Wednesday, 26 August 2015

Richard Murphy, Corbyn’s clown guru, says BoE independence is a charade.

Richard Murphy has just announced that Bank of England independence is a fiasco because politicians have the power to withdraw that independence. See here and here. (For non-UK readers, Corbyn is running for leadership of the Labour Party).

Well the average fifteen year old has worked out that ultimate power always lies with politicians. We all know that one of those politicians, Gordon Brown, granted various forms of independence to the BoE. Plus we all know that Brown’s successors can withdraw that independence if they wish. And apart from the Bank of England, the Foreign Office, the Army, Navy and Airforce all have a MEASURE OF independence. Every head teacher in the country has freedom to make various decisions relating to their schools without consulting the minister of education.

Contrary to the false logic advocated by Richard Murphy, the fact that politicians can withdraw some form of independence from some arm of government is not of itself an argument for withdrawing that independence. Put another way, it's not an argument  for ceasing to delegate various decisions to various arms of government.

Moreover (as the average fifteen year old also knows) there is a VERY GOOD argument for giving the central bank a say, if not a dominant say, in how much stimulus there is: it's that if POLITICIANS determine stimulus (i.e. have access to the printing press) they're liable to organise booms just before elections.

The fact that I need to spell out this elementary stuff is an indication that Jeremy Corbyn needs to get himself a different economic adviser.

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