Paul Volcker Took On Lots of Challenges. I Was One of Them.
(Bloomberg Opinion) -- In the spring of 1969, I’d just been sent to Washington by the Wall Street Journal as a junior reporter covering the Treasury Department. I knew little about economics. A refunding of Treasury notes was announced, and I filed an article about it to our financial news ticker. I got one of the numbers wrong.
The undersecretary of the Treasury summoned me, and after a short conversation he said, “You really don’t know what the hell a refunding is.” He suggested periodically stopping by to receive the necessary remedial education, though he said he expected it to be a slog.
That was Paul A. Volcker.
As I read his recent memoir, “Keeping At It: The Quest for Sound Money and Good Government,” that anecdote resonated as a reminder of how much he values government service and cares about getting things right.
Any list of the 10 most valuable U.S. public servants over the past half-century would include Volcker, who started in the administration of President John F. Kennedy and finished with President Barack Obama. With the economy in tatters in 1979, he took over as chairman of the Federal Reserve for eight years, restoring both national economic stability and the credibility of the central bank.
His book, written with Christine Harper, editor of Bloomberg Markets magazine, is full of insights on the central role he played in most of the great economic challenges since the 1960s. Volcker’s prescience and patience prevented several cataclysms.
He was attacked by liberals and labor unions during the 1980s for engineering huge increases in interest rates to wring double-digit inflation out of the economy. He incurred the wrath of conservatives and some on Wall Street when, after the 2008 financial crisis, he authored the rule cracking down on short-term, high-risk trades by banks.
He’s a zealot for Fed independence from political pressures. But he also notes that the Fed is an essential partner with elected officials whenever coordinated economic policy is needed in challenging circumstances.
Sometimes, this kind of coordination works, as when Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson collaborated in tackling the financial crisis, or when the Fed’s Alan Greenspan and Treasury’s Robert Rubin and Larry Summers worked together in the 1990s to navigate turbulent global financial markets.
At other times, it doesn’t. The Fed’s Arthur Burns caved in to pressure from President Richard Nixon to engage in expansionary monetary policy before the 1972 election. President Donald Trump already is attacking Fed Chairman Jerome Powell, whom he appointed less than a year ago. (Volcker is a Powell fan.)
I’m no economic-policy maven, but I’ve long admired Volcker’s devotion to public service, which started with his father, a town manager in Teaneck, New Jersey. Volcker has led commissions, taught courses and given lectures. Two guests at a dinner last year celebrating his accomplishments were Bill Bradley, the former liberal New Jersey senator, and John DiIulio, the Princeton University political scientist who directed the White House Office of Faith-Based and Community Initiatives for President George W. Bush. Both say Volcker is a hero.
But Volcker is pessimistic about governance today, even apart from his contempt for Trump. In Washington, he writes, “Money is directed toward shaping public policy and laws to benefit special interests.” He says that academic institutions, including Princeton, are doing a poor job preparing students for government service. Thus it’s no surprise when he declares that the country “is in a hell of mess.”
Yet he also expresses optimism about America’s long-term future and his book is not a downer. In addition to professional insights, it includes touching writing about the courage of his late wife, who suffered from diabetes, and his son, who was born with cerebral palsy and is now a father and successful businessman.
Volcker is ill and publication was accelerated; the official publication date was Tuesday. I hope he’ll be able to join the discussion his book is bound to stimulate. There must be something special in the water at the Marriner S. Eccles Federal Reserve Board Building on Constitution Avenue. Two of the fabled public servants of the last half-century, Volcker, age 91, and his successor, Alan Greenspan, 92, just published books.
A postscript to our first meeting: Thirteen and a half years after accepting Volcker’s barbed offer of assistance, I spoke at the Brookings Institution’s annual dinner. Volcker, who by then was Fed chairman, was in the audience. I mentioned my mistake and a few of the Volcker tutorials that followed, noting that I’d learned from the best.
After the dinner, he tracked me down. “I’ve read your stuff,” he said. “Please don’t tell that story again.”
To contact the editor responsible for this story: Jonathan Landman at jlandman4@bloomberg.net
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Albert R. Hunt is a Bloomberg Opinion columnist covering politics and policy. He was the executive editor of Bloomberg News, before which he was a reporter, bureau chief and executive Washington editor at the Wall Street Journal.
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