Last month saw the 25th anniversary in Britain of the landslide election of Tony Blair’s Labour government. One of Blair’s first acts was to hand over control of monetary policy to the Bank of England. Granted “operational independence,” the central bank was tasked with ensuring that inflation did not rise above 2.5 percent (later 2 percent).
Though the move took many by surprise—Labour hadn’t heralded it in its election manifesto—its supposed sagacity is now almost universally accepted across British politics. Few policymakers and commentators believe that such weighty matters as control of the money supply ought to fall squarely within the bailiwick of elected politicians, rather than unaccountable officials.
But as the global aftershocks of the Great Recession continue to reverberate, even at 14 years’ distance, and as our politicians now flail and flounder in the face of a cost-of-living crisis, it is time to reappraise not only the concept of central-bank independence, but the general propensity of the Western political class to cede evermore of its powers to technocrats and privateers.