Oops! The (Intellectually) Bankrupt Reserve Bank just went and did it again
The RBNZ has featured in the news on the issue of staff turnover, which became a line of questioning at yesterday's Finance & Expenditure Select Committee. Questions by Shadow Finance Spokesman, Simon Bridges, and Leader of the ACT Party, David Seymour, on this topic were rebuffed by the Governor. We have already blogged on the dwindling pool of talented economists who work at the Bank. Gone are the days when the likes of Dr (now Professor) Arthur Grimes (PhD & Masters with Distinction, London School of Economics), Dr Alan Bollard, Dr Don Brash (PhD, Australian National University), Dr John McDermott (PhD, Yale University), Graeme Wheeler (former Managing Director of the World Bank) & Grant Spencer (Masters with Distinction, London School of Economics) worked there.
Indeed, it's hard to find anyone who I'd rank as an economist with serious international standing or clout who is there now. Staggeringly, it's hard to even find an economist on the Senior Executive Leadership Team or Board. The shift against economists now seems to have intensified. Today the RBNZ announced three new "Assistant Governor" appointments to its Executive Leadership Team, none of whom are economists. One of them has studied "information management", another has a (LLB) law degree, and the other is an accountant.
With Geoff Bascand leaving, I now count 6 out of the 8 remaining "Executive Leaders" to be untrained in economics, leaving only the Governor (Masters, Leicester) and his underling, Hawkesby (Masters, Canterbury). Odd, isn't it, when this subject is THE core discipline required at a Central Bank? The reason, one may speculate, is that the RBNZ as an institution doesn't want folks with high standing in the subject who may not go along with the "narrative" that the Bank is trying to push - for example, like how it had to implement a $100 billion money printing program to avoid deflation in NZ, which is garbage. Instead all that program did was send house prices through the roof.
In response to a request for comment from the Herald, Reserve Bank Chair Neil Quigley "has now expressed confidence in the Governor's handling of a restructure". Quigley said he had been involved in the interview process for the Assistant Governor roles. "We are impressed by the quality of the field that the bank has attracted for these roles, making it clear that the bank is an attractive place for talented people to work."
I'd flatly disagree with Neil Quigley and now do not encourage talented economics students to pursue a career at the RBNZ, even though it was once the pre-eminent place of nurturing for such young people. I can't help but think that the Bank is deliberately not championing the careers of these types, who are so desperately needed to help design the environment conducive for inclusive economic growth in this country.
And yes, there does appear to be a deliberate political strategy at play. Back in August, 2019, interest.co.nz reported, "the Reserve Bank Board & Finance Minister's Decision to Rule out Specialist Researchers from Joining Committee tasked with Setting the Official Cash Rate dubbed 'Utterly Extraordinary' and at Odds with International Norms". Former Governor Bollard pointed out that the appointment criteria could’ve simply been aimed at ensuring those with market interests weren’t hired. Former Governor Brash was the one who described the revelations that there was a policy to write off specialist researchers as “utterly extraordinary”.
The above move signaled the start of Finance Minister Robertson's politicization of our Central Bank & destruction of its independence, which had previously made it one of our most venerated institutions. His government appeared to have been worried that someone who specialized in financial supervision & monetary economics research - that is, someone who was actually knowledgeable about these topics - may not tow the government line.
By the way, evidence of an independent Central Bank occurs when a left-wing government re-appoints a Governor who was originally appointed by a right-wing one (and vice versa). Alan Greenspan, for example, a past US Federal Reserve Chair, was appointed by President Reagan (Republican) & re-appointed by President Clinton (Democrat). The fact National & ACT seem unhappy with the RBNZ Governor & are unlikely to support him being re-appointed is practically proof of how our Central Bank is no longer independent & has instead become a politicized institution.