The last of the heroic technocrats

Two giants of the postwar economic landscape died last week. The actions of Paul Volcker (1927–2019) and Felix Rohatyn (1928–2019) had profound effects on millions of Americans, and bestowed stellar reputations on both men.

Why it matters: There are, and will be, many other successful and powerful technocrats, many of them just as capable as these two paragons of austerity. But none of them are likely to receive the kind of popular acclaim that Volcker and Rohatyn enjoyed.

The big picture: In good times, economic institutions tend to run themselves reasonably effectively. But in times of crisis, the leadership of key individuals often becomes paramount.

• Volcker became Fed chair in 1979, when inflation was close to 15%. By hiking the Fed funds rate to a peak of 20% in 1981, he sparked the 1980–82 recession, drove unemployment to over 10%, and cost President Jimmy Carter his job. But he also killed inflation, bringing it down to 3% by 1983.
• "Felix the Fixer" spent most of his career as an M&A banker, but is remembered chiefly for rescuing New York City from the brink of bankruptcy in the 1970s. He refinanced the city's debt, slashed its budget, raised prices in the subway and the city university system, and exercised astonishing fiscal control for almost 20 years as the unelected head of the Municipal Assistance Corporation.

Neither man was broadly popular at the time, but history treated them both very kindly.

• Volcker and Rohatyn were in large part responsible for the neoliberal consensus that painful measures are often necessary in the short term, in order to build the foundations for long-term prosperity.

Subsequent technocrats were just as important, but didn't receive the same kind of broad public acclaim.

• Ngozi Okonjo-Iweala did a magnificent job in almost singlehandedly restructuring Nigeria's massive debt burden in 2005, after moving to the country from a long career at the World Bank.
• The New York Fed's Terrence Checki and Lee Buchheit, a senior partner at Cleary Gottlieb, were also instrumental in helping multiple countries get out from unsustainable debt burdens.
• Natalie Jaresko, who's managing Puerto Rico's bankruptcy process, is currently performing a role there that's very similar to the one Rohatyn played in New York.

Flashback: Alan Greenspan, Robert Rubin, and Lawrence Summers famously appeared on the cover of Time in 1999 as "the committee to save the world." That cover has not aged well.

• All three men are now viewed as having mostly benefited the financial services industry, while laying the deregulatory groundwork for the 2008 financial crisis.

The bottom line: Volcker and Rohatyn lived in an era of smoke-filled rooms, and cultivated a certain degree of mystery and opacity. Today's civil servants spend much more time in the public spotlight, being second-guessed every minute on Twitter and on cable news. That makes it much harder for leaders to accumulate the broad respect that's a crucial component of effective leadership.

Go deeper: Former Fed chairman Paul Volcker dies at 92