The Bank of England’s Monetary Policy Committee are having a squabble about independence.
Adam Posen claims that Mervyn King was excessively political by supporting the coalition and that independence is essential.
King has dismissed this as “not serious”.
Neither is right. Posen wants to play at the neoliberal game of the economist being an objective observer. That is nonsense: we will come with our prejudices, baggage, experience, likes ,dislikes and preferences attached. No one, not even a neoliberal economist, can get rid of them. They just pretend they can. And that, like everything else about their prescription, is false.
There is on the other hand, the duty that a senior civil servant has (and yes, the Governor of the Bank of England is a senior civil servant) do not state their opinion, and to offer the advice they think is appropriate.
King undoubtedly fail that test.
So Posen has a point, but for all the wrong reasons.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
I am puzzled by this. Here is Paul Krugman on Adam Posen: December 1, 2008, 6:25 am “People should be reading Adam Posen. Everyone’s looking back to the 1930s for policy guidance — and that’s a good thing. But we don’t have to go back that far to see how fiscal policy works in a liquidity trap; Japan was there only a little while ago. And Adam Posen’s book, especially Chapter 2, Fiscal Policy Works When It Is Tried, is must reading right now.”
If I can point you to Posen’s speech “THE CASE FOR DOING MORE,Speech to the Hull and Humber Chamber of Commerce, Industry and Shipping KC Stadium, Hull 28 September 2010” which can be found at the Peterson Institute for International economics, particularly page 37 fig.8, which plots the UK economy from Q3 2009 against the UK economy Q3 1991 against the Japanese economy Q3 1993. If I thought that the future outlook for the UK was Japanese (not Canada or the UK in the 1990s), then I too would be distancing myself from Mr. King.
Krugman went on to say that, “Adam Posen, my favorite Japan expert (and now on the policy board of the BOE)”, and Krugman certainly knows a neoliberal from Adam.