Wednesday, July 22, 2015

Greece Has Been Shat Upon With the Dung of the Devil

Over the last few weeks, I could not but help notice the parallel narratives unrolling with the Pope on tour in South America condemning the moral bankruptcy of our present economic system and the arduous negotiations surrounding yet another bailout of the Greek government.  In short, the Pope repeatedly exposed the absence of morality within capitalism and linked it to the exploitation of the poor and the rising environmental crisis encircling the globe.  As Pope Francis points out -- I still find it strange that I would be quoting the Pope, but hey, he tells like it is -- capitalism today is the dung of the devil:

An unfettered pursuit of money rules. The service of the common good is left behind.  Once capital becomes an idol and guides people’s decisions, once greed for money presides over the entire socioeconomic system, it condemns and enslaves men and women, it destroys human fraternity, it sets people against one another and, as we clearly see, it even puts at risk our common home.

Sounds like a pretty accurate description on what is happening in Europe.  For instance, we have witnessed the usurping of Greek sovereignty over its territory, Greece having been reduced to the status of a debtor colony by the German led European Union, which has become little more than an extension of European banking system, that above all protects the interests of the French, Swiss, and German banks.
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The Greek people, on the other hand, are being sacrificed on the altar of maintaining a common currency.  The so called structural adjustments imposed upon the Greeks have just made matters worse: the economy has shrunk by 25%, and young Greeks are leaving the country to seek their fortunes elsewhere, and why wouldn’t they, facing the bleak prospect of trying to find a job in a country where the unemployment rate for the young top 50%.  As well, child poverty is rampant and the suicide rate has skyrocketed.  So much for being a member of the European Union. 

To make matters worse, officials from the European Commission will be in place to make sure that the Greeks continue to liquidate whatever remaining public assets that can be sold off at fire sale prices, the proceeds going to cover a portion of the potential, or should I say inevitable, losses that the European banks stand to incur.

Eventually, there will be a day of reckoning.  Indeed, the Washington based International Monetary Fund has indicated in one its reports that given the present state of the Greek economy, Greece will not be able to meet its debt obligations: “Greece’s debts can only be sustainable with debt relief measures going far beyond what the Eurozone has offered so far.”

In fact, Greece’s accumulated debt has reached 200% of its GDP while its economy continues to shrink.  In other words, the economic activities within the Greek economy do not and, most likely, will not generate sufficient revenue so that the Greek government can pay off its debt.

The former Greek Finance Minister, Yanis Varoufakis, makes the point succinctly when speaking to the BBC. He said that the program that Greece was subjected to “will go down in history as the greatest disaster of macroeconomic management ever.”
Say what you will about the Greek penchant of not paying their taxes, awarding themselves overly generous pension plans, and defrauding the social system, the million dollar question (pardon the pun) is the following: given the present state of the Greek economy why continue to extend credit, three massive bailouts in five years, and continue to pretend that the structural adjustments that to date have utterly failed will somehow miraculously resuscitate and bring the moribund Greek economy back to life? 

Where the dung of the devil seems to be pretty thick is with the German-led banking system.  If there is any nation on this planet that should be aware of the effects of debt relief, it is definitely the Germans, having been crushed by the reparations imposed by the victors of the First World War in the Treaty of Versaille, which many believe that created the conditions that brought about the Second World War, and having been forgiven for their debts during the reconstruction years of the Marshall Plan.  Indeed, the Germans were the beneficiaries of an overwhelmingly forgive and forget attitude on the part of the allies who could have sought their "pound of flesh", which given the scale of the harm the Germans inflicted upon humanity, they could still be paying today and would do so for the next thousand years.

So, where's the love?

It's not as if the German banks were lending the Greeks a portion of the hard gained savings of the German population.  The money that was lent was created out of thin air in writing up the IOU to the Greek government which then reciprocated with one of their own to the consortium of European banks.  Moreover, potential losses due to non-performing loans can be easily removed off the balance sheets by the act of quantitative easing in which the European Central Bank also creates money from thin air and transfers the bad debt away from those banks that were foolish enough to lend funds to the Greek government in the first place, a practice that the American Federal Reserve employed to prop up to the too big to fail banks in the US following the collapse of the financial markets in 2008-09. 

Simply put, the European banks do not want the contagion to spread.  The default of a small member country like Greece would not imperil the solvency of the European Union.  However, other countries like Portugal, Spain, and Italy would do considerable harm to the continued viability of the EU if they too were to default on their debt obligations.  By teaching the Greeks a lesson they will never forget, the aforementioned nations take notice and fall into line with the dictates of the European Central Bank.

The other thing to consider is the exposure that the banks holding the Greek debt have with regard to the derivatives markets.  A default could trigger a chain of massive payments that could freeze the liquidity of the entire European banking system, and, as a result, the entire European economy. 

Perhaps, this is the scenario that needs to be avoided at all costs.  In such a situation, the Greek government's default must be avoided for the time being, and if that means extending credit to a debtor that cannot repay the debt in order to keep the debtor nation on life support for an indefinite period of time, so be it.  In the meantime, the significant extraction of wealth from the Greek economy can be used to hedge against the repercussions of a possible default, even make money if it indeed comes about.

As you can imagine, the Greeks find themselves in an extremely shitty situation.  Regardless of the financial strategies, the desire to make money from money amongst the creditors trumps the productive use of capital in Greece's real economy.  Without access to sufficient lines of credit from its domestic banks, businesses cannot finance their day-to-day operations.  As a result, many of them will simply close their doors, laying off employees in the process, while they contemplate moving their operations elsewhere.  By doing so, the economy continues to shrink as do the revenues of the state and the capacity to service the existing debt.  Caught in a vicious circle, it should not come as a surprise if the pain caused by the imposition of draconian fiscal measures upon the society lead to social unrest and violence.  In the worse case scenario, one the Germans know all too well, the drowning man will clutch upon a dragon and those from the far right will take control of the state. 

What we have been witness to in Europe is the machinations of an amoral political agenda, which organizes the global community into becoming the means to the end of maximizing profit at the expense of the human condition and the health of the planet.  Breaking free from this institutional order cannot be done by simply changing the positions of the economic levers.  It can only be achieved by changing the moral code at the base of our society.

In such a context, what Pope Francis has been saying over the last couple of weeks needs to be taken seriously and acted upon, by Catholics and non-Catholics alike.      

Thursday, June 25, 2015

Pope Francis Captures the Moral High Ground Much to the Dismay of His Detractors

Way to go Frank!  You really knocked that one out of the park.  I never thought that I'd be writing about an encyclical from you, but what you had to say about climate change and how it is connected to the economy and our relationship with the planet and the rest of humanity pretty well sums up what I and a host of other progressive bloggers have been writing about for the last few years. 

Coming from you, however, carries a moral authority that has the potential to counterbalance the amoral neoliberal garbage that is spewed upon us by the traditional media, captured, for the most part, by a money-grubbing, Mammon-worshiping, financial elite and their minions.

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There are many memorable quotes to be found in this encyclical.  Perhaps the most direct, no holds barred observation is "the Earth, our home, is beginning to look more and more like an immense pile of filth." 

Tell it like it is Frank.  Don't pull any punches.

It's refreshing to hear a message that doesn't buy into the economy uber alles bullshit we hear everyday.  If you can read between the lines, it goes something like this:

Through put.  It's all about through put.  The more of the earth's natural resources we can extract and put to use, the better it is for all of us.  Don't worry about the toxic waste.  If you make enough cash, you can live far away from the garbage dumps.  Climate change?  Who gives a fuck about climate change when you and me will be long dead before the worst of it arrives?  Greed is good, I tell ya.  It's all about making as much cash as you can, and don't let anybody stand in you way, least of all those tree-hugging, bike-peddling, granola-munching, solar panel freaks that will be forcing us all to drive Priuses if we let them.

Ok, I had my fun, but, on the serious side, Pope Francis goes for the jugular when he exposes the irrational belief in the market's "invisible hand", the economists blind leap of faith which will make everything just right:

Once more, we need to reject a magical conception of the market, which would suggest that problems can be solved simply by an increase in the profits of companies or individuals. Is it realistic to hope that those who are obsessed with maximizing profits will stop to reflect on the environmental damage which they will leave behind for future generations? Where profits alone count, there can be no thinking about the rhythms of nature, its phases of decay and regeneration, or the complexity of ecosystems which may be gravely upset by human intervention.

You got that right Frank. The quality of life doesn't come down to the bottom line. 

Life is a mystery. Nevertheless, we just happen to live on an incredibly beautiful planet.  For the most part, what's been missing from the climate change debate is a sense of morality, and who better than the Pope to capture the essence of the moral question we face.  In his words:

When we ask ourselves what kind of world we want to leave behind, we think in the first place of its general direction, its meaning and its values. Unless we struggle with these deeper issues, I do not believe that our concern for ecology will produce significant results. But if these issues are courageously faced, we are led inexorably to ask other pointed questions: What is the purpose of our life in this world? Why are we here? What is the goal of our work and all our efforts? What need does the earth have of us? It is no longer enough, then simply to state that we should be concerned for future generations. We need to see that what is at stake is our own dignity.

Powerful words that we need to return to from time to time regardless of one's religious beliefs.  Yes, these words are indeed addressed to everyone on the planet.

In closing, I take great pleasure in thinking that Pope Francis will now use the considerable means that he has at his disposal to get his message out to his more than a billion followers, and there is nothing that the traditional media can do about it except watch.

Thanks Frank.  Your sense of timing is impeccable, or should I say infallible.  ;-)


Tuesday, May 26, 2015

Fuck the Job Count! What People Need Are Living Wages!

Every month the charade continues. Governments in North America announce the latest labour market statistics, hoping to pull the wool over the population’s eyes, making them believe that things are a lot better than they really are.

It’s relatively easy to do: just don’t count those who are so discouraged that they have given up looking for a job.  In reality, these people still exist; they just don’t show up in the unemployment figures.  As a result, people are spoon fed a distorted picture of reality that they seem more than happy to accept, unless, of course, they are struggling to make ends meet, which in America is more than 100 million people.
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You don’t need to be a genius to see how the big lie works.  If the numbers are jigged to show less than a 10% unemployment rate, people will think that this means that 90% or more of the people who are employable do in fact have jobs.

It’s difficult to know in North America what the real unemployment rate is.  Estimates, based on the participation rate, those who are between 18-54 years old and do have jobs (see John Williams' site, Shadow Statistics) are closer to 23%.  In other words, three times the official, government endorsed, rate!

If that’s not enough, the government stats do not differentiate between part-time and full-time jobs, between temporary and permanent employment.  Having a permanent, full-time job with benefits that pays more the $50,000 is not the same as working part-time at Walmart, but for the purposes of propaganda they are.

What would make a difference is if we starting using the median income as an indicator of economic performance.  For example, U.S. real (inflation adjusted) median household income was $51, 939 in 2013 versus $51,759 in 2012, statistically unchanged.  In 2013, real median income was 8% lower than in 2007, the year before the onset of the Great Recession.  What’s up with that?

Things are about to get worse.  The U.S. Congress, otherwise known as America’s elected millionaires club, has just given the President of the United States of America, Mr. “Forget About Change You Can Believe In“ Barak Obama, the authority to fast track trade negotiations for the Transatlantic Trade and Investment Partnership and the Trans-Pacific Partnership, which effectively will make it easier for multinational corporations to offshore production where salaries are the cheapest and where the environmental regulations are the most lax.

This recent development reminds of the lyrics of Bruce Springsteen’s poignant classic, “My Hometown” released in 1984 on the Born In The U.S.A album, a precursor for what was coming down the road:

Now Main Street’s whitewashed windows and vacant stores

Seems like there ain’t nobody wants to come down here no more

They’re closing down the textile mill across the railroad tracks

Foreman says these jobs are going boys and they ain’t coming back to your hometown

Fortunately, there is push back and it’s coming from municipal government, the level of government closest to the people.  Last week, the municipal council of Los Angeles adopted a resolution that would see the minimum wage become $15 an hour by 2020, joining Seattle and San Francisco in the fight against poverty.  As could be expected, billionaire Warren Buffet went on record to say that that raising the minimum wage to a living wage was a bad idea.  Bad idea for whom Warren?  Fat-assed rentiers like yourself or for the children of parents who have two work at least two wage-slave jobs in order to house, clothe, and feed their kids?

What will be really interesting to see and very sad if it is indeed the case –of course, we won’t know beforehand since the wordings of the multinational trade agreements are being kept secret—is if a corporation can file a motion in the investor-state dispute settlement tribunal to roll back living wage legislation adopted at the state or municipal level.

That’s certainly not the kind of change people were hoping for!!!  

Tuesday, May 19, 2015

The Politics of Greed

Politics in North America often hides behind the veil of economic discourse.  Underneath the veil is the unmitigated pursuit of self-interest, the maximization of personal gain.  As humans, however, we are sensitive to questions of who gets what and for what reason.  We have an innate conception of what constitutes a fair share.  Those who insist on getting more than their fair share run the risk of meeting strong resistance from those whose pocket is being picked, from those who are receiving less than they deserve.

Historically, might gave the right to take what one wants.  In some countries it is still the case.  Fortunately, in most developed societies, however, the well-being of the people must be taken into consideration in the distribution of material wealth.  Indeed, it is the mark of a developed society to have some form of wealth distribution in order to counter the dire effects of being born into poverty.
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I consider myself fortunate that I was born in North America during the period of shared prosperity that followed the end of the Second World War.  Although I was born into the working class, I had no problem making my way to university after having received a quality education in the public school system.  Tuition fees were nominal and I could fund my post-secondary studies without difficulty, simply by working during the summer months and on the weekends during the school year.  Working construction, I earned five times my tuition fees in only four months.

Years of neo-liberal politics have changed the equation.  For example, my step daughter graduated from a law school in Ontario with approximately $60, 000 of student loan debt.  I guess she won’t be starting a family anytime soon.

Certainly, the cost of post-secondary education is only one marker of how things have changed over the last forty years, but it is an important one since in North America, education is considered as the most important enabler that allows individuals to improve their lot. 

So how did we get here?  Did we just wake up one day and decide that we no longer could afford equal opportunity for the masses?

No, our politicians never came out and stated directly that we had no choice, that we had to deny hope for a brighter future for those less well off.  They couldn’t.  They would have been voted out of office.  Instead, they hoodwinked the public by making them believe that they were working on their behalf because their focus was to improve the economy.

If we think of the equitable distribution of wealth within a society as a zero-sum game, attempts to claim more wealth at the expense of others can be disguised by claims of intentions to grow the economy.  Essentially, the state of the economy becomes a red herring that throws the public off the scent that measures are about to be taken that will shift wealth from the working and middle classes to the upper class, for the most part, to the rentiers.  All that is required is plausibility and that’s when discussions about the economy become paramount.

For instance, during the last forty years in North America, we have been bombarded by supply-side economics.  According to the cant, lowering corporate tax rates as well for those in the upper tax brackets will free up the wealth necessary to reinvest in the real economy, leading to more economic growth, more jobs, higher wages, in other words, greater prosperity for the society.  Despite the economic data that shows otherwise, the story keeps getting told and for good reason.

The primary effect of lowering taxes for the rich is to increase their after tax income.  Our politicians have been very successful in reaching this goal.  Yet, the secondary effect of increasing prosperity for the society at large is not materializing.  No matter, since once the tax rates are lowered, the primary benefit remains for the rich, despite sluggish economic growth, a lack of jobs, and wage stagnation for those who were also supposed to benefit from the fiscal change.  Moreover, any proposal to increase tax rates to previous levels is successfully countered by claims that such measures would impair economic growth.

All the while wealth is being transferred to the top 1% of the population, our political masters maintain the image of being competent managers of the economy by making use of dubious statistics: the first being the Gross Domestic Product (GDP) and the second is the official unemployment rate, which both give the impression that economic conditions are quite good.  For example, GDP continues to grow in North America because of constant population growth.  GDP per capita would give a much better indication of economic performance, but is almost never used in the mainstream media.  Similarly, the rate of unemployment is kept artificially low simply by shrinking the size of the workforce: the long-term unemployed no longer appear in the data since they have been classified to be no longer actively searching for a job.  As a result of not counting a great number of potential workers in the calculation, the US has a very acceptable unemployment rate of 5.6%, yet the participation rate, those who are of working age and do have jobs, is at its lowest point since the late 1970s, only 62.8%.  In reality, some 93 million Americans of working age do not have jobs.  As could be expected, the participation rate is almost never mentioned in the mainstream media.

By now, it should also be obvious to everyone in our Internet enabled culture that commerce no longer respects national borders.  Today’s investor class is under no obligation to reinvest earnings back into the national economy.  No longer would anyone claim that what good for General Motors is good for America.  Instead, the golden boy of the American corporate world, Apple Inc., for example, the highest valued corporation on the planet, is registered in Ireland, assembles its products in China, and keeps its huge profits offshore. 

Finally, now that the recession is over and the economy is apparently set to take off for another cycle of robust growth, it appears that Corporate America couldn’t be bothered to reinvest its record profits back into the real economy. In fact, there is more money to be made by manipulating the value of the company’s shares through increasing dividends paid to shareholders and by buying back stock.  This year will be a record year for buybacks, an estimated trillion dollars from corporate earnings that won’t be reinvested anytime soon.  So much hype about unfettering the job makers when there is a dearth of productive investment that would benefit those who toil in the real economy.

Of course there are dissenting voices.  The progressive American economists like Joseph Stiglitz, Paul Krugman, and Robert Reich come to mind.  All three are quite vocal in their critiques of neo-liberalism and American economic policy.  Yet, their ideas fail to gain traction.  It is as if they are delusional in their optimism that things could somehow be different if only we got the economic policies right.

In my opinion, they fail to see beyond their professional loyalties and to see the primary function of economics in political debate.  In short, economics has been used and will continue to be used as a polemic against egalitarian politics.  Concerns about economic performance trump concerns about the quality of democracy. 

In the Realpolitik of the English speaking nations, there is no debate.  It is the “economy uber alles “, for it is the cornerstone of the politics of greed.   

Monday, May 4, 2015

Let's Put Politics Where It Belongs: The Political Economy

The advantage of being able to speak and read in several languages is that you get to see how different cultures divide up the world, a phenomenon commonly referred to as linguistic relativity.  No where is this more evident in discussion about the political economy.

In the English speaking world, the term "political economy" is rarely used.  It is as if the economy actually exists in the real world, imposing its assumptions, mathematical abstractions, and calculations so popular with mainstream economists upon an unsuspecting public regardless of the context of the particular cultural matrix in which they are used.  Indeed, real world deviations from the "laws" of supply and demand and market equilibrium are most often ignored.  Essentially, this conceptual construct is reified to take on a life of its own to then become the central focus of political debate: how to increase economic growth, how to lower unemployment -- and my favorite -- "let's not do anything that would harm the economy", completely forgetting that what is referred to as THE ECONOMY is nothing more than an aggregation of statistics, often jigged to give a much better picture of what is really happening in the households of real people.

The French have a wonderful expression for this manner of constructing a social reality, la pensee unique, in other words, the one and only way of thinking.  And although there is disagreement within the economic discourse in English-speaking countries on how to manipulate the macroeconomic levers of interest rates, the value of the currency, taxation, and the level of government intervention into the economic affairs of the nation, there is a overwhelming consensus that the greatest societal good is to promote robust economic growth.  As long as the economy is growing, it's all good.

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In my mind, this way of thinking in the English-speaking world is nothing more, nothing less, than the politics of greed.

First and foremost, the complexity of human behavior is reduced to the bizarre conception of homo economicus or "econs" for short.  Econs exist in a world of perfect information happily leading their lives in the pursuit of the rational maximization of self interest, a worldview common and fortunately limited to sociopaths and neoclassical economists.  It always amazes me that hundreds of millions of English speakers allow their societies be dominated by such a paltry conception of human nature.

But there is a reason to explain its ironclad grip on how politics functions in the English-speaking world.  If humans are simply conceived as being rational and obeying the prime directive of maximizing their self interest, the moral consequences of choice is almost completely eliminated from examination, thereby absolving the few who engage in fraudulent practices at the expense of the many.

In the immortal words of Gordon Gekko, one of the main characters in Oliver Stone's award winning film, Wall Street, "Greed is good", an affirmation of faith that I would push even further by saying that "Greed is God" in America.

However, the politics of greed are about to bring a second global economic crisis within a decade.  Simply put, although financial markets are at record highs as are the capital valuations of Corporate America, the real economy is still in recession: the median income in the US is still 6% lower than it was in 2000!  This time around the size of the crash will beyond the capacity of the world's central bankers to counteract. 

Six years of massive government stimulus and investment in the automobile sector, near zero interest rates, quantitative easing, and record corporate profits have failed to revive the comatose patient.  North America is already in recession and it is only a question of time before this cold hearted reality wreaks carnage once again in the financial markets. 

Who is holding the bad debt?  In a manner of months we will find out.  Moreover, the huge write down that pension funds will incur will call into question their continued solvability in their present form.

And that's when the shit will hit the fan!!!

Indebted Millennials, having seen their once bright future flushed away, along with tapped out Boomers, struggling to survive on reduced pension benefits, will finally wake up to the fact that most of the cash that could have been used for productive investment has been hoovered up by the top .01%  and now resides offshore beyond their reach.

Money can influence electoral results only as long as the electorate is apathetic.  Fear and anger are great motivators to get ordinary people marching again, and the fallout from the second great crash will do just that.  One hundred years later, a second progressive movement is about to arise in North America, but it will take really tough times to bring it about.

Once it begins to swell, the political discourse will change, not only in the English-speaking countries but globally as well.  Then, at long last, we will be able to speak about the political economy in North America as an important concept, not simply to be dismissed outright as a strange way of thinking. 

Tuesday, April 7, 2015

It’s the Stupid Economy

Back at the end of the previous century, before the advent of browsers and search engines, during the 1992 presidential campaign in the United States, Bill Clinton’s campaign strategist, James Carver, coined the phrase, “The economy, stupid.”  Very quickly, in a manner that George Orwell with his love of politics and the English language would have appreciated, the phrase morphed into its present usage, “It’s the economy, stupid.”

In this formulaic iteration, the noun “economy” is a stand-in for any concept one wishes, like loyalty, climate change, income equality, etc.; and “stupid” is a stand-in for anyone’s name.  It’s a brilliant construction.  Since no one wants to be referred to as stupid, there is an increased acceptance of the initial premise that, in this case, it is the economy that is the important issue.  Subtlety, the barriers of entering into an economic discourse for political reasons are lowered. 

Today, however, it is the stupid economy that it is the problem and the stupid manner in which it is conceptualized.
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Simply put, the tried and true economic measures of growth in the gross domestic product, low unemployment, low interest rates, and record high corporate profits, coupled with six year bull market in financial securities have not brought about a significant increase in the prosperity shared by the vast majority of people in North America.  In other words, what worked in the past is not working very well today.

With good reason, smart money doesn’t flow into the stupid economy, by that I mean the domestic national economy where the entire cycle of economic exchange from the raising of capital to the production and marketing of goods and services to the payment of taxes and dividends takes place within a single nation’s borders.

Indeed, greater profits for those who control North American enterprise are realized in the global economy and are generated by financial transactions, off shore incorporation, and multinational production chains that take advantage of lower production costs elsewhere.  So, if more money can be made outside of the domestic economy where people toil to bring forward goods and services for their compatriots, you would have to be stupid to invest where the return on investment is significantly lower.

According to a Bloomberg Business Report, the untaxed cash for US corporations held abroad keeps building up and few are choosing to bring it home, instead preferring to borrow for any domestic needs.  GE’s $110 billion leads US companies, followed by Microsoft’s $76.4 billion, Pfizer’s $69 billion, Merck & Co.’s $57.1 billion and Apple’s $54.4 billion.  It is estimated that US-based multinational companies have accumulated $2 trillion outside the country.

That’s a staggering amount of money that is not being reinvested back into the domestic economy.  Imagine the effect on the entire population if first these dollars were repatriated and subject to tax, thereby generating the much needed revenues that could be then reinvested in order to renew North America’s rapidly aging infrastructure.  That would create hundreds of thousands of good paying jobs as would the after tax profits if they were then redirected into the capital investments for the further production of tangible goods and services instead of being used for stock buybacks and other non-productive financial means of generating wealth.

Effective government policies could significantly reduce the amount of dollars that are being sucked out of the domestic economy by the corporate and financial sectors; however, that would take the political will of the people who live and toil in the domestic economy, and that’s something that Corporate America aided by the Supreme Court has been successful in circumventing by making the electoral process totally dependent on the ability to raise substantial amounts of money from the corporate and financial sectors, the very sectors that oppose any fundamental change to the manner in which wealth is accumulated.

To make matters worse, it has now become fashionable for our media star economists to say that our economic problems are not being caused by the rapacious greed of North American financial elites.  Instead, these problems arise out of factors endogenous to an economy that is experiencing “secular stagnation”.  Orwell would have fallen off his chair upon hearing such an assertion.

Previously, self-serving interests would invoke potential benefits to the economy if their preferred course of action were adopted.  For example, we should all remember the cant of supply side economic arguments that would have us believe that everyone would be better off by reducing the taxes of the rich, who would then reinvest their new found wealth back into the economy and, in the process, create new ventures with new jobs that would more than make up for the lost tax revenues.  Unfortunately, it was tried, and, as we know, nothing of the sort transpired.

Now, we are being asked to accept the idea the economy is very sick, suffering from secular stagnation (is that like the mumps?), brought on by an aging population, low interest rates, low inflation, and a lack of investment opportunities.  Like getting old, there is nothing that can be done.  We’ll simply have to keep a stiff upper lip and endure the sight of watching the quality of life of the vast majority sink further into decline.

Essentially, there are two economies, one of them is primarily domestic and the other is global.  They operate by different rules, with the players in the global economy getting preferential treatment with regard to taxes, so much so that they are limiting both their operations and investments in the domestic economy to the detriment of the players whose economic activities remain within national borders.  It is the domestic economy that is stagnating, while the multinational corporations and their principle beneficiaries, their shareholders and executive officers, are flourishing as they conduct their business beyond the regulatory reach of nation-states and their governments, a condition that only will be exacerbated by the implementation of Trans-Pacific and Trans-Atlantic trade agreements.

As the election cycles play out in North America over the next eighteen months, candidates will once again roll out their economic action plans for their respective domestic economies in Canada and the United States, and once again the electorate will be duped into thinking that these plans have some potential of making significant change in the lives of ordinary people.

However, without addressing the disparate treatment that multinational corporations and the financial sector receive, capital will be continued to be sucked out of the domestic economy and transferred to offshore accounts to be reinvested in securities and foreign investment projects that boost the economies of other nations and other individuals.

So, we can expect much to be said about the stupid economy that refuses to grow and create jobs in the months ahead and precious little about the dynamics of the global economy that creates vast riches for those who know how to position themselves to capture a portion of its vast revenue streams.


Tuesday, February 24, 2015

Has Canada Become a Post-Democratic Petro State?

Tell me it isn't so Joe.  No can do.  Sadly, over the last 40 years Canada has morphed into a mere shadow of its former self, a nation where prosperity was once shared widely and where hope for the future did not depend on the chance of birth.

If asked what did it mean to be Canadian, most of us would mention something about the creation of our social programs that increased the quality of life for the vast majority of Canadians, the demos.

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Clearly, as we approach the 150th anniversary of our confederation, we have passed the zenith of our development as a caring society.  Neoliberal values have taken hold and, as could be expected, economic inequality has increased, meaning that the rich are doing extremely well while the lower and middle classes struggle to make ends meet.

What happened?

According to Colin Crouch, professor and author of the highly acclaimed,
Post-Democracy, Canada, like other English settler states, made significant democratic gains during the first half of the twentieth century, but has subsequently moved on, not to pre-democratic period of the nineteenth century, but to something different, to a society that has not entirely relinquished the social gains provided by the welfare state, but where the provision of social services has become so modest that they have lost much of their efficacy to address the social ills which gave rise to their creation.

Essentially, the idea of post-democracy helps us describe situations when boredom, frustration and disillusion have settled in after a democratic moment; when powerful minority interests have become far more active than the mass of ordinary people in making the political system work for them; where political elites have learned to manage and manipulate popular demands; and where people have to be persuaded to vote by top-down publicity campaigns.

In Crouch's analysis, democracy is an ideal, something we either move towards or retreat from, which is important because it moves the discussion about the quality of our political institutions out of the simple binary whether we have or don't have democratic institutions.  As well, moving back towards the pre-democratic period does not mean we have come full circle.  We retain some elements of the democratization phase.  What changes is the manner the elites are able to avoid democratic rule.

For Crouch, two societal developments are largely responsible for the move towards post-democracy: the diminution of the importance and number of skilled manual workers and the rise of the global firm.  In short, we no longer live in a society where mass production and mass consumption within national borders bring about shared prosperity.  Instead, wages are now spread across international production chains and the benefits of enterprise accrue disproportionately to executive officers and shareholders.

As a result, those at the top global firm have the resources to bypass what had been the traditional political process of making decisions through the people's elected representatives and lobby with great success for whatever policies they need to add to their wealth. 

Politicians are very eager to respond to their wishes since those with the cash in hand have the means to finance the electoral campaigns that get our politicians elected.  In this symbiotic relationship, the common folk, the demos, are outside the loop and have very little say in matters that affect them.  Their role in politics is simply to respond to the public relations campaigns that have replaced any meaningful discussion concerning real political choices during elections and place their "x" beside the name of the candidate that represents their favored marketed brand, commonly referred to as a political party.

In my opinion, Canada has been in the post-democratic phase for at least thirty years;  corporate interests trump the interests of the people; a media circus has replaced informed political debate; and a disillusioned public, sensing it no longer has much say in what gets done, has lost interest in politics and has to be cajoled to even cast their ballots.

Given this state of affairs, Canada is moving towards becoming a petro state, meaning that although our economy does not rely solely on fossil fuel extraction for the creation of wealth, it is the focus of those global corporate interests that lobby the hardest for favourable government intervention and the focus of our federal government.  In other words, we are moving in that direction.

For instance, the power base of the ruling Conservative Party is the oil producing provinces of Alberta and Saskatchewan, where the Tories hold all but two ridings; our currency has become a petro dollar: its value in lock step with the fluctuations for a barrel of crude oil; Canada withdrew from the Kyoto Accord which would have placed limits on the greenhouse gas emissions, thereby exonerating oil producers for not respecting the limits the Accord placed upon Canada; the government does everything it can to get the pipelines built that would bring oil sands oil to a seaport; in the meantime, unable to overcome resistance from the environmental lobby opposing the construction of the pipelines, oil producers began shipping oil by rail at record levels (a 4000% increase from 2009) which combined with an insufficient oversight of the safety of this method of transport led to the incineration of 47 unsuspecting Canadians in the Lac Megantic derailment disaster.

It is important to note that is the post-democratic state of our political institutions that has allowed Canada to move towards becoming a petro state.  Once political power has been transferred to the political/corporate elites as a result of our archaic electoral practices, the demos just stands by and bears witness to the decisions that have been made in their name but not on their behalf.