On Osborne and Balls' "Political Currency" Podcast

So far, too much conventional political point-scoring

I’ve been ill this week and so spent more time than usual listening to economics and policy-related podcasts, including from the UK. A new one appeared on my radar: Political Currency, by Ed Balls and George Osborne.

Political Currency promised to take “listeners behind the scenes of the biggest political and economic decisions that really affect the nation’s pockets.” Given that Osborne served as UK Chancellor for six years, and Balls played a central role in Gordon Brown’s Treasury, I hoped this podcast series would illuminate just how the financial ministry goes about thinking through new economic decisions, as they arise. Who knows, freed from the shackles of high office, perhaps these two old-timers would give us some edgy, no-holds-barred critiques of current policy in real time too?

And it does some of that. There have been a couple of good monologues from Balls, in particular. In the first full episode, he strongly implied that the second leg of HS2 had too high an opportunity cost to go ahead; in the more recent episode, he gave a fairly lucid and thoughtful explanation of how he thought the Monetary Policy Committee should have approached the recent interest rate decision.

Yet at other times I’ve found the show infuriating. When the pair fall into the sort of political knock-about associated with podcasts like The Rest Is Politics, it reminds you of the narrowness of intellectual curiosity that is a feature of Westminster on economics.

Here are two examples. In episode 2, George Osborne, talking about Britain’s bilateral trade agenda, recalls President Barack Obama’s visit during the EU referendum campaign. The president said Britain would be at the “back of the queue” for a free-trade deal with the U.S. if the UK Brexited. That caused a lot of consternation among Brexiteers at the time. Yet Osborne claims the threat has ultimately been vindicated. After all, Britain still doesn't have a free trade agreement with the United States.

This score-settling obviously leaves out a critical detail. Britain not having a U.S. free trade deal doesn’t reflect us being pushed to the back of the queue, but the U.S. abandoning free trade agreements as a priority under Biden, rendering the queue non-existent. The last trade deal the U.S. signed was in 2018, when President Trump renegotiated NAFTA in the form of USMCA. The Trump administration was involved in early discussions about a U.S.-UK deal. With the UK due to soon be part of the Pacific trade deal, known as CPTPP, it would theoretically be easier for the U.S. to negotiate a deal with the UK than the EU too. But that point is moot, because no trade deals are being negotiated by the Biden administration at all. Not TTIP with the EU, not CPTPP, and no, not a US-UK deal, despite a bipartisan effort in Congress to get the ball rolling. You can’t be at the back of a line that isn’t there.

Osborne and Balls are surely aware that Trump adopted protectionism for the U.S. through tariffs and Biden has run with that thinking through lots of domestic green subsidies. Biden’s trade representative has said explicitly that she’s not interested in free trade agreements. She sees them as a tool that enriched corporations at the expense of domestic workers and national security. Just this week Larry Summers, former Obama National Economic Council director, was slamming this new, misguided bipartisan consensus and rubbishing its promise of a manufacturing renaissance.

Instead of taking jabs at Brexiteers, Balls and Osborne could've delved into whether they align with Summers on this concerning shift. Or explained their stance for the UK's future. Should the government follow the EU into some sort of subsidy arms-race to coax certain industries here, as my Times colleague Juliet Samuel advocates? Should the country double-down on free trade, removing barriers multilaterally, where possible, or even unilaterally, given the vast bulk of the benefits of free trade stem from opening up the domestic market to competition?

We leave the podcast none-the-wiser over how the hosts would have approached this major international policy shift, but well aware that Osborne is still bitter about the referendum.

Or take another example. Earlier in the podcast, Osborne reports on the spat between former Prime Minister Liz Truss and former Bank of England governor Mark Carney. Carney said this week that though Brexiteers had “tried to create Singapore on the Thames, the Truss government instead delivered Argentina on the Channel.” Truss responded that criticism from the likes of Carney came in part because he and other central bankers didn’t want to admit their own culpability for recent failures.

Cue a flurry of well-rehearsed Balls and Osborne complaints about how Truss was wrong to dub so many institutions as a left-wing establishment, wrong to “attack” the Bank of England during her leadership campaign, and wrong to sideline the OBR before her ill-fated mini-budget. And yes: Truss made big mistakes around the scale of borrowing and in not having the OBR do a forecast alongside her tax and spending plans. She definitely overstates how much the OBR and BoE, as opposed to the bond markets, proved the binding constraint on her agenda.

But do you know what Balls and Osborne didn’t address in this discussion? Whether Truss had a point that the independent Bank of England was culpable for the surge in inflation and for ailing to spot the LDI crisis.

The Bank of England is an inflation-targeting central bank, let’s not forget, and its target is 2 percent annual inflation. Inflation peaked at 11.1 percent last October. Are politicians not allowed to have a view on how well the MPC is doing its job? Truss’s original criticism of the Bank of England, remember, is that they had created too much money, imposing unnecessary pain on households through higher inflation. She was saying this week that politicians get scrutinized for their actions (as she has), but that central bankers seemed to have skirted evaluation for their own records. Do Osborne and Balls actually disagree?

Now maybe both Balls and Osborne subscribe to the view that the loose money during the pandemic was a worthwhile bet to encourage a strong recovery and that, contra its inflation target, the BoE was also correct to “look through” the supply-shocks of 2021-22 and allow inflation to rise hugely above target. But do they actually think the Bank knowingly “allowed” inflation? Or do they think that the MPC simply misjudged their original monetary stimulus relative to the productive capacity of the economy? Again, the hosts leave us in the dark about their own views.

The absence of their thoughts gives every impression that both hold an anodyne view that sees the complete independence of institutions like the Bank as ensuring they are the sheer pinnacle of effectiveness. Where does this come from? Perhaps after the Bank kept inflation so well anchored between 1997 and 2021, Balls and Osborne just can’t compute that the recent surge might be, in part, the Bank’s fault. But we don’t know, because this podcast focuses on pushing back politically against Truss, rather than exploring her argument more deeply.

That, really, is my complaint about this show so far. It has the potential to be extremely enlightening - much more so than other political podcasts. But at times it currently serves to highlight the narrow range of acceptable wisdom about economics in Westminster, and seems more interested in settling new and old scores than exploring the economics.