And if that is the way economists insist on performing these roles, there will be more pressure to appoint non-economists.The root cause of the difficulty was Bank and Treasury paranoia about conflicts of interest, which made it difficult for them to conceive of members of the MPC having any outside role except an academic one. And since Bank pay compares favourably with academic salaries, any economist can work out that it is better to be full-time. Now so much is known of MPC discussions, it is much harder to see why its members should be maintained in purdah, and indeed they have been admirably free to promote their views in public. For the more they acquire their own offices and Bank support, the less they are going to look like "outsiders". But as others followed suit, the Bank has filled up with economists wanting interesting things to do. There was bound to be trouble.It is, however, far from clear that the outside members were hired to turn the Bank into a university.
In order to persuade DeAnne Julius to give up her job with British Airways and join the MPC, she was offered a full-time post. Dr Julius, an economist with serious industrial experience, has been a great asset to the MPC and the Bank, widening its horizons and attitudes. It is pretty clear that the four outside economists on the MPC were originally intended to be non-executive But by now, three are more or less full-time. It is far from clear why any of them need five days a week to do what Professor Charles Goodhart does in two.It all began with such good intentions. Those watchdogs would also disapprove of the fact that these "independents" are in a minority - the split should be five-four in their favour, not the Bank's. In summary, the board model would suggest there should be more outsiders - but also that they should be clearly based outside the Bank.Nor, however, does the MPC fit the executive model. There are simply too many of these appointments to make sense of them as insiders.
No organisation could work well with nine executive teams responsible for the same job. The outsiders are too dug into the Bank to pass as independents. They would certainly fail the corporate governance watchdogs' tests of independence applied to private sector boards at AGMs. The other model is the outside selection of key executives, appointed to refresh the strategy of the company.The MPC does not fit either model.