Sen. Richard Shelby of Alabama, perhaps the least studious member of the world’s greatest deliberative body, has made his mark again.
Shelby led the way in blocking Senate confirmation of economist and Nobel laureate Peter Diamond to the Federal Reserve Board.
In his inimitable way, Shelby (the domestic auto industry’s nemesis) concluded that an economist who recently won the Nobel Prize lacks the qualifications to serve on the Fed board.
Amazingly, Shelby, in that Southern drawl of his, argued that professor Diamond’s resume is a little weak.
“Does Dr. Diamond have any experience in conducting monetary policy? No,” said Shelby, who has no financial experience yet serves as the ranking Republican on the Senate Banking Committee. “His academic work has been on pensions and labor market theory.”
Then Shelby added this: “Does Dr. Diamond have any experience in crisis management? No.”
In The Washington Post, Ezra Klein noted the embarrassing nature of the line of questioning by Shelby, a former prosecutor:
“It’s not entirely clear what Shelby thinks monetary policy actually does, but over the next couple of decades, managing labor markets and the pressure from pension policy is going be a pretty big part of the Fed’s job. On Friday, the Bureau of Labor Statistics said that the economy had only created 54,000 jobs in March. If you look beyond 10 years, social insurance programs like Medicare and Social Security will be putting immense stress on the federal budget.
“By Shelby’s admission, Diamond is a world-renowned expert on both topics. If he’s what unqualified looks like, I’d love to see qualified.”
Klein noted that Shelby, a frequently disruptive force in the Senate, is playing politics in a very awkward manner. The 77-year-old is taking revenge for a 2007 Fed nomination that was held up by the Democrats for more than a year. Diamond’s nomination was delayed three times before it was rejected by Shelby’s committee.
Klein continued: “… It’s remarkable that what Shelby thinks he can say is that Diamond is unqualified because his expertise lies in labor-market analysis. Unemployment is above 9 percent. Almost half of the 15 million workers who’re looking for jobs and can’t find them have been unemployed for six months or longer.
“We’ve got a jobs crisis is this country. And yet Shelby thinks it’s self-evident that knowledge about the labor market isn’t the sort of expertise that monetary policymakers need right now. If you wanted further evidence that Washington has stopped caring about jobs, there it is.”
In the Sunday New York Times, Diamond, a veteran MIT professor of economics, confirmed that he is withdrawing as a nominee. In a guest column, he explained in detail, while maintaining a polite demeanor, why Shelby’s criticisms were off the mark. Diamond wrote that his career will be just fine, but he worries about the functionality of the U.S. Senate.
Here’s a portion of his thinking on the confirmation process:
“The easy answer is to point to shortcomings in our confirmation process and to partisan polarization in Washington. The more troubling answer, though, points to a fundamental misunderstanding: a failure to recognize that analysis of unemployment is crucial to conducting monetary policy.
“We should all worry about how distorted the confirmation process has become, and how little understanding of monetary policy there is among some of those responsible for its congressional oversight. We need to preserve the independence of the Fed from efforts to politicize monetary policy and to limit the Fed’s ability to regulate financial firms.
“Skilled analytical thinking should not be drowned out by mistaken, ideologically driven views that more is always better, or less is always better. I had hoped to bring some of my own expertise and experience to the Fed. Now I hope someone else can.”
As Klein noted, if Diamond is not qualified for the Fed, who is? And it seems one thing becomes quite clear in the wake of this whole mess: Shelby is not qualified to be a U.S. senator.
I wonder how many liberal Democrats would have blocked a confirmation had Nobel Prize winning economist Milton Friedman's name forward for such a position? If Senator Shelby's dissentions does something to bring to light to problems associated with our monetary policy, all the better. We always attack people for "obstructionism" on blocking confirmations to important positions that greatly impact our lives as Americans. When Senator Obama gave a speech about his vote against John Roberts confirmation as Chief Justice of the Supreame Court, he did so for ideological reasons. Never underestimate the role of political philosophy and the importance of it when debating the serious issues of our time.