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Trailblazing Black Economist Weighs Nation's Crisis

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Transcript

MICHEL MARTIN, host:

I'm Michel Martin, and this is Tell Me More from NPR News. Coming up, another in our series of commentaries, looking ahead to the new administration - one writer's letter to Barack Obama. But first, it's time for our Wisdom Watch. It's our ongoing series where we speak with distinguished elders from a variety of fields hoping they'll share not just knowledge, but wisdom from years of accomplishment.

Today, Andrew Brimmer. He was born to a family of sharecroppers, went on to earn a doctorate in economics from Harvard, and made history as the first black man to be named to the Board of Governors of the Federal Reserve. A frequent contributor to newspapers and magazines on economic matters related to the national and international economy, he's an author and heads up his own consultant firm. I'd like to welcome Andrew Brimmer. Mr. Brimmer, thanks for joining us.

Dr. ANDREW BRIMMER (Founder, Brimmer & Co.): Thank you. I'm glad to have come.

MARTIN: And, of course, the economic news is so much in the headlines these days. The Labor Department reported that December's 524,000 layoffs brought the 2008 job loss total to more than 2.6 million jobs. I think the question a lot of people have is, why are things so bad, and how long is this going to last?

Dr. BRIMMER: The immediate cause was the fall-off in home construction and the tight credit. The economy was already slowing down, but the credit crisis which developed in the summer and early fall of 2008 really threw the economy into the - what is now a recession, which is likely to be very deep and most likely will last well into 2010.

MARTIN: Could anyone have foreseen this? Is there anything that could have been done to mitigate this, the seriousness of this?

Dr. BRIMMER: Yes, there's something that could've been done. The Democrats made an effort earlier in 2008 to provide a stimulus package, but the Bush administration did not take this warning very seriously. Unfortunately, President Bush took the view that the economy was vibrant. Leave it to the market, and things will turn out to be much better.

MARTIN: So what should the incoming administration do? Could you just give me what you think the president-elect's priority should be as he takes office next week?

Dr. BRIMMER: I come out on the side of substantial increase in government expenditures. On what should the government spend money? They should spend money on things which will give a boost to economic activity and create jobs. When I say create jobs, the main problem now is to avoid losing more jobs. In my forecast, I have the unemployment rate well over nine percent.

MARTIN: That's two full percentage points above where it is now. It's about 7.2 percent as - I think. So that's a big jump, even over the course of the next year.

Dr. BRIMMER: That is the second quarter of next year. And by year end, I have it up to nine and a half percent.

MARTIN: Where do you think the bulk of those dollars should go? What should that money be spent on?

Dr. BRIMMER: The first thing I would do is to extend the unemployment compensation. The unemployment funds in the states are running dry, and some of them already running dry. I would also provide more access to food stamps. I would also make a down payment on the health program. How would I do that? By funding Medicaid, Medicare.

MARTIN: Medicaid, which provides health services for poor people; Medicare being for seniors.

Dr. BRIMMER: Let me correct that notion. When Medicaid was put in, it didn't say poor people. It said disadvantaged people, and anyone who loses a job is disadvantaged. Governors are now asking for help so they could expand the coverage. And so, what I would do - people first, infrastructure second.

MARTIN: I wanted to wheel around and talk about you for a minute. Can we do that?

Dr. BRIMMER: All right.

MARTIN: As I mentioned that you are - you became the first African-American to serve on the Board of Governors of the Federal Reserve. What does the Fed do?

Dr. BRIMMER: The Federal Reserve wears two hats. One - on the one hat, it fights inflation. But with the other hat, it promotes economic growth. And what is needed now is a promotion of economic growth, and it is doing just that. The Federal Reserve has been responsible for much of the financial aid that's come through the economy at this time.

MARTIN: I do want to ask one more question though about the sort of the current economic situation. And I note that you have been on the board of Bank of America.

Dr. BRIMMER: Yes.

MARTIN: And some people believe that the banks played a critical role in the current economic collapse because of their excessive lending of subprime mortgages to people who couldn't afford them. And now, when these people can't pay these mortgages, you know, this has been sort of the - part of current economic collapse. Do you have some thoughts about that?

Dr. BRIMMER: Yes.

MARTIN: Can you talk about that?

Dr. BRIMMER: That is - I'm sure - to use colloquial language, that's a bum rap. Subprime mortgages was not created by - problem was not created by banks. It was created by mortgage bankers and speculators in financial assets. In that regard, the institution - not only banks, but the lenders who include banks, insurance companies and so on, they should have had more supervision.

MARTIN: So do you feel that there were regulatory failures at issue here? And if so, on whom?

Dr. BRIMMER: Oh, yes in the Treasury Department. This current secretary of Treasury, Paulson, is a quote, "100 percent free American person," opposed to regulation, and he was very, very slow to come to the need for increased regulation.

MARTIN: If you're just joining us, you're listening to Tell Me More from NPR News. We're speaking with Andrew Brimmer. He's an economist. He was also the first African-American to serve on the Board of Governors of the Federal Reserve. And he's hopefully going to impart some wisdom to us. I wanted to ask, how did you get interested in economics to begin with? Do you remember?

Dr. BRIMMER: Oh, yes, yes - quite precisely. I did my undergraduate work and my first masters' degree at the University of Washington in Seattle. I was a journalism major. And for the journalism curriculum, one has to do courses in history, economics, and so on. My first course in economics was taught by a professor who is completely unknown, but he was a very good teacher. He was a child of the Depression. And he emphasized the need for economic change.

And so I learned - I began to apply my skills to the study of prosperity and depressions. And I was so fascinated that I switched to economics. And much of my writing is in the area of what's necessary for economic progress, and I've done a lot of my work on what's required in terms of economics for African-Americans to make economic progress.

MARTIN: And you've made quite a journey yourself, as I mentioned, that you come from a family of sharecroppers. You grew up going up to segregated schools in Louisiana and went on get a Ph.D. from Harvard. If you could just tell me, how did you make that journey?

Dr. BRIMMER: Well, the first thing - and by the way, I'm doing some memoirs, and so I give you the two bit version.

(Soundbite of laughter)

MARTIN: Well, then you'll come back when you finish your memoir and tell us more of it.

Dr. BRIMMER: Quickly, I learned to read and write very early because my father taught me how to read and write. So I learned to read, to write, and to figure. I was good in arithmetic and then in mathematics, but above all, I learned how to think logically.

I had very good teachers. Even in Louisiana, I had two teachers who were very good. One taught me literally how to read and write. I applied it. My father taught me the basics. But my English teacher taught me - in fact, she's the one who got me interested in journalism. The other one, the principle of the school himself, he had done his masters' degree in history. And so I learned to look at the record.

But from then on, step by step, I was forcing it. I always had a professor, somebody who was interested in me. And I was flattered. They thought I was bright - brighter than most and that I caught on more quickly. So from then, it was just discipline and training. In other words, you have to do dichotomies, and anyone who's pursuing a profession has to be able to get the person's hands dirty. And that's what I did.

MARTIN: We've mentioned several times that you are a first and we're about to see another first take office next week. President-elect Barack Obama will become the first African-American president of the United States. Did you ever think you would see this in your lifetime?

Dr. BRIMMER: Not this early. As you know, I was appointed to the Federal Reserve Board by Lyndon Johnson who told me that - he always called me Andy - Andy, when I'm gone, they might put on my tombstone that I was the author of the Civil Rights Bill of 1964. But if I were writing, I would put on my tombstone that I was the author of the Voting Rights Bill of 1965.

And he said, look, if African-Americans use the bill, use the right to vote, before you know it, we'll have a black senator from South Carolina, Strom Thurmond's territory. So I anticipated, I took him seriously that participation would lead to some change. Now, I'm not saying - of course, it's not true, blacks didn't elect Obama alone. Americans have elected him. I saw it coming but not this early.

MARTIN: The irony, of course, is we have an African-American president before we have an African-American senator from South Carolina. I wonder what that means.

Dr. BRIMMER: Well, it means that there remain sections of differences in perception in participation. But you noticed, he carried several Southern states. So his election was broadly based. And above all, it was strategically planned.

And his behavior with respect to the $700 billion bailout, McCain suspended his campaign, rushed back to Washington, and tried to do something. What he did is hard to discern, but Obama quietly, systematically thought it through, had very good advisers - many of whom I knew personally - calmly used the information, gave counsel and guidance. So I think that behavior is indicative of how I anticipate he will run the government.

MARTIN: Well, I can tell just from our brief conversation that you're not given to emotional outbursts or irrational exuberance, as our former Fed chairman used to say, but do you have a sense of how you think you will feel given your own life's journey when he takes the oath of office next week?

Dr. BRIMMER: I won't grow to be 10 feet tall, but I will grow to be a few inches taller.

(Soundbite of laughter)

MARTIN: Do you have any wisdom for us? I always like to end the segment by asking if you have any wisdom to share to perhaps a younger you.

Dr. BRIMMER: Wisdom comes from experience, but imagination is acquired very early. So my counsel is first, you must prepare yourself well. Any accomplishment comes because of hard work, and the world is getting more competitive. I say this especially to our African-American young people. You're not just competing against whites. You're competing against everybody.

MARTIN: And I think the same is true the other way, that whites are not just competing against themselves. They're competing against everybody.

Mr. BRIMMER: Of course.

MARTIN: The world, you know.

Dr. BRIMMER: Of course. And the rewards are substantial, but it is very easy to lose whatever progress you've made. It's still true for those of us who did not get a head start. My daughter got a head start. Her son is getting a head start. But once you attain a position, you have to work hard to keep it.

MARTIN: Andrew Brimmer is an economist. He is the president of the consulting firm Brimmer and Company. He was kind enough to join us from our studios in Washington, D.C. Andrew Brimmer, thank you so much for speaking with us.

Dr. BRIMMER: Thank you very much. Transcript provided by NPR, Copyright NPR.

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