reprint from WSJ:
Has Canada Learned From Its Lost Decade?
The Liberals elect Mark Carney to talk about Trump, not Trudeau.
‘Why don’t I become a circus clown?” That was Mark Carney’s sensible reply when asked in 2012 about ambitions to enter Canadian politics. On Sunday he was elected leader of Canada’s Liberal Party, soon to be sworn in as Prime Minister. Welcome to the circus.
Mr. Carney, a central banker who became a global face of “net-zero” and “ESG” environmental schemes, won 86% of the Liberal leadership vote. His big advantage: He was off in England, or globe-trotting as a United Nations climate envoy, or working for large U.S. firms rather than serving as a minister in Justin Trudeau’s Liberal government (2015-25).
“Trudeauism,” the Canadian policy intellectual Sean Speer writes, “came to be marked by massive deficit spending, large-scale industrial policy, an unprecedented use of the federal spending power, a major increase in immigration in general and temporary migration in particular, and a significant expansion of the federal government itself.”
It didn’t work. Government spending nearly doubled, but business investment fell by a third and productivity plunged. Canada is now 30% less productive than America, and Canadian GDP per capita is no higher than it was in late 2014. This has been Canada’s lost decade.
The Trudeau carbon tax flopped, and even Mr. Carney now pledges to junk its consumer end. He’d replace it with a more complex scheme as well as a “carbon border adjustment mechanism”—a tariff or quota that is bound to elicit U.S. retaliation.
Liberal governance has left Canada in poor shape to face Donald Trump’s tariff onslaught. But irony of ironies, those U.S. tariffs have become the Liberals’ great hope, spurring a recovery of 10 or 15 points in election polls.
“We didn’t ask for this fight, but Canadians are always ready when someone else drops the gloves,” Mr. Carney vowed in his victory speech. “The Americans should make no mistake: In trade, as in hockey, Canada will win.”
The Liberals still trail in most polls, but they are in striking distance of Pierre Poilievre’s Conservatives. Mr. Poilievre is pro-American, strong on defense and much better suited to deal with Mr. Trump. That’s an urgent need for Canada, but voters antagonized by Trump tariffs may prefer the hockey fight.
Mr. Carney has no experience in electoral politics, but he is recalled fondly for guiding the Bank of Canada through the 2008-09 recession. Further from Canadians’ minds is Mr. Carney’s time atop the Bank of England (2013-20), when he presided over historically low interest rates that sent property prices soaring.
As one of the founders in 2021 of the trendy Net-Zero Banking Alliance, lately deserted by U.S. banks, Mr. Carney explained, “The companies, and those who invest and lend in them, who are part of the solution, will be rewarded. Those that are lagging behind, and are still part of the problem, will be punished.”