Mark Carney on Uncommons

Uncommons with Nate Erskine-Smith

On this episode, Mark Carney joins Nate on the podcast to discuss the current political landscape, sustainable finance and the economic opportunities of climate action, and his future in politics as now economic advisor to the Liberal Party and potential future candidate.Mark has served as the Governor of the Bank of Canada and then the Governor of the Bank of England. He now serves as the UN Special Envoy on Climate Action and Finance, and as the Vice Chair of Brookfield Asset Management.

Transcript:

Introduction

Nate Erskine-Smith: Welcome to Uncommons. I’m Nate Erskine-Smith, and on this episode, I’m joined by Mark Carney. He is, of course, the former governor of the Bank of Canada, he’s the former governor of the Bank of England, and he is also much more political these days, including joining a podcast like this to talk about not only politics, but Liberal politics, because right now, he occupies the role of chair of an economic task force to the Liberal Party and Prime Minister, and he might well have a future in politics beyond that as well.

Sustainable Finance Within a Global Context

Nate Erskine-Smith: Mark, thanks for joining me.

Mark Carney: Thanks for having me, Nate.

Nate Erskine-Smith: I was going to make a joke about how you are the first guest we've had since the Prime Minister and people can read into that as they like. But I actually want to start with why you're here in Toronto–sustainable finance. And before people's eyes glaze over, maybe you can help ensure their eyes don’t glaze over.

Mark Carney: We’ve lost the audience already.

Nate Erskine-Smith: But what do you hope to see achieved through sustainable finance in terms of actual serious climate action?

Mark Carney: Yeah, so first thing, thanks for having me and I'm here, I'm giving, a talk later on today at something called the PRI in person, which is 2000 people from around the world focused on more than just sustainable finance, but certainly sustainable finance, and I'm going to talk about that aspect of it and specifically what is the financial sector doing and not doing to get capital to solutions to address climate change.

In essence, that's what sustainable finance is. Success in sustainable finance will be when we can drop the adjective, when this just becomes mainstream. And all the work that I and others have been doing, particularly since three years ago, almost to the day, there was a COP, one of these big processes in Glasgow, where finance was at the heart of it. And we've been working to make sure that people have the information first and foremost.

And when I say people, I mean people, you know, out here in The Beaches, people working in the center of Wall Street or around the world, investors, people managing people's pensions, that they have the information that's needed in order to judge who's part of the solution and who's still part of the problem, that we have the right market structure. We need some new markets in order to solve this and that we see action and we can judge that action accordingly.

Nate Erskine-Smith: And before we get to the possible potential impact of that disclosure–the Canadian context. So you had said in 2019 I think you'd expressed some frustration in one of your speeches about, and this wasn't specific to Canada, but the global pace of progress towards sustainable finance was moving far too slow. We wake up and it’s five years later and in Canada, we still haven't seen these rules put in place. And so what do you hope to see hopefully sooner than later here in Canada?

Mark Carney: Yeah, well, let me give a global context first. It's a global event, global context, we operate in a global market, capital moves around the world.

And if I look at the world, you have over 700 of the world's largest financial institutions controlling over 40% of the financial assets in the world. Huge numbers, $150 trillion, US dollars, for that matter that these institutions oversee, They're all committed to shift the management of those assets consistent with the transition towards net zero. In other words, to help companies and countries and municipalities get their emissions down. Okay. That's what they're committed to do. And by the way, that what comes with that is if somebody isn't trying to get their emissions down, then money is shifting from those companies.

And in one example, to those who are doing something. So globally, you have a huge shift towards this first thing. Secondly, it starts with just reporting on where you stand today. What does your portfolio look like? Who are you investing in or lending to? The next step, of course, is to have a plan. You don't solve anything without a plan. You got to put the plan in action. And as we meet today, we're in a situation where 500 of those 700 institutions have full blown, what's called a transition plan, but a plan, to move the money, and they are moving the money, towards the solutions.

Sustainable Finance Within a Canadian Context

Fast forward to Canada, or shift to Canada. What we don't yet have is the disclosure regime fully operating so that Canadians can judge who's doing the right thing or not. A number of Canadian institutions are doing it voluntarily, but it's not required for everyone like it is in Europe, like it is in the UK, and elsewhere. And secondly, we don't have, sorry, a framework, an accepted way or consistent way of putting together those plans.

And look, I've been through a bunch of crises over my time as a central bank governor and policymaker. And the one thing I know is in a crisis, plan beats no plan. You cannot get your way out of a situation without a plan. It's a good motto for life, I guess, as well.

Nate Erskine-Smith: What do you make though? So we put the plans in place. We've got the disclosure regime, hopefully sooner than later, as they say. How do we move away from, take ESG. And there's promise to it, but there's also the bottom line, and a company will, as fast as anything, walk away from ESG if it no longer matters to their bottom line. And how does this differ from that?

Mark Carney: Yeah, so I work in a subset of ESG, so ESG–environmental, social, and governance. I work on the environment bit of it, and I work in a subset of the environment, which is the transition towards a low carbon economy or net zero.

because obviously in environment there's nature and biodiversity and other aspects. I work in the bit where you can count very clearly what's happening and that's part of what so-called disclosure is doing. And therefore, people are able to judge, again, who's part of the solution, who's still part of the problem. Now in order to do that, in order for everyone to be able to make those judgments, they need access to that information in a way that they can,you know, access it readily. It should be free and it should be consistent. And one of the things that some of the voluntary work that I'm doing is to build out the net zero data public utility. First time that's been on the podcast, I'm sure.

Nate Erskine-Smith: Yeah, I know eyes are now fully glazed.

Mark Carney: But what it means is that you can, you can judge which of our banks, as of, as of the middle of next year, which of our banks is doing well relative to the others and how are they doing relative to other international banks? What happens today is somebody will write a report and it'll become an argument about the quality of the data or the, you know, the completeness of the data. So first is to get, is to get that information.

The second, but the bigger point which I think you're driving at is okay, but why are companies going to do this? Companies and financial institutions are going to do this because Canadians and people around the world want them to do it. After all, they elected a government, your government, over the course, and a number of provincial governments, that have climate action at the core of their platforms. After all, it is the law of the land. It literally is the law of the land in Canada that we transition towards net zero. Now, how we do that requires certain policies from government, and a number of them are being put in place. More will be required without question.

But financial institutions and companies in Canada and elsewhere around the world react to those policies and they react to the values of people. A lot of the work that I've done in recent years has been around getting the market, shorthand, value, value in the market, what's priced, to be consistent with what people care about, what people value, the values, in this case, of Canadians around sustainability and the transition.

Capturing the Value of the Environment

Nate Erskine-Smith: Yeah, I mean, I remember reading your Reith lectures, which then were sort of the basis of the book. And, I know you've got another book we can talk about. But I mean, and the core of it is that idea that disconnect between value and values and, you know, the price of everything and the value of nothing, that old line.

One of your examples, though, is, you know, we know how to, we know the value of Amazon, the company and we don't properly capture the value of Amazon, the rainforest. And despite the obvious value to the world, to the climate, to the environment, the world, disclosure gets us part of the way there. So how do you tackle, take that example, that simple example of Amazon and Amazon, what policies should we be looking at to solve that problem?

Mark Carney: Yeah, absolutely. And so, and just to make the challenge greater, the price on the Amazon, the rainforest actually occurs when the trees are cut down and they start farming. So it's the exact opposite direction of what the planet needs and what future generations deserve. So how do we solve that?

I mean, first and foremost, this is about the translation of what people care about, what people want through the political process, and setting in place objectives, clear objectives, policies today, and the prospect of more policies in the future, that are consistent with achieving those objectives. What the financial sector can do, what it does well, it does lots of things not well, just to be clear.

Nate Erskine-Smith: You've lived it.

Mark Carney: I've lived it, and people have lived the consequences of it. Yeah, we've spent time clearing up those messes. But what it does do well is it pulls the future to the present. It sees where the world is going and then it will put money behind where the world's going. So if it becomes inevitable or at least highly likely that we're going to address this problem, then money starts to flow to those solutions.

Okay. Now let's go to the specific major issue around nature and the Amazon specifically. So how do we get to a point where we ensure that there is, not just disincentives to burn the Amazon or cut down the Amazon, but also what's now needed is to reforest the Amazon. You know, let's put this in context for those who are still listening. So speaking to my immediate family now… The, you know, deforestation in the world last year was 10% of global emissions, just the mere act of cutting down trees.

We lose the size of the Netherlands in effectively tropical rainforests, not all deforestation. So not including the wildfires, horrible wildfires we had in Canada, but just actually the harvesting of the tropical rainforest. So it's absolutely enormous. And so we need to stop that and then reverse it.

And so one of the things that we're working on is with the Brazilian government and other governments around the world, is how can we get payments for reforestation and the value to the planet of that reforestation?

Political Challenges to Climate Action

Nate Erskine-Smith: Okay, positive, because payments for reforestation make a lot of sense. I can imagine, because of the profile of the Amazon, I can imagine knocking doors and saying, we're gonna deliver more dollars to international climate finance, and that's gonna help make sure that we protect the Amazon, and that's the work we need to do as Canadians, as leaders around the world.

I can also, though, imagine a world, because we've lived through it, where there's a Bolsonaro government in Brazil that doesn't care. I can imagine a world because if the election was tomorrow, it might well be a Poilievre government that is going to not only cancel the price on pollution and an effective and efficient way of reducing emissions, climate disclosure might be by the wayside. Who knows? Who knows what they have in store? Because climate is not part of their agenda. It's not a going concern.

And how do you maintain that sense of optimism when we live in the political world that we do, and the political reality is that progress doesn't always exist. That voter might care in my riding and in certain ridings across the country, but collectively with ‘First Past the Post’ especially, we're gonna wake up potentially to a majority government that doesn't have this on the agenda at all.

Mark Carney: Well, okay, there's a lot in those questions slash statements.

Nate Erskine-Smith: We have a progressive government that doesn't even deliver the climate finance internationally at least that is required to do the work you're even talking about, and that's a progressive government. So, you know, the backsliding we're going to see is going to be incredible given we were starting at a place that isn't even sufficient.

Mark Carney: Okay, so let me unpack a few, I'm to say a couple of rapid fire things and then you can pick up on any of them to drill down and, and full disclosure for those listening, there, there is, there's a lot beneath what I'm about to say.

The first is in terms of payments for, for example, reforestation in the Amazon, my judgment is that that is predominantly going to come from the private sector through something called the private voluntary credit market.

And that is going to be a consequence of a number of major jurisdictions, hopefully Canada included, but certainly the European Union, the UK, most of Asia, depending on the US outcome in the election, the United States as well, requiring companies to be reducing their emissions, including what's called scope three. Okay. So I said a lot there, but it's a lot of it will come from that.

Nate Erskine-Smith: And jurisdictions like the EU forcing it upon others through carbon border adjustments and everything else.

Mark Carney: Okay. So that's the next point. So very important point. Sorry, I talked over you, but a carbon border adjustment mechanism, which Europe is putting in place, and I think underappreciated, the Biden administration has made pretty clear that they intend to put that in place. Obviously, it won't be the Biden administration, he's not running again. But if it were a Harris administration, I think it's reasonable to expect that. There's something called, this is in the public domain, the Climate and Trade Task Force.

It's headed by John Podesta, who's one of the most able public servants in the US government. And it's looking at what's called, well, it's looking at a carbon border adjustment and specifically how much carbon is in a product delivered to the United States. They use the term “embodied carbon”. So the issue is if I'm exporting steel, how much carbon do I have in that steel that shows up in the United States? And if it's a lot higher than what's in the US, then they're not going to let it in. I mean, or they're going to have a very large tariff on it.

Because after all what they've been doing, and we've got to think about this for our industries, is huge efforts to get carbon down and it doesn't make sense to do that and then just import all the carbon from China or some other jurisdiction. I think actually the Americans are going to go further, and the Europeans are going to go further, in the following respect, which is not just to say how much carbon is in the steel that shows up here, but how much carbon is in all the steel you produce as that company, because we don't want you just dumping the green steel over here and then polluting over there.

And that's a fairer way of doing things for the US company, and let's keep it close to home, for the Canadian company. So we're going to quickly move, I think, over the course of the next 5, 10 years, certainly over the horizon when any business decision is being made to a global trading system or the core of the global trading system, Europe, the US, under certain political circumstances. But I would argue, if not the next administration, the administration after that will do this.

We're going to move to a system where it matters how much carbon you have in your product when you export it there. Now, fast forward to the next Canadian government after the next election. So are they just gonna walk away from that reality? I mean, we're a trading nation, we're an exporting nation. This is our most important market. I mean, you can live in a fantasy land and say, this doesn't matter, and it's all about the other guys, but that is not the way the world works and is going to work.

And, you know, one of the things we've talked about this, and it's part of the reason I'm doing this growth task force, which we may come to, for the Prime Minister, is that the world's being reshaped. The trading system is being reshaped. That creates challenges, massive challenges if you ignore it, flip side, massive opportunities if you understand it, get in front of it and start to embrace it. And, you know, Canada's in a good position where, we can be in a great position to take advantage of this.

Personal Political Engagement

Nate Erskine-Smith: I mean, one might have, though, expressed a certain optimism around markets and the market that Ontario was in with Quebec and California, for example, then they walked away from it. So politics does matter. So I want to get to politics. And, one can be optimistic and market forces matter and the EU's actions matter and one can be optimistic for certain reasons. But there's a reason to get involved in politics to make sure you push back against the backsliding and to make sure you protect progress.

You have gone from a role where you were political but divorced from partisan politics as the central bank governor, both in Canada and in England. You, in 2021, I think, spoke for the first time in a more partisan way at a Liberal convention. You're now, you're occupying a more partisan role, giving, you're the chair of an economic task force for the Party and the Prime Minister. But again, a partisan front, not the machinery of government.

Why you've got, you know, you're making money at Brookfield, you've got your UN envoy role. You don't need to throw yourself into the Pierre Polievre tax and the Michael Barrett saying conflict this and “Carbon Tax Carney”. And why, why insert yourself in this way now?

Mark Carney: I could ask you the same question and all the people that work for you, which is, you know, I mean, there's, there's a couple levels of it.

I mean, there's the personal level, which I, you know, this country has given me so much, virtually everything. I think when I think about it, you know, my education, my values, I've raised my family here. I owe it, I owe it a lot. I've been very fortunate. So, you know, and, and I can give back and there's, there's certain things I can do to give back. And I happen to know something about economic policy, I happen to have some experience, I've got some perspective. I can give it back. That's the, that's the first thing.

And, know, I could stop there, but it goes back to what we were talking about earlier is this gap between value in the market and the values of Canadians, the values of society, what we're trying to achieve. There are certain technical things, and they're really important.

They're super boring, which is why you rightly diverted off the PRI in person. They're super boring and they're plumbing, et cetera. And I know something about that and I work in it. it's, know, and it's value, I, just trust me, tt's, it's useful work. Okay. It's useful work.

But at the heart is getting the, the heart is political in the end because it is translating, it's building coalitions. It's listening to people. It's developing the consensus. It's fighting it out in the, in the House of Commons, in committees, in order to get legislation through and move forward and you know, can be frustrating and it would be much easier for me to just sit back and criticize about this. But I've got some expertise, the Prime Minister has asked, we need to close this gap. I think it's the right thing to do for Canadians because it's living up to what Canadians want, say they want.

It's certainly the right thing to do for our kids and grandkids. But also, you know, as time goes on, it becomes more and more an economic imperative. It becomes more and more current, you know, an issue in terms of how fast is this economy going to grow? Are people's wages going to grow? Are we going to lose a lot of jobs that we shouldn't lose or not create new jobs that we could create because we think that this is an issue for other people? It's not an issue for other people, it's an issue for all of us.

Nate Erskine-Smith: When it comes to politics, I am not running again, solely because I've got a young family. I still think elected office, for all of its faults, and there are many faults, there's a lot of nonsense to it if you watch the question period or the House of Commons. But it's still the most important way to make a difference, bar none. Having said that, everything you said there gets at that sort of the man in the arena sort of idea, and an opportunity to make a difference. I believe in all that.

There's a difference though between giving advice and being a decision maker, and, are you gonna put your name on a ballot at some point?

Mark Carney: I'm taking steps to that, support that, support the party, because I believe in the party, I believe in the Liberal Party. I think it's got the right values, it has the right combination of a social conscience and social priorities at its core and that's, it’s demonstrated, it's not, these aren't words on a page, it's demonstrated through decades of delivery and the past years of delivery. So it has its core, but it also understands that we need a strong economy in order to ultimately deliver that.

So I absolutely believe in that. And look, the opportunity may present itself. This is what I can do right now and I'm doing it to the best of my ability.

Nate Erskine-Smith: And do you think, when you think of politics, mean, you have occupied positions of great power and really difficult crises. And there isn't that same grinding it out, knocking doors, engaging people who are, you know, the example I use is, you've got to be able to go downtown and have Bay Street with my friends from law school. You could do that in a heartbeat, but you also got to be able to go play cards and drink Rye and Cokes with my cousins from Sarnia. And are you, do you see yourself being able to do both?

Mark Carney: Well, I used to drink Rye and 7UP. So am I allowed to have?

Nate Erskine-Smith: Yeah, that's allowed. That's okay. I don't know if you smoke joints. You can do that too.

Mark Carney: That's true. You can now. Thank you. There's progress.

Nate Erskine-Smith: Yeah, I know. You're welcome.

Mark Carney: Look, I mean, that's, I've been in and around it, I recognize that. I mean, you've got to be connected to the people you serve. And one of the issues, look, it's also an issue, it's not fully analogous, I'm not going to stretch it to that.

But even in a role like being a central bank governor, if you're just in the monetary temple, so to speak, and you're not out there talking to people up and down the country, which the Bank of Canada does, I did as governor, Governor Dodge did before me, and I know the current governor, my successors both have done it, I did in the UK, you've got to get out there and talk to people. And it's not just businesses, but, you know, social groups, other groups, to understand how the macro economy, the numbers way up there, are actually impacting people for accountability, but also for perspective and you know, there's something that was impressed on me decades ago, I guess was that you know, you see most clearly from the, from the periphery.

So when you look at you know, the economy, how does the economy look if you're unemployed? You know, how does, you know, the, you know, the, the situations where you're under pressure and that provides a necessary, you know, grounding to everything you do. But yeah, you know, you've got to do that and you've got to build, you've got to build a consensus and you have to work. Look, let's, let's take another level of this, if I could, which is one of the issues.

So, okay. We have a mini industry in Canada, which has grown up around that we don't have any productivity or we've, know, the productivity or the rate with which we're improving the way we work has slowed, it's basically been flatlined since before the pandemic. Ultimately, that is going to put pressure and it's starting to put pressure on governments, all levels of governments and the ability to, you know, continue to provide the social safety net, our social model, opportunities for children, our education system, all those things. So this is an issue we have to solve. We can certainly solve. And not that there's going to be some magical report at the end of my task force work. I mean, there will be a report. I'm not going to say it's magical.

Nate Erskine-Smith: We'll get to that. We'll get to that.

Mark Carney: But there will be elements of that in there. But one of the things I think is clear is that the nature of many of the solutions will require something that's fundamentally political, which is political in terms of working across different levels of government, different stakeholders to implement solutions. And we're going to have to do more of that or relearn that muscle, which is, in my experience, is kind of inherent to the Federation, maybe has weakened a bit.

Challenges of Politicization

Nate Erskine-Smith: Well, I want to get to what you see as the objectives and what you see as the possible outcomes, what you hope to achieve through that task force and your involvement in all of that. But, I'm still interested in, you know, I like that you're interested in politics. I like that good people are interested in politics. I think it's necessary that serious people are still interested in doing this. And I worry that when you've got a certain crass attack before anything else approach to politics, you push good people out. Why are good people gonna wanna get off the sidelines and do this if you're gonna join committee in 2021, which you did at the industry committee that I was a part of, and I was at a front row seat to Pierre Poilievre before he was the leader, just spent, he was the only Conservative to speak for that two hours of time, and just try and run roughshod over you, knowing that you might be in politics one day. That's the approach. It's, you know, take no prisoners. So I'm glad you're interested.

At the same time, you know, there are some challenges that will be thrown your way and I'm interested in how you navigate them. So you've got, on the one hand, a politicization of the Bank of Canada with Pierre Poilievre saying Tiff Macklem should be fired. You've got other folks though, like Stephen Gordon, who have said, well, you know, Mark Carney, he was the central bank governor. If he joins partisan politics, then that also puts some independence of that institution at risk. Do you take stock of that in any way? What's your answer to that?

Mark Carney: Well, I think a couple of things. I think my track record at Bank Canada, others can judge it, I, know, inflation was at 2%. Our financial system was the strongest in the world. We had financial stability. We got through crises, got through a few crises.

I'd note that I was appointed by Stephen Harper as governor of the Bank Canada. Then I was appointed by a Conservative prime minister in the United Kingdom, David Cameron. And then I was asked to extend my term by a Conservative prime minister, Theresa May, and a Conservative prime minister, Boris Johnson. And in all of those cases, I discharged, did the best of my ability, I did my job.

I ceased to be governor of the Bank of Canada in 2013. We are 11 years later. We've been through a few governors. The world has changed. Look I mean if we were, if we were in a situation where the stakes weren't so high, in part because of the start of your question in part because of the unseriousness of some of those in public life, I mean it's serious, but the facile…

Nate Erskine-Smith: Yeah, serious what’s at stake but a childish approach to it.

Mark Carney: Facile is probably, is a euphemism. So I'll just leave it at that to describe the approach that's taken. It's not trying to find solutions, it's trying to destroy and cut down. And who knows what comes after that, it's not clear what comes after that. So the stakes are high, so that pulls me towards trying to be part of it, because this is our country, it's my country, and I care about it. And so wanting to be there.

I think the thing though that's in your question, as someone who's been through crises, who lived through Brexit and the intense, everything was politicized in Brexit in the UK. The King, the now King was politicized. The Archbishop of Canterbury, the head of the Church of England was politicized. The governor of the Bank of England was politicized. In other words, we were all attacked in various ways by various, well, one faction, I guess, on the referendum.

And many, many others, everything basically. So I know what I'd be getting into. I know what I'm in. Look, I'm in it now in the following respect. As you said, in 2021, I'm a private citizen. I'm invited to a committee.

Nate Erskine-Smith: Getting grilled for no reason.

Mark Carney: I don't mind being grilled, but just getting, you know, sort of insulted, ad hominem attacks, basically being insulted. And well, four other expert witnesses have to sit there mute.

And just watch it. And just watch it for two and a half hours. I mean, that's, you know, that's a waste of taxpayers' money. It's a waste of time. It's not advancing the cause. And so I know what's involved.

Nate Erskine-Smith: So you're ready to put up with that absolute nonsense when it comes, like right now you're living through people attacking you to say, he's no. I mean, Andrew Scheer, I love that Andrew Scheer is the spokesperson they put up, as if anyone likes Andrew Scheer, but Andrew Scheer is saying, there's no difference between Trudeau and Carney, carbon tax Carney and like, you are the object of their attention as much as anyone, and probably because they're worried about you, but also there is, you are going to put up with an incredible amount of of hate and an incredible,you know, look what Trudeau's got to put up with. F**k Trudeau flags, and his kids have to listen to f**k Trudeau chants at ultimate fight events. So you're ready for that?

Mark Carney: Look, yeah, yes, is the short answer. I think we're, you know, this is an overused phrase, we're better than that. Canada's better than that. We should be better than that. And, but you've got to stand up. I mean, if you think that, you think that, you act it, you stand up, you stood up for the Ontario leadership. I mean, it's, you know, these are difficult.

Nate Erskine-Smith: You'll come in with more name recognition than I did, I will say that. Are you also ready? So I think your name recognition will...

Mark Carney: I’m really touched by your concern about my welfare.

The Benefits of Lived Experience

Nate Erskine-Smith: It's not for the faint of heart, that's for sure, especially in a leadership role. And they'll come at you with everything as you've already seen, they're coming at you as a citizen.

The other challenge you will have to navigate if you get there is every time your name comes up, like I'm here in The Beaches and people will come up and say, what about that Carney guy, is he gonna run? And so there's obviously an interest. At the same time, there will be another cohort, often people in the Liberal Party who have lived the wars who will say, yeah, but what about Michael Ignatieff? And the comparison comes up all the time. Why? Because intellectual, someone who has not lived through partisan politics throughout a career, and is coming to it as an intellectual who's earned a reputation as an intellectual. And do you see that comparison? Are you concerned with that comparison? And how do you answer that comparison?

Mark Carney: Well, think there's a couple of things. One is we don't want to restrict politics only to lifelong politicians. I hope not. I mean, that's first and foremost.

Nate Erskine-Smith: Having done it for 10 years, I was also saying I hope we don't limit it to that.

Mark Carney: You understand, you're going to go off and do something else for a while. Hopefully you'll come back into political life. Maybe you won't. Maybe you will have served that tenure.

Nate Erskine-Smith: Yeah, who knows?

Mark Carney: But we'll see. I'm not casting aspersions on people who are lifelong politicians, although if somebody is a lifelong politician and they're talking about, for example, as only someone like Pierre Poilievre who's been a lifelong politician talks about the market in a way, and the economy in a way, that betrays very limited understanding of how the economy actually works undervalues institutions, undervalues people, doesn't know this relationship.

Nate Erskine-Smith: I like when he talks about electricians and lightning personally.

Mark Carney: Yeah, Yeah. the capture, there's a few things that doesn't understand. So that's, that's the first thing. So I don't think this is a sort of simple, you're ruled out unless you've gone through the school of politics. That's number one.

Number two, I think with, with the respect to Michael Ignatieff, I've been in the, I've been as close to the political arena as you can be. I have been a public figure through crises in Canada, elsewhere around the world. I've been there for making tough decisions. I've worked with a variety of governments. I've been in and around. Look, I know how to deal with tough issues and not just talk about them, but implement and get things done.

So, you know, we'll take where we started today, this discussion on climate change and what's going on in climate change. Three years ago, there were no major, there were $5 trillion of money managed by financial institutions that was going to be managed towards net zero. Today, there's 150 trillion. 150 trillion. That is 70 times larger than the Canadian economy.

I helped marshal that. I chair the group that put that together. I know how to get things done. I have a track record. So I have experience in working with a wide variety of stakeholders across different geographies, countries, continents, political classes. As I mentioned earlier, I've been appointed by the Conservatives. And so that brings something to the table. Does it answer every question?

And look, and Michael Ignatieff is a better intellectual than I am. I mean, I would not, do not aspire…

Nate Erskine-Smith: It comes down to connecting with people. And you mentioned it before we started recording, just everything, I forget exactly how you phrased it, but sort of everything is about authenticity. Because there's no perfect candidate and not everyone's going to see everything about themselves in any particular candidate. I was struck, I did my Master of Law in the UK at Oxford and my wife was there doing her Master of Nutrition at Oxford Brooks and

we visited the Imperial War Museum in London, and there was a genocide exhibit at the time. And I like, I recognize that voice. And there's a film of Michael Ignatiev in a Jeep.

Mark Carney: That was Blood and Belonging probably, right?

Nate Erskine-Smith: Right. And he in some ways ran away from that. It was Michael's just visiting. And there was no answer to say, you're damn right I've been overseas. I've been a Canadian overseas being, as Canadians act, we deliver for the world. We act in the best interests of people around the world. And I've been out there addressing genocide. I've been out there speaking about human rights. I'm proud of that record. And I'm coming back to Canada to make sure I deliver on those values as a leader here in Canada for Canadians. I think it was a disservice to be skittish about that record.

And you don't have the same challenge in that you've had a high profile position here in Canada. You are now entering into partisan politics in a, you know, you're not jumping right to a leadership position. You're playing, I don't know if you have a view of-

Mark Carney: I'm in the trenches. I'm in the trenches.

Nate Erskine-Smith: Well, one question I would have is, do you see a value in elected office as a backbencher or as an MP before a higher profile role.

Mark Carney: I mean, there's, you can't map these things out. Of course there's value in that. But let me pick up, something popped into my head while you were using that example. So one of the knocks on me that the opposition makes, or part of the opposition makes.

Nate Erskine-Smith: You're a WEF global elite.

Mark Carney: Exactly. I'm a WEF global elite.

Nate Erskine-Smith: John Barrett is too, I don't know, campaign coach here, that never comes up.

Mark Carney: And you know, when...

Nate Erskine-Smith: He's banned his ministers from going to World Economic Forum events to cater to conspiracies and you've been a board member for over a decade.

Mark Carney: I've rolled off the board, but that's absolutely right. I had a board member there and I used to go there with the Prime Minister, Stephen Harper, when he was there, and etc.

But let's be clear what you know, my international experience. I understand how the world works. You know, I know other world leaders, I know people and I understand, I know people who run some of the world's largest companies and understand how they work. I know how financial institutions work. I know how markets work. I know, and I know the good and bad of that. I've experienced it. I've had to, in some of my roles, discipline it, discipline the financial system, discipline, with others, the world's largest banks, the, you know, the Wall Street banks in America after the crisis.

So I understand how the world works. I'm trying to apply that to the benefit of Canada, you know, so I'm not going to run away from the fact that I understand how things work. And actually one of the issues, one of the things that has drawn me more into, into politics, right now is that we have an opposition who's leading in the polls, who doesn't understand the economy, doesn't understand where the world's going, doesn't understand what's necessary to build this economy for Canadians who thinks it's a series of simplistic slogans. There's nothing behind those slogans. There's nothing behind those slogans. Plenty of opportunity, plenty of opportunity after this podcast comes out to release, you know, some platforms, behind those slogans. They won't. And, and that's a, that is a massive risk.

That is a risk. Doing nothing is a choice. Pretending we're in the economy of the 1980s and 1990s, that is a huge, huge mistake. And the other jurisdictions are moving. I understand that. I can contribute part of that. We've got to do it in a way that is socially inclusive, that brings Canadians along, that supports people through these big transitions. And we can do it in a way that really wins if we're deliberate about it. But if we shut all that out, we're gonna lose.

Recommendations of Economic Task Force

Nate Erskine-Smith: That's a useful turn then to the role that you now occupy to chair this economic task force. You are in a position now, principally, I mean we've got a Fall Economic Statement and we've got a budget, but principally as I understand the role, it's also to inform, we have an election in the spring, in a perfect world that might last all the way to October, but that seems unlikely these days.

You've got one version of the cartoonish slogans you've got a debate in Parliament right now where the Bloc is saying we demand support for 16 billion dollars over five years to a poorly targeted and expensive program, seems an ineffective way of using a taxpayer dollar we don't have right now. I don't want you to be so prescriptive about here are all the answers, I've got all the answers. I'm, you know, this is the platform today, because you're at the beginning of it, but where, if, put it this way, in 2021, you said, we need a growth agenda and this budget isn't delivering all of that, but it's the beginnings of it and it's gonna take a number of budgets to get us to where we are.

Well, we're a number of budgets in and I was at the Canada 2020 speech where you were talking about, it sounded like a third way almost, you've got government spending, you've got cuts, and you were talking about a little bit of a different path as between them. Articulate what, and not at such a high level, maybe, but articulate, and maybe there are examples you could point to, of what we can expect to see in the advice you're giving and the approach that you hope the government takes hold of into the next election.

Mark Carney: Yeah, well, let me, again, these are great questions and there's a lot in them. Let me make a couple observations, and I noted your comments, not because I was coming on this, I just happened to catch them in last 10 days or so, about that Bloc proposal and the fact that all the opposition parties supported it.

Nate Erskine-Smith: Yeah, it's wild.

Mark Carney: It's wild. So an extra 3 billion of spending each year, and is that really the best use of that money. And what came to my mind instantly, and I think you observed it as well,is that in the simple slogan category, Pierre Polievre has a simple rule, a dollar for a dollar.

Nate Erskine-Smith: Yeah, spend a dollar, cut a dollar.

Mark Carney: So what are the $3 billion of spending cuts that he's going to make? I mean, if you're going to put up new spending and you have that rule, you've got to show Canadians what's there. Okay, but let's talk about the growth issues in Canada. So how do we get growth back up?

And let me put it in context, which is if the Canadian economy were as productive as the American economy, so if we had used all our resources, so to speak, as efficiently as the American economy, if we close that gap, which is about 30% with the US, it's an additional $35,000 Canadian, for every Canadian. So it's a huge amount of money.

That's money that goes obviously for government, for social programs. We can invest in our health service, not rely on compound increases in foreign students in order to pay for our post-secondary education, all these sorts of things. So there's real value in doing this. It also means much higher wages for Canadians by definition. So, why are we less productive? Which things can we change in order to close some of that gap and where can we build on our advantage, our unique advantages? And that's basically what I'm looking at with others through this task force, and so one of the core things in terms of why we're less productive is we actually give our workers less to work with. There's less so-called capital, there's less software, there's less investment, fewer tools, so to speak, for our workers. It's like shoveling your driveway with a shovel.

Nate Erskine-Smith: And it's business investment.

Mark Carney: And it's business investment, yeah. And you have to, when you look at outside of the resource sector, we just don't, we don't invest in much in our workers. We also don't use those tools as effectively as others do, so it's also kind of how we work.

Nate Erskine-Smith: We’ll talk about frameworks, just on that though and I'm interested in the rest of what you’ve got there, but you talk about the need for frameworks and the importance of a plan and a framework to deliver. What is the difference when you look at American companies that do invest in their workers to a much higher degree than Canadian companies invest in their workers? Is there a policy framework that explains the difference? What explains that difference?

Mark Carney: Okay, so this is part of the challenge, which is there's no one magical change to the tax system or one regulation that you adjust that is going to instantly write this or start to close the gap. And you have to look across a series of options in order to get there.

Nate Erskine-Smith: But this will be a core focus.

Mark Carney: But that is going to be a core focus. The element of the diagnosis of the problem needs to look at part of it fundamentally is about under investment. Why is that the case? How can we change it?

Part of it is about the industries that we have. Where have we built up and what haven't we built up? But to use that overused analogy, also where is the puck going? If the world is going to be moving to lower carbon, which parts of that transition can we lead? In fact, can we dominate in? Also, how are we going to apply AI? mean, this is one of the world's leader in AI. We just had a Canadian win the Nobel Prize, Jeffrey Hinton. I mean, amazing, his impact in this country and the AI ecosystem has been absolutely enormous. We can build off of that in so many different ways. The companies themselves, how we use AI for all, not just use AI to displace workers. That's what we don't want to do. We want to use AI to give people more tools to have better jobs and be more productive and do that. So there's lots of things that we can do with that.

So it shifts from the overall why do we invest not as much? Why do we not use the tools as well? But then we'll go to which areas, which parts of the economy can we build up and which are the elements that make all of the economy more productive. So let me be, can I be a little more specific about this?

Nate Erskine-Smith: Specifics are good, yeah, specifics are always good.

Long-Term Investments for Productivity

Mark Carney: So, you know, the previous prime minister, Prime Minister Harper wanted Canada to be an energy superpower. And in many respects, we are because we have hydro, we have oil and gas, we have nuclear, et cetera. We need to be a clean energy superpower. That's where the world's going. That means a couple of things. So there's certain things, my point, which I should have started with, is there's certain things that can make all of the economy better, all of the economy more productive, can help close the gap.

Nate Erskine-Smith: Cleaner, cheaper power is an example.

Mark Carney: Cleaner, cheaper power across Canada is good for Canadians. It's good for Canadian jobs. It is great for Canadian manufacturing because companies around the world, as the world's being rewired, are looking for low-risk jurisdictions, we’re about as risk-free as anyone can be, with trade access to the biggest markets. We've got the best trade relationships of anybody, and who have clean power.

That is ever more the case in the new industries on technology, the so-called hyperscalers, the big technology companies. They are looking to build out data centers and computing in jurisdictions outside of the United States where they can trust, but they have to have clean power. So we have to take our natural advantages in clean power and grow them quickly.

But let's do that in a way that benefits Canadians above and beyond just having those data centers come and built here by let's say, Google or Meta or Microsoft or whoever. We want to make sure that a portion of those data centers is available for our companies. The companies that Jeffrey Hinton helped spawn, the Coheres of this world, if you will.

And as well, we want to make sure that Canadians are learning how to use these tools to solve problems for the world, whether it's protein folding, in life sciences, by the way, another Nobel prize, we're recording today, Demis Hassabis, won the Nobel prize for that. Okay. And we have the capability of building that out. So we build out the ecosystem around that. Then you take a step back and say, and there's every reason why we should, the great universities here in Toronto and in, in Alberta and Montreal, et cetera, that are building this expertise, the creative destruction lab just down the street here. All of that is part of, I'm sorry to use the word ecosystem, but it's relevant to how we can build this out at scale. What else do we need to do to incentivize and reward the builders of that economy? And so you work your way back.

Nate Erskine-Smith: I'm curious. I haven't read Hinge. It's not out yet, but this is your book.

Mark Carney: It's not written yet.

Nate Erskine-Smith: It's not written? Okay, well, I saw an announcement around it.

Mark Carney: It's large. I mean, it's not finished. Sorry, my publisher is listening. It's not perfect.

Nate Erskine-Smith: I like that. It's good. In some summary that I read though, whether you wrote it or not, maybe the publisher wrote it, it does talk about it being time to build. But what I found interesting about the knock-on language was not just governments. This isn't just governments putting public capital in to build.

This is about encouraging the private sector to invest in things that also are going to create long lasting value to our country. It's one thing to say we want businesses to invest in workers and that's a priority, but when we talk about building things and you know, I wish we were waking up 10 years after the Liberal government was elected in 2015 and we had high speed rail between Toronto and Montreal. We don't have that unfortunately. I mean there is high frequency rail, maybe high speed.

Mark Carney: With a spur to Ottawa.

Nate Erskine-Smith: Maybe it's coming, I don't know.

Mark Carney: And between Edmonton and Calgary.

Nate Erskine-Smith: But when you say it's time, do you have something in mind of what this country up looks like?

Mark Carney: I've got, yeah absolutely, without question, without question. Look, and I'm glad you raise it because where we are around the world is, we are at the start of an investment era. I could call it an investment boom, but investment era.

Let me use an example from the European Union. So, Mario Draghi, central banker, became a prime minister, just did an analysis.

Nate Erskine-Smith: You should’ve used that example.

Mark Carney: I know, I threw it in, took me a while. Just did a very comprehensive analysis for the European Union and where do they go in their next phase of their growth strategy. One of the things that's striking is their analysis is that the scale of investment that Europe needs to do for the net zero transition and the AI transformation or revolution, depending on how you frame it, plus a bit on security, is twice the size of the Marshall Plan, which was put in place after World War II to rebuild an absolutely destroyed Europe.

So it's five percentage points in his estimation of GDP in additional investment year in, year out for decades. We have probably not quite that level, but something similar. That is building. That is an enormous opportunity for this country because the actual act of building clean energy, the act of building out the computing power for AI, the act of investing in skills, all of that is growth at the time. But what it will do if we do it right, it will lock in competitive advantage for our companies and futures for Canadians and their children in the industries of the future.

And because both being low carbon and deploying machine learning, artificial intelligence, are generalized drivers of competitiveness, in other words, across a bunch of industries, you don't have to be working in AI to get the benefit of it if we do this right. You can be manufacturing or in the resource sector but if you're, if you're low carbon, you will have access to those markers. We talked earlier about CBAM. So how do we get ahead of that and how do we build? So it's absolutely a time to build. You had, you had Lisa Raitt on the podcast a few weeks ago. And she with Don Iveson, did, did great work, on this housing report. Mike Moffatt was part of it. Others, was, I was a small, part of, part of the group.

You know, we need to build a lot of houses. Okay. We all know that there is a smart way to do that. There's an effective way to do that. There's a way that builds a Canadian industry and Canadian expertise on next generation, you know, efficient, energy efficient and livable houses, housing that can build a real industry in this country, above and beyond provide the needs for that.

And, and at the core of their report, is that strategy. We have taken, I think, as a country, components of that strategy, the more immediate components, but not fully drawn through the recommendations. It's time to build. We should pull that through because we don't just get the benefit of, I mean, look, it's an imperative. It's not a benefit. It's an imperative of building these houses, somewhere between five to eight million additional houses.

Nate Erskine-Smith: Yeah, we're well short at the moment.

Mark Carney: Yeah, we're well short. So we know, we'll worry about whether it's five or eight, you know, several years down the line. But let's do it in a way that builds an industry that, you know, Canada can export around the world.

Nate Erskine-Smith: I've got a question around fairness, but before I get there, just on the productivity question, do you worry about, you've got, I think it's something like 75% of consumer debt is tied up in mortgages. You've got 50% of the bank balance sheet is mortgages.

You've got, when you look at the percentage of our economy that is premised on real estate, and we're not just talking about building new houses at that point, which is productive use of capital. In many cases, it's acquiring an existing asset and it's not the most productive use of a dollar in Canadian society. Do you worry about just how much we have invested as a country in the real estate sector?

Mark Carney: Look, I certainly had jobs where I had to worry about that. That was the second nature of that. I think the following, which is that we're in a position where we are very short housing and we have a responsibility, all of us, whether we're in government or those who are in the sector, in the private sector, and particularly, it's all levels of government to solve that problem to make sure that every Canadian resident has a decent place to live, that it's affordable, that they can manage it. We can grow our way into that situation. It's natural that, you know, the separate point or related point, it's natural that people, you know, that their biggest asset is their home. And, you know, their biggest liability is their mortgage. That's natural. You know, if everyone waited until they could buy their home for cash, yeah, no one would own a home.

Nate Erskine-Smith: But it does strike me, pushing investment dollars into building. And again, what the framework is, we want to push any new dollar that's coming into the housing space, we want to get new housing built as opposed to competing with first time home buyers for residential resales, for example.

Mark Carney: Absolutely. Yes. I mean, we need to build a lot of homes and that has implications for building standards codes, permitting, the way we build those homes. It would be a huge missed opportunity if we build the homes of yesterday for the world of today, in a world where, again, in Lisa's and Don's report, they quite rightly make this point that the risks from a changing climate change the specifications and the locations of where you should build. And, you know, the efficiency of greater density in our cities is, look, it's great for neighborhoods. I mean, we've got a great mixed, I mean, this is one of the classic neighborhoods, great neighborhoods in the world, let alone Canada. But more of that infill density is valuable if you do it the right way.

Inclusive Growth and Fairness

Nate Erskine-Smith: Your focus on this task force is growth productivity, but you have also written a good deal about inclusive growth. You have written that we have to be more honest with people about winners and losers when it comes to trade and technological transformation. And then the idea behind inclusive growth is to make sure we support people along the way. And there's an underlying sense of fairness to it. And when you look at the Canadian context, when you look at the work you're going to do with this task force, how much does inclusive growth factor into it? And how would you articulate, you know, I'm not gonna knock on doors and talk about inclusive growth. I don't think that is a doorstep way of talking about it, but helping people in need and helping people who are struggling and helping make sure we're addressing cost of living, that sounds like what we're trying to drive at when we talk about inclusive growth. What do you mean when you talk about it?

Mark Carney: Yeah, I agree with everything you said. I would frame it a bit this way if I could, which is, it gets us substantially the way there towards an inclusive society, but not all of the way there to an inclusive society. By which I mean, there's ways to grow that recognize that you're going to have, it's an ugly word, but it's an ugly process, where you're going to have big churn in firms, in industries, and therefore in jobs.

So new jobs will be created, but old jobs will be lost. And the question is what happens to the people in those jobs? Are they ready for the new jobs? How do you get them ready for the new jobs? And look, the lesson of previous industrial revolutions, and we are entering two industrial revolutions at the same time, the sustainable revolution and the AI revolution, the lesson of previous industrial revolutions is what happens is that you go through a long period with huge change of jobs and industries, and that workers are slow to benefit from the benefits of those new industries.

Now that doesn't have to be the case and what happens is that eventually people get retrained, eventually new social safety net and welfare systems are put in place to support people, but it happens decades after the fact, the political process lags. I think we should benefit from that knowledge, that history, and do this in real time. And it therefore has to be part and parcel of the growth strategy. So a huge element of this is necessarily going to have to be around the skills agenda, and the skills agenda in real time.

And make these changes not threatening for people, but legitimately, legitimately exciting for people because they have the opportunity to develop the skills that you know, are in the clean economy, are applying AI across a huge range of those economies and they're growing their jobs from there. And that means, you know, it means multiple levels of government, as you can appreciate, because the skills is not unique to any level of government. And it means being coordinated with industry, it means coordinated with other stakeholders.

And I think it also means, and this is, I don't think I'll draw this out in the report, but it's a broader question. You've thought about this is, well, what does it mean for social welfare and support? Because ideally, look, what's happening, not ideally what's happening, but what is likely to happen is, you know, you have people in their thirties or forties and the industry is changing and they have an opportunity to shift into a new role. But ideally, this is where the ideal is, they have a partner. You know, they have a mortgage because they have a place to live. Maybe they have children as well. So they have obligations. So how easy is it for them to then take a year out or time out to develop some social support? And how do you, so how do you integrate the, both, the social welfare system with that, or the social support for that, as well as make sure you have real places, real opportunity to get that training. And we need to be thinking about that right now to integrate that.

Nate Erskine-Smith: Well yesterday, because apart from any transformation which you're getting at, you have 1.5 million people that don't have a job right now. And there's got to be an overriding focus on supporting people through the social safety net, where they are unable to work and helping people, properly supporting them, not get off your a-s-s approach of Doug Ford, which is, I don't even know what decade to accuse him from being from. But actually supporting people with that skills training and that education and those social supports on the income side.

The other question on fairness, and I did ask you this, a version of this at least, when you gave that speech and then no one was putting up their hand and I was like, all right, I'll ask Mark Carney a question. I'm not shy about asking questions. And I put it this way, and I'll give you a second crack at it.

Mark Carney: You really liked my first answer.

Nate-Erskine Smith: Your first answer left a little to be desired, I would say. So, you have spoken about income inequality, but you then have highlighted rightly that income inequality is sizably outpaced by wealth inequality. And there are challenging ways of tackling this problem, but before we get to the tackling of the problem, just so people who are listening understand this, StatsCan measures this in different ways. Social Capital Partners, and this is what I referenced in my preamble to the question previously, but they estimate that the top 1% owns 25% of the wealth in Canada and the top 0.1% owns 13% of the wealth. And it's an incredible amount of inequality when you think about the scale of it all, especially when you contrast that as against the insignificant disability benefit and the number of people who are truly in need in society. And so when we have that, I think everything through the lens of a fair and productive economy.

You're focused on the productive end of it, but when we talk about inclusive growth, when we think of inequalities like wealth inequality, fairness looms large. How do you think we can best address this? Now, the capital gains changes, I'm curious if you have a comment on that because I think those were a very useful step forward in addressing wealth inequality as the OECD has highlighted personal capital income taxes as the most effective path forward in terms of tackling this problem because of capital flight risks with other changes, potential changes in net wealth taxes. How would you best address that question of wealth inequality?

Mark Carney: Well, I think the following, and this is where the trade-off comes and this is where the political system comes together in order to make the judgments around those trade-offs. Because we're in a position where it's a time to build, right? Time to build out the housing, the industries of the future, get the economy growing, and increase income and wealth for all Canadians. And for that to happen, and I'm going to come to your question, but I want to pick up on something you mentioned earlier, which I didn't really highlight, which is, and you referenced it as a third way, as opposed to, you know, spend and subsidize and support or, you know, cut our way to prosperity, the destroy, deny type approach, demolish approach. And that's a way that is clear through a political process about what we're trying to accomplish, the missions, if you will, of the government. Are we trying to become a clean energy superpower? Are we trying to become the essential trading partner of our friends, et cetera, et cetera? What are we trying to do in order to create that wealth? And then how do we go about it?

And how we go about it, the role of government in that respect is partly through policy, present and future, partly through regulation, smart regulation, in fact, not too many, but smart regulation standards, and sometimes through a bit of capital investment themselves, is to catalyze a huge amount of private investment. That's what's necessary. Because the orders of magnitude are so large that no government can or should try to take it on.

In order to get that last component, the private investment, we need builders. We need companies and individuals and entrepreneurs and people to figure out better, not just to invest, but also figure out better ways to accomplish the goals that we've set as a society. And they need to be rewarded, right? I mean, they're going to do it in part to be rewarded. So they are going to create wealth. They're going to create wealth for the country as a whole, but also they're going to have some of that. And so the judgment is around what's the right reward and how do you balance that with how much of the wealth that's created, the total wealth is created that is captured by society. Do we capture it in general in the economy? Do we tax the economy in general, or do we go and tax at that, at that source, so to speak?

And the thing I didn't, I'll be candid, what I didn't like about the capital gains discussion earlier this year was the way it was framed, the way it was toned. It was a kind of class warfare type language, which, well, as if, we're entering an era where if we're going to be successful, we need some people, some companies, some Canadians to be successful.

And that doesn't mean they're bad people, that they've done the wrong thing. In fact, they've been doing, they will have done what we want them to do. If we have a clean tech entrepreneur, carbon cure, carbon capture, you know, those people, and they get to scale. If, a Canadian company is the world leader in small modular reactors, for example, which is necessary for so many solutions around the world, yeah, actually we do want them to see some of the gain. They're not bad people, they're good people. They're part of what we need to do. So then how do we balance that? And how do we balance it through overall levels of taxation, taxation of income on the way up? And do we have some form of, is it around capital gains? Do we have capital gains at the right level now?

Nate Erskine-Smith: And is there a way to distinguish at times between active and passive income? Because, like, take housing as the classic example, but if you've got, and I mentioned this example earlier, but if you've got dollars coming in to build, I want to incentivize that every chance that I get, more dollars coming in to build. But I want to disincentivize if anything, dollars coming in to compete with first-time homebuyers in the residential resale space. That's not productive capital in the same way, and you could have a tax regime that treats that wealth differently.

Mark Carney: Well, you can have, and we do have some of this, which is you can have other elements of the regime which support the first-time homebuyer which tilts the, you know, the playing field that way. So these are, look, these are all crucial things and I used the term earlier, the adjective earlier, it's not gonna be a magical ...

Nate Erskine-Smith: It doesn't sound like you're gonna address extreme wealth inequality, but you are addressing productivity.

Mark Carney: Well, no, but I think but you've got to address, yeah, you've got to address how are we going to grow this economy? How are we best going to grow this economy? And in part, how are we going to grow this economy in a way that brings, that puts people first and brings as many Canadians along as possible in that growth, in and of that self, in that growth, in the dignity of a job and a career and flourishing in Canada.

And then, and then, but above and beyond that, there is these questions which you're rightly raising, which is, okay, but there's no perfect growth strategy that lifts absolutely all boats. That's absolute. We've lived through that.

Nate Erskine-Smith: And we've just delivered after, so here's the, you didn't live through this in the same way I did, but we just promised people with disabilities, like we set an expectation here, we delivered this and it's not nothing, it's like effectively a billion dollars plus a year works out at 1.2, 1.3 on an ongoing basis, but it pales in comparison. I mean, we're now having a debate about $3 billion in new spending for old age security, which is poorly targeted, when you're talking about a senior that makes $120,000 in a given year is gonna earn, you know, they’re taxable benefits, but would receive $4,000 in benefits. That doesn't stack up when I look at the who are we, what is inclusive growth, how are we gonna help people and make sure people aren't left behind? And I do think as we think about productivity and growth, and that's your overall variety objective, and rightly so. There, does have to be this knock on consideration to say, okay, well, I don't see this skills training and this AI transformation necessarily benefiting someone who's really struggling, who has a disability and is on this support. So how do we make sure we do both at the same time and we deliver the growth we need, but we also have, we also have promised to expand that disability benefit.

Mark Carney: But that's why, okay. But that's, that's, and you talked earlier about, why, you know, why am I involved working with the, with the Liberal Party working for the Prime Minister on this? But that's because both questions get asked and both questions are looked at, to be answered. So the growth element and the social element, broader social, as opposed to growth, as the be all and end all.

But we are in a position now, as I think other economies, you know, the UK, the EU, the US has a different weighting of these issues, but certainly those other economies that have a similar, not exactly the same, but a similar set of values, a similar set of balance between equality of opportunity, equality of outcome, and fairness across generations. Those three big factors, different societies weigh those differently. I think we as Canadians try to balance across all three as much as possible.

But we're in a situation, as is the UK, as is the EU, where our ability to meet all of those will be compromised unless we solve the growth equation. Okay. We have to solve this. That does, it does not follow that by solving the growth equation, we solve all these other things because we then have to make choices of what do we do with that growth? And what do we do with the fruits of that growth?

Nate Erskine-Smith: Yeah, redistribution is still part of the conversation.

Mark Carney: Yeah. That bring all Canadians along.

Conclusion

I think you talk about it is redistribution and regeneration, but you need both.

Look, I appreciate the time. When you are, when you're ready to beat Kevin Vuong in Spadina-Harborfront, I'm there to canvas for you. If you need any political advice along the way, I'm happy to help. And I really, I will, you know, with all sincerity, I really am glad that you have not been put off by the absurdity of our politics and that there's still that interest. And I hope many people who are, who see you doing it will follow suit and say, look, I've contributed, I have a lot to contribute, I'm gonna contribute to politics. Because I do have this great worry that we're gonna see people not leave the sidelines in a way that you seem to be willing to do because of the state of the state of our politics, so I appreciate you joining.

Mark Carney: That's very, that's very kind I mean, but let me just say this, which is that if there are people like that on the sidelines and they come in, you can, they can flood the zone. They can come in and flood the zone and change the tone.

Nate Erskine-Smith: We’ll leave with that optimism.

Mark Carney: We can leave with that optimism. Okay, thanks Nate.

Nate Erskine-Smith: Thanks for joining me on this episode of Uncommons. A special shout out, by the way, to Beaches Sandbox, which is where we are recording this. You might hear the daycare that is happening right beside us. As always, you can reach us with topics, with guests, with ideas @beynate on social media and [e-mail] by email. And otherwise, until next time.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.uncommons.ca