When a governor resigns, the BoC's board of directors is supposed to recommend a candidate to the finance minister. However, we learned this week that Stephen Harper decided to make the Governor of the Bank of Canada a political appointment, so Jim Flaherty did not involve the board of directors at all. This is a disturbing repeat of the way Harper changed the appointment of judges a few years ago.
We learned that Harper's interference in the BoC goes much deeper:
- The whole world sees Mark Carney as one of the great economic minds of our times and as the world's greatest central bank chief - the whole world but Stephen Harper, who apparently pushed Carney out of his position early. Carney's no fool - he got himself a much better job at the Bank of England - but Canada has lost immensely, and at a time when our economy is still in peril.
- Carney's pick for his successor, and the person groomed for the job, was ignored by Harper in what appears to be a petty retaliation against Carney. Harper's nastiness towards Carney went so far that he held the Ottawa press announcement of Carney's replacement at the same time as Carney's Toronto goodbye party, ensuring that Carney couldn't make it.
- We learned that Harper has been letting his ego drive in other ways: lecturing Carney about basic economics, releasing photos that seek to show Carney as an inferior, and so on.
Is all this important? Very.
A central bank exists to set monetary policy for a country, but its real business is to maintain stability and confidence in the economy and financial markets. The governor is supposed to be free from political interference so the markets (and public) know that central bank decisions are being made impartially. By making the job a political appointment - and by forcing out the previous governor - Harper is removing that freedom from political interference.
Let's be very clear. Our prime minister is not an economist. He holds the same degree I do and has no work experience as an economist. Worse, his approach to economics is ideological rather than pragmatic. He is motivated by ego and political ambition rather than a concern for the citizens of the country.
Note: In a very strange "letter from the editor" in the Globe yesterday, John Stackhouse admitted that during the prorogation, he knew that Carney felt that Harper/Flaherty did not have a plan for how to deal with the recession. Carney's assessment was not exposed at the time, even though the opposition was saying that was why they prorogued parliament and Harper was claiming that prorogation was over the per-vote subsidy.