Thursday, December 17, 2009

Ben Bernanke—A Creative Leader

In my Triumph of Dullness blog post I say that there aren’t any contemporary creative geniuses in the arts and sciences. Creativity can be exercised in other fields, however, most notably in business or political leadership, and technology. Bill Gates and Steve Jobs are two names that come to mind as geniuses in technology management. Those of us who are old enough to remember life without the PC or Mac realize how much our lives have been transformed by these devices. When I was in high school in the early 1980’s, the early versions of PC’s and Mac’s were available. There was no Internet, however, and we still did our term papers on typewriters. I couldn’t imagine using a typewriter now.

It’s much rarer to find intelligently creative political leadership. FDR was a good example of a creative leader, who guided his country through two of the biggest crises of the last century: the Great Depression and World War II. There was no guidebook to follow, no historical precedent, so FDR had to improvise. While you can disagree with specific policies or programs, by the time he died in 1945 the U.S. had defeated Hitler in just 3 ½ years, and was on its way to defeating Japan. World War II also ended the Great Depression.

After reading Time Magazine’s Person of the Year article, I have to conclude that Fed Chairman Ben Bernanke is a creative leader. In the fall of 2008, the world financial system ground to a halt. The housing bubble had burst, and a Depression 2.0 was a real possibility. Instead of responding in predictable ways, such as only lowering interest rates, this scholar of the Great Depression did some creative things. These had never been done before on the scale that Bernanke did them:
  1. Coordinating rate cuts and other interventions with central bankers around the world
  2. Buying up commercial paper, mortgage-based securities, and other debts.
  3. Bailing out troubled banks and other financial firms.
One can disagree with specific actions, such as some of the bailouts, but that’s the case for any leader or policy maker. It’s easy to lose sight of the fact that we were threatened with an economic depression. If Bernanke hadn’t acted, we could have 25% unemployment now, instead of 10%. It’s easy to blame people for disasters that actually happened; it’s harder to praise them for disasters that didn’t happen. A good example of this is that we haven’t had any terrorist attacks on American soil since 9/11. Our national security agencies deserve credit for this, but they’re rarely praised. For the same reason, Bernanke deserves recognition for the disaster that didn’t happen.

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