I’m seeing quite a bit of kvetching about President Trump’s appointment of Stephen Moore to be a governor of the Federal Reserve. I carry no water for Mr. Moore. I find his writing a bit obnoxious and disagree with him as often as not.
I became a little curious when I read charges of his being unqualified. What do you think the qualifications for being a member of the Federal Reserve Board of Governors are? Basically, there are none.
I read the biographies of as many present and former governors going back right to the beginnings of the Fed as I could lay my hands on. I found three career paths academic, legal, and party apparatchik, sometimes all three. I found very few with practical banking experience other than having been a Rolodex hire. That’s pretty odd for an institution that’s tasked with regulating the banking industry. It’s almost as though it were constructed to facilitate regulatory capture.
Given our lousy experience with public-private hybrids like the Fed or FNMA and their enormous power I would think there would be more of a hue and cry for reform or at least some basic qualifications for the job. A PhD in economics qualifies you to teach at the college level. Full stop.
Or maybe we need to rethink what the function of the Federal Reserve should be.
In conclusion I have no idea whether Stephen Moore is qualified for the Federal Reserve or not or even how you’d make the determination.
I’m sure you understand the kvetching is political.
Sure. But I’m making a larger point.
There’s a difference between teaching a class in aerospace engineering and flying a 747. The career path to the latter runs through the military. The career path for the former runs through graduate school. Some Air Force officers go back to graduate school. Almost no PhDs in economics join the Air Force.
Since its inception the Federal Reserve Board of Governors has repeatedly flopped, sometimes catastrophically. I think the institution needs rethinking and restructuring.
A PhD in economics just provides you the basis to do the work which would actually qualify you to work at the Fed, or most other places. If I am wrong I am sure you will be glad to point out the many instances where someone joined the Fed right after they got their PhD.
Qualify has several meanings. The job has no formal job description so in that sense everyone is qualified. I would say he is not qualified in the sense that Mankiw uses the term. Moore has neither scholarly work nor practical experience. He has worked as a political functionary and ideologue. Importantly he supports different policies not based upon underlying economic conditions but solely based upon who is in office.
I can’t link Mankiws piece on my phone but he says it better. ( His just say no column.)
Steve
I know of no Federal Reserve governor who worked his or her way up through the ranks of the Fed to governor.
I’m not arguing in favor of Moore. I’m arguing for more serious level of professionalism at the Fed. Contrast the career paths of Fed governors with those of presidents of big banks and you’ll see what I mean.
Who’s qualified? I could probably find you some witch doctors down here or some snake handlers from up in the mountains.
If you go through the biographies of past Fed governors quite a few worked for the Fed in some role before b being named a governor.
Steve