Recently by Robert Wenzel: Another Ron Paul Critic at the Fed: ‘IKnow Some PowerfulPeople’
I am on the West Coast, in the San Francisco area. Whenever I am out here, I try to get a sense for what is going on at the epicenter of the Regressive Movement. Such an opportunity was provided to me late yesterday afternoon when former Labor Secretary Robert Reich delivered, at the University of Califonia-Berkeley, the Barbara Weinstock Memorial Lecture on the Morals of Trade.
He started his lecture by telling us that "morals of trade" in the late 19th century, included economics, so that he was justified in giving a speech on economics and then he proceeded to deliver a mostly political speech.
He’s no Bob Murphy, but Reich could have a second career as a stand-up comic. He’s comfortable speaking in front of a crowd and his timing is good when he delivers jokes.
He told us that once when he was debating an issue on television, that during a commercial break, the producer said into his ear plug that he needed to get angrier in the debate. He replied to the producer that he thought the debate was going just fine, but the producer reiterated that he needed to become angrier because people flipping channels will stop when they hear an angry debate. This he said got his temperature boiling.
In watching him speak, I got the sense that he is a surface guy. He seemed to be aware of all the topics of the day, but there really wasn’t any depth to his knowledge. He seemed to keep up on events, but that was about it.
I once knew a "high class" stripper that reminded me of Reich. She didn’t seem to have a particular interest in world affairs, but would force herself to watch at least an hour of news everyday. I got the sense that she did this so that during breaks between lap dances at work, she would have a working knowledge about what men were talking to her about. She might for example recognize the name Hosni Mubarek, but most certainly would not know that the Shah of Iran was a dictator propped up by the U.S. and that he was replaced during the revolution by Ayatollah Khomeini.
This was the sense I got about Reich. Now, I can’t imagine the man providing a lap dance, but he rattled off knowledge the way my friend could rattle off knowledge about headlines, and given that Reich gives a lot of speeches, if he wasn’t an in depth thinker, this surface "lap knowledge" in economics would serve him well.
Getting this sense, and given that he writes a lot of books about economics, I decided to have a little fun with Reich during Q&A. I asked him about excess reserves and the fact that there were a trillion dollars sitting there because Bernanke had started to pay interest on them and I asked him if this was a mistake.
He clearly didn’t have a clue about excess reserves and started to rattle off about risk that execs didn’t want to take. I stopped him and replied that this wasn’t about risk but the fact that Bernanke was paying, risk free to banks, an interest rate that was 3 to 4 times the comparable T-bill rates. He went on to make a total fabricated point as if at the recent FOMC meeting there was some big discussion about excess reserves. It was obvious at this point that he was just going to continue to make inane comments, so I stopped pushing the question.
But the point is clear, he’s a real surface guy when it comes to economics, despite all the books he has written on the topic. I have had discussions about the Fed with another member of Bill Clinton’s cabinet, where we have debated and discussed many Fed-related topics, including excess reserves. This cabinet member’s knowledge of economics is deep and there appears to be a real search for knowledge. In comparison, Reich is running a carnival act.