Susan Walsh/AP Photo
Janet Yellen during her tenure as Federal Reserve Chair, Washington, March 2017
Janet Yellen, the first woman to chair the Federal Reserve, rarely comments on inside-the-Beltway politics. But on occasion, she’s shown less restraint about President Trump. After blasting his failure to grasp basic macroeconomics earlier this year, Yellen said she’s grown alarmed by his efforts to politicize the central bank.
Trump has worked diligently to erode the Federal Reserve’s independence, from his plans in the spring to nominate two allies to the Fed’s board to his Twitter tirades against the current chairman, Jerome Powell.
“In the old days, the president called the Fed chair and told him what he wanted out of the public eye,” Yellen told the Prospect recently. “Trump’s doing this on Twitter every day.” She paused for a moment, then continued, “The Federal Reserve is not political. But if Trump continues to inject politics into its decisions—and the Senate goes along with it—that can change.”
Yellen, now a fellow in residence at the Brookings Institution, has had ample experience confronting powerful men in Washington. Speaking at a recent Economic Policy Institute forum on diversity in economics, she reflected on a particularly frustrating moment in her long and venerable career.
The question centered on a 1999 Time magazine cover story featuring then-Fed Chairman Alan Greenspan, outgoing Treasury Secretary Robert Rubin, and his successor Larry Summers. The fawning coverage of the so-called saviors of the economy has aged poorly, as the trio went on to deregulate the derivatives market and deregulate retail banks. For their efforts, Sheila Bair, the former Federal Deposit Insurance Corporation head, famously labeled them “the deregulatory cabal that got us into the 2008 financial crisis.”
Two decades later, women remain heavily underrepresented in economics, particularly in senior positions.
Along with Brooksley Born, the then-chair of the Commodity Futures Trading Commission, Yellen anticipated a collapse of the financial system from the Fed’s actions. But their warnings went unheeded. Born was bullied by Greenspan and his cronies for pushing to regulate derivatives.
Yellen reflected on the hostility female economists faced in those days. “I think Brooksley was 100 percent correct about her concern about derivatives,” she said. “The guys there really clobbered her … There was an element of ‘What does this woman think she’s doing?’”
Two decades later, women remain heavily underrepresented in economics, particularly in senior positions. Since 2013, the portion of female economists employed by the Federal Reserve System has hovered at a mere 24 percent, according to a recent Brookings Institution report. The figure has risen only modestly since 2014, when Yellen was appointed by Barack Obama to chair the Fed.
A compelling argument for increasing diversity in economics is that men and women gravitate toward different issues. At the Federal Reserve, Yellen diverged from some of her male colleagues by prioritizing lowering unemployment over controlling inflation. During her four-year tenure as the chair, she oversaw a period of historic job creation and low unemployment. Studies have shown that female economists are more likely than their male counterparts to focus on inequities in the labor market, health care, housing, and education—the very problems that concern underprivileged Americans are the ones that Wall Street brokers ignore.
Yellen recounted her early experiences as the lone female faculty member at Harvard, where she got her first job as an assistant professor. “I found it a very lonely and discouraging life,” she said. “There was no one to talk to or work with. It’s not an atmosphere that’s conducive to success.” Recruiting more women to the field helps chip away at a dynamic that persists in some spaces, Yellen said, creating morally and intellectually stimulating environments for everyone and fostering the collaborative atmosphere in which economists produce some of their best work.
