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.