SMALL-D DEMOCRATS by nature, Americans do not favor technocracy — rule by experts. A necessary exception is the Federal Reserve, the central bank, which, also by nature, is a technocratic institution. It takes integrity and common sense, but also highly specialized knowledge, to manage the U.S. money supply, perhaps the most important factor in the global economy. You not only have to know your stuff, economics-wise, but also be willing to follow objective data wherever they might lead, sublimating as much as possible ideological “priors” or the interests of your side in partisan politics.
It’s therefore alarming that President Trump has announced his intention to nominate Stephen Moore to one of two open positions on the Fed’s seven-member Board of Governors, for a period that could be as short as five years or as long as 11. Before this, Mr. Trump’s appointments to the Fed, Chairman Jerome H. Powell included, had been a relative bright spot of the past two years. In contrast to the qualified, mainstream figures previously selected, Mr. Moore is no expert; “enthusiast” better describes this denizen of the conservative think tanks, op-ed pages and green rooms.
Specifically, he is perennially fired up about cutting taxes to boost economic growth — often more fired up than either theory or data would support. Mr. Moore is especially over-committed to the notion that tax cuts pay for themselves via increased output. On other matters, he can be flexible, the problem being that he seems to flex according to which party occupies the White House. Relevant example: When Barack Obama was president, Mr. Moore denounced the Fed for, as he put it in 2011, pumping out “easy money [that] has become like a narcotic for the U.S. economy.” More recently, in December, he demanded Mr. Powell resign for allegedly pursuing an overly tight money policy that threatened “the investment, employment and wage-growth spurt Trump policies have created.”
Note that in each case, Mr. Moore’s advice echoed Republican talking points but flew in the face of economic theory, which calls for monetary easing to help recover from recession (as in 2011) and gradual tightening to prevent booms from sparking inflation, as the Powell Fed did last year. As it happens, Mr. Moore can claim vindication in the latter case, because Mr. Powell has just called a halt to his previous policy. In interviews with major media this week, Mr. Moore crowed about that. Simultaneously, he expressed regret (“I was furious — and Trump was furious, too,” he explained to the New York Times) for his intemperate earlier trashing of Mr. Powell — and for being wrong in 2011.
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A .500 batting average on such matters is hardly reassuring, when the source of error was a tendency to grandstand. We have no right to expect perfection in a Fed nominee, but intellectual honesty is not too much to ask. The best evidence that Mr. Moore possessed it was his heretofore consistent opposition to protectionism, which he has recently modified to accommodate the president’s use of tariffs to pressure China.
In any case, the Fed does not influence trade. Confirming an underqualified self-described “fan” of the president would set a bad precedent for future Fed picks and for nominations to other positions that require combined expertise and independence, such as the Supreme Court. Cheerleaders belong on the sidelines.
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