Mark Carney smiles as he arrives for Britain's former chancellor of the exchequer Rishi Sunak's speech at the COP26 U.N. Climate Summit in Glasgow, Scotland, on Nov. 3, 2021.Alberto Pezzali/The Associated Press
In a Q&A session at a dinner in Toronto last week, guest of honour Mark Carney – former Bank of Canada governor, current green-economy crusader, possible future prime minister – was asked what fiscal policy could be doing better in aid of the Canadian economy.
“A lot,” was his immediate response.
What Mr. Carney thinks about Canadian fiscal policy might also matter, a lot, in the next decade, if the constant buzz around Ottawa comes to fruition. He’s on everyone’s short list to become the next leader of the federal Liberals, if and when Prime Minister Justin Trudeau steps down. Many see him as the ideal Liberal antidote to Conservative Leader Pierre Poilievre’s rising popularity.
While Mr. Carney doesn’t talk about it publicly, it’s pretty much a given that he’s interested in the job, in the right circumstances. What are the right circumstances? No one knows; perhaps even Mr. Carney himself hasn’t worked that out yet. (He did decide in 2021, when he was touted as a potential Liberal candidate in that fall’s federal election, that the circumstances were wrong; he didn’t run.)
Seeing him hold court at this C.D. Howe Institute event – before an audience stacked with serious economic thinkers – it’s evident why he would be a formidable opponent in an election campaign.
He’s charming. He’s humourous. (The laugh he got from enunciating the overused political cliché “hard-working Canadians,” as if reciting a rehearsed talking point, was priceless.) He speaks off the cuff easily, comfortably and engagingly. And he knows his economic stuff very, very well.
Indeed, Mr. Poilievre, who prides himself on his economic knowledge, looks decidedly lightweight on pretty much any aspect of the subject, when measured against Mr. Carney’s résumé.
On monetary policy, Mr. Carney – the former head of the central banks of both Canada and Britain – has much more expertise than Mr. Poilievre. On fiscal policy, Mr. Carney – a former senior associate deputy minister in the Finance department – has more hands-on experience than Mr. Poilievre. On climate change policy, Mr. Carney – the United Nations Special Envoy for Climate Action and Finance – knows much more than Mr. Poilievre. On private-sector business and finance issues, Mr. Carney – who spent 13 years at investment bank Goldman Sachs – is miles ahead of Mr. Poilievre, who has spent his entire professional career in politics.
If we wanted someone to lead us into the brave new economic world of deglobalization and green transition – a “rewiring of the global economy,” Mr. Carney called it – it would be hard to find any Canadian more qualified.
Much of Mr. Carney’s talk at the C.D. Howe dinner focused on various aspects of the climate question – understandable, given his current work as the UN’s special envoy on climate. It was largely through that lens that he discussed the economic challenges that our policy makers will face in the coming years. Moving to a net-zero world will have its costs, and they will weigh on the economy long before it realizes the benefits.
“There will be ongoing drags, likely, on productivity from things that are fundamentally good,” he predicted.
The challenge for elected officials holding the public purse strings, he said, will be to address all the demands for investment and social supports, in a time when governments’ capacity to increase revenue is fading, amid slow-growth economies and aging populations.
“It is a time that fiscal policy has to be incredibly disciplined,” he said.
By that, he means more than our traditional sense of fiscal discipline – constraining spending, reducing deficits, balancing budgets. Mr. Carney believes government needs to become more sophisticated in the way it measures and assesses the value it gets for every dollar it spends.
“If I think about it from the perspective of energy transition … what’s the carbon value for money? What is, effectively, the dollar-per-tonne reduction you’re getting from that spend?” he said.
“There are places for fiscal intervention. But part of the discipline is tracking the return on that intervention.”
His vision for fiscal policy is one that’s very goal-driven – deciding what we want to achieve as a country, aligning fiscal priorities to those ends, and then testing and measuring spending and taxation policies against those objectives.
And he suggested that these goals shouldn’t look like a grocery list – another element of this broader sense of fiscal discipline.
“I think you can do that with a few big things. You can’t have 15 priorities.”
In a friendly room full of people who, like Mr. Carney, spend a lot of time thinking about economic policy options, his words elicited plenty of smiles and nods. But this crowd is easy.
A bigger, broader audience – the one that a national party leader, or even prime minister, must connect with – hasn’t been intellectually engaged on economic questions in a long, long time. It has been dazzled and misinformed by many years of spin, of hyperbole, of dumbed-down fearmongering and finger-pointing doled out in 15-second sound bites. As recent opinion polls show, our national understanding of even the basics of economic policy is distressingly lacking.
Would Mr. Carney’s brand of sophisticated, thoughtful, productive economic discourse fly in a national election campaign? It’s hard to say.
But it sure would be fun to find out.