Bernanke: Let's Get Philosophical

The Fed chairman wants economists to spend more time on the "why" of what they do


“Textbooks describe economics as the study of the allocation of scarce resources,” said Ben Bernanke on Monday morning. “That definition may be the ‘what,’ but it certainly is not the ‘why.’” He was speaking to the International Association for Research in Income and Wealth, and “why” is not a question that Federal Reserve chairmen tend to ask in front of any audience. The Fed is charged with two precise, measurable tasks: Keep unemployment low and prices stable. These are indexes, numbers on a scale, and if a Fed chairman can keep them where they should be, he can be satisfied that he has done his job. In that sense, Bernanke is playing the world’s most complex video game.