The Occupy Wall Street demonstrations and other expressions of frustration with the global economic and financial system highlight the need for policy makers to show they are serious about forcing change, Bank of Canada governor Mark Carney says.
In a television interview, Mr. Carney acknowledged that the movement is an understandable product of the ``increase in inequality’’ – particularly in the United States – that started with globalization and was thrust into sharp relief by the worst downturn since the Great Depression, which hit the less well-educated and blue-collar segments of the population hardest.
"You’ve had a big increase in the ratio of CEO earnings to workers on the shop floor,’’ Mr. Carney said, according to a transcript of the interview with Peter Mansbridge of CBC News, parts of which aired on Friday evening. "And then on top of that, a financial crisis.’’
But Mr. Carney – a former Goldman Sachs Co. investment banker – suggested that while he understands the frustration, some of it is rooted in an overly pessimistic view of policy makers’ resolve to make it harder for financial firms to take the sort of risks that led to the meltdown of 2008 and the brutal recession that followed.
“There’s a frustration with policy and a frustration that, `are things going back to business as usual,’’’ Mr. Carney said in the interview. ``If I may say, that is not going to happen, but I can understand the frustrations.’’
Demonstrations like the Occupy Wall Street protests, which will hit Canadian cities this weekend, are a “democratic expression of views’’ and “entirely constructive,’’ Mr. Carney said.
“It makes it more tangible, the challenges that that economy is facing, and it makes it more important to demonstrate success on issues such as financial reform,’’ he said.
The words that Mr. Carney applies to the civil disruption carry extra weight because the Harper government is pushing for him to become the next chairman of the Financial Stability Board (FSB), a group charged with co-ordinating the overhaul of international banking regulations. There is widespread fear that, the more time that passes, the tougher it will be to muster political enthusiasm for reforms, against which the financial industry is lobbying furiously.
Mr. Carney has been a fierce critic of the industry backlash and has vowed to counter it.
Asked whether he would accept the part-time job if it were offered, Mr. Carney said yes, although it would be on top of his main role at the Bank of Canada. The new chairman will be named early next month at the Group of 20 leaders’ summit in France.
Mr. Carney – currently in Paris with Finance Minister Jim Flaherty and other G20 policy makers working on the latest reform proposals – expressed confidence in the outcome of the push to make banks hold more capital in reserve and to find ways to allow big banks to fail if they get themselves into trouble instead of showering them with taxpayer-funded bailouts.
"We can start to show real tangible progress on issues like that,’’ he said. “From my part of the world, what we can do is those reforms that are going to change the game for Wall Street, for Bay Street, for the way that the financial system functions to make it like any other business.’’
Earlier Friday, the Occupy Wall Street movement got a boost when the owners of a private park in lower Manhattan where protesters have camped out for a month postponed a planned clean-up.
Demonstrators were scrambling to clean the park themselves, fearing that the official effort was an excuse to kick them out. Union members and other supporters of the protesters had started pouring into the plaza near the heart of the U.S. financial industry in the early morning to show their solidarity.
The movement has spread to at least 70 U.S. cities and will reach at least 15 Canadian cities this weekend. Still, whether it will turn out to be North America’s Tahrir Square or just an exercise remains to be seen. Leaderless and without a clear set of demands, the occupiers are a loosely based coalition of activists and ordinary citizens with a rough goal of addressing growing inequality between rich and the poor. (One of the movement’s most popular messages is that one per cent of the U.S. population holds 40 per cent of the wealth.)
Joseph Heath, author of The Rebel Sell, a critique of modern counter-culture, warned both the Canadian and U.S. movements are likely to fail.
“To sustain this kind of movement, you have to have a feeling there’s a capacity to change things,” he said. “A bunch of protestors are not going to stop banks from being greedy.”
The protesters can take some solace knowing that Mr. Carney – whose reform-minded stand has already put him at odds with powerful titans of the banking world like Jamie Dimon, chief executive officer of JPMorgan Chase & Co. – hopes to do just that.
With reports from Anita Elash in Toronto and Associated Press