The One Type of Person at the Heart of the Fed

The current Federal reserve board chairman and his successor share a very specific trajectory. They both went to an Ivy League for undergrad, got elite law degrees, went into the banking industry, and then transitioned to the public sphere. Their specific path should not be surprising to anyone, but we must critically ask whether people from such siloed backgrounds are really the best option to lead our country. An incredible amount of people in positions of power in the United States have Ivy League backgrounds, and before we can question whether this is good, we must first address the fact that their thinking, when wrong, will most likely fail in shared ways. An entire generation of leaders is affected by momentary fads on Ivy League campuses. One example of this is Keynesian economics, which grew rapidly in popularity after getting its foot in the door at just a few Ivy League institutions. We must decouple the fate of our nation from the fate of these institutions if we are to create a future that is robust to unpredictable types of change. There is nothing wrong with having these elite pathways, but the fact that so much power is concentrated in the hands of an extremely specific type of person that makes up so much less than a fraction of a percent of our nation’s populace should be questioned.

Having a ruling class spend seven years in post high school school cannot be the most efficient way to train them. If they really are individuals of such incredible capability, why could a 19-year-old version of them not do what a 30-year-old normal person could do, and thus skip years of development and go straight to leadership. If these people are really capable enough to control the economic realities of billions of people across the world, why must they go through so many years of education? Education serves a purpose as a verifier of general intelligence and ability to devote your time to a specific pursuit. Even for the most elite jobs, very little of people’s education allows them to succeed. By graduating from Georgetown and Harvard law, Powell and Warsh didn’t prepare themselves any better for governing, they merely proved that they were elite individuals. They are spending time to prove a point rather than spending time to develop. They can’t be blamed for this, as no one in their right mind would have let them into the positions they were in if they did not have those degrees, but from a broader perspective, we must find a way to allow for skill development without stripping away so many productive years for education.

While the motivation of ambition can be very helpful to getting things done, it can also greatly diminish personal development. While neither Warsh nor Powell would regret the path that they took, they are blind to a wide range of human experience that would let them make better decisions. They have not experienced failure in the same way that many people have, and they don’t understand what poverty feels like. People who graduate from Ivy League schools, share an incredible number of characteristics, and these characteristics have a way of making them systematically blind. There is a certain way that they are taught to think that is informed by a certain set of experiences, and economic policy and business outcomes are damaged by this. We do not know what this specifically changes in each generation, but we can be confident that society being so heavily determined by people from so few institutions looks different from one shaped by a wider range of individuals. We do not even know the greatest amount of this damage, because it primarily arises from a lack of ideas that otherwise would’ve been created rather than any sort of dramatic outcome. 

The grip of the Ivy League is weakening. Their authority has been questioned and they are no longer universally revered as they once were. They bet on leftist ideological extremism and lost. They chose to rail against the very systems they created while doing nothing to make those systems better for everyone involved. They fight one another in a performative death spiral, attempting to beat the others to be the most sensitive and victimized. They shy away from the power they used to broker, and have paid the price for it. While the strong Ivy Leagues created leaders with certain traits, and the weak Ivy leagues seem to be only a shadow of their past selves, the schools still have brand name staying power that makes them powerful in almost every realm. As we are selecting our next generation of officials, we must critically ask whether these elite institutions are really the best preparation, or whether they are making our leaders systematically blind.