It seems hypocritical that MIT faculty member and recent Nobel Laureate, Peter Diamond, would lash out in a New York Times Op Ed titled: “When a Nobel Prize Isn’t Enough”, for not being confirmed by the U.S. Senate to the Board of Governors of the U.S. Federal Reserve. It was only after twice failing to receive Senate support that the good professor miraculously received his Nobel Memorial Prize in Economic Sciences from the Royal Swedish Academy of Sciences in October of 2010.
Nobel Prizes were once considered to be prestigious honors awarded by panels of impartial experts in recognition of lifetimes of cultural and scientific achievement in the fields of Physics, Chemistry, Physiology or Medicine, Literature, and Peace. But with Peter Diamond in 2010 joining Barak Obama in 2009, Paul Krugman in 2008, and Al Gore in 2007; the Nobel has been reduced to just another example of a left wing political action committee bestowing faux credibility on fellow travellers to influence American political policy.
President Obama on April 29, 2010 nominated Janet Yellen, Sarah Bloom Raskin, and Peter Diamond to fill vacancies on the Federal Reserve Board. Ms. Yellen, a liberal, and Ms. Rasking, a moderate, were quickly confirmed based on their sterling intellectual credentials and known discipline in maintaining the type of confidential information necessary to lead America’s central bank. But the nomination of labor economist Diamond came as a stunning surprise to the financial community. Dr. Diamond had absolutely zero professional experience with Fed’s day to day regulation of banking, implementation of monetary policy, or setting of interest rates. The only relevant credentials Dr. Diamond could muster was his ardent “policy preferences” in favor President Obama’s $800 billion spending stimulus, big bank bail-out package, QE1 stimulus, QE2 stimulus, Obamacare, and demand for higher taxes.
Dr. Diamond was never shy about trumpeting his intention to use the clout he would gain as an unelected member of government to advance his Keynesian dreams of mandating that the banking system implement social policy initiatives.
To many Senators this sounded like asking them to support social policy initiatives, like the disgraced Community Redevelopment Act, now blamed for bank losses in sub-prime lending. But to the Nobel Prize selection committees, Peter Diamond’s vocal commitment to social engineering stood for the change they were waiting for. In November 2010 the Swedes rewarded Dr. Diamond for his unwavering commitment to the uber-left agenda with the Nobel Prize. Unfortunately for the professor, by the time he received Nobel credibility, the Tea Party movement was in full rebellion against the activist deficit spending Diamond had so avidly supported and Congress in no mode to walk the plank and confirm another extremist spender.
Frustrated that he would never be confirmed to the secretive and powerful Federal Reserve Board, Peter Diamond went rogue and announced he was withdrawing his nomination in the highly visible Op Ed section of the Times. Dr. Diamond argued that his Nobel Prize alone made him fully qualified to be a Federal Reserve Board member. The professor was especially indignant that his leading confirmation opponent was the ranking Republican on the Senate Banking Committee, Richard Shelby of Alabama. Diamond scoffed at the audacity of a mere mortal like Shelby to question how a Nobel Prize winner’s academic work on pensions and the labor market could fit with conducting monetary policy:
“understanding the labor market – and the process by which workers and jobs come together and separate – is critical to devising an effective monetary policy,” he wrote.
Professor Diamond tried to infer that he was a moderate:
“To the public, the Washington debate is often about more versus less — in both spending and regulation, skilled analytical thinking should not be drowned out by mistaken, ideologically driven views that more is always better or less is always better.”
He made no mention of the extremist ideological conclusion in his research publications such as; “distortionary taxes on transactions between individuals and corporations may well be needed to redistribute real income”, generated opposition to his serving on Fed. Neither did he show any empathy that the “distortionary” deficit spending he and his Swedish cheerleaders have advocated, scare the hell out of us lowly peasants now that America is on the verge of losing her AAA credit rating.
Our newest Nobel Laureate’s Op Ed concluded by blaming his failure to be confirmed on “partisan polarization”; then as a partisan he blamed the Republicans for “a failure to recognize that the analysis of unemployment is crucial to conducting monetary policy.” Armed with the faux credibility of a Nobel Prize, we will undoubtedly be hearing more of the blatantly partisan views of Peter Diamond. Thankfully, his agenda of “distortionary” economic initiative will not be part of the next Federal Reserve Board’s agenda.