This is no legend
Just exactly which fairy tale is Bank of England Chief Economist Andy Haldane living in? Ben Marlow
How apt that Andy Haldane likes children’s folk stories. To listen to the Bank of England’s chief economist in recent days, you might wonder what fairy tale he’s living in at the moment. Or perhaps it was an acorn falling on his head that prompted a series of bizarre speeches from Haldane?
First, we were told by this career number-cruncher that it was our own pessimism that was holding back the economy’s miraculous recovery – “the economics of Chicken Licken” as he so neatly described it.
Yet, not content with this wonderful piece of revisionism, Haldane then popped up a day later to bemoan the lack of spending by companies. Hiring and investment were the “missing ingredient” in the recovery, he said.
Let’s start with the Chicken Licken analogy. There are lots of things that are holding back the economic recovery, but excessive gloom isn’t one of them. Surely, the chief economist of the Bank of England of all people doesn’t need reminding of what has just happened. Companies have been turned upside down by the virus. Most are simply trying to get through each day and survive.
Thousands have only managed it with state support that will soon be taken away.
Cost-cutting to meet lower demand is the order of the day, not spending. That is the last thing on people’s minds. Only someone out of touch with a loose grip on reality would think otherwise.
And what about the tens of thousands of people that have lost their loved ones, or the hundreds of thousands that have been made unemployed, and the many more that will lose their jobs once furlough ends later late this month? Try telling them they need nee to cheer up and everything will be all right.
By B all means, let’s have a debate about abo whether the glass is half empty or half h full, but if coronavirus has taken tak the glass and smashed it against the wall, then maybe it’s time to face facts.
As for the missing ingredient, well there are plenty of those. How about a competent government for a start? Or clear messaging from ministers? Or regulations that actually have some logic, and are followed by the people that make them? Or perhaps a track and trace system capable of actually tracking people? All these things are holding back the recovery.
Sure, you could argue that ministers are being overly cautious. But that’s not the same thing as telling everyone to stop looking so glum at a time when a quarter of the country is in lockdown again with Christmas approaching, and the Government is said to be preparing for four million unemployed.
Or is he advocating a free-for-all where we all get on with our lives unimpeded while the number of cases is spiking every day?
In Haldane’s alternative reality, it is the media that is to blame for the current mood of despondency.
That’s right, in August when the Office for National Statistics released the latest economic data, apparently the press should have reported June’s revival (spoiler: they did), rather than the second quarter’s thumping downturn.
In case Haldane has forgotten, it’s the job of the media to report the news, and when the UK economy has just experienced its worst-ever fall, that’s quite a major news story. In fact, it’s hard to think of many bigger news events in modern times.
A more plausible explanation for this insufferable Pollyanna act is a classic case of confirmation bias.
Don’t forget that he has been one of the biggest cheerleaders of a V-shaped recovery. Like all economists, he will be desperate for his forecasts to come right. So with evidence mounting to the contrary, the Bank of England man seems to be latching on to anything that might support his firmly held beliefs.
It’s tempting to say that Haldane should get out more, but maybe the opposite would be a safer option.
Could the Bank of England lock him in a room alone with his massive brain and spreadsheets rather than allowing him to give silly, unhelpful lectures that bear no reflection on the real world?
‘Could the Bank lock him in a room alone with his massive brain?’
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