For Future Reference

June 6th, 2011 at 3:45 pm

I’m not predicting the downfall of modern society as we know it.  Especially for an economist, I tend to be congenitally optimistic.

But if such a downfall should occur, it would not surprise me if future historians wrote about Peter Diamond withdrawing his name for a governorship at the Federal Reserve as, if not a pivotal moment, a signpost on the road to perdition.

He wrote about his decision today, and his comments on the current gridlock remind one how desperately we need wise minds like his at the helm of policy making:

“In reality, we need more spending on some programs and less spending on others, and we need more good regulations and fewer bad ones.  Skilled analytical thinking should not be drowned out by mistaken, ideologically driven views that more is always better or less is always better. I had hoped to bring some of my own expertise and experience to the Fed. Now I hope someone else can.”

Those last six words are the saddest words you’ll read in economics for awhile.

Update: Michael Grunwald has a similar reaction.

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8 comments in reply to "For Future Reference"

  1. foosion says:

    Our political system has become totally dysfunctional, which benefits those who don’t want to have to pay for government. The Republicans have realized that a bad economy advances their electoral interests, that they can worsen our economy and that they wouldn’t pay a political price for doing so. That was a major turning point. If McConnell can say “our first priority is defeating Obama” and Boehner can say “if we have to lose jobs, so be it” and not get any meaningful push-back, then there’s little hope.

    The Democrats abandoning rational economics didn’t help: “The hard truth is that getting this deficit under control is gonna require some broad sacrifice, and that sacrifice must be shared by the employees of the federal government,” Obama said. “After all, small businesses and families are tightening their belts. Their government should, too.”

  2. foosion says:

    By the way, I strongly encourage readers of this blog to watch Charlie Rose’s June 3 interview with Jared, Paul Krugman, David Walker of Comeback America Initiative & Ken Rogoff of Harvard University. It’s on

    Jared does a great job of focusing people on what should be done rather than re-litigating the past.

    • Jeffrey says:

      Except for the part where Jared argues that we have recovered. I wonder why no one has the political appetite for more to be done? Perhaps because the word recovery tells people that intervention by the Govt. would be heavy handed.

  3. D Furlano says:

    The problem is you ask people about Weiner and they can tell you the story blow by blow and tell give you all kinds of opinions.

    Ask about Diamond and they’ll say, who?

    Next time you’re on a show ask the host how much time they spent on the two stories and why.

  4. dougR says:

    HI Jared, I’m glad you’re blogging!

    The Diamond disgrace (and it’s Obama’s disgrace, not the Rs’) is just another in a long, long series of indicators that Obama and his advisors coveted power, but now that they have it, don’t care to use it to truly change society in line with their campaign promises. People accuse Walker and Kasich of gaining office and then springing a rightist revolution on people who didn’t vote for it. Similarly, Obama seems bent on imposing a finance-friendly, corporate-friendly, “jobs? Not my problem” philosophy that NONE of his voters wanted. In this, the government seems utterly out of touch with the hard realities of life in the Other America (to borrow a classic phrase), and, to listen to administration spokespeople talk, seems almost proud of it.

    I’m hearing story after story of young people who, in their maiden venture into participatory democracy, worked and campaigned joyously and hard for Obama, and are now utterly cynical and completely disillusioned at what he has wrought. If that’s not the downfall of civilization, it’s a big step toward it.

    • Mimikatz says:

      It’s not Obama so much as the GOP’s desire to see him fail at every turn. And their stupidity. Let’s face it. Richard Shelby is one of the stupidest men in Congress. I agree that Obama’s failures have engendered cynicism, but what about the utter cynicism of the GOP wanting him to fail and not caring who else gets hurt so they can cling to power?

      And talk about not wanting to govern. The GOP can’t even put up a credible, sensible candidate who has real understanding of policy. All we get are clowns, hacks and halfwits.

      • dougR says:

        Look, the GOP does what they always do. That’s a given. What’s not a given is the degree to which the Obama admin. and the Dem party have abdicated their fervent campaign promises in favor of capitulation, surrender, accommodation, attempting to disguise defeat as victory, and finally throwing up their hands at the mess and saying “we can do no more, it’s up to Private Enterprise now” (as Austan Goolsbee did this weekend on “This Week.”). Part of my complaint about Obama is his cynicism: either his administration is severely incompetent, or he’s fine with having literally closed the door on the American dream for an entire generation. When he could have fought hard, he either fought half-heartedly or not at all; when he could have used the bully pulpit, he remained mute.

        No, the GOP is just insane. It’s a clown caucus that doesn’t deserve the legitimacy Obama and the media give them. Wish we had elected a president who was committed to preserving economic opportunity from their depredations. He sure sounded like it on the campaign trail. Now, “It’s up to the private sector, we’ve done all we can.” REALLY?

  5. Jeffrey says:

    This may or may not be the appropriate place for this inquiry but here goes. On Charlie Rose recently you disputed Mr. Krugman’s position that there was never a ‘recovery’ associated with the stimulus. I have to back him up on this. I may be econ 201/202 in my simplicity here but I’ve heard that is where we are at. So here goes my analogy: A patient (our economy) is hospitalized with serious injuries that if not treated will mean the end of the patient. Now even if the bleeding (job losses) is stopped the patient has not recovered. If they receive a small blood transfusion (minimal job gains) that takes them from the brink to a somewhat safer, yet unsustainable condition they still yet have not recovered. They are recovered when they can resume their lives in a sustainable way. Right?
    I know you worked for the administration during this time and I do not expect you to disparage yourself or anyone else that tried so hard to help regular people like myself. What I do expect though is that you either explain what recovery means to you economically in this nation and how I am supposed to survive in that new recovered state, or temper your self congratulation so we have room to argue that more needs to be done politically and otherwise. You look at numbers so you may see a recovery, but let me tell you what it looks like from here: The longer this continues the worse the conditions are getting on the ground. The long term unemployment is killing us as a society and the unemployment rate and the number you quote about the average number of weeks on unemployment is misleading at best. Here in the real world where I live people have been unemployed or under-employed since the start of this mess. This is where the people are that are losing faith in just about everything: politics, economists, the President, and even the nation as a whole. If this is a recovery bro, you need to get out more, or inform and educate the people (like Bubba used to do so well) instead of excuse the half-___ actions of those who we rely upon to save our souls.