How about comparing Stevenson with the B of E interest rate committee

Yes — that is a very fair criticism, and I would qualify what I said earlier.

Working inside the Bank of England gives someone enormous knowledge of how the existing monetary-policy system works. It does not necessarily make them better at imagining how the system could work differently.

In fact, this is one of the strongest arguments for having independent members on the MPC in the first place. The Bank itself says the four external members are there specifically to bring expertise and thinking from outside the Bank, and that the committee is intended to benefit from diversity of thought and experience.

There are really two different questions

Question 1: “How should we operate the existing system?”

The Bank’s economists are exceptionally well qualified.

Question 2: “Is the existing system itself the right system?”

That’s a much harder question — and experience inside the system can actually create a degree of institutional bias.

The Bank itself acknowledges that monetary policymaking requires judgement and says its framework is designed to encourage debate, new ideas and challenge.

This makes Stevenson’s position rather more interesting

Stevenson’s advantage isn’t that he knows more about conventional monetary economics than the MPC.

It’s that he is prepared to ask:

“What if the assumptions underlying the current system are wrong?”

For example:

What if 2% inflation isn’t the only sensible objective?
What if interest rates redistribute wealth more dramatically than conventional models capture?
What if asset prices should be considered much more explicitly when setting rates?
What if monetary policy has been disproportionately benefiting asset owners?
What if fiscal policy and monetary policy should be coordinated differently?
What if Britain should use taxation rather than interest rates to control excess demand?
What if a different mix of interest rates, taxation, housing policy and credit controls would produce better outcomes?

Those are system-design questions, rather than merely questions about operating the existing system.

And that’s where I think Stevenson deserves more weight than I gave him in my previous answer.

There is actually an important point in the Bank’s own framework

The MPC’s remit is a “constrained discretion” framework. The Bank’s own recent explanation says the remit doesn’t specify precisely how the MPC should trade off inflation against output stability; that is left to the committee’s judgement.

So the MPC isn’t simply following an automatic formula.

But there is still a boundary: price stability remains paramount. The Bank’s statutory framework requires it to maintain price stability and, subject to that, support government objectives for growth and employment.

That means someone like Stevenson can legitimately challenge the framework and its consequences, but the sitting MPC members are constrained by the framework they are legally required to operate.

And I would make another correction to my previous answer

I was too quick to say:

“If the question is where Bank Rate should be, the MPC — overwhelmingly.”

I’d change that to:

If the question is “What Bank Rate is consistent with the current UK monetary-policy framework?” — the MPC is overwhelmingly better placed to answer it.

But:

If the question is “Is the current framework producing the best economic outcome for Britain?” — that is absolutely not a question that belongs exclusively to the MPC.

And Stevenson can have a legitimate contribution to that debate.

In fact, Alan Taylor and Megan Greene illustrate exactly why external experience is valuable. Taylor came from Columbia and has advised Morgan Stanley and PIMCO; Greene came from international macroeconomic and financial-market work outside the Bank.

So I wouldn’t put “Bank insider = conventional, Stevenson = independent thinker” quite so simply.

The more useful distinction is:

MPC: How do we optimise monetary policy within the existing framework?

Stevenson: Are we optimising the wrong thing, using the wrong framework, or ignoring important distributional effects?

And that second question is extremely important.

If you want, I think the next comparison would be particularly worthwhile: take Stevenson’s actual proposals and ask what an alternative UK monetary system would look like — including whether Bank Rate should be lower, whether wealth/property taxation should do more of the work, and whether the Bank should explicitly consider asset prices when setting interest rates. That would get to the heart of whether Stevenson is actually offering a better economic model rather than simply criticising the present one.

is an economist qualified by not actively experiencing the results of his actions/beliefs ?

Not necessarily — and you’ve put your finger on a real weakness in how economic expertise is often judged.

An economist can be highly qualified academically without ever having personally experienced the consequences of the policies he recommends. But that does not mean his analysis is worthless. It means we should distinguish between technical competence and practical/empirical judgement.

I would separate four kinds of qualification
Type What it gives you Example
Academic Economic theory, statistics, modelling PhD economist
Institutional Knowledge of how policy operates Bank of England economist
Market experience Direct experience of financial behaviour Gary Stevenson
Consequential experience Seeing what policies actually do to people/businesses Business owner, borrower, investor, worker

The last two are particularly important.

Consider interest rates

An economist can construct an excellent model showing:

Bank Rate ↑ → borrowing costs ↑ → demand ↓ → inflation ↓

But someone who has actually experienced:

Bank Rate 2% → 5% → mortgage doubles → business investment cancelled → employee made redundant

has information that isn’t necessarily captured by the model.

That doesn’t make the second person automatically right.

But it means the first person’s model needs to be tested against reality.

And this is where I think your question about Stevenson becomes important

Stevenson has actually experienced several sides of the system:

As a trader:
He experienced how central-bank decisions affect markets.

As someone who became wealthy through markets:
He experienced the enormous benefits of asset-price movements.

After leaving the City:
He became concerned about the consequences for people who don’t own significant assets.

That gives him a perspective that is difficult to obtain from an academic career alone.

But there’s an equally important counterpoint.

Experience can create its own bias.

A person who has lived through something can become convinced that his experience represents the general rule.

For example:

“I saw interest rates cause X, therefore interest rates cause X generally.”

An economist may respond:

“Your experience is real, but let’s examine 50 years of data involving millions of households.”

Both perspectives are necessary.

The really important distinction

I wouldn’t ask:

“Is an economist qualified if he hasn’t experienced the consequences?”

I’d ask:

“Has the economist’s theory been repeatedly tested against the consequences in the real world?”

That’s the critical test.

A scientist doesn’t need to personally experience every chemical reaction.

But if his theory repeatedly predicts something that doesn’t happen, we stop believing the theory.

Economics should be held to the same standard.

And this leads to an uncomfortable question for the Bank of England

The Bank has enormous expertise in forecasting inflation.

But look at the history.

It has repeatedly had to revise its forecasts because the economy behaved differently from its models.

That doesn’t mean the economists are incompetent.

Economies are extraordinarily complex.

But it does mean institutional expertise should never be confused with infallibility.

And this is where independent thinkers such as Stevenson can be useful.

He can say:

“Your model says this should happen. I’m looking at the actual market and household consequences and I’m seeing something different.”

The Bank then has the responsibility to demonstrate why its model remains superior.

My view

I would actually rank economic expertise roughly like this:

Theory + data + real-world experience + willingness to test your beliefs against evidence

is considerably stronger than:

Theory + qualifications + institutional position.

And there is an additional quality that matters enormously:

Have you been wrong — and did you change your mind?

That, to me, is one of the best tests of an economist.

Someone who has made a forecast, been wrong, analysed why they were wrong and changed their model may be far more valuable than someone with a perfect academic CV who never seriously challenges his own assumptions.

So your instinct is sound:

An economist who has never experienced the consequences of economic decisions is not necessarily unqualified — but his qualification is incomplete if he doesn’t actively confront the real-world consequences of those decisions.

And that is precisely why I think Stevenson’s challenge to the MPC deserves to be taken seriously even when some of his conclusions may ultimately be wrong.

Does this come back to the old adage, he that can, Does, he that cannot teaches!

Yes — there is a connection, but I would be careful about taking the adage literally.

The saying “Those who can, do; those who can’t, teach” is a witty criticism of people who theorise about something without being capable of doing it themselves. It was popularised by George Bernard Shaw in Man and Superman (1903).

In the context we’ve been discussing, it does capture part of your objection to economists:

If someone has spent their entire career studying economic behaviour but has never actually operated a business, traded markets, employed people, borrowed money, invested capital or borne the consequences of economic decisions, how much practical authority should their theory carry?

That’s a legitimate question.

But I’d make one important change to the saying.

I would say:

“Those who can, do; those who understand, teach; those who do both are particularly valuable.”

Because some of the world’s best practitioners also become outstanding teachers and theorists.

And the reverse is true: some of the world’s best economists have never been traders or businesspeople but have nevertheless produced extremely valuable empirical research.

In the Stevenson/MPC debate, I’d therefore see three groups:

1. The theorist

Understands economic models, statistics and historical evidence.

2. The practitioner

Has actually operated in the environment and experienced the consequences.

3. The practitioner-theorist

Has done it, studied it, measured the results and then changed his thinking when the evidence disagreed with him.

That third category is what I’d put the highest value on.

And Stevenson is interesting because he has at least part of that combination:

Mathematics & Economics → Oxford economics → Citibank trading → enormous real-world financial experience → research into inequality → public challenge to conventional economics.

The fact that he was actually financially successful within the system he now criticises makes his arguments rather more interesting than those of someone who has only studied the system from a university office.

But there’s an important irony:

Stevenson himself now teaches economics.

So if the old adage were literally true, he’d have gone from “can do” to “teaches” — having first demonstrated that he could do.

That’s probably the better standard:

Don’t ask merely whether someone is an economist. Ask what they have actually done, what consequences they have experienced, what predictions they have made, whether those predictions proved correct — and whether they changed their mind when they were wrong.

That is a much tougher and, in my view, much fairer test of economic expertise.