Sunday, February 16, 2014

One Is The Loneliest Number

“I want to be dismal when I grow up”, says no child, ever.

I’m not writing about this dismal, snow-pocalypse winter we have found ourselves buried under.  I’m writing about the dismal science: Economics.

I love economics.  I love all things quantifiable and countable.  I admit I’m a little sad that my two year old got his alphabet down before he could count.  And now, when he does count, he often skips over one and starts with two.  So if there are three horns on a triceratops, he counts them proudly “Two, Three, Four”. We’re going to have to work on that.  He’s inflationary.  One falls by the wayside, it is after all, the loneliest number. 

Lately, and in a fully respectful, admiring way (not in a stalking way), I’ve been tracking the rise of one particular economist: Janet Yellen.  On January 6th, Ms. Yellen was confirmed as the Chairwoman of the Federal Reserve Bank of The United States of America, making her the first woman to hold this post in the one hundred-year history of the Federal Reserve.  She is also a Brooklyn native and an alumna of Bay Ridge’s own Fort Hamilton High School, fittingly so named after Alexander Hamilton, the first Secretary of the Treasury of the United States (and the guy on the $10 bill).  In other words, Janet is my homegirl.

I thought Ms. Yellen’s appointment was a tremendous achievement for the Fed, for the global banking system, and for female students of economics, both from Brooklyn and from the rest of the U.S., if not the world.  I was personally excited, even if 13 and one half years of dust had started to accumulate on my own economics degree, which in its purest form, I do not use on a daily basis, but more so I was wondering who else was excited?????  I mean EXCITED!!!???!!

 On January 7th, I scooped up my print version of the Wall Street Journal from my front lawn/driveway/snow pile (where ever it ends up) and opened the paper with much gusto.  On Tuesday, January 7th, 2014, the cover of the WSJ had a photo of a football game, with the caption, “Florida State beat Auburn 34-31…” insert bla bla football bla college bla whatever.  The Wall Street Journal gave the cover shot to friggin college football?  Ok, two of my cousins went to FSU, but seriously.  SERIOUSLY the WSJ of all reputable papers, college football, seriously.  Ok I guess it was the Rose Bowl, so that makes it ok.  No.  On the right-hand column of the front page, it read “Senators Confirm Yellen for Fed”.  Redemption, WSJ, redemption.

Paraphrasing the article, ‘Ms. Yellen was confirmed with a 56-26 vote’ (where were the other 18 Senators?, and why did 26 clowns vote ‘no’? oh, wait, maybe they’re hung over from the Rose Bowl) .  The article continues to page two, where finally, a smiling Janet gets her picture in the paper.  Ms. Yellen’s path to the Fed Chair is not unlike many of our other past Fed Chairs, a resume of academia and government posts, an ivy-league education, a NYC public school start, her career trajectory is fantastic: An economics degree from Brown, a PhD from Yale, faculty positions at Harvard and The London School of Economics, tenure at Berkeley, chair of the Council of Economic Advisers under the Clinton years, rising positions at the Fed, including President of the Twelfth District Federal Reserve Bank (San Francisco), Vice Chair of the Board of Governors of the Federal Reserve System, and now Chair of the (entire) Fed.  One of Ms. Yellen’s subject matter specializations include studying the forces behind unemployment, which I personally believe is key at this time in our economy, 3, 4, 5 years into a ‘jobless’ recovery, unemployment numbers slowly ticking downward yet not robustly so, I think she will bring much to the table on that topic.  She’s even married to an economist, who better to run your central bank, America?  (source:

If this blog post isn’t dismal enough for you yet, don’t worry, it’s only going to get worse. 

Page two of the 1/7/14 WSJ highlighted another issue in a greyed-out box set into the Yellen confirmation article, entitled “Women Rise in Economics, but Not Its Academic Realm”.   Or in other words, why did it take 100 years to find a qualified female economist to run our central bank?  100 years ago, lest we forget, women didn’t even have the right to vote in America.  Those were the days, and perhaps even less so far back in our history, where women were to be found barefoot and pregnant.  And the friggin irony to that statement is that as I sit here writing this post on my laptop on my couch, I am both 20 and one-half weeks pregnant and currently not wearing any shoes.  Ok 100 years ago, there probably weren’t many female economists anywhere, with shoes, without shoes, with child, without children, in America, in Brooklyn, not anywhere.  But today?  As they say, the bench is shallow. 

The article continues, “ looks like a golden era for women economists has arrived” but “Women earned 32% of economics PhDs awarded in the US in 2012” and “the nation’s roughly 3-to-1 ratio of male to female economics majors hasn’t changed in 20 years.”  This is dismal. 

When I was in college, when Alan Greenspan was the chair of the Fed, Economics was like the 5th or 6th most popular major amongst the senior classes.  But don’t forget, these were classes made up entirely of women, and I was fully oblivious to the starkness of a 3-to-1 male to female ratio of econ majors.  Though perhaps it became a little clearer to me in my London program: 14 college graduates, 4 Economics majors, I was the only female.  That’s a three-to-one right there.  Upon classmate introductions in my MBA program, it was more of the same, we were a class of about 1/3 women to 2/3rds men, all the other econ majors were guys.   Seriously?

So let’s put on our thinking caps: Do women hate economics or does economics hate women? Economists will argue that their field is a science and does not have feelings, animosities, vendettas nor carry grudges.  Women, generally speaking, and paraphrasing from the WSJ article, will argue the field does not have a human side, it does not impact people’s lives the way government and sociology do.  And this is a turn off. 

And I’m sad because I disagree.

 Yes, econ uses a lot of formulas, for example (and I’m a bit rusty on this) output = labor x capital.  So where are the humans, well they are the labor part of the equation.  Another major formula econ students study is the calculation of Gross Domestic Product (GDP) or the total production of a country (typically, as this increases, the economy is doing well).   GDP = I + G + NetX+ C  (Investments plus Government spending plus exports less imports plus private Consumption)   But the argument is, in all this math, where are the people, where are the warm fuzzies and the humanitarian implications?

Get out your pencils.  There are like 7 Billion people in this world and you can’t find the humanity in economics.  I’m going to help you find it.

 Example 1:  Economist from Brooklyn becomes chair of the Fed, all of Brooklyn rejoices (2 Million people right there).  Ok that’s a stretch.  My brother lives in Brooklyn and I’m pretty sure he has no idea who Janet Yellen nor what the Federal Reserve Bank is. 

Example 2:  During the snow-pocalypse, you fall into an ice ditch and get frostbite.  You go to the hospital where a doctor and two nurses take care of you.  You have private insurance.  You have just generated private consumption and GDP goes up.  You have Medicare.  You have just increased government spending and GDP goes up.  One of the nurses specializes in frostbite treatment, she’s on a visa from Iceland.   Hospitals, overwhelmed by the amount of frostbite patients coming in after the polar vortex, have begun seeking frostbite specialists.  The demand for Icelandic nurses goes up, thus they charge more for their services, plus the cost of visas (supply vs demand).  Health care costs rise, everyone complains, but no one dies of frostbite.  And being laid up in the hospital has prevented you from buying coffee at your local coffee wagon man, the coffee wagon loses business and GDP goes down.

Example 3: You buy a designer Italian handbag.  You buy it legitimately, Gross Domestic Product goes down, imports subtract from our GDP, Italy’s GDP goes up as they are the exporter.  You buy a knock off from China, our GDP goes down, China’s GDP goes up.  You buy a really bad knock off from a van on Canal street, technically GDP goes up, as you just increased private consumption, but that transaction is probably never reported, so nothing happened, until the peddler (or yourself) gets arrested, the arresting officer is backed up at central booking and files for overtime pay, government spending goes up, GDP goes up. 

Example 4: You work(ed) in a pool of 20 secretaries using typewriters and steno pads.  Output = 20 workers (labor) x the productivity capacity of typewriters (capital).  Slowly, typewriters are replaced by word processors, then desk top computers, then iPads with touch screens and wifi.  That pool of 20 secretaries is reduced to one administrative assistant with an iPad and a cell phone.  The same (if not more) output is generated by one person instead of twenty because the capital (iPad, cell phone) is way, way, way more efficient and capable than typewriters, steno pads and a telephone switchboard.  Technology has displaced 19 jobs.  19 people could go on unemployment (government spending) or take part in job training classes offered at public colleges or libraries (so let’s also say government spending).  Government spending could be the same in dollar amounts, but what’s a better use of public funds?  Secretaries don’t come to career day anymore.  Everyone has Apple products and their stock goes to a bazillion dollars, and creates millionaires all over California, who buy nice cars (domestic, GDP goes up, foreign, GDP goes down).  One of the former secretaries creates a webpage for people who can read and write in short hand, a bunch of these people meet once a month for coffee at a local restaurant.  Private consumption goes up, GDP goes up.  Out of these meetings, romance brews and a couple keen on shorthand get married.  They have twins and set up college funds.  Investments go up, GDP goes up.

If you are alive, you are impacting and/or being impacted by economic forces.  And if that’s not dismal enough for you yet, don’t worry, it’s only going to get worse. 

This ‘shallow bench’ of qualified female economists isn’t a problem unique to America.  The WSJ article stated that Russia, Israel and South Africa all currently have Central Banks led by women.  That’s three countries in the whole world.  So this piqued my interest, and in the hours upon hours of free time I have (not really) I decided to look at some of the other major central bankers around the world.  This ‘research’ of mine is mostly based off Google searches, and some central banks have really informative websites, and others are not available in English, so that’s my caveat.  Here we go.

I looked at the top 10 economies in the world, as based on 2012 Gross Domestic Product (and you thought you’d never see that term again), then looked for the diversity in their central bankers.  I didn’t find much.  (note the Federal Reserve is the central bank of the US, so I use the terms interchangeably)

#10 – India

India has the tenth largest GDP in the world, it just edged out Canada.  2 years ago, I think Canada would hold this spot but it lost out to the growing Indian economy.  So if you search for India’s ‘Central Bank’ you get a privately held commercial bank that makes loans to individuals.  This is not a Federal Reserve equivalent.  I found India’s central bank under ‘Reserve Bank of India’, established in 1935.  It did not have, nor had it ever, been governed by a woman.  Four women were in the deputy Governor ranks, but not the lead spot.   Not bad.

#10.5 (11) – Canada (and only because I felt bad for them)

Did not have a woman head of their central bank, though 3 of the 17 board of director level positions were held by women.  Not bad.  Very nice Central Bank website.  Lots of photos.

#9 – Italy

The Banca d’Italia was founded in 1893 and has never had a woman lead its ranks.  Not really surprised.

#8 – Russia

The Russian central bank, as it exists today, was founded in July of 1990, after the breakup of the Soviet Union.  Elvira Nabiulina was appointed the Governor (head) of the Bank of Russia in June of 2013 by Putin.  Prior to this role, she was the Minister of Economic Trade and Development. 

#7 – The United Kingdom

Technically founded in 1694, the Bank of England was never really part of England’s national system until more recently.  My understanding is that it was founded to serve the monarchy and only rechartered itself more recently to serve the whole country, not just the monarchy.  Never headed up by a woman, the Bank of England has one governor-level position held by a woman, at the chief operating officer level.

#6 – Brazil

Founded in 1964, the central bank of Brazil has never been led by a woman.

#5 – France

Founded by Napoleon in 1800 (I guess he needed money), and never led by a woman.   Not really surprised. 

#4 – Germany

The Bundesbank was founded in West Germany in 1957, and upon German reunification, just absorbed East German legacy banking.  One woman is on the Bundesbank’s executive board, but it has never been led by a woman in the top position. 

#3 – Japan

Founded in 1882 the Bank of Japan has never been led by a woman.  Not really surprised.  When I read the list of bank heads from 1882 to present day I realized I had no idea which names were male and which could be female.  Then I found photographs.  They were all guys.

#2 – China

Again, I thought I was not familiar with the language enough to distinguish male names from female names, or if the Chinese have names that could go either way (Pat, Chris etc) but my deduction was that when they used ‘Chairman’, it was a guy, and when they used ‘Chairperson’ it was a woman.  One ‘Chairperson’ made it to the rank of governor, but all the heads of the Chinese central bank, founded in 1948, were Chairmen.

Honorable Mentions:

The central banks of South Africa and Israel may be headed by women, as they made the WSJ article, but they aren’t in the top ten of world economies, but they aren’t just small potatoes either.  I looked up one more country, one synonymous with banking: Switzerland.  Founded in 1907, the Swiss central bank website is chock full of portraits of all their heads and executives.  None of which, were women. 

#1 -   If you don’t know the largest economy in the world, you live a dismal life.  Call me, we’ll have a chat.  Here’s a clue: Founded in December, 1913 by Woodrow Wilson, it’s basically been the topic of this blog post.  

And as for our friend Alexander Hamilton, the US has had 75 subsequent Secretaries of the Treasury since its founding in 1789, none of whom were women. 


Author’s Note:

The topic of this entry was of particular interest to me, and I hope you found it to be informative.  It was a bit subject-matter specific and as I was writing, I was trying to keep things generic enough to follow.  If you found something confusing or unclear, please contact me and I will be happy to further clarify.