Things were in a state of flux last week in terms of the selection of a new chair of the Federal Reserve. First, a congressional vote on the use of military force against the Syrian government was stunningly co-opted and delayed by a proposal to turn Syria’s chemical weapons over to international control. This delays a decision on who will take over the Federal Reserve once Benjamin Bernanke’s term is up in January.
The two top contenders at this writing are Lawrence J. Summers and Janet L. Yellen. Summers is an economic advisor to President Obama and a former treasury secretary in the Clinton Administration, as well as former head of the National Economic Council. He was president of Harvard from 2001 to 2006, exiled from that job due to mounting discontent with his management style, which culminated in a politically correct firestorm over remarks that were taken out of context by the popular media.
Janet L. Yellen is now vice chair of the Federal Reserve, former head of the San Francisco Federal Reserve bank, and a favorite of many Democrats and the labor movement. In many quarters, she is given credit for predicting the meltdown in the housing sector, though some accounts of that prescience vary.
Summers’ advocates say he can make spot decisions in a crisis. Detractors condemn his Wall Street ties and his deregulatory stance. Yellen’s advocates say she’s been a consensus builder at the San Francisco Fed, and that’s what’s needed at the Fed today. But some raise questions on whether she has the temperament for the top job, based on the perception that the structure of many of her posts have kept her away from the fulcrum of decision-making.
As they say in the financials, past results are no indication of future performance.
Let’s be fair to Summers. His Wall Street ties were once cited as a strength, before they fell out of fashion during the economic crisis. When he arrived at Harvard, he was seen as someone who would challenge sacred cows and ask questions no one else would touch. That, he did. And then, in a private meeting in 2005 he cited data on the math aptitude of males and females and how it related to the ratio of females to males in the elite math sciences. The shoot-from-the-hip media inference, the one that went viral, was that women have less math talent than men. What he really said, though, was that while average math aptitude is the same for both sexes, males’ math aptitude varies more widely than that of females. So there are more males in the top percentile because of their wider range of variability. But that means there are also more males in the bottom, which he maybe should have said but reportedly didn’t.
In measuring the aptitude of the leaders we choose, we should be particularly careful of the quality of input we put into our evaluation of them. The fault is not in those stars, but in ourselves.
