Tuesday, June 7, 2011

Wherein I Agree With the WSJ; Or More Evidence of the Washington Lobotomy Factory

The Diamond withdrawal is a pure political travesty. Just to reiterate the basic points:

1.) Peter Diamond won the Noble Prize in economics for his work on unemployment
2.) He was rejected by the Senate Republicans because of his probable support for QEII

Here is the main thrust of the Journal's argument:

Shelby, among other things, stated Diamond supports QE2, the about-to-be-completed second round of so-called Fed quantitative easing. Guess who also supports it, in fact came up with it and implemented the QE2 policy: Bernanke and company.

The claims about Diamond not being qualified don’t hold up well. Shelby has rhetorically asked whether Diamond has experience in conducting monetary policy. Who does before they actually get to help conduct monetary policy? Other credential-based objections seem surmountable.

So, should a nominee not get to serve on the Fed because his views appear in line with the administration that nominated him and the majority of serving Fed policy makers? Seems like a dubious, if current, notion.

The primary problem the economy currently faces is high unemployment. Maybe actually listening to people who have studied the problem -- and gotten really important awards for it -- is a good idea. I'm reminded of the scene in the movie Armageddon where they are talking about how to deal with the "planet killer asteroid," and the general rejects what the NASA scientist says. Billy Bob Thornton interjects, "This is Dr. So and So. He's the smartest guy on the planet. You probably want to listen to him." I'm deeply concerned that we're now at a point where we reject very qualified candidates because they might have a view of reality that is different from ours. That is a sign of intellectual immaturity of the highest order.

Diamond's non-confirmation is a tragedy and shows just how incredibly stupid Washington has become.