A new book looks at Treasury Secretary Janet Yellen — her upbringing, her economic thinking and her career.
Here & Now's Scott Tong speaks with Jon Hilsenrath, the author of "Yellen: The Trailblazing Economist Who Navigated an Era of Upheaval." He is also a senior writer and editor at the Wall Street Journal.
Book excerpt: 'Yellen'
By Jon Hilsenrath
A new biography of Janet Yellen, the Treasury Secretary and former Federal Reserve chairwoman, traces her path to becoming the most powerful woman in U.S. economic policymaking history.
“Yellen,” by Wall Street Journal reporter Jon Hilsenrath, emphasizes her partnership with husband George Akerlof, a Nobel Prize-winning economist himself, as she broke glass ceilings. Akerlof was her research partner and then became her traveling spouse, engaged in raising their son Robby and taking on supporting roles to her as she rose in Washington.
The following excerpt from the book, from a section titled “Love Stories,” retraces how they met:
When Janet Yellen and George Akerlof arrived at the Fed in the fall of 1977, the place was a mess, and its leader, Arthur Burns, was on his way out the door. Inflation was running rampant and Burns ran the money printing presses that helped to make it happen.
Inflation didn’t occur overnight. During the late 1960s and 1970s it gathered force, building through a cascade of policy missteps and misfortunes until it became so embedded in the psychology of nearly every American that few thought it would ever end.
Presidents Lyndon Johnson and Richard Nixon had fallen into a pattern of badgering the Fed to keep pumping money into the economy, which kept interest rates low. Johnson and Nixon thought low interest rates would boost growth and drive unemployment down, which they hoped would help their economic programs and their electoral prospects. The Fed often complied, which instead helped to drive inflation higher by overcharging consumer demand and made the White House even less popular.
Yellen and Akerlof were both coming off life disappointments when they arrived at the Fed. She had been an assistant professor at Harvard University and was rejected for tenure. She also had tried writing an economics textbook with her mentor, James Tobin at Yale, which they didn’t complete. Akerlof had left the University of California at Berkeley when his promotion was rejected. He was recently divorced.
They met briefly at the going-away party of a colleague in the fall of 1977. The event was on the eighth floor of the Watergate complex, where the Fed had a satellite office, a few blocks from its main building and two floors up from the Democratic National Committee headquarters that Nixon’s operatives fatefully raided before his 1972 reelection.
Fed economists at the Watergate had a pet theory about the break-in. A back door in the Watergate complex led to a bakeshop at its base. Some Fed researchers had rigged the door to remain unlocked so they could get to the bakeshop quickly, without taking the longer route through the main entrance. Some theorized their unlocked door was the point of entry for Nixon’s burglars.
George was preoccupied the evening he met Janet—but not with Watergate history, or the inflation problem consuming the nation, or even with Janet. He was spellbound by a cake set out for the affair, with delicious vanilla frosting that he was enjoying licking off his fingers. He and Janet didn’t talk much, and quickly went their separate ways.
A few days later, however, they found themselves sitting together at a side table during a lecture by a visiting researcher in the cafeteria of one of the Fed’s two main buildings, the Martin Building. It was a large room, with floor-to-ceiling windows that looked out on the Lincoln Memorial and served as a hub of activity in the central bank’s daily affairs.
This time, Janet, petite with a bob of dark hair and a broad, friendly smile, had George’s complete attention. They had friends in common, including Joe Stiglitz, one of Janet’s thesis advisers and George’s friend from his days as a PhD student at the Massachusetts Institute of Technology. She was familiar with a paper George had written on the used car market, titled, “The Market for ‘Lemons’,” which challenged conventional views that markets were efficient and would eventually win him a Nobel Prize.
The two quickly discovered they had a common devotion to the ideas of John Maynard Keynes, the Depression-era economist who called for government spending to lift moribund economies. Both were driven by lifelong preoccupations with the problem of unemployment and saw the ideas of Keynes as a potential solution to the problem.
They agreed to go on a date.
Janet was greeted at George’s unkempt town house by a bland and messy boiled rice dish he had cooked for her and a rescue dog George had taken in. Half pit-bull terrier and half Dalmatian, the dog had torn up papers everywhere and had once urinated on a carpet at the Fed when George took him to the office. George named his mischievous pup “Sweetie.”
Janet and George were smitten. A second date ensued the following day at Janet’s neat and orderly place.
George had already suffered through one hasty marriage that ended in failure, but he had no hesitation when he met Janet. He felt he had found his match in her, a woman whose worldview and temperament meshed perfectly with his.
In George, Janet felt she had found a good soul with a value system just like hers and an uncommonly inventive mind. He also made her laugh.
In many ways Janet and George were opposites. Janet was disciplined, grounded, sensible, orderly; George was creative, contrarian, and unorthodox. His mind went fast and in different directions; she thought through problems slowly and linearly. To each, it was a natural fit.
They had only known each other a few weeks when George told Janet he had a theory about decision-making and marriage. When a person isn’t sure about a decision, he said, that person will analyze the choice carefully, at length and from different angles, taking the time needed to understand the issues and the tradeoffs involved. But when a person is really sure of something a decision can come fast.
Janet saw his point and did the most impetuous thing in her life: she agreed to marry the man.
She was thirty-one years old. He was thirty-seven.
Akerlof was born into a long line of strong women. His mother came from an academic family and studied chemistry in graduate school at Yale. Her strong-willed mother spent time with the family during summers on Squam Lake in New Hampshire. “My mother and grandmother would have considered themselves equal to anybody,” Akerlof reflected later.
As far as he was concerned, Yellen’s career would stand on equal ground with his own. “It was automatic that we wouldn’t go anyplace where she didn’t have a job she was happy with,” Akerlof said. “It was always expected that everything was equal.”
They married and moved to London to teach at the London School of Economics. He had a job there and she found one there too. She had followed him this time, but when she became a policy maker later, he would follow her routinely.
Janet and George rented a home in the city’s Clapham neighborhood south of the Thames River. The place had a piano in the living room, a throwback for Janet, who had practiced as a child. She dug up the sheet music for Mozart’s Sonata in C Major, a light, fast-moving piece for piano that Mozart said he wrote for beginners.
“I’ll bet you can play this,” she told George.
He took it as a challenge and started practicing the piece. When he messed up, he politely asked his new wife if she minded if he started again. She politely said she didn’t mind at all. George practiced for hours on end, and then for days. Then days spilled into weeks. By December, before they headed home for the holidays to visit family, he was still trying to learn the piece.
Janet threw her hands in the air.
“I can’t take it anymore,” she shrieked, exasperated by her new husband’s obsessive new habit.
In fact, she could. They have been married 44 years.
Many years later Janet, George, and their son, Robby, watched a Japanese movie called “Big Joys, Small Sorrows,” by director Keisuke Kinoshita.
Set during the 1970s and 1980s, as Japan’s economy reemerged from the ravages of war, the movie traced the often lonely life of a family of Japanese lighthouse keepers as they shifted from place to place along the island-nation’s rugged coast.
Husband and wife come to realize in the movie that they are bound by the duty they feel to a cause bigger than themselves, in their case protecting ships along the nation’s coastline. The joys and sorrows they experience in life, and the relationships they develop with family and friends, grow out of the path they have chosen to serve as lighthouse keepers together.
Watching the movie, George and Janet came to think of the movie as a metaphor for the marriage they started together in the late 1970s.
Their purpose, as they saw it, was a larger journey as stewards for the economy. Their own joys and sorrows, their own family and friends, all grew out of that. They saw themselves as lighthouse keepers.
Some storms they managed well. Others, including a resurgence of inflation today, drove a state of emergency.
Back in those early days, Janet and George developed a pet name for each other. They started calling each other Sweetie.
Excerpted from "Yellen" by Jon Hilsenrath. Copyright ©2022 Jon Hilsenrath. Published by Harper Collins. Reproduced by arrangement with the Publisher. All rights reserved.
This segment aired on December 27, 2022.