A Victory For The Obstructionists

by Stuart Shapiro

Last year I blogged about the difficulty that Nobel Prize-winning economist Peter Diamond was having getting confirmed to the Federal Reserve Board of Governors.  Now the tale reached its sad conclusion as Diamond withdrew his name from consideration after Republicans indicated uniform opposition to his nomination.  Diamond writes:

The leading opponent to my appointment, Richard C. Shelby of Alabama, the ranking Republican on the committee, has questioned the relevance of my expertise. “Does Dr. Diamond have any experience in conducting monetary policy? No,” he said in March. “His academic work has been on pensions and labor market theory.”

But understanding the labor market — and the process by which workers and jobs come together and separate — is critical to devising an effective monetary policy. The financial crisis has led to continuing high unemployment. The Fed has to properly assess the nature of that unemployment to be able to lower it as much as possible while avoiding inflation.

There is so much wrong with this story that is hard to know where to begin.  Of course there is the broken Senate confirmation process which hampers the ability of government to function and discourages talented people like Diamond from even considering a government job.  But what really gets me is the Republican hypocrisy on unemployment.  Here is one of the worldwide experts on the labor market nominated for a position where he can advocate for policies that would help the jobless.  But despite their rhetoric, one is forced to conclude that either unemployment isn’t important to the the GOP, or they actually want to keep it high to maximize their electoral chances.  Either possibility is revolting.

By: Stuart Shapiro

Stuart is a professor and the Director of the Public Policy
program at the Bloustein School of Planning and Public Policy at Rutgers
University. He teaches economics and cost-benefit analysis and studies
regulation in the United States at both the federal and state levels.
Prior to coming to Rutgers, Stuart worked for five years at the Office
of Management and Budget in Washington under Presidents Clinton and
George W. Bush.