Tuesday 27 November 2012

New Governor of the Bank

I know little about Mark Carney, the Canadian appointed by George Osborne as the new Governor of the Bank of England, but am disappointed that my own favoured candidate, Adair Turner, has not got the job. I must confess that I don't know much about Lord Turner either, and haven't even read his book, "Economics after the Crisis," on which my preference is based.  But I have read Robert Skidelski's review of it in the Times Literary Supplement (28/09/2012).

In this review Skidelski claims that Turner challenges "the three main planks of 'instrumental conventional wisdom'" viz:-

  • that the chief objective of  economic policy is to maximise GDP per head;
  • that the way to achieve this is to create freer markets;
  • that the resulting increase in inequality is acceptable if it delivers superior growth.
These criticisms are totally consistent with the arguments expressed in this blog and which  in my view ought to underlie Liberal Democrat approaches to economic policy.

To elaborate briefly in support of Lord Turner's challenges:

  • We ought to be looking to increase well-being  per head and that is not synonymous with material GDP.  Greater sharing, shorter working hours, more leisure, more co-operation and less aggressive competition, more seeking to reach our own potential rather than outdo that of our neighbours, are all aims which will not only better conserve the earth's scarce resources but also lead to greater happiness.
  • Deregulated (ie "free") markets, rather than increasing welfare, or even material output,  are the major cause of our present economic problems.  Government regulation is needed, as our great economist Adam Smith, wrongly adopted as the icon of the neo-conservatives, explained over 200 years ago because: "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends  in a conspiracy against the public, or in some contrivance to raise prices."  (Wealth of Nations, p116, Everyman's Edition).  This is particularly true when the financial sector is so overcame by greed that it loses track of what it is actually buying and selling.
  • We should not be relaxed about some people becoming "filthy rich" as Labour politician Peter Mandelson is, because their affluence doesn't trickle down, they keep it to themselves and hoard it for their offspring. And, as Wilkinson and Pickett in "The Spirit Level" (Penguin), demonstrate,  unequal societies are more dysfunctional.  Emphatically, as present we are not "all in this together" and if we were there would be a lot less angst.
So I hope Mark Carney will take the opportunity to read Lord Turner's book whilst waiting to take over.

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