Today, the Senate Banking Committee is set to vote on five nominations for the Federal Reserve Board. My CEI colleague Myron Ebell and I have opposed the nomination of Sarah Bloom Raskin for vice chair for supervision, due to her calls for the use of financial regulation to cut off business with energy companies.
With Lisa Cook, nominee for Fed governor, there is also a strong concern: that she has expressed support for European-style speech restrictions that would violate the U.S. Constitution’s First Amendment. Moreover, she participated in a social media campaign to “cancel” a respected University of Chicago economics professor.
Cook is professor of economics and international relations at Michigan State University and was a senior economist on President Obama’s Council of Economic Advisers. Much of the focus around her nominations has been on her provocative writings on race, including support for reparations for African Americans to compensate for slavery and discrimination. Opponents say her areas of research and writing stray far from the Fed’s core mission, while supporters say these writings show she would bring much-needed intellectual diversity to the Fed.
Yet Cook’s advocacy of cancelling and censoring voices with whom she disagrees should be the biggest concern of about her nomination. In a Wall Street Journal op-ed entitled “The Fed Doesn’t Need a Censor,” University of Chicago economics professor Harald Uhlig recounts his experience of being the target of an attempted cancellation in which Cook participated.
Just after the “defund the police” movement came into vogue in mid-2020, Uhlig tweeted that this was a bad idea. A string of denunciations came forth on Twitter, as well as allegations that Uhlig had made insensitive comments about Martin Luther King, Jr. in his class years earlier. Uhlig told the Chicago Tribune he did not recall the classroom incident and called King a “global hero.” A University of Chicago investigation found no basis for allegations of mistreatment of students in his class.
Just after the controversy started, Cook jumped into the fray in a tweet thread. She called for Uhlig’s removal as editor of the Journal of Political Economy, a renowned economics journal, and said she hoped the then-ongoing investigation “results in removing yr [sic] access to students.”
In the tweet thread, Cook also made broader comments advocating limits on the freedom of speech guaranteed by the U.S. Constitution. Embedding a tweet about Germany’s then-Chancellor Angela Merkel praising the penalizing of offensive speech in European nations, Cook wrote: “I agree with Angela Merkel … that free speech has its limits. It should not be used to spread hatred and violate the dignity of other people.”
Cook’s tweets expressing sympathy for European-style limits on speech, in which citizens are fined and even jailed for offensive words (some of which wouldn’t even fit any reasonable definition of “hate speech”) should raise alarms about her serving on the Fed. Although the Fed at first glance may not seem like a government entity with the power of censorship, its power over the economy could affect free expression in a number of ways.
First, as Uhlig notes in his Journal op-ed, having an advocate for censorship as governor might make Fed researchers feel pressure to come to “politically correct” conclusions on important economic matters. Pointing out that Fed researchers “routinely examine labor markets and economic inequality,” and asks, “Will they continue to provide the board with balanced and reasoned assessments? Or will only activist voices be welcome.”
Second, in the past few years, pressure has come from both activist campaigns and government officials to “de-bank” certain unpopular industries. The Electronic Frontier Foundation, a liberal-leaning civil liberties group, raised this alarm about financial threats to free expression:
As we’ve seen with digital booksellers, whistleblower websites, online publishers, and online personal ads, payment providers often cave to pressure—whether formal or informal—to shut down or restrict accounts of those engaged in First Amendment-protected activity. In order to foster a future where digital expression can flourish, we need to ensure that necessary service providers like banks and payment processors don’t turn into the weak link used to cut off unpopular speech.
As the Fed is a bank regulator, words from a Fed governor castigating certain forms of speech could make financial institutions at least think twice about doing business with practitioners of that speech. Senators should keep that in mind—in today’s vote and if the vote advances to the Senate floor.