The Corner

The Fed and Inequality Returns

Fed chair Janet Yellen’s speech on inequality is back in the news thanks to yesterday’s rough-and-tumble Congressional hearing. I wrote about this a bit back at the time.

Speaking in Boston last week, Federal Reserve Chair Janet Yellen announced that “the extent of and continuing increase in inequality in the United States greatly concern” her. “I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity.”

Well. I think it is appropriate to ask whether the Fed chair should be expressing concern over whether income inequality is un-American. And to answer: No. The Fed chair shouldn’t sound like a left-leaning politician opining about hot-button political issues.

You can read that column here.

I followed that column up with an op-ed.

Whether the rich-poor gap is of great concern and whether it is incompatible with American values are normative, moral questions. They are also subjects of deep disagreement between liberals and conservatives, reflecting fundamental differences over the nature of success and the relative importance of the individual in society. And the question of whether policy should shrink the rich-poor gap — the natural conclusion if one is greatly concerned — admits further disagreement over the appropriate role of government.

Because these questions are fundamentally moral questions, their deliberation and resolution properly belong to the political process. This process has many participants — elected officials, public intellectuals, clergy, academics, advocacy groups, pundits and many more. But the Fed chair should most certainly not be among them, for at least three reasons.

That led to some criticism, which I answered here: “Greenspan Was Wrong, Too: More on the Fed And Inequality.”

— Michael R. Strain is deputy director of economic policy studies and resident scholar at the American Enterprise Institute. You can follow him on Twitter at


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