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| Mark Carney: we must tackle isolation and detachment caused by globalisation Mark Carney: we must tackle isolation and detachment caused by globalisation | |
| (about 4 hours later) | |
| The governor of the Bank of England has issued a rallying cry to policymakers across advanced economies to tackle the causes of a growing sense of “isolation and detachment” among people who feel left behind by globalisation. | The governor of the Bank of England has issued a rallying cry to policymakers across advanced economies to tackle the causes of a growing sense of “isolation and detachment” among people who feel left behind by globalisation. |
| Warning that the UK was suffering its “first lost decade since the 1860s”, Mark Carney said that one of the reasons for the Brexit vote was a sense among people that they had lost control of their futures. | Warning that the UK was suffering its “first lost decade since the 1860s”, Mark Carney said that one of the reasons for the Brexit vote was a sense among people that they had lost control of their futures. |
| The governor also used his first big speech since Donald Trump swept to power in the US to warn that open markets are under threat and that politicians must do more to share out the gains of global trade and the rise of technology. | The governor also used his first big speech since Donald Trump swept to power in the US to warn that open markets are under threat and that politicians must do more to share out the gains of global trade and the rise of technology. |
| Speaking against a backdrop of growing support for anti-establishment politicians, Carney repeatedly referred to people’s isolation, sense of insecurity and their frustrations with global trade and technology. Those forces had favoured the “superstar and the lucky”, he said. “But what of the frustrated and frightened?” | Speaking against a backdrop of growing support for anti-establishment politicians, Carney repeatedly referred to people’s isolation, sense of insecurity and their frustrations with global trade and technology. Those forces had favoured the “superstar and the lucky”, he said. “But what of the frustrated and frightened?” |
| “From the rising spectre of global terrorism to intensifying geopolitical tensions and financial crises, for too long, for too many people, the world seems to be getting riskier,” he said in a lecture to Liverpool John Moores University. | “From the rising spectre of global terrorism to intensifying geopolitical tensions and financial crises, for too long, for too many people, the world seems to be getting riskier,” he said in a lecture to Liverpool John Moores University. |
| He did not refer specifically toTrump’s use of a protectionist platform. But asked after the speech about the UK vote to leave the EU, he said people were driven to support Brexit by different reasons, including questions of sovereignty, economic concerns and a sense of losing control. | He did not refer specifically toTrump’s use of a protectionist platform. But asked after the speech about the UK vote to leave the EU, he said people were driven to support Brexit by different reasons, including questions of sovereignty, economic concerns and a sense of losing control. |
| Following criticism of experts from some Brexit campaigners, such as Michael Gove, Carney acknowledged in his speech that voters deserved a more honest appraisal from economists when it came to the real impact of changes such as globalisation and the automation of jobs. | Following criticism of experts from some Brexit campaigners, such as Michael Gove, Carney acknowledged in his speech that voters deserved a more honest appraisal from economists when it came to the real impact of changes such as globalisation and the automation of jobs. |
| “The fundamental challenge is that, alongside its great benefits, every technological revolution mercilessly destroys jobs and livelihoods – and therefore identities – well before new ones emerge,” he said. | “The fundamental challenge is that, alongside its great benefits, every technological revolution mercilessly destroys jobs and livelihoods – and therefore identities – well before new ones emerge,” he said. |
| He noted the rise in living standards around the world in recent decades and said technological progress had lifted more than 1 billion people out of poverty. But he recognised those advances had not been felt equally. | He noted the rise in living standards around the world in recent decades and said technological progress had lifted more than 1 billion people out of poverty. But he recognised those advances had not been felt equally. |
| “Despite such immense progress many citizens in advanced economies are facing heightened uncertainty, lamenting a loss of control and losing trust in the system. To them, measures of aggregate progress bear little relation to their own experience. Rather than a new golden era, globalisation is associated with low wages, insecure employment, stateless corporations and striking inequalities,” he said. | “Despite such immense progress many citizens in advanced economies are facing heightened uncertainty, lamenting a loss of control and losing trust in the system. To them, measures of aggregate progress bear little relation to their own experience. Rather than a new golden era, globalisation is associated with low wages, insecure employment, stateless corporations and striking inequalities,” he said. |
| That climate had combined with the aftermath of a financial crisis that exposed how banks had been working in a “heads-I-win-tails-you-lose bubble”, he added. | That climate had combined with the aftermath of a financial crisis that exposed how banks had been working in a “heads-I-win-tails-you-lose bubble”, he added. |
| “As a consequence of all of these developments, public support for open markets is under threat. Turning our backs on open markets would be a tragedy, but it is a possibility. It can only be averted by confronting the underlying reasons for this risk upfront.” | “As a consequence of all of these developments, public support for open markets is under threat. Turning our backs on open markets would be a tragedy, but it is a possibility. It can only be averted by confronting the underlying reasons for this risk upfront.” |
| Carney also used his speech to defend the Bank in the wake of Theresa May’s remarks in October that there had been “some bad side-effects” from low interest rates and quantitative easing, which involves central banks pumping electronic money into the financial system. | Carney also used his speech to defend the Bank in the wake of Theresa May’s remarks in October that there had been “some bad side-effects” from low interest rates and quantitative easing, which involves central banks pumping electronic money into the financial system. |
| He reiterated the Bank’s stance that monetary policy could not be held accountable for rising inequality and insisted the policymakers would set rates with a view to keeping inflation in check while also being careful not to damage the jobs market as the Brexit process progresses. | He reiterated the Bank’s stance that monetary policy could not be held accountable for rising inequality and insisted the policymakers would set rates with a view to keeping inflation in check while also being careful not to damage the jobs market as the Brexit process progresses. |
| The main focus of his last speech of an eventful year, was inequality and he described current times as “the first lost decade since the 1860s”. | The main focus of his last speech of an eventful year, was inequality and he described current times as “the first lost decade since the 1860s”. |
| Carney set out three priorities to tackle the sense of “isolation and detachment” felt by substantial proportions of people, including the Bank’s recurring plea for the government to play a role in shoring up the economy rather than leaving monetary policy to do all the heavy lifting. | Carney set out three priorities to tackle the sense of “isolation and detachment” felt by substantial proportions of people, including the Bank’s recurring plea for the government to play a role in shoring up the economy rather than leaving monetary policy to do all the heavy lifting. |
| “First economists must clearly acknowledge the challenges we face, including the realities of uneven gains from trade and technology,” he said. | “First economists must clearly acknowledge the challenges we face, including the realities of uneven gains from trade and technology,” he said. |
| “Second, we must grow our economy by rebalancing the mix of monetary policy, fiscal policy and structural reforms. | “Second, we must grow our economy by rebalancing the mix of monetary policy, fiscal policy and structural reforms. |
| “Third, we need to move towards more inclusive growth where everyone has a stake in globalisation.” | “Third, we need to move towards more inclusive growth where everyone has a stake in globalisation.” |
| Most potential solutions to the sense of disenchantment lay “outside the Bank’s remit,” Carney said. | Most potential solutions to the sense of disenchantment lay “outside the Bank’s remit,” Carney said. |
| Defending the Bank he said: “Monetary policy has been keeping the patient alive, creating the possibility of a lasting cure through fiscal and structural operations. It has averted depression and helped advanced economies live to fight another day, so that measures to restore vitality can be taken.” | Defending the Bank he said: “Monetary policy has been keeping the patient alive, creating the possibility of a lasting cure through fiscal and structural operations. It has averted depression and helped advanced economies live to fight another day, so that measures to restore vitality can be taken.” |
| “In the end, monetary policy isn’t a spectre but a friendly ghost.” | “In the end, monetary policy isn’t a spectre but a friendly ghost.” |