Nutters, the MPC and the sorry state of British macroeconomics

On Friday I posted about BoE Governor King's displeasure at Treasury delays in filling MPC vacancies. Chris at Stumbling and Mumbling has an explanation for the MPC's staffing problem: the talent pool is small.

...there's a reason for the delay. The pool of talent from which the Chancellor can appoint MPC members is small - it's less a pool, more a fetid puddle. There are several reasons for this.

1. Macroeconomics has not been a very interesting field of study for the last 15 years or so. Many good economists, therefore, have gone into (say) financial or micro rather than macro.

2. Since the 1980s, many of those economists who have been interested in macro have gone not into academia but rather into the Bank itself (and so aren't eligible for the external members' position), or into the City, where they've become deskilled.

3. Many good British academic economists prefer not to work in UK universities. Like David Blanchflower, they've emigrated.

These problems are exacerbated by others. Brown, possibly for good reasons, possibly for bad, doesn't want many City economists on the committee. And he seems not to want a full diversity of opinion on it: why do you think Tim Congdon or Patrick Minford have never been appointed?

A further difficulty is that the MPC's job is partly to provide the illusion of sagacity. Let's face it, it's not that hard to work out whether rates should rise or fall a quarter-point, simply because it makes little difference. What the MPC must do is give the impression that decisions are taken by wise men of good judgment - to comfort the public. Given the choice between a 50-year-old dullard with a good reputation among the chuntering classes, and a 30-year-old genius with no reputation, Brown would go for the dullard every time.

These factors mean there are few economists suitable for the MPC - which is why Brown has already had to resort to employing a mere journalist and the head of an organization which one of Brown's senior colleagues deems "not fit for purpose."

This problem will only get worse. Herein, I think, lies one argument for adopting a Taylor rule. The MPC just can't get the members to make judgment-based decisions.

Well, Danny Blanchlower is 54, but judging by his published output one would hardly call him a dullard. Patrick Minford in full flight seems a bit of a nutter to me - though I can see quite a good case for appointing Tim Congdon. He would certainly liven up MPC meetings!

But is the state of macroeconomics in the UK, or elsewhere,really so dire? Comments welcome.

Well, Danny Blanchlower is 54, but judging by his published output one would hardly call him a dullard. Patrick Minford in full flight seems a bit of a nutter to me - though I can see quite a good case for appointing Tim Congdon. He would certainly liven up MPC meetings!

But is the state of macroeconomics in the UK, or elsewhere,really so dire? Comments welcome.

Comments

[chris]

I wouldn't call Danny Blanchflower a dullard either; that analogy was certainly not intended to apply to him.

[chris]

And, just look at your own blog. How many posts have there been along the lines of "here's a brilliant macroeconomic paper by a British economist"?
Not too many, have there?

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