a tiny glimpse into the ways our government serves the corporate and financial world, not the people of Canada

Some Key Areas Where Neoliberal Policy Undermines both the Industrial Economy and Canadian Democracy

Under the Harper Regime, the investor class is constantly being protected at the expense of the real industrial economy, for just about all policy decisions privilege both the financial sector, with its market-driven initiatives and debt-driven growth strategies, and of course corporations - in particular resource corporations in oil, gas, and mining, all of which combined have a heavily weighted presence on the TSX and, in fact, together with financials drive the TSX index. The obsession with deficit reduction and austerity are part of this process in order to maintain socalled  “market confidence,” played off ironically, as they always are around the world, against sustainable growth. And do I need to mention successive corporate tax cuts presumably designed to attract investment, but the success of which no economist has ever measured accurately? Much if not all of the financial sector is, of course, composed of corporations.

Foreign worker policy is designed both to drive wages down with differential pay scales, and targeted immigrant recruitment is designed to enhance a neoliberal policy of economic growth in the sectors the Regime favours as being in “Canada’s national interest.”

Anti-labour, anti-union, policies and back-to-work legislation are obviously designed to suppress wages and erode workers’  benefits. Throw the newly proposed changes in EI into the mix here too, and it’s a war on  the majority of Canada’s very own citizenry.

Reducing in effect government financial participation, pension reforms clearly favour the financial class because of the profit possibilities of the  Pooled Registered Pension Plan proposal, as do the OAS changes that will force many to seek private pension arrangements if they can afford it or otherwise to stay in the workforce for longer than planned.  Add the corporate management shift to defined contribution plans, which also obviously aid corporate bottom lines and, in turn,  shareholders and the investor class, and we see another neoliberal triumph.

Gutting of a myriad of regulations and other laws and policies wherever and whenever possible to allow corporations to exploit both people and the planet at will for profit is now commonplace for the Regime. The legislative assault on long-standing environmental regulations is only the latest, but countless not-so-subtle manoeuvres in foreign policy, whereby Foreign Affair diplomats become sales people, so-called shifts in foreign aid such as the new CEDA relationship with mining companies, and the assault on charities  through the CRA also come readily to mind.

All the free trade agreements negotiated by the Regime serve a neo-liberal agenda, as they did, to be fair, under Liberal rule as well.  Even as we can’t change NAFTA through parliamentary process, we will not be able to change any of these other, more recent international trade agreements, including CETA, simply because they’re international. We lack the power nationally in law to do so, though there are costly international mechanisms we could avail ourselves of but, it would seem,  never do.

 Gutting expenditures and a host of smaller programs  for Social Services, including limited Health transfers to the provinces, wherever possible is de rigueur in such neoliberal driven government such as ours.

This is a mere but, alas, sad glimpse into some of the ways our government serves the corporate and financial world, not the people of Canada.

14 economic advisors Flaherty consults on policy and budgets are all from the financial sector: Fiscal contraction doesn't work

The 14 economic advisors Flaherty consults on policy and budgets are all from the financial sector, mostly banksters.

Here's what James K. Galbraith says about the implicit danger of such a stacked deck:

 "....economic policy should not be under the control of bankers, and any economic team which is dominated by the financial sector is going to be largely serving that sector's interest. Now, that, I think, is a very clear fact and something which everybody should be prepared to resist and to object to when it occurs and to protest until it changes. Until that happens, very little else will happen."  http://goo.gl/sMidp

 Let me reiterate by way of paraphrase that last bit:  we should be resisting, objecting to - whenever and wherever we can -  the Harper Regime's deep privileging of the financial sector through its overt neoliberal agenda. There's nothing remotely subtle going on here. As I've noted many times, it's such a classic neoliberal agenda it ought to be taught in university political economy classes. If we can't shift that ideological policy ground, none of the social and poltical transformations we seek has a chance. This should be our primary concern in our efforts to bring about system change. Everything else is a symptom.

And here's what even Larry Summers, Harvard professor, late of the White House advisory staff, has to say about misguided austerity such as that implemented by the Harper Regime:

"Fiscal contraction reduces incomes, limiting the capacity to repay debts. It achieves only limited reductions in deficits once the adverse effects of economic contraction on tax revenue and benefit payments are accounted for. And it casts a shadow over future growth prospects by reducing capital investment and raising unemployment, which inevitably takes a toll on the capacity and willingness of the unemployed to work."   http://goo.gl/GyZri

This is what protests around the world yesterday were really about.

The Harper Regime is Playing Dangerous Game

By unleashing strident propagandistic messages aimed nominally at environmentalists but really anyone opposed to or even questioning of the Gateway pipeline, the Harper Regime is playing a dangerous game in attempting to limit legitimate discussion on the Gateway pipeline. This is, as David Eaves argues, given all the complex issues involved, exactly the moment to begin a full and transparent arms-length approval process. Otherwise, I would add, any sort of intervention will potentially result in political blow-back from ordinary Canadians - who of course expect fairness in the assessment - that may turn out to be severely politically damaging, especially since the Regime is already skating on thin ice with so many other policies and practices, including - ordinary Canadians are beginning to realize - mismanagement of the economy through misguided spending and the loss of jobs in the general economy. Watch out once the full force of austerity measures kick in. http://goo.gl/AgmdV 

Unemployed people can't pay taxes, and they certainly curtail their spending

Like the good neoclassical economist he is, President Harper said on Friday that he and his bulldog want to indulge their pathological addiction to austerity and tackle that mean old junk yard federal budget when, in fact, we know that they should really be focusing on the job creation strategies we so desperately need. My last  few posts have painted a very bleak picture of the Canadian economy, and further austerity measures or implementing the ones in the works are only going to make things worse, draging out the recession/depression even longer.

There is only one reason to concentrate on reducing government debt at the expense of other economic inititatives, and that is to satisfy "markets" - that is,  to create investor confidence.  But we should always remember that the financial sector contributes next to nothing directly to real GDP.  And austerity in the cause of debt reduction does nothing directly for the real, industrial economy. In fact, it creates only more hardship for real people and the economy by, among other effects, increasing the number of people unemployed and by reducing correlated spending and tax revenue. Unemployed people can't pay taxes, and they certainly curtail their spending.

We need reasonable economic growth through job creation, through some kind of economic stimulus, infrastructure projects or otherwise, for without reasonable growth government revenues suffer, and that gap, in turn, increases the pressure for more austerity measures because the money simply isn't there.  It's a an economic whirlpool difficult to escape. But jobs fuel the economy because employed people spend money, and both they and the business which are recipients of their spending, who also spend as businesses,  pay taxes and thus increase government revenues, part of which can be used for paying down debt at at reasonable pace while maintaining government programs that service Canadians in general.

Not much chance of this kind of thinking in Harperland  given what's emerged for many as a disturbing psychoanalytic reading of Harper the man, whose resentful - sometime vengeful - personality is fully reflected, as Dan Gardner suggests,  in the way both parliament and the government in general are run. This is a regime in which, as someone suggested the other day, lying is not a moral issue but a political tactic and empirical evidence ("stastistics") is irrelevant.  We cannot expect truth from such a regime let alone a wise economic policy, the irony being of course that the Harperites presumably won their beloved majority on the basis of promising sound economic management. Hello! Read my last three or four posts.

Krugman: His Lucid Best on Euro Crisis and Its Implications

Legends of the Fail - NYTimes.com

Borrowing, if you must, in your own sovereign currency matters, and austerity never works, especially during a recession. Here are the facts, though I coud add the caveat if I were a neoclassical economist that those high interest rates for Spain and Italy are also, no matter what the currency, the result of lack of investor confidence in the economies of those countries. But I'm not, so I'll just say had the countries been able to manipulate fiscal and monetary policy with their own currencies instead of being locked into the Euro, which is controlled by the more wealthy EU countries - namely, Germany and France - there would be no investor confidence issue.

"... if you look around the world you see that the big determining factor for interest rates isn’t the level of government debt but whether a government borrows in its own currency. Japan is much more deeply in debt than Italy, but the interest rate on long-term Japanese bonds is only about 1 percent to Italy’s 7 percent. Britain’s fiscal prospects look worse than Spain’s, but Britain can borrow at just a bit over 2 percent, while Spain is paying almost 6 percent.

What has happened, it turns out, is that by going on the euro, Spain and Italy in effect reduced themselves to the status of third-world countries that have to borrow in someone else’s currency, with all the loss of flexibility that implies. In particular, since euro-area countries can’t print money even in an emergency, they’re subject to funding disruptions in a way that nations that kept their own currencies aren’t — and the result is what you see right now. America, which borrows in dollars, doesn’t have that problem.

The other thing you need to know is that in the face of the current crisis, austerity has been a failure everywhere it has been tried: no country with significant debts has managed to slash its way back into the good graces of the financial markets. For example, Ireland is the good boy of Europe, having responded to its debt problems with savage austerity that has driven its unemployment rate to 14 percent. Yet the interest rate on Irish bonds is still above 8 percent — worse than Italy."

See too my earlier posts:
Pathological Commitment to the Ideology of Austerity Brings Only Economic Stagnation
Fiscal Austerity: Does it Work?

Pathological Commitment to the Ideology of Austerity Brings Only Economic Stagnation

The curse of austerity - thestar.com

This is a very insightful analysis of our current situation. Here's a bit of a gloss on it:

Neither the private sector nor consummer spending seems to be able to stimulate growth in the economy. This is the real issue. Only public spending can do that, but a pathological commitment to the ideology of austerity on the part of so many Western countries - bred by the tenacity of neo-classical economic theory and neo-liberalism politics - has created nothing but economic stagnation. We are beginning to see the real results in Canada now even without the full launch of cuts next year. Imagine that disastrous scenario.

This is not a simple economic or fiscal issue. It's a political issue - a question of the political brain trust actually understanding the real crisis. If they don't, we can certainly look forward to a lot more social and political unrest as they continue their misdirected austerity programs - implemented of course really to please the investor class - for it is real people who suffer, as always, from the pathologically inflicted leadership of the Western world. In Canada, we can only hope Harper pays a price for his blindness.

Fiscal Austerity: Does it Work?

The Harper Regime is in the process of implementing some severe fiscal austerity measures. But does slashing spending and reducing deficits, as the advocates of such a policy claim,  really restore confidence and drive economic renewal?  It would seem not if we take both the Euro Zone countries - especially Greece where public servants are rioting in the streets of Athens - and the U.S. as examples. In fact, as Paul Krugman argues persuasively,  "budget austerity may well be counterproductive even from a purely fiscal point of view, because lower future growth means lower tax receipts."  


Get that: lower future growth means lower tax receipts, and there can be no growth, in the current world economic situation, without government stimulus funded by tax receipts. Not to mention that slashing government departments in the interest of so-called "efficiencies" requires firing people, who then cease to be tax payers providing government revenues since they are unemployed. Does axing employees ever inspire confidence except in some amoral/immoral investors who think cost cutting improves the bottom line and right wing economic pundits who think it inspires business investment? Not at this moment.


So what should be done?  Klugman says "the answer is that we need a major push to get the economy moving, not at some future date, but right now. For the time being we need more, not less, government spending, supported by aggressively expansionary policies from the [in this case the Bank of Canada] and its counterparts abroad."


What this also means, I think, is that Mark Carney's stand-up push to get European banks more substantially capitalized is not necessarily the right move at this moment either, especially now that Greece wll probably default.   The theory is that further capitalization will mitigate risk and  forestall a potential banking collapse and resulting bailout.  But from where does that new capital come in these already struggling countries? Beats me, but my guess is European taxpayers.  Isn't this sharp stance just adding more pressure to an already absurd situation, which - let's face it - is going to migrate here to some extent no matter how much the Harper Regime tinkers with boutique tax credits while slashing, burning, and killing.


Once again, it's not about ordinary people, the 99%.  It's about the 1% - banks and their investors -  euphemistically called, as Jim Stanford says, "the market."  As always, finance trumps both industry and people.