My interview with Kelly Evans at the WSJ

Here’s the interview.  I may have indicated in comments that I’d be on “TV.”  Actually it’s more like a TV show on the internet, called “Heard on the Street.”

A few comments:

1.  I haven’t watched it, but it’s harder than I thought to do TV.  The show is done in one take, with no editing.  One also has to constantly think about expressing ideas in a way that’s comprehensible to laymen.  That’s not easy with NGDP targeting.  There were a couple places where I slightly lost my train of thought (senility), but just charged ahead so that there wouldn’t be an awkward silence.  If it looks like I was dodging a question, it was unintentional.  I tried to answer as best I could, but probably missed slightly on one or two.

2. The News Corp building was interesting.  There’s lots of security, and peculiar elevators.  When standing in front of the bank of elevators you push a button for the floor you want.  A screen tells you which elevator to get on.  When you step in, there are no buttons–the elevator whisks you to the appropriate floor.  Not sure why they do things that way.

3.  I had an interesting round-table discussion with a half dozen WSJ reporters, including names like Phil Izzo and Jon Hilsenrath, as well as Kelly Evans.  Evans was very personable, which made the 20 minute conversation on air a bit less intimidating.

I had a few minutes to walk around NYC.  I had forgotten:

1.  How interesting it is to just walk around the city.  I really wish I could live in NYC for 4 months, but it won’t happen.  At least I had the chance to experience 4 months in London (in 1986.)

2.  How bad the infrastructure is, especially in contrast to the impressive buildings and parks.  (Cue Galbraith quotation.)

3.  I walked along the brand new “High Line” park extension, which is sort of interesting.

4.  Times Square:  Blade Runner has arrived.  I recall when I was young thinking those gritty sci-fi movies were so unrealistic.   By the time they could have building walls covered with video, society would be much richer and the rest of the city wouldn’t look squalid.  But many parts of NYC still look run down.



31 Responses to “My interview with Kelly Evans at the WSJ”

  1. Gravatar of db db
    8. November 2011 at 12:59

    RE: elevators without buttons

    It makes the elevators faster by allowing them to optimize stops. For example, it puts everyone who wants to go to a particular floor on the same elevator.

  2. Gravatar of gwern gwern
    8. November 2011 at 13:08

    > 2. The News Corp building was interesting. There’s lots of security, and peculiar elevators. When standing in front of the bank of elevators you push a button for the floor you want. A screen tells you which elevator to get on. When you step in, there are no buttons-the elevator whisks you to the appropriate floor. Not sure why they do things that way.

    As db says, it allows optimization by forcing people to provide key information ahead of time. Elevators are actually a significant constraint on skyscrapers, and this helps cut costs. (I hear it also helps security.)

  3. Gravatar of Kelly Evans interviews Scott Sumner « The Market Monetarist Kelly Evans interviews Scott Sumner « The Market Monetarist
    8. November 2011 at 13:16

    […] Scott has a comment on his interview as […]

  4. Gravatar of JimP JimP
    8. November 2011 at 13:16

    The interview was outstanding. Congratulations Scott. You were very graceful to her when she stepped on you a bit. She had done her homework and did a good job.

    I think there was a real payoff when you engaged her here after her first article. I think the whole thing was just great.

  5. Gravatar of CA CA
    8. November 2011 at 14:20

    Very good interview. I’d love to hear more details about your round-table discussion.

  6. Gravatar of Martin Martin
    8. November 2011 at 14:50

    Good interview Scott. I think the WSJ-crowd will like your free market credentials and the way (second best) you phrased your support for regulation. It’s basically “I agree with you guys, but let’s be practical about this”. Your discussion of inflation/NGDP was also clear.

    Although I am obviously slightly biased as a reader of your blog – I have heard this before – I think you did a good job. Good not perfect, perfect would be Friedman-like, but those (Friedman as a popularizer of free market economics) are pretty big shoes to fill.

    “But many parts of NYC still look run down.”

    Scott, do you recall a few months ago when I made comment along the lines that American cities compare unfavorably with comparable European cities and you replied that American wealth is mostly concentrated in its suburbs? Well that [NY run down and poor infrastructure] was what I meant.

    I don’t know how your own views have evolved on this with your visit to Italy and your recent visit to NY? Or do you think now that European (Italian) cities compare unfavorably to American cities (NY)?

  7. Gravatar of ssumner ssumner
    8. November 2011 at 15:29

    db and gwern, Thanks for the info. A blog is like my own private Google–commenters know everything.

    JimP and CA, Thanks.

    CA, The reporters challanged me on my policy ideas, both on technical grounds and in terms of political feasibility. I don’t recall the details too well–but we had a nice discussion and I don’t think there was anything too earthshaking. Mostly the sorts of debates we have in the comment section.

    Martin, In Europe the rich tend to live in cities and in America they tend to live in the suburbs. So comparisons are difficult. NYC is one exception, as there are wealthy areas of Manhattan.

    I believe Italy looks better than the US, but also looks poorer. People tended to live in more crowed conditions and drive cheaper cars. But Italy is a far more beautiful country, so it’s hard to make comparisons. For instance, I find Venice to be beautiful, but that’s from an artistic viewpoint. Most Americans would find the suburbs of Boston more convenient, and many would also find them more attractive. Then there’s the question of whether aspects of Italy that seem inconvenient to me are not a big problem to the Italians, as they are used to their country.

    I don’t think it’s possible to make any overall claims of “better”, but I think the average middle class person who doesn’t care about art would be much more likely to move from Italy to American for a better life (in purely materialist terms), than vice versa.

  8. Gravatar of Morgan Warstler Morgan Warstler
    8. November 2011 at 16:26

    Scott, do you want to be on TV???


    First sentence out of your mouth – covered in hot sauce, punch line up front, zinger baby.

    Then you explain yourself. People have to know what they are getting, the benefit, not the feature, so they lean in.

    The media has to have a sound bite. No one will listen very long.

  9. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    8. November 2011 at 16:28

    Kelly is learning. She did a much better job following your logic than she did Greenspan’s. You didn’t have to correct her misconceptions nearly as often as The Alan.

    You came across as a nice mix of professorial and practical. Good shot at the big name modelers; not too arrogant, but justified.

  10. Gravatar of TGGP TGGP
    8. November 2011 at 16:52

    Good job, Scott. Kelly also seems to have learned a lot since as recently as her bloggingheads episode with Karl Smith. At that time there were a lot of moments of the two not being on the same wave-length and inferential distance having to be traveled. I can only recall about one instance of that in your interview and it took only a second to rectify.

    One thing I think you should have mentioned: even if we still had regulatory failure and a subprime crash, if the Fed had kept up NGDP expectations there would not have been the broader financial panic. So rather than just repairing after we’ve hit bottom, we could have avoided such a drop in the first place (if not on the scale of Greenspan’s response to the 1987 stock market crash then at least his response to the tech slump).

  11. Gravatar of dwb dwb
    8. November 2011 at 18:02

    your response that both higher inflation and higher real gdp lead to credit growth was great. I thought it was a good interview. yes, everyone should live in NY or London once. I did too, it was fantasic.

  12. Gravatar of dwb dwb
    8. November 2011 at 18:02

    your response that both higher inflation and higher real gdp lead to credit growth was great. I thought it was a good interview. yes, everyone should live in NY or London once. I did too, it was fantasic.

  13. Gravatar of B B
    8. November 2011 at 18:03

    “Do I have to spank all my children if one of them misbehaved?”

    My favorite part of the interview. I think you will get a lot of mileage out of that quote.

  14. Gravatar of Manny C Manny C
    8. November 2011 at 18:15

    Here’s the correct link:

  15. Gravatar of StatsGuy StatsGuy
    8. November 2011 at 18:42

    I agree with B – great quote.

    You had a number of other good moments – “We can’t push the economy into recession to reign in bank risk taking”

    Good points on…. Fed saying it can do more.

    Toughest part was explaining what nominal GDP is. There’s this gut reaction that “real” is somehow better than nominal, and that nominal is somehow fake. Hard nut to crack.

    I love the last question – “coming out of nowhere”… “on the fringe”.

    Maybe we should call nominal GDP targeting just nominal income targeting. That way when the Fed says they want to increase nominal incomes, it sounds a lot better. The critics can say that increases inflation, but the goal isn’t to increase inflation, but to increase incomes.

  16. Gravatar of Mike Sandifer Mike Sandifer
    8. November 2011 at 18:53


    This was an excellent interview. You’ve become very polished when presenting the ideas around this, even developing a plausible way to sell it to the public. You should do more interviews.

    I want to see you on CNBC, Meet the Press, etc..

  17. Gravatar of Jim Glass Jim Glass
    8. November 2011 at 19:18

    I walked along the brand new “High Line” park extension, which is sort of interesting.

    Hey, you could’ve knocked on my door I’d have bought you a beer.

    many parts of NYC still look run down

    Wow, the High Line’s neighborhood is probably the hottest in the city, with more movie and media stars moving in every day. (The value of my apartment has risen steadily even since 2008 — my one lucky good investment that’s made up for all the smart bad ones.) It is not old and run down, but “classic”, “vintage”.

    Manhattan has been booming for a generation. If you think it’s run down, then to parphrase Rick to Major Strasser, there are a whole lot of other parts of the city you’d best not invade. And just be grateful you didn’t visit during the Lindsey-to-Dinkins era. (Back then in the High Line area they were *literally* near giving apartments away — which is how as a poor kid just out of school I lucked into mine.)

  18. Gravatar of JKH JKH
    8. November 2011 at 21:08

    Very good interview – presentation was very good, plus it was quite interesting to hear about NGDP targeting in a broader context, including comments on regulation and fiscal/monetary policy mix. Also, the message about communicating policy as targeting higher incomes rather than higher inflation (in current circumstances) came across as quite powerful.

    What I found missing was some reference to the fact that there are two sides to the question of how effective QE is per se – bank reserve effects, etc. It would add to your case if you were to explain how you would respond directly to the other view. As it is, your discussion of nominal NGDP assumes full effectiveness of QE – at least it came across that way here. One could assume you think a contrary view is so obviously wrong that it isn’t worth addressing. And maybe you think that, but addressing the point might be constructive and helpful.

  19. Gravatar of Charlie Charlie
    8. November 2011 at 22:14

    I thought the only bad answer was on the run up to the crisis. NGDP didn’t really differ greatly from trend. I think you should of just said that monetary policy was pretty good. It’s silly to think that the Fed can predict bubbles better than the market can. And declines in asset prices shouldn’t be devastating to an economy (see 1987 stock market crash). The real problem was that the Fed let falling asset prices lead to a huge fall in NGDP (see 1929 stock market crash). When NGDP falls 10% below trend, everyone’s income ends up 10% below where they thought it would be. That costs many more defaults than there should have been had the Fed followed a more stable policy. They didn’t react quickly enough to the situation and they let there errors compound over time, because they weren’t looking at the right measures.

    I think that captures your views better, agree? It was interesting to hear you go off on a regulation tangent, while I respect that you have a nuanced view on regulation, you must have been a bit unsure what you were trying to get across there.

  20. Gravatar of Scott Wentland Scott Wentland
    9. November 2011 at 04:28

    Great interview! She had done her homework and prompted good discussion. I kept expecting some “senility” that you spoke of, but didn’t see it.

    I thought she set you up for an opportunity to explain your views on how the Fed’s policies at the recession’s onset actually worsened the recession (interest on reserves, allowing NGDP to fall far below trend, not targeting the forecast, etc. etc.). Your discussion of regulation and factors leading up to the recession was good too, but one of the selling points of NGDP targeting is that it is an improvement over current AND past Fed policies, particularly during the recession. Maybe I am being nitpicky because, again, the interview went extremely well; but, a casual observer of the interview (not the folks who read this blog, because we already know your views on this) may not attribute much error to the Fed’s recent policies and therefore conclude that it may not need fixed.

    In other words, the dominant view seems to be that the recession (both its severity and longevity) was caused by a number of factors like housing, banking, excessive risk taking/leveraging, government policies/regulations, etc., etc.. But the mainstream view also assigns little culpability to the Fed over the last few years. So, as I see it, your arguments about the Fed’s mis-steps in the past go hand-in-hand with your ideas about what they should do going forward. If the mainstream (economists, media, policy-makers, etc.) are not convinced the Fed is broken, or at least part of the problem, they will be less interested in fixing it.

    I think your writings are consistent with this, but for future interviews, you might consider packaging these complementary ideas more tightly together.

  21. Gravatar of MMJ MMJ
    9. November 2011 at 05:45

    the infrastructure sucks, but NYC, run by a democratic city council, gave the yankees 1.2bn for their new stadium and gave GS 300mm for their new hq. yet what do we hear from the left? there is no money for social services! we must raise taxes! etc.

  22. Gravatar of caveat bettor caveat bettor
    9. November 2011 at 10:07

    I’ll take you out to lunch next time you are midtown and have nothing better to do.

  23. Gravatar of ssumner ssumner
    9. November 2011 at 10:12

    Morgan, You asked:

    “Scott, do you want to be on TV???”

    Not especially.

    Thanks Patrick and TGGP.

    TGGP, Yes, I should have mentioned the secondary deflation made the crisis worse.

    Thanks DWB and B.

    Thanks Manny.

    Statsguy, I’ve thought about “nominal income” too. It also better matches NGDI, a variable which gives better initial estimates than NGDP itself.

    I wish I had more time on the spanking example. Strong died in 1928, and the Fed then tried to restrain the stock boom by gradually ratcheting up rates. It failed, and failed . . . until late 1929 when rates got so high the economy tanked. Then we had a severe stock crash. Lesson: you can only kill a bubble by killing the economy.

    Thanks Mike.

    Jim Glass, I wish I’d known. I do see see vast improvements in Manhattan since I first visited in the early 1980s. At that time most of 8th Avenue was run down. But some parts still look that way. I do understand that a given Manhattan neighborhood is more expensive that an outsider might imagine by just looking at the run down shops nearby, trash in the street, etc.

    JKH, The anti-QE view has two possibilities. One is the liquidity trap–it does nothing. Another completely different view is that it boosts asset prices but not RGDP. It’s hard to get into all those nuances in a simple interview, but would be glad to discuss if I had more time.

    Charlie, Yes, I needed a more complete explanation. One feels pressured to answer fast on TV, so I left out some important points.

    Scott, Yes, you are right. That came up in the 90 minute discussion before the TV interview, but I should have brought it up again.

    MMJ, Good point. And Galbraith is wrong. It’s not that we spend too little, it’s that what was once spent on infrastructure is now spent on social services (plus stadiums.)

  24. Gravatar of Lorenzo from Oz Lorenzo from Oz
    9. November 2011 at 17:50

    Great interview Scott. Excellent no-nonsense, reasonable, courteous tv persona.

    Glad to see you pushing for the Fed to be explicit. As I have recently argued (slightly revised version here, with a nice comment by Nick Rowe), I see explicitness as a major reason why the Reserve Bank of Australia has been much more successful at macroeconomic stability than the Fed since 1993 (i.e. even compared to Greenspan).

    It was politic of you not to mention the surreptitious disinflation the Fed engaged in, but I wonder if mentioning the huge drop in NGDP might have made your case even stronger. Of course, hindsight tends to be 20×20 in these matters: as I know from experience, it is easy to think of things after the event rather than in the heat of the interview moment.

    So, a fine presentation of the case. And I agree with the comments above, Lee Kelly is showing herself to be a journalist to watch. I wonder if she is young and internet-savvy enough to have realised some of the problems with mainstream media journalism and is seeking to position herself accordingly.

  25. Gravatar of Lorenzo from Oz Lorenzo from Oz
    9. November 2011 at 18:00

    I also particularly liked you citing Canadian banking regulation as a success story. Americans can be a touch parochial about learning from the policy experience of others. (Though the Europeans seem to be much worse, at least at the EU level.)

    (I should have mentioned that Marcus Nunes was kind about the earlier version of my piece on being explicit in monetary policy.)

  26. Gravatar of ssumner ssumner
    10. November 2011 at 20:21

    Thanks Caveat bettor.

    Lorenzo, Thanks for those comments. I regret not mentioning the big drop in NGDP–that was an oversight on my part.

  27. Gravatar of Bob O’Brien Bob O'Brien
    10. November 2011 at 22:17

    Was it just my imagination or does Scott come across on TV as an adult Mr. Rogers?

  28. Gravatar of Catherine Catherine
    11. November 2011 at 05:37

    You did a great job! Fantastic.

    You have to do lots and lots of television.

  29. Gravatar of Scott Sumner Scott Sumner
    12. November 2011 at 14:25

    Bob, I hope it was your imagination.

    Thanks Catherine.

  30. Gravatar of Jason Odegaard Jason Odegaard
    14. November 2011 at 05:45


    Your interview went well, you didn’t seem to jump topics or evade part of a question at all. I enjoyed listening to it. Hopefully this is good practice, as the real trick of these video interviews is being able to defend the ideas in a debate. But televised debates/news shows are to convince the public (still important), but written word probably still works better for convincing the Fed.

  31. Gravatar of Scott Sumner Scott Sumner
    14. November 2011 at 18:37

    Thanks Jason.

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