Joseph Stiglitz (Courtesy of Wikimedia Commons)
The big election race of 2013 is for the position of Federal Reserve chairman.
The United States is not an economy democracy, however. So there will be no popular vote on who will make the most critical decisions on jobs, investments, interest rates and a host of other defining issues for working families, communities, states and the nation.
But there is a campaign going on. In order to influence the selection of a new chair by President Obama and the Senate confirmation process: contenders are positioning. Camps and caucuses are organizing. Endorsements are being made. Issues are being placed on the table.
So let’s invite the American people into the process.
Let’s tell them how powerful the Fed is, and what it could do to address poverty, unemployment and the economic challenges faced by cities like Detroit.
One member of Congress, Michigan Democrat Dan Kildee, is already inviting us to imagine the possibilities.
In response to the threat of bankruptcy that looms for Detroit and other cities, Kildee has argued that the Fed should be actively engaged in developing solutions for cities that are in economic turmoil after decades of deindustrialization and federal and state neglect. “While Detroit’s problems may be extreme, they are certainly not unique,” says Kildee. “Municipalities in Michigan and across the country are increasingly facing insolvency that requires us to rethink the way we support our cities.”
When Fed Chair Ben Bernanke appeared before the House Financial Service Committee in mid-July, the congressman said, “I would ask if you would think about how you would advise Congress or how the Fed itself might pursue policy that would have the effect of potentially avoiding—but certainly mitigating—the economic effect of municipal financial failure.”
Kildee’s point is well taken, not merely with regard to the debate over Detroit—but with regard to the debate over who will head the Fed.
One potential contender for the job, Lawrence Summers, has a record of delivering for Wall Street and the big banks—as an advocate for deregulation, privatization and the elimination of essential regulatory protections such as the Glass-Steagall Act. As economist Dean Baker noted after the economy melted down in 2007 and 2008, “The policies [Summers] promoted as Treasury Secretary and in his subsequent writings led to the economic disaster that we now face.” But Summers is also an over-the-top advocate for the sort of free trade agreements that have left communities across this country with shuttered factories and high unemployment. He’s so disinclined toward the public investments that might renew those communities that Congressman Peter DeFazio, D-Oregon, has said, “Larry Summers hates infrastructure.”