“The best central banker in the world” – The Economist on Alan Greenspan, 2000
“The outstanding central banker of his generation” – George Osborne on Mark Carney, 2012
Is anyone else out there taken aback by the almost universal adulation of Mark Carney, the incoming Bank of England Governor?
I’m not suggesting Carney isn’t worth the money or effort that’s gone into his recruitment. There’s no doubt the Canadian financial system performed well during the crisis. No bank was bailed out; the country recovered its pre-crisis peak faster than any other major developed economy.
But to lay that at the feet of a single individual – whether explicitly or implicitly – is a foolhardy exercise. Remember the adulation with which Alan Greenspan or Gordon Brown were regarded for their handling of their respective economies until a few years ago?
The reality is that it is rare, to put it mildly, for an individual to have single-handed sway over an entire economic system. They are more often beneficiaries (or victims) of a combination of circumstance and deep-seated systemic features.
Canada’s economic and financial success surely owes something to Mark Carney, to his slightly more intrusive nature of bank regulation, to his clarity on the future level of Canadian interest rates.
But it also owes something to powers beyond his control: the country has long had a culture of sensible banking: back in the Great Depression only a few, small Canadian banks failed. The system is smaller and more manageable than the American or British systems. And the economy has benefited from the commodity boom, just as its fellow Commonwealth nation Australia did.
As I’ve said, the last thing I want to do is to do down Osborne’s achievement in hiring such a highly-rated individual. And that may well benefit the institution of the Bank, which could undoubtedly do with a change of leadership.
But don’t expect him to single-handedly save the UK economy. As we learnt to our cost with Greenspan and Brown, we are far too quick to worship false idols when it comes to economics