Remembering Stanley Fischer: An economist for all

Indian Express

5 days ago

When news came about Stanley Fischer having passed away, I got emotional. I am penning these lines in the hope that people will learn about this unique human being. He was a three-dimensional Donald Bradman, a pinnacle reached by very few — indeed I don't know of any other. First, he was every (wo)man's economist. It is impossible for a student of macroeconomics to not have heard of him, and learnt from him. His Macroeconomics with Rudi Dornbusch is the go-to textbook if you want to understand macroeconomics.
His students included our own Isher Ahluwalia (his second PhD supervision), a pre-eminent Indian macroeconomist and institution builder. Other formal PhD students have included Ben Bernanke, former chairman of the US Fed, Mario Draghi, former president of the European Central Bank, and Kazuo Ueda, present governor of the Bank of Japan. If that is not a lifetime's achievement award by itself, consider that among his students were Lawrence H Summers, former secretary of the US Treasury and president of Harvard University, and two chairpersons of the US Council of Economic Advisers, Christina Romer and Greg Mankiw.
In a fundamental way, all policy economists were his students. In several seminars/discussions where I had the good fortune to be in the same room as Stan, it was obvious that we were all in awe of him. When he spoke, people listened. Because the quality of his insight commanded attention.
His second mega-dimension achievement was in policy. He started on this path in 1988 when he was named chief economist at the World Bank. He left in 1990 for MIT, only to forever return to dominate and influence policy-making from 1994 onwards.
I did not have the good fortune of being Stan's student or colleague. Then why am I emotional at his departure? Because of his third, and most important dimension, his humaneness. The dictionary defines humaneness as being about kindness, compassion, and consideration for others. Any story about Stan, and especially my story, is heavily one-sided. I cannot speak for others, but this is likely to be the case with them as well. It is about how he helped those in need, guided us and mentored us, without possibly recognising that he was having this influence.
Two episodes from my interactions with him show this. I wasn't even an academic (just a proprietary currency trader at Goldman Sachs) when in 1993 he invited me to give a talk to his class at MIT. The policy topic: Do democratic societies grow at a faster rate than non-democratic countries? At that time, China had been growing at above 10 per cent per annum since the Great Economic Leap of 1978 and many assumed that dictatorship was the way to go. But not Stan, and not me — hence the unusual invitation to a non-academic for a seminar.
Another example: My draft of a book on currency misalignments achieved a stop-the-press status in 2010 at a leading think tank, the Peterson Institute for International Economics (PIIE). I was an ordinary author — Stan was Stan. His response to my email requesting his help was short (as were all his emails) and accurate. 'This must have fallen prey to some issues relating to countries that intervene in their FX markets — and must therefore be all the harder to accept. I can understand your frustration… Best — and we should talk at some point.' It was only because of Stan's intervention and guidance (to PIIE and me) that allowed the book, Devaluing to Prosperity, to be finally published in 2012.
Prakash Loungani documents in erudite detail Stan's conversion to policy (IMF Finance and Development, September 2013, 'A Class Act'). Stan found it hard adjusting to academic life at MIT from 1990-1993. 'I remember going to theory seminars and saying to myself, what difference does it make whether this guy is right or wrong?' Even becoming chairman of the Economics department at MIT 'was only partly inspiring,' says Fischer, likening the role to Alfred Kahn's description of a dean's role: 'The dean is to the faculty as the fire hydrant is to the dog.' Another of his attributes — his wicked, but polite, sense of humour.
On policy influence — and paraphrasing Jane Austen — it is a truth universally acknowledged, that a country in economic trouble, wanted Stan Fischer to help steer it right. Stan, as first deputy managing editor at the IMF was in charge and helped resolve the East Asian currency crisis. He was governor at the Bank of Israel, 2005-13, and helped Israel both reform and most effectively face the 2008 Global Financial Crisis. He cut policy rates a week before even the Fed did.
He was born in Rhodesia, now Zimbabwe. That explains his special connection with issues of development, growth and poverty reduction. It also explains part of my bond with him — he followed cricket. He was a unique multi-dimensional Bradman — there won't be another.
The writer is chairperson of the Technical Expert Group for the first official Household Income Survey for India