Daniel Greenfield, a Shillman Journalism Fellow at the Freedom Center, is an investigative journalist and writer focusing on the radical Left and Islamic terrorism.
Earlier this month the Biden administration’s nomination of Sarah Bloom Raskin as a top bank regulator fell apart. Raskin, who favored using monetary policy to crush the oil and gas industry while rewarding the subsidized wind and solar boondoggles of politically connected investors, was blocked by Senator Manchin who announced he would not vote for the radical.
“The Federal Reserve Board is not an institution that should politicize its critical decisions. This is a 10-year term to perhaps the most important independent body that is tasked with ensuring the stability of the American economy. At this historic moment for both the United States and the world at large, it is imperative the Federal Reserve Board preserves its independence and steers clear of any hint of partisanship,” Manchin stated.
He urged the Fed to focus on fighting inflation instead of pursuing political agendas.
This was the second radical financial nomination the Biden administration had lost after Saule Omarova: a Soviet trained academic who wanted the Federal Reserve to nationalize banking.
These two high-profile defeats don’t appear to have taught the Biden administration anything.
Still waiting in the wings is Lisa Cook’s nomination to the Federal Reserve Board. Cook is unqualified for the position and she’s only being nominated because of her radical racial views.
Cook has promoted police defunding, advocated for slavery reparations, and declared that, “free speech has its limits”. Beyond her abrasive social media presence, Cook’s academic work, such as it is, is oriented toward identity politics and blaming racism for economic disparities.
She’s the co-author of a New York Times op-ed titled, “It Was a Mistake for Me to Choose This Field” which falsely claims that, “if economics is hostile to women, it is especially antagonistic to black women”. This familiar brand of professional victimhood is the last thing the Fed needs.
Despite all this, Lisa Cook was selected for the board of the Federal Reserve Bank of Chicago. This is part of a larger phenomenon in which local Fed boards have already been politicized.
The involvement of local Fed boards in politics includes the false claim by the New York Fed that America suffers from “systemic racism” and that “economic equality is a critical component for social justice”. These are not only economically misguided views, but they’re particularly dangerous when advocated by bodies with the power to manipulate monetary policies.
Finance professor Emre Kuvvet cites research showing that, “Democrats outnumber Republicans 4.5:1 among economics faculty at 40 leading universities” and found that “the ratio of Democrats to Republicans among Fed economists is 10.4 to 1.”
As disastrous economic policies have triggered a wave of catastrophic inflation, with possible worse consequences to come, while Democrats embrace academic socialist theories like Modern Monetary Theory which insist that money can be endlessly printed with no consequences, the growing radicalization of Fed economists represents a systemic threat.
The Left believes that it understands economics when over a century of history clearly shows otherwise. Destructive policies that have wrecked our economy are being justified by credentialism and gatekeeping through networks of politically aligned academics.
But as the debate over Sarah Bloom Raskin’s Fed nomination shows, we are no longer simply dealing with traditional tax-and-spend policies, or even pure spending policies, but larger efforts to transform the economy by eliminating entire industries, like the energy industry, or nationalizing others, such as the banking industry, to force leftist policies on Americans.
Kuvvet notes that, “Among those whose voter registration information is available, there are 208 Democrat and only 20 Republican economists at the Federal Reserve System.“ Regionally he finds that there are, “111 Democrat and 18 Republican economists at the regional Federal Reserve Banks” and “44 Democrat and only 3 Republican economists in leadership positions at all regional Federal Reserve Banks.”
Meanwhile “at the Board of Governors of the Federal Reserve System, there are 97 Democrat economists and only two Republican economists” and he finds that “at the Board of Governors of the Federal Reserve System, there is only one Republican economist in the leadership position, while there are 45 Democrat economists in leadership positions.”
The growing radicalization of the Democrats is translating, over time, into a growing radicalization of Fed economists. The defeat of individual radical nominees who are so far out of step as to be unsuitable for the last moderate Senate Democrat who can cast a crucial vote is not a sign that the system is working, but that a last ditch battle is being fought for our survival.
The lack of intellectual diversity at the Fed has all but eliminated ideological checks and balances. And while the radicalization of academia in general has had catastrophic consequences for American intellectual life, the economic consequences are potentially even more serious. Like the next generation of judges, the next generation of economists will be detached from the very concept of objective truths, they will be convinced that their mission is to transform the institutions they are part of until they bow to their political ideology and values.
That means using the Federal Reserve, like any other institution, to punish their political opponents and reward their allies, to destroy those elements of American life that they oppose and to abuse their institutional power to build socialist systems at everyone else’s expense.
The radicalization of the Democrats and their preponderance in leadership positions through the Fed system due to a lack of intellectual diversity represents a systemic threat to the American economy. It is a threat that Republicans have been negligent in failing to acknowledge and confront. The consolidation of academia as a hostile environment for conservatives, moderates, libertarians, and other non-leftists is not just a cultural and political, but also an economic crisis.
Without intellectual diversity, the Federal Reserve will become increasingly radicalized, tainted by radical appointees who will insist that a failure to comply with leftist political agendas represents a risk and that complying with those agendas is sound economic policy.
If Republicans fail to meet this threat, socialism will arrive without the need for elections.
When conservatives recognized that the radicalization of the legal profession was tainting the judiciary and endangering the constitution, they rallied and built the Federalist Society. Economics has a strong conservative tendency, but the lack of external attention and support being paid to the problem means that it has not become a priority for conservative groups.
The latest slate of radical Fed nominees is a warning of what a radical group of regulators can look like, but the answer goes beyond casting votes on individual nominees, but remedying the disproportionate ideological tilt within the Fed system before the system decides to remedy us.