tag:blogger.com,1999:blog-2546602206734889307.post8237673024812890968..comments2024-03-19T09:54:37.187+00:00Comments on mainly macro: Delegation and accountabilityMainly Macrohttp://www.blogger.com/profile/09984575852247982901noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-2546602206734889307.post-32391313151365179572012-12-17T12:45:34.303+00:002012-12-17T12:45:34.303+00:00I got clearly not the answer. But some things migh...I got clearly not the answer. But some things might help.<br /><br />-Get the structure in place (and made it clear) beforehand. Fed is less of a credibility problem than the ECB because of that. Not the only thing but it helps.<br />-Difficult one (not really a good idea howe to do it) split technical and political issues.<br />-2 layer system. Decison by say politics but has to be approved or requires heavy and in public advice.<br />-No politics in the expert forum as much as possible. If appointments become Supreme-Courtish you have a problem. Also especially in Europe you see a lot of so called independent bodies basically via selfappointment being effectively 'consensus left of centre'. In the US likely to see more lobby influence.<br /><br /><br />Another point is have a plan ready and adjust it every year or twice a year. Combined with a stimulus (if that is the issue) priority list. Looking at Obama he did spend a lot but effectively it is all social transfers. Cash for clunkers. It simply looks crap (uncredible as stimulus) to a lot of people and they were probably right. There might have been good social reasons for doing it, but apparently Obama was pretty sure that that was not the way to sell them.<br /><br />Which brings us to the subject that politics also has a huge credibility issue at hand in the Western world and they are doing very little to cure that.<br /><br />Post WW2 continental Europe had strong advisory bodies with a lot of power. Partly coming from the fact that a substantial part of their members came from unions resp employers. But it looks like it didnot really work well the importance of these bodies have become less over time. An issue to be looked at why.<br /><br />Overseen everything.<br />Probably still mainly political decisonmaking for democratic legitimacy. But with something close to approval by a truly independent body. I would also like to see that body having done a lot odf homework. So especially stimuli are used effectively. And it becomes clear which decisions are taken for political reasons.<br />But at the end of the day it is not the best of times to set such a thing up. Credibility of all sorts of authorities is probably at a historic low. Combined that a lot of people think that think/expect/demand that things will go back to the pre-crisis normal, which is imho very doubtful. Nevertheless politicians and advising economists in the widest sense of the word are likely to be judged on this at the ned of the day. It simply looks like another dip in credibility is built in the system whatever it will be. Either for mainly Western politicians or the combination of an independent body and politics, the outcome is a nasty hit for the credibility of authorities in general. Riknoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-3208843792027941302012-12-17T12:43:45.602+00:002012-12-17T12:43:45.602+00:00You never get this completely right imho.
Let pol...You never get this completely right imho.<br /><br />Let politcs do it. And you have all sorts of other issues involved. Probably Osborne knows he needs a bit of pressure to be able to make some changes in the too expensive and most likely long term unaffordable welfarestate. Likely like a proper politician rather short term focussed (kicking the can to after the next election when somebody else is at the job is ok); allocations are likely inefficient because of political choices; in general politicians always like reasons why they can spend more; stimulus in the form of extended social spending is incredibly difficult to reverse lateron when the stimulus is not longer needed. Missing the expertise (in the UK less of an issue, but especially in smaller countries a real problem).<br /><br />Economists (or any specialist forum). Especially with not exact sciences like economy there is not 'one truth', plus it clearly looks like points of view are heavily biased by political alliance.<br />Anyway it is not only good or bad for the economy in general. It is also making effectively political choices. Say somebody who gets nearly all his income from abroad and his nearly all his wealth there as well could not care less for a stimulus, while furtheron up the road he will be asked to pay for it by higher taxes.<br />Allocation of stimulus will have effect at a personal level as it is partly a choice as well.<br />Another issue is that economist in the widest sense have a credibility problem. Some very simple points have been completely missed before the crisis. RE bubble, partly caused by the with economists very popular low interestrates. Banks simply regulation/supervision within the possibilites overseeers had were way below standard.<br />Another issue economist in general havenot got a clue how to sell things to the general public. What you see on economic blogs is that they simply donot understand that a) the general public is doubtful about their expertise and b) that creating money from nothing (as that how it is seen by many) triggers a sort of natural allergic reaction by many. <br /><br />I donot believe in ad hoc decisionmaking. Sometimes it will be necessary, but in general it should be clear beforehand who has the power to make a certain decision. The EuroZone is a good example of this powers not clear so everybody is trying to do things for which there is no political and social platform. If you want to mess with the basics of the state that is the way to do it. <br /><br />In a nutshell. Politicians are not really to be trusted to make the right decision but decisions have such a political dimension (next to the economical one) that in a democracy there should be democratic legitimacy. Now the most important question how?<br /><br /><br />Riknoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-13436685795173880542012-12-16T10:41:32.816+00:002012-12-16T10:41:32.816+00:00"... you will find it very hard to discover a...<i>"... you will find it very hard to discover a voter who will say in 2015: I’m not voting for the Conservatives because the Chancellor got his calculations about the output gap wrong."</i><br /><br />No, but you may very well find voters who say "I"m not voting for the Conservatives because they left me unemployed/without retirement savings/with my home loan underwater/with falling wages in the face of rising living costs/any or all of the above". Same thing, different language.<br /><br />And Mr Osborne will, rightly, be unable to persuade them that the faulty calculations were not his but those of some unelected technocrat. The buck stops with him.derrida deridernoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-15604532934026604652012-12-15T22:58:51.327+00:002012-12-15T22:58:51.327+00:00Interesting post, although, I respectfully disagre...Interesting post, although, I respectfully disagree. This post, and the earlier political economy one you link to, only adress one side of the argument. A false dichotomy is created, because the issue is presented as independent institutes vs. central government. What about keeping the OBR or central bank independent, but putting the decision to nominate governors in the hand of the public rather than the government?<br />In this case it is ensured that a democratic process centres around the issues adressed by these institutions - thus accountability is created and preserved.<br />And through the maintenance of independence, it creates a check and balance on gov't policy.<br />And ultimately the greatest benefit is that it at least provides a structure where those facing the trade-offs macro opines about (be it deficits vs stimulus or inflation vs unemployment) actually also can decide about them. They may be wrong on these issues sometimes (or mislead), but ultimately, it should be those that are actually affected by unemployment and inflation that know best about its effects and relative importance to their well-being (and thats what we are trying to maximise, no?). And I think it would actually present an incentive to economists as well to really explain their ideas to the public.Alex1noreply@blogger.com