According to multiple reports, Donald Trump is preparing to nominate Herman Cain to fill one of the two vacant positions on the Federal Reserve’s Board of Governors.
Cain, the former CEO of Godfathers Pizza and a meme-friendly 2012 presidential candidate, shares several similarities to Stephen Moore, who was also nominated last month. To their credit, neither man comes from the arena of economic groupthink that persists among many central bankers. Both also owe their nomination to the strong personal relationship they both have with Trump, which is why the administration isn’t worried about their past superficial criticism of the low interest rate policy the president has made clear he desires.
While Moore has been criticized strongly within beltway circles since his nomination, it will be interesting to see how Trump critics handle Mr. Cain. After all, he has the one quality Elizabeth Warren and other Democrats have chosen to focus on when it comes to a Federal Reserve nominee: he isn’t a white guy.
For several years now, Warren and other Democrats have been pounding the table for greater diversity at the Fed. As a letter from 2016 states:
Given the critical linkage between monetary policy and the experiences of hardworking Americans, the importance of ensuring that such positions are filled by persons that reflect and represent the interests of our diverse country, cannot be understated. When the voices of women, African-Americans, Latinos, and representatives of consumers and labor are excluded from key discussions, their interests are too often neglected.
If the view point of Warren and her colleagues truly is that simply skin color and experience are important to the Federal Reserve considering the interests of Americans broadly, it would make sense for them to celebrate this nomination. Here we would have the first African American Fed governor in several decades, who rose up from a working class background to become an American success story.
Should Cain be nominated, anything short of grand applause from Democrats will only highlight how shallow the emphasis on superficial “diversity” truly is.
The additional irony here is that Trump’s desire to stack the deck with his own allies actually serves the policy goals of progressive groups. For example, Fed Up, a left-populist organization policy that has been part of the larger push to emphasize “Fed diversity,” has been pounding the table against interest rate increases for years. In theory, a Governor Herman Cain that is loyal to Trump’s vision should check the two largest boxes the organization has been promoting.
Of course, there is a real tragedy connected to this superficial push for “diversity,” as it is precisely the interventionist monetary policy advocated by politicians like Warren and groups like Fed Up that do real damage to minority communities. While Fed Chair Jerome Powell took time to visit the historically black college of Mississippi Valley State this February, his speech failed to highlight how the Fed’s post-2008 monetary policy has disproportionally hurt black communities due to the fact African Americans are less likely to be invested in a juiced up stock market. Or how the Fed-fueled housing bubble was particularly damaging to black communities.
So while Herman Cain does check a diversity box for the Federal Reserve, he is unlikely to bring the far more important ideological diversity to America’s central bank that is desperately needed. On the bright side though, at least he isn’t Marvin Goodfriend.
