There seems to be a consensus that this has been a good and bad year for feminism. Well sisters, listen up, because it’s time to celebrate. According to a Radio 4 profile by Mary Anne Sieghart, a woman is now the first or second most powerful person in the world (depending on the relative power you attribute to Angela Merkel). And the Atlantic has described her as the most powerful woman in American history.
How’s that for progress? Let’s all raise a glass in congratulations to Janet Yellen, the first female chair of the US Federal Reserve. We should be clear: this is a major break-through. No woman in history has ever chaired any of the world’s leading domestic financial institutions. The Bank of England, the European Central Bank, the Bundesbank, the Fed: all men, for all of history. When her term begins in February, against that backdrop, there will be Janet.
Whatever your economic standpoint about the role of central bankers in the microeconomic challenges we all face – paying for the shopping, affording next year’s holiday – surely it matters that there is one less hallowed, powerful, lofty position for which women are yet to be deemed qualified? So what might we expect from the Fed’s new chair?
Yellen hails from an economic tradition that sees the economist’s role as deeply connected to the concerns of ordinary individuals, having gained her PhD with James Tobin at Yale. As President Obama said yesterday, “The American people will have a fierce champion who understands that the ultimate goal of economic and financial policymaking is to improve the lives, jobs and standard of living of American workers and their families.”
The current incumbent, Ben Bernanke, is a monetarist, building on the foundations of Milton Friedman and Anna Schwartz. They see the role of government in the economy being to appropriately control the money supply to provide price stability. Inflation is the target, no matter what the impact on individuals within the economy.
In contrast, Yellen is certainly a progressive. She chaired Bill Clinton’s Council of Economic Advisers late in his term of office. Her critics from the left might argue that Wall Street’s apparent ease and, in some quarters, enthusiasm for Yellen’s appointment does not augur well for a tougher approach to regulation, though this probably stems as much from Yellen being a known actor already within the Fed, as opposed to a Fed outsider choice such as Larry Summers. But as we’ve seen with George Osborne’s approach to financial services regulation, and his defence of the bonus culture, the battle for a well-regulated global financial services industry is far from won.
As a highly distinguished labour market economist, Yellen authored work on the interplay between wage rates, unemployment, and what we might now term underemployment. Of course, this is now a major challenge in the US and European economies. At the Fed itself, she has been successful in placing unemployment on an equal footing with fighting inflation as a macro-economic target. And according to Time magazine, she’s a numbers person, setting high regard for evidence over orthodoxy. And when the orthodoxy has so conclusively failed, surely change is a good thing.
Alison McGovern is Labour MP for Wirral South, shadow minister for international development, and studied economics at Birkbeck College