After eight years as chair of the US Federal Reserve, Ben Bernanke is stepping down. Fairly soon, President Barack Obama will need to choose a successor – a decision that will be among the most important that he will ever make. I believe he should be looking for a candidate who passes three tests.
First, he must find someone with the right experience. They must have served in a similar role, and served with distinction. Washington is an unusual place, and its bureaucracies are unusual institutions. People appointed to high federal office can learn on the job. But it is better if the bulk of that learning takes place before one is chairing the Fed.
Second, they must have the right values. Right now, America’s biggest economic problem is that employment is too low. In normal times there may be an argument that the Fed chair should care deeply about inflation and less so about other goals. But these times are not normal. The new chair must feel the pain of the unemployed in their viscera.