It’s a hot August afternoon when Gregory Hess navigates his way around The Claremont Colleges in his car, admiring the architecture while on his way for coffee. Back in his office in Bauer, boxes await unpacking. It’s nearly two weeks before classes begin, and HessCMC’s inaugural Russell S. Bock Chair of Public Economics and Taxationhas been in Claremont for half that time. In Ohio for the past four years as Oberlin College’s Danforth-Lewis Professor of Economics, Hess is readjusting to Californiaparticularly the southern part, but it’s not his introduction to the state. Hess grew up in San Francisco and graduated with honors from the University of California, Davis, with a bachelor’s degree in economics.
“One thing I learned how to do living in San Francisco, Washington, D.C., and England is how to parallel park,” says Hess. “I’m a great parallel-parker.” A swift turn of the wheel and the point is proven when the professor occupies a downtown curbside spot with deft precision.
With a remarkable resume in economics, Hess’ talents clearly aren’t limited to visual-spatial skills behind the wheel. In 1998 he became the youngest member of the Federal Reserve Board Shadow Open Market Committee. He has served as an economist at the Federal Reserve in Washington, D.C., and as a visiing scholar at its regional banks in Kansas City and Cleveland; coedited the textbook, Intranational Macroeconomics; and has a stellar teaching record that includes former posts at Cambridge University, the University of Kansas, and St. John’s College.
Hess says he is looking forward to being part of CMC’s distinguished economic's department. “CMC has an extremely fine reputation. The students seem to possess that rare combination of being very directed, and having a tremendously strong set of fundamental skills and an ability to translate their desires into tangible actions,” he said.
“There’s also a greater sense that people want a hands-on approach to education, and I think that’s something I can provide,” Hess says.
Hess is teaching macroeconomics and will add an annual course in public finance. Hess’ students reap the benefit of his current work with the Shadow Open Market Committee, a watchdog group that was started in the 1970s by a “group of people who thought that the Federal Reserve Board was making a lot of mistakes, and that there wasn’t a strong, coordinated voice to give direction as to where the Fed should move,” Hess says.
Like European shadow committees (Hess was on the U.K.’s Shadow Monetary Policy Committee for a year in 1997), the groups exist to “give a stronger, principled approach to how monetary policy should be made,” he says. “It’s enjoyable to talk about economics in a very specific, concrete way that academics don’t usually talk about it,” Hess says of his work on the committee. “Usually, academics have the luxury of taking their time and thinking about things, whereas policy makers typically have to respond much more quickly. So it’s been enjoyable.”
The committee meets twice annually, and one of the greater tasksthe one sure to benefit Hess’ studentsis filtering through news on a daily basis, and extracting what’s most important regarding policy. In other words, determining what’s “signal,” and what’s “noise,” as academics say. “You have to consider yourself a miner, looking for gold nuggets. You have to use the right filter to extract the important aspects that you’re looking for. It’s the toughest thing, and you still have to remember that there are some deep fundamental principles that you learn in economics,” he says. “And you can never let go of those.”
Hess says he has learned several things from the fallout of recent corporate misdoings:
• On CEO scandals and market confidence:“I think this kind of scandal has a short-term, negative impact on people’s thinking,” he says. “But from a medium- or long-term perspective, an accounting scandal is not the same thing as a banking scandal or crisis. We can fix accounting scandals relatively quickly, but banking crises take a long time to work out--just ask Japan. What it does suggest is that what’s really more important than anything else is how a firm is managed, and how oversight works . . . I think this whole issue of management and monitoring will be emphasized, and that there will be long-term benefits from it for the U.S.A. I’m extremely bullish,” says Hess, smiling.
• On Martha Stewart:“I think she’s definitely being made an example of. People want to see her come down a bit because she epitomized too much of the '90s . . . And when they’re trying to get your friends to rat you out, it’s not looking so good for her, or whom she chooses for her friends.”
• On the current economy:“The economythough not greatis probably not suffering from anything that the Fed’s done. Inflation is pretty low. And some of the improvements we (Shadow Committee members) would make right now are probably not as important as the ones the Market Committee made 25 years ago.”
• On the relationship between international relations and economics:“I think there’s still a pretty strong amount of evidence out there that the extent to which countries trade makes the world more peaceful. Countries which trade more tend to be more democratic, and thus tend to live in a more peaceful world.”
• On the possible connection between moral failure and crises:“I think there is plenty of moral failure in good times, and in bad! (Laughs.) I think sometimes we talk about how greedy certain individuals are, but I think in some sense we were all seduced. For example: tech funds. Nobody made anyone put their money in tech funds. We should have known these a-historical things may not be all they’re cracked up to be. I think it’s more hubris on our parts than greed on a few other people’s parts. I don’t know where that is on the list of big sins or little sins, but I’m sure it’s a common failing that will stand the test of time.”
Hess and wife, Lora, are the parents of Abigail, 8, and Meredith, 6. Hess says being a father “gobbles up” most of his hours outside class. He also is taking time to coach his youngest daughter’s A.Y.S.O. soccer team this year, and is trying to squeeze in more reading by favorite authors.
“I recently went through a period of reading only books by authors who’d won the Nobel Prize in literature,” Hess says. “That was a bit of a struggle, but a good one.”
And if he runs out of books, there are always places to parallel park.