Outgoing Bank of Canada Governor Mark Carney, pictured, was one of three speakers, along with Catholic Register columnist Fr. Raymond de Souza, at a Cardus panel May 3 in Toronto. Roger Martin, dean of the Rotman School of Management, rounded out the panel which spoke to a lunchtime Bay Street audience about ethics in the marketplace. Photos by Michael Swan

Greed should not be the driving force of economy

  • May 12, 2013

TORONTO - When the economy becomes a game don’t be surprised if people game the system. The financial crisis of 2008 exposed not just structural and regulatory weakness in global capitalism but the cost of an amoral business ethic detached from the real economy, outgoing Bank of Canada Governor Mark Carney told a Bay Street audience.

“When banks become detached from the end user, from the real economy, then the only measure left is money,” Carney said at the May 3 lunch-time panel discussion sponsored by Cardus, a Christian think tank that publishes Convivium magazine.

The collapse of Asset Backed Commercial Paper in Canada at the end of 2008 exposed what happens when banks manufacture products that can be traded simply for the purpose of trading them. As the ABC derivatives chopped up and repacked various kinds of debt they began to lose their basis in the goods, services, wages and investments of real life, said Carney.

“Someone in that chain had a mortgage,” he said. “They forgot that.”

Carney urged bankers to see themselves and what they do as part of the machinery of capitalism, but not the end product. He also criticized banks for failing to speak honestly and frankly to everybody.

“Bank annual reports are over 400 pages. You have all the information you don’t need and none of the information you do need.”

Carney pointed to the LIBOR rate scandal in the United Kingdom as another example of bankers and financial markets becoming detached from reality and from morality.

“These abuses have reinforced questions about the fundamental values of people in the system,” he said.

But don’t expect more government regulation and oversight to solve the problem, he said.

“In the end virtue can’t be regulated,” said Carney. “Ultimately it’s a question of personal responsibility.”

Convivium editor and Catholic Register columnist Fr. Raymond De Souza said the financial world should turn to moral philosophy, even theology, for values which can be part of a new attitude in finance. Prudence, honesty and justice — cardinal virtues — ought to be incorporated into the basic thinking of bankers, brokers and fund managers, he said.

“Greed is not the value that ought to drive the financial sector,” said De Souza.

Regulatory schemes will constantly have to readjust to close off new opportunities to make money from money, rather than making money from real enterprise, said Rotman School of Management dean Roger Martin, the third speaker on the panel.

“The key is not the rules themselves, but the principles underlying the rules,” he said.

Business schools must begin to teach values and moral principles not just in corporate social responsibility courses and ethics classes but in everything they do, said Martin.

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