Canada’s economy does not need a new guru. But its government might

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It began with a story in Saturday’s Toronto Star. The Prime Minister, it said, was thinking of ways to seize the “once in a century opportunity” of the COVID-19 pandemic to radically expand the scope and reach of government.

“Now is the time,” the story said, summarizing the views of those close to him, to move past the “incrementally progressive” course he has pursued to date, and to “take a more aggressive approach to being progressive” – to “think big” about child care, income support, climate change and other Liberal agenda items.

The story did not make precisely clear why “now is the time,” with a minority government, to adopt this new aggressively progressive position, or what “thinking big” would entail other than spending a great deal of money, or why a disease that has to date killed nearly 9,000 Canadians presents such an “opportunity” – other than to note that the cost of borrowing, at current interest rates, is historically cheap.

Which suggests where this is going. You thought the federal deficit, at $343-billion (or 16 per cent of our GDP), was high enough already? You ain’t seen nothing yet.

So it was intriguing to see Bloomberg News report on Monday that Justin Trudeau had retained former Bank of Canada governor Mark Carney as an “informal adviser,” helping him to craft “an ambitious economic recovery plan” that would “tackle everything from deficiencies in the social safety net to climate change, infrastructure and immigration.”

Hang on, one thought. Isn’t that the sort of assignment one usually hands to one’s finance minister? But then Tuesday’s Globe scoop landed, and the penny dropped: The Finance Minister’s job is in play. Mr. Trudeau and he had clashed, it said, over “the Finance Department’s policy responses” to the crisis – namely, how much it was willing to spend on it – leaving the Prime Minister “uncertain” whether Bill Morneau is “the right fit” to steer the country’s finances. Sources said Mr. Trudeau is “not committed” to keeping him as “architect of the federal government’s economic revival plan.” And “sources did not deny that Mr. Carney could replace Mr. Morneau if he is interested.”

What are we to make of all this? The significance of these stories is usually less the substance than the provenance: not what was said but who said it, and why. The Prime Minister’s people would not be talking to the press in this way without his authority. Which means Mr. Morneau is probably headed for the door, notwithstanding the PMO’s belated expression of “confidence” in him.

Of course, speculation about the Finance Minister’s future was already rife after it emerged he had accepted an undisclosed $41,000 in free trips from the now notorious WE Charity. But firing him for an ethics violation is a messy, humiliating business, and might invite questions as to why the Prime Minister’s own transgressions should not merit the same penalty.

How much better for both men for Mr. Morneau to exit over a question of policy, allowing each to simultaneously claim the high ground: as either the last voice of relative fiscal sanity in this government, or the author of a bold new vision of federal activism – with help from the most admired central banker of his generation.

The interesting thing about Mr. Carney’s wing-lurking is likewise less that Mr. Trudeau is consulting him than that Mr. Trudeau wishes it to be known that he is. This will be exciting to those who imagine the economy as a kind of machine, to be programmed only by the most brilliant minds. Whether or not Mr. Trudeau subscribes to this superstition, he likes to appeal to those who do. It is typical of him to recruit a “rock star” as his economic guru, as it was to recruit an astronaut as Governor-General.

Mr. Carney’s brilliance is not in doubt; neither is his ambition. But the economy is not in need of geniuses or master plans and, if it were, there is no particular reason to look for these in a central banker. It is an executive position, not an advisory one. There are better technical economists, inside the Bank of Canada and out, than the governor. His job is not to devise policy on his own, but to synthesize their advice: to make judgment calls, to explain them to the public and to stick to them in the face of political and special-interest pressure to do otherwise. The job calls for shrewdness, integrity, gravitas, some political dexterity and not a little stubbornness. It neither requires nor confers the power to work economic miracles.

But the die is cast. Once Mr. Trudeau’s rival, and long regarded as a potential successor, Mr. Carney has now been drawn into his orbit, the de facto finance minister if not de jure. He will get none of the credit if the plan works, and all of the blame if it fails.

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