Operation Nobel, part II

The prize committee issues Obama with a call to action

So, the weather didn't clear, but the mood in Oslo lifted distinctly yesterday evening: Barack Obama seems to have pulled off the remarkable trick of talking peace while standing firm to his commitments to war. And despite annoying the Norwegians at first by making his visit so peremptory -- "Everybody wants to visit the Peace Centre except Obama," snarked the newspaper Aftenposten -- he even seems to have warmed their hearts. He has done all this in less than a day. Living up to the prize will be nothing like as easy.

After his morning visit to the Nobel Peace Institute, Obama met with Prime Minister Jens Stoltenberg, who hardly needed the popularity boost, having just been re-elected, but who was doubtless grateful for it all the same. He set out a to-do list for the US president, beginning with a strong political agreement in Copenhagen.

That established one theme for the day: telling Obama how to do his job. At the press conference afterwards, a Norwegian journalist set the other: the search for justifications for his prize. What were the president's own views on it? Obama was asked. He replied by defusing the question with a one-liner: "The goal is not to win a popularity contest." That was the easy base covered, but the one American journalist then also granted a question went straight for the jugular: "Will the July 2011 date be when US troops actually withdraw [from Afghanistan]?" It would, Obama acknowledged, be just the beginning. He was doubtless relieved that the day's tight schedule would leave no time for follow-up questions.

The proddings and calls for justifications followed Obama over in the early afternoon to City Hall, where he was to give his Nobel Lecture, the prizewinner's address. Introducing Obama, the chairman of the Nobel Committee, Thorbjørn Jagland, gave his own, highly self-conscious defence of the committee's decision to award the prize to the US president, as well as a running commentary on the sort of world they would like to see him help create.

When Albert Luthuli received his prize in 1961, Obama was told, the struggle against apartheid was in its infancy; when Martin Luther King received his in 1964, the struggle for civil rights in America was also far from over. And as the committee has constantly been pointing out since making the award, Obama's prize, much more so than theirs, is intended to be "a call to action".

Some might, of course, say that all this is merely wishful thinking, and that their hopes of handing Obama a set of golden handcuffs at the same time as the Nobel gold medal are misplaced, misguided even. But as the words of Obama's own speech echoed literally right around the city this afternoon -- broadcast as they were from a large screen outside the City Hall -- he seemed to win a good few people to their cause.

In any case, "A Call to Action" is a phrase the Norwegians will keep hearing over the next year, it also being the title of the Obama exhibition that will run until December at the Nobel Peace Centre. Whether it is a phrase that still rings in the man's own ears in six months, let alone a year's time, remains to be seen.

With luck, he might still remember it next week at least, when he flies back this way to Copenhagen. But my guess is that he will not. After an afternoon spent tying himself in knots over the mirage of "just wars", and paying lip service -- however eloquent that lip service may have been -- to the much harder task of rebuilding the livelihoods of those in whose country he currently commands an army, it seems that Obama will not himself be making the shift from the probable to the possible any time soon.


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Leader: Mark Carney — a rock star banker feels the heat

Rather than mutual buck-passing, politicians and central bankers must collaborate in good faith.

On 24 June, the day after the EU referendum, the United Kingdom resembled a leaderless state. David Cameron promptly resigned as prime minister after his humiliating defeat. His closest ally, George Osborne, retreated to the safety and silence of the Treasury. Labour descended into open warfare; meanwhile, the leaders of the Leave campaign appeared terrified by the challenge confronting them and were already plotting and scheming against one another.

The government had not planned for Brexit, and so one of the few remaining sources of authority was the independent Bank of England. Its Canadian governor, the former Goldman Sachs banker Mark Carney, provided calm by announcing that Threadneedle Street had performed “extensive contingency planning” and would not “hesitate to take additional measures”. A month later, the Bank cut interest rates to a ­record low of 0.25 per cent and announced an additional £60bn of quantitative easing (QE). Both measures helped to avert the threat of an immediate recession by stimulating growth and employment.

Since then the Bank of England governor, who this week gave evidence on monetary policy to the economic affairs committee at the House of Lords, has become a favoured target of Brexiteers and former politicians. Michael Gove has compared Mr Carney to a vainglorious Chinese emperor and chided him for his lack of “humility”. William Hague has accused the Bank of having “lost the plot” and has questioned its future independence. Nigel Lawson has called for Mr Carney to resign, declaring that he has “behaved disgracefully”.

At no point since the Bank achieved independence under the New Labour government in 1997 has it attracted such opprobrium. For politicians faced with the risk, and the reality, of economic instability, Mr Carney and his colleagues are an easy target. However, they are the wrong one.

The consequences of loose monetary policy are not wholly benign. Ultra-low rates and QE have widened inequality by enriching asset-holders, while punishing savers. Yet the economy’s sustained weakness as well as poor productivity have necessitated such action. As Mr Osborne consistently recognised when he was chancellor, monetary activism was the inevitable corollary of fiscal conservatism. Without the Bank’s interventionism, government austerity would have had even harsher consequences.

The new Chancellor, Philip Hammond, has rightly taken the opportunity to “reset” fiscal policy. He has abandoned Mr Osborne’s absurd target of seeking to achieve a budget surplus by 2020 and has promised new infrastructure investment in his Autumn Statement on 23 November.

After years of over-reliance on monetary stimulus, a rebalancing is, in our view, necessary. Squeezed living standards (inflation is forecast to reach 3 per cent next year, given the collapse in the value of sterling) and anaemic growth are best addressed through government action rather than a premature rise in interest rates. Though UK gilt yields have risen in recent weeks, borrowing costs remain at near-record lows. Mr Hammond should not hesitate to borrow to invest, as Keynesians have long argued.

The Bank of England is far from infallible, of course. In recent years, its growth and employment forecasts have proved overly pessimistic. Mr Carney’s immediate predecessor, Mervyn King, was too slow to cut rates at the start of the financial crisis and was ill-prepared for the recession that followed. Central bankers across the developed world, most notably the former Federal Reserve head Alan Greenspan, have too often been treated as seers beyond criticism. Their reputations have suffered as a consequence.

Yet the principle of central bank independence remains one worthy of defence. Labour’s 1997 decision ended the manipulation of interest rates by opportunistic politicians and enhanced economic stability. Although the Bank’s mandate is determined by ministers, it must be free to set monetary policy without fear of interference. The challenge of delivering Brexit is the greatest any British government has faced since 1945. Rather than mutual buck-passing, politicians and central bankers must collaborate in good faith on this epic task.

This article first appeared in the 27 October 2016 issue of the New Statesman, American Rage