What do the following people have in common:

If you guessed that they are all men – you are correct and you are a misogynist.

If you guessed that they are all economists – you are correct again.

If you guessed that they are all central bankers – you are correct once more.

If you guessed that they are all PhDs in economics from MIT (Massachusetts Institute of Technology) – you are not only correct again, but you get the bonus point.

Why does this matter?  Because MIT has produced a disproportionate number of central bankers.  And as described in the Wall Street Journal:

The Massachusetts Institute of Technology in the 1970s and 1980s was the center of a generational shift in economic thinking that ascribed substantial influence to central banks for managing economic turbulence.

MIT, in Cambridge, Mass., became home to many “New Keynesians,” economists immersed in the real-world complexities of markets and sympathetic to government intervention. They helped modernize the work of Depression-era economist John Maynard Keynes, whose views had come under attack for advocating a strong government hand.

Managing economic turbulence.  Hows that going then?  And new Keynesians.   Modernising the work of Keynes.  Hows that going also then?

An MIT economist here or there does not necessarily a pattern make.  Except …. at the RBA.

The Governor, the Deputy Governor (the only 2 RBA executives who sit on the RBA board) and an Assistant Governor are all MIT PhDs.

Of a “management team” of 7, 3 are MIT PhDs.  And if you take out the business services and corporate services Assistant Governors, you get 3 MIT PhDs out of 5.  Or another way, half of the non administrative reports to the MIT PhD are MIT Phds.

Fine.  There is gender balance – 3 out of 7.  How about some cognitive balance?

Unless of course there is unconscious bias in the recruitment systems of the RBA requiring MIT type thinking.

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10 Responses to Diversity

  1. Sunni Bakchat

    You missed the two most dangerous and unfortunately influential economic figures of the left in the past ten years; Joseph Stiglitz and Paul Krugman. Both of MIT amongst other institutions.

    Krugman mentored Lowe

    Fischer mentored Debelle.

    Low interest rates in the absence of inflation, are here to stay.

    Expect a debt/deflationary trap to eventually blow up a good portion of Australia’s wealth.

    Wrote about in this blog two months ago!

  2. Tel

    Come on Steve … you should know by now that the word “diversity” is shorthand for “token diversity” and if there was a risk of this causing any real change of opinion they wouldn’t allow it.

  3. Pyrmonter

    TBF, Bernanke at least from that list probably counts as right-of-centre.

    That said, … it is remarkable that so few RBA-types have doctorates from the UK; or from other US universities.

  4. Robbo

    What do they have in common? I’ve never heard of any of them.

  5. Elderly White Man From Skipton

    Only an idiot would think monetary policy alone can do anything. In fact the longer we go on the more I am convinced we have governments that rule by Royal Commission, blame games and regulatory show trials.

  6. Squirrel

    “…..economists immersed in the real-world complexities of markets….” – and yet regularly surprised and mystified by the financial decisions of people who are not paid Goverment-guaranteed salaries of (very well into) six or seven figures, with pensions to match waiting for them on retirement.

    When the debt bubble finally explodes, we can add the RBA and its confrere to the list of topics for a Royal Commission.

  7. TFX

    Not having done any work in macroeconomics since university student days, my understanding was that under standard economic theory, the natural interest rate for a full employment economy was positively correlated to the growth rate of potential output. In the current economic world for countries at the technology frontier, it would be hoped that the bankers would understand the microeconomic foundations such as the Solow Swan model that GDP growth and consequently interest rates and wage rises were dependent upon the Total Factor Productivity residual. This was dependent upon improvements in productivity from factors such as innovations and research.
    The bankers should be aware that productivity growth rates in technology frontier countries have diminished substantially over time, primarily because of diminishing marginal returns to research. Robert Gordon from Northwest University in the US has provided numerous empirical studies of different industries demonstrating this. In my own area of knowledge, agriculture in Australia, ABARES have shown the diminishing marginal returns from research.
    The new normal for frontier countries is wages are unlikely to rise significantly and interest rates will remain relatively low and governments and voters will have to get used to this future.

  8. Cynic of Ayr

    I’m with Robbo!
    Never heard of them.
    More highly paid, faceless people, with nothing to do but think about it.

  9. Colonel Crispin Berka

    You have indirectly mentioned Massachusetts, so this is my chance.

    Q: How do you get to Washington D.C. ?
    A: You go to Harvard and you turn to the Left.

  10. Elderly White Man From Skipton
    #3253929, posted on December 6, 2019 at 6:09 pm

    Only an idiot would think monetary policy alone can do anything. In fact the longer we go on the more I am convinced we have governments that rule by Royal Commission, blame games and regulatory show trials.

    Okay, I’ll triple the required minimum capital adequacy ratio banks have and we’ll see what happens…you utter dolt.

    The stuff about royal commissions is an own goal by a leftist, the ALP have hard ons for these clown shows.

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