Mark Carney, the newly appointed governor of the Bank of England, will be paid about £1 million a year, all in. That cannot be the right amount. It is either way too much or way too little.
To see why, begin by supposing that monetary economics is an advanced science, that economists have discovered the relationships between interest rates, the money supply, inflation and other relevant economic variables. This would make Mr. Carney's job dead easy. He need only get some diligent secondary-school children to plug the relevant economic data into a computer model that embodies this scientific knowledge, then vary input interest rates and see which one will deliver the British government's 2% inflation target.
Anyone who can read numbers from a computer screen could do the job. Mr. Carney should be paid no more than minimum wage for the few minutes it would take him to do it each month. He should earn no more than £50 a year.
There are two possibilities. Mr. Carney could be an economic "seer." He may just know, in some way he cannot translate into economic theory, how interest rates will affect inflation.
But the idea that knowledge of future economic events can be derived from a kind of economic sense, unmediated by confirmed scientific theory, is so wonky that no one serious can seriously believe it. If Mr. Osborne is paying Mr. Carney £1 million a year because he believes him to be an economic seer, then Mr. Osborne should not be the chancellor of the Exchequer. He should work in an ashram in Colorado or be sectioned under the Mental Health Act.
The second possibility is that Mr. Carney has discovered the real relationships between interest rates, inflation and so on, but decided not to share his findings. He keeps his breakthrough secret for the same reason that witch doctors do not share their rudimentary scientific knowledge - doing so would destroy his market value. It would reduce his annual salary from the £1 million that he can earn as a presumed seer to the £50 he would earn as someone who reads numbers from a computer screen 12 times a year.
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