Justin Fox has an interesting post on HBR.com about the changing background of Fed staff and governors, noting that a body that used to be a mixture of businessmen and lawyers is now dominated by PhD economists with academic backgrounds.
The Fed makes economic policy, so it stands to reason that there should be economists involved. But graduate education in economics, especially in macroeconomics, comes under pretty regular criticism for being narrow and unrealistic. Could there be value in diversity of opinion and background as well as opposed to just economic expertise?
…A Fed with lots of PhD economists is probably a good thing. A Fed with only PhD economists in its top jobs would be limiting itself. Diversity brings all sorts of positive side-effects; monocultures are fragile and unhealthy. The FOMC hasn’t gotten nearly as narrow in its recruiting as the Supreme Court, where the nine justices are the product of just three law schools (Harvard, Yale, and Columbia), and eight were U.S. appeals court justices before joining the Supremes. Let’s hope it never does.
I agree with Fox that a Fed made up only of economists is not ideal, and I say that not for abstract reasons of social “diversity” but simply because in my experience having a decision making group with identical intellectual backgrounds is sub-optimal. Maybe it’s time to rebalance the demographics a bit?
Read more: http://blogs.hbr.org/2014/02/how-economics-phds-took-over-the-federal-reserve/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+harvardbusiness+%28HBR.org%29&cm_ite=DailyAlert-020414+%281%29&cm_lm=sp%3Acalvaren%40icloud.com&cm_ven=Spop-Email