Tuesday, June 21, 2011

Not a diamond in the rough

Peter Diamond withdrew his name from being a FEderal Reserve governor nominee. Diamond who is an MIT labor economist was clearly miffed. He wrote a self serving whine in the New York Times lamenting that while he was qualified to be awarded a Nobel prize in economics, certainly he was qualified to be on the Fed board. He is wrong. Certainly a Nobel prize is noteworthy but it does not guarantee expertise in monetary economics or financial institutions. Indeed, Diamond's area is labor economics and although Diamond says that understanding of the labor market is a "central part" of managing monetary policy, that statement by itself should disqualify him. Sen. Shelby (R-AL) ranking minority member of Senate Banking was right to insist on someone who would not need on the job training as Mr. Diamond would require. Put Diamond on the NLRB but not the Fed board.

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