You’d think that having a Nobel Prize under your belt would be a clincher for getting a promotion or a job change. But it may not help economist Peter Diamond win a coveted seat on the Federal Reserve.
Mr. Diamond, a professor at the Massachusetts Institute of Technology, won a Nobel Prize in economics with two other economists, American Dale Mortensen and British-Cypriot Christopher Pissarides, on Monday.
But Senate Republicans have so far blocked his nomination. Why? They suggest he lacks the experience to serve on the Fed’s board of governors.
Given the partisan rancour that permeates U.S. politics these days, and Republican disdain for some recent Nobel awards, the news from Stockholm won’t necessarily lead to a confirmation nod for Mr. Diamond.
“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,” said Sen. Richard Shelby of Alabama, the senior Republican on the Senate Banking Committee.
Mr. Diamond and the two other economists won the prize for their insights into unemployment and the impact of government policies on helping people to find jobs or cushioning their periods of joblessness.
That’s certainly a prime topic right now with the U.S. jobless rate stuck at 9.6 per cent and nearly 15 million Americans out of work from the worst recession since the Great Depression of the 1930s.
Their research found, in part, that programmes such as government unemployment benefits can help the process of lining up job seekers with jobs that match their skills and abilities.
“How can economic policy affect unemployment? This year’s laureates have developed a theory that can be used to answer these questions,” the Royal Swedish Academy of Sciences said in a statement.
Republicans in this election cycle have railed against the administration’s spending, suggesting the tens of billions of dollars in bank and auto bailouts and stimulus programs have done little to produce jobs. Many have fought extensions of unemployment benefit programs pushed by President Barack Obama and the Democratic-controlled Congress, arguing that the extensions have reduced incentives for finding work.
Some of Mr. Diamond’s research findings may run afoul of Republican campaign dogma.
Mr. Diamond, 70, widely considered a world expert on labour analysis, once taught Fed Chairman Ben Bernanke. He was one of three individuals Mr. Obama nominated in April to fill vacancies on the seven-member Fed board.
The others, Janet L. Yellen and Sarah Bloom Raskin, were unanimously confirmed last month before the Senate left town. Ms. Yellen was president of the Federal Reserve Bank of San Francisco, and Ms. Raskin was Maryland’s commissioner of financial regulation.
Mr. Diamond’s nomination was returned to the White House. Sen. Shelby argued at the time: “I do not believe he’s ready to be a member of the Federal Reserve Board. 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.”
Democrats took strong issue with the “learning on the job” comment. Mr. Obama promptly re-nominated Mr. Diamond.
Senate Banking Committee Chairman Chris Dodd plans a hearing on Mr. Diamond’s new nomination when the Senate reconvenes after the November elections.
Mr. Obama said on Monday that he had selected Mr. Diamond “to help bring his extraordinary expertise to our economic recovery. I hope he will be confirmed by the Senate as quickly as possible.”
Jason Furman, a top White House economic aide, said he hopes those blocking Mr. Diamond’s confirmation would see the Nobel Prize as “still more evidence that he is qualified.”
Mr. Furman added that, since there are roughly four applicants for every job vacancy, extending jobless benefits have a “small to nonexistent” impact on the employment rate.
But Republicans are unlikely to be impressed with the prize. They generally scoffed at the Nobel Peace Prize awarded last year to Mr. Obama and before then to former Vice-President Al Gore.
“It’s not automatic that someone receiving a Nobel Prize will be helped by it, politically, any more,” said James Thurber, a political scientist and congressional scholar at American University. “It used to be that it would help them. Now, it’s a question mark.”
Peter Morici, an outspoken University of Maryland business economist who was a trade official in the administration of President George H.W. Bush, said he thinks the Nobel will help Mr. Diamond’s prospects.
“It’s going to be more difficult for Shelby now” to hold Republicans in line in opposition, Mr. Morici suggested. He said Diamond and the two others who shared the prize “did interesting work. This cannot be overlooked.”