After irking the Chinese with the award of the Nobel peace prize last week, the Nobel committee set a few feathers flying in Washington today by awarding the economics prize to Peter Diamond, an MIT professor who has also been nominated by President Barack Obama for a spot on the Board of Governors of the Federal Reserve.
Diamond’s nomination to the Fed job has been held up by Senate Republicans who have questioned his qualifications. At the time Richard Shelby, the most senior Republican on the Senate Banking Committee said the current uncertain environment would not benefit from board members deciding monetary policy “who are learning on the job” and told Reuters Diamond was a “behavioral man” who had no background in monetary policy and the economy.
It is a probably little conspiratorial to suggest the Nobel committee was deliberately tweaking Republican noses by recognizing Diamond along with two other leading economists for their work in helping to explain unemployment and jobs markets. Nevertheless, critics are bound to seize on this, along with Obama’s peace prize last year and Paul Krugman’s economics prize in 2008, to draw their own conclusions.
The White House wasted no time in making political capital from the award, with Obama urging speedy confirmation so Diamond could bring his “extraordinary expertise” to the Fed job. Spokesman Robert Gibbs said blocking Diamond was a “harmful attempt to score political points that hurts our middle class and our broader economic recovery.”
Shelby was unbowed. “While the Nobel Prize for Economics is a significant recognition, the Royal Swedish Academy of Sciences does not determine who is qualified to serve on the Board of Governors of the Federal Reserve System,” he said.