Leaving behind a valuable Diamond

LEAVING BEHIND A VALUABLE DIAMOND…. Last year, the Senate Banking Committee twice approved Peter Diamond’s nomination to the Federal Reserve. And twice, the Senate wasn’t allowed to vote on Diamond because Sen. Richard Shelby (R-Ala.) threw tantrums and blocked the nominee.

So, this year, President Obama resubmitted the Diamond nomination. And once again, the petulant Republican from Alabama has decided he’s entitled to veto power over the process.

The top Republican on the Senate banking panel made clear Tuesday that he still opposed the nomination of the M.I.T. professor and Nobel laureate, Peter A. Diamond, to the Federal Reserve calling him an “old-fashioned” Keynesian supporter of big government.

Opposition from Senator Richard C. Shelby of Alabama to a nomination that Republicans have already scuttled twice poses a challenge to President Obama, who must decide how much political capital he wants to spend to push for Mr. Diamond’s approval.

“It is clear to many of us that he does not possess the appropriate background, experience or policy preferences to serve,” on the Fed’s board, Mr. Shelby said of Mr. Diamond.

It’s important to understand how ridiculous this is. Diamond is among the most accomplished economists of his generation. Even after Diamond won a Nobel Prize in economics, Shelby insisted the economist lacked the qualifications to join the board of governors of the Federal Reserve.

As far as the conservative Republican is concerned, Diamond’s background is not in monetary policy, which necessarily raises doubts about his nomination. It’s true that this isn’t Diamond’s specific field, but it’s hardly a prerequisite — of the five sitting Fed governors at the time of Diamond’s nomination, three were not specialists in monetary economics. One of Bush’s appointees has no advanced degree in economics at all and has never done any academic research in the field.

What did Shelby have to say about this nominee? Nothing — he never raised questions about the nominee’s qualifications and didn’t hesitate to support the nomination.

Diamond’s expertise — the scholarship that produced a Nobel prize — is in understanding competing kinds of unemployment. Paul Krugman, himself a Nobel winner, noted a while back that “there’s an ongoing dispute over what the rise in vacancies without a corresponding fall in unemployment means,” and as luck would have it, Diamond “pioneered the whole study of this subject.”

But for reasons that defy comprehension, Shelby simply decided he just doesn’t like Diamond. The confused senator has the option of registering his opposition by voting against Diamond’s nomination, and urging his colleagues to do the same, but the Republican lawmaker decided that wasn’t good enough — the Nobel laureate is so offensive, Shelby believes the Senate simply cannot be allowed to vote on the nominee at all.

This is no way to run an advanced democracy in the 21st century. Shelby is not only embarrassing himself, he’s undercutting an institution that has a direct effect on the health of the economy.