He may as well have done.
This speech came soon after several occasions locking horns with Jacob Rees Mogg over the Bank of England’s analysis of the pernicious economics effects of Brexit. Rees Mogg wrongly accused the Governor of politicising his role, of involving himself in government policy. The Bank had to form conclusions about the impact of Brexit, and to make those transparent so that its policy changes would be most effective.
Those of us who backed him during these scuffles, and were appalled at the seemingly partisan nature of JRM’s attacks, [and those of others of a similar persuasion], surely feel like raising a non-Governor’s eyebrow at a speech that could not be more political.
If you are of a certain persuasion, the analysis, and the political judgement coursing through this speech, is the right one. Globalisation created winners and losers; governments did not do enough to compensate the losers. Do more to compensate the losers, or globalisation, perhaps even capitalism itself, is doomed.
In Carney’s speech you’ll find things like: ‘such high income inequalities’; ‘staggering wealth inequalities…’; ‘the cry for inclusive growth….’; ‘inequality of opportunity remains disturbingly low’.
And we learn that ‘subjective well being is significantly affected by perceptions of inequality and the sense of community’. We are told the ‘challenge is how to manage and moderate the forces of innovation and integration’
And the speech comes to a crunch in advice on ‘The Way Forward’.
Three pieces of advice are offered. I find them compelling. But hard to reconcile with the task of turning the handles the BoE was given to turn under the terms of operational independence:
“First, economists must clearly acknowledge the challenges we face, including the realities of uneven gains from trade and technology.” [OK that one might be harmless in a different speech].
“Second, we must grow our economy by rebalancing the mix of monetary policy, fiscal policy and structural reforms.” [Translate: more fiscal stimulus please, and more [or is it less?] structural reform – neither the province of the central bank].
“Third, we need to move towards more inclusive growth where everyone has a stake in globalisation.” [Many of us agree, but is this the central bank governor’s business?]
The country needed the BoE, and continuity in its leadership most, this year, through the turbulence of the referendum vote. And it needs these things over the coming years. What that provides is a sober, apolitical response of the BoE policy levers to events as they unfold.
Speeches like the one Mr Carney gave offer ammunition to the coalition of those that would sweep aside our institutions to get the hardest Brexit possible as soon as possible, and all kinds of other social and political change with it.
His words come after other interventions [eg urging that we need more action on climate change]. And at a time when the BoE is in the awkward position of having been rewarded for its custody of the economy during the disaster of 2008/9 with many more powers than it started with.
There is an argument that if the leaders of our major institutions did not start speaking out and recognising these social dysfunctions and calling for solutions to them, all of the bodies they lead would lose legitimacy, and be swept away in an electoral tide of discontent. But reflecting on how to respond to this risk is just not a job the Bank has been mandated to carry out. At least not in public.
Those who cheer Mr Carney’s political economy lectures might reflect on how they would feel if the technocrat delegated interest rate and capital adequacy policy started lecturing them about Ayn Rand or social Darwinism.
In one of the heated exchanges between Carney and Rees Mogg at Treasury Committee, the latter asks why Carney did not critique the economic proposals of Jeremy Corbyn. Carney, clearly exasperated, chose not to respond.
The genuine answer to that jibe was that there was no prospect of Corbyn’s policies being enacted in the forecast horizon, so they were not relevant to the Bank’s interest rate decisions. But the mischievous answer Rees Mogg wanted to plant, and which gains currency with speeches like the one the Governor has just made, is that being a good inclusive capitalist, he had sympathy with some of the things Corbyn was proposing and did not want to criticise.