Tuesday, 27 November 2012

Carneymania hits Westminster

Over-reaction of the week:
George Osborne announced a new governor of the Bank [of England] ... Andrea Leadsom, a Tory, was so excited about the appointment that, she declared: "I could jump up and down! But I won't!" 
 From a parliamentary sketch by Simon Hoggart.

It's not just the hyperventilating Member for South Northamptonshire who needs to calm down and take a cold shower. I've no reason to question Mark Carney's competence or suitability for the job, but there's a worrying assumption behind all the cross-party adulation.  Carney was the governor of the Bank of Canada and the 2008 global financial crisis happened on his watch. Canada weathered the crisis pretty well. Therefore we need a boss like that in charge of the Bank of England.

Fair enough, if Mark Carney was the sole proximate cause of Canada's good fortune. But it sounds to me as if the main reason Canada came through in good shape was because Canada was in a better place to start with:
Experts here note that Canadian banks are more tightly regulated, more liquid and less highly leveraged. Instead of being highflying investment banks, they tend to operate in a more traditional manner, with large numbers of loyal depositors and a more solid base of capital.

"I think the regulatory framework in Canada is a little more stringent," [Michael] Gregory [chief economist at BMO Nesbitt Burns] said, "and Canadian banks are a little more conservative in terms of lending." The World Economic Forum this month rated Canada's banks as the world's soundest, ahead of banks in Sweden and Luxembourg.
Keith B. Richburg, writing in the Washington Post.

 Mark Carney may have done the right things as governor of the central bank, but the killer fact that leaps out is that he had the huge advantage of working in a country that wasn't being systematically brought to its knees by the recklessness of its own rogue financial institutions.

Maybe what we should be taking from Canada isn't a superstar boss, but a lesson in re-balancing the economy from an economy that doesn't seem to have been that unbalanced in the first place. I find all this hero-worship worrying on two levels. Firstly, the idea that any organisation can be turned around by the quick fix of getting the right calibre of leader behind the executive desk takes the focus away from tackling underlying, systemic problems. A competent leader might help, but don't look to the leader to save us all (or to the ejection of a leader who's perceived to have failed as some short-cut to salvation).

Secondly, the ideology of leadership superstars is rather problematic in itself. At best, it reinforces inequality, by misattributing moral virtue to power  - might is right, whilst the poor and voiceless are the authors of their own misfortune. At worst, it leads to a mindless, fascistic faith in strong leaders, which is the last thing we need at a time when people's economic insecurity and resentment is already being channelled into support for anti-immigrant, anti-foreigner parties (even if Britain's version of xenophobic rage wears Ukip's "mainstream", "respectable"* vanilla face). Back to Simon Hoggart's sketch:
But the key moment revolved round Michael Fabricant, the former disc jockey who has, without anyone noticing, become vice-chairman of the Conservative party. In this role he has just produced a report suggesting that the Tories cut a deal with Ukip.