As U.S. President Donald Trump starts asking about whether he can fire the Chairman of the Federal Reserve, it is time to start asking how strong the protections are for politically independent central banks. The answers are alarming: Trump is not the only one challenging central bank independence; he is also not the most successful. Indeed, the challeges are widespread and they have been growing for some time. That is reason enough to pick up Paul Tucker’s book Unelected Power — which was recently named by Foreign Affairs as one of the top books published in 2018. If you want a taster, my review of Tucker’s book from Survival is below. The punchline is that while people are right to be concerned that Trump would violate the independence of the Fed, that does not mean either the Fed or any central bank should be left entirely to its own devices.
On 28 September 2018, Lorenzo Forni of Prometeia invited me to give a short comment on the relationship between ‘populism’ and economic policy-making. Although, I hadn’t thought about that relationship before, I came up with four things I think we might want to consider (in addition to what we might useful think of as ‘populism’ in the context of the question Lorenzo asked). My argument was that populists bring new people into the policy-making process. They also bring a healthy dose of unpredictability. Their messaging on policy issues is not great, which causes problems in a world defined by rational expectations, and they tend to be skeptical toward independent agencies like central banks. Finally, populists are disinclined to international policy coordination. The combination is not wholly bad — sometimes change is for the good! — but the results are often below the promises that populists make to the electorate. The text of the presentation follows.
On Tuesday, 6 November, Americans went to the polls to elect members of the House of Representatives, one-third of the membership of the Senate, a handful of state governors, a host of politicians at the state and local level, and a series of ballot propositions concerning local rules and finances (like bond issues for school maintenance) across the country. These elections are called mid-term because they are held midway through the four-year term of office of the sitting national president.
The name ‘midterm’ is misleading, however, because it makes these elections sound like a national contest. They are not. Although the election results will have a strong impact on the performance of the national government, the mid-term elections are primarily local contests. Moreover, despite and perhaps even because of the very prominent role played by President Donald Trump in the campaign, these mid-term elections were even more local than most.
International political economy used to be about wealth and power. Now the sources of influence and control are more subtle. Governments choose to follow rules that are not enforced, they sign onto policies recommended to them by foreign nationals (or even ‘citizens of nowhere’), and they invite powerful non-state actors to assume control over crucial economic sectors, finance in particular. Three recent books explain why this is so.
Steve Bannon is coming to Brussels to repeat the success he had during the Trump campaign in the upcoming elections to the European Parliament. He has held high profile encounters with Matteo Salvini, Marine Le Pen, and even Boris Johnson. He has talked to the press, toured the capitals, and now set up his own office, called ‘The Movement’. As he has done all this, Bannon has raised awareness that there are a lot of people in many different European countries who are fearful about migration and fed up with their ruling elites. On the surface, that picture does look a little like the discontent Bannon tapped in the United States. But if Bannon is hoping to use the same arguments and tactics, what will matter more is how Europe is different.
The past decade has witnessed a sudden uptick in secessionist movements in Europe. The uptick started on the western side of the continent with the 2009 Belgian elections, where the New Flemish Alliance emerged as the largest party in the country; further to the east, we might point to the Russian invasion and partition of Georgia. Flemings, Abkhazians, and South Ossetians rarely fall in the same category for analysis. Nevertheless, there is something they have in common that warrants exploration. Moreover, that something is shared by the Scots, the Catalans, and the Russian-speakers in Crimea and the Donbass region.
The fast pace of change in European politics has everyone focusing on current events. Behind the scenes, however, politicians are manipulating how we view the past. Since change requires some kind of baseline or benchmark for us to appreciate its magnitude, we need to be very careful about how our memories are curated. The new ‘normal’ is only normalised when we forget just how far we have travelled and when we stop remembering (or appreciating) the lessons we learned through harsh experience.
The British government faced another crisis in the House of Commons this week over Brexit, having found a way to stave off the crisis it faced the week before. Both the country and its political parties appear deeply divided over whether the remain in the European Union or to leave. As we know from the June 2016 referendum, the ‘leave’ voters have a narrow majority. The ‘remain’ voters lost. And while the facts on the ground appear to point inexorably toward a British exit, the choice is still far from settled. The reason for this indecisiveness is fundamental. As the British have learned over the two years, Brexit is about more than just their relations with Europe. It is about who makes decisions in a liberal democracy.
As the Trump Administration prepares for the G7 meeting in Canada, the bulk of commentary in the press is focusing on how isolated the United States has become. The aluminium and steel tariffs, the renegotiation of the North Atlantic Free Trade Agreement (NAFTA), the withdrawal from the joint comprehensive plan of action (JCPOA) with respect to Iran, and the repudiation of the Paris accords all combine to create tension between the Trump Administration and its G7 partners. At the same time, the Trump Administration seems more interested in courting China, Russia, and North Korea than its traditional allies. Hence the question is not just what the Trump Administration hopes to achieve but also why it is bothering to attend at all. The answer is revealing both for what it says about the Trump Administration’s approach to global governance and what it reveals about the enduring legacies of U.S. leadership during the post-Second World War era.