In the Governorship race, my money’s on the hedgehog to beat the fox

Like most country dwellers, I have a sneaking admiration for the fox but for the hedgehog I have real affection. So I was entertained to find references to these creatures which might help Downing Street decide who to appoint to the governorship of the Bank of England, for which applications close on Monday. Both draw on the philosopher Isaiah Berlin’s categorisation of great thinkers according to a fragment from the ancient Greek poet Archilochus: ‘The fox knows many little things, but the hedgehog knows one big thing.’

In The Signal and the Noise, published this month, the US political forecaster Nate Silver argues that ‘hedgehogs’ with big, fixed ideas make lively pundits but are very often proved wrong, while ‘foxes’ who rely on empirical evidence from multiple sources are more likely to make accurate predictions. A second reference cropped up in a recent speech by Bank of England executive director Andrew Haldane: ‘Historically, financial supervision has been long foxes and short hedgehogs,’ he observed, but crucial to the development of a better oversight system than the one that allowed the banking crisis to happen will be ‘well-honed rules of thumb’ rather than layer upon layer of complexity: ‘That means having staff with a nose for a crisis (like a hedgehog) as well as ears and eyes (like a fox).’

So there you have it: the hedgehog driven by what Berlin called a ‘universal, organising principle’ makes a better regulator; the fox capable of ‘seizing upon the essence of a vast variety of experiences’ makes a better forecaster. The Governor needs to be both, but which is more important? Sir Mervyn King — who we might characterise for this purpose as an increasingly prickly old fox — has given a clue by dismissing financial prediction as ‘a mug’s game’ and ‘a stab in the dark’, particularly amid current euro-turmoil.