The Political Chase

Krugman on Bernanke

Paul Krugman performs a dual role today - comedian and economist. Half of his column is humor, at the expense of George Bush, and the second half focused on his view of Bernanke. The humor within the first half readily let’s the reader know he is pleased with the appointment of Bernanke.

Mr. Bernanke’s partisanship, if it exists, is so low-key that his co-author on a textbook didn’t know he was a registered Republican. The academic work on which his professional reputation rests is apolitical. Moreover, that work is all about how the Fed can influence demand - there’s not a hint in his work of support for the right-wing supply-side doctrine.

Nor is he a laissez-faire purist who believes that government governs best when it governs least. On the contrary, he’s a policy activist who advocates aggressive government moves to jump-start stalled economies.

Last but not least, Mr. Bernanke has no personal ties to the Bush family. It’s hard to imagine him doing something indictable to support his masters.

Moving on to the real substance of the piece, Krugman does not attempt to make a long list of items that support his endorsement. His endorsement is primarily based on Ben Bernanke’s role as Chairman of the economics department at Princeton prior to moving to Washington.

George Bush has appointed so many unqualified people to key positions, the mere fact that a nominee has a credible background for a position, potentially elicits an almost overly zealous approval. Better that way though, than the opposite direction.

Krugman does note some concerns, but they are not so much about the person as they are about the situation Bernanke will face.

My main concern is that the economy may well face a day of reckoning soon after Mr. Bernanke takes office. And while he is surely the best politically possible man for the job (all the other candidates I would have been happy with are independents or Democrats), coping with that day of reckoning without some nasty shocks may be beyond anyone’s talents.

So, in a week of horror befitting Halloween, Bernanke’s appointment is a welcome relief. I remember the skepticism when Greenspan followed Paul Volker…Greenspan rose to the occasion. We don’t know what effect Mr. Bernanke’s will have three years from now, but we do know there is reason for hope rather than a known failure before he assumes the position.

Bernanke is not Harriet Miers, which isn’t a slam on Ms. Miers’ capabilities. I’m sure she’s well qualified for corporate law and to serve as White House counsel, but a constitutional expert she is not. Bernanke stands a chance to further prove his capabilities, with less reason for anxiety from the American people.