Back in 2012, when he was still governor of the Bank of Canada, Mark Carney managed to irritate much of the country’s corporate elite with what many considered a tedious lecture on how to do their jobs from someone who had never himself run a business.
Decrying the more than half a trillion dollars in liquid assets that non-financial Canadian companies had sitting on their balance sheets, Mr. Carney accused corporate barons of stalling the economic recovery by hoarding cash instead of investing it.
“This is dead money,” the then central bank governor told a conference organized by the Canadian Auto Workers union. “If companies can’t figure out what to do with it, then they should give it to shareholders and they’ll figure it out.”
Mr. Carney’s upbraiding did not go down well on Bay Street. First, his criticism was not true, as economic growth figures released the following week by Statistics Canada showed that business investment had risen in the previous quarter. Second, many believed Mr. Carney was overstepping the neutral role of a central bank governor and meddling in the private economy.
The incident showed that Mr. Carney, who was already being touted as a future federal Liberal leader, might not be the potential saviour that many in the party had made him out to be. He rubbed a lot of people the wrong way. His tone could be perceived as condescending. As an alumnus of Goldman Sachs, which had got richer during the financial crisis, he was distrusted by many on the left as a friend of the big banks.
By the time he wrapped up his stint as governor of the Bank of England this past March, Mr. Carney had become a lightning rod for populist politicians on both the left and right. His (mostly unfulfilled) prophesies about the doom that would befall Britain if it left the European Union had led to charges of partisanship on his part. He was also seen as inappropriately stretching the boundaries of the central bank’s mandate by constantly harping on the risks of climate change for business.
None of this has prevented large numbers of Liberals from continuing to dream of Mr. Carney. For these Grits, the now-unemployed former central banker retains an aura of invincibility that could help Prime Minister Justin Trudeau’s government plot an activist postpandemic economic agenda to vastly increase the size of the state.
Many Liberals, including quite possibly Mr. Trudeau himself, believe Finance Minister Bill Morneau has become toxic and must be replaced. No matter that Mr. Morneau and Mr. Trudeau appear equally to blame for engulfing the government in another ethics scandal – this one involving the WE Charity – the Finance Minister is more likely to walk the plank than his boss, with whom he has never been that simpatico in the first place.
Untainted by political scandal, and with more economic and financial knowledge than the entire Liberal cabinet combined, Mr. Carney could take over from Mr. Morneau without sending shock waves through the markets. Indeed, the latter would likely react enthusiastically knowing that Canadian fiscal policy was in such experienced hands.
Besides, Mr. Carney is obviously looking for a new gig and has long seemed to fancy taking a turn at politics. He is even writing a book, whose immodest subtitle – “Building a Better World for All” – makes it sound like one of those virtue-signalling quickies that politicians publish just as they as are about to launch their candidacies for higher office.
“Now, we have the chance for our values to shape our possibilities, creating a dynamic economy that works for all and sustainably over time,” Mr. Carney said in June in a statement about the book.
But politics is an all-or-nothing proposition, and Mr. Carney has yet to demonstrate that he has the stomach for it. There is also a risk for Mr. Trudeau that Mr. Carney would upstage him, along with those who would become his future leadership rivals already in cabinet, such as Deputy Prime Minister Chrystia Freeland and Foreign Affairs Minister François-Philippe Champagne. Mr. Trudeau cannot afford to pit his own ministers against one another.
Still, Mr. Trudeau needs to do something to regain the trust of Canadians as the economic fallout from the pandemic accelerates in the fall. Temporary income support programs will be wound down and business bankruptcies are expected to surge. Anxious Canadians will need a government in which they can confidently place their hopes.
The current cabinet does not appear up to the task of providing one. Could adding Mr. Carney to the team change that? There’s no way of knowing until it happens.
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