By Steven K. Beckner
(MNI) – When the name Ben Bernanke is mentioned, the acronyms that
normally spring to mind are QE3 and FFR, or maybe IOER — not RBI or
But in an unusual column penned for the weekend Wall Street Journal
the Federal Reserve Chair holds forth on, of all things, professional
baseball in the nation’s capitol.
Nominally, Bernanke is writing about the Washington Nationals, who
after a shaky start in 2005, have climbed near the pinnacle of success
in Major League Baseball, winning the National League East and advancing
to the playoffs for the first time in franchise history.
But not surprisingly the Fed chief has a more than just subliminal
message — about leadership and management on the Potomac. An
imaginative reader might even discern some analogies to monetary policy.
He talks about risk-benefit and short-term/long-term tradeoffs and
the importance of careful analysis in decisionmaking. But he also
suggests that a lot of judgment is involved — just as in determining
how long to hold the federal funds rate near zero, or how much and what
kind of assets to buy.
Bernanke, an MIT-trained economist and former Princeton professor,
sings the praises of Nats manager Davey Johnson, who happens to hold a
degree in mathematics himself. He credits Johnson with successfully
reviving baseball in the District of Columbia after a long hiatus.
Naturally, the guy charged with assessing the prospects for the
U.S. economy and with adjusting interest rates to achieve maximum
employment with price stability, has a keen interest in statistics, as
Bernanke admits in the column. And so he has a special appreciation for
Johnson, he notes, is a practitioner of “sabermetrics” — the
application of statistics to winning baseball.
The idea behind “sabermetrics” is “very appealing to an economist,”
Bernanke explains: “Given the voluminous data available from 130 years
of major league history, it’s possible to submit the hoary conventional
wisdoms of baseball to rigorous statistical tests.”
Sabermetrics derives statistical insights from such things as “the
importance of on-base percentage, the low value of stolen bases and
sacrifice bunts in most situations, and of adjusting for park effects
when evaluating player performance,” he notes.
The alternative for a baseball club trying to build a winning team
is to simply go out and identify the most talented players.
Johnson, a former Gold Glove Award winner who has led his
seven-year-old team to the National League Eastern Division
championship, takes a “head-and-heart” approach that combines the best
of both strategies, Bernanke says.
“Most strikingly, he has shown himself willing to sacrifice
short-term tactical advantage for the long-term benefit of bolstering
the confidence of a player in whom he sees great potential,” the Fed
chief writes. “He lets players play through slumps and gives pitchers
who have gotten behind a chance to dig themselves out.”
Sound familiar? It should. Insert some economic jargon, and he
could be talking about his own job of “managing” the U.S. economy.
In recent weeks, for example, Bernanke has acknowledged that
holding interest rates at very low levels has caused short-term pain for
savers by limiting their fixed income returns, but has maintained there
are off-setting gains for stock and home prices, and in turn the
economy, which will help everyone in the longer term.
And he has defended the Fed’s controversial decision to further
delay the anticipated date of rate hikes until at least mid-2015 as
needed to boost confidence and spur spending.
Prominent economists, such as Columbia University Professor Michael
Woodford, have warned that the Fed’s extended “forward guidance” might
have the opposite effect by sending a pessimistic signal. But it is a
risk Bernanke and most of his colleagues on the Fed’s policymaking
Federal Open Market Committee were willing to take at their Sept. 13
Clearly Bernanke identifies with the Nats manager. He almost seems
to take Davey Johnson as a model.
“Davey fully appreciates the importance of making decisions based
on factual evidence and rigorous analysis,” he writes. “He strikes the
right balance between relying on the tangible (data) and the intangible
(confidence and motivation) and shows the rare ability of being able to
make the right trade-off between winning the day’s game and motivating a
player who will help the team win in the long run.”
“These trade-offs don’t always pay off, but many times they do, and
the high success rate is a reflection of Davey’s ability and judgment,”
And he concludes: “Many of us in Washington could learn a thing or
two from the Nationals’ approach.”
Might he also be looking in the direction of the White House and
** MNI **