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These days it’s hard to know where to focus one’s mind — the President’s contracting COVID, the President’s taxes, the nomination of Judge Barrett to the Supreme Court, the national COVID death rate, the moribund economy, the vaccine salvation that may be going sideways, the possible salvation of rapid home tests, our national super-spreader event (school reopening), and the list goes on. But we all have to distract our brains from the big picture and do our day jobs as best we can. For the Senate, this includes deciding whether or not to confirm Judy Shelton as a Governor of the Board of Governors of the Federal Reserve.
Dr. Shelton is a PhD economist. But she’s not someone that leading economists, from both the right and left, think is remotely qualified for the job. A total of 130 economists have signed a letter, which I helped draft, urging the Senate to reject President Trump’s nomination. The list includes seven Nobel Prize winners. Number one on the list is the University of Chicago’s Robert Lucas. Lucas is one of the seven Prize winners. He’s also, hands down, the top macro economist in the world. But the list is a veritable Who’s Who of the best and brightest macro economists in our country.
Most economists are apolitical. Yet some are more market oriented than others. Lucas is definitely a free-market economist. Nobel Laureate, Joseph Stiglitz, on the other hand, is a strong advocate of government intervention in a wide range of economic arenas. He’s another of the seven. Had anyone suggested to me, say a year back, that Lucas and Stiglitz would both offer the same advice to the U.S. Senate, I’d have said, “Impossible.” But Judy Shelton has managed to get Lucas and Stiglitz on the same page.
In addition to U Chicago, the 130 signatories hail from the University of Alabama, the University of Idaho, UCLA, Harvard, MIT, UC Berkeley, Stanford, Princeton, Columbia, Yale, Boston University, Northwestern, NYU, U Penn, Brown, U Minnesota, U Wisconsin, Carnegie Mellon, Penn State, Ohio U, U Maryland, Arizona State, Duke, NC State, Kansas State, Indiana University, U Rochester, and U Michigan.
There are, of course, thousands of economists in the country. Were I to email them all to sign the letter, virtually all would do so. Shelton is that bad. Were virtually all legal scholars, conservative and liberal, to tell the Senate that Judge Barrett is not remotely qualified to be a Supreme, the Senate would surely take a pass. This situation is no different. If any Senator is in doubt about Shelton’s nomination, they should pick up the phone and talk to Lucas or Stiglitz or any of the names on the list. Or call me. I’m happy to explain why appointing Judy Shelton to the Federal Reserve Board would be a terrible mistake.
Here is my letter.
August 2020
RE: Nomination of Judy Shelton for the Federal Reserve Board
Dear Senators: President Trump has nominated Judy Shelton to one of the vacancies on the Board of Governors of the Federal Reserve System. The nomination recently cleared the Senate Banking Committee and will soon reach the Senate floor. We urge the Senate to reject this nomination.
The undersigned are business and academic economists. We know and appreciate the unique position of the Federal Reserve in our nation’s economy and the need to preserve its nonpartisan approach to its many responsibilities. We wish to associate ourselves with a similar letter recently submitted to you by prominent alumni/ae of the Federal Reserve System.
The Federal Reserve is a vital part of our government and has been particularly important during our current crisis. The COVID-19 pandemic has required the suspension of much of the nation’s and the world’s economic activity. The Fed’s quick action to provide the markets with the necessary liquidity was crucial to restoring order to those markets and ensuring that the economic crisis that we are enduring did not become much, much worse. However, like the pandemic, the economic challenges persist.
Ms. Shelton has a decades-long record of writings and statements that call into question her fitness for a spot on the Fed’s Board of Governors. She has advocated for a return to the gold standard; she has questioned the need for federal deposit insurance; she has even questioned the need for a central bank at all. Now, she appears to have jettisoned all of these positions to argue for subordination of the Fed’s policies to the White House — at least as long as the White House is occupied by a president who agrees with her political views.
The Fed has serious work ahead of it. While we applaud the Board having a diversity of viewpoints represented at its table, Ms. Shelton’s views are so extreme and ill-considered as to be an unnecessary distraction from the tasks at hand.
The late Chairman Paul Volcker was noted for advising new governors that “when you enter this building, you leave your politics at the door.” Sound advice that, from her record, Ms. Shelton is incapable of following.
We urge the Senate to reject her nomination.