A Benjamin Cole post
I cringed when I read The Wall Street Journal headline: “Janet Yellen Decries Widening Income Inequality.”
It got worse. U.S. Federal Reserve Chief Janet Yellen, reported the WSJ, addressed the “Conference on Economic Opportunity and Inequality, Federal Reserve Bank of Boston, Boston, Massachusetts.”
Hooo-boy. You don’t have to be a right-wing talk-show dittohead to know Yellen preached to a confab of lefties full of tax schemes and government programs to make life more equal for Americans.
Yellen may be an ace academic economist, but she has no sense of politics or public relations. This is a PR disaster, and also a substantive real-world blunder: a Fed Chief’s Job 1—and there is no Job 2—is to create conditions for sustained robust economic growth.
The topic of “income redistribution” is radioactive for any Fed chief.
The Right Wing Targets Yellen, a Fat Bullseye
Already Yellen is suspect in righty-tighty circles as a wishy-washy liberal. Yellen is the archetype of the Ivy League academic who conflates printing money with wealth generated by hard work and prudent investing in infrastructure, plant and equipment.
Thus, if Yellen dares to reverse the Fed’s current course on quantitative easing (QE)—and she probably should fire up QE again—she will be disparaged as an indecisive “flip-flopper,” a charge the Fox News-goons are leveling already.
Fox News digital hit-man Phil Flynn’s most recent column is entitled, “Fed’s QE Flip Flop,” and it condemned St. Louis Fed President James Bullard for surmising out loud that a monetary noose for the economy now makes poor sense, given gathering deflation and global slow growth. (Actually, deflation and slow growth are the new normals, in case anyone has not noticed.)
What Yellen Should Say
First, monetary doves need to eschew the sissy label “doves” and seize the label “bulls.” Egads, the battle is lost before begun with a banner like “doves.” Seizing the word “bull” also properly connotes a break-out from the outdated “hawks” and “doves” binary frame-up.
Yellen should first, last and always describe herself as a “monetary bull with resolve to see robust economic growth, lots of hiring and especially lots of profits.” Every speech she gives should contain references to profits and the need for higher profits.
Yellen should say, “The tight-money crowd wants to starve American businesses. I don’t.”
If the dollar exchange rate comes into question, Yellen should reply, “I am happy to abide by a U.S. export boom, and the Made-in-America jobs and profits that go along with that export boom.”
I could go on, but you get the picture.
Yellen’s sniveling about income equality is not going to convert the tight-money ascetic-fanatics to sanity. Maybe nothing will, but certainly handwringing about income inequality will only harden positions.
Besides, the best way to bring about a better life for Americans is robust economic growth and tight labor markets. Boomtimes, I want. Wages will rise if demand is robust—see North Dakota, where wages have been inching up. Businesses will hire if they think demand will stay strong for a long time.
Somehow in central-banking and money-ascetic circles, the idea of a robust and growing economy has become suspect, trumped by the imperative of zero inflation.
These are strange times—but Yellen can turn the increasing dementedness of the right-wing tight-money nuts against them.
She only needs to talk about profits and jobs and robust economic growth again and again.
But not “income inequality.”