Devil's Advocate: ARE People Demanding a Diverse Fed?

Or do they just want a Fed that works?

Diversifying the Federal Reserve has become a priority for many progressive activists. In November, a letter to President Biden from 14 advocacy groups called for more Black people in Fed leadership roles. They called on Biden to “make history” and “deliver on your words to Black Americans in your November 2020 victory speech: ‘You’ve always had my back; and I’ll have yours.’”

Calls for diversity have come from other places. Here are 116 House Democrats calling the lack of representation “distressing”. Here’s Elizabeth Warren lamenting the white, male history of the New York Fed and calling for someone with “a new perspective and background.” On Thursday, Biden nominated a diverse group for three empty Federal Reserve Board seats, and in doing so celebrated their “diversity of thought and perspective,” and opined that diversity will lead to “better outcomes for all Americans.”

I should probably just be a good progressive here. I’m tempted to simply chant “yes, diversity — all hail diversity” and get on with my life. But — channeling the sprit that almost caused me to call this blog “Turd in the Punchbowl” — I’m actually feeling a bit more like this:

Do ordinary people actually give a hot shit about the racial composition of the Fed Board? What about non-white Americans, specifically: Do non-white Americans who aren’t progressive activists — which is almost all of them — lie awake at night troubled by the fact that the Fed’s demographics don’t match the nation’s? Or, to be less snarky about it: Given the choice between a Fed comprised of the best team available, which may or may not be highly diverse, and a Fed that prioritizes diversity but that may or may not function at optimal capacity, which would most people choose? Which would most non-white people choose?

There is, of course, no data on this. Nor will there ever be, because the average American devotes exactly zero percent of their brain to Fed Board appointments (which is fine — people are busy, and vetting federal appointments isn’t their job). In fact, if you put a poll in the field, I’m pretty sure the results would be something like this:

Remember: I made this up! Don’t cite it!

The stakes in this specific instance seem pretty low; Biden’s picks appear to be qualified. But I think it’s worth picking apart some of the progressive logic that’s going unchallenged. The goal of an optimally-functioning Fed could, conceivably, be at odds with the goal of a more diverse Fed. In fact, this has already happened at least once (more on that in a bit). Activists claim to be speaking for non-white Americans, but I think we should ask: Are they? Democrats very recently assumed that progressive activists were speaking for Black Americans on “defund the police”, but that ended up being disastrously wrong. Given that the Fed’s work is extremely important, and that their decisions affect all Americans, especially those who are struggling to get by, it seems like we should be at least a little curious about what people actually want.

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The part of this dialogue that really gets under my skin is the assumption that a person is naturally — perhaps magically — on the same wavelength as every other person in their racial group. I’ve written about this before — I hate, hate, hate this logic. I find it unfathomably racist; it reminds me of 19th century pseudoscience, where people would write things like: “The Mohammedan has a temperament most subdued, while the Indo-China-Man possesses a spirit most freely incensed!” I find race essentialism to be the most fucked-up, extreme form of racism; if ordinary, jumping-to-conclusions racism is Playboy, then race essentialism is dirty Polaroids sold out of a van by a guy in a track suit who only accepts Bitcoin.

And yet, you hear this sentiment in progressive circles all the time. The letter from House Democrats, the Warren tweet, and the Biden statement all assume that Black economists offer a different “perspective”. But…do they? All of them? Automatically? Isn’t a person’s perspective determined by their experiences, not their skin color? And isn’t the assumption that all 41 million Black Americans share a singular economic experience both obviously wrong and also about as racist as anything Henry Ford thought to himself in his darkest moments?

In reality, it’s entirely possible for a Black person to have no special insight into the lives of most Black Americans and no good ideas for how monetary policy should work. And, in fact, one such person almost ascended to the Federal Reserve Board: Trump tried to nominate Herman Cain in 2019. I never tire of talking about Herman Cain; he might be the most gloriously buffoonish political figure of my time. He produced an Abba-level procession of instantly memorable hits, except that his medium was public self-ownership, not pop music. Consider his resume:

• Ran for president in 2012, with his primary qualification being that he had been CEO of Godfather’s Pizza, a mafia-themed pizza chain;

• Appeared to believe that Cubans speak “Cuban”;

• Staked out a strong position against the concept of countries he had never heard of, especially in Central Asia;

• Campaigned on the regressive “9-9-9 Plan”, which proposed nine percent corporate, income, and sales taxes, and which Cain said he chose because it’s “the lowest possible rate”, at which point it was impossible not to think of the “Seven Minute Abs” scene from There’s Something About Mary;

• Appeared to plagiarize the “I was elected to lead, not to read” line from The Simpsons Movie;

• Abruptly ended his campaign amidst accusations of sexual harassment;

• Appeared to plagiarize from The Pokemon Movie in his farewell speech;

• Resurfaced as an avid Trump supporter;

• Loudly opposed mask wearing and social distancing upon the onset of Covid, promoted the use of hydroxychloroquine as a treatment;

• Died of Covid;

• Continued tweeting despite being dead.

If you ask me, that’s not a guy I want influencing monetary policy. Honestly, I’m a bit troubled by the fact that he was in charge of pizza in the ‘90s. Cain’s proposed nomination led to backlash from virtually all Democrats and some Republicans, and he wasn’t nominated. I’m recapping this story in order to establish that on some level, we all agree that a person’s race does not automatically make them an advocate for other people of that race. Herman Cain was not attuned to some mystical force that connected him to every other Black person on Earth any more than I, a white guy, can light a candle, chant a Vampire Weekend lyric five times, and come to know the thoughts of some random white person in Armenia.

Biden’s nominees are billions, perhaps trillions of times more qualified than Herman Cain. But do their economic and career experiences typify the experience of most Black Americans? That seems like a stretch. Consider the bios of Biden’s two Black nominees to the Fed Board (the third, Sarah Bloom Raskin, is white):

Dr. Lisa D. Cook was raised in Midgeville, Georgia, the daughter of a chaplain and a college professor. Her family was personal friends with Martin Luther King, Jr. Dr. Cook graduated magna cum laude from Spellman College and then earned a Marshall Scholarship and attended Oxford, where she earned a second BA. She did post-graduate coursework in Senegal and earned her PhD from the University of California, Berkeley. Her dissertation was on Russian banking systems. Cook has served on the faculty at Harvard and Michigan State (current), and has also worked at the US Treasury Department, the Hoover Institute, and on the Obama Administration’s Council of Economic Advisors.

Dr. Philip Jefferson is from Washington, DC; he developed an interest in economics by watching the CBS Evening News with his father. He earned his BA from Vassar College, during which time he studied at the London School of Economics and participated in the American Economic Association pipeline program at Yale. He earned his PhD from the University of Virginia, and has taught at the University of Virginia, Columbia University, the University of California, Berkeley, Swarthmore College, and Davidson College (current). He served as the president of the National Economic Association and as a research economist at the Federal Reserve Board.

I do not think these experiences are typical. They are not typical of Black Americans, or any Americans, because of course they’re fucking not THESE PEOPLE ARE BEING NOMINATED FOR ONE OF THE MOST ELITE JOBS ON THE PLANET!!! When you’re dealing with a job in which being highly distinguished is a prerequisite, typical economic experiences aren’t really on the menu. Anyone demanding a nominee with lived experience that’s maximally relevant to the needs of average Americans needs to find a guy with no college degree who makes $35,000 and is also an elite-level economist. Good fucking luck with that. I know that highly successful people still have real challenges and experiences, but credible Federal Reserve candidates by definition have lived atypical lives. And so I wonder: What highly-attuned perspective is supposedly being brought to the table here?

There is, of course, also the argument that demographic diversity at high levels of government matters. I’m somewhat persuaded by this argument; it would, after all, be awfully weird if — at this late date — our government was almost entirely white guys. Extreme disproportionality reduces legitimacy. If you started dating a woman, and you found out that all her previous boyfriends were Pilipino guys with one arm, you’d think “that’s not random — something’s up”. And you’d almost certainly be right.

Still, I think that the “representation matters” argument is often overstated. To begin with, the fact that people underestimate statistical randomness probably leads us to ascribe meaning to demographic oddities even when no causality is present. Of course, this is especially true when dealing with small numbers; I remember being on a work group in which six of the twelve participants were named “Jeff”. Five of eight Last Week Tonight writers were left-handed. Currently, six out of nine Supreme Court justices are Catholic. Now: We could write that off as a quirk of statistical randomness, or we could ascribe it to A SECRET VATICAN PLOT TO POPULATE THE LEVERS OF POWER WITH PAPISTS!!! But it’s probably just a coincidence. OR IS IT???? It is. UNTIL YOU REALISE THAT THE PRESIDENT HIMSELF IS SUBSERVIENT TO ROME!!!

They tried to warn us, but we didn’t listen, and now we’re overrun with Popery! POPERY!!!

I also think the importance of people “seeing themselves” in various roles is overstated. Again: I think there’s some truth to this. The first Black President was a big deal. The first Black major league ballplayer was big deal. But the first Black winner of a professional Magic the Gathering tournament? Uhh…congratulations and everything to Julian Nuijtan on his big win, but hopefully he’ll understand if we don’t start naming mountains after him just yet.¹ Lisa Cook is being celebrated for potentially being the first Black woman on the Fed Board, and — with all respect to Dr. Cook, who seems to have lived an extraordinary life — is that actually something people really care about? Are young Black girls across the country thinking “Wow…a Black woman on the Federal Reserve Board of Governors! We’re not talking Federal Open Market Committee or one of the twelve District Banks — this is the actual Board! No disrespect to Michelle Bowman and Chris Waller — who are fine economists, if a little hawkish on inflation for my tastes — but when I look at Dr. Lisa Cook, I really see me.” I must be a total dumbass, because when I was a kid, I probably couldn’t have named five of the seven members of the Fed Board. I idolized athletes and musicians like a total dork when I could have been looking up to famed inflation-tamer Lyle Gramley!

Shit, I had a poster of Magic Johnson on my wall instead of this guy. I blew it!

I think the only people who really enjoy the “there must be X number of people with Y characteristics in Z organization” game are progressive activists. I think that most people care about representation a tad and about diversity of perspective a smidge, but they mostly want to not be discriminated against and they want their institutions to work. That’s my guess. And it’s just a guess, but it’s informed by polls like this one:

I think that most die-hard progressives would be shocked by these numbers. It seems to be a given among the NPR set that most non-white people want aggressive measures to balance racial outcomes, but I don’t see much evidence that they actually do. I think that maybe — just as with defund the police — progressives are guessing at what non-white people want and guessing wrong. On the other side of the ledger, I could point to any number of polls showing that people of all races care a lot about jobs, inflation, and the economy. And that — along with the fact that I’m sort of a natural asshole — is why I’ve decided to challenge this bit of progressive conventional wisdom.

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I’d like to reiterate that a possible diversity/efficacy tradeoff doesn’t really seem to be an issue with Biden’s recent nominees. We’ll find out more about Cook, Jefferson, and Raskin in the coming weeks, but their résumés are what you’d expect, and the most negative thing I found about any of them is this Wall Street Journal editorial criticizing Raskin’s climate beliefs. I looked for negative reactions to Cook and Jefferson on Twitter and didn’t find any, and any public figure who can avoid having people on Twitter heckle them like a soccer referee must be doing something right!

I think it’s actually pretty clear what’s going on here: Progressives wanted Lael Brainard to be Fed Chair. But Biden reappointed Jerome Powell, and Brainard had to settle for Vice Chair. Now, to further mollify the Warren/Sanders crowd, Biden is also giving them Raskin — who seems to be kind of left-ish (she’s billed here as “the biggest change agent in the bunch”) — along with Cook and Jefferson, who appear to be exactly who you’d expect a Democrat to pick, and they also satisfy progressives’ calls for diversity. Basically, these picks are happening because Biden didn’t take care of things right here in Brainard (and you thought I’d finish this column without a Coen brothers reference!).

This the second column in a row in which I’ve picked apart what I see as crappy progressive logic. From my perspective, progressive activist world is morphing into an uncontrollable beast that exists to produce bad ideas that make Democrats unpopular. Nonetheless, you may have noticed that I’m not an absolutist on this issue; I think diversity matters a bit, and I’m not calling for total color-blindness. But I think that the belief that the Fed Board’s demographics are key to unlocking economic potential, and that many people share that belief and are demanding that diversity be a priority, might ultimately be completely wrong.

1. I do not actually know whether Julian Nuijtan is the first Black winner of a professional Magic the Gathering tournament. He has won a tournament, and he appears to be Black. I do, however, know that he was the youngest player to ever win a tournament, so any way you slice it, Julian Nuijtan is a trailblazer!