Last Thursday night I was listening to central banker Mark Carney’s Reith Lectures, originally given on the BBC and rebroadcast on the CBC, and hearing the news about Canada Pension Plan Investment Board (CPPIB) CEO Mark Machin’s vaccine tourism to the UAE. Machin’s trip didn’t end well. He was forced to resign the next day. So this is a blog post about two finance boffins, both Goldman Sachs alumni, both in their mid-fifties, and both named Mark.
What was Mark Machin Thinking?
The CPPIB is a Crown (i.e. federal government-owned) corporation that invests the Canada Pension Plan’s portfolio of approximately $500 billion Canadian ($400 billion US). Its mandate is to maximize return and its annualized ten-year rate of return is an impressive 10.8 percent. Machin was paid a salary of over $5 million.
The federal government has strongly discouraged Canadians from overseas travel and numerous politicians who ignored this moral suasion have recently been named and shamed, most notably former Ontario Finance Minister Rod Phillips. Clearly, Canadians are expecting their leaders to set an example.
So the obvious question that comes to my mind is what was Mark Machin thinking when he decided to undertake his career-ending trip. I’ll pose a series of questions, some rhetorical. Did he think no one would notice his absence? Did he expect no one would out him? Did he consult with the Chair of his board (Heather Monroe-Blum, a very savvy former university president) before he left? Did he ask, “how will it look on the front page of The Globe and Mail?” Did he think that his organization’s success made him untouchable? Did he think he could shoot someone in the middle of the street in Toronto’s financial district and no one would care? Does he plan to apologize, whether earnestly or even a sorry-not sorry?
What is Mark Carney Thinking?
Mark Carney is probably the only person who has headed two central banks, in his case Canada’s and England’s. In his post-central banking career, he is taking a leading role on climate change, in particular working on public policy to reduce carbon emissions. His Reith Lectures, which are available as either recordings or transcripts on the BBC’s website, are precursors to a book on the disparity between social and market values.
Carney gave four lectures. The first sets out the theoretical groundwork by distinguishing many things people value (loyalty, family, friendship, solidarity, integrity) from values set by the market and criticizing the shift from social values to a market-dominated society with market values. The second lecture deals with the financial crisis and the failures of banks and their regulators that led to the crisis. Carney has no need to offer a mea culpa, as the Canadian regulatory system prevented the excesses that occurred in the US and Europe and, as Governor of the Bank of Canada, he made on-the-money decisions to support our banking sector. The third lecture deals with the Covid crisis and criticizes the pseudo-science of estimating the value of human life in monetary terms and the false tradeoff between epidemiology and economics. The fourth lecture deals with climate change and supports carbon pricing as a policy to help the world move to net zero emissions. As a former central banker, Carney is well aware of the problem of how to evaluate the risk that Miami, Boston, and New York, among many other cities, could be under water in 30 years.
After the fourth lecture, Carney was asked by the moderator whether the short horizons implicit in the political cycle made his policy position tantamount to “green window dressing.” Carney became indignant and pointed to the fact that in the last federal election 70 percent of Canadians supported parties committed to net zero. Btw, that was the point I made in my criticism of Bill Gates in my previous post.
Carney has a lot to say and a one paragraph summary can hardly do him justice. I encourage readers to check the lectures or read the forthcoming book.
Carney his been subjected to the ressentiment of both English and Canadian society. In England, he has been disparaged because – shocking! – he speaks with an obvious Canadian accent. Unlike Canadians of earlier generations he doesn’t mimic English speech or attempt to sound mid-Atlantic. In Canada, he has been tall-poppified. For example, when he recently went on Twitter, cognoscenti were wondering if this was to signal a political career. If he does go into politics, he will be Iggied.
The Way Forward
I think that Carney’s public policy role in the struggle to achieve net zero emissions is comparable in value and significance to Gates’s technological role, and indeed I think their roles dovetail. More green power to them both.
Finally, I don’t know Mark Machin, but I’m sure he’s too smart and persistent to be silenced. Some self-examination would be appropriate before an attempt at reinvention.