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Stanley Fischer: Macroeconomic Wizardry v. Conflicts Of Interest
Dave Pinsen asks in the comments on my own site:
One question for you Steve, since you've implicated this clique in our ongoing economic malaise: given the constraints of the Fed (e.g., its dual mandate to promote economic growth and maximize employment, and its inability to address economic problems not associated with monetary policy, such as unchecked immigration, naive trade deals, poor fiscal policy, etc.), what would you have preferred it did differently over the last several years?
I don't talk about macroeconomics a lot anymore. I spent a fair amount of time in the 1970s and 1980s thinking about macroeconomics, but ultimately I didn't notice that I had a comparative advantage in that field.
Perhaps when I was 21 my views on current macroeconomic policy were more correct than, say, Stanley Fischer's, who was 36 at the time (here's a long 2001 interview with Fischer on how his views have evolved toward the right), but if so, that would have been sheer blind luck on my part. (Fischer's disadvantage was that he started out as a child in the Habonim socialist-Zionist youth movement, spending six months at an impressionable age on a kibbutz in Israel, so he had a lot to unlearn.)
As the decades went by, I didn't notice that I had all that much to contribute to understanding macroeconomics.
So, today, I focus on simpler topics that don't attract much attention, such as conflicts of interest among the great and the good. The concept of conflict of interest is a very useful one, but one that the conflicted have largely lost interest in.
Dr. Fischer's career, for example, features a number of interesting conflicts of interest, but we are being told that those should be of no interest to us because he is the world's greatest macroeconomist, according to other great macroeconomists, who are his friends, students, bosses, and so forth. How do we know they are great macroeconomists? Because they are his bosses, students, and friends. The world's greatest macroeconomist wouldn't have friends, bosses, and students who aren't great macroeconomists, right?
I'm really not capable of assessing just how valuable Fischer's macroeconomic policymaking skills are, so perhaps that's why I am skeptical that they make up for his manifest conflicts of interest: I'm not smart enough to be confident that the macroeconomic magic that Dr. Fischer will conjure up will do us so so much good that his conflicts of interest are a negligible price to pay.
More importantly, exceptions rapidly become rules.