David Blanchflower: Bank needs governor with experience of how markets work

Economic Outlook: I read I was a candidate for the Monetary Policy Committee in a national newspaper

I spent most of last week flying around Europe. A total of eight flights, including four in or out of Frankfurt, the home of the European Central Bank. I was stuck in Frankfurt for the night when my flight from Heathrow was delayed by bad weather, and I missed my connection to Boston.

While I was kicking my heels in the hotel, I found the unprecedented advert in The Economist for the job of Governor of the Bank of England. Sir Mervyn King didn't get his job by answering a bloody advert.

I went to the Treasury website, where I downloaded the details, plus a "diversity questionnaire" with details of an "interview access scheme" to make it easier for the disabled to apply. It's a pretty good bet that we are not going to see a disabled black female being appointed. I assume Cameron substituted this form for one that asked potential cabinet members if they were male, rich, went to private school and Oxbridge and considered most people in the country to be "plebs". Hence all the "posh boys" in the Cabinet, which is also rather slim, to say the least, on women, minorities as well as the disabled. Why?

The point of advertising the job escapes me: it's rather unlikely there are unknown candidates out there who are going to apply online. The chances that the governors of the central banks of China or Russia, or Ben Bernanke, might apply are pretty slim.

I do recall I never actually applied to join the Monetary Policy Committee (MPC). I read I was a candidate in a national newspaper, and a few weeks later Sir Nicholas Macpherson (permanent secretary at the Treasury) called to ask if I was interested. I was never interviewed, and a couple of weeks later Sir Nick rang back to ask if I wanted the job.

The nature of the job Osborne has created – with an eight-year term – and pressure from Downing Street to produce a get-out-of-jail-free card to save the failed fiscal strategy and get the economy moving again, looks hugely unattractive. They don't even state the salary, although it notes that Sir Mervyn's salary is £302k, so some candidates might do the job for less, which would mean George Osborne could use the savings to reduce the amount he is going to cut welfare benefits. Mike Bloomberg, the billionaire Mayor of New York and owner of Bloomberg News, takes only $1 a year in salary, so Mr Osborne might be attracted to the idea of hiring someone rich, like Icap's Michael Spencer.

Obvious candidates like my good friend Rachel Lomax, who would have been perfect, have ruled themselves out, and others who would have liked the job have Libor and money-laundering troubles,so have also been ruled out.

I don't have a problem with Alastair Darling's suggestion that it could be a foreigner – Donald Kohn, maybe, who was on the Federal Open Market Committee, and is already on the Financial Policy Committee (FPC). Tim Geithner, US Treasury Secretary, ex-president of the New York Federal Reserve and Dartmouth alumnus, is available in January, but talk on the street is that he will replace Jim Yong Kim , whom he appointed as head of the World Bank, as Dartmouth's new president. The Canadian central bank governor Mark Carney apparently has ruled himself out. But I found his protestations rather hollow, so maybe he is still in contention.

John Vickers, who was previously chief economist at the Bank, is another viable British contender, although apparently he doesn't want the job, but he may change his mind; I understand that if he does want it, he would be likely to be offered it.

Paul Tucker's troubles in regard to the Libor presumably also disqualify him.

Anyway, the new Governor, according to the "role profile", is expected to play a central role, among other things, in:

l setting the Bank's overall strategy to deliver financial and monetary stability in the UK;

l ensuring that the new arrangements for the FPC operate as effectively as the MPC;

l leading the Bank through the reforms to the regulatory system, including the transfer of new responsibilities that will see the Bank take the lead in safeguarding the stability of the UK financial system, including the prudential regulation of banks, other deposit-takers and certain investment firms (via the Prudential Regulation Authority, the PRA), and the regulation of the systemic infrastructure.

This looks like a mammoth task. Are members of the FPC going to vote on anything as the MPC does? What is the overlap between the PRA, FPC and MPC? How the PRA fits into all this is still to be determined. Of course, to get the job the candidate presumably has to tell Mr Osborne what a great idea it was to set all of this up, and it is all going to work out just fine, and quickly. It really does look like another shambles in the making.

One of the difficulties in the United States is that an incoming president has to make several thousand political appointments to run the government, which takes a long time to do. The candidates have to be identified, then security cleared. About a third of them have to be confirmed by the Senate, which also takes a long time. This gives an added advantage to an incumbent president like Barack Obama. In the UK, there are many fewer political appointments on a change of government, and the civil service enables continuity. The newly constituted Bank of England, though, will not be fit for purpose for a year or two; the concern is that they will not be prepared if another big shock hits.

My advice to the new governor would be to stay well away from fiscal policy. What is needed is someone with practical experience of how the financial markets work, not some theoretical economist who knows how to write down mathematical squiggles, which was Sir Mervyn's background. The next governor probably will be an economist of some kind, and it is vital they have knowledge and experience of the real world, but above all they need to have clean hands.

It is important that they are interested in evidence and take note of what I call the economics of walking about – where you listen to what people say and take it seriously. Both Gus O'Donnell and Adair Turner pass these tests.

I have no intention of applying. But maybe Sir Nick has plans to call me again?

people'It can last and it's terrifying'
Alexis Sanchez, Radamel Falcao, Diego Costa and Mario Balotelli
Danny Welbeck's Manchester United future is in doubt
footballGunners confirm signing from Manchester United
people Emma Watson addresses celebrity nude photo leak
footballFeaturing Bart Simpson
Katie Hopkins appearing on 'This Morning' after she purposefully put on 4 stone.
peopleKatie Hopkins breaks down in tears over weight gain challenge
Arts and Entertainment
Olivia Colman topped the list of the 30 most influential females in broadcasting
Kelly Brook
peopleA spokesperson said the support group was 'extremely disappointed'
Life and Style
techIf those brochure kitchens look a little too perfect to be true, well, that’s probably because they are
ebooksAn unforgettable anthology of contemporary reportage
Andy Murray celebrates a shot while playing Jo-Wilfried Tsonga
TennisWin sets up blockbuster US Open quarter-final against Djokovic
Arts and Entertainment
Hare’s a riddle: Kit Williams with the treasure linked to Masquerade
booksRiddling trilogy could net you $3m
Arts and Entertainment
Alex Kapranos of Franz Ferdinand performs live
music Pro-independence show to take place four days before vote
news Video - hailed as 'most original' since Benedict Cumberbatch's
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Infrastructure Lead, (Trading, VCE, Converged, Hyper V)

£600 - £900 per day: Harrington Starr: Infrastructure Lead, (Trading infrastru...

Planning Manager (Training, Learning and Development) - London

£35000 - £38000 per annum + benefits: Ashdown Group: A highly successful, glob...

Business Anaylst

£60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: Business Anal...

SQL Implementation Consultant (VB,C#, SQL, Java, Eclipse, integ

£40000 - £50000 per annum + benefits+bonus+package: Harrington Starr: SQL Impl...

Day In a Page

'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York
Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

'I like Orwell's writing as much as the next talented mediocrity'

Will Self takes aim at Orwell's rules for writing plain English
Meet Afghanistan's middle-class paint-ballers

Meet Afghanistan's middle-class paint-ballers

Toy guns proving a popular diversion in a country flooded with the real thing
Al Pacino wows Venice

Al Pacino wows Venice

Ham among the brilliance as actor premieres two films at festival
Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

Neil Lawson Baker interview

‘I’ve gained so much from art. It’s only right to give something back’.
The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering