Academic career

Blinder is the Gordon S. Rentschler Memorial Professor of Economics and Public Affairs at Princeton where he has been since 1971; from 1988 to 1990, he chaired the economics department.^[4] Also in 1990, he founded Princeton's Griswold Center for Economic Policy Studies. And he has served as vice-chair of The Observatory Group.

Since 1978, Blinder has been a Research Associate of the National Bureau of Economic Research.^[11] He is a past president of the Eastern Economic Association and Vice President of the American Economic Association and was named a Distinguished Fellow of the latter in 2011.^[4] He is a Fellow of the American Academy of Arts and Sciences (since 1991), a member of the American Philosophical Society since 1996,^[12] and a member of the board of the Council on Foreign Relations (since 2008).^[13] Blinder's textbook Economics: Principles and Policy, co-written with William Baumol, was first published in 1979 and, in 2012 was printed in its twelfth edition.^[14]

In 2009 Blinder was inducted into the American Academy of Political and Social Science, "for his distinguished scholarship on fiscal policy, monetary policy and the distribution of income, and for consistently bringing that knowledge to bear on the public arena."^[15] He is a strong proponent of free trade.^[16] Blinder has been critical of the public discussion of the US national debt, describing it as generally ranging from "ludicrous to horrific".^[17]

Political career

In 1975, Blinder served as the Deputy Assistant Director of the Congressional Budget Office.

In the 1990s, he served on President Bill Clinton's Council of Economic Advisers from January 1993 to June 1994,^[3][4] and as the 15th Vice Chair of the Federal Reserve from June 27, 1994, to January 31, 1996 (more specifically as the Vice Chairman of Board of Governors of the Federal Reserve System).^[4]

As Vice Chairman, Blinder cautioned against raising interest rates too quickly to slow inflation because of the lags in earlier rises feeding through into the economy. He also warned against ignoring the short term costs in terms of unemployment that inflation-fighting could cause.^[18]

Many have argued that Blinder's stint at the Fed was cut short because of his tendency to challenge chairman Alan Greenspan. In particular, by challenging assumptions, Blinder disrupted “the whole pipeline of Greenspan-arriving-at-decisions.”^[19]

He was an adviser to Al Gore and John Kerry during their respective presidential campaigns in 2000 and 2004.^[4]

"Cash for Clunkers"

Blinder was an early advocate of a "Cash for Clunkers" program, in which the government buys some of the oldest, most-polluting vehicles and scraps them. In July 2008, he wrote an article in The New York Times advocating such a program,^[20] which was implemented by the Obama administration during the summer of 2009.^[21] Blinder asserted it could stimulate the economy, benefit the environment, and reduce income inequality.^[20] The program was praised by President Obama for "exceeding expectations,"^[22] but criticized for economic and environmental reasons.^{[23][24][25][26]}

Private sector

Blinder was a co-founder and a vice-chair of the Promontory Interfinancial Network, LLC.

After his service as the vice chairman of the Federal Reserve, Blinder, along with several former regulators, founded a company that offers a number of services that provide a means for depositors (including governmental entities, nonprofits, businesses, as well as individuals such as retirees) to access millions in Federal Deposit Insurance Corporation (FDIC) coverage at a single institution instead of multiple ones. This provides banks that are members the ability to offer coverage above the FDIC per account/per bank limit by letting those banks place funds into CDs or deposit accounts issued by other network banks. This occurs in increments below the standard FDIC insurance maximum ($250,000) so that both principal and interest are eligible for FDIC insurance.^[27] The company acts as a sort of clearinghouse, matching deposits from one institution with another.^[27] Through its services it allows access to higher levels of FDIC insurance although limits apply.^[28]

Views regarding 2008 near-collapse of major financial institutions

In an article entitled "What Did We Learn from the Financial Crisis, the Great Recession, and the Pathetic Recovery?”, Blinder draws 10 lessons for fellow economists.^[6][29]

1) It can happen here.
.

6) Excessive complexity is not just anti-competitive, it's dangerous.

“ . . no one knows what these securities are really worth. .”

.

9) Moral hazard isn’t a show-stopper, it’s a tradeoff.

“ . . with the house on fire, it may be imperative to douse the fire first and try to persuade the occupant not to smoke later. .”

.

Is economics "barking up the wrong tree" by focusing so heavily on consumption, and not on jobs?

In a 2019 article entitled "The Free-Trade Paradox: The Bad Politics of a Good Idea," Blinder states that the main focus of the economics profession has been on how to use price signals to produce goods and services as cheaply as possible. Jobs are viewed as secondary, and often as a negative that people put up with only to get the money to afford their own consumption.^[30]

Blinder writes, “What if people care as much (or more) about their role as producers — about their jobs — as they do about the goods and services they consume? That would mean economists have been barking up the wrong tree for more than two centuries.”^[30]

Blinder still thinks there’s an excellent case to be made for free trade, but it’s not the case economists typically make.^[30]