And here’s to you, Mr. Robinson

The Fed seems to be far less dysfunctional than just a few months ago.  Did this guy play a role?

On Thursday July 12, Federal Reserve Chairman Ben Bernanke called or met with Treasury Secretary Timothy Geithner, a senior Republican senator, Bank of Canada Gov. Mark Carney and Princeton University economics professor Harvey Rosen. He also met with Carl Robinson.

In fact, Mr. Robinson, the managing partner of Vantage Leadership Consulting, a Chicago strategic talent-management firm, has been a frequent visitor to the Fed chairman’s office this summer.

Though Mr. Bernanke’s schedule is generally crammed full of gatherings with staff, other policy makers and prominent figures in academe and finance, the Fed chief met four times with Mr. Robinson between May 9 and July 20, according to Mr. Bernanke’s monthly calendars of appointments, obtained through public-records requests. He also met twice with the Fed chairman in 2011.

A 58-year-old licensed psychologist, Mr. Robinson specializes in helping companies foster leadership, both in working with firms to select leaders and through executive coaching, according to the Vantage website.

.   .   .

While his work varies with each organization, Mr. Robinson said three decades in the business have underscored a few basic principles.

“We spend a lot of time trying to help people understand organizations don’t function like individuals,” he said. Workplace politics and an employee’s reputation, for example, can play a part in company dynamics.

And Mr. Robinson emphasized the importance of getting the right people in charge.

“Leaders cast long shadows,” he said. “You cannot overestimate the impact of a leader.”


HT:  Marcus Nunes



9 Responses to “And here’s to you, Mr. Robinson”

  1. Gravatar of Bill Ellis Bill Ellis
    21. September 2012 at 17:00

    Maybe it had a little bit to do with bashing Ben in the press ?

  2. Gravatar of ChargerCarl ChargerCarl
    21. September 2012 at 18:34

    i prefer to believe it was the internets

  3. Gravatar of Neal Neal
    21. September 2012 at 18:42

    Thanks, it’s stuck in my head now.

  4. Gravatar of John John
    21. September 2012 at 22:26

    I had a general macro question that I was wondering if anyone could answer. Why is it that macro people say things like “real GDP growth has not been fast enough to bring down the rate of unemployment”? To me this seems backwards. In my thinking, the more people you have working to produce things, the more things you can produce given that productivity doesn’t change very rapidly.

    I think this point is hard to argue with so I’m gonna use it to challenge Scott’s argument about sticky wages. In a graph Scott put up a few months ago, he showed his theory that rising hourly wages in the face of a contraction and resumption of a lower trend level in NGDP correlated well to our current unemployment figures. I don’t think that this necessarily shows a shortfall in demand because you could tell the same story of unemployment and falling NGDP from a structural side as well.

    If expansionary monetary pushes down interest rates to a point where they don’t match consumer preferences for saving vs consumption, resources will tend to flow into the most interest rate sensitive projects like housing. However, the old debate between Bob Murphy and Scott about housing and construction employment numbers doesn’t capture the degree of misallocation produced by the low-rate policy as the financial system, consumer spending patterns, and almost every facet of the economy in general will be affected in some form or another by the increase in long-term investment that people have not been able to save the capital and capital goods to sustain.

    This leaves an entire economy in need of adjustment. Imagine waking up one day and all our factories had been taken apart and reassembled in another area to do another thing. Nominal GDP would fall and many workers would have to go through a lengthy search process or have almost nothing useful to do as production has to be reestablished along rational lines by the pricing mechanism.

    In short, the situation would create broad aggregates that look much like what Scott was pointing to as a shortfall in demand. NGDP would fall, nominal wages could possibly keep increasing as the people who had jobs doing things very valuable like transporting equipment in my story would continue to get paid. Boosting demand by pumping more money into the system would do zilch to encourage sustainable production to resume and would in fact make it more difficult by falsifying price signals and encouraging uneconomic behaviors like the stock piling of metals (they are really doing that now with physical metal ETFs).

    In short, my second question for Scott or any other knowledgeable reader is why does the graph showing wages rising next to NGDP prove or strongly indicate a demand rather than structural problem?

    Sorry for typing so much. Hopefully people will just see my questions and give me a crack at answering them.

  5. Gravatar of Saturos Saturos
    21. September 2012 at 23:04

    John, I agree with your first point. But reallocation does not require NGDP (the total flow of money through the economy in a year) to fall. Especially not if the Fed is targeting it, which is really the most sensible way to interpret its dual mandate. So an independent Fed failure looks like the cause.

    There are broader points against reallocation – most of the observed reallocation didn’t involve much unemployment, didn’t require NGDP to fall, NGDP keeps falling at structurally random times and this time stayed down, correlating with massive across-the-board unemployment, whilst firms continue to claim that demand is their number one barrier to hiring…

    Also, reallocation should if anything require real growth to be higher not lower afterwards (diminishing returns)… hang on, I was going to make this point on an earlier post –

  6. Gravatar of Benjamin Cole Benjamin Cole
    22. September 2012 at 01:49

    I have really enjoyed the last three posts—excellent blogging, and yes the world is coming around to MM, slowly, slowly, slowly. I think.

  7. Gravatar of Bill Woolsey Bill Woolsey
    22. September 2012 at 04:48


    You need to go back one step to first principles–scarcity. There aren’t enough resources to produce everything everyone wants to use. And so, prices ration demand to production. The prices provide signals and incentives to direct production and allocate resources to what people want most.

    What “misallocation” means is that the wrong things are produced. Usually, it is too much of some things and too little of other things. Resources are used to produce less value goods rather than more valuable goods on the margin.

    When there is a need to reallocate, there is more demand for things that were underproduced and less demand for the things that were overproduced.

    This remains true if the reason for the misallocation was that an excess supply of money caused market interest rates to fall below the natural interest rates. The demands for some things rose relative to other things, and too many of the high demand things are produced and too little of the lower demand things were produced.

    When the reallocation occurs, the relative demands readust, and tehre is more demand for the things that had relatively low demands and less demand for the things that had relatively high demands. There are shortages of some things and surpluses of other things.

    Now, if the demand to hold money remains equal to the quantity of money while all of this is going on, the price level will remain stable. If the prices of all goods are perfectly flexible, the prices of the goods with surpluses fall, and the prices of goods with shortages rise. The price level stays the same and the quantity of money and demand for money stay in equilibrium.

    If, on the other hand, firms with lower demand choose to reduce production and lay off workers rapidly, and not lower their prices much, while firms with added demand raise their prices immediately and are only gradually able to expand production, then output falls and the price level rises. The increased production of the sectors with higher demand falls to offset the decreased production with sectors with lower demand. The decrease in the prices of sectors with lower demand fails to offset the increased prices of the sectors with higher demand.

    If the nominal quantity of money stays the same, then the higher price level reduces the real quantity of money. If the real demand to hold money were constant, then this would force the price level back down. However, if money is a normal good, then the lower real output and real income causes the real demand for money to fall. If the demand for money is unit elastic with respect to real income, then increase in the price level would be inversely proportional to the decrease in real income. Total spending–nominal GDP–would be constant. More spending on the higher demand products (slight increases in output and much higher prices) would be matched by reduced spending in sectors with lower demand (slight decreases in prices and large decreases in output.) The expanding sectors are earning high profits and as they are able to produce more, output rises and compeition brings down prices. Real output recovers and the price level falls again.

    With a price level target, this tendency for the price level to rise must be prevented or reversed. This could come from an even greater reduction in demand for the goods with lower demand, smaller increases in demand for the goods with higher demands, and, most likely, reduced demand for goods that really require no reallocation. Price level targeting is stupid!

    If there is an increase in the demand for money that happens to occur, and the nominal quantity of money is fixed, then this entire realloation must occur in the context of a lower price level, so the real quantity of money will rise to meet the demand. What happens is the demand for everything falls, perhaps including the demands for those goods whose relative demands are increasing! By reducing resources prices, such as wages, this reduces costs across the board. The sectors whose relative demands increased return to profitability first, once wages and other costs have fallen enough. The sectors whose relative demands were unchanged then recover, and finally, those sectors with reduced relative demands recover last and are permanently smaller.

    So, market monetarists argue that if there is a needed reallocation of resources, the best envirorment is to keep the nominal quantity of money equal to the level of money demand consistent with spending on output remaining stable. If prices rise more in sectors with shortages than prices fall in sectors with surpluses, it is best to just let the price level rise. But never do we want to reduce spending on output in sectors whose relative demand is increasing. Never do we want to reduce spending on goods whose relative demands are unchanged. Spending decreases should be limited to those sectors that need to contract.

    Also, with this interest rate stories, it is important to understand that the natural interest rate can change and depends on desired saving and investment. If business is worried about the future and chooses to invest less, that is a decrease in investment demand and results in a lower natural interest rate. If households worry about the future and choose to save more, that is an increase in saving supply, and reduces the natural interest rate. The market interest rate would need to fall in that circumstance. If the demand to hold money increases with a lower market interest rate, then the quantity of money would need to rise too.

  8. Gravatar of John John
    22. September 2012 at 10:40

    Saturos and Bill Woosley,

    Thanks for your thoughtful answers. One thing I’m still left wondering is can misallocated capital goods, stuff used to make other stuff, cause the symptoms we associate with a lack of demand: decreased production, lowered employment, diminished production and consumption especially related to “higher order” goods, increased money demand, etc.?

  9. Gravatar of Saturos Saturos
    4. October 2012 at 02:33

    John, reallocation is a “real shock” story, so there will obviously be less production and consumption in real terms for a time. But money demand should fall not rise as real income falls. And a failure of the labor market to clear means that the flow of money isn’t great enough to stabilize employment given the sticky path of wages. That flow depends fully on the supply and demand for money, both of which the Fed fully controls.

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