By Bryan Caplan
My teacher Ben Bernanke has been nominated as Greenspan’s replacement. While some libertarians think he’s the Antichrist, in reality he’s about the best that libertarians could reasonably hope for. As I wrote a few months back:
I was a student of Ben Bernanke at Princeton, and he was by far the best teacher and most impressive mind I encountered there. He is not a dinosaur Keynesian left over from the 60’s, or an idiot savant math whiz. Bernanke is a macro theorist who knows an enormous amount of economic history, and an empirical economist interested in wise policy…
[Bernanke] has a firm grip on the ephemeral benefits and long-run dangers of inflation. In fact, he has long been sympathetic to inflation targeting. The idea is simple: Have central banks aim for a low, constant inflation rate, rather than pursuing a laundry list of amorphous goals. It’s not free banking, which I’d prefer, but Bernanke’s inflation targeting would have precluded most of the bad things central banks have done this century.
…Bernanke is part of the wave of modern macroeconomists who finally noticed what Rothbard pointed out to his uncomprehending colleagues forty years ago: Wage floors make unemployment worse, especially in the face of a monetary contraction…
Bernanke is admittedly a mainstream economist – and I’m not. I’m sure we’d disagree on a great many issues. But at the same time, he is living proof that the mainstream of economics has vastly improved since the dark days of the 60’s. Bush’s Number One economic mistake is not appointing Bernanke to head the CEA. In fact, Bush’s Number One economic mistake is a lot more likely to be habitually ignoring the advice of the excellent economist he appointed.