Mark Carney’s leaving his post as Governor of the Bank of Canada to take the top job at the Bank of England next July will be a major loss of talent for Canada. And for the United Kingdom, where a central bank already facing a feeble economy and an incipient European financial crisis badly needs someone with Mr. Carney’s knowledge, drive and discipline, it is a coup.
Taking a broader view, however, a remarkable feature of this episode is the precedent: a major modern national central bank hiring its chief executive abroad. We are starting to take the internationalization of the market for top private-sector executives for granted: some companies and head-hunters now see foreign experience as a huge positive in a C-suite candidate.
But for top public-sector jobs – indeed, for most public-sector jobs – nationality trumps talent. Imagine the furor if the search committee the Bank of Canada’s board of directors forms to find Mr. Carney’s replacement started interviewing in the United States!
Not only nationalism makes us assume that top government jobs should go to nationals. Heads of crown corporations, government departments, regulatory bodies and so on typically need a background in Canada’s history, institutions and economy. They will start more strongly, and likely do a better over time, if they know the key policy, business and opinion leaders – and for that, it helps to have spent years in Canada. If the prejudice among Canadians generally is that only “one of us” can serve the public interest, moreover, even people who themselves might prefer the most able person – no matter where in the world that person comes from – might feel the need for trust among the wider population makes picking the national better.
Yet the same applies in many private sector jobs. Retailing, professional services, food and beverages, transportation, health care and financial services are just a few examples of industries where local conditions – consumer preferences, business practices, attitudes of regulators and politicians – matter a lot. Yet in those businesses, as in many others, companies increasingly seek talent wherever they can find it. The list of people who have achieved success in business outside their countries of origin may not be as long as the list of athletes who have done so, but it is growing all the time – hence the increasing desire for international experience on the resume of any potential chief executive.
The almost complete absence of foreign nationals among central bank governors, heads of government departments, and chief executives of state agencies and corporations testifies to a more xenophobic kind of nationalism in their selection – often expressed in laws to keep foreigners out. The U.K. showed its ability to get past such prejudices in hiring Canadian Moya Greene away from Canada Post to run the Royal Mail. Now, the Bank of England’s choice of Mr. Carney underlines the point. That hire sends a clear message: the job of central bank governor is too important to rule anyone out for geographic reasons. The U.K. wanted the best person they could get, and were prepared to go anywhere to get him.
The Bank of Canada will probably pick its next governor from within Canada. There is plenty of talent inside our borders – and running a central bank is certainly easier for a person who knows the local scene. Perhaps, though, the Bank’s search committee should look at the rich talent in the U.S. Federal Reserve System and other central banks as they consider their choice. They’d take some flack – but if a Canadian ultimately gets the job, that wider search would reinforce the view that they had picked the best person available. And in the arena for international public-sector talent, Canada should not just play defence. If top public sector jobs are going international, we in Canada should make sure that we don’t just lose our Mark Carneys, but pick up a few stars as well.
William Robson is president and CEO of the C.D. Howe Institute.