“Given the choice between a country run by technocrats, and a country run by elected politicians with no technical knowledge whatsoever… I would still go for the politicians!”

Paul Tucker, a “self proclaimed technocrat”, speaks like a central banker with over thirty years of experience in monetary policy design. Although the evenings’ talk was billed as a presentation of his new book, Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State, Tucker instead offered listeners a broad insight into the complexities and contradictions of the world’s political and financial power structures.

The ultimate trade-off, the former central banker argues, is the necessity for robust checks and measures to both the government and to the banking sector, versus the danger of regulatory institutions becoming unelected additional arms of power. In the context of this year’s Festival of Economics, Paul Tucker reminded listeners of the delicately balanced dance that economics must tread with the political and regulatory system in order to best serve our country. The institutional seesaw hangs on a knife edge and the preservation of democratic and economic integrity are only maintained if we remain vigilant and remember the core purpose of each institution.

Tucker’s point is that, while they are essential to achieving targets like reasonable inflation levels and a (relatively) stable financial system, independent bodies such as the Bank of England cannot be vested with too much control. It is the devolution and separation of power that sits at the very heart of effective constitutionalism. It is vital, he argues, that each branch of power, both in and out of government, is kept in line by its opposite number. Government must hold Central Banks to account for monetary decisions, but Central Banks must still confidently act with an apolitical and clear agenda that holds the country’s financial and inflationary wellbeing as paramount. During the talk, Tucker simultaneously warned of a world where feckless politicians fiddle with financial policy decisions to gander favour for re-election, whilst calling for caution against “becoming too casual in handing over power in this country.”

An elegant example that illustrated his book’s takeaway point was Tucker’s evaluation of the role of the chief executive of OFCOM, Sharon White. As the head of an institution responsible for both the British media’s content and its budget, she is “…one of the most powerful people in Britain. And you probably don’t even know her name.” Regulate and control by all means, but instate balance within the structure of power that prevents any one body or individual from becoming too elevated from democratic retribution.

In looking forward, Tucker argued that “our basic structure will survive the influence of blockchain and cryptocurrency.” There will always be a role for a centralised, independent monetary institution like the Bank of England. As the future looks towards an age of data-ism, automation and AI, perhaps it is more important than ever to vest appropriate powers in human hands? Tucker’s prescription is clear. Make the objectives of regulators clear and monitor the progress of each body with these goals in mind. At the heart of effective governance lies transparent goals which leave those in power accountable to their actions.

Paul Tucker left the audience with a passionate defence of the role of technocrats and of regulators. The Bank of England, he insisted, “is there to fill out a gap in constitutionalism.” Tucker is not calling for more monetary power to be wrestled into the arms of these unelected institutions, nor arguing a case for more influence to be granted to Parliament. Instead, he reminds us that independent regulatory bodies are vital pillars in an effective democracy. Pillars that help ensure that no one part of a power system can keep too tight a grip on its jurisdiction. In a time of braying populism and seemingly unaccountable politicians and heads of state, perhaps these institutions are more important than ever?

However, as Paul Tucker reminded listeners with the opening quip, at the expense of his technocratic kin, ultimately democracy must be preserved and we cannot leave too much power in the hands of the unelected.

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Festival of Economics 2018 was run in association with Triodos Bank.


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