I posted this on Twitter yesterday afternoon:
My reasoning was straightforward. We have a new chief economist at the Bank of England, who will serve on its Monetary Policy Committee and so be responsible for setting interest rates for the UK, who looks as though he has come out of central casting to be the stereotypical neoliberal banker.
Leave aside why the Bank needed another white, late middle age member of the committee for the moment.
And try to ignore the fact that he is ex-Goldman Sachs, as if any more influence from that bank was required.
Pretend for a moment that he has a strong academic record (which it's not clear he has) which would seem to be a pre-requisite for this job.
Instead note that it is reported that he does not have much faith in QE and is a conventional monetary economist. In other words, he thinks that the government should rely on bond markets, which is wholly unnecessary, and should vary interest rates to beat inflation because that is the focus of conventional monetary policy. In fact, that is all there is to it.
How is such a person, who wishes we were still living in 2007, going to help in the situation we now face in the UK? How too are they going to help create policy that will do anything but serve the interests of banks and the very rich? It is very hard to tell.
As Danny Blanchflower tweeted a little later yesterday:
Too darned right we will be. If ever there was a moment to have a voice criticising the City from outside its boundaries this is it. And that is what Danny and I will be doing.
Put Huw Pill's conventional monetary policy together with Rishi Sunak's very apparent desire for cuts in government sending and the current economic recipe is for a prolonged recession, induced solely by policy makers acting without any concern for the people of the UK as a whole.
Worry.
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You surely didn’t think that those who espouse and benefit from the application of the ugly dogmas of this mis-named neoliberalism were prepared to take their apparent recent reverses lying down? The pushback from the forces of darkness and resistance (FODAR) will be ferocious. The Biden administration is pivoting determinedly away from neoliberalism. The Bretton Woods institutions are gingerly clambering on board. The EU, via the Covid Recovery Fund, is making tentative steps, but it is mired in institutional dysfunction, political ineptitude and strategic incoherence.
There was always going to be a battle here. This government, probably the most incompetent and mendacious since the pre D’Israeli/Gladstone era, is trying to ride two horses – politically expedient selective fiscal activism and fiscal retrenchment to facilitate the previous dominance of neoliberal monetary policy.
It appears there is considerable debate and even conflict behind the scenes. But democracy will prevail if the public are kept in the loop.
From the FT article –
“But he called for limits on quantitative easing so that government would never be able to count on the central bank financing its deficits”.
Before I saw that, I did a quick search for his name, and was somewhat encouraged by what turned up in an op-ed by Huw Pill in 2016 –
“Time, then, to pass the baton to fiscal policy. With yields still close to historically low levels, government borrowing to fund much-needed infrastructure not only serves to bolster demand in uncertain times, but also strengthens the economy’s supply side.”
but especially this –
“In particular, governments’ ability to ease fiscal policy is supported by the creation of “fiscal space” on their balance sheets via central bank purchases of sovereign debt.”
https://www.goldmansachs.com/media-relations/in-the-news/archive/huw-pill-op-ed-29-nov-2016.html
He seems to be a man of many opinions!
Interesting…..
Perhaps worth noting that the GS website seems only to claim that the article was ‘“published” by Mr. Pill, not that he wrote it. Having written a number of documents while working in the investment banking business over the years I can assure you that authorship is often a flexible concept once senior management get hold of a text…
Perhaps, like most in that milieu, he has a clear understanding of on what side his bread is buttered. When he expressed the views you quote in 2016 he was Chief European Economist for Goldman Sachs. At that time policies of the ECB and the emasculation of fiscal policy were probably not in the interests of Goldman Sachs or its clients. He is now with a central bank which is seeking to re-establish the dominance of neoliberal monetary policy.
Almost all economists, like most professionals, will say what they’re paid to say. Citizens, to protect their collective interests, should be statutorily empowered and resourced to retain professionals to say what they want them to say.
@Paul I agree, although qualifying your post with “Perhaps” at the start seems superfluous.
@George S. Gordon,
I used the “perhaps” because I don’t want to libel anyone. There is an infinitesimally small probability that this gentleman could be a candidate for canonisation.
Worry indeed.
The last thing we need is a vigorous prosecution of the thinking and policies which created our current mess in the first place. The British economy was flatlining when it entered 2020, and the pandemic has simply served to cover up the gross inadequacies in the way it has not worked for most people.
https://leftfootforward.org/2020/01/this-is-the-state-of-our-economy-after-a-decade-of-tory-rule/?doing_wp_cron=1630585557.0821189880371093750000
Robert Skidelsky’s latest book, “What’s Wrong With economics” takes such thinking apart:
https://www.amazon.co.uk/Whats-Wrong-Economics-Primer-Perplexed/dp/030025749X
And here, is a reasonably balanced, but ultimately positive assesment:
https://link.springer.com/article/10.1007/s00712-021-00743-x
The problem with technocrats such as the Bank’s new Chief Economist, is that in the end, they forget that they are ultimately in the business of peoples’ lives.
And when things go drastically wrong, due to stupid policy choices, that’s when the rioting begins…….
Hubris leading to nemesis is a characteristic Conservative trajectory (no pun intended).
I’ve been worried since 2010.
It never seems to end………………
Tories well on the way to turning this country into a wasteland surrounding the City of London