Winner of the New Statesman SPERI Prize in Political Economy 2016

Monday, 22 June 2015

The paranoia of power

A coda to my previous post, where I reported on some simulations presented in the Bank of England’s new blog. My final paragraph started: “The blog does not discuss the policy implications, but they are pretty obvious.” I went on to say what I thought the implications were. Tony Yates thinks that maybe there was a hidden meaning in the sentence I wrote. The hidden meaning was: ‘see how subversive the new blog is: they are allowing staff to communicate that they think the MPC should be overshooting the target’.

When Tony first raised this possibility with me on twitter, I just had to laugh, for two reasons. The first is that I had never imagined what I wrote could be interpreted this way. I am an academic, not a journalist trying to gain kudos by embarrassing the Bank. I am interested in what policy should be, not what some Bank staff think it should be. The second is that Tony’s imagined interpretation of what I had written was a perfect illustration of the kind of old Bank thinking that used to make it such a closed institution.

This kind of thinking subjects each possible release of economic analysis, however technical, to the following test. Could you imagine a malevolent journalist taking this analysis and using it to infer something about what policy might be or what some people in the institution think policy should be? The imagined journalist could be both very knowledgeable and quite stupid. If the answer is yes for any combination of these things, the analysis should not be released.

Now Tony is the last person to support such an attitude, but by imagining I had some hidden meaning, and then putting his imagination into print, he just encourages the old way of thinking. As far as I can see some staff members published a piece of technical analysis, and left those reading it to draw any policy conclusions they wished. Now what on earth is wrong with that! 


  1. This Bill Mitchell casts doubt on monetary policy:
    I think they are trying to be as vague as possible. Think Fedspeak.

  2. Off-topic, I know, but this is a quite stunning example of mediamacro

    1) "Five years into its austerity regime, the Greek government has once again had to go cap in hand to its creditors and ask for more money."
    Yes. To roll over their debts. Not to fund new ones. No mention of the fact that Greece is running a cyclically adjusted 5% surplus at the moment.

    2) "overall the Greek government is spending 30% more on pensions than the British government does."

    Really? Look at the public pension spending as a % of GDP in the Key Indicators tables in the OECD figures for Greece and UK

    2013: Greece Public Pension spending 13% of GDP - GDP= ~$290bn (OECD figures) so public pension costs were ~ $38bn

    2013: UK Public Pension spending 6.8% of GDP - GDP=~$2450bn (OECD figures) so public pension costs were ~$168bn.

    How do journalists get away with making these blithe comments (which affect the opinions of the general population) without being held to account?

    3) Greece didn't raise as much from privatisations as expected. No shit Sherlock? Have you ever heard the phrase "fire sale"?

    In the whole article, not one mention of multipliers, of the depressionary effects of austerity (which Greece, under duress, has implemented in spades). No mention of demand side issues, just a stream of supply side problems.

    Quite breathtakingly one-sided editorialising here, and (I suspect) bone-idle repetition of a falsehood on the pensions issue. Now, if there was EVER a similarly biased article from the BBC on demand-side problems in depressed countries, maybe we'd be having a grown-up debate. But of course the BBC (see: Peston) prides itself on taking the middle ground on this issue.

    Except in the case of this article, apparently.

  3. It's transparency, and that's good. Most of US Fed regional banks have blogs and are useful. Now Bernake does too. The econ blogosphere is rough and tumble._.Post dubious stuff and it will be exposed.


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