In blocking Diamond’s nomination, Shelby said:
“I do not believe he’s ready to be a member of the Federal Reserve Board,” Shelby said in August. “I do not believe that the current environment of uncertainty would benefit from monetary policy decisions made by board members who are learning on the job.”
Not many days later, Diamond gets the Nobel Prize for economics. (Dale Mortensen and Christopher Pissarides also won.)
Talk about a fast learner! I guess Shelby’s diss really made Diamond hit the books.
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UD hears Shelby’s working with consultants from the Chinese government to figure out how to respond to Diamond’s award.
October 11th, 2010 at 9:36AM
I wouldn’t *automatically* assume that because someone is a Nobel-prize-winning economist he would make a good Fed member…there are certainly leading aerodynamicists who don’t know how to fly and airplane, and probably even some who would have difficulty in learning how to do so.
Seems to me that ideally, a Fed member would have some background either in a business or in a bank, or both, so as to have some hands-on experience as to how investment and lending decisions are actually made.
October 11th, 2010 at 10:26AM
The sad bit is that Shelby is the more statesmanlike of Alabama’s two senators.
Who knew behavioral economics was so controversial?
October 12th, 2010 at 12:33PM
So I guess David Foster is really pleased with the work Alan Greenspan did as Fed chairman. He was someone with that great “hands-on experience,” but of very dubious academic credentials.
October 12th, 2010 at 1:34PM
ITP…nope. I didn’t say that hands-on experience was a guarantee, just that it improves the odds of success. As does an academic research background IF (a)the work the individual has done is reasonably congruent with reality (some would question whether this is the case with Modern Portfolio Theory and Black-Scholes option theory) and/or he is willing to take his own conclusions with a grain of salt or two. Economic theory, while useful, is a little less definitive than structural engineering theory or aerodynamics theory.