Cecil on a mission creep
Bureaucrats seem intent on mission creep and appear to be targeting growth policies. But if they succeed, what is the point of the politician?
Sometimes you wonder whether those in power know what they are doing. Actually, change that; practically most of the time it’s you and I left wondering what those in power are doing. Although politicians claim they have growth strategies, we generally see decision-making that is highly unlikely to grow anything except for favourable lobbyists’ wallets. But at least it is part of the democratic process.
The US Federal Bank meanwhile has stepped into the political void across the pond, promising that the insanity of money-purchasing will continue until the jobless rate falls below 6.8 percent. And it looks like the Bank of England could be following suit if the comments from the incoming governor have anything to do with it.
In a speech in Toronto this week, governor-to-be Mark Carney said that in major slumps a “central bank may need to commit credibly to maintaining highly accommodative policy even after the economy and, potentially, inflation picks up”.
He added: “To ‘tie its hands’, a central bank could publicly announce precise numerical thresholds for inflation and unemployment that must be met before reducing stimulus.”
We appear to be entering a dangerous period politically, and possibly economically, if those bureaucrats in the Central Banks have lost patience with their political masters, insisting they can turn economies around.
In fact, this sounds dangerously like command economics where, if we are not already, we will be smothered with tractor statistics and five-year plans that do not take into account the effect on the people, or even the will of the people.
Because, that is in essence what would happen if the bureaucrats complete their takeover of the process. Despite their incompetence, despite their failures, at least at the end of the day, politicians are subject to the will of the people through the ballot box.
If growth is handed over to the Central Banks then, like Europe, decisions will be taken which will not be answerable to the voter. No matter who would get in, the economic policy would stay the same.
I know I am talking in extremes, but like taxes, once you introduce something, there becomes a great reluctance to remove it. After all income tax was meant to be a temporary war measure, remember?
The thing is that so far all Central Bank policies haven’t worked. In the US, the economy remains steadfastly sluggish with unemployment at 7.7 percent in November with interest rates at near-zero and $2.4trn of bond purchases. GPD grew at 2.7 percent annual rate in the third quarter with economists expecting that to slow to around 1.2 percent this quarter.
Things are even worse in the UK with growth non-existent, deficit plans consistently being pushed back and Merv the Swerve constantly writing letters about missing inflation targets.
Ah yes, inflation. One of the fundamentals of the Bank’s raison d’etre and constantly missed.
The roundly applauded idea of giving the BoE independence in controlling interest rates has seen us hit near negative rates of 0.5 percent – negative if you take inflation into account.
I admit, I thought taking the politics out of the decision making in interest rates was a good idea. Unfortunately, what we have seen is bureaucracy fill the political space. Numbers on the page; meetings in Threadneedle Street; the Old Lady has no real concept of what real inflation – the price of gas, food, transport – does to the economos of the working man who, thanks to slack supervision of the banks, has not seen a real income rise in two years.
The paper says that inflation stands at 2.7 percent – does that reflect what you see in real life where gas bills have risen by over 20 percent in a year? Where pint prices have gone up by around 15 percent in most chains?
Bureaucrats see inflation at 2.7 percent, not the shrinking change in your pocket or that £20 you took out yesterday disappearing faster than it used to. And the politician loves it. They love that they can shrug their shoulders and claim independent decision making. That they have nothing to do with it - just like the EU in fact.
And there’s an idea that Central Banks should shift to a growth policy? Why? So once again a politician can shrug, point East to EC2, and say ‘nothing to do with us’?
What is the point of a politician if decisions are being taken by bureaucrats? The danger of a shift in policy is that we cannot approve or disapprove of policy. We become the peasant in the field where whoever rules the land doesn't really affect us as long as we pay our tithes.
Is it incompetence? Are we now paying for all those career politicians that do not know the value of anything? So devoid of real politics that they are relieved that hard decision making can be thrown to unaccountable bureaucrats both here and in Europe. So relieved that they can waste time on insignificant law making or even significantly dangerous laws that affect the very nature of the Rule of Law.
The bureaucracy has spotted the vacuum: the inability of politicians to create growth strategies, to remove the bureaucracy that is stifling business and individuals alike. As a result, we continue with intrusive paperwork simply to get a bank account, with demands on health and safety that prevent trips to museums for kids, and with regulations that only exist to keep bureaucrats and lawyers in work.
Who knows, perhaps we would be better off in a benign bureaucratic dictatorship where all decisions are taken without resolve to the ballot box. But in my experience of the Civil Service, I very much doubt it.
It is about time politicians remember that they are there to service the will of the people. To be brave and take decisions that, rightly or wrongly, they have to answer for at the ballot box.
Perhaps we should cater for their own appetite for power. After all if economic growth and other such important issues are left with the Cecils, then pray answer me this – what would be the point of the politicians?
Simon Miller is a Contributing Editor to The Commentator
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