Econ Profs Split on Bernanke ’75

As Federal Reserve Chairman Ben S. Bernanke ’75 faces a challenging reconfirmation battle in the U.S. Senate, he has garnered lukewarm support from some Harvard economists.

The macroeconomists interviewed for this article commended Bernanke for steering the economy away from the brink of collapse, but they also questioned elements of his monetary policies.

“I’d probably give [Bernanke] more of a C+,” said Jeffrey A. Miron, the economics department’s director of undergraduate studies. “But I don’t think many other people would have done better than a C-.”

Miron added that Bernanke at least has “a stable consistent set of policies,” even though they are not “optimum.”

“If you bail out [banks] for taking too much risk, you’re going to encourage more risk-taking,” said Miron, who identifies himself as a libertarian.

It has grown increasingly unclear in the past week whether Bernanke—whose term as Federal Reserve chairman expires Sunday—can garner the needed 60 votes in the Senate to be reconfirmed.

Opposition to Bernanke has emerged from both the left and the right. Seventeen senators said they would oppose Bernanke or are leaning in that direction, but only 36 were committed to or leaning toward approving his nomination, according to a Reuters poll released Monday.

Former Economics Department Chair James H. Stock credited Bernanke with coming up with “creative options” to combat the economic crisis. He called Bernanke “far and away the best choice” because the learning curve for a new chairman would be overwhelming.

While Stock blamed the Bush administration and Department of the Treasury for clumsy fiscal management of the economic crisis, he described Bernanke’s aggressive monetary policies as having “a strong theoretical foundation” and being “the right way to pursue the problem.”

Harvard Kennedy School Professor Jeffrey A. Frankel also expressed strong support for Bernanke.

“There will be some senators who are looking forward to their own elections, and think that they have to stampede with the rest of the panicking herd,” Frankel said. “It’s scapegoating.”

Columbia Economics Professor Joseph E. Stiglitz—who has more liberal leanings—said in an interview Monday that Bernanke’s economic philosophy was fundamentally flawed.

“He was responsible to bringing the economy to the brink,” said Stiglitz, who called the AIG bailout “unconscionable.”

“On the other hand, the economy didn’t go over the brink, and people are appreciative of that,” he added.

Nonetheless, Stiglitz predicted that it is “likely that [Bernanke] will be confirmed.”

—Staff writer Gautam S. Kumar can be reached at gkumar@college.harvard.edu.

—Staff writer Julia L. Ryan can be reached at jryan@college.harvard.edu.