A new book out this year: Value(s): Building A Better World For All, by Mark Carney is challenging to summarize in one article, especially when economics was not one of my favourite subjects.
After my wife brought the (600-page) book home from the local library, I was hooked upon reading the introduction and appreciating that here was a Canadian economist that had been in some of the most influential positions during the most challenging economic times in the world.
I was especially interested in what ideas an economist would have on climate change. I had first heard of Carney while he was Governor of the Bank of Canada (2008 to 2013) during the recession and then was surprised when he was asked to be the Governor of the Bank of England (2013 to 2020).
The experience from his Canadian position, plus his degrees from Oxford University convinced Britain he could help them, as well. The book is a good introduction to economic history and its basic principles and then deals with three topics that will be of interest to most of us.
His coverage of the 2007 economics crisis is described under the headings: “Global financial crisis, A WORLD UNMOORED and follows with creating a simple, safer, fairer financial system.
His second topic is: “The COVID crisis: how we got here and follows with “fallout, recovery and renaissance.”
His third topic is the climate crisis followed by a number of sections that he feels will help us deal with it in the long-term. His final two topics are how Canada can build value for all and humility.
In the introduction he describes how the credit crisis was caused by the authorities and market participants who fell for the three lies of finance: 1.) This time it will be different 2.) Markets are always right and 3.) Markets are moral.
Rather than reinforcing social capital we consumed it. Banks were deemed too big to fail, technology was favoured over retail investors and finally with too few market participants feeling responsible for the system lead to unchecked bad behaviour which eventually became the norm.
Concerning COVID, Mr. Carney feels we have had the proper response by showing solidarity, fairness, responsibility and compassion over economic consequences and the aspirations of society will focus not just on growth but also on its direction and its quality. He also expects the public will demand improvements in the quality and coverage of social support and medical care.
He feels these same values will need to carry over into the climate crisis, which is the ultimate betrayal of inter-generational equity. It imposes costs to the future generations that the current generation has no direct incentives to fix. In Chapter 11 he highlights how changes in policies, new technology and growing physical risks will prompt reassessments of virtually every asset.
Firms that align with the transition to a net zero carbon economy will be rewarded while those that fail to adapt will cease to exist. He goes on to describe how the solution to solving the climate crisis is through three technologies: engineering, political and financial.
He describes how the internal combustion engine is being replaced by electricity and financial markets need to work alongside climate policies but the task is large, the window of opportunity is short and the risks are existential.
Jim Hilton is a professional agrologist and forester who has lived and worked in the Cariboo Chilcotin for the past 40 years. Now retired, Hilton still volunteers his skills with local community forests organizations.