Facing Political Barriers, Fed Candidate Opts Out

Facing Political Barriers Fed Candidate Opts Out

Nobel laureate Peter Diamond had a depressing Op-Ed in The New York Times on June 5, withdrawing himself from contention as a member of the Federal Reserve board in the face of Republican opposition.

“Skilled analytical thinking should not be drowned out by mistaken, ideologically driven views that more is always better or less is always better,” wrote Mr. Diamond, who is a professor of economics at the Massachusetts Institute of Technology. “I had hoped to bring some of my own expertise and experience to the Fed. Now I hope someone else can.”

What you need to know about Mr. Diamond is not just that he’s a very great economist, but that he’s an economist’s economist — someone who is a deeply respected theorist, not at all someone who made his way as an ideologue. His work is basically apolitical.

Except that these days everything is political.

Never mind the obviously fake concerns about his suitability for the Fed. Obviously, Mr. Diamond was blackballed for two sins: being personally a Democrat, and having been nominated by President Obama.

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The thing is, the Fed was supposed to be above and aside from the partisan brawl. It never was, completely — but that was an ideal to be striven for. No more.

I think the rejection of a Nobel laureate for a seat at the Fed is tied, in a fundamental way, to the willingness of economists with decent professional reputations to sign on to the increasingly crazy proclamations issued by Republican politicians. Whether they are honest with themselves or not, what economists have realized is that they face a loyalty test — or maybe that’s an apparatchik test; if they have any ambitions of serving in a policy position, they have to prove themselves willing to follow the party line wherever it goes.

There’s nothing comparable on the other side. For one thing, you don’t find people like Christy Romer, who served as chairwoman of the Council of Economic Advisers, (or, well, me) taking positions on policy issues that are directly at odds with what they’ve said in their professional writings; whereas you see that a lot on the Republican side. And former officials on the Democratic side like Ms. Romer or the economist Jared Bernstein are quite willing to criticize Mr. Obama’s policies, if only from a basically friendly position.

The way that the polarization of our politics is corrupting the theory and practice of economics is, to be sure, not its biggest cost. But it’s not trivial, either.

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Paul Krugman joined The New York Times in 1999 as a columnist on the Op-Ed page and continues as a professor of economics and international affairs at Princeton University. He was awarded the Nobel in economic science in 2008.

Mr Krugman is the author or editor of 20 books and more than 200 papers in professional journals and edited volumes, including “The Return of Depression Economics” (2008) and “The Conscience of a Liberal” (2007). Copyright 2011 The New York Times.