Traditional Mysteries

Close readers of the economics pages may have noticed the confirmation of Janet Yellen as Chair of the Federal Reserve Bank—and wondered why, in the stories about this event, pundits are treating the lady as a de facto Queen of Finance in the United States—indeed, as one put it, the most powerful woman in the world.

After all. After all, if we stick strictly with the mechanics of the thing, the policy set by the Federal Reserve Bank is expressed in the decisions taken by the Federal Open Market Committee (FOMC). That body is made up of twelve members and reaches decisions by voting. Seven of its members, including the chair, are members of the Board of Governors of the Federal Reserve System. Five other members are drawn from the twelve presidents of the twelve regional Federal Reserve Banks of the United States. One of those, however, has a permanent seat on the FOMC, the president of the NewYork Federal Bank. The other four serve for one year and are then replaced by another four drawn from regional federal banks.

What we have here, in other words, is a straight-forward democratic arrangement in which the Chairwoman of the Fed could just as likely be on the losing as on the winning side of a particular vote. Why then is she treated as the de facto “monarch” of monetary policy.

Well, the simple answer is that she actually is—now that she is confirmed. But the reason for that has little to do with voting and everything to do with the gradual evolution of a tradition. Let me try to describe this.

The simplest way to put this is that the FOMC is governed by consensus—not really by majority vote. The consensus forms around the person of the Chair. In the course of FOMC meetings, members of the committee may disagree with the Chair and may also express their dissent in so many words; but when it comes to a vote, they will back the Chair. It is customary for all Governors to vote unanimously with the Chair—and to be joined by the President of the New York Fed in doing so. That produces a majority of eight, each time. But the tradition at the FOMC is that no no more than two members may dissent. This is described as the “informal policy of the FOMC.” Dissents, some say, are intended to signal potential changes in policy in the future.

It’s quite amusing, in a way, to read how academic observers of this process attempt to explain it. At best they merely describe how it has gradually come about. As for the Why of this curious centering of effective power in one person, students of the process fall back on equally nebulous phrases. The importance or prestige of the office has gradually increased. A “tradition” rules this community; it is made up of, after all, highly qualified experts who’ve spent entire working lives in or around banking and finance. They all abhor the evil consequences of signaling rifts to the Market. The real decisions are worked out in privacy and out of the glare of journalistic light. Therefore, you see. And, presumably, whoever is appointed to be Chair of this institution will be reliably a member of this community and will uphold the traditional way. She or he will move to a vote only after the decision has been sanctioned by consensus.

No wonder, then, that chairs of the Fed are by any measure the most careful speakers in public—and their words are subjected to careful parsing as if they were an omen or issued from some being beyond the clouds.

It remains a fact, nonetheless, that this very sane and deliberate tradition of governance—at least of a part of our public affairs—could break down and, given time enough, someday will do so. Not, we hope, under Janet Yellen. May she rule in peace.

A Third Kind

An illuminating article in The American Conservative (March 2012) by Rod Dreher (link) brings a portrait of the Prince of Wales under the title, “Philosopher Prince.” Dreher describes Prince Charles as a revolutionary anti-modernist. Well worth reading. When classification time recurs, as it often does during the perpetual campaign which is American politics, I have a tendency of trying to opt out; thus I call myself a “royalist” which, it seems to me, describes correctly the stance I have—embracing elements both of the left and right but omitting major portions of both. Such, indeed, seems also to be Prince Charles’ view of things—so that Brigitte, when she came across this article, made quite a showy preparation before she settled me at table for my lunch before she began to read it out loud. We kept high-fiving across the table at right regular intervals.

The royal gentleman’s conservatism is of the third kind. The two well-known varieties are social and economic. For the first it largely suffices to be anti-abortion and pro-Israel; the second kind ranges from what I call country club republicanism to libertarianism. The last two are actually liberalism as it was once understood, but never mind. The third is a kind of traditionalism based on values—the commitment to preserve them. Yes. The underlying structures keep on changing rapidly under the dissolving acids of modernity—and what but time will stop that vast chemicalization fueled by oil? But values are always clearly discernible—and commitment to their conservation is a worthy stance.

Why The Raj Quartet Resonates

Herewith the beginning of a chapter from a family memoir I wrote in 2003. The chapter is entitled “Bordertown — 1942-1943” and talks about a brief period in our life in what was then a temporary Hungarian possession of a piece of Serbia. The city I call Szabadka here is now called Subotica.

Traditions Preserve…the Good and the Bad

Tradition, tradition! Tradition!
     [The Fiddler on the Roof]

A pleasing story in the New York Times this morning (“Wartime Pope Has a Huge Fan: A Jewish Knight”) reminded me that tradition is a two-edged sword. It preserves both the good and the bad. The story concerns the activities of a Gary L. Krupp, a New Yorker, who once received a distinction from Pope John Paul II for fundraising activities on behalf of an Italian hospital. He was named—

A Knight Commander of the
Pontifical Equestrian
Order of St. Gregory
The Great

—the mere citation of which justifies the effort required to write this post, hence my elevation of the title to the status of verse.

In later years Krupp, a medical equipment dealer but now retired, engaged in research regarding the long-standing assertion by Jewish groups that Pope Pius XII failed during World War II to exert himself energetically to save Jews from the holocaust. Krupp’s conclusion was that Pius is innocent of the charges levied against him. The Times quotes him as saying: “Listen to me: Pius XII was the greatest hero of World War II. He saved more Jews than Roosevelt, Churchill and all the rest of them combined. We should not let him be an issues between Catholics and Jews.”

I applaud this sort of effort to lean a single shoulder against a “tradition” that, I don’t for a minute doubt, will linger on and on in time for centuries to come. It is difficult to live in human community. One is invariably lonely. My roots rise from very conservative soil, a royalist past, and I’m very comfortable in reading books like Russell Kirk’s The Conservative Mind in which the concept of tradition takes on a multi-dimensional aspect and even a word like prejudice undergoes an interesting transformation. But while the company may be congenial, I must preserve a certain reserve. Traditions preserve, and if the balance of the past has been positive, its preservation is laudable. But tradition also carries forward all manner of other detritus that ought to be examined, sifted, and, occasionally left behind as information rather than serving as a carrier of resentments that pass from individual to individual for generations unexamined.