported for the job, guarantees a seamless transition from Ben Bernanke. Best of all, it’s one for the doves. She will have no trouble at all being confirmed by the US Senate, even though folks such as Rand Paul will vote against her because they don’t believe there should be a central bank. She needs only 60 out of 100 votes to be confirmed, and will be.

The appointment of Professor Yellen has been welcomed by economists no matter what their economic persuasion, Keynesian or monetarist, saltwater (Harvard) or freshwater (Chicago). There have been few if any dissenting voices. Her CV is second to none. She is definitely the number-one central banker in the world; Mark Carney was just the best central banker available in the banker draft when George Osborne chose him to lead the Bank of England.

Yellen, who is only five feet tall, obtained her PhD from Yale, where she was supervised by the Nobel economics laureate James Tobin. She taught at Harvard and the LSE before moving to the University of California, Berkeley. She first worked at “the Fed” as an economist in the 1970s and then returned as a governor from 1994-1997, when I met her as a feisty but “small lady with a large IQ”, as the New York Times has said. She was chair of Bill Clinton’s council of economic advisers from 1997-1999.

From 2004-2011 Yellen was the president and chief executive of the Federal Reserve Bank of San Francisco and, as the 12 bank presidents do, attended Fed rate-setting meetings. In 2010 she returned to the Fed as a governor and vice-chair. She is married to the Nobel economics laureate George Akerlof; they have a son who is an economist at the University of Warwick.

Yellen is a distinguished academic, especially known for her work on unemployment. She has even written about out-of-wedlock child-rearing, gang behaviour and the brain drain; she cares about the real world and her work involves careful analysis of behaviour.

The new Fed chief is especially concerned about long-duration unemployment and its consequences. Her view is that, for now, inflation can go on the back burner –which is music to my ears, given my recent work showing that a 1 percentage point increase in unemployment lowers well-being by over four times as much as an equivalent increase in inflation.

Yellen has been influential in developing the forward guidance on interest rates that the Bank of England has copied. There will be no rate rises any time soon on her watch unless something dramatic and good happens. I couldn’t ask for better than that.

Pint-sized engagement, going all the way to the top: Janet Yellen, the world's top central banker. Image: Getty

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

This article first appeared in the 17 October 2013 issue of the New Statesman, The Austerity Pope

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The SNP retains power as Scottish Labour faces being beaten into third

Ruth Davidson’s Conservative Party looks on track to become the official opposition in Holyrood.

As expected, the SNP have performed well in the Scottish elections, with an increased vote share and some key gains – particularly from Labour in Glasgow, where Nicola Sturgeon’s party took all eight constituency seats. As it stands, they could be on course for a second successive majority in Holyrood, once the list members are fully counted.

The story of the night, though, is the demise of Scottish Labour, which put in its worst ever performance in Scotland (my stalwart liveblogging colleague Stephen Bush points out that it’s the party’s worst result since universal suffrage was introduced in 1928). The party’s vote share was done across Scotland, and the results are sufficiently poor that they could see them fall behind the Conservatives to become the third biggest party north of the border.

Losses for Labour include seat of Eastwood in Glasgow, where Scottish Conservatives deputy leader Jackson Carlaw defeated Ken Macintosh. Labour had held the seat for 17 years, though it had been Conservative beforehand.

Other key losses for Scottish Labour include Dumfriesshire, where they were beaten into third; Renfrewshire South (which went to the SNP); Cowdenbeath, where Gordon Brown's old constituency manager and protégé Alex Rowley also lost to the SNP; Glasgow Pollok, where former Scottish Labour leader Johann Lamont lost to the SNP’s Humza Yousaf. There was a close call for Labour’s Jackie Baillie in Dumbarton, where she held on by just 109 votes.

Rare successes came in Edinburgh Southern, where Daniel Johnson took the seat from the SNP’s Jim Eadie (although since the seat is effectively a four-way marginal, it’s not a particularly indicative gain), and East Lothian, where former Scottish Labour leader Iain Gray managed to increase a previously slender majority.

Speaking to the BBC, Scottish Labour leader Kezia Dugdale said:

“A very bad night for the Labour party… There’s no doubt that the constitution has dominated this election.”

She also confirmed that “no matter what, 100 per cent, I will remain leader of the Scottish Labour party”.

In a great night for her party, Ruth Davison won her seat in Edinburgh Central, making her the first Scottish Conservative leader not to need the list system to enter the Scottish Parliament  since 2005. The Tories also gained Aberdeen West from the SNP as well as their success in Dumfriesshire.

The Liberal Democrats also had a better-than-expected night. Their leader, Willie Rennie, took the Fife North East seat from the SNP, and his party also had comfortable holds in Orkney and Shetland.

Caroline Crampton is web editor of the New Statesman.