Central bank independence: the orthodoxy's under attack

Have we handed the foxes the keys to the hen house?

Japan's central bank and treasury are discussing co-operating more on economic policy — news which has sent the Nikkei soaring, opening around 2 per cent higher than it closed yesterday, and rising further throughout today.

We've already had previews of this news. After all, new Prime Minister Shinzo Abe was elected on a promise (or threat?) to force the Bank of Japan to do more monetary easing, and has already made other unconventional moves like "nationalising" industrial stock to encourage private-sector investment.

Nonetheless, it was unclear that Abe would actually pull it off. Business Insider describes it as "one of the most taboo concepts in modern economics", noting that "the Treasury is supposed to do fiscal policy. The central bank is supposed to do monetary policy. And that's that".

But, as with so many orthodoxies of economics, the idea of central bank independence has come under attack since the global financial crisis.

Central banks are supposed to be independent to remove the risk that politicians will use monetary policy the same way they all-too-frequently use fiscal policy: to engineer temporary booms, gain brief popularity, and win elections. By removing control of policy from people who stand to gain if they favour the short- over the long-term, monetary policy ought to be "better run".

Monetary policy is worse for this sort of thing because it depends far more on ideas of credibility and restraint than fiscal does. Much of the job of a central bank involves saying the right things, rather than doing them. There's a thousand ways to hold interest rates low, but doing so while explicitly saying they will be low for the next two years (as with the Evans Rule) is very different from doing so while saying they may rise at any time.

But it's important to remember that an "independent" central bank may be no such thing. If principal-agent problems apply to banks run by democratically elected politicians, they apply just as effectively to banks run by technocratic ex-financiers. Frequently, this works well. As Tyler Cowen wrote in 2009:

The default selection mechanism favors bankers, i.e. lenders, people whose interests make them more favorable towards lower inflation.

Given the trend in monetary policy for most of the last thirty years was a desire to reduce then suppress inflation, that convergence of interests was beneficial. But there's no particular reason to expect the convergence of interests between the economy as a whole and one subsection of it to be a long-term thing.

If nothing else, we get the downsides of "independent" central banks when their policy turns to whether to backstop banks and bankers. As a lengthy Atlantic piece by Simon Johnson from May 2009 describes, too many of those decisions were actively favouring the interests of the finance industry when those interests were in direct opposition to the rest of the nation.

And as we've faced an increasing number of unprecedented situations, even the old truth has come under attack. As Joseph Stiglitz said in India earlier this year:

In the crisis, countries with less independent central banks-China, India, and Brazil-did far, far better than countries with more independent central banks, Europe and the United States. There is no such thing as truly independent institutions. All public institutions are accountable, and the only question is to whom.

Obviously the independence, or not, of the central banks is unlikely to have been the deciding factor between whether China or Europe came out of the crisis intact. But more and more people are starting to realise that concepts of independence need to be re-examined, as technocratic rulers are demonstrated to be just as beholden to their own interests as democratic ones, and as those interests continue to diverge from those of the nation as a whole.

So if Japan is about to break a taboo, maybe it has picked the right time to do it.

Pedestrians walk past a stock quotation board in Tokyo on January 11, 2013. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Is Google Maps discriminating against people with disabilities?

Its walking routes are not access-friendly.

“I ended up having to be pushed through a main road in London, which was really scary.” Three weeks ago, Mary Bradley went to London to visit her daughter Belinda, who is just finishing her first year at university there. Her other daughter joined them on the trip.

But what was supposed to be an enjoyable weekend with her two children turned into a frustrating ordeal. The apps they were using to find their way around kept sending them on routes that are not wheelchair-friendly, leading to time-consuming and sometimes frightening consequences.

Bradley has been using a wheelchair – when having to go longer distances without a vehicle – for over a year, due to a 45-degree curve in her spine, severe joint facet deterioration in her back, and other conditions.

She lives in Weston-super-Mare in Somerset, and has made the trip up to London to visit her daughter a handful of times. Each visit, they use Google Maps and the transport app Citymapper to find their way around, as neither of them know London particularly well.


Belinda and Mary Bradley. Photo: Belinda Bradley

“It was just horrible,” says Bradley of her most recent trip to the capital. “We’re following the maps, and we go along, then find we are faced with a footbridge, and realise there was no way I was going to get over it, so we had to go back the way we’d come. At one point, we were faced with a strip of narrow pavement the wheelchair couldn’t go down. That was something we found all weekend.”

While Google Maps did highlight accessible Tube stations, they found that once they had alighted to do the rest of the journey to their destination on foot, “it took us three times as long, because the route that it takes us just wasn’t passable”.

They ended up having to try different routes “having no real idea of where were going”.

“It meant that it took so much longer, the girls ended up having to push me for longer, I got more and more embarrassed and frustrated and upset about the whole thing,” Bradley tells me.

At one point, her daughters had to take her down a main road. “Being pushed on a road, especially in London, is scary,” she says. “It was scary for me, it was scary for the girls.”

When they returned home, Belinda, who is a 19-year-old Writing and Theatre student at the University of Roehampton, was so furious at the situation that she started a petition for Google Maps to include wheelchair-friendly routes. It hit over 100,000 signatures in a fortnight. At the time of writing, it has 110,601 petitioners.


Belinda's petition.

Belinda was surprised that Google Maps didn’t have accessible routes. “I know Google Maps so well, [Google]’s such a big company, it has the satellite pictures and everything,” she says. “So I was really surprised because there’s loads of disabled people who must have such an issue.”

The aim of her petition is for Google Maps to generate routes that people using wheelchairs, crutches, walking sticks, or pushing prams will be able to use. “It just says that they’re a little bit ignorant,” is Belinda’s view of the service’s omission. “To me, just to ignore any issues that big needs to be solved; it needs to be addressed almost immediately.”

But she also wants to raise awareness to “make life better in general” for people with disabilities using navigation apps.

Belinda has not received a response from Google or Citymapper, but I understand that Google is aware of the petition and the issue it raises. Google declined to comment and I have contacted Citymapper but have not received a response.

Google Maps does provide information about how accessible its locations are, and also allows users to fill in accessibility features themselves via an amenities checklist for places that are missing that information. But it doesn’t provide accessible walking routes.

“There’s no reason that they couldn’t take it that bit further and include wheelchair accessible routes,” says Matt McCann, the founder of Access Earth, an online service and app that aims to be the Google Maps for people with disabilities. “When I first started Access Earth, I always thought this is something Google should be doing, and I was always surprised they haven’t done it. And that’s the next logical step.”

McCann began crowdsourcing information for Access Earth in 2013, when he booked a hotel in London that was supposed to be wheelchair-friendly – but turned out not to be accessible for his rollator, which he uses due to having cerebral palsy.

Based in Dublin, McCann says Google Maps has often sent him on pedestrian routes down cobbled streets, which are unsuitable for his rollator. “That’s another level of detail; to know whether the footpaths are pedestrian-friendly, but also if they’re wheelchair-friendly as well in terms of the surface,” he notes. “And that was the main problem that I had in my experience [of using walking routes].”

Access Earth, which includes bespoke accessibility information for locations around the world, aims to introduce accessible routes once the project has received enough funding. “The goal is to encompass all aspects of a route and trip,” he says. Other services such as Wheelmap and Euan's Guide also crowdsource information to provide access-friendly maps.

So how long will it take for more established tech companies like Google to clear the obstacles stopping Mary Bradley and millions like her using everyday services to get around?

“You can use them for public transport, to drive, you can use them if you’re an able-bodied person on foot,” she says. “But there are loads of us who are completely excluded now.”

Sign Belinda Bradley’s “Create Wheelchair Friendly Routes on Google Maps" here.

Anoosh Chakelian is senior writer at the New Statesman.