On Monday, Mark Carney unofficially threw his hat into the Liberal leadership race during an interview. No. He didn’t choose to go on CTV’s Power Play, hosted by Vassy Kapleos, who no doubt would’ve grilled him on how he’d handle our dire economic situation, as well as the wisdom of his chosen party proroguing Parliament to avoid a non-confidence vote and a likely election, at a time when Donald Trump’s threats should be debated in the House by all MPs, instead of being handled in the shadows by a wildly unpopular minority government.
Carney didn’t even choose to make this soft-pitch for leadership in Canada. No. Carney chose to have the tough questions put to him by American comedian Jon Stewart, who was woefully unprepared to negate most of Carney’s claims, including his “outsider” status. So I will.
The interview of compliments and boasts began with Stewart congratulating Carney for helping Canada avoid the worst of the 2008 financial crisis that led to so many Americans losing their homes.
“Your work in helping Canada get through the economic crisis of 2008, the financial crisis that hit this country terribly, and I thought made a lot of really painful decisions for the people of this country. I thought Canada played a really strong role in that.” To which Carney responded, “Thank you. We did. We didn’t let the banks do things we didn’t understand.”
The bizarre derivatives that incentivized American banks to give mortgages to people unable pay them, precipitating the financial crisis were never likely to take hold in Canada, whether we understood them or not. Stewart’s applause paints a picture of Carney doing something remarkably ingenious, as if he paced in front of a chalkboard, like Russell Crowe’s character in A Beautiful Mind, brilliantly negating U.S. derivatives.
The truth is far less remarkable. The Canadian banking system is far too regulated for those types of schemes, where borrowers, at least at the time, were subjected to much more rigorous vetting than in the United States. It is a reality that predates Carney’s time and decisions made while governor at the Bank of Canada.
What did Carney actually do? He rapidly lowered the interest rate starting in late 2008. This led to increased borrowing due to attractive low monthly repayment amounts. Low interest rates caused savings to plummet, and Canada seems to have been in a state of dependency on low rates ever since. Low rates encourage borrowing and spending, and Canadians now have the highest household debt to disposable income ratio in the G7. In hindsight, Canadians need strong debates about the wisdom of this move by Carney.
Carney’s time as Bank of England governor was only briefly mentioned and then dropped before his record was discussed. Too bad, as Matthew Lynn of The Spectator has suggested, his results in the United Kingdom were “not actually very good.” He claims Carney “made a whole series of mistakes under his management,” that “growth was consistently weak,” that “the Bank printed way too much money, stoking an asset bubble, and ultimately triggering the highest inflation rate in the G7.”
According to Lynn, the U.K. Bank, with Carney at the helm, “badly misjudged the impact of the UK’s departure from the European Union” allowed it to become “politicized,” which led to scaremongering and pessimism about the economic and social impacts of Brexit. In short, Lynn cautions Canadians, Carney’s record is “hardly inspiring.”
Others have accused his pre-Brexit interventions, predicting a recession without the data to back it up, of being too political. It has been said that he “consistently highlighted the threat to the financial system from climate change,” further illustrating how he injected his politics into the governor’s job. Unfortunately, Carney didn’t decide to go on a show where he’d be pressed on any of this. He chose a notoriously left-leaning comedy show, where he was sure to be congratulated simply for being left-wing.
The interview then segued into a playful Canada-U.S. friends with benefits conversation where Carney suggested that the two countries could enjoy the “benefits of defence.”
If Stewart had done his research, he’d have known that Carney’s suggestion of any kind of equivalency on defence was ignorant and insulting to members of Canada’s armed forces. Last March, Defence Minister Bill Blair described Canada’s military as facing a “death spiral,” short 16,000 people around that time, or 15 per cent of their authorized strength. There have been reports of soldiers having to ask for donations for housing and food. One commentary on the state of Canada’s military unreadiness put it this way: “Don’t count on us.” Which begs the question, how would Carney respond to Trump’s demand that Canada increase its defence spending to two per cent of GDP?
When asked how much preparation he would need for the coming trade war between Canada and the U.S., Carney brought up previous tensions with the Americans over lumber tariffs, which he described as a “similar situation in a trade war,” to which Stewart rightfully exclaimed: “But that was only on lumber, and what?” Carney replied, seemingly not understanding the difference between the U.S. placing steep tariffs on one industry and the current threat of 25 per cent tariffs across the board, “Lumber is very important to us, Jon.”
We’ve had no “similar situation in a trade war.” If Carney believes this, Donald Trump is going to eat him for breakfast.
Near the end of the interview, Stewart surmised how difficult it would be for an internal candidate, saddled with the baggage of the wildly unpopular Liberal party, to do well with Canadians. Carney suggested he wasn’t affiliated with the party. “I am an outsider,” he said.
That was a bold-faced lie. Carney was publicly welcomed to the party by former Finance Minister Chrystia Freeland on Sept. 9 as her “longtime and respected friend.” Conservative MP Michelle Rempel also noted that Carney has been embedded in the party’s circle for years, serving as their senior policy advisor, chairing Trudeau’s Task Force on Economic Growth going back to at least last summer. Carney doesn’t sound like much of an outsider to me.
We can forgive Stewart’s ignorance for not raising a point here. He is just an American comedian, after all. But the Liberal party effectively used prorogation to escape a non-confidence vote, to save their own skin, which is not how Canadian democracy is supposed to work.
In fact, prorogation will be challenged in federal court as self-serving. The precedent for this challenge — the 2019 United Kingdom Supreme Court decision in R (Miller) v. The Prime Minister (Boris Johnson) which ruled that Prime Minister Boris Johnson had prorogued Parliament illegally, as a means of avoiding Parliamentary scrutiny over the government’s “Brexit” negotiations.
After Carney joked that Brexit wasn’t his idea, Stewart remarked: “You’re never one of those like, ‘I want to leave a union…’”
Ironically, this alludes to Carney’s biggest challenge. Many Canadians will see Carney’s move to the U.K. as breaking union with Canada. “What? You think you’re better than us?,” is pretty much a mind-forged manacle built into the Canadian psyche as a retort for anyone who leaves their small community, and the sentiment exists on a larger scaled as well, for better or worse. Many are likely to see Carney as not all-in with Canadians.
Stewart continued: “No. You stay in it until it dies.”
I can’t think of no better description of what will happen if Carney, or anyone else for that matter, takes the reins of the ill-fated Liberal party on March 9.
National Post