Despite the name, I don’t just want to talk about the marvels of the Fed, but actually about how the Fed is a good model for other public agencies and corporations. The Federal Reserve has always been the target of criticism from all sides of the spectrum, but this is reflective of inherent strengths of the Fed that naturally can draw some ire from the Political space. The Federal Reserve has successfully led the country through over 70 years of economic hardships in way that no other governmental body truly could and this is due to its unique features that set it apart.
Firstly, its independence: The Fed’s independence and staggered elections, allow it to fly above the partisan fray in way that few other institutions can muster and have allowed it to make hard, but necessary decisions. Secondly, its structure: The Fed’s structure that mirrors more of corporate structure and willingness to pay the cost of keeping good talent, allows for a better governmental body with more highly trained experts than almost any other institution in the government. Thirdly, the public/private nature: The fact that the main Fed is public and has a mandate, with the minor Fed’s being private, is one of the aspects that allows the Fed to function in such an efficient manor.
It is important to compare this model to the current models of government in the U.S. In the public sector, there inefficient and sometimes corrupt state-run Utilities and there equally problematic government-sanctioned monopoly private counterparts. The supreme court is another example of a problematic institution, with partisan infighting often leading to checkered pasts and sub-optimal judicial records. It is hard to say which aspects of the Fed could be imported to other governmental bodies, but the idea of semi-private subsidiaries, mandates, and independence for our institutions are ideas that should be strengthened and expanded, not minimized and chipped away at.
