The cult of the expert – and how it collapsed

The cult of the expert – and how it collapsed, by Sebastian Mallaby.

Led by a class of omnipotent central bankers, experts have gained extraordinary political power. Will a populist backlash shatter their technocratic dream?

It’s 2008 and the US Congress has decided it needed US$85 billion to spend stabilizing an insurance company (AIG). That’s a lot of money. Enter Ben Bernanke, head of the US central bank, the US Federal Reserve.

“Do you have 85bn?” one sceptical lawmaker demanded.

“I have 800bn,” Bernanke replied evenly – a central bank could conjure as much money as it deemed necessary.

But did the Federal Reserve have the legal right to take this sort of action unilaterally, another lawmaker inquired?

Yes, Bernanke answered: as Fed chairman, he wielded the largest chequebook in the world – and the only counter-signatures required would come from other Fed experts, who were no more elected or accountable than he was. Somehow America’s famous apparatus of democratic checks and balances did not apply to the monetary priesthood. Their authority derived from technocratic virtuosity.

The “experts” are not Gods, but the politicians are easily led because they usually know so little — the political class nowadays  is overwhelmingly drawn from people whose life experience is law and political activism. That doesn’t mean the politicians can escape their duties, however.

At some point towards the middle of the decade … the shocking power of central banks came to feel normal. Nobody blinked an eye when Haruhiko Kuroda, the head of Japan’s central bank, created money at a rate that made his western counterparts seem timid. … And nobody missed a beat when India’s breathless journalists described Raghuram Rajan, the new head of the Reserve Bank of India, as a “rock star”, or when he was pictured as James Bond in the country’s biggest business newspaper. “Clearly I am not a superman,” Rajan modestly responded.

If Bernanke’s laconic “I have 800bn” moment signalled a new era of central-banking power, Rajan’s “I am not a superman” wisecrack marked its apotheosis. And it was a high watermark for a wider phenomenon as well … : the cult of the expert.

Even before Bernanke rescued the global economy, technocrats of all stripes – business leaders, scientists, foreign and domestic policy wonks – were enthralled by the notion that politicians might defer to the authority of experts armed with facts and rational analysis. Those moments when Bernanke faced down Congress, or when Draghi succeeded where bickering politicians had failed, made it seem possible that this technocratic vision, with its apolitical ideal of government, might actually be realised.

The key to the power of the central bankers – and the envy of all the other experts – lay precisely in their ability to escape political interference.