Carneynomics and the investment summit We’ve written extensively in recent weeks about Prime Minister Mark Carney’s political economy—or what we’ve sometimes called “Carneynomics.” Next week’s investment summit illustrates both its departure and continuity from Trudeaunomics. On its differences, as I wrote last week, Carney is clearly more comfortable with conventional economic concerns about growth, investment and productivity. He understands that capital formation is fundamental to rising living standards. That represents an improvement over the Trudeau government’s tendency to present an expanding “care economy” as somehow growth enhancing in itself. Spending on care can support employment and enable people to work. But the Trudeau government too often seemed to reverse the larger relationship: a growing private economy generates the public revenues that allow us to afford social services. Expanding subsidized services cannot substitute for generating the wealth to sustain them.  Carney puts greater emphasis on that wealth generation. Yet his conception of how to achieve it is similarly state centric. In this sense, the investment summit is a metaphor for the prime minister’s political economy worldview. Domestic and global investors will receive a “deal book” of projects submitted by the provinces and territories and selected by Ottawa. The prime minister, select ministers and the premiers will essentially pitch the projects to investors during breakout sessions. Think of it as a politicized version of the “Dragons’ Den.” Although the prospectus has some similarities to an investment bank’s catalogue of deals—including individual projects, capital requirements, financing objectives, and prospective commercial partnerships—, the chief difference is that the list has been adjudicated by politics and the summit itself is being mediated by politicians. There’s something reminiscent of a third-world economy in which political brokerage is inherent to the deployment of private capital. This isn’t how market capitalism is supposed to work. Normally a company or pension fund identifies an opportunity, evaluates its prospective returns, negotiates with the proponents, and decides whether to invest. The role of government is limited to the overall policy environment and whatever approvals are required. There’s also no reason to think that the Carney government’s intervention will end with an introduction. Once politicians have championed a project, they acquire a stake in its success. If the commercial terms don’t quite work, there will be an implicit expectation for public financing, regulatory forbearance, and other preferential treatment. This is the continuity with Trudeaunomics. Justin Trudeau’s costly and ineffectual electric-vehicle subsidies also involved politicians identifying preferred industries and technologies and deploying the public balance sheet to secure them. The risk is that Carneynomics extends that model across a much larger share of the economy. It would be Trudeaunomics at scale. Carney is right that Canada needs more private investment. But what it really needs are conditions under which businesses and investors can make commercially viable deals—including ones that never appear in a prime ministerial pitch book.