NEW, Feb. 2012: Here’s a translation of this blog post in Romanian, by Alexander Ovsov!
MIT economics professor Peter Diamond is one of three economists who have just won the Nobel Prize in Economics. The AP’s Louise Nordstrom and Karl Ritter note how it was easier for Diamond to get the Nobel than to get confirmed for the Federal Reserve Board (emphasis added):
President Barack Obama has nominated Diamond to become a member of the Federal Reserve. However, the Senate failed to approve his nomination before lawmakers left to campaign for the midterm congressional elections.
Senate Republicans have objected to what they see as Diamond’s limited experience in dissecting the inner workings of the national economy.
[Federal Reserve Chairman Ben] Bernanke was one of Diamond’s students at MIT. When Bernanke turned in his doctoral dissertation in 1979, one of the people he thanked was Diamond for being generous with his time and reading and discussing Bernanke’s work.
And what was the work that earned Diamond his Nobel? As the same AP story explains:
Two Americans and a British-Cypriot economist won the 2010 Nobel economics prize Monday for developing a theory that helps explain why many people can remain unemployed despite a large number of job vacancies…for their analysis of the obstacles that prevent buyers and sellers from efficiently pairing up in markets.
Diamond…analyzed the foundations of so-called search markets…
Diamond wrote a paper in the early 1980s that found that unemployment compensation can lead to better job matches. Workers “become more selective in the jobs they accept” because of the employment aid. And, that makes for better matches and increases efficiency, he found.
He told a Senate committee during his nomination hearing in July that a central theme of his research has been how the economy deals with risks that affect both individuals, and the entire economy.
“In all my central research areas, I have thought about and written about the risks in the economy and how markets and government can combine to make the economy function better for individuals,” he said in that hearing.
Hmmm…. perhaps what Senate Republicans really object to in Diamond’s nomination is that he doesn’t ascribe to the notion that unemployment compensation makes people lazy. As Ezra Klein points out, the “lack of experience” argument is a bit hard to swallow given others who serve and have served on the Board.