It’s not often we get a chance to glimpse how power really operates in Canada. Last night was one of those rare opportunities.
At 6 p.m., the men who dominate our financial system assembled at the Hilton Hotel in downtown Toronto. Among them were the CEOs of Canada’s five big banks and the top insurance companies. In many ways, this crowd could be regarded as the executive committee of Canada’s ruling elite.
They came for a dinner ($1,250 a ticket) to raise funds for a new monetary policy research centre connected to the C.D. Howe Institute. That may sound innocuous. But Canada’s top bankers were not getting together to figure out how they can make banking more customer-friendly.
Monetary policy may seem dull, but what’s at stake isn’t. It deals with money — how much will be in circulation and how much it will cost to borrow. The answers to those questions affect us all — but in different ways, depending on our financial circumstances.
For those with lots of money (i.e. rich people), the chief focus is usually on preventing inflation from whittling away the value of their money. For the rest, however, the focus is more on maintaining employment. Therefore, they want low interest rates, so consumers can finance purchases and businesses can afford to hire workers.
The trade-off between fighting inflation and fighting unemployment lies as the centre of the monetary policy debate.
But it’s a debate that’s almost entirely dominated by the financial community. That dominance will only increase with the establishment of this new monetary policy centre, which will present itself as a credible “independent” voice, while parroting the views of the financial elite that’s paying for it. (Financial firms have already donated $1.725 million.)
In fact, the C.D. Howe Institute – which is itself funded by the corporate sector and wealthy individuals — has a long history of pressuring the Bank of Canada to focus on eliminating inflation through high interest rates, even though high interest rates also kill jobs.
In the early 1990s, the Howe crowd was keenly supportive when the Bank waged an aggressive anti-inflation campaign with high interest rates that threw hundreds of thousands of Canadians out of work.
The Howe, as it’s known, has kept up the battle in recent years. Even as the Wall Street crisis pushed Canada into recession in late 2008, the Howe was urging tighter monetary policy than the Bank adopted. And despite massive job losses, Howe president Bill Robson advised the Harper government against increasing public spending to help the faltering Canadian economy.
The struggle over monetary policy is about to heat up again, with the financial elite determined to stifle inflation rather than alleviate the plight of Canada’s workers.
If you’re wondering who will have the ear of the Bank of Canada this time, one clue is where its governor, Mark Carney, was last night: at the Hilton. While Carney has authority over the banking industry, he’s also part of it, having spent 13 years working for Goldman Sachs, the Wall Street banking powerhouse.
Absurdly, the new monetary policy centre qualifies as a “charitable” organization, so bankers at last night’s dinner got a tax receipt to deduct part of the cost of their tickets.
Yet the last thing this country needs is a new centre enabling the wealthy to exert even more influence over whether other Canadians – the ones who can’t afford $1,250 for dinner — will have jobs.
Linda McQuaig is the author of It’s the Crude, Dude: War, Big Oil and the Fight for the Planet.