The apoplexy I expected to hear from the economic left over Randy Kroszner’s free-market views never really surfaced between his nomination to the Federal Reserve System Board of Governors and his confirmation. But now, after his confirmation, the Financial Market Center vents its spleen, in its report yesterday on “Bush’s Board” (pdf file). Choice excerpts are below the fold.

Kroszner has spent his academic career advocating a purist brand of laissez-faire thinking that questions the need for central banks and conventional payment systems. In addition, his doctrinal framework presumptively favors the abolition of most public-purpose limits and controls on financial activity. …

At a philosophical level, these ideas reflect familiar neoclassical assumptions: markets and the private regulatory mechanisms they purportedly self-generate are always superior to public sector rules, supervision and safety nets. …

At a more visceral level, Kroszner’s writing demonstrates his abiding contempt for the public sphere in democratic societies and distaste for rules governing the enterprises that such societies help make possible through their legal systems and public goods.7 It also emphasizes an idealized conception of markets as not merely welfare-enhancing and stability promoting but also intrinsically honest and competitive. …

Reality, of course, has not been so obliging. …

Kroszner’s passion for 19th century revivalism will also sound familiar at the Fed. In many ways his economic philosophy strongly resembles the views Alan Greenspan brought to the central bank and frequently voiced from his bully pulpit as chairman. … At the same time, however, Greenspan frequently put aside his laissez-faire convictions during a career in which he became the greatest dispenser of emergency liquidity in Federal Reserve history and a de facto practitioner of activist fine-tuning.

Only time will tell whether Dr. Kroszner – who differs significantly from the Alan Greenspan of 1987 in background and level of maturity – will adapt to life as a central banker as the maestro did. But for the moment it is clear that the ideas Kroszner has spent two decades working out and promoting are fundamentally at odds with responsible leadership of the country’s most important financial regulatory agency.