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Why Economics | A Way to Help People

Janet YellenJanet Yellen, Ph.D., made history this month as the first woman ever to be chosen to head the Federal Reserve. According to some accounts, this makes her the second most powerful person in the world and the most powerful woman. The person who controls the purse strings of the most powerful economy affects economies world-wide. And even more noteworthy, the banking industry (notably dominated by suit-wearing white males) is being led by a woman.
But Janet Yellen is not just any woman. Associates, fellow-students and acquaintances say she could have succeeded in any field that challenged her considerable intellect, but she switched from math to economics, because she saw it as a way to help people. Economics “set her on fire.” And after serving the Fed off and on for 36 years, she will assume the role of Director January 31, 2014.

Who is Janet Yellen?

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For Janet, the idea of helping people began in childhood. Like many children growing up in the 50’s, she heard the tales of the Depression from her father, who was a family doctor in Brooklyn. Not all of his patients could pay, so she became personally aware at a young age of how economic circumstances, like joblessness, affected people in her lifetime, not just the Great Depression.
Janet’s peers in high school marked her for success. She was voted class scholar and was editor of the school newspaper, valedictorian of her senior class and had that quality people recognize as necessary to achieve something memorable. She found her passion in her first economics class at Pembroke (then-women’s section of Brown University). The rest of her education and career reads like a blue print to head the Federal Reserve one day.
She received her Ph.D. in Economics from Yale, studying under her mentor, James Tobin, Nobel Laureate and author of the idea “that governments could mitigate recessions”. She taught at Harvard, the London School of Economics and the Haas School of Business at UC Berkley. While a staff economist for The Federal Reserve, she met her soul mate. In less than a year, she married a fellow economist doing research for the Fed, George Akerlof.
Janet and George worked together, researching and co-authoring papers from 1984-1994. When George wrote his autobiography after receiving the Nobel Prize for Economics in 2001, he speaks at length about their work and their romance, which seem to be inseparable. “We liked each other immediately and decided to get married. Not only did our personalities mesh perfectly, but we have also always been in all but perfect agreement about macroeconomics. Our lone disagreement is that she is a bit more supportive of free trade than I.”
Their work together in economics has earned them the title of “power couple” in their field and established pre-eminent ideas taught in classrooms today. But their careers took different turns when Janet returned to the Fed in 1994. George commuted between Berkeley and Washington.  And she when became Chief of Clinton’s Economic Advisers, Akerlof took leave to help with household chores and raise their son, Robert Akerlof, now professor of economics at University of Warwick in England.

Janet Yellen’s Tenure with the Federal Reserve

Janet began her uninterrupted service to the Fed in 1994, with President Clinton’s appointment to The Board of GovJob Search Tipsernors. She was recommended by her long-time colleague from Berkeley’s Hass School of Business, Laura D’Andrea Tyson. Laura was chairperson of the Council of Economic Advisers, which made her Clinton’s top economist at the White House.
Since then, her positions have been:

  • Chairperson Council of Economic Advisers
  • Chief Executive, Federal Reserve Bank of San Francisco
  • Vice Chairwoman, Federal Reserve

The Real Power behind Yellen’s 5 foot Stature

Prior to being appointed to head the Federal Reserve, Forbes listed her as #72 on its most powerful people list. She has been formulating economic policy for decades. And her insights have shaped how the Fed operates today. She “spearheaded the 2% annual inflation rate” goal to maintain a healthy growth rate in operation since 2010.
Her peers in the field describe her arguments as well-reasoned, factually-based, frequently presenting unarguable analysis that does not anger or demean her opponents. They also maintain that in spite of her soft-spoken Brooklyn-accented delivery, she is fearless in presenting her beliefs and courageous in the face of opposition.
Janet’s friends and associates also depict her feelings about unemployment as deeply personal. She does not equate the numbers with some elevated academic theory that doesn’t relate to the real world. Instead, she knows from her childhood experience and subsequent research how joblessness can disrupt families and ruin lives. Therefore she subscribes to the role of the Federal Reserve as an activist in its relationship with the markets and the banks. She is the first such economist since Paul Volcker served under President Carter.
nofearThere is some argument about how much the Fed can control inflation. But as the only bank that makes money and controls the source of that money to other banks, it’s in the driver seat of the economy right now. Janet has sworn to continue the balancing act of the policies under Bernecke and proceeding with the goal of maintaining 2% annual inflation. Like everyone, she would like to see unemployment decrease and Americans go back to work pursuing their dreams. Unlike everyone, she has spent decades researching how wages affect productivity, the effects of poverty on economies, etc. and has the determination, the heart and the position as Chairwoman of the Fed to make a difference.
Many observers predict that there will be little change, since she has occupied a prominent place at the Fed for two decades. Some people worry that she will be too conservative as a “dove” at the Central Bank, others worry that she will completely change the face of world-wide economies. The fact anyone is worried at all shows how much the Federal Reserve affects everyone’s lives. So far no one has worried that she is a woman or that she is 67 years old.

Role Model for Young Women

Happy LifeJanet reportedly perceives herself as “being in the prime of a late-blooming career.” But with her considerable academic credentials, including being a Guggenheim Fellow in the 80’s and authoring/co-authoring several papers and a book on macroeconomics, and her 36 years of service to the Fed, she is not exactly late blooming. She is an example for what dogged persistence can and should do for a gifted intellectual who wants to make a difference, regardless of gender.
All “firsts” get noticed and their careers and performance are closely watched. As the appointed head of the Fed, Janet Yellen will not be noticed for her gray hair, or whether she got her lipstick on straight. She will be judged by whether or not people are able to return to work and if the U.S. is able to return to the perceived prosperity of the 90’s. Equally important is what her position means for girls who are good at math. Her career points the way toward possibility. A girl who is smart and good at math and science should not hide her light under a bushel, as our grandmothers used to say. She should use her gifts, follow her passion and not let anyone discourage her from making a difference or even trying to change the world.

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