24 July 2009

An immature culture

In today's AFR (click here but you'll need to be a subscriber), Stephen Kirchner says that we'd be more mature if our central bankers gave press conferences. Apart from trying to put a veneer of rationality onto cultural cringe, it is hard to imagine what this might mean and reading the article leaves you none the wiser.

So, central bankers in the UK, Japan and other countries front a news conference. So what? Questions are reverential and not well thought out, hardly better than the brain-farts Kirchner complains about from politicians and other commentators.
Australian media and politicians do not exactly facilitate mature public debate, often seizing on trivial differences of opinion and beating them up into something they are not.

Quite so, and it is hard to imagine why the pearls of central bankers should be cast before such swine even more than they are. Wait until we get a central banker who has a colourful love life, or who is "linked" to someone of ill repute, and then the folly of this proposal will be clear. Face it Stephen, your only claim that this is anything approaching a good idea is the whine that "everyone else does it, why can't we?".
The Reserve Bank of New Zealand, when releasing its monetary policy statements, holds a media conference at which the governor takes questions on interest rates and the economy.

Well, whoopee-doo for New Zealand. The governor who instituted this practice, Don Brash, did so because he wanted to raise his profile for a political career. What's good for the governor is not necessarily what's best for the bank, nor the economy at large.
A central bank unwilling or unable to speak out on issues related to its statutory mandate gives the appearance of timidity and compliance rather than independence.

This call-out is way beyond wrong and well into the realm of stupidity. It's outsider pique. Other public servants, such as judges and military officers, disdain publicity and journalists demean themselves by demanding public disclosure of operational matters best left off the public record for the time being. Accountability to journalists is not at all the same thing as accountability to the public.

If you underestimate the sheer folly of this naive faith in public disclosure, get a transcript of any public inquiry of former US Federal Reserve Chairman Alan Greenspan, who spoke quite a lot but said nothing: transparent as billy-o but an architect of a financial system that collapsed in on itself. This is the very sort of person who would float to the top of a system where the Reserve Bank Governor was expected to be a media star - and frankly, it's too much a price to pay. Quiet, nerdy competence is fine by me, as is the idea of diversity - just because others do it does not make it better.

That said, Kirchner has a point about disclosure in a democracy. He is simply wrong in believing that this openness can be had in a press conference, a heavily stage-managed environment designed to conceal more than it reveals.

What should happen is that the Reserve Bank's raw data, including its modelling, should be publicly available. The Reserve Bank has some of the most sophisticated economic modelling tools in the world, and it would be an inestimable public benefit to be able to see inside the raw data on which the RBA makes its decisions. The assumptions, the depersonalised inputs and intelligence (and comparisons with, say, ABS and census data), would be fascinating for the idle viewer and constructive for variously interested parties. Yes, some commentary would continue to be ill-informed or disingenuously spun - but you could tap into the source and get another side of how this country really works, the kind of insights currently only available from opinion polling. IT and education in this country would benefit enormously, and sources of information other than the admittedly-inadequate media would (in true CIS style) emerge. Rather than follow the world Australia could lead it in a truly admirable way.
A decade of cosy neglect under former treasurer Peter Costello had left the RBA languishing near the bottom of international rankings of central bank transparency ...

One of the tragedies of [Ian] Macfarlane's time as governor [of the RBA] is that a great mind that could have contributed so much to national debate over economic policy was rarely heard in public.

Eh? If Macfarlane's mind was so fine, why weren't the benefits of transparency clear to him? If Macfarlane and Costello had a serious disagreement over RBA transparency, or any other aspect of national economic policy, who would have won it? Would any such debate have been examined on its merits, or merely reported as a "stoush", and somehow wedged into the then leadership of the Liberal Party? Costello used to front press conferences all the time - hell, he even used to run for elections. Is that the sort of thing you're after, Stephen? Really?
The issues are simply too important to be left to politicians.

All issues are too important to be left to politicians, and too important for MSM journos for that matter. It's always a pity when a radical suggestion ends up as a damp squib, particularly so that the usually rigorous Kirchner should slump into an intellectually lazy set of assumptions that would leave us none the wiser nor better informed about our economy.

Andrew Elder has just been awarded this year's Greg Lindsay Fellowship at the Politically Homeless Institute.


  1. You must attend this: