The Chairman of the Federal Reserve went to Princeton to give the Commencement Address and seems to have misunderstood his role. I've given a number of these addresses and have always taken a fairly modest approach to them. Indeed, I am giving one at a university in Mexico at the end of the month. I work from three rules. First, they should be brief. Graduates and their families are there to celebrate their commencement into a new phase in life not to listen to endless meanderings in erudition. Second, if possible, they should have a bit of humor. Third, if you cannot satisfy the second rule, you still need to satisfy the first.
The speech is a series of short explorations (they are even numbered) into a several fields. One part of his address was remarkably candid, which started after a short comment on Lily Tomlin and cynicism. "Honest error in the face of complex and possibly intractable problems is a far more important source of bad results than are bad motives." One might send him a copy of Hayek's paper on "the knowledge problem" which argues that centralized solutions are doomed to fail because they cannot ever understand the complexity of human perceptions/motivations across the spectrum. From my experience most players in the political system are motivated by ideology not cynicism but they are also motivated by a sincere belief that their opponents are motivated from ignorance. Part of the perceived intractability of many problems is the failure to recognize that we often cannot know enough to understand the consequences of our actions and as importantly that our perception of the ability to affect human behavior is far more limited than most in the political system understand. Adam Smith, in the Theory of Moral Sentiments (what many economists call "his other book"), call the man on the chess board problem.
Where I was bothered by his talk was in his riff climbing on to the "you did not build it" myth. Admittedly he started out the talk with a nod toward the virtues of striving. But then he said “The concept of success leads me to consider so-called meritocracies and their implications. We have been taught that meritocratic institutions and societies are fair. Putting aside the reality that no system, including our own, is really entirely meritocratic, meritocracies may be fairer and more efficient than some alternatives. But fair in an absolute sense? Think about it. A meritocracy is a system in which the people who are the luckiest in their health and genetic endowment; luckiest in terms of family support, encouragement, and, probably, income; luckiest in their educational and career opportunities; and luckiest in so many other ways difficult to enumerate-these are the folks who reap the largest rewards.” Bernanke does not make an absolute claim on the "you did not build it" riff but in my opinion Luck always plays a role in life. But any system which denigrates human effort and ingenuity is designed to fail from the start. Part of the rationale for establishing equity compensations in a just society is to make some accounting for the role of chance.
Some writers on the left, like the author of Wonkblog, jumped on the "you did not build it" section. From my view, the speech is worth reading in its entirety (which is why I gave you the link to it above). But were Bernanke a bit more modest in his expectations for the role of a commencement address - it would have been a much better product. Come to think of it, his role in making policy at the federal level could have benefited from the same level of modesty.