I’ll be sorry to see Governor David Dodge leave the Bank of Canada. To be sure, I’ll take a good deal of critical distance from his and the Bank’s view that we are operating “above capacity” when real wages for at least the bottom half of the work force are flat, and I think monetary policy as a whole should and could have somewhat lessened the scale and severity of the current manufacturing jobs crisis. Still, one would hardly expect a convergence of views between unions and a central banker on the desirable degree of labour market slack, and Dodge has no control of commodity prices or forces pushing down the US dollar.
To his credit, Dodge met at least annually with the union leadership during his term, and union economists have met annually with top Bank staff. We have no cause for complaint on lack of consultation. It would have been nicer to have had more agreement and less polite debate, but I think monetary policy has been modified to some modest degree by these consultations.
Moreover, somewhat at odds with his otherwise impeccably neo liberal/macro orthodoxy credentials, Dodge had a lively interest in broader public policy as a force for social and economic improvement. He weighed in regularly on the importance of “human capital” for productivity, and was something of a champion for child care and early learning investment, as well as serious attempts to promote “lifelong learning.” During his brief tenure as Deputy Minister of Health, my suspicion is that he developed a plan for safeguarding Medicare for the future which was largely jettisoned in negotiations with the provinces.
Dodge was acutely aware of the serious imbalances of global capitalism as currently configured, and pressed internationally for a more demestic demand driven Chinese and Asian economy. He was also not insensitive to the dramatic tilting of bargaining power away from labour towards capital.
I doubt Dodge was pushed out. But the Governor and Minister of Finance work very closely together, and I also doubt that Dodge thinks highly of Flaherty’s intensified political oversight of Department of Finance officials – who have frowned at GST cuts, and large increases in spending via transfers.
- Inflation Collapse Confounds Monetary Hawks (May 17th, 2013)
- Polozogistics: Nine Thoughts About the Choice of the New Bank of Canada Governor (May 3rd, 2013)
- Breaking The Taboo on Monetizing Deficits (February 22nd, 2013)
- What Does the Bank of Canada Do? (January 7th, 2013)
- Mark Carney’s tenure and the state of monetary policy (November 27th, 2012)