Why does the Fed chair need to be American?
Today’s rapturously-received news that Mark Carney, a Canadian, will be the next governor of the Bank of England reminded me of this tweet from Charles Kenny:
One day we’ll see legal discrimination by *place* of birth as evil as discrim. by other features of birth –gender, orientation, color.
— Charles Kenny (@charlesjkenny) June 25, 2011
As far as I can tell, absolutely everybody thinks that Carney is the best possible person for the Bank of England job, and that it’s an absolute triumph for UK chancellor George Osborne that he managed to persuade Carney to change his mind and accept it.
Much the same can be said of Stanley Fischer, who’s done a fantastic job running the Bank of Israel. Indeed, in general, high-profile public-sector jobs tend to be done better when they’re done by foreign nationals. The logic is simple: if you’re choosing from a global pool of candidates rather than simply a national pool of candidates, you’ll end up with a better person at the end.
Which raises the obvious question: why is such a move still unthinkable in the US? There are lots of big jobs coming up here: Treasury secretary, SEC chairman, Fed chairman — and all of them are going to go, automatically, to US nationals. Think about it this way: Mark Carney is the best central banker in the world, and he would be an amazing replacement for Ben Bernanke. What’s more, given the choice, he would surely plump for the Fed over the Bank of England. So it’s reasonable to assume that if the US wanted him, they could have had him.
In England, everybody has cheered the choice of Carney as inspired — but if the same announcement had happened in the US, there would be an immediate chorus of boos. Apparently US exceptionalism is so deeply ingrained in the national psyche that not only must everybody always believe that the US is the greatest nation on the planet, it is also necessary to believe that all the greatest people on the planet were born here too. (Except Jesus, maybe.)
It’s obvious that the leadership of the world’s most important international financial institutions — the World Bank and the IMF — should go to the best-qualified candidate, rather than whomever happens to have been chosen for the job by the US and Europe respectively. But the fact is that the same is true for the world’s most important national financial institutions as well. If England can have a Canadian central bank chief, why can’t the US pick a Brazilian? Arminio Fraga for the Fed! It would be inspired.