Janet Yellen and the Economic Impact of Gender Discrimination
By andrea carr
When Janet Yellen took the role as the first woman to chair the Federal Reserve in 2014, it was generally unremarkable to most major media outlets. Which is generally what you expect when you nominate the Vice Chair to the Chair position and the Vice Chair is excessively qualified for a role where it would be impossible to be overqualified. It’s as interesting as finishing a pack of M&Ms, it’s the natural order of things. She was the first woman to do so, but I imagine this also wasn’t media worthy because in the modern day we’re supposed to pretend gender isn’t relevant.
Some might argue the Chair of the Federal Reserve isn’t that big of a position to warrant an interest in. And maybe that’s true, but certainly everyone has heard of Alan Greenspan, but then there’s the fact that Alan Greenspan served as Federal Chair for an unprecedented amount of time. So then you start to wonder if more people cared about Ben Bernanke, but you say Ben Bernanke was part of talks when the financial meltdown crashed in 2008, and when the banking system collapses, who’s more important than the Chair of the central bank?
And all these “buts” become the central theme to gender issues. It’s nearly impossible to really prove gender discrimination because there’s an unlimited number of variables. We can’t create a scientific study about people and biases in a vacuum. You can always find reasons why someone just “isn’t right for the job” and no one knows, including the person saying the comment, whether there isn’t an underlying gender bias. If you want details on this read Ellen Pao’s book Reset right alongside John Doerr’s book, Measure What Matters.
By all accounts Janet Yellen was more than qualified for the position is Chair of the Federal Reserve. Her PhD in economics is from Yale University. From 1994 to 1997 she was on the Federal Reserve Board of Governors. In 1997 she served as Chair of Bill Clinton’s Council of Economic Advisors. From 2004 to 2010 she was the President and Chief Executive Officer of the Federal Reserve Bank of San Francisco (there are twelve regional reserve banks and San Francisco is the second largest by assets held, next to New York). She worked her way up in the Federal Reserve after an impressive career and education at the top U.S. schools in economics. Yet, she was confirmed in the Senate by the narrowest margin in history.
The Federal Reserve is tasked with two goals: maximize employment and stabilize prices (inflation). The biggest argument against Janet Yellen for her confirmation was she was a “dove”. A “dove” refers to someone whose economic policy favors low unemployment above the inflation goals. The opposite of a “dove” is a “hawk” whose focus is more on inflation than unemployment. Yellen’s goal was unemployment and during her tenure there was one of the largest drops in unemployment during any Federal Chair’s tenure. And the other mandate, of keeping inflation stable, she did.
By all accounts she had one of the best job performances in history and didn’t even tweet pictures of her crotch to members of the opposite sex. You can scour the internet, but there’s almost no criticisms from legitimate organizations (Republican or Democrat) of Janet Yellen’s reign as Chair of the Federal Reserve. But maybe she should have tweeted pictures of her crotch, because very few cared when she was not renominated for the position.
The person nominated to replace her was Jerome Powell, who does not have a single degree in economics. The Federal Bank operates solely based on macroeconomic models (referred to as Keynesian economics) introduced by John Maynard Keynes and refined by academics like Janet Yellen in multiple peer-reviewed papers. Knowing the underlying economic theories is central to decision making at the Federal Reserve. Jerome Powell has a bachelor’s degree in politics and he has a law degree. His primary work experience has been in private equity and investment banking, which generally does not include a lot of in-depth study of macroeconomic policies. On Wall Street, Jerome Powell is probably called a “big swinging dick”, which made famous by Michael Lewis’s book Liar’s Poker, is Wall Street speak for an Alpha Male, or maybe a “hawk”. And at the helm of U.S.’s central bank do you want a “hawk” or a “dove”?
One argument is the President of the United States was the person who chose not to renominate Janet Yellen and a lot of us suspect our current President has a bias against women. But Jerome Powell was confirmed by a Senate vote of 84-13 and Janet Yellen was confirmed by a 56-26 vote. In economics they would call that “statistically significant”.
If you need an example on how our economy suffers because of gender bias, there’s no greater, current example, then the loss of Janet Yellen as the Chair of the Federal Reserve.