About the Author

Sir Paul Tucker is chair of the Systemic Risk Council, a research fellow at Harvard Kennedy School's Mossavar-Rahmani Center for Business and Government, and author of Unelected Power (Princeton University Press, 2018). His other activities include being a senior fellow at the Center for European Studies at Harvard University; president of the UK’s National Institute for Economic and Social Research; a director at Swiss Re; a member of the Board of the Financial Services Volunteer Corps, and a Governor of the Ditchley Foundation. For over thirty years he was a central banker, and a member of the Bank of England’s Monetary Policy Committee from 2002. He was Deputy Governor from 2009 to late 2013, including serving on the Financial Policy Committee (vice chair) and Prudential Regulatory Authority Board (vice chair). Internationally, he was a member of the steering committee of the G20 Financial Stability Board, and chaired its Committee on the Resolution of Cross-Border Banks to solve “too big to fail”. He was a member of the board of directors of the Bank for International Settlements, and was chair of the Basel Committee for Payment and Settlement Systems from April 2012.

Book Description

Central bankers have emerged from the financial crisis as the third great pillar of unelected power alongside the judiciary and the military. They pull the regulatory and financial levers of our economic well-being, yet unlike democratically elected leaders, their power does not come directly from the people. Unelected Power lays out the principles needed to ensure that central bankers, technocrats, regulators, and other agents of the administrative state remain stewards of the common good and do not become overmighty citizens.

Paul Tucker draws on a wealth of personal experience from his many years in domestic and international policymaking to tackle the big issues raised by unelected power, and enriches his discussion with examples from the United States, Britain, France, Germany, and the European Union. Blending economics, political theory, and public law, Tucker explores the necessary conditions for delegated but politically insulated power to be legitimate in the eyes of constitutional democracy and the rule of law. He explains why the solution must fit with how real-world government is structured, and why technocrats and their political overseers need incentives to make the system work as intended. Tucker explains how the regulatory state need not be a fourth branch of government free to steer by its own lights, and how central bankers can emulate the best of judicial self-restraint and become models of dispersed power.

Like it or not, unelected power has become a hallmark of modern government. This critically important book shows how to harness it to the people's purposes.

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Transcript

Paul Tucker:

I'm Paul Tucker. I'm a Research Fellow at the Mossavar-Rahmani center for business and government at the Harvard Kennedy school here in Harvard University. The name of my book is Unelected Power, The Quest For Legitimacy in Central Banking and the Regulatory State.

I have become concerned that our system of government has been changing without us noticing. Whose faces does one associate with the crisis of 2008, 2009? Chairman Bernanke of the Fed? Secretary Paulson? Secretary Geithner? None of these people were elected. Somehow Presidents Bush and Obama are not the faces, that 10 years after the crisis, we associate with getting us out of the crisis. This this marks a remarkable change and I wanted to to write a book about why our societies on both sides of the Atlantic have handed more and more power to unelected people.

In this country, in the United States in the 1930s, the system of government was creaking, the economy was falling apart, society was almost at war with itself, and Roosevelt took a massive step of moving a lot of government away from politics. And then over the decades that have followed, in Europe since maybe the 1980s and 1990s, it has suited the politicians to take fewer of the bigger decisions themselves. I like independent central banks. I think independent regulators are a good thing, but the people in Congress, the people in Parliament have got to decide what they want these agencies to do and then monitor whether they're doing them and hold them to account.

The really big decisions in politics in government should be taken in Congress and in Parliament. That it's a good idea to delegate some functions to independent agencies such as the Federal Reserve, such as the Securities And Exchange Commission, but only with a clear mandate so that we the people and our representatives in Parliament in Congress, can track whether or not these delegated agencies are doing the job that we want them to do. If the objectives are vague, they can make up their own course of action, their own values. They can decide what they want to do. When government inevitably fails, as it does massively so in the run up to the great financial crisis, people are frustrated if they can't simply vote out the people who let them down. No one can vote out the central bankers, no one can vote out the regulators. And to be clear I think that's good, but I think they need to be constrained much more than they have been.

I was a bit surprised to find that France had probably being more thoughtful about this than any of the other advanced democracy economies. More so than the U.S., the U.K. or Germany. The Constitutional Court and the top Court of Appeal have set out the legal constraints on their agencies. But more important, the French Parliament, the Assembly, have set out a generic law for independent agencies and as part of that decided to reduce the number of independent agencies. And that followed a pretty extensive public debate in France a decade or so ago. As I say, as an Englishman I was slightly surprised by that and I'm thinking, well if they can do it, why can't we in Britain? And why can't the United States of America? In a slightly different way, why can't Germany? I think we're all going to end up doing this and I wish we could get on with it.

The idea that the accountability of unelected technocrats lies entirely to unelected judges is somehow to miss the core of representative democracy. We elect people to take the really big decisions for us, and I don't want to get back to a world where Congress or Parliament passes laws that are incredibly detailed. But I do want them to make the very big decisions rather than delegating the very big decisions to an elected people and the judges cannot cure that. Legal liberalism, as some people call it, is not the solution, not the whole of the solution. Our Republican values, our democratic values matter too.

So one response is, "Paul come off it. It's the elected people that are the problem. It's the politicians that are the problem. What do you mean, taking power away from unelected technocrats and giving more to politicians?" And I just don't buy that. I think that the legitimacy of our system of government matters enormously. Another response has been, "My God, here's a former top central banker who wants to trim the powers of central banks. What can be going on?" And I think some of those people don't believe I'm for real. But I am. I hope this book matters because it's addressing a gap in our constitutional values. The world designed for us by James Madison, Montesquieu, Locke of a three branch state, we can still live with that but we need to fill in some of the detail about how these independent agencies fit in.

So my book is addressed to legislators, think tankers, constitutional lawyers. I hope it's going to be debated. Yeah, I've got quite a bit of interest from some capitals, but I really want this book to be debated. I want it to make a difference. I care more about that than whether people agree with me.