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The Tories Should Appoint a Bank Governor to Box in Jeremy Corbyn

September 19, 2019 in Economics

By Ryan Bourne

Ryan Bourne

If President Donald Trump had the opportunity to fill a Supreme Court or Federal Reserve vacancy just before an election, do you think he’d pass it up? The answer, of course, is “absolutely not”.

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Distasteful though it might seem, Washington Republicans are not shy in discussing how speedily they’d replace Democratic-appointed Justice Ruth Bader Ginsburg in the event of her near-term death or retirement.

And that’s because they understand something important: the executive power of appointment to high-powered institutions is an important tool in conserving your agenda or constraining your opponents’ impulses, even after you’ve left office. 

Do Conservatives understand this?

With Remainers in Parliament seeking to block, delay, and frustrate its every move on Brexit, one would hope Boris Johnson’s government had learnt a thing or two about constraints. But reports suggest the Chancellor Sajid Javid will actually delay appointing a replacement for Bank of England Governor Mark Carney until after an election, in part because another government might not like the appointee.

The Tories, it seems, are playing by Queensbury Rules in a hostile world of “anything goes”.

This would be a missed opportunity in ordinary times. But the whole justification for an independent Bank of England is to insulate monetary policy from clear political risks, the biggest of which is surely giving Jeremy Corbyn and John McDonnell the power of appointing a radical new Governor.

That’s what makes the reasoning for the Governor appointment delay so baffling.

Kate Barker, a member of the independent appointment panel, has said that, given ongoing events and the eight-year term, any appointment must be “politically sensitive” – i.e. robust to a change in administration. Other journalists have claimed that Javid hurriedly replacing Mark Carney would “risk” a new Corbyn government firing the appointee.

That risk, though, is a trivial one in the grand scheme of things. Economic policy is the area of Government activity where politicians frequently mess up with disastrous consequences.

Corbyn and McDonnell’s long-desired socialist agenda has an economic record of failure so obvious and so blatant that their views are seemingly impervious to facts, experience or reasoning. And the institution with arguably the greatest impact on the economy of the UK is the Bank of England. Far from being a “risk” to political decency or the institutional credibility of the Bank of England to appoint a …read more

Source: OP-EDS

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