Politics beat quality any day: Diamond calls it quits

Politics are powerful. Much more powerful than scientific arguments. This is probably a well-known dictum, and I am certain that I could find some cool references to great thinkers who have said something like this in the past. I have refrained from doing so, as I just wanted to put this recent example within economics on record:

In the US, members of the board of governors for the Federal Reserve are appointed through a long-winded political process. The fact that elected politicians should have a saying in the nomination of members who will shape monetary policy is sensible from a democratic point of view. I will not dispute that. However, the process often seems to end with a strong focus on partisan criteria rather than the qualifications of the nominated candidates.

This became evident the other day, when Nobel laureate Paul A. Diamond, who was nominated for a place on the board of governors, withdrew from the nomination process as he describes in this New York Times column. Apparently, he could see that he would be blocked by republicans who did not like his support for recent Federal Reserve policies (in particular, quantitative easing). His overall academic qualifications were not disputed directly, but many used the argument that he was not a monetary economist, had no experience from financial markets, and was therefore not qualified. This is incredible hogwash. The man is an exceptionally smart economist, who could contribute productively to any subject area (as he has actually done throughout his career).

But politics are politics. And a Nobel Prize in economics will not change that.

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