In delivering the Liverpool John Moores University’s Roscoe Lecture Carney talked of the ‘uneven gains from trade and technology.’
While acknowledging that the ‘deepening of the symbiotic relationship’ between markets and technological progress has helped the worlds’ poor, lifting more than a billion people out of poverty, Carney suggested such measures of aggregate progress ‘bear little relation’ to the experience of many people in the developed world whose standards of living have stalled.
The consequence of this he said, seemingly referring to Brexit and Donald Trump’s election win, is that ‘public support for open markets is under threat.’
He added that rejecting open markets would be ‘a tragedy, but it is a possibility’ and it can only be averted by ‘confronting the underlying reasons for this.’
Referring to the rapid rises in economic inequality seen in the developed world, Carney invoked the notorious ‘1%’ statistic, which refers to one hundredth of the people in developed economies having 20% of the wealth, seemingly suggesting policies to facilitate redistribution of wealth will be required to achieve what he dubbed ‘inclusive growth.’
Monetarism is also under threat as a different, but related consequence to the lack of progress in living standards, Carney said. While he defended monetary policy as having been ‘highly effective’ he conceded that it is understandable for central banks to face criticism when populations experience economic difficulty.
Focusing in on the United Kingdom specifically, he said the country is facing its ‘first lost decade since the 1860s,’ pointedly noting that this was the time in which Karl Marx was developing communism as an ideology.
Carney also noted that the fall in sterling seen following the Brexit vote will lead to inflation in 2017, but suggested this may not be a bad thing if the other side of the coin is better performance in the economy.