FTAlphavilleFT Alphaville is a 2008 Webby Award Winner

• News
• Markets Live

With full credit to the economics team at ABN Amro:

Series four of ‘The Apprentice’. Cut to the boardroom, where Margaret Mountford and Nick Hewer look stern as they sit opposite the nine members of the Bank of England’s monetary policy committee. Enter Sir Alan Sugar.

Sir Alan: “Now, Mervyn. You were asked to lead this team. What did we think of him as a leader?”

Some nod and mutter. Danny Blanchflower shuffles nervously. An unidentified murmur of ‘he was alright’.

Sir Alan: “An unconvincing response. So, Mervyn, your team had the relatively simple task of keeping inflation at 2%. Margaret, what was the actual number?”

Margaret Mountford: “Well, I’m afraid it’s bad news Sir Alan. It was 3%.”

Nick raises his eyebrows in disbelief.

Sir Alan: “3%! That’s a total bloody fiasco. I should fire all nine of you. Mervyn, you’d better explain to me what went wrong.”

Mervyn King: “The objective you set us, Sir Alan, made clear that in practice it might not always be possible to keep inflation at target. In certain circumstances, such as when external shocks temporarily push inflation higher, an attempt to keep it at target could result in undesirable volatility in output. It’s my view that…”

Sir Alan: “Let me stop you there, sunshine. This isn’t about one, tiny mistake. It was a series of mistakes. Inflation is on its way to 4%! This whole task was a shambles. Charlie, you were appointed chief economist. You’ve got to take some of the blame. What have you got to say?”

Charlie Bean: “Well, Sir Alan, we acted in accordance with the neo-Keynesian Phillips curve, which suggests you can accommodate short-term price movements as long as they don’t influence inflation expectations and shift the curve upwards.”

Sir Alan: “Don’t give me any of that ‘Phillips’ bull****. My Amstrad out-competed them ten years ago. You might talk a good game, my friend. But there’s only room for one bigmouth in my organisation and that’s me. When it came down to it, you didn’t vote to raise interest rates and that’s what matters. What about you, Danny?”

Danny Blanchflower: “Well, Sir Alan, I still think unemployment makes people more unhappy than inflation.”

Sir Alan: “Happiness! If I wanted people to be happy, I’d have hired a comedian. As it was, I just ended up with a bunch of jokers. Mervyn, I want you to nominate two people to come back in here with you.”

Mervyn King: “It’ll have to be Charlie and Danny.”

After a brief discussion between Sir Alan, Margaret and Nick, the three candidates shuffle back into the boardroom.

Sir Alan: “You’ve all made mistakes, but I’ve come to a conclusion. Danny, you failed to understand the basic objective of this task. You’re inflation targeters. You’re fired!”

—