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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Cabinet audit: what does the appointment of Andrea Leadsom as Environment Secretary mean for policy?

The political and policy-based implications of the new Secretary of State for Environment, Food and Rural Affairs.

A little over a week into Andrea Leadsom’s new role as Secretary of State for Environment, Food and Rural Affairs (Defra), and senior industry figures are already questioning her credentials. A growing list of campaigners have called for her resignation, and even the Cabinet Office implied that her department's responsibilities will be downgraded.

So far, so bad.

The appointment would appear to be something of a consolation prize, coming just days after Leadsom pulled out of the Conservative leadership race and allowed Theresa May to enter No 10 unopposed.

Yet while Leadsom may have been able to twist the truth on her CV in the City, no amount of tampering will improve the agriculture-related side to her record: one barely exists. In fact, recent statements made on the subject have only added to her reputation for vacuous opinion: “It would make so much more sense if those with the big fields do the sheep, and those with the hill farms do the butterflies,” she told an audience assembled for a referendum debate. No matter the livelihoods of thousands of the UK’s hilltop sheep farmers, then? No need for butterflies outside of national parks?

Normally such a lack of experience is unsurprising. The department has gained a reputation as something of a ministerial backwater; a useful place to send problematic colleagues for some sobering time-out.

But these are not normal times.

As Brexit negotiations unfold, Defra will be central to establishing new, domestic policies for UK food and farming; sectors worth around £108bn to the economy and responsible for employing one in eight of the population.

In this context, Leadsom’s appointment seems, at best, a misguided attempt to make the architects of Brexit either live up to their promises or be seen to fail in the attempt.

At worst, May might actually think she is a good fit for the job. Leadsom’s one, water-tight credential – her commitment to opposing restraints on industry – certainly has its upsides for a Prime Minister in need of an alternative to the EU’s Common Agricultural Policy (CAP); a policy responsible for around 40 per cent the entire EU budget.

Why not leave such a daunting task in the hands of someone with an instinct for “abolishing” subsidies  thus freeing up money to spend elsewhere?

As with most things to do with the EU, CAP has some major cons and some equally compelling pros. Take the fact that 80 per cent of CAP aid is paid out to the richest 25 per cent of farmers (most of whom are either landed gentry or vast, industrialised, mega-farmers). But then offset this against the provision of vital lifelines for some of the UK’s most conscientious, local and insecure of food producers.

The NFU told the New Statesman that there are many issues in need of urgent attention; from an improved Basic Payment Scheme, to guarantees for agri-environment funding, and a commitment to the 25-year TB eradication strategy. But that they also hope, above all, “that Mrs Leadsom will champion British food and farming. Our industry has a great story to tell”.

The construction of a new domestic agricultural policy is a once-in-a-generation opportunity for Britain to truly decide where its priorities for food and environment lie, as well as to which kind of farmers (as well as which countries) it wants to delegate their delivery.

In the context of so much uncertainty and such great opportunity, Leadsom has a tough job ahead of her. And no amount of “speaking as a mother” will change that.

India Bourke is the New Statesman's editorial assistant.