When the next crisis comes, don’t blame the central bankers

President Trump’s tweets criticising the Federal Reserve bank, and the European Central Bank, draw attention to how prominent central banking has become over recent years. Central banking’s high profile today marks a significant shift from earlier times. Central banking used to be regarded as a necessary activity that most people knew existed, but few could get that excited about.

Increasingly over the past three decades the central banks have attained a much more prominent role, not only in the US but across the mature industrial countries. This has had nothing to do with changes to the calibre of central bankers, or to the development of new banking techniques. Instead, it was primarily a response to the exhaustion of Western politics that became more evident from the second half of the 1980s.

There are three important features of central banking in modern mature economies. First, the misleading fallacy of central bank ‘independence’. Second, the associated sheltering of politicians from responsibility for the economy. And third, the waning efficacy of central banking.

Read the full article here.

How to help British Steel workers

News broke last week that British Steel had been placed in compulsory liquidation, putting 5,000 jobs at risk. This has sparked debate on what to do about the ailing British steel industry and the people impacted upon. The best, and most honest, way the government can help the employees is to let failing steel plants go under and sponsor all the people affected during the transition into better and more lasting jobs that they should be doing much more to help create.  Read the full article here.

Philip Hammond’s ‘Tiggerish’ delusions

A few months of better productivity figures and a whole 0.1 per cent upgrade in the Office for Budget Responsibility’s growth forecast for this year is not much to be positive about. Yet under instructions from the prime minister, chancellor Philip Hammond presented a more upbeat, ‘Tiggerish’ side of himself at his first Spring Statement, and announced that there was ‘light at the end of the tunnel’ in Britain’s elusive recovery from the financial crisis of 10 years ago.

It didn’t take long for critics to accuse the chancellor of complacency.

Read the full article here

After Carillion: we need to end zombie capitalism

The liquidation of Carillion, Britain’s second largest construction company, is extremely worrying for its 43,000 workers and their families worldwide, of whom 20,000 live in Britain. This big government contractor going bust means damaging disruption not just to its own employees, but also to its many suppliers and their employees. And it is bad news, too, for the many more thousands relying on Carillion for their pensions. Unfortunately, though, much of the initial political and media reaction has been too narrow to learn the lessons from this calamity. The state has been propping up business and making life more precarious for workers.

Read the full article here.

May’s industrial strategy will fail unless it clears out zombie firms

My opinion piece for City A.M. arguing that in order to generate a new dynamic for economic growth, government has first to stop propping up the zombie economy. The application of many regulations, of government spending and procurement policies, changes to insolvency rules, easier monetary policies – all these and more have acted to support incumbent businesses. The full article is here.

Foster new sectors

I have submitted a Response to Questions 1 and 2 in the Green Paper Building our Industrial Strategy (Department of Business, Energy, and Industrial Strategy, January 2017). The submission can be read here.

This is part of a collective submission from the Institute of Ideas Economy Forum called ‘Go for Growth’, available here.

Keeping the zombie economy on its feet

On 23 January the British government introduced its long-flagged industrial strategy. It was another in a long line of disappointing launches of industrial policies. I wrote an article explaining that Theresa May’s ‘modern’ industrial strategy isn’t nearly enough to boost productivity. Moreover, government economic policies that have primarily propped on the zombie economy are making matters worse. The article is here