In April 2010, President Obama nominated me to be one of the seven governors of the Fed. He renominated me in September, and again in January, after Senate Republicans blocked a floor vote on my confirmation. When the Senate Banking Committee took up my nomination in July and again in November, three Republican senators voted for me each time. But the third time around, the Republicans on the committee voted in lockstep against my appointment, making it extremely unlikely that the opposition to a full Senate vote can be overcome. It is time for me to withdraw, as I plan to inform the White House.
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. If much of the unemployment is related to the business cycle — caused by a lack of adequate demand — the Fed can act to reduce it without touching off inflation. If instead the unemployment is primarily structural — caused by mismatches between the skills that companies need and the skills that workers have — aggressive Fed action to reduce it could be misguided.
So I'm thinking, "Hmmmmmmmm, here's a guy who would bring a fresh perspective to the Federal Reserve Board. Someone who wasn't a bankster. Someone who had a grip on what it's like to actually be a tax-paying worker bee in the Great Transfer Of Wealth that is the American capitalist system.
But Dick thinks differently, you see. Dick believes that someone who can actually bring to the Board a fresh perspective might somehow damage his dry cleaning empire (not a joke). Or that somehow stopping a Fed nomination would force the White House to pony up for a couple of pork barrel projects for his district, like an unneeded refueling aircraft or an FBI counterterrorism center located in that bustling hive of terror targets, Alabama (except maybe Huntsville, which is military anyway, and not in need of much protection).
No, Dick believes in the antiBenthamian credo of the needs of the few override the needs of everyone. I'm not suggesting that Dr. Diamond is the nation's economic salvation, no, but he certainly could help the Fed break out of the morass of bureacratic concrete thinking that it's currently invested in, and let a little fresh air into the Board room.
Dick would rather game theory our lives.
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