Leonhardt’s Sharp Look at the Mind of the Fed

Why has debate at the central bank been so constrained?

It’s a few days old now, but David Leonhardt had a great column in the Sunday Review section of The New York Times about the Federal Reserve—specifically, about how the debate within the Fed on ways to get the economy going has been far more constrained than the debate among the broader economics community.

If you spoke to top economists outside the Fed, Leonhardt writes, you’d find many who would be wary of more aggressive monetary expansion:

But you would also find a sizable group of economists who thought the Fed could and should do far more than it was doing. This group, known as doves, tilts liberal, though it includes conservatives as well. If anything, it can probably claim a larger number of big-name economists — J. Bradford DeLong, Paul Krugman (an Op-Ed columnist for The New York Times), Christina D. Romer, Scott Sumner and Mark Thoma, among others — than the camp that believes the Fed has done too much.

You would never know this, however, from listening to the public debate among Federal Reserve officials. That debate is much narrower.

This is spot-on, though I might quarrel with Leonhardt’s description of the “dove” group as tilting liberal. (While most of the bold-face names he cites are liberals, it’s a certain stripe of conservative economist—personified by Sumner—that has been most critical of the Fed, and most confident that more aggressive monetary measures will boost the economy.) Leonhardt also adds some trenchant thoughts about why the Fed skews relatively hawkish, and how the limited official debate affects the politics surrounding—and ultimately, the policy pursued by—the central bank.

To temper that praise, two minor points of criticism. The first is that while Leonhardt nicely captures the divide between the Fed and the broader community of economists, he doesn’t note here how slow the mainstream press was to report on the discrepancy. I did a lot of reading in this area about a year ago, and it was always startling to move between the econ blogs—where people were more or less running about with their hair on fire—and the newspaper accounts, which often were limited to the debate within the Fed, and very rarely gave a sense of the intensity and breadth of the outsiders’ critique. Leonhardt, after noting that the closed-door dialogue between Fed officials is no doubt more robust than their public discussion, writes that “the public conversation still matters.” But the public conversation outside of official channels matters too, and in this case most of the press was slow to the story. (Leonhardt, it should be noted, got to it before many other journalists.)

The second point is not a critique of the column but a question about editorial strategy. Since Leonhardt was named the new D.C. bureau chief at the Times, both he and the paper’s higher-ups have insisted that his selection doesn’t signal a stronger emphasis on economic policy within the bureau. Perhaps that’s just for public consumption, but if they’re too sincere, it’s too bad.

Of course, the Times shouldn’t neglect the national security beat, or environmental coverage, or the coming elections. But it’s looking more and more like the struggling economy will be our country’s central challenge for years to come, and that the question of how to respond will be central to our political divides. There will be a special need for the press to excel in its coverage of economic policy—and, as his latest column (and his other, Pulitzer-winning work) shows, Leonhardt is uniquely prepared to lead that effort. So why wouldn’t the bureau put special emphasis on that story?

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Greg Marx is an associate editor at CJR. Follow him on Twitter @gregamarx.