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By: Michael Sims
Like scientists and doctors, economists often talk in jargon that only their colleagues can translate. No doubt Charlie Evans knows intimidating terminology and can throw it around in meetings, but he has an unusual ability to articulate economic subtleties in a lucid and easygoing way. His approach is a good omen for public understanding of monetary policy. On September 1, he became the ninth president and CEO of the Federal Reserve Bank of Chicago, one of the 12 regional banks in the Federal Reserve System that constitute the central bank of the United States.
Many people confuse the Federal Reserve with the Treasury Department, says Doug Tillett, vice president of the Chicago Fed’s Public Affairs Department. America’s currency, he explains, “is created by the Treasury Department; we put it into circulation and serve as fiscal agent for the government by managing the checkbook. In this reserve bank, and they’re all different, on any given day we may be sitting on somewhere between eight and $10 billion in cash. And some portion of the $13 trillion U.S. economy is moving in the form of electronic payments through our wires—our veins—every 24 hours.”
However necessary it may be, most of us think of banking as boring. Yet Evans manages to make it fascinating as he describes the intricate ways a nation links up through its central banking system. With his lively anecdotes and self-deprecating humor, he sounds like actor Alan Alda. He relates a conversation he had with the head of his undergraduate honors program. Evans told him (late in the spring semester of his senior year) that he had been working without guidance on his honors thesis: “He said, ‘Oh my God! What have you been doing?’ And I told him about my research, and he thought for a moment and said, ‘Well, that doesn’t sound so bad.’ After skimming through the first few pages of my draft, he added, ‘Well, this is actually pretty good.’”
It was during that college honors course when economics captured Evans’ imagination. Previously, he had experienced the field’s big picture only in a “not very interesting” course back in high school. He attended T. C. Williams High in Alexandria, Va., a few years after the school became famous for its integrated football team—a story later dramatized in the Denzel Washington movie Remember the Titans.
The “not very interesting” course gave Evans his first academic glimpse of how supply and demand influence society. Already, he had witnessed high-level finance in his father’s work as CFO of a life insurance company. “My father was quite intelligent and successful at what he did,” says Evans. But when Evans began to study abstruse details of national economics in college, his dad would ask in puzzlement, “Now, Charles, what is it you’re writing about?”
The imagination of young Charlie had been captured by a topic to which most of us give only the occasional grumble. He was drawn to macroeconomics—the study of the behavior of an entire national economy, as opposed to the microeconomics of how you balance your checkbook or how a toy store stays afloat until the Christmas season. Most scholars attribute the beginning of macroeconomics to John Maynard Keynes’ analyses of the Great Depression. Keynes was followed by Dutch economist Jan Tinbergen, who after World War II developed the first comprehensive national economic model in the Netherlands. Soon, modifications to Tinbergen’s approach were being applied internationally. From Evans’ first exposure to the field, he “found an awful lot of power in thinking about how resources are allocated through market mechanisms and prices.”
Sparks from his high school economics class caught fire when Evans signed up for the honors program as a junior at the University of Virginia. The school’s two-year honors program required no core classes and no exams until just before graduation. Evans could attend seminars and audit graduate-level courses, so he began to seriously investigate how national financial policies affect every level of society.
There was a problem, however. About the time that his friends were preparing to kick back and drink beer, Evans found himself with inadequate records of his honors-class studies, leading to the professor’s outburst. But it turned out that his senior thesis—about different models of how education contributes to productivity—passed with flying colors. He graduated with high honors. During his last year, he also met a woman named Ann Leavitt, whom he eventually married.
After college, Evans returned to Alexandria, where he spent three years working for defense consulting firms. But what he really wanted to do, he decided, was to dig more deeply into economics. So in 1983, he began graduate school for an MBA and PhD. He chose Carnegie Mellon, he says, primarily for its “very well-respected faculty.” He especially liked its focus on macroeconomics and econometrics, the application of quantitative procedures such as statistical analysis to the study of economic principles. He also liked the teacher/student ratio; there were only four people in the incoming class of his economics program.(Continued …)