The Federal Reserve Bank of New York announced today that it has chosen John Williams as its next president. We have written before about how important the head of the New York Fed is to American economic policymaking. This is probably the single most important position in economic policymaking that is not controlled by President Trump or the Republican-led Congress. This meant that it was a golden opportunity to select somebody who would fight for policies that could restore some measure of economic leverage and power back to low and moderate-wage workers.
But because the process of appointing regional Federal Reserve banks presidents is opaque and subject to little democratic accountability, we have always worried that the choice would be one that perpetuates the flawed status quo of the Federal Reserve system, rather than opening it up to new voices that would be responsive to the economic challenges facing American workers. Williams, who is currently head of the San Francisco Fed, seems like the very definition of status quo. This is particularly disappointing given that a roster of eminently qualified and diverse candidates—by gender, race, and professional experience—was forwarded to the New York Fed hiring committee and given very little attention. While Williams is clearly an excellent economist, his policy judgment in recent years has not been encouraging. For example, he has consistently been premature in declaring that the economy had reached or even exceeded full employment, running well ahead of what the evidence was actually showing on this score.
Today’s announcement is a clear step back for the fight for a more democratically accountable Fed that uses its influence to help ordinary workers, not just big banks, prosper in good times and weather the bad times.