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Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State
Guiding principles for ensuring that central bankers and other unelected policymakers remain stewards of the common good
Central bankers have emerged from the financial crisis as the third great pillar of unelected power alongside the judiciary and the military. They pull the regulatory and financial levers of our economic well-being, yet unlike democratically elected leaders, their power does not come directly from the people. Unelected Power lays out the principles needed to ensure that central bankers, technocrats, regulators, and other agents of the administrative state remain stewards of the common good and do not become overmighty citizens.
Paul Tucker draws on a wealth of personal experience from his many years in domestic and international policymaking to tackle the big issues raised by unelected power, and enriches his discussion with examples from the United States, Britain, France, Germany, and the European Union. Blending economics, political theory, and public law, Tucker explores the necessary conditions for delegated but politically insulated power to be legitimate in the eyes of constitutional democracy and the rule of law. He explains why the solution must fit with how real-world government is structured, and why technocrats and their political overseers need incentives to make the system work as intended. Tucker explains how the regulatory state need not be a fourth branch of government free to steer by its own lights, and how central bankers can emulate the best of judicial self-restraint and become models of dispersed power.
Like it or not, unelected power has become a hallmark of modern government. This critically important book shows how to harness it to the people's purposes.
Central bankers have emerged from the financial crisis as the third great pillar of unelected power alongside the judiciary and the military. They pull the regulatory and financial levers of our economic well-being, yet unlike democratically elected leaders, their power does not come directly from the people. Unelected Power lays out the principles needed to ensure that central bankers, technocrats, regulators, and other agents of the administrative state remain stewards of the common good and do not become overmighty citizens.
Paul Tucker draws on a wealth of personal experience from his many years in domestic and international policymaking to tackle the big issues raised by unelected power, and enriches his discussion with examples from the United States, Britain, France, Germany, and the European Union. Blending economics, political theory, and public law, Tucker explores the necessary conditions for delegated but politically insulated power to be legitimate in the eyes of constitutional democracy and the rule of law. He explains why the solution must fit with how real-world government is structured, and why technocrats and their political overseers need incentives to make the system work as intended. Tucker explains how the regulatory state need not be a fourth branch of government free to steer by its own lights, and how central bankers can emulate the best of judicial self-restraint and become models of dispersed power.
Like it or not, unelected power has become a hallmark of modern government. This critically important book shows how to harness it to the people's purposes.
656 pages, Hardcover
First published January 1, 2018
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Displaying 1 - 7 of 7 reviews
July 27, 2018
Of the hundreds of books that came out of the 2008 crisis, comfortably my favorite was Mervyn King’s masterpiece, “The End of Alchemy.” I’ve read it twice and if you put a gun to my head and forced me to read a book about the crisis, I’d re-read that than try something new. Yet many people will tell you that his deputy at the Bank of England, Paul Tucker, was the real heavyweight. So when Tucker came out with “Unelected Power” I had to buy it.
It’s a bit of a brick. And it’s not about the crisis. The hottest topic in the world right now is the titanic fight between “undemocratic liberalism” and “illiberal democracy” (a false dichotomy, I know, but it’s all the rage) and Paul Tucker has come in with a 600 page tome on how to make unelected bureaucrats accountable. He never calls them bureaucrats, of course.
The structure of the book is as follows: the author opens with a “sparse” list of principles for Independent Agencies to operate and spends 350 pages fleshing out the full detail, which can be found in all its (four page) glory in the Appendix. With that in place, he finally launches into some 150 pages where he looks at how these principles can be applied to Central Banking. So rather than write a book about the crisis, Tucker has written an incredibly detailed and painstakingly thorough manual on how democracies should go about delegating responsibility to unelected technocrats.
Except, of course it is about the crisis. He’s ten times more subtle than Howard Stern, who spends all of “Private Parts” telling you he never cheated on his wife. And he’s more subtle than Ben Bernanke, who could not help choosing “The Courage to Act (without explicit permission)” as the title for his snorefest of a book about his efforts at the Spelling Bee contest. But Tucker does harp on a fair bit about the fact that a proper Independent Agency should have provisions for what happens in an emergency. Around page 244, with more than 300 left, where he demands “norms for non-normal times,” I had to toss a coin on whether I’d read on…
But I did, and I was rewarded!
I must confess that the whole 400 first pages I’d already been doing my best to apply everything he was talking about to central banks –simply because that’s the type of independent agency I’ve read about most—but when I made it to the other side and started reading what the man has to say about his actual area of expertise, he really took me somewhere else; I was mesmerized. The way he takes you through the perfect logic of inflation targeting and then pulls the carpet from under you is truly awesome. And yet, this is a book with an optimistic message. Not to spoil it for you, but the conclusion is that we can set up a way to make central banks work for all of us.
So the question inevitably arises: is there any point in slogging through the first 400 pages? What happens if I just read the Appendix on page 578? Well, you probably won’t be able to figure out where some of those details came from. But you will also avoid reading the word “burkean” a few hundred times. And you will skip some very dry prose. Smarter than Mervyn King his deputy might well have been, but he does not have the same way with a pen, not by a country mile. The way he refers to the principles by number is rather unacceptable, in particular. Why should I have to keep a crib to hand when I’m reading a book? And what’s with all the initials? Why IA for independent agency and CBA for cost-benefit-analysis. You’re on 600 pages, dude, that game is lost.
And you will also miss the fact that Tucker cross-checks a million times with practices in America, the UK, France, Germany and the EU, but not once discusses Japan, where all these new tools like QE were first used and where central bankers first had to step up in the ways that gave Bernanke discomfort and cost the author so much. And you’ll have to take my word for it that he should have limited his scope to central banking, rather than attempt to write the manual for all independent agencies.
But it’s up to you! This is a monument of a book. The last 170 pages stand alone; if you’re equipped with a law degree and blessed with spare time you’d do yourself a big favor to read the whole thing.
Should you choose to do so, write down the five principles on a piece of paper, they’ll come in handy!
It’s a bit of a brick. And it’s not about the crisis. The hottest topic in the world right now is the titanic fight between “undemocratic liberalism” and “illiberal democracy” (a false dichotomy, I know, but it’s all the rage) and Paul Tucker has come in with a 600 page tome on how to make unelected bureaucrats accountable. He never calls them bureaucrats, of course.
The structure of the book is as follows: the author opens with a “sparse” list of principles for Independent Agencies to operate and spends 350 pages fleshing out the full detail, which can be found in all its (four page) glory in the Appendix. With that in place, he finally launches into some 150 pages where he looks at how these principles can be applied to Central Banking. So rather than write a book about the crisis, Tucker has written an incredibly detailed and painstakingly thorough manual on how democracies should go about delegating responsibility to unelected technocrats.
Except, of course it is about the crisis. He’s ten times more subtle than Howard Stern, who spends all of “Private Parts” telling you he never cheated on his wife. And he’s more subtle than Ben Bernanke, who could not help choosing “The Courage to Act (without explicit permission)” as the title for his snorefest of a book about his efforts at the Spelling Bee contest. But Tucker does harp on a fair bit about the fact that a proper Independent Agency should have provisions for what happens in an emergency. Around page 244, with more than 300 left, where he demands “norms for non-normal times,” I had to toss a coin on whether I’d read on…
But I did, and I was rewarded!
I must confess that the whole 400 first pages I’d already been doing my best to apply everything he was talking about to central banks –simply because that’s the type of independent agency I’ve read about most—but when I made it to the other side and started reading what the man has to say about his actual area of expertise, he really took me somewhere else; I was mesmerized. The way he takes you through the perfect logic of inflation targeting and then pulls the carpet from under you is truly awesome. And yet, this is a book with an optimistic message. Not to spoil it for you, but the conclusion is that we can set up a way to make central banks work for all of us.
So the question inevitably arises: is there any point in slogging through the first 400 pages? What happens if I just read the Appendix on page 578? Well, you probably won’t be able to figure out where some of those details came from. But you will also avoid reading the word “burkean” a few hundred times. And you will skip some very dry prose. Smarter than Mervyn King his deputy might well have been, but he does not have the same way with a pen, not by a country mile. The way he refers to the principles by number is rather unacceptable, in particular. Why should I have to keep a crib to hand when I’m reading a book? And what’s with all the initials? Why IA for independent agency and CBA for cost-benefit-analysis. You’re on 600 pages, dude, that game is lost.
And you will also miss the fact that Tucker cross-checks a million times with practices in America, the UK, France, Germany and the EU, but not once discusses Japan, where all these new tools like QE were first used and where central bankers first had to step up in the ways that gave Bernanke discomfort and cost the author so much. And you’ll have to take my word for it that he should have limited his scope to central banking, rather than attempt to write the manual for all independent agencies.
But it’s up to you! This is a monument of a book. The last 170 pages stand alone; if you’re equipped with a law degree and blessed with spare time you’d do yourself a big favor to read the whole thing.
Should you choose to do so, write down the five principles on a piece of paper, they’ll come in handy!
August 6, 2024
Finally finished this behemoth! It took almost 2 years. LOL
It wasn't "bad", it was just boring. This book is for public administrators and serious policy wonks. But it should be required reading for any bozo in congress wanting to systematically END any independent agency.
It wasn't "bad", it was just boring. This book is for public administrators and serious policy wonks. But it should be required reading for any bozo in congress wanting to systematically END any independent agency.
August 27, 2026
Unelected Power is intellectually ambitious but ultimately too defensive of the central-banking establishment. Tucker provides a sophisticated framework for delegation, central-bank independence, credible commitment, constitutional constraints, transparency, and limits on unelected discretion, but the analysis becomes excessively normative and spends too much time constructing legitimacy rather than testing the actual distributional and political consequences of modern central-bank power. The weakest point is the treatment of QE, financial intervention, unemployment, asset-price effects, and cross-border monetary spillovers: these decisions clearly create winners and losers, yet the book largely preserves the distinction between technocratic execution and political choice instead of fully confronting how blurred that boundary has become. The book raises the right institutional questions but does not sufficiently resolve the hardest ones—especially who ultimately controls monetary power when elected governments and central banks jointly shape credit, liquidity, asset prices, and financial stability.
July 4, 2022
The geometry of government — Unelected Power (Paul Tucker)
An excellent tome — essential reading for the profession — about the importance of legacy to central banks. Indeed, more generally, the importance of legitimacy for the administrative (or regulatory) state, comprising of unelected policymakers who in essence make laws, enforce them, and deliver judgements. The central question: can we square this unelected power with closely held democratic norms? Tucker presents a set of design principles that independent agencies should follow in order to answer in the affirmative.
While Tucker delves into the economic and political foundations required to make the argument, we needn’t detain ourselves covering it. All I would say is that these sections are supremely comprehensible although not for casual readers in the subject. The following review comments on a few important themes from the book, on my reading.
The key instrumental and intrinsic motivator behind the creation of agencies is credible commitment. Intrinsic because, due to time inconsistency or political short-termism, politicians (or the government generally) may not be able to promise that they will actually implement a (legitimate and presumably electorally mandated) policy. Inherent because the performance of these institutions and of government will be higher once we are able to credibly commit and people believe our promises.
The most powerful commitment technology Tucker discusses is referred to as “democracy as watchfulness” or “360-degree accountability”. This solves the infinite regress problem of accountability (quis custodiet ipsos custodes?). Legislators have every right to repeal an agency’s mandate, but this (enacted via legislation) would be highly visible and incur “audience costs”. Essentially, raising the short-term costs to reneging on commitment capriciously. Tucker also makes an important point about committees (the “personnel is policy” problem): multiple decision makers, over and above their epistemic benefit, makes any one political appointment less important. Policy is therefore more stable and it increases the effectiveness of commitment. Conveniently, it also increases the cost of agency capture.
Tucker introduces a legitimacy “robustness test” as a check on agency legitimacy. Not exactly a Rawlsean public reason test (as footnoted in the book), but in my reading not too dissimilar, we spend part II of the book enumerating several “reasonable” conceptions of democracy, and then ask whether the design of an agency can justify itself as legitimate to a plurality of conceptions. If we can do that, then agencies can reasonably derive legitimacy from the elected lawmakers.
Interestingly, central banks are presented as a corollary of the separation of powers (i.e. they prevent the executive from printing money and ignoring fiscal prerogatives from the legislature), providing a strong reason for independence rather than simple permission. We conclude that central banks are a constitutionally necessary branch of government, but not equal to the canonical three. We stop a hair short of a constitutional convention and disappoint those asking for a central bank to be in the constitution! I think the door is left ajar, but regardless I think this is a powerful political argument for central bank independence.
Tucker also weighs in on some debates that central bankers have been having between themselves (and in public) since at least the Global Financial Crisis (and, clearly, since the inception of the institution).
First of all: rules or discretion? Should we adopt a Taylor-rule like method for setting policy? Tucker’s answer is emphatically no: crises or other unforeseen weather inevitable, and rules cannot guide us here — policy innovation is required. Indeed, the “metarule” becomes when the rule is replaced with discretion, making purely rule-based policy more a theoretical dream. Institutions are “devices for reconfiguring incentives”, meaning that delegating to mechanical rules does not solve the underlying credible commitment problems (discussed above).
Second: should central banks have some power (and responsibility) for financial stability? Tucker: emphatically yes. Money and credit, given fractional-reserve banking, are intimately linked, and so we only bury our heads in the sand if we ignore it. Central banks perform an important liquidity reinsurance role — banks insure against liquidity risk (i.e. the need to hold liquid assets to meet your obligations) — and the central bank via its lender-of-last-resort (LOLR) role insures the banks (ideally subject to strong solvency tests — we shouldn’t bail out any financial institution just because they ask!) against liquidity crises. Indeed because of the LOLR function a central bank should expect to find itself at the scene of disaster. We have an interest, then, in financial stability and the continuation of financial services (payment, credit, insurance) as we cannot separate the private monetary system from simple reserves at the central bank. Legitimating these dual interests in monetary and financial stability requires a “money-credit constitution” (with a fiscal carve-out to delineate society’s line between monetary and fiscal policy).
There are many other worthy things the book touches on. Including, but not limited to: the function of central banks in emergencies (and their very nature as an emergency institution), balance sheet and unconventional policy, guidance on liquidity provision, a taxonomy of agencies based on the insulation they require, historical motivations for a professional public service, the role of forecasts in policy justification (for legitimacy reasons), the epistemic purpose and function of committees, etc. I’d love to cover at least several but this review is long enough!
Perhaps the last point to touch upon are the distributional consequences of central bank policy. It is fairly uncontroversial that central bank policy has these consequences, but they are not choices central banks get to make. Indeed, policy in normal times has distributional consequences. Tucker argues, in retrospect, that central banks should have highlighted (publicly and loudly) these consequences in order to make them part of public debate. This hints at a theme which becomes less of a hint later one: the “grand dilemma” of central banking, or the “only game in town” problem: aggregate demand stimulus from central banks can create time and space for supply-side reforms. But ultimately, it is up to fiscal authorities, households, and businesses to readjust. Central banks can’t set aside their legal mandates and play chicken with legislators (to “abrogate the sovereign power” — that of delegation, in this case). This grand dilemma is the strategic interaction between fiscal and monetary authorities incentivising fiscal authorities to slack. That rings true: the refrain that fiscal authorities are shirking responsibility to monetary ones dates 2010s financial and economic commentary.
In summary, Tucker presents and justifies the necessity of delegation. In my mind, we have the elected legislators providing fundamental legitimacy to unelected branches of government. If agencies make high policy without being designed as legitimate (via Tucker’s design principles, or something like them), then this can “set a slow fuse” damaging the fundamental legitimacy of government. Agencies are important commitment and policy legitimating devices though, so are not only necessary but can enhance the legitimacy of government generally. Tucker emphasises that other unelected institutions — the courts, generally — cannot bestow legitimacy or solve a democratic deficit. Likewise, if the fundamental legitimacy of lawmakers is eroding, then no legitimacy can be derived from them. My reading is that much like a liquidity crisis can precipitate an economic crisis, a legitimacy crisis can precipitate a political one, although perhaps in slow motion. I would argue that even if you are not interested in central banking, this is essential reading under the shadow of an extremely activist Supreme Court in 2022.
An excellent tome — essential reading for the profession — about the importance of legacy to central banks. Indeed, more generally, the importance of legitimacy for the administrative (or regulatory) state, comprising of unelected policymakers who in essence make laws, enforce them, and deliver judgements. The central question: can we square this unelected power with closely held democratic norms? Tucker presents a set of design principles that independent agencies should follow in order to answer in the affirmative.
While Tucker delves into the economic and political foundations required to make the argument, we needn’t detain ourselves covering it. All I would say is that these sections are supremely comprehensible although not for casual readers in the subject. The following review comments on a few important themes from the book, on my reading.
The key instrumental and intrinsic motivator behind the creation of agencies is credible commitment. Intrinsic because, due to time inconsistency or political short-termism, politicians (or the government generally) may not be able to promise that they will actually implement a (legitimate and presumably electorally mandated) policy. Inherent because the performance of these institutions and of government will be higher once we are able to credibly commit and people believe our promises.
The most powerful commitment technology Tucker discusses is referred to as “democracy as watchfulness” or “360-degree accountability”. This solves the infinite regress problem of accountability (quis custodiet ipsos custodes?). Legislators have every right to repeal an agency’s mandate, but this (enacted via legislation) would be highly visible and incur “audience costs”. Essentially, raising the short-term costs to reneging on commitment capriciously. Tucker also makes an important point about committees (the “personnel is policy” problem): multiple decision makers, over and above their epistemic benefit, makes any one political appointment less important. Policy is therefore more stable and it increases the effectiveness of commitment. Conveniently, it also increases the cost of agency capture.
Tucker introduces a legitimacy “robustness test” as a check on agency legitimacy. Not exactly a Rawlsean public reason test (as footnoted in the book), but in my reading not too dissimilar, we spend part II of the book enumerating several “reasonable” conceptions of democracy, and then ask whether the design of an agency can justify itself as legitimate to a plurality of conceptions. If we can do that, then agencies can reasonably derive legitimacy from the elected lawmakers.
Interestingly, central banks are presented as a corollary of the separation of powers (i.e. they prevent the executive from printing money and ignoring fiscal prerogatives from the legislature), providing a strong reason for independence rather than simple permission. We conclude that central banks are a constitutionally necessary branch of government, but not equal to the canonical three. We stop a hair short of a constitutional convention and disappoint those asking for a central bank to be in the constitution! I think the door is left ajar, but regardless I think this is a powerful political argument for central bank independence.
Tucker also weighs in on some debates that central bankers have been having between themselves (and in public) since at least the Global Financial Crisis (and, clearly, since the inception of the institution).
First of all: rules or discretion? Should we adopt a Taylor-rule like method for setting policy? Tucker’s answer is emphatically no: crises or other unforeseen weather inevitable, and rules cannot guide us here — policy innovation is required. Indeed, the “metarule” becomes when the rule is replaced with discretion, making purely rule-based policy more a theoretical dream. Institutions are “devices for reconfiguring incentives”, meaning that delegating to mechanical rules does not solve the underlying credible commitment problems (discussed above).
Second: should central banks have some power (and responsibility) for financial stability? Tucker: emphatically yes. Money and credit, given fractional-reserve banking, are intimately linked, and so we only bury our heads in the sand if we ignore it. Central banks perform an important liquidity reinsurance role — banks insure against liquidity risk (i.e. the need to hold liquid assets to meet your obligations) — and the central bank via its lender-of-last-resort (LOLR) role insures the banks (ideally subject to strong solvency tests — we shouldn’t bail out any financial institution just because they ask!) against liquidity crises. Indeed because of the LOLR function a central bank should expect to find itself at the scene of disaster. We have an interest, then, in financial stability and the continuation of financial services (payment, credit, insurance) as we cannot separate the private monetary system from simple reserves at the central bank. Legitimating these dual interests in monetary and financial stability requires a “money-credit constitution” (with a fiscal carve-out to delineate society’s line between monetary and fiscal policy).
There are many other worthy things the book touches on. Including, but not limited to: the function of central banks in emergencies (and their very nature as an emergency institution), balance sheet and unconventional policy, guidance on liquidity provision, a taxonomy of agencies based on the insulation they require, historical motivations for a professional public service, the role of forecasts in policy justification (for legitimacy reasons), the epistemic purpose and function of committees, etc. I’d love to cover at least several but this review is long enough!
Perhaps the last point to touch upon are the distributional consequences of central bank policy. It is fairly uncontroversial that central bank policy has these consequences, but they are not choices central banks get to make. Indeed, policy in normal times has distributional consequences. Tucker argues, in retrospect, that central banks should have highlighted (publicly and loudly) these consequences in order to make them part of public debate. This hints at a theme which becomes less of a hint later one: the “grand dilemma” of central banking, or the “only game in town” problem: aggregate demand stimulus from central banks can create time and space for supply-side reforms. But ultimately, it is up to fiscal authorities, households, and businesses to readjust. Central banks can’t set aside their legal mandates and play chicken with legislators (to “abrogate the sovereign power” — that of delegation, in this case). This grand dilemma is the strategic interaction between fiscal and monetary authorities incentivising fiscal authorities to slack. That rings true: the refrain that fiscal authorities are shirking responsibility to monetary ones dates 2010s financial and economic commentary.
In summary, Tucker presents and justifies the necessity of delegation. In my mind, we have the elected legislators providing fundamental legitimacy to unelected branches of government. If agencies make high policy without being designed as legitimate (via Tucker’s design principles, or something like them), then this can “set a slow fuse” damaging the fundamental legitimacy of government. Agencies are important commitment and policy legitimating devices though, so are not only necessary but can enhance the legitimacy of government generally. Tucker emphasises that other unelected institutions — the courts, generally — cannot bestow legitimacy or solve a democratic deficit. Likewise, if the fundamental legitimacy of lawmakers is eroding, then no legitimacy can be derived from them. My reading is that much like a liquidity crisis can precipitate an economic crisis, a legitimacy crisis can precipitate a political one, although perhaps in slow motion. I would argue that even if you are not interested in central banking, this is essential reading under the shadow of an extremely activist Supreme Court in 2022.
November 19, 2022
While I can't say I'm exactly sympathetic to Tucker's position (that of a rather insulated technocrat with a narrow conception of what constitutes "respectable opinion" in policy) it is impossible to deny the achievements of Unelected Power. This is a thorough and precise (if not concise) statement of the self-understanding of the "price stability/inflation management credible commitment" -gang on central banking. Tucker, if I was not already on his side, made me fully convert to the idea that there is even a relatively large set of situations where delegation can be democratically non-problematic.
I do feel like the book could've used some more time on the cutting board. The order of its presentation is somewhat illogical and Tucker is sometimes guilty of excessive repetition. On the other hand, a volume where a characteristically fragmented debate has its preconceptions, historical background, political theory, and economic rationale laid out is a huge step forward from the state of debate on monetary policy which, due to its technical and academic nature, often assumes a large background of knowledge and acuity from its readers and does very little to even signpost where various ideas and arguments originate.
The weakest points of Tucker's project are to be found at the more normative end of the spectrum, especially in the implausible idea that central banks would not make significant distributional choices in pursuing price stability and low inflation, and in his unsatisfactorily brief and narrow considerations about the implications of employing a sociological and politically realist theory of legitimacy and legitimation. Though realist theories are naturally better for his aims (and for political theory generally, methinks), than say, a Rawlsian account of delegation, he fails to face up to the full import of a few central facets of his picture.
First, Tucker doesn't elaborate what the Williamsian locutions like something being legitimate "in and around here" mean from the perspective of producing knowledge about society. He does think that there is something interesting to say about the nexus of central banking and professional economics, though merely announcing this interest is about as far as he gets (in the more "theoretical" tone, at least). Second, there is a grim shadow that hangs over a purely sociological account of legitimation, which makes Tucker's theory easily appear elitist. Sure, Following Williams, the first question of politics can be how social order is best secured. This does not mean that there aren't other interesting questions to ask about politics, though. As soon as a basic scheme of cooperation with sufficient legitimacy and stability is established, things like worries about expert power should stop worrying us. But Tucker seems to be more inclined to ask, simply, what keeps the plebs happy, even if he remembers to pay lip-service (and sometimes genuine respect! delegation always has democratic legitimacy as a precondition!), to deeper democratic ideals.
Lastly, the range of opinion treated in the book is extremely narrow. The most radical challenge Tucker considers from the perspective of "our values" (sic!) is that of a kind of market social democracy, articulated in the terms of professional economics. If the range of opinion treated is this narrow, considerations of political epistemology left to the side and questions of the normative content of politics relativised to one social scheme, we are at the danger of taking our assumptions about political reality for its nature, and the echo chambers of our professional peers for a stand-in for public deliberation.
I do feel like the book could've used some more time on the cutting board. The order of its presentation is somewhat illogical and Tucker is sometimes guilty of excessive repetition. On the other hand, a volume where a characteristically fragmented debate has its preconceptions, historical background, political theory, and economic rationale laid out is a huge step forward from the state of debate on monetary policy which, due to its technical and academic nature, often assumes a large background of knowledge and acuity from its readers and does very little to even signpost where various ideas and arguments originate.
The weakest points of Tucker's project are to be found at the more normative end of the spectrum, especially in the implausible idea that central banks would not make significant distributional choices in pursuing price stability and low inflation, and in his unsatisfactorily brief and narrow considerations about the implications of employing a sociological and politically realist theory of legitimacy and legitimation. Though realist theories are naturally better for his aims (and for political theory generally, methinks), than say, a Rawlsian account of delegation, he fails to face up to the full import of a few central facets of his picture.
First, Tucker doesn't elaborate what the Williamsian locutions like something being legitimate "in and around here" mean from the perspective of producing knowledge about society. He does think that there is something interesting to say about the nexus of central banking and professional economics, though merely announcing this interest is about as far as he gets (in the more "theoretical" tone, at least). Second, there is a grim shadow that hangs over a purely sociological account of legitimation, which makes Tucker's theory easily appear elitist. Sure, Following Williams, the first question of politics can be how social order is best secured. This does not mean that there aren't other interesting questions to ask about politics, though. As soon as a basic scheme of cooperation with sufficient legitimacy and stability is established, things like worries about expert power should stop worrying us. But Tucker seems to be more inclined to ask, simply, what keeps the plebs happy, even if he remembers to pay lip-service (and sometimes genuine respect! delegation always has democratic legitimacy as a precondition!), to deeper democratic ideals.
Lastly, the range of opinion treated in the book is extremely narrow. The most radical challenge Tucker considers from the perspective of "our values" (sic!) is that of a kind of market social democracy, articulated in the terms of professional economics. If the range of opinion treated is this narrow, considerations of political epistemology left to the side and questions of the normative content of politics relativised to one social scheme, we are at the danger of taking our assumptions about political reality for its nature, and the echo chambers of our professional peers for a stand-in for public deliberation.
January 23, 2020
In the aftermath of the Global Financial Crisis, who was the more noteworthy figure in US public affairs, Barack Obama or Ben Bernanke? Probably President Obama, but not by much. The first elected, the second appointed. In terms of influence over the economy, especially with false-austerity theology dominating the fiscal debate and an obstructionist Senate blocking policy, clearly the unelected ( and extraordinarily talented ) Fed Governor was in the lead (consider the “2013 Taper Tantrum”).
Through a broad and meticulously researched study, the Author (1) evaluates the legitimacy of the administrative state; and (2) provides a set of “delegation principles” to balance fealty to democratic principles and the achievement of the efficiency and welfare objectives of government. Although a seasoned and accomplished central banker, the Author examines the full spectrum of the administrative state, of which central banks are but one part. On the specific topic of banking, there is clear support for an independent central bank but, one can believe, a growing need to coordinate with an effective fiscal policy stance on the part of the government.
As a number of readers have commented, Mr. Tucker has distinguished himself by avoiding the selfish temptation of writing the script of a mini-series on the GFC, with him as the “courageous yet humble” protagonist, instead choosing to contribute to our understanding of the public policy lessons of this crisis, and their application to governing writ large.
This is a heavy read, but worth the effort.
Through a broad and meticulously researched study, the Author (1) evaluates the legitimacy of the administrative state; and (2) provides a set of “delegation principles” to balance fealty to democratic principles and the achievement of the efficiency and welfare objectives of government. Although a seasoned and accomplished central banker, the Author examines the full spectrum of the administrative state, of which central banks are but one part. On the specific topic of banking, there is clear support for an independent central bank but, one can believe, a growing need to coordinate with an effective fiscal policy stance on the part of the government.
As a number of readers have commented, Mr. Tucker has distinguished himself by avoiding the selfish temptation of writing the script of a mini-series on the GFC, with him as the “courageous yet humble” protagonist, instead choosing to contribute to our understanding of the public policy lessons of this crisis, and their application to governing writ large.
This is a heavy read, but worth the effort.
October 9, 2020
During this extraordinary time of Covid-19 pandemic, central banks are called to take extraordinary actions to ensure economic stability. Independence is one of the attributes of central banks. It insulates them from political influence powered by different motivations. However, in times of crises, central banks’ independence is proven to be not absolute, or maybe just more stretched than in normal times. This is true now when governments rely on their central banks to come to their rescue through extraordinary use of monetary tools and prudential policies to help them deliver their promise of improving, or at the very least, keeping people’s welfare.
This book clearly discusses how powerful central banks are notwithstanding possession and control of powers not through popular elections. However, they also constantly face challenges to their independence and knowing when to stretch their boundaries is critical in keeping true to their mandate.
This book clearly discusses how powerful central banks are notwithstanding possession and control of powers not through popular elections. However, they also constantly face challenges to their independence and knowing when to stretch their boundaries is critical in keeping true to their mandate.
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