The 1 weird thing you need to know about Janet Yellen
I think the defenestration of the odious Larry Summers is super, and I hope Larry's hitherto impermeable ego took a deep puncture wound from the shards and splinters, though I doubt very much that it did. And Janet Yellen, both as a glass ceiling-shattering woman and a consensus builder, is clearly a superior choice* to a corrupt, chauvanist gasbag who cashed in at DE Shaw and blew a squillionaire-sized hole in Harvard's endowment, after which he fired the (black (female)) whistleblower who called him on it, Iris Mack, Ph.D.
Nevertheless, schadenfreude is a poor basis for determining policy, as is -- and one would think after campaign 2008, we'd understand this -- hagiography. Dr. Lynn Parramore provides a fine example of Yellen hagiography here. First, I'll summarize the article's talking points; then, I'll do a closer reading and point out one issue, pertaining to women, that one would have thought a focused editorial process would have protected Parramore from failing to raise. Happily, however, this same issue provides a litmus test both for the seriousness of Yellen's advocates on politics, and the seriousness of Yellen herself on policy. 6 Things You Need to Know About the Woman Who May Soon Be the Most Powerful Economist on Earth:**
1. Yellen has an impressive resume.
2. She has an independent streak.
3. Her forecasting ability is renowned.
4. She cares about unemployment.
5. She has the right management skills.
6. Yellen is the most qualified.
OK, let's color code those talking points. I'll use blue for careerist talking points (credentials, resume, job performance, and so forth), yellow for personality talking points (example: "In addition to the progressive values I believe Obama holds in his heart, I also believe he is an honest, decent person who wants to do the right thing"), and green for policy talking points (example: "[I]t'd be nice if someone in the Fed at least acknowledged that 'giving people free money' is what needs to happen."):
1. Yellen has an impressive resume .
2. She has an independent streak .
3. Her forecasting ability is renowned .
4. She cares about unemployment .
5. She has the right management skills .
6. Yellen is the most qualified .
See any policy there?
Didn't think so. In other words, if all you know is the "6 things you need to know," Parramore's conclusion isn't warranted by her evidence:
Yellen may not be a perfect candidate, but she is a person of enormous ability and boasts the best qualifications of any serious contender. She takes us from the foregone conclusions of a Rubinite world to the possibilities of a future than can be shaped with more of an emphasis on fairness and the needs of working people.
But the Rubinite world is a policy world. Absent concrete, public commitments on policy, we're left with the hope that replacing one faction of elite policymakers with another faction will yield the concrete material benefits "fairness" and "caring" would dictate. I'm all for a world that's shaped by the needs of working people, but to reason from Yellen's career and personal characteristics to policy outcomes is a leap of faith on the order of "hope and change" in 2008. Experience has taught us the necessity for auxiliary precautions.
Here it may be objected that "Lambert, it's deeply unfair that you focused on Parramore's actual '6 Things You Need to Know,' because the serious analysis is hidden away beneath the superficies of bolded and numbered talking points to which the headline so forcefully draws attention!" So let's look at one of those talking points. Let's look at Chained CPI. I'll give the entire talking point, which is a little lengthy (brackets mine):
2. She has an independent streak.
Yellen’s stint in the Clinton administration has recently come under scrutiny, and that’s as it should be. Huffington Post’s Zach Carter revisited her 1997 Senate confirmation hearings and noted that at the time, she supported the repeal of  Glass-Steagall, NAFTA and chained-CPI, an adjustment to the calculation of Social Security payments*** that amounts to a cut. It is true that Yellen supported  the positions of the Clinton administrations at the time, and many of these positions are understandably unsettling to progressives. However, one has to look at the context and compare Yellen’s  relatively tepid endorsement of deregulation to the relentless cheerleading of someone like Summers. In an email to me, Dean Baker explained:
“Summers was very vociferous in pushing deregulation. He put down people who raised questions about deregulation as financial luddites. This was a big project for him. Yellen went along with the deregulation because that was the fashion in economics at the time. There is no evidence that she had a principled commitment to deregulation. This doesn't mean that we can count on Yellen to be an aggressive regulator but the odds are certainly better than when you put someone there who was a leading proponent of deregulation.”
Even during the Clinton days Yellen showed signs of prescience and an independent streak. In 1998, she testified in a hearing before the Senate Judiciary Committee on the wave of corporate mega-mergers and acquisitions that were sweeping over the economy like wildfire, giving rise to Franken-companies that crushed competition and produced monopoly conditions. (I have written about how this has played out in the banking industry and it isn’t pretty.) A laissez-faire economist like Greenspan would have insisted that the government had no business getting involved. And that’s just what the then-Fed chair did at this particular meeting: “Bigness per se,” said Greenspan, “does not appear to be an issue of national economic policy.” Simply trust the markets to straighten everything out, Greenspan suggested: “Adam Smith’s invisible hand does apparently work.”
Yellen, in contrast to Greenspan, sounded  a more cautionary note, casting doubt on claims that mergers result in efficiency, as executives claimed: “An increase in shareholder value,” said Yellen, “can arise for reasons other than greater efficiency, such as increased power and the resulting ability to increase profits by raising prices.” At that time, when “Maestro” Greenspan’s views about market efficiency were gospel, this was politely expressed heresy. Yellen further noted that many mergers actually decrease efficiency and warned that mergers undertaken to increase market power and concentration would hurt consumers, squelch innovation, and decrease future competition.
At the height of free market fever, Yellen was on record as  not buying the “anything goes” mentality touted by Greenspan. This point has not been sufficiently understood.
More recently, Yellen was not part of the bank-centric Summers/Geithner boys’ club which made calls in Washington when the economy went into freefall in 2008. In sharp contrast to Fed Chair Bernanke’s recurrent happy talk about “green shoots,” she warned steadily that we were not out of the woods, stating in a 2009 speech that "the pace of the recovery will be frustratingly slow." It must also be said that Yellen has not been lining her pockets, like Larry Summers, with lucrative Wall Street consulting gigs, making her free of the conflicts of interest that plagued her rival.
So, at , the article specifically mentions repeal of Glass-Steagall, NAFTA, and chained-CPI as policy positions that Yellen has taken. Subsequent sentences elide policy specificity into  "supporting the positions of the Clinton administration,"  "tepid endorsement of deregulation," until we reach the virtually meaningless (in policy terms)  "a more cautionary note," and the vacuous  "not buying the 'anything goes' mentality." But in policy terms what does "go"? In particular, does "Chained CPI" "go"? Weirdly, we don't know. There's nothing from Yellen, and Parramore does not speculate.
Why is Chained CPI so important, and why is it so important now?
First, Chained CPI disproportionately affects elderly women. From the National Women's Law Center:
As part of deficit-reduction negotiations, some policy makers have proposed switching to the chained consumer price index (CPI) to calculate the cost-of-living adjustment (COLA) for Social Security and other programs. The chained CPI would lower the annual COLA, reducing the value of Social Security benefits more and more over time. It is not a more accurate measure of inflation for the elderly – and it would be especially harmful to women, because on average they live longer than men, rely more on income from Social Security, and are already more likely to be poor.
(The piece goes on to discuss the Rube Goldberg-ian "bump up," which is supposed to mitigate Chained CPI's effects. It doesn't.) How much would benefits be cut? Maine Senior Guide:
The chained CPI would cut the yearly cost-of-living adjustment for Social Security, now indexed to inflation, by $127 billion over 10 years. The current inflation index already underestimates inflation for older women because it doesn’t account for their higher health care spending, which is rising faster than overall inflation. Single women 65 and older receive a median Social Security benefit of just $13,000 per year – roughly $4,000 less than men. With the chained CPI, by the time they reached the age of 80, their benefits would be reduced by nearly $700 annually. That is a sizeable loss when one is living on just over $1,000 a month with everyday costs continually on the rise.
So, Chained CPI advocates like Yellen -- and if Yellen has changed her views, I would have expected Parramore to have mentioned that, or a fact checking editorial process to have remedied the omission -- want to beat $700 bucks a year out of old ladies living large on $13K. I think that's appalling and disgusting as policy, and I think it's every bit as appalling and disgusting, on a policy basis, as Larry Summers's chauvanism and corruption is, on a personal basis. So I think it's weird that Yellen's advocates could be seen to airbrush Yellen's views on this point away. The National Women's Law Center puts the effect of Chained CPI in terms of concrete material benefits:
The average weekly cost of food for a single elderly person is about $56. Thus, a benefit cut of $56 per month is equivalent to the loss of one week’s worth of food each month by age 80. By age 95, the loss would be equivalent to almost 13 days’ worth of food each month.
Now, I'm sure that Yellen, Yellen's advocates, and Parramore don't really wish to pilfer a week's worth of food from the scanty larders of 80-year-old ladies -- Parramore's mother is, after all, 80 -- but that is the concrete material effect of the policies that Yellen, Yellen's advocates, and Parramore support, if they support Yellen's views on Chained CPI.****
Then later on MSNBC's “NOW with Alex Wagner” during a panel discussion also, including Alex Wagner, David Corn, and Ezra Klein again. After Ezra once again repeated his apocalypse now framing of the debt limit crisis, Sam Stein emphasized that Obama and the Administration continue to emphasize a willingness to negotiate over the budget.
Sam Stein: . . . you can see the contours of a deal that would upset both parties but palatable. something like in exchange for changes to social security payments, cpi, chained cpi. you could get a reprieve from sequestration. something like that along the lines where both parties are like, well, we don't really want to do it, but for the sake of making sure we pay our bills -- that's why the republicans keep going there. they know obama care defunding isn't going to happen, but there are other hostages.
Alex: why does president obama come to the table at all?
Ezra: i think that's the kind of deal they would come to the table on. they would consider that a deal over sequestration. i'm not sure if they would do that exact deal, but the two deals they won't do are the ones the republicans want. they don't want that sequestration deal. they want an obama care deal or a debt ceiling deal. they won't come to the table on those. . .
So, Sam Stein thinks the zombie “chained CPI” lives again, and Ezra agrees, but also thinks that the Republicans will not agree to that unless they get the deals they want.
Right now would be an excellent time -- maybe even the best possible time -- for a "caring" person with an "independent streak" who values "fairness" and "the needs of working people" to deanimate the Chained CPI zombie before it starts chewing through the catfood reserves of millions of old ladies. Shouldn't Yellen take this opportunity to take Chained CPI "off the table," as incompatible with the values of the Democratic Party, which (I am told) has a preferential option for common human decency?
So, concluding, here's the one weird thing you need to know about Janet Yellen -- and the thing that's really weird is that we don't already know it. What we need to know comes in the form of a question:
1. Vice Chairwoman Yellen: Do you believe the Chained CPI is an idea whose time has come -- and gone?
If only we had a Senator on the Senate Finance Committee who had a knack for asking pointed questions!
Litmus test for the policies: Do "progressives" really support Chained CPI? Will they trade, say, Chained CPI for ObamaCare in the upcoming debt ceiling kayfabe, because Obama?
Litmust test for the poltitics: Can "progressives" be brought to understand that the only to get anything out of Obama is to threaten him? That's what the gay bundlers and the Hispanics did before campaign 2012, that's what the strange bedfellows working against Obama's act of war in Syria did, and that's what Yellen's supporters did before Summers withdrew. But the Summers defenestration is so last week. What has Obama done for us lately? With Yellen the presumptive nominee, now is not the time for hagiography; now is the time to ratchet the presure up again! And in a very good cause -- the defense of elder women -- one might add.
NOTE * Especially for those who see "regulation" of the banksters, rather then their breakup, as the superior policy option, and who view consensus among mainstream economists as some sort of improvement, as opposed to the replacement of mainstream economists (and hence, economics) by something like MMT or points left. It's the mainstream that's the problem!
NOTE ** For connoisseurs, Parramore's "N things" headline is a well-known hitbuilder from the SEO world:
Include a number. You clicked on this headline, right? More seriously, though, some sites take this trick to incredible levels. If you’ve ever visited Cracked.com, you’ll know exactly what I mean. (And if you haven’t, don’t do it while you’re working). “The 14 Most Unintentionally Terrifying Statues in the World.” “The Six Creepiest Things Hiding in Your DNA.” “The Six Weirdest Dangers of Space Travel.” Yep, those are all Cracked.com headlines. They’ve increased the impact by adding intensifiers: most, creepiest, weirdest, etc. Heck, these headlines are so compelling I may go back and read the articles after I finish writing this one.
I wonder if "1 weird thing" will work the same way? I'm guessing no. Heck, maybe I blew my hit count by even mentioning it, if Google hates the meta!
NOTE *** "Chained CPI" is the idea that if you substitute offal and variety meats for beef, or dry catfood for wet catfood, your standard of living has not changed. The desired policy outcome is the immiseration of elders.
NOTE **** Since Parramore, given the opportunity to express disagreement with Yellen on Chained CPI, does not do so, but rather elides Chained CPI entirely from her discussion of Yellen's "independent streak," I can only assume Parramore supports Chained CPI along with Yellen. If she does not, she has several forums in which to clarify or mitigate her views.
NOTE I do not deny that having a female chair for the Federal Reserve would be a good thing for women everywhere, especially those, with careers, who experience the reality of "the glass ceiling" all too harshly. However, many millions of women will be badly affected -- one week's worth of food a month, at least -- by a vicious and inhumane policy option that Yellen supports. I want both Yellen's confirmation and protection for those millions. Surely "progressives" can walk and chew gum at the same time? Because if Yellen and the "progressives" who support her can't protect millions of elderly women from taking the hit in Obama's latest Grand Bargain ploy, what good is she, and what good are they?