Revamp BOE or Yield to ‘Tyranny of Consensus,’ Blanchflower Says
Revamp BOE or Yield to ‘Tyranny of Consensus,’ Blanchflower Says
(Bloomberg) -- Explore what’s moving the global economy in the new season of the Stephanomics podcast. Subscribe via Pocket Cast or iTunes.
The Bank of England rate-setting committee should be drastically overhauled to follow the model of the Federal Reserve, otherwise it will remain hostage to the “tyranny of consensus,” according to former policy maker Danny Blanchflower.
Groupthink has befallen the current system in which the Monetary Policy Committee is comprised of a governor, three deputies, a chief economist and four external members, he wrote in the Financial Times on Sunday. As a result, they failed to spot the last recession or sufficiently boost growth in its aftermath.
He advocates a system whereby the MPC would comprise the governor and six members to represent regions, including London and the South, the Midlands, the North, Scotland, Wales and Northern Ireland.
MPC members would no longer need to be economists and would have their own staff. They would be selected through a new system and be accountable to elected officials in their own regions, he said.
Blanchflower, who now teaches at Dartmouth College, said that when he sat on the MPC from 2006 to 2009, he was the only member not to have studied at the University of Oxford or Cambridge and who didn’t live in London or South East England. Current external policy makers have “few staff, no constituency, and no real accountability,” he said, highlighting the lack of any dissenting vote throughout this year’s Brexit uncertainty.
“I was a lone voice when I argued early on that the data showed that a recession was spreading to the U.K. from the U.S.,” he wrote. “I am concerned that the current MPC is similarly homogeneous and the tyranny of the consensus continues to reign.”
To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Angela Cullen, Sara Marley
©2019 Bloomberg L.P.