on being a former bank of england economist
professional deformations, and my own
A day late, sorry, but another one in the series “Memoirs of famous people who I might have known but in fact didn’t”. Rachel Reeves, the current Shadow and presumptive next Chancellor of the Exchequer is like me in that people keep calling her a “former Bank of England economist”, even though we were only there for a few years and it was quite a while ago. In my case I have gone from trading off this status aggressively, to trying not to mention it, to a point where I now actually ask people not to refer to me that way. (I was there for four years, from 1994 to 1998, and after what looked like a promising start, my career was really going nowhere by the time I left, mainly due to an inability to keep my mouth shut. The Bank of England and me really can’t blame each other for our respective problems).
Reeves was there for a bit longer and a bit more recently (2000-2006), and I am guessing from her LinkedIn that she was doing somewhat better (she had a secondment to Washington which was a bit of a plum job). But nonetheless, it’s worth asking – why do people do this? And what does it mean?
The first question is a lot easier to answer than the second. The Bank is a good brand (even still), and it’s directly relevant to economics. Although I regularly joke that being a FBoEE proves nothing – there were even bigger idiots than me working there – it doesn’t prove literally nothing, it does show that you were able to do things like “show up for work”, “write notes without obvious glaring errors of logic in them” and “understand very basic facts about the UK economy”. So in a world in which none of these skills can be taken for granted at the highest levels of British public life, it might not be such a swizz for Rachel Reeves to indicate that she has membership of the alumni club.
As for the second, there are cultural traits and blind spots which go with the territory. I’ll try and list a few. Bear in mind that my knowledge is now almost thirty years out of date, and the working culture of the Bank of England might have changed, but a) from all I know about it, I bet it hasn’t, and b) if it did, the likely break would have been with the Great Financial Crisis and both my and her experience date from before that. So I think the noticeable traits, positive and negative, of FBoEEs might be:
Nitpicking. I think this is the thing that really marks them out. The Bank has its own monetary statistics department, and spends a lot of time talking to the relevant bods at the ONS to get an understanding of the oddities and vagaries of their data series. This is useful a lot of the time – FboEEs are less likely to be caught out by anomalies or to mistake noise for signal – but it comes at the cost of the big picture. The comfort zone of central bank economists of all sorts is finely grained nerdy technical arguments, while the house is on fire.
Excessive respect for “markets”. Bank of England people have exactly the same cultural cringe with respect to the private sector as any other public servants of the last five decades. They also deal more directly with investment bankers than most, and many of us had one eye on a private sector job as an exit route. Consequently they’re always very likely to give a market-centric answer if nothing else has occurred to them.
Pointless contrarianism. There is a bad rhetorical habit which gets Andrew Bailey in trouble a lot (although it dates back a lot longer) of giving “can I shock you” type answers. When the full answer to a question is “Basically yes, although there are a lot of qualifications to that, many special cases, and in fact this whole framing of the issue is questionable”, you can do two things. Either give that answer without the first three words, or do it with a lot of emphasis on the first two words and a long pause afterwards. I think Reeves often overstates the extent to which she is at odds with traditional Labour Party thinking; if you just shake your head and go “ah, yeah funny” at the Thatcherism references in her Mais Lecture, it’s actually quite an interesting and modern centre-left set of ideas with at least as much useful and creative stuff as there are “reform and sound finances” cliches.
Those are the ones that come to my mind; readers will probably note that I still have bad cases of 1) and 3) three decades later, and it took a surprising amount of direct exposure to “markets” to get rid of 2). Obviously, being an FBoEE doesn’t really tell you much about anyone’s ideas – it’s a category that includes Andy Haldane, Matt Hancock and me. But there are little things that you need to look out for, and probably divide through as being bad habits learned at an impressionable age rather than any insights into ultimate personal values.
I'll say "with love" that being a FBoEE puts you in a place where a lot more people are going to listen to you about economics and information than (eg) me (former engineer then anthropologist who studied economists and decided they had developed a weird set of tribal beliefs about information). Not sure what this says about Reeves, probably that if she actually wants to make the interesting and modern centre-left ideas she has happen, touting the FBoEE probably will make it easier for her to do it than it would be for (eg) John McDonnell. But the hanging question (as the spectres of Hancock and Haldane loom like Banquo's ghost) is does she actually want to push the good ideas, or whatever contrarian ones are buzzing in the back of her brain?
"Bank of England people have exactly the same cultural cringe with respect to the private sector as any other public servants of the last five decades"
This is a really big deal. I wrote something similar about Australia and Covid. Key quote asterisked
https://www.themonthly.com.au/issue/2021/september/1630418400/john-quiggin/dismembering-government#mtr
I'll quote at length since you've already given the tl;dr version
Suppose that a Commonwealth government such as the one we had 50 years ago was in place when the pandemic began. It’s highly unlikely that the crisis management would have been left to the states. In the 1970s, the Commonwealth still operated quarantine facilities and had its own department of works, capable of building new facilities or expanding old ones. In the previous decades it had managed both the repatriation of hundreds of thousands of troops from World War Two and the provision of housing to support an immigration program on an unparalleled scale.
The farcical situation today where Australians stranded abroad have to pay horrendous amounts for a handful of available seats on commercial flights would scarcely have occurred if, as in the 1970s, the Commonwealth owned its own airline (and, for that matter, rail and shipping businesses).
On the medical front, the Commonwealth ran its own network of repatriation hospitals and owned Commonwealth Serum Laboratories, now privatised as CSL. The question of vaccine passports would certainly not have been controversial, since the government required a range of vaccinations for travellers (indeed, the scar from smallpox inoculation, required before overseas travel, served as a kind of permanent passport).
*Above all, the Commonwealth government had confidence in its own capacity, employing the best and brightest graduates of the universities that had expanded massively thanks to Commonwealth funding beginning in the 1960s. The Commonwealth government saw itself as both more competent and less subject to interest group pressure than the states. Under both conservative and Labor governments, the Commonwealth had steadily expanded the scope and scale of its operations, reducing the roles of both state governments and the business sector.*
The Commonwealth government of those times would have been far better equipped to deal with a pandemic, and would have seen itself as having the obvious responsibility to do so. We might therefore have expected a national response, including requirements for Qantas to repatriate Australians from overseas, a rapid expansion of dedicated quarantine facilities, and a consistent national policy on lockdowns and movement restrictions.
Of course, we have seen nothing like this. At almost every stage in the process, the Commonwealth has sought to avoid responsibility, and transfer it either to the states or to private parties ranging from management consultants to hotel operators.