Sir Paul Tucker, the author of “Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State” (Princeton University Press, 2018), spoke at AEI on Monday. He noted that the problem of too much government lies in the hands of unelected regulators and activist judges. He discussed administrative agencies in different countries and categorized agencies according to their degrees of insulation from everyday politics. Then, he focused on independent agencies, the ones with the most insulation, and explained how to determine whether and how to delegate power to them. He concluded by applying his principles to the central banking system.
Sarah Binder from the Brookings Institution and George Washington University emphasized a point from the book: The more power politicians give to central banks, the less incentivized politicians are to do their share, as they expect central banks to step into fiscal policy. She thus concluded that the democratic dilemma of central banks is not an unintended consequence but a feature of democratic governance.
R Street Institute’s Philip Wallach stated that the question for central banks is not whether they should be independent, but how independent they should be and how they should balance their different accountabilities to the public, legislators, and the specialized professional community.
— Hao-Kai Pai
Significant parts of the modern public sector are not under the direct control of the elected representatives of the people. Instead, judges and independent regulators exercise immense delegated, unelected power over a range of areas and activities. The response to the global financial crisis and the deep recession that followed has brought central bankers, in particular, to the forefront of public attention. In his new book “Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State” (Princeton University Press, 2018), Sir Paul Tucker presents lessons for agents of the administrative state in their quest to maintain democratic legitimacy while insulating their decision-making from the frenzy of the political class.
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Stan Veuger, AEI
Sir Paul Tucker, Harvard Kennedy School; Systemic Risk Council
Sarah Binder, Brookings Institution; George Washington University
Sir Paul Tucker, Harvard Kennedy School; Systemic Risk Council
Stan Veuger, AEI
Philip Wallach, R Street Institute
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Sarah Binder is a senior fellow in the Governance Studies program at the Brookings Institution and a professor of political science at the George Washington University, where she specializes in Congress and legislative politics. Her current research explores the historical and contemporary relationship between Congress and the Federal Reserve System. She is an associate editor of The Washington Post’s The Monkey Cage. Dr. Binder is a former coeditor of Legislative Studies Quarterly. She is the author of “Stalemate: Causes and Consequences of Legislative Gridlock” (Brookings Institution Press, 2003), which was awarded the 2004 Richard F. Fenno Prize by the American Political Science Association, and “Minority Rights, Majority Rule: Partisanship and the Development of Congress” (Cambridge University Press, 1997). She is the coauthor of “The Myth of Independence: How Congress Governs the Federal Reserve” (Princeton University Press, 2017) with Mark Spindel; “Advice and Dissent: The Struggle to Shape the Federal Judiciary” (Brookings Institution Press, 2009) with Forrest Maltzman; and “Politics or Principle? Filibustering in the United States Senate” (Brookings Institution Press, 1996) with Steven S. Smith. Her other work on congressional politics has appeared in publications such as the American Political Science Review and the American Journal of Political Science. Dr. Binder was elected to the American Academy of Arts and Sciences in 2015. Between 1986 and 1990, she served as legislative aide and press secretary to Rep. Lee H. Hamilton (D-IN). She received a Ph.D. in political science from the University of Minnesota and a B.A. from Yale University.
Sir Paul Tucker is chair of the Systemic Risk Council and a fellow at the John F. Kennedy School of Government at Harvard University. From 2009 to late 2013 he was deputy governor of the Bank of England, having joined the bank in 1980. He was a member of the bank’s Court of Directors and all its statutory policy committees: the Monetary Policy Committee, the Financial Policy Committee (vice chairman) and the Prudential Regulation Authority Board (vice chairman). Internationally, he was a member of the steering committee of the Financial Stability Board and chaired the Basel Committee on Banking Supervision’s Cross-Border Bank Resolution Group to solve the “too big to fail” problem. Sir Tucker was a member of the board of directors of the Bank for International Settlements and was chair of the Basel Committee on Payment and Settlement Systems. He is a member of the board of the Financial Services Volunteer Corps, a director at the Swiss Re Group, a visiting fellow at Nuffield College of the University of Oxford, a member of the advisory council of the AQR Asset Management Institute at the London Business School, and a governor of The Ditchley Foundation.
Stan Veuger is a resident scholar at AEI, where his research is in political economy and public finance. He is also the editor of AEI Economic Perspectives. He has been a visiting lecturer of economics at Harvard University and is a fellow at the Center for the Governance of Change at the IE School of International Relations in Madrid. Dr. Veuger’s research has been published in leading academic and professional journals, including the Journal of Monetary Economics, The Quarterly Journal of Economics, and the Review of Economics and Statistics. He is the coeditor, with Michael R. Strain, of “Economic Freedom and Human Flourishing: Perspectives from Political Philosophy” (AEI Press, 2016). He also writes frequently for general audiences on economics, politics, and popular culture. His writing has appeared in Foreign Affairs, the Los Angeles Times, The National Interest, The New York Times, and USA Today, among others. He serves as the chairman of the Washington, DC, chapter of The Netherland-America Foundation. He received a Ph.D. and an M.A. in economics from Harvard and an M.S. in economics from Universitat Pompeu Fabra. He completed his undergraduate education at Utrecht University and Erasmus University Rotterdam.
Philip A. Wallach is a senior fellow of governance at the R Street Institute, where he researches America’s separation of powers with a focus on the relationship between Congress and the administrative state. He also follows a wide range of regulatory policy issues, including the efficacy of the Trump administration’s deregulatory efforts. Dr. Wallach joined R Street in January 2018. He was previously a fellow and then a senior fellow in governance studies at Brookings Institution, where he authored “To the Edge: Legality, Legitimacy, and the Responses to the 2008 Financial Crisis” (Brookings Institution Press, 2015). He received his bachelor’s degree with honors from Wesleyan University’s College of Social Studies and his doctorate in politics from Princeton University.