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Can’t We Just Print More Money? review – the Bank of England

by its own admission, the Bank of England is a “forbidding place”.

It is responsible for storing gold bars and setting monetary policy but is currently best known for making ominous predictions about the economic outlook. Located on Threadneedle Street in the City of London, its headquarters is a neoclassical fortress, with walls so high they seem built to deter anyone from looking in. Can’t We Just Print More Money?, by Bank of England economists Rupal Patel and Jack Meaning, is a well-timed attempt to show the public what goes on inside – and familiarise them with some basic economic concepts. Each chapter tackles a different question, such as “Where does my breakfast come from?” or “Why am I richer than my great-great-grandmother?” The book is punctuated with jaunty anecdotes and neat examples: price increases are explained by reference to Dairy Milk bars; the value of collective bargaining is illustrated with an episode of The Simpsons. Most of the time this chirpy tone works, but it can occasionally grate: “Hopefully, you’ll come to see that [money] is not just a piece of metal or plastic,” the authors write (surely anyone already reading wouldn’t need telling).
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This is all “quite different from most things the Bank of England has published over the last three centuries”, its governor, Andrew Bailey, writes in a foreword. The Bank of England has been attempting to explain economics to the public since at least 2018, when it first launched a series of citizens panels. As living standards have plummeted in the UK, a trend has emerged for talking about things such as “financial inclusion” and “money management”. You might think of this as the Martin Lewis theory of social change: educate people in how to navigate an increasingly unforgiving economy, and they will be able to improve their lot.

Economics styles itself as a science, but – at least in terms of getting the message across – stories are often as important as empirical observation. Parables of primeval villages and market squares where beans are exchanged for cows are used to explain things such as the evolution of money. Then there’s Easter Island, whose iconic stone heads (Moai) have been read as a warning of the fraught relationship between growth and environmental degradation. “The story goes that the islanders chopped down the trees to make tools so that they could build and transport the moai around,” Patel and Meaning write. “Without any trees, soil erosion increased and crop yields declined. The result was a catastrophic decline in population”. But stories can be misleading: as the authors note, anthropologists are increasingly starting to question it.

Consider another tale about the “tragedy of the commons”, illustrated in a dispute over unlimited chip portions in the Bank of England canteen. This is the idea that a shared resource can be depleted to the point of destruction, and was introduced in a 1968 paper by the economist and ecologist Garrett Hardin, whose argument encoded an entire attitude to politics (Hardin also worked hard to establish the idea that immigration was a plausible ecological threat). Again, on closer inspection, it doesn’t fully hold. Economist Elinor Ostrom found that “when communities have control over their common resources, they don’t actually deplete them to destruction”. If implemented, her insights “might just be able to save markets from themselves”, Patel and Meaning write.

Stories involve abstraction and selection. The same goes for models, which the authors concede are never wholly correct. “Aall models make a set of assumptions to simplify the world around us” (the statistician George Box once said: “All models are wrong, but some are useful”). These assumptions shape how the economy is measured and calculated: in France, economists include frog legs in their annual “consumption basket” to determine the rising cost of goods, while the German basket features bratwurst. Britain’s list includes the somewhat nostalgic “oven-ready joint” as a gauge of price inflation. This year, meat-free sausages, canned pulses and sports bras were added to the UK’s statistical shopping basket. Doughnuts, men’s suits and coal were removed.

The authors seem to be constantly trying to communicate the idea that we exist for you. When the Bank of England was made independent in 1997, it was given the task of controlling inflation, something politicians had previously been responsible for. How do you establish the democratic legitimacy of an institution whose purpose is partly to wrest control away from elected representatives? This question is made more awkward by recent events: inflation seems poised to spiral, and many peoples’ lived experience of the economy is dire. The Bank of England can seem distant or even out of touch, as when Bailey recently said workers shouldn’t ask for generous pay rises. This book is an attempt to give the bank a human face – but its forbidding reputation may not be so easily banished.

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