The Times‘ Matt Chorley has succeeded in getting everyone talking with his story about Michael Gove supposedly using cabinet meeting to audition for the role of chancellor. Gove reportedly talked about ‘the obscure Markets in Financial Instruments Directives’ two weeks ago and has cabinet sources complaining that at this week’s meeting he used ‘lots of long, economicky words’.
So, what were those ‘long, economicky words’? Well, according to one cabinet minister present, Gove talked about Schumpeter and creative destruction and raised the question of whether the Bank of England’s monetary policy was creating zombie companies. The argument is fairly simple: if interest rates are so low, a flood of borrowed money distorts the economy by propping up inefficient companies hogging resources that could be more productively deployed elsewhere. At a time when everyone’s moaning about the UK’s productivity levels, there is, surely, a discussion to be had about whether rock-bottom interest rates are contributing to this problem.
Monetary policy hasn’t been normal for a decade now and the cabinet should be talking about what the consequences of that are, and whether there is anything that government should be doing to address them.
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