A few weeks ago the mainstream progressive view was that Yellen and Summers were two peas in a pod in regards to monetary policy (although many progressives saw differences in other areas.)
Here’s Paul Krugman on July 19:
First of all, what do we need in a Fed chair? Above all, a committed dove — someone who will not succumb to the pressure to tighten policy too soon, and almost equally important, someone who will be seen by investors as resistant to this temptation. We’ve just seen how much damage even a hint of Fed hawkishness can do; it’s really critical to not follow the far worse step of making an appointment that gives the wrong signal.
As it happens, both Janet and Larry have good credentials on those grounds, at least in terms of what they’ve said in recent years.
And here’s Matt Yglesias on July 23:
Rumors are flying in DC that apparent front-runner as Federal Reserve Chairman Janet Yellen has been left in the dust by Lawrence Summers. My view continues to be that passing over Yellen for Summers makes no real sense, but it’s worth emphasizing that as far as we know there’s no real daylight between Yellen and Summers and monetary policy.
I’ve been highly critical of Summers over the past 4 years, but based on very weak evidence. Recently commenters like TravisV and Mark Sadowski started sending me a flood of information on Summers, which in my view made him look too hawkish, too worried about Fed-created bubbles, too attached to fiscal policy, and too pessimistic about the potency of monetary policy at the zero bound.
Without naming Summers, Krugman seems increasingly concerned about the White House’s views on monetary policy:
So, here we are with inflation at a long-term low, many economists arguing that we need higher inflation expectations, and unemployment the overwhelming problem we face. Yet Obama appears if anything to give more emphasis to inflation-fighting than to unemployment reduction, and throws in stuff about bubbles; basically, he has a definite tight-money lean. I don’t know who it’s coming from.
I think we know which candidate has been talking about the danger that QE could lead to bubbles.
Yglesias has done an even more forceful turnaround, with posts like:
Unlike Summers’ monetary policy analysis, I think this is correct. But the conjunction of the views is remarkable. He’s saying that in a low interest rate environment we dare not leave investment decisions up to the private sector, which is going to just blow the money on boondoggles and white elephants—the state needs to step in and plan the economy. Socialism, in other words. But does Summers really think that? It sure doesn’t sound like something he thinks.
If the choice were up to me and this was what I had to go on, I’d consider this viewpoint to be nearly disqualifying.
Although Krugman cited Carola Binder, at least one of the Yglesias posts was motivated by one of my recent posts. The White House does not pay attention to what I say, but they do pay attention to Krugman and Yglesias. And that means that the views of my commenters do get heard in the White House. Keep it up!
BTW, this isn’t a criticism of these two bloggers, indeed it speaks well of them that they update their views with new information. I was originally quite negative on Yellen, but it was based on one misleading statement. I’ve changed my views on her.