David Blanchflower’s Pot-Kettle Conundrum
December 1, 2010
David Blanchflower, the man who called for interest rates to be held at a low rate on the eve of the bursting of history’s greatest credit bubble, has called on Mervyn King to resign on the grounds that he’s shown political bias. This ‘bias’ is supposed to be demonstrated by the Wikileaks documents that show (a) King pushed for a severe deficit-reduction strategy, and (b) King doesn’t think Osborne or Cameron are up to much.
Now, I’m puzzled. Has King demonstrated bias by pushing for a particular policy line that happens to be in line with Conservative ideals, or has he demonstrated bias by heavily criticising the Conservative front bench? Because both would perhaps demonstrate partisanship by themselves, but together they look like a governor of the Bank of England pushing for a particular line on fiscal policy and being concerned with impediments to the implementation of that policy. Is Mr Blanchflower criticising Mr King for pushing a policy that he personally doesn’t agree with?
The governor of the Bank of England should be non-partisan – but saying that he shouldn’t take a position on fiscal policy is like saying a general shouldn’t take a position on battlefield strategy. The Wikileaks revelations point to a man concerned with ensuring that politicians don’t do anything stupid – but not a man seeking to bolster a particular party. Hard as it may be for Mr Blanchflower to accept, a man partly responsible for putting the economy of the UK on a secure footing will, occasionally, have to pay attention to fiscal reality.
Update: Hmm. I might be wrong about King being a-okay to comment on fiscal policy as opposed to monetary. It’s certainly the case that other members of the MPC expressed their concern at King’s approach, other than just the notoriously Labourite Blanchflower. On the other hand, if fiscal policy has an impact on monetary outcomes like inflation, for which King is responsible, is it in his remit to speak out? Answers on a postcard, please.