Why this technocracy?

| Comments (2) | Misc
One of the truly odd things about the US (and indeed the world) financial system is the degree to which we seem willing to leave the state of the economy in the hands of a bunch of unelected technocrats (i.e., the other decisions that way: even scientifically oriented organizations like EPA, FDA, or DOE are often non-scientists, and even when they are scientists, they're subject to political control, unlike the Fed Governors, who are appointed for 14 year terms and in practice don't get fired (though they can be removed for cause.) Can you imagine appointing 7 scientists to serve as the "carbon emissions board" with power to decide on the price of carbon emissions (which seems fairly analogous to the Fed's power over interest rates)? Even our process for deciding how much lead and mercury get emitted into the atmosphere (and I think we can all agree that they're not good for you) isn't anywhere near that independent. I don't have an answer to this; I just find it puzzling.

2 Comments

"the Fed’s ultimate political function is to serve as a political scapegoat when things go wrong", from The Myth of the “Independent” Fed: http://www.independent.org/publications/article.asp?id=171

I think the most straightforward explanation is that the decisions of the EPA, FDA, etc. are generally low-profile enough that indirect independence suffices: the political appointees can defer to expert committees with little risk of heavy-handed interference from politicians. The Fed, on the other hand, would inevitably be under constant pressure if they didn't have direct, formal independence.

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