Yesterday, there was a speech. Seven quotes:
- “Many citizens in advanced economies are facing heightened uncertainty, lamenting a loss of control and losing trust in the system. To them, measures of aggregate progress bear little relation to their own experience.”
- “When the financial crisis hit, the world’s largest banks were shown to be operating in a ‘heads-I-win-tails you-lose’ bubble; widespread rigging of some core markets was exposed; and masters of the universe became minions. Few in positions of responsibility took theirs.”
“High income inequalities are dwarfed by staggering wealth inequalities.”
“Trade and technology do not raise all boats.”
“Higher uncertainty has contributed to what psychologists call an affect heuristic amongst households, businesses and investors. Put simply, long after the original trigger becomes remote, perceptions endure, affecting risk perceptions and economic behaviour. Just like those who lived through the Great Depression, people appear more cautious about the future and more reluctant to take irreversible decisions. That means less willingness to put capital to work and, ultimately, lower growth. These dynamics are clearly visible in financial markets.”
“There appears to be little evidence that stimulative monetary policy makes groups worse off.”
“For free trade to benefit all requires some redistribution.”
I put quote #5 in italics, because it is extraordinary: a claim that markets don’t work. Quote #6 also deserves scrutiny: it is a claim that some inflation is good. And #7 speaks for itself.
The author? Well, he heads the Bank of England.
To be honest, I have posted this for a specific audience. It is one that takes as an axiom that Ricardian rents should not be reduced or redistributed. But when the head of the Bank of England starts to doubt that markets work or that finance adds value, it is time to start rethinking basic assumptions.