Claudia Sahm, Director of Macroeconomic Policy at the Washington Center for Equitable Growth, has worked as an economist for over a decade. Her experience includes a 12-year tenure at the Federal Reserve, where she rose to the position of section chief in the Division of Consumer and Community Affairs. She is the architect of the well-known “Sahm Rule,” which indicates the start of a recession.
Recently, Sahm sent a sharp written critique of the economics field to Janet Yellen, Ben Bernanke, & Peter Rousseau, subsequently adapted for her blog, Macromom. Her post, titled, “Economics is a Disgrace,” is a cri de coeur, a protest, and a warning that “everyone who is privileged enough to hold a PhD in economics should reflect on our toxic culture.”
Sahm details years of bullying, harassment, and a failure to take diversity seriously that she witnessed and experienced from the very beginning of her career. Devoted to her work, she found the discipline she loved stymied by elitism and exclusion that compromised knowledge and policy advice. Repeated humiliating attacks by a senior male colleague at the Federal Reserve became so distressing that Sahm suffered mental health symptoms in 2011. Despite complaining of his abuse, the man today is a high-ranking officer at the Fed. Sahm left.
“Economics breaks people and it is broken,” she writes. “I am angry. You should be too.”
Sahm spoke to the Institute for New Economic Thinking about what it means to call out problems in a field that she says is failing the American people.
Lynn Parramore: Let’s talk a little bit about your background. How did you come to study economics and what attracted you?
Claudia Sahm: I fell in love with economics my first semester at Denison University. I went having no idea what an economist was. I thought I was going off to college to be an English major! But my first semester I took an honors economics class, an honors seminar in political science, a German course, and math. The first three became my triple major, I thought they were so fascinating.
My first economics professor was Sohrab Behdad, who ended up being my senior thesis advisor and my first mentor in economics. He was encouraging both in the classroom and in thinking about my future career—a lot of tips of the trade, how to be successful, how to push back effectively on some of the things that even as an undergraduate I found lacking in economics. For example, I developed a fascination with history of economic thought and role of institutions. Those were largely missing from textbooks. He told me to learn the standard toolkit; showed me I could do it; and then pushed me to extend it.
From the start, I saw how powerful economics could be in the world. In his class, we had a subscription to The Economist, and each week we wrote a short essay on how what we were learning applied to the real world – that was really part of the love of econ. Like, economics can do good in the world. It helps me understand what was happening.
I had great mentors. After the course, Sohrab sent me a personal letter commending my work, affirming that this was something I was good at. That was a really good start. As a research assistant, Barry Bosworth and Gary Burtless encouraged me to get my PhD and work in policy. At the University of Michigan, I focused on macroeconomics and labor, and in both cases, it was very applied. Policy work was considered a good way to apply your technical training.
I had a good cohort at Michigan, and we were really supportive of each other. Some departments tend to build in a degree of competition – for funding, accolades, etc. But at Michigan we were funded and supported, and most really wanted all of us to succeed. My advisor, Matthew Shapiro, who has been a co-author and continues to be very supportive in the various ups and downs in my career, was a great mentor. Each member of my committee was pushing me to my best work and affirming that I could do it.
My interests are wide ranging. My dissertation was focused on macroeconomics, but I use a lot of applied micro methods. I kind of sit across fields and methods. It doesn’t always make my life easy as a researcher, but I find it very fulfilling. Faculty members were supportive of the crossover, but they also told me it would be harder – I’d have to prove things to two different groups, which was fine with me. I like a challenge.
LP: This sounds like a very positive experience so far. Were there any hints of the culture you came to know as toxic?
CS: I felt like the students at Michigan were largely affirmed, and yet, in the macro seminars, there was a culture of giving direct feedback to the speaker, which, when done well, is very constructive. There’s no sugar-coating, and we all need feedback. But there was a degree of being critical that sometimes crossed the lined from being constructive to being destructive. You can get to a place where it’s abusive. A lot of posturing. Hypercompetitive behavior. I didn’t experience this, but I had classmates who did.
One woman was told by a faculty member – we all had to take his class – that she really should just quit economics. Not a supportive thing to say. She went on and she’s an economist and does great work. But that’s not a great start to your career.
LP: When did you begin to experience a less supportive environment personally?
CS: It really wasn’t until I was a PhD economist that I truly experienced the toxic culture. Not just at the Federal Reserve, but while you’re trying to publish stuff in journals, or when you’re at some top conference. Once you’re not a student, you really move into that space where people ask, well, how good are you, really? They see you as competition. And it is competitive. If you get a paper into a spot in the top journal — somebody else doesn’t get theirs published. If you get the special assignment at work, someone else doesn’t.
I understand why competition can go too far, why it happens, but it absolutely does not excuse bad behavior, because it undermines the science.
LP: What attracted you to working at the Federal Reserve?
CS: I continued to have this belief that economics could do good in the world. As I mentioned, I had become a research assistant at the Brookings Institution right before a I went to Michigan. My mentors there, Bosworth, a macroeconomist and Bertloff, a labor economist, did policy work. They did research, but it was applied to how to make economic policy better. I did a large project with them on Social Security, understanding how it affected peoples’ lives in different parts of the income distribution. We used a macro model similar to the one used at the Federal Reserve.
I thought, this is what I want to do. But I needed more tools and technical skills in order to contribute, so when I finished the PhD and had them, I was drawn to getting a job where I could apply them and inform economic policy.
Research is very important to me. I applied to research universities, but in the end, I decided not to go that route for professional and family reasons – it was easier for my kids’ dad to find a job in Washington than some of the places I had academic offers. I went to the Fed and I’m happy that I did. I truly believe that monetary policy is extremely important and underappreciated. I love the Fed, though the Fed does not always love me back. I feel like I contributed at the Fed – and continue to contribute — to helping us all understand what they’re doing and push them to do it better.
LP: What was it like when you got there?
CS: I was hired and started in summer of 2007. I was a consumption analyst and covered consumer spending. My first forecast as the lead consumption analyst was in January of 2008. For my second forecast, we put in the recession call — forecasting that we, as the staff at the Fed, are forecasting that the United States is in a recession. Late in the year we had the financial crisis.
My first year was absolutely birth by fire. I learned five years of macroeconomics in one year. That was hard! I continued as a consumption expert, and for me, the hardest part was in the recovery, because it was so slow. I focused on families, not just their spending, but their finances and what was happening with wealth and income. It was so clear how much pain there was. For years, I and others were very loud about the fact that hey, no, they’re not going to get back on their feet easily. This was different than a normal recession when things would have snapped back faster. It took years, and then Congress stepped away and started cutting back on fiscal support. As someone who focuses very intently on people, and caring about people, I have an emotional reaction to macroeconomic data.
In 2015 and 2016, towards the end of the Obama administration, I was at the Council of Economic Advisors on a rotation, covering macro and housing policy. When I came back to the Fed, I had a few more years working on the staff forecasts. Then, in 2017, I become a section chief at a different part of the Fed, the Division of Consumer and Community Affairs.
This division is more multidisciplinary than the Division of Research and Statistics, in which I had worked in before. There were attorneys and people with backgrounds — public policy and data science people. I was the most senior economist. The section chief position is your first rung up into management, and I managed a team of five economists and three research assistants. By this time, the Fed had put more resources into training managers than it had when I started, which was really important. When you manage and you have power over someone – evaluating, writing letters of recommendation, and so on — it’s really important to be cognizant of what you’re doing so that you can help people.
My first year as section chief, I really had imposter syndrome. It was such a big change. I took it very seriously and it gave me tools to be a better mentor. It was hard work, but I really enjoyed it. I did my own work nights and weekends because my whole day was checking in on people. I liked it, but when I left in 2019 to go to the Center for Equitable Growth, I was relieved to be just managing myself!
LP: At what point did you experience signs that something was wrong with the culture?
CS: The main argument my blog, “Economics is a Disgrace,” is not about individuals, but a culture that I see as toxic. Most of my experience in economics has been at the Fed, so that’s the environment I know best.
The staff forecasting position I did for many years is a prominent job. We report to the chair, we give the board analysis. In the 2008 crisis, this role became even more important and we had to move fast. What I learned is that stress does not bring out the best in people. The situations I found myself in that were hurtful began during my first year, straight out of grad school.
I was worried that I hadn’t been taught enough and I had imposter syndrome. Frankly, all of macroeconomics should have had imposter syndrome at that time. It was complete whiplash.
As a new person, I was already insecure in my expertise. When you’re new, you make mistakes, and you get yelled at. There were people who told me who told me, “You don’t know what you’re doing, you don’t know what you’re talking about,” bordering on, “You’re stupid.” It wasn’t a critique of the work or an attempt to improve the work. It was degrading and it was harmful to my success. The most painful thing is that the environment gave cover to people who are abusers.
In the blog I describe an incident where things really went south in 2008. I had an interaction with a colleague from another group in his office. When his section chief walked in, he said, “Don’t listen to her. She doesn’t know what she’s talking about.” I was dumbfounded. This was a problem because not only was it embarrassing, but because it led to that colleague who was my peer telling the board the wrong thing about the material we had been discussing. He had taken the section chief’s advice and discounted my input. The culture was such when I heard my colleague giving this incorrect information in the briefing, I did not feel that I could challenge him. We’re not supposed to disagree in front of the board members or the chair — we were told it would damage our credibility. But I never left a meeting without one of the officers grabbing me and telling me I shouldn’t have talked or what I’d done or said was wrong. And I’m thinking, if I was wrong, why didn’t you correct me then? Why am I even in the meeting?
The section chief who had made the comment in front of my colleague continued to rattle my chain, making comments that were humiliating to me. My feelings are legitimate. He would try to pass it off as, oh, it was just a joke or oh, you’re too sensitive. But I was a junior person, even though I didn’t report to him. I wasn’t in a position to push back. And I wasn’t the first person he had hurt. This is something I saw at the Fed. It’s the new people that end up getting hurt. That’s who the bad actors go after. Years later, a woman came to me who was hurt by a friend of the person who hurt me.
LP: Were these two who were being abusive part of the same group?
CS: There was this one section in my division that had an especially toxic climate. Maybe it had something to do with being a macroeconomist. There’s a certain bravado that just seems to be considered necessary to be a macroeconomist. People want to go to those who sound like they know what they’re talking about. Some of it is fueled by the media and policy makers: they want people who sound sure of themselves. You don’t settle debates with 20 years of time series data. A lot of it is about attitude.
I always had bosses who had my back and supportive colleagues, but there are parts of the Fed—and some of this has changed – but there was a group that had a critical mass of people who just weren’t nice people. They influenced the younger ones who watched them and thought they had to act that way too, just to get ahead. The Fed had more of a hostile work environment before I showed up. By the time I got there, things had started to change.
When I arrived, there had been some abusive senior staff in the past, but they were gone. Yet the people who got promoted under them were still there. They weren’t necessarily bad actors, but they had thrived in an environment that was really not ok. If you went to them and complained, they were going to say, “You’ve got to toughen up.”
I think the people who were vulnerable in some way were the ones who tended to get hurt. The ones who didn’t quite feel like they belong, who looked around the room and didn’t see themselves. If you’re a woman or a person of color and somebody says, “You don’t know what you’re doing. You only got this promotion because they needed women this year,” that’s a problem. They pile on. There was a Black woman research assistant whose name a higher up couldn’t remember. Nobody can do their work well if they feel attacked. Our work is hard enough.
The people who have least amount of power in an institution are often targeted, and it’s often women and people of color. It’s also people early in their career, like research assistants who are so dependent on recommendations. Some people abuse that power imbalance, and when they do, it has a chilling effect on all the research assistants. The Fed has a problem, and economics in general, even more so, of a silent majority that just looks the other way.
It did get better over time. Janet Yellen as Fed Chair really pushed the whole organization to think about diversity and inclusion.
LP: Besides the humiliating comments, what other kinds of behaviors did you observe?
CS: Mostly it was psychological abuse, gaslighting and humiliation. But there were aspects of sexual harassment and a whole range of thing that happen that are unacceptable. Definitely there was discriminatory behavior. I know of people of color and LGBT who work at the Fed – and there aren’t that many of them – who had problems. Also, people who are first generation college students, who just didn’t have the elite background. Stuff happens to them, too.
It would be really hard for me to think of a woman who hasn’t had something said to her that’s inappropriate. And it’s things that are very personalized. A woman whose husband works at the Fed came to me and said that at a lunch, she had been asked if she satisfied her husband. The person who made the comment is a problem, but so is everyone else who sat at the lunch table and said, “hah, hah, hah.” None of this is acceptable.
LP: You discussed the issue that women at the Fed regularly had their expertise questioned by male economists, and note that Bill Dudley, the former President of the New York Fed, actually wrote to you implying that you didn’t deserve the Sahm rule. How did that make you feel?
CS: Last fall he wrote me a very terse email with an attachment from a Goldman Sachs newsletter with yellow highlighter on a recession rule, seeming to undercut the importance of my contribution. I had never met him, and I hadn’t asked for his feedback. When my Sahm rule became popular, I had a lot of pushback from colleagues at the Fed, as if I didn’t deserve it, even though my rule is different from others and it wouldn’t have gotten attention if everybody in the world already knew it. People questioned whether the rule was even mine. We all stand on the shoulders of giants, but that rule is mine.
So now I get this email from Bill Dudley, a senior person in my field who is not treating me with respect. I showed his email to friends and others to see if I was overreacting. They agreed that it wasn’t supportive. There was no congratulations that my rule had been covered in the Wall Street Journal, nothing like that.
He did contact me after I wrote the blog post and apologized for his email comments, and we had a follow up conversation where I talked to him about power dynamics. It was a good conversation, and he is the first economist who has apologized to me. I don’t want him to pay for the fact that for 12 years I’ve had this questioning of my expertise. There was also a context of his email that caused discomfort for me because of the Goldman Sachs newsletter reference. I don’t want Wall Street to implode – financial markets are important – but I also don’t like the idea of taking what we learn at the Fed and just using it to help Wall Street. So that was in the background of my reaction.
Earlier in 2019, I was at an event with Christy Romer [former head of President Obama’s Council of Economic Advisers] and I told her how uncomfortable I was about the Sahm rule. She looked at me and said, “Claudia, you have to own this. Any man would.” Christy’s a hero—I listened to her.
LP: You pointed to the problem of elites tolerating the bad behavior of other elites, and cite Larry Summers as someone who attacks people who disagree with him and devalues the contributions of women. I recall the advice Summers, then a top advisor to President Obama, gave to Elizabeth Warren: never criticize “insiders” in public if you want to get ahead. In your view, how does this stance reflect what has gone wrong with economics?
CS: It’s real. You’re not supposed to rock the boat. There’s an aspect of it, don’t bite the hand that feeds you. I very specifically chose in my blog post to talk about problems at the very top of the house. Names that any economist would recognize. It’s not about them as individuals, but the culture. A lot of senior men suck up and punch down, which you should never do. Unfortunately, I have to tell younger people that retaliation is real.
Ben Bernanke and Janet Yellen got a copy of my blog three weeks before I posted it. I had worked for both of them, and what I sent them was supposed to just be my reflections on the economics profession. It wasn’t intended to be a blog post. But then [Harvard economist] Emmanuel Farhi killed himself. He was the fourth prominent economist to kill himself in two years. I said, enough is enough. I got mad and decided to be really loud about it and get it out into the world. I didn’t think anyone would listen. In 2011, when my mental health suffered as a result of what I was experiencing, they gave me the space to get better, but no one said, oh, this is a bigger problem.
My teenager reminded me that this is 2020, not 2011, and a lot of these discussions are now happening out in the world. There are some special things about economists not be willing to admit our problems and being more competitive than other aspects of society, but really, economics is just a reflection of the world we live in.
I’ll be honest. Retaliation is real. I’ve had some real issues to deal with in the last month. I know that if I had not named names and rocked the boat, I would not be having these problems. But I do not regret the blog post one bit. Somebody needed to say it. I’m in a very privileged position so I could say it. I’m established in my career. I have the Sahm rule. I’m very employable, in the private sector, too. Things are going to change in my life. Sometimes you gotta pivot when you go all in.
I was told at the Fed that we aren’t supposed to disagree with each other in front of the Fed Governors because the staff would lose credibility. But what I have tried to live is the idea that you build up credibility to burn it down when you need to. At the Fed, sometimes I could take a stand on something that was considered really “out there” because people knew I was really good at my job. I focused on diversity and inclusion at the Fed before it was sexy. They were like, what are you doing? The blog post was the same thing. I’ll take this one for the team because I can. I don’t mind rocking the boat—I’m not trying to destroy economics. I love it. I’m not trying to destroy Larry Summers or any of these men. I just want them to stop and think: could I be more supportive?
LP: What about internet forums and social media, such as Twitter? You mentioned an incident involving the famous behavioral economist Robert Thaler, who tweeted an inaccurate and snarky statement about a paper you coauthored, saying it was too flawed to be published, when, in fact, it had been. Do these forums amplify the point-scoring and hazing behavior among economists you’ve described??
SC: Twitter has become increasingly important among economists. A lot of us use the hashtag #EconTwitter. It’s a good platform for us to amplify research –ours and other people’s.
#EconTwitter refers to everything from doctoral students to full professors and professional economists who are active on Twitter. There are curated lists – like a couple on women and economics. But a lot of it is just poking around. You find an economist and see who they follow and then follow those people. You can look for top economists or students or people of color – up to you. There are a lot of different ways to use it. You get the research, the policy debates, and it’s also a social place. There’s even a hashtag for economists who like to bake!
In my opinion, you really see the good, the bad, and the ugly there.
What’s good is that you see stuff you wouldn’t otherwise pick up on. It helps break down barriers. Like, you may not be on the email list for the NBER [National Bureau of Economic Research] or other institutions putting out their working papers. Not everyone is a member and has the ability to post their work. On Twitter, you can get it out there. It really opens things up. If you’re intentional about it, which I try to be, you can follow scholars that work in areas that you don’t work in, scholars from marginalized groups, from other parts of the country or the world. You can “curate” Twitter experience that is more diverse and more inclusive that if you just thought about the peer group that you already have.
I went on Twitter many years ago because I was frustrated at the Fed with how similar everything we talked about inside the building was. That lack of diversity in thought was leading to us making big mistakes. Before I got there, they didn’t catch the housing bubble. There were a few people that talked about it, but they were essentially silenced, told, there’s no bubble, blah-blah-blah. After the Great Recession, we were missing how slow and painful the recovery was. I knew from blogs that people had other ideas. Twitter gave me the ability to sample a wide range of opinions. It was a very low-cost way to get out into the wider world of economics and see what people were talking about, to meet people I wouldn’t otherwise meet. I could do it in my free time or at night. I just love information flying by and following a lot of people.
You have to like the platform. At the Fed, it’s now kind of mandatory to be on Twitter because Chair Powell is on Twitter. He loves Twitter. I knew that from right when he started as a governor.
Some people don’t like it, though, because it can be a really tough platform. My fiancé, who is health economist, hates Twitter. The bad side is that the hypercompetitive nature of economics does get amplified. I recall a thread where somebody at a top university said that in order to succeed in your PhD program, you really need to take all the classes once before you start. People were like, what? That takes an incredible amount of time and financial resources that most people don’t have. The PhD takes six years already! A lot of people got stressed out. There are lots of things like this that circulate and increase stress unnecessarily. You see a lot of tips of the trade exchanged, but some of them just show how hypercompetitive and messed up the trade is, especially at elite schools. At the same time, it’s a window, and that’s useful.
Another thing that can be a problem is that you can get heated debates that turn hostile. And the conversations are not private. Senior people in the profession who have a large following have a lot of influence. You have this culture of being very direct and critical, and it can lead to comments that may not be badly intended, but play out differently on Twitter than they would in the seminar room. Some of the senior men have tens of thousands of followers. Hundreds of thousands. It becomes very problematic if the people who are supposed to be the leaders and have the biggest positions act like jerks on Twitter.
That’s where we get to the ugly attacks on people. When I saw Dick Thaler’s tweet dissing my work, I was shaking at my computer. I was so angry. It wasn’t the first time. I knew he was critical of the research that I do, so it wasn’t a surprise, except that he was doing it in public, and going back and forth about it with another very prominent male economist. It was really public and really inappropriate. And there’s no accountability. At the time, Thaler was president of the American Economic Association. He had a Nobel Prize. Super, super prominent, and I was a staff economist at the Federal Reserve. There was a huge gap in stature. I try really hard on social media to be respectful. I don’t punch down. I punch up. I sent him a link on Twitter to the published paper, because I didn’t want people to see him getting away with that.
I really think a lot of these guys have no idea what they are doing, and they’re shocked to have it called out. Their behavior is just totally tolerated. It’s exhausting to call it out and it’s not considered a norm in society if a woman matches them and says, ok, you want to be like that? I’ll give it right back. The woman will be called “shrill.” There’s a double standard. I’m in my 40s and this is not my first rodeo, and I get that there are these different expectations for men and women. Economics certainly has this, and now that Twitter is the place where economists go, it’s on display for the whole world. And there are names on the accounts. Anonymous accounts really don’t go very far. It’s hard to believe what some people will put out there with their name attached.
During the George Floyd protest, another prominent economist, Harold Uhlig, the editor of one of the top five journals and absolutely a gatekeeper for who gets published and promoted– he was going off on Twitter blaming the protesters for the violence. I don’t think he understood the impact of what he was doing. They don’t understand that even if they delete it, people know how to take a screen shot. They don’t understand that the rules have changed. They blow it off as political correctness—they haven’t gotten the message that there is now more of an expectation to be respectful.
The moniker I use on my blog, “macromom,” is very intentional. It’s like, “ya’ll need to straighten up, wash your mouth out with soap!” I refer to the jerks as macro men, just to mess with them a little bit.
The other part of the ugly is an anonymous online forum. A whole introspection in economics that has taken place over the last three years started over work done by Alice Wu, an undergraduate at Berkeley, who wrote a very gutsy thesis analyzing the website, “Economics Job Market Rumors.” It’s anonymous, and it’s a cesspool of misogyny and racism and homophobia. Even though I think the website should go away, getting rid of it won’t solve the problem. The site is a reflection of the problem. We need a bigger conversation.
Even though Janet Yellen, for example, did so much at the Fed to address diversity, the inclusion piece of it is so lacking. People want to say, wait, we have all these committees, and we’re hiring all these Black research assistants. But they don’t stop to ask why it is that after three years, none of the Black women research assistants go on to a PhD program. I want to point a light not only on how far we have to go, but also how even when we get started, we don’t see it through.
LP: What’s at stake with this lack of inclusion of women, people of color, and people from non-elite backgrounds? What does it mean to everyone who is impacted by economic research and policy, which is, basically, everyone?
CS: There is a lot at stake. I am putting my time, energy, and name into the diversity and inclusion discussion because we are failing at economic policy. There are moral reasons why this is important, but as economists, we can’t do the most good in the world unless we are more diverse, more open-minded, and make more people feel welcome at the table.
It’s not necessarily about bringing more people in. People focus on the pipeline – that’s important – it’s good to bring students and research assistants in. But are people listening to their diverse perspectives, to their lived experiences? It’s about amplifying them, getting them in the room and taking them seriously.
In my last job at the Fed, I managed the group that did the Survey of Household Economics and Decision Making. This was in the Division of Consumer and Community Affairs, a very diverse group on a lot of dimensions. It’s also a very marginalized group at the Fed when it comes to thinking about monetary policy. One of the reasons I went over there was to try to find a way to wedge them into the conversation because I knew how that conversation happened. I knew how to put the information into a form that would makes sense to the governors.
We were in a training session on how to do briefings in the boardroom, and one of my coworkers was about to start her outstanding, well-put-together presentation on low- and moderate-income people and communities. In the practice scenario, a senior economist who works on monetary policy was standing in for the Chair. He stopped my colleague and said, “No, you’ll have to go last because what you’re working on is so different and it’s really simple.”
I couldn’t believe that he had just blown her off like that. If you don’t pay attention to scholars who come from diverse perspectives unlike your own – people out in the world unlike you – there’s no way you’ll get anywhere.
LP: How do you see this problem playing out during the Covid crisis? Would better decisions be made if the field were more diverse?
CS: My biggest frustration right now is with Congress, because they’re not doing stuff, but setting that aside, I have a big frustration with the Fed. It’s gotten to the point that I think I’m really annoying people there.
At the Fed, they are starting to talk the talk. Powell’s Jackson Hole speech mentioned race. A lot of the governors will now talk about race or lower income and less educated people. They didn’t used to. During the financial crisis, Black people just didn’t come up. So, we have a step forward and that’s good.
But I’m impatient. As soon as the Covid crisis happened, I’m saying, ok, we have to move here. Even as late as recently as when Powell was doing his speech, he was presenting a new framework or strategy, goals for the FOMC [Federal Open Market Committee]. Talking the talk. They had done a whole year of what they call “Fed Listens,” doing all these convenings, reaching out to regular people and putting them on the stage. They couldn’t find regular people who would talk about inflation. They were talking about full employment, and particularly bringing workers in who had been on the sidelines.
I truly believe Powell heard that, but the framework that they rolled out, it’s like, seriously? They are still focused on inflation. They still will not define what full employment looks like. They’re doing what they did ten years ago, and they missed it. They are not walking the walk. They continue to say, well, Congress needs to act. I’m saying, what? You’re really going to wait for Congress to act? You can do more. You can set up a Main Street lending facility for mid-sized businesses, you can set up a municipal lending facility for state and local governments. Congress told you to set it up. They gave you money for losses. And you’re not making loans. You’re nowhere near what’s needed. You have a job to do. You didn’t even try to save Main Street last time. This time, you say you’re going to do it, but you actually have to do it. Words are not enough. It’s so frustrating.
Not to fault the Fed Governors on this – if you, at the Fed, particularly the staff that works on monetary policy and in the macroeconomic community — if you don’t have people that are taking these issues seriously, they are not going to produce research, policy tools, or advice that moves the ball on this.
LP: On the whole, what encouraging signs do you see?
CS: One thing I find encouraging, is that the American Economic Association’s diversity group committee that has been formed in the last three years is putting together a list of research and scholarship from diverse economists that could be used, say, in teaching an undergrad or doctoral course. They’re trying to give people tools to broaden their minds. Of course, people have to then go out and use the tools, but there’s less of a barrier to action. Now you could easily access a list of seminal papers on race and discrimination in the United States economy written by scholars of color.
The thoughtfulness of getting the tools out there and then encouraging people to use them makes it a little easier for people to come into a space without totally messing up every step and then getting it wrong. Trying is not enough. You have to do it. But let’s make it easier to do good.