This week, Janet Yellen was duly confirmed by the US Senate as the first chairwoman of the Federal Reserve Board. It is something that we should welcome for at least three reasons. The most obvious is her gender, for this does break through a particular glass ceiling that should have been smashed long ago.
The second – less obvious but ultimately the most important thing of all – is that she is very good. Even as an economics undergraduate, so I was told by someone who marked her work, Yellen was outstanding, going beyond the wording of the question to tackle the deeper issues it raised. She has also been a thoughtful articulator of the subtleties of central banking, and that will be a quality much needed in the coming months as the Fed tightens policy. This was always going to be a tricky time, for in the phrase of her 1950s and ’60s predecessor, William McChesney Martin, she has to “take the punchbowl away just as the party gets going”. It sure got going for Wall Street last year.
But there is a third reason, much less remarked upon, for the welcome. It is her age. Yellen is 67. That means that she will have been through four full economic cycles as a professional economist. If the last cycle taught us anything, it is that you need people in banking, and central banking, who have been round the block a few times. And if there is a wider message for the labour market – that there is a lot of talent available in people beyond normal retirement age and we need to deploy that talent – well, that is a useful message, too.