Canadian Central Bankers Past and Present: IgNoble Truths

What an odd week. David Dodge wants an adult conversation about tax levels and the quality of public services. This clearly runs afoul of the conservative meme that less is always more. But the big show- stopper had to be Carney’s remarks on Canada’s abysmal productivity record. Carney bluntly argued that the business community had been showered for some time with a pro-business, pro growth policies but had failed to deliver the goods as it were. A Globe column by Kevin Carmichael and Iain Marlow nicely captured the essence of it:

Insulting or not, Mr. Carney’s comments represent a certain frustration among policy makers who feel they have done everything the business lobby says is necessary to encourage better productivity and innovation – only to see executives sit on piles of cash and avoid the risks taken by companies in countries where productivity is higher, such as the United States.

For example, Canada’s corporate tax rates are among the lowest in the world, thanks to a near-universal acceptance on the part of federal and provincial governments in recent years that this is necessary to spur investment.

Clearly the business community is miffed because someone, and not just an anybody but a somebody, finally asked the relevant question: After a GENERATION of giving corporate Canada public policy, hand delivered on a silver tray, where pray tell, for the love of all that is profane, are the results?

Over at the Post, no surprise, Terence Corcoran, attempts to exercise the intellectual side of his brain. Inter alia he dusts off Hegel in an attempt to preserve The World Historical Spirit; aka the right of private property owners to do what they want; aka, naked capitalism (this is Corcoran’s reading of Hegel).

As for productivity, even Mr. Carney’s review of the causes of Canada’s poor performance failed to come to any clear conclusions. Maybe it’s this, maybe it’s that, maybe it’s lack of competition, too many small firms, lags in investment results, to few high-tech innovators. Even in finance, supposedly Canada’s global trump card, Canada severely lagged the United States in productivity growth. And maybe nobody has a clue.

One thing is certain, no business makes investment decisions to achieve national productivity goals set by the Bank of Canada. Even Hegel got it. In Philosophy of Right, he wrote: “Wealth, like any other mass, makes itself into a power. Accumulation of wealth takes place partly by chance, partly through the universal mode of production and distribution. Wealth is a point of attraction.” The message, perhaps, being that central banks have nothing to do with it.

Productivity as divine mystery not even as divine revelation! What a glib Hegelian Corcoran is. And what an odd twist he throws on Hegel too. Increasing wealth for Hegel, as later with his student Marx, comes along with increasing poverty. Knowing this we can appropriately re-read Corcoran’s conclusion:

Wealth and poverty are something the central bank has nothing to do with.

Self serving, de-politicizing, obfuscating clap trap.

What seems to have Corcoran so exercised is that Carney made a big mistake: he pointed out that business has not delivered productivity. That is, he politicized the issue. What Corcoran and the other ciphers of private privilege do not get is that sooner or later public officials and institutions have to provide outcomes that preserve and increase the general good. Neoliberals like Corcoran error when they think they cling to to the meme that private gain always translates into public betterment and will never be asked to pony-up. It is as if he, Corcoran, is angry that Carney betrayed the IgNobel Truth: increases in private privilege are accompanied, more often than not, by increases in private deprivation.

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