The United Kingdom has made the unconventional decision to hire a foreigner to lead the Bank of England – the central bank of the country. How much should he be paid? Matthew O’Brien reflected on the question and suggested that London was making an incredibly smart move:

• The great crisis has cost the United States a trillion dollars in lost output every year. This means that if there existed a central banker who could more quickly fix America’s economy then they would be worth trillions of dollars.
• In contrast Ben Bernanke, the chair of the central bank of the United States, has an annual salary of $199,700.
• But you can’t just pay somebody (in this case entirely unrealistic) monetary amounts and hope that they will do a good job. They must have proven themselves. Preferably in a smaller, less important economy. They can then be poached away to the big leagues.
• But if you truly want a successful economy, you’ll want a team of the best…a ‘fantasy team’ of central bankers. You’d simply pay to hire the best central bankers from smaller economies across the world.

Read more about why Obama should consider hiring Sweden’s central banker, where Bernanke would fit into this all-star list, and why most economists would be okay with a $199,700 salary for the position of America’s chief-central banker, over here.

Source: The Atlantic

Via: The Economist