Controlling the weather

published 23 October 2014

There are many reasons to vaguely disapprove of Twitter. But there are more to love it. Here's one little exchange that shows why. Earlier this week The Herald tweeted one of its headlines: "Give Scotland powers to boost economy, says business chief."

An immediate response came from the account of @countprosper (which belongs to an ex-partner in a Scottish fund-management firm): "Give Scotland power to change the weather, says tourist chief."

Here you have all the nonsense spoken about economics summed up in fewer than 280 characters. Politics is about pretending economies can somehow be "boosted" as long as governments have the correct "powers" and "levers" to control supply and demand.Jobs can be "created" and tax revenues lifted as long as "powers" are correctly used.

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Countprosper has been around long enough to know this isn't true we might as well claim to be able to stop the rain in Glasgow as to know exactly how to boost its economy. If it was that simple to make everyone rich, it would surely have been done already.

Bill Bonner feels the same. "Modern policymakers are either fools or knaves. Their programmes are senseless and useless. Their theories airy claptrap".

It's a point picked up by Ed Conway in The Times. He notes that the UK economy has done better than expected. GDP is growing at over 3% a year; we're manufacturing more than ever; unemployment has fallen fast; and private indebtedness is down from a stunning 210% of GDP to a merely shocking 166%. Why? We can't be sure.

Is it quantitative easing? Deficit reduction (which matters)? Low wages plus low taxes on the low paid? Changes to benefits? A lag effect of the slide in the pound? A result of our open-door policy to new immigrants and tolerance of globalisation? Or just mean reversion an inevitable bounce after a nasty recession?

And what if the recovery continues? Further strength might be down to factors mentioned already or (more likely perhaps) due to the falling oil price, which could give households more spending power than all the monetary policy of the last five years put together.

We know a few things about economies the key thing being that they work best when left alone. But we don't know enough to precisely control them. Everyone wants to take credit for the UK's recovery. But a more honest approach, as Conway says, would be to meet each new number with, "Wow. Well how about that?"

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Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast - but still writes for Moneyweek monthly.

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.