Alan Blinder

Alan Blinder
Alan Blinder
Born	Alan Stuart Blinder; October 14, 1945 (age 81); Brooklyn, New York, U.S.
Occupation(s)	Economist, professor
Years active	1971–present
Known for	Vice Chair of the Federal Reserve, Council of Economic Advisers member, Keynesian economics advocacy
Notable work	Economics: Principles and Policy (co-author)

Alan Stuart Blinder (, born October 14, 1945) is a distinguished American economist and professor at Princeton University, recognized as one of the foremost economists worldwide. He specializes in macroeconomics, holds politically liberal views, and is a notable proponent of Keynesian economic theory and related policy measures.

Blinder was a member of President Bill Clinton's Council of Economic Advisers from January 1993 until June 1994, followed by his role as the 15th Vice Chair of the Federal Reserve between June 1994 and January 1996.

His scholarly research primarily addresses issues in monetary policy, central banking, and the economic implications of "offshoring" employment. His insights have been featured in publications such as The New York Times, The Washington Post, and through a recurring column in The Wall Street Journal.

Following the 2008 financial crisis, Blinder articulated important lessons for the economic community, emphasizing that "Excessive complexity is not just anti-competitive, it's dangerous" and that "Illiquidity closely resembles insolvency."

Early life

Born into a Jewish family in Brooklyn, New York, Blinder completed his secondary education at Syosset High School in Syosset, New York. He earned a B.A. in economics from Princeton University in 1967, graduating summa cum laude. His senior thesis was entitled "The Theory of Corporate Choice". Subsequently, he obtained an M.Sc. in economics from the London School of Economics in 1968 and finalized his Ph.D. in economics at MIT in 1971 under the mentorship of Robert Solow.

Academic career

Since 1971, Blinder has held the position of Gordon S. Rentschler Memorial Professor of Economics and Public Affairs at Princeton University and served as chair of its economics department from 1988 to 1990. In 1990, he established Princeton's Griswold Center for Economic Policy Studies and has been vice-chairman of The Observatory Group.

Blinder has been affiliated with the National Bureau of Economic Research as a Research Associate since 1978. His leadership roles include past presidency of the Eastern Economic Association and Vice Presidency of the American Economic Association, which honored him as a Distinguished Fellow in 2011. He is also a Fellow of the American Academy of Arts and Sciences (since 1991), a member of the American Philosophical Society (since 1996), and has served on the Council on Foreign Relations board since 2008. Together with William Baumol, he co-authored Economics: Principles and Policy, first published in 1979 and currently available in its twelfth edition.

In recognition of his contributions to fiscal policy, monetary policy, and income distribution scholarship, Blinder was inducted into the American Academy of Political and Social Science in 2009. An advocate for free trade, he has criticized public discussions on the US national debt as ranging from "ludicrous to horrific."

Political career

Blinder is listed among the world's most influential economists by IDEAS/RePEc.

In 1975, he held the position of Deputy Assistant Director at the Congressional Budget Office. Throughout the 1990s, he participated on President Bill Clinton's Council of Economic Advisers (1993–1994) before assuming the role of Vice Chair of the Federal Reserve from June 1994 to January 1996.

During his vice chairmanship, Blinder counseled restraint against swiftly increasing interest rates to combat inflation due to lagged economic impacts and potential rises in unemployment. His term reportedly ended earlier than expected after disputes with chairman Alan Greenspan over fundamental assumptions, which some considered disruptive to policymaking dynamics.

Additionally, Blinder provided economic advice to Al Gore and John Kerry during their respective presidential campaigns in 2000 and 2004.

Private sector

Following his tenure at the Federal Reserve, Blinder co-established and took on the role of vice-chair at Promontory Interfinancial Network, LLC. This firm offers solutions that allow depositors—including governmental bodies, nonprofit organizations, corporations, and individuals—to secure FDIC insurance coverage beyond conventional limits by utilizing a network of participating banks.

The approach enables affiliated banks to provide insured deposits surpassing the standard FDIC cap ($250,000) by allocating funds in portions below this limit across several financial institutions. Serving as an intermediary, the company facilitates deposit matching among banks, thereby increasing insurance protection for depositors while aiding banks in managing their liquidity efficiently.

"Cash for Clunkers"

Blinder was among the early advocates for a "Cash for Clunkers" initiative, which involves government purchase and dismantling of the oldest and most polluting vehicles. In July 2008, he promoted this idea in The New York Times, and the program was later enacted by the Obama administration in 2009. Blinder maintained that such a program could boost economic activity, benefit environmental conditions, and help reduce income disparities. Although President Obama commended the initiative for "exceeding expectations," it also faced criticism regarding its economic impact and environmental effectiveness.

Great Recession of 2008 and 2009, and slow recovery

The Great Recession commenced in December 2007 and reached its lowest point in June 2009, followed by a gradual recovery period. Blinder points out that payroll employment did not rebound to pre-recession figures until almost five years afterward.

He identified ten key lessons for economists, including: 4) "Self-regulation is an oxymoron." 5) "Fraud and near-fraud can escalate to macroeconomic importance." 6) "Excessive complexity is not only anti-competitive but also hazardous."

"The true value of these securities is unknown."

Blinder emphasizes that Keynesian economics goes beyond political affiliations and supports teaching that economic stimulus can be delivered through either tax reductions or monetary policy, citing examples from Reagan’s and Bush’s administrations.

He critiques conventional economic models that depend on a single interest rate by highlighting the instability of risk spreads during the financial crisis of the 2000s.

For introductory economics courses, Blinder suggests incorporating topics such as Quantitative Easing (QE), investment bubbles, and the dual nature of leverage. More complex subjects like "Too Big To Fail" should be introduced only at advanced levels, with foundational courses focusing on broadly accepted economic concepts.

Criticism of consumption-focused economics

In a 2019 publication, Blinder contends that economics has traditionally emphasized price signals aimed at producing goods and services as inexpensively as possible, often viewing employment as secondary or merely a necessary means to facilitate consumption. He challenges this perspective by proposing that individuals may value their roles as producers—their jobs—as much or even more than the goods they consume, suggesting that economists have neglected this fundamental aspect for over two centuries.

While continuing to endorse free trade, Blinder calls for a revised justification differing from the conventional economic arguments typically presented.

Selected works

(2022), A Monetary and Fiscal History of the United States, 1961–2021, published by Princeton University Press.
(2014), "Insights Gained from the Financial Crisis, the Great Recession, and the Disappointing Recovery," Princeton University Griswold Center for Economic Policy Studies Working Paper No. 243.
(2013), After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead, New York: Penguin Press. ISBN 978–1594205309.
(2009), "Estimating the Number of U.S. Jobs Potentially Subject to Offshoring," World Economics, 10(2): 41–78.
(2009), "Committee-Based Monetary Policy Making," International Finance, 12(2): 171–194.
(2008), "Is Leadership Necessary for Monetary Policy Committees? Findings from an Experimental Study," American Economic Review (Papers and Proceedings), pp. 224–229.
(2006), "Offshoring as a Potential Industrial Revolution?" Foreign Affairs, pp. 113–128. (Expanded version titled "Fear of Offshoring," CEPS Working Paper No. 119)
(2006), "Defending Discretionary Fiscal Policy: A Rebuttal," in R. Kopcke et al., The Macroeconomics of Fiscal Policy, MIT Press, pp. 25–61.
(2004), The Quiet Revolution, released by Yale University Press.
(2001, co-authored with William Baumol and Edward N. Wolff), Downsizing in America: Reality, Causes, And Consequences, Russell Sage Foundation.
(2001, with Janet Yellen), The Fabulous Decade: Macroeconomic Lessons from the 1990s, The Century Foundation Press.
(1998, with E. Canetti et al.), Asking About Prices: A New Approach to Understanding Price Stickiness, Russell Sage Foundation.
(1998), Central Banking in Theory and Practice, MIT Press.
(1991), Growing Together: An Alternative Economic Strategy for the 1990s, Whittle.
(1990, editor), Paying for Productivity, Brookings Institution Press.
(1989), Macroeconomics Under Debate, Harvester-Wheatsheaf.
(1989), Inventory Theory and Consumer Behavior, Harvester-Wheatsheaf.
(1987), Hard Heads, Soft Hearts: Tough‑Minded Economics for a Just Society, Addison-Wesley.
(1983), Economic Opinion, Private Pensions and Public Pensions: Theory and Fact. University of Michigan.
(1979, co-written with William Baumol), Economics: Principles and Policy – textbook.
(1979), Economic Policy and the Great Stagflation. Academic Press.
(co-edited with Philip Friedman, 1977), Natural Resources, Uncertainty and General Equilibrium Systems: Essays in Memory of Rafael Lusky, Academic Press.
(1974), Toward an Economic Theory of Income Distribution, MIT Press.

External links