Should U.S. Economic Policy Extend Beyond Our Borders?

When the Fed talks about monetary policy, it says it doesn't worry about the effect of its policies on inflation, unemployment, etc. in other countries, its job is to do what's best for the U.S. economy and for U.S. citizens. Worrying about economic conditions in other countries is not its job, the Fed says, and it worries about the effect of its policies on other countries only to the extent there is a feedback that will affect U.S. economic conditions (e.g. through demand for our exports).

I'm not sure this is correct. Conceptually this also involves topics such as immigration and trade policy, it involves any policy that can affect people both within and outside of our national borders.

What should monetary, immigration, and trade policy use as the objective function for policy, that is, what should the goal of policy be? Should U.S. economic policy be devoted solely to the welfare of U.S. citizens, or should it be broader than that?

I think there is an argument that national policy ought to be defined over and devoted solely to the entity called a nation, and that policy that comes out of congress, or the policy that comes out of the Fed, ought to be devoted to making the nation and its citizens as well off as possible. It's the job of elected officials and the Fed to improve conditions within the U.S., and let policymakers in other countries worry about economic conditions within their borders.

But that's not the argument I would use. Suppose, for example, just as a rough approximation, that the citizens of a country weight their own welfare at .75 and weight the rest of the word's welfare at .25 in any decision. Thus, for example, immigration policy would be evaluated both on the basis of its effect on U.S. citizens (75%) and its ability to help people in other, perhaps poorer, nations (25%).

In such a case, shouldn't U.S. monetary, fiscal, immigration, trade, and other policies reflect the preferences of U.S. citizens and take account of the effect of policy choices on the residents of other nations? It seems to me that policy should reflect the preferences of U.S. citizens. If U.S. citizens care about foreigners, then maximizing the welfare of U.S. citizens requires policymakers to consider how policy affects other nations, e.g. to take account of how immigration, trade, and monetary policies impact the poor in Mexico, China, India, and other countries. But that's not how we conduct monetary policy for sure, and not how much of the immigration and trade debate is formed.

So who should national policymakers represent? Should policymakers represent U.S. citizens only, or is there an argument (as I think there is) that U.S. economic policy ought to be broader than that if, on average, U.S. citizens have preferences that extend beyond our borders?