The Trump White House’s personnel problems now generate increased systemic risk. The problems have long been apparent with aides and officials penning anonymous op-eds, pleading guilty to federal crimes and resigning in protest.
The president’s inability to recognize or retain competent leadership now imperils the United States financial stability.
{mosads}Recall the selection process for the Federal Reserve chairman. News reports revealed a president questioning whether then-Chairwoman Janet Yellen should continue to lead the Fed, asking aides whether she was tall enough to lead.
Making height a factor for leading the Federal Reserve made little sense. After all, the job involves setting monetary policy to achieve two objectives, low unemployment and low, stable inflation.
The job mostly involves sitting in a chair, thinking, talking to people on the phone and occasionally sitting in a chair and talking to people in Congress. It does not involve cleaning the top of a refrigerator, installing ceiling fans or reaching the top shelf.
On the qualifications that matter, Janet Yellen had them in spades. She:
- has a Ph.D. in economics from Yale;
- has years of experience teaching economics at Harvard, Berkeley and the London School of Economics;
- has experience as an economist within the Federal Reserve;
- was chair of the Council of Economic Advisors;
- was chair of the Economic Policy Committee for the Organization for Economic Cooperation and Development; and
- already proved she could do the job, having served as both vice chair and chair of the Federal Reserve.
Under her watch, the economy steadily expanded. We lost her leadership because the president looks down on someone he has to look down to see.
Oddly enough, the president’s preference for large males may have caused him to pick a Federal Reserve chairman — Jerome Powell — less aligned with his preferences than Janet Yellen would have been.
In recent weeks, the president has hammered the Federal Reserve with criticism over its decisions to raise interest rates. Yellen had, historically, been viewed as more dove-ish on interest rates with a bias toward slow movement to protect employment.
This is not to say that the Federal Reserve erred in raising interest rates. It’s impossible to know whether the Federal Reserve would have made the same moves and faced the same market reaction under Yellen.
Nonetheless, the president’s behavior makes it hard to staff competent leadership. Consider the dilemma facing any competent recruit. His or her position will remain insecure and hostage to unpredictable and unmoored president.
After all, Trump justified his recent criticism of the Federal Reserve’s interest-rate policy by saying “I have a gut, and my gut tells me more sometimes than anybody else’s brain can ever tell me.” If you’re at the Federal Reserve, your spreadsheets cannot tell you how to peg interest rate policy to Trump’s gut.
The president’s preferences for impulsive, gut-based decisions based on height and other irrelevant and seemingly random characteristics undoubtedly explains some of the attrition from his administration.
{mossecondads}When the president’s gut picks policy advisers and cabinet officials, it may not take into account other issues that cannot be so easily sized up by a septuagenarian relying on eyeballing and handshaking.
A history of ethics issues or other conflicts of interest will only factor into the process if the president reads briefing papers and thinks through things in a more analytical frame. A tall crank can skate through with height’s halo effect.
Ultimately, the president’s personnel selection process may be setting our nation up for a harder fall. When physical size tilts the selection process for critical economic policy positions, it increases the likelihood that the persons selected for these roles will not be the best available.
This is not to say that current Federal Reserve Chairman Jerome Powell should be presumed a dullard because he stands nearly 6 feet tall.
Even if markets will not have as much confidence in his stewardship as they did Yellen’s, attacking or ousting him only generates more instability and ensures that his replacement will be even less competent.
Benjamin Edwards is a associate professor of law at the University of Las Vegas Nevada William S. Boyd School of Law where he specializes in business and securities law, corporate governance and consumer protection.