First, I have a confession to make. I’m part of the problem. I am a boomer though I fall into the category called the SOL (shit-out-of-luck) boomers, those who are in the second wave that graduated from university after 1981.
On average, if you graduated during the recession of 1981-1982, upon graduation, you stood to earn $25,000 less than the maudits boomers who graduated before, and twenty years later, you probably had earned at least $200,000 less over the same time frame.
As a result, although I benefited from the social investments that made going to university ridiculously cheap and a growing population that turned residential homes into cash cows, I was never in the game of conspicuous consumption because I never had the income that would allow me to even enter into the game.
Nevertheless, I am extremely grateful for the social fabric that was provided for me that allowed me as a working- class kid to get a quality university education, which enabled me to attain an enviable quality of life on the cheap.
So, what’s my beef?
Well, I have a bone to pick with the maudits boomers, the most spoiled generation that ever graced the planet, who are so immersed in their own narcissistic self image that they have no idea what a pathetic legacy they are leaving for future generations.
From a financial perspective, they are ringing up a huge tab and are intending to stick future generations with an unmanageable debt load, and from an environmental perspective, they are pursuing a scorched-earth policy, hell bent on extracting as much fossil fuels from the earth as they can in order to maintain their unsustainable lifestyle as long as they can.
Now, that the chickens of the financial-speculation led, global recession have come home to roost, we are witnessing an inter-generational class war when it comes to the struggle to balance the books and to decide how to distribute the collective wealth.
This is where the economy becomes extremely political and we must be sensitive to the questions of social justice, in particular the question on inter-generational social justice, that underlie the debate over the numbers.
At the heart of the no-tax-increase position of economic and fiscal policy is the fact that the refusal to increase taxes coupled with a reduction of social program expenditures other than healthcare outlays benefits the maudits boomers and the silent generation at the expense of everyone that follows.
Here, the positioning to be prudent managers of the economy – remember the cant before the onset of the latest recession that the fundamentals of the economy were sound and that we would have no deficit – is a ruse to cover the collective greed of a large segment of the population and its intent to screw the rest.
Let’s face up to the facts. The huge increase in the quality of material life for post-war North Americans was due to a unique configuration of variables that will never be repeated: oil was cheap and abundant and the rest of the world lay in ruins while we switched our economic focus from the production of armaments to the production of consumer goods.
The maudits boomers had the extreme good fortune of being born into a generation that, through no effort of their own, afforded them the scale of economic opportunities that no subsequent generation will ever see.
The second fact to keep in mind is that there is no empirical evidence to support the claim that increases to the marginal tax rate will impact negatively on economic growth and, as a result, on government revenues.
The reality is that there is no correlation between tax rates and economic growth among OECD countries. Robust economic growth is possible in high tax rate countries like Sweden and Finland and in low tax rate countries like the US and Japan. In short, tax rates are conditioning not determining factors for economic growth.
So, the refusal to raise taxes and the intent to slash expenditures offset by increases in user fees is tantamount to setting up a social system built by and for the maudits boomers and then slamming the door behind them as they head off into retirement, which for many will be longer than the years they participated in the work force.
What kind of legacy is that?
It seems to me that at the very least boomers should leave behind a state of affairs that is at least as healthy as those that greeted them when they were born and that they enjoyed over the course of their lives.
Measures must be taken, other than offloading our collective problems to future generations, to ensure that we leave our children and our grandchildren a world in which we would want to live in.
Importantly, boomers have the democratic weight at the polls to translate our collective desires into the policy options of our choosing.
Since we are just days away from the tabling of the first post-recession beget, I will put questions concerning environmental stewardship aside and return to them in a later post.
To reduce deficits provincially and federally revenues must increase and expenditures must be controlled in a manner that adheres to the principle of inter-generational social justice.
Looking at the revenue side, the imposition of a financial transaction tax as a means to address structural deficits and accumulated debt holds great promise. Potential revenues are huge and the tax is progressive in nature since those who make the most transactions will pay the most taxes.
Moreover, since it has become readily apparent that risk management towards the economy is more important that fiscal policy focused on growth, the imposition of such a tax benefits everyone because increased economic stability reduces systemic risk.
In absolute terms, the benefits accrue on a progressive gradient: jobs for the working and middle class garner more protection and the rentier class is less apt to experience catastrophic losses when financial markets drop significantly, which now includes those who benefit from pension funds.
Second, relatively painless for those who were fortunate to experience economic conditions that led to unprecedented increases in material wealth, estate taxes should be raised significantly.
Collectively, since it is our generation that has benefited the most from the creation of our generous social programs, we should on our exit pay our fair share to ensure that we do not imperil the capacity of future generations to address their collective challenges.
Think of it as a boomer exit tax. It’s progressive by nature and it can be designed so that it balances our desires to leave a heritage to our individual families with the necessity to protect the common good.
On the expenditure side, let’s not get into the zero-sum game of healthcare versus education. Personally, I find it morally repugnant that we allow healthcare expenditures to take up approximately 50% of provincial budgets (supported by federal transfers), do nothing to bring them under control other than making a lame reference to further privatization, and then demand the younger generation to pay more for their post-secondary education, thereby forcing many of them into becoming wage slaves so they can pay down their individual debt while supporting our generous pensions and healthcare system.
If raising estate taxes is the first sacred cow that needs to be sacrifices, the second is the payment-by-medical act-performed healthcare system.
This system is no longer sustainable and it should be modified so that physicians are salaried employees as they are at the Mayo Clinic and the Cleveland Health Center, two of the leading healthcare institutions in North America.
From a deontological perspective, given the well-documented negative effects of income disparity on public health and the revenues physicians presently enjoy, they would be hard pressed to justify why we should continue to maintain their present levels of remuneration relative to the population at large.
If ever there was a time to think creatively about how we are to deal with our collective challenges, the time is now, especially since we are at the beginning of a demographic transition of which we have no idea of our public institutions capacity to adapt.
What is desperately needed is some exemplary leadership from boomers, so that we can properly assume our roles of stewards for future generations.
Sunday, February 28, 2010
Monday, February 15, 2010
Evidence-based Economics Finally Arrives in Canada
Orthodox economics is based on simplifications that so distort the real world as to make it unrecognisable, yet its basic tenets are credulously repeated on an almost daily basis in national newspapers and on television news. A genuinely evidence-based approach to economic policymaking would not produce a system remotely like the one we have. (Andrew Simms)
Something has changed. No longer are we obliged to follow the dictates of the high and mighty school of orthodox economics. For example, the Canadian Government is actually contemplating changes to the rules governing home loans that would make it more difficult for some prospective home buyers to obtain a mortgage. Instead of putting down 5% of the purchase price, they would be required to put down 10%, and the time period in which the mortgage could be amortized would be shortened.
Two years ago, such talk would have been considered economic heresy. However, since the near collapse of the global financial system and the onset of a global economic recession, regulation is no longer a mortal sin. In fact, it should now be recognized that we have moved out of the economic discourse where the debate concerning less versus more regulation ruled the day, and we have moved into a discourse where the discussion now concerns the effectiveness of the proposed regulation. Pragmatism has triumphed over ideology.
Two years ago, there was precious little talk in the mainstream media of asset bubbles forming and then bursting. That was before the millions of foreclosures and underwater mortgages in the U.S. As a result, it seems only prudent that the Minister of Finance would muse publicly about the possibility of a similar housing bubble taking shape here in Canada. After all, interest rates are at a historic low, the return on debt securities is meagre, and the equity markets are flat. Given this context, residential real estate looks very good. Where else can we find a 50% return on the initial investment upon a successful flip of a residential property?
Yet, as recent experience in the U.S. has shown, an overheated market not only drives up home prices but brings into the market buyers who do not have the capability of meeting their financial obligations if the market goes flat or begins to decline. In short, the growing influx of the Ponzi investor engenders systemic risk within the housing market and possible severe economic fallout if the housing market experiences a sudden and precipitous drop.
So, if we connect the dots with regard to what the Minister of Finance is thinking, we can see that he is actually placing greater value upon stability within the housing sector than on the quick fix to the economy that a real estate bubble would most likely bring about. In other words, in this instance, sustainability trumps rapid economic growth.
Now if we could only get the Finance Minister and the Prime Minister to think systemically about the stability and resilience of the economy within the context of climate change, maybe, just maybe, Canada could regain its cherished international reputation.
Something has changed. No longer are we obliged to follow the dictates of the high and mighty school of orthodox economics. For example, the Canadian Government is actually contemplating changes to the rules governing home loans that would make it more difficult for some prospective home buyers to obtain a mortgage. Instead of putting down 5% of the purchase price, they would be required to put down 10%, and the time period in which the mortgage could be amortized would be shortened.
Two years ago, such talk would have been considered economic heresy. However, since the near collapse of the global financial system and the onset of a global economic recession, regulation is no longer a mortal sin. In fact, it should now be recognized that we have moved out of the economic discourse where the debate concerning less versus more regulation ruled the day, and we have moved into a discourse where the discussion now concerns the effectiveness of the proposed regulation. Pragmatism has triumphed over ideology.
Two years ago, there was precious little talk in the mainstream media of asset bubbles forming and then bursting. That was before the millions of foreclosures and underwater mortgages in the U.S. As a result, it seems only prudent that the Minister of Finance would muse publicly about the possibility of a similar housing bubble taking shape here in Canada. After all, interest rates are at a historic low, the return on debt securities is meagre, and the equity markets are flat. Given this context, residential real estate looks very good. Where else can we find a 50% return on the initial investment upon a successful flip of a residential property?
Yet, as recent experience in the U.S. has shown, an overheated market not only drives up home prices but brings into the market buyers who do not have the capability of meeting their financial obligations if the market goes flat or begins to decline. In short, the growing influx of the Ponzi investor engenders systemic risk within the housing market and possible severe economic fallout if the housing market experiences a sudden and precipitous drop.
So, if we connect the dots with regard to what the Minister of Finance is thinking, we can see that he is actually placing greater value upon stability within the housing sector than on the quick fix to the economy that a real estate bubble would most likely bring about. In other words, in this instance, sustainability trumps rapid economic growth.
Now if we could only get the Finance Minister and the Prime Minister to think systemically about the stability and resilience of the economy within the context of climate change, maybe, just maybe, Canada could regain its cherished international reputation.
Monday, February 1, 2010
Will Deficit Politics Lead to Greater Economic Inequality?
Although the leaders of the two leading federal political parties would have us believe we can address the deficit and the problem of our accumulated debt by growing the economy, the pesky Parliamentary Budget Officer, Kevin Page, has said otherwise convincingly.
In reality, our deficits have become structural, and we face the tough choice of either raising taxes or cutting spending. Certainly, bringing home the troops from Afghanistan will reduce expenditures, but not nearly enough to address the approximately $60 billion hole we have dug for ourselves. If we are to cut expenditures, who will be targeted? Let’s hope it’s not going to be the already disadvantaged.
One thing that distinguishes Canada from the U.S. and the U.K. is that we have less economic inequality because we transfer more wealth from the upper to lower classes. As a result, we have a healthier society for as Richard Wilkinson and Kate Pickett point out in a recent article:
Greater equality improves the quality of life for everyone – not just the poor. Whatever your income or education,living in a more equal society means you will be likely to live longer while being less likely to suffer violence or have a problem with obesity. In turn, your children have a better chance of doing well at school and are less likely to use drugs or to become teenage parents. This is about the quality of life for all of us.
Unequal societies, on the other hand, do worst on child wellbeing and badly on teenage births, imprisonment, drug abuse, trust, obesity, social mobility and
mental¬illness, which engender significant social costs for those who live in poverty and financial costs for those who pay for the social and health programs.
Forget trying to raise the GDP by 3% a year because what we have seen over the last thirty years is that increased economic growth has, in fact, reduced the medium income in Canada, the U.S. and the U.K., which is hard factual evidence that demonstrates that economic inequality is growing.
This should be cause for concern because if we are to reduce expenditures we will have to inevitably reduce demand on our health and social care systems. Looking at the empirical evidence from other OECD countries, we can reduce the burden on the public purse if we reduce the gap between the rich and the poor since most of the social determinants of health are affected negatively by economic inequality, keeping in mind that health-care expenditures represent the largest portion of provincial budgets.
From a global perspective of promoting public health and not sticking future generations with a tab that they will have great difficulty paying, it makes more sense to reduce economic inequality than taking measures to increase economic production.
We should follow Obama’s lead and increase taxes on the rich. As well, we should pass legislation with the objective of reducing executive compensation. Furthermore, there should be a tax on all financial transactions, which could be used for eliminating the deficit and paying down the debt.
Think about it next time you go to an automatic teller and withdraw cash. You are charged $1.75 to make a withdrawal and another $1.75 from your financial institution to release the funds. Imagine the millions of transaction that are made each day and that rather than making billions in profits exclusively for the shareholders of our five major banks, part of this enormous wealth is transferred into a national account benefiting the general population.
We could do the same for the trading of securities, which would protect our real economy from the ravages of financial speculation, real estate transactions, which would make housing more affordable for everyone, and for the exchange of Canadian dollars, which would give us a more stable currency.
Yes, such measures would reduce the income and wealth of the top one percent of revenue earners, and that’s exactly the desired result if we are to have a healthier society and a population that experiences greater well-being.
In reality, our deficits have become structural, and we face the tough choice of either raising taxes or cutting spending. Certainly, bringing home the troops from Afghanistan will reduce expenditures, but not nearly enough to address the approximately $60 billion hole we have dug for ourselves. If we are to cut expenditures, who will be targeted? Let’s hope it’s not going to be the already disadvantaged.
One thing that distinguishes Canada from the U.S. and the U.K. is that we have less economic inequality because we transfer more wealth from the upper to lower classes. As a result, we have a healthier society for as Richard Wilkinson and Kate Pickett point out in a recent article:
Greater equality improves the quality of life for everyone – not just the poor. Whatever your income or education,living in a more equal society means you will be likely to live longer while being less likely to suffer violence or have a problem with obesity. In turn, your children have a better chance of doing well at school and are less likely to use drugs or to become teenage parents. This is about the quality of life for all of us.
Unequal societies, on the other hand, do worst on child wellbeing and badly on teenage births, imprisonment, drug abuse, trust, obesity, social mobility and
mental¬illness, which engender significant social costs for those who live in poverty and financial costs for those who pay for the social and health programs.
Forget trying to raise the GDP by 3% a year because what we have seen over the last thirty years is that increased economic growth has, in fact, reduced the medium income in Canada, the U.S. and the U.K., which is hard factual evidence that demonstrates that economic inequality is growing.
This should be cause for concern because if we are to reduce expenditures we will have to inevitably reduce demand on our health and social care systems. Looking at the empirical evidence from other OECD countries, we can reduce the burden on the public purse if we reduce the gap between the rich and the poor since most of the social determinants of health are affected negatively by economic inequality, keeping in mind that health-care expenditures represent the largest portion of provincial budgets.
From a global perspective of promoting public health and not sticking future generations with a tab that they will have great difficulty paying, it makes more sense to reduce economic inequality than taking measures to increase economic production.
We should follow Obama’s lead and increase taxes on the rich. As well, we should pass legislation with the objective of reducing executive compensation. Furthermore, there should be a tax on all financial transactions, which could be used for eliminating the deficit and paying down the debt.
Think about it next time you go to an automatic teller and withdraw cash. You are charged $1.75 to make a withdrawal and another $1.75 from your financial institution to release the funds. Imagine the millions of transaction that are made each day and that rather than making billions in profits exclusively for the shareholders of our five major banks, part of this enormous wealth is transferred into a national account benefiting the general population.
We could do the same for the trading of securities, which would protect our real economy from the ravages of financial speculation, real estate transactions, which would make housing more affordable for everyone, and for the exchange of Canadian dollars, which would give us a more stable currency.
Yes, such measures would reduce the income and wealth of the top one percent of revenue earners, and that’s exactly the desired result if we are to have a healthier society and a population that experiences greater well-being.
Saturday, January 30, 2010
Canada is in Dire Need of a Constitutional Convention
Canada is in dire need of a constitutional convention. Looking southward, so does the United States. In the U.S. and in Canada, the living find themselves shackled to a past that bears little resemblance to the present. So much so, it now appears that many of the fundamental guiding principles informing the respective constitutional documents are seriously out of date such that the interpretation and application of these principles by the highest Courts of the land are leading to bizarre decisions that preserve and promote the capacity of a small elite to thwart democratic rule.
The Supreme Court of Canada in respecting the constitutional division of powers between the judiciary and the executive branch of government rendered a decision in the Omar Khadr case in which a violation of the most central element in our Charter of Rights and Freedoms, the right to life, liberty and security of the person as articulated in Section 7 of the Charter is trumped by the feudal right of the Prime Minister’s royal prerogative over foreign affairs, which includes his right to unilaterally declare war.
In other words, although Mr. Khadr’s legal rights have been clearly violated, the Prime Minister is not under legal obligation to provide an effective remedy like repatriation to address this flagrant violation of a Canadian citizen’s rights in which the Canadian Government actively participated. In this instance, there is a fundamental flaw at the heart of our constitutional law.
What makes this result even less palatable is the fact that the Prime Minister has utilized another of his royal prerogatives to prorogue Parliament, effectively suspending democratic debate concerning this repugnant turn of events. As a result, democratic dissent cannot be presently expressed in the institution to which the Prime Minister is accountable. Consequently, Canadians through their elected representatives are unable to demand that the Prime Minister justify his refusal to intercede on behalf of one of their fellow citizens.
With a similar disregard for the principles and modern practice of democracy, the US Supreme Court interpreted the Bill of Rights’ first amendment stipulation that Congress shall make no law abridging the freedom of speech to include the right of corporations to spend without limits during electoral campaigns. Given the financial capacity of the corporate sector to influence electoral results, the Court effectively put into place a path in which democratic rule gives way to corporate rule in the United States.
In summary, the Court empowers the corporate sector by use a conception of freedom from an 18th century text to escape from the control of the people and their democratic institutions that grant corporate charters. In exercising this right to freedom of speech, which is fortunately constrained in Canada, corporations, including those offshore, will gain final parasitic control over the American system of governance.
Faced with the reality of having their basic democratic rights superseded as a result of the application of feudal practices, it is time for Canadians to exercise their right to be governed by laws that reflect the reality of their generation and not to be enslaved by the deference to the reality of an out-dated past. We are no longer a British Colony. The ratification of our Charter of Rights and Freedoms brought about our legal independence. We are free from British rule.
To become a modern democracy, we need a modern constitution, one that recognizes basic democratic principles and puts them into practice in the manner that our elected assemblies function. It is time to convene a constitutional convention in order to rewrite that part of our constitution that is derived from the British North America Act.
As a people, we owe it to ourselves and to future generations to create a system of governance suited to the reality in which we live and to which we give our consent until that time arrives when a rewritten constitution will be again subject to further major change as the society evolves. In this way, Canada’s Constitution will become a living document that reflects the desires of Canadians to live collectively guided by their shared values.
In convening a constitutional convention, Canadians should follow the example of the Scots who, in their desire to be ruled by Scottish law rather than English law, initiated a claim of right, which eventually led to the devolution power from Westminster and the creation of the Scottish Parliament.
The Supreme Court of Canada in respecting the constitutional division of powers between the judiciary and the executive branch of government rendered a decision in the Omar Khadr case in which a violation of the most central element in our Charter of Rights and Freedoms, the right to life, liberty and security of the person as articulated in Section 7 of the Charter is trumped by the feudal right of the Prime Minister’s royal prerogative over foreign affairs, which includes his right to unilaterally declare war.
In other words, although Mr. Khadr’s legal rights have been clearly violated, the Prime Minister is not under legal obligation to provide an effective remedy like repatriation to address this flagrant violation of a Canadian citizen’s rights in which the Canadian Government actively participated. In this instance, there is a fundamental flaw at the heart of our constitutional law.
What makes this result even less palatable is the fact that the Prime Minister has utilized another of his royal prerogatives to prorogue Parliament, effectively suspending democratic debate concerning this repugnant turn of events. As a result, democratic dissent cannot be presently expressed in the institution to which the Prime Minister is accountable. Consequently, Canadians through their elected representatives are unable to demand that the Prime Minister justify his refusal to intercede on behalf of one of their fellow citizens.
With a similar disregard for the principles and modern practice of democracy, the US Supreme Court interpreted the Bill of Rights’ first amendment stipulation that Congress shall make no law abridging the freedom of speech to include the right of corporations to spend without limits during electoral campaigns. Given the financial capacity of the corporate sector to influence electoral results, the Court effectively put into place a path in which democratic rule gives way to corporate rule in the United States.
In summary, the Court empowers the corporate sector by use a conception of freedom from an 18th century text to escape from the control of the people and their democratic institutions that grant corporate charters. In exercising this right to freedom of speech, which is fortunately constrained in Canada, corporations, including those offshore, will gain final parasitic control over the American system of governance.
Faced with the reality of having their basic democratic rights superseded as a result of the application of feudal practices, it is time for Canadians to exercise their right to be governed by laws that reflect the reality of their generation and not to be enslaved by the deference to the reality of an out-dated past. We are no longer a British Colony. The ratification of our Charter of Rights and Freedoms brought about our legal independence. We are free from British rule.
To become a modern democracy, we need a modern constitution, one that recognizes basic democratic principles and puts them into practice in the manner that our elected assemblies function. It is time to convene a constitutional convention in order to rewrite that part of our constitution that is derived from the British North America Act.
As a people, we owe it to ourselves and to future generations to create a system of governance suited to the reality in which we live and to which we give our consent until that time arrives when a rewritten constitution will be again subject to further major change as the society evolves. In this way, Canada’s Constitution will become a living document that reflects the desires of Canadians to live collectively guided by their shared values.
In convening a constitutional convention, Canadians should follow the example of the Scots who, in their desire to be ruled by Scottish law rather than English law, initiated a claim of right, which eventually led to the devolution power from Westminster and the creation of the Scottish Parliament.
Sunday, January 17, 2010
The Sovereignty of Privilege versus the Democratic Rights of the People
The evolution of democracy in the Anglo-American realm has not yet reached its end state. Here in Canada, as well in the US and the UK, the rule of the majority has not been attained.
In fact, Canadians elect a government where the leader of the political party that has won the greatest number of electoral fiefdoms assumes the privileges and prerogatives of the sovereign. The prorogation of Parliament is part of the prerogatives bestowed by Canada’s Sovereign Monarch, Queen Elizabeth, to the Prime Minister through the Queen’s representative in Canada, the Governor General. As a result, the Prime Minister can shut down Parliament as he sees fit, and this all well within the rule of law, even if the Prime Minister reigns with only a minority government.
Sounds like we are still stuck in our feudal past to me.
Historically, the evolution of democracy in the English-speaking world has been a gradual transition from the power of privilege towards the democratic rights of the people, and this has largely played itself out through the evolution of the electoral system.
Essentially, the right to vote was extended to the white, Christian, landowners as a counterbalance to the hereditary privileges of the sovereign monarch, but throughout its evolution the right to vote has been used first as means to protect the privileges of a group of landlords against the powers of royalty and then later against the claims of the masses, the demos.
At the heart of this political struggle is the preservation and slow modification of the dominant social paradigm and the privileges of those who profit the most from the political system. Within the realm of human rights, it is hard to imagine today the legitimacy of a political system that did not grant the franchise to women, men without property, or members of ethnic and religious minorities. However, such were the conditions to be found in Canada at the time of confederation.
Over time, the franchise was extended to include the entire adult population, and this evolution saw with it a greater redistribution of the nation’s wealth in the way of transfers of revenue to fund social programs targeting the less fortunate. Yet, if we look elsewhere in the developed world, one cannot help but notice the those countries that continue to use the electoral systems using the Britannic method of first-past-the-post are those countries (Canada, US, England, Australia) that continue to have greater levels of inequality within their respective societies.
The reason for this glaring anomaly is the territorial bias built into the electoral system that allows a privileged class to usurp political power from the majority in order to maintain the privileged position of not only their financial status but also the manner the political economy is organized.
Since feudal practice has given way to democratic principles in theory, in practice the struggle for power shifted to the control of the rules of the electoral game. Essentially, in the Anglo-American realm, there exists a bias toward the landlord, the lords of the land, which is maintained by not aggregating all of the votes when they are cast regardless of where they are cast and by drawing up the electoral map to maximise the number of favourable fiefdoms that can be extracted from the territory. In other words, representation is skewed towards those who have the greater means to wage an electoral campaign and the values that they hold at the expense of those of more limited means and their corresponding values – private interest trumps the common good.
No where is this more evident than in the inability of either Canada or the United States to adopt effective legislation to combat climate change. In both countries, the majority of citizens desire effective legislation to be enacted. However, the territorial bias of the political systems will not allow the private interest of those who desire to amass as much wealth as they can at the expense of the environment to be overturned.
In Canada, the parliamentary system allows for a minority to usurp the power of the majority by transferring political power to the party that wins the greatest of electoral districts. In practice, neither of the two principal parties can expect to win this contest if it promises action to fight climate change since private interest will devote its considerable resources to counter any serious attempt to enact environmental legislation that would somehow limit economic growth. What makes this situation completely at odds with democratic principles is that the will of the majority can be overturned by even a minority government.
In the US, the will of the majority is thwarted by the disproportional power given to the smaller states, each state has two senators regardless of its population, and the supra majority (60%) required to adopt legislation. For example, it takes 60 votes in the Senate to break a filibuster on controversial legislation, and 41 votes is in effect a blocking minority. In fact, states that together hold about 12 percent of the US population can provide that many Senate votes. So, if you are thinking that we can expect to see effective climate change legislation to be adopted in the US this year, think again.
In summary, the territorial bias that grants representation to those who control a territory at the expense of its inhabitants renders both systems profoundly undemocratic.
Yet, representation should not be qualified by whether one’s vote belongs to the winning side. Each and every vote should be given relative equal weight regardless of where it is cast. However, the first-past-the-post voting method does not allow this to occur. It was conceived to transfer to transfer the sovereignty from the masses to the most powerful. If the demos wants to assert its legitimate claim to political power, it must force the political class to change the electoral laws. Otherwise, a privileged few will continue to rule.
In fact, Canadians elect a government where the leader of the political party that has won the greatest number of electoral fiefdoms assumes the privileges and prerogatives of the sovereign. The prorogation of Parliament is part of the prerogatives bestowed by Canada’s Sovereign Monarch, Queen Elizabeth, to the Prime Minister through the Queen’s representative in Canada, the Governor General. As a result, the Prime Minister can shut down Parliament as he sees fit, and this all well within the rule of law, even if the Prime Minister reigns with only a minority government.
Sounds like we are still stuck in our feudal past to me.
Historically, the evolution of democracy in the English-speaking world has been a gradual transition from the power of privilege towards the democratic rights of the people, and this has largely played itself out through the evolution of the electoral system.
Essentially, the right to vote was extended to the white, Christian, landowners as a counterbalance to the hereditary privileges of the sovereign monarch, but throughout its evolution the right to vote has been used first as means to protect the privileges of a group of landlords against the powers of royalty and then later against the claims of the masses, the demos.
At the heart of this political struggle is the preservation and slow modification of the dominant social paradigm and the privileges of those who profit the most from the political system. Within the realm of human rights, it is hard to imagine today the legitimacy of a political system that did not grant the franchise to women, men without property, or members of ethnic and religious minorities. However, such were the conditions to be found in Canada at the time of confederation.
Over time, the franchise was extended to include the entire adult population, and this evolution saw with it a greater redistribution of the nation’s wealth in the way of transfers of revenue to fund social programs targeting the less fortunate. Yet, if we look elsewhere in the developed world, one cannot help but notice the those countries that continue to use the electoral systems using the Britannic method of first-past-the-post are those countries (Canada, US, England, Australia) that continue to have greater levels of inequality within their respective societies.
The reason for this glaring anomaly is the territorial bias built into the electoral system that allows a privileged class to usurp political power from the majority in order to maintain the privileged position of not only their financial status but also the manner the political economy is organized.
Since feudal practice has given way to democratic principles in theory, in practice the struggle for power shifted to the control of the rules of the electoral game. Essentially, in the Anglo-American realm, there exists a bias toward the landlord, the lords of the land, which is maintained by not aggregating all of the votes when they are cast regardless of where they are cast and by drawing up the electoral map to maximise the number of favourable fiefdoms that can be extracted from the territory. In other words, representation is skewed towards those who have the greater means to wage an electoral campaign and the values that they hold at the expense of those of more limited means and their corresponding values – private interest trumps the common good.
No where is this more evident than in the inability of either Canada or the United States to adopt effective legislation to combat climate change. In both countries, the majority of citizens desire effective legislation to be enacted. However, the territorial bias of the political systems will not allow the private interest of those who desire to amass as much wealth as they can at the expense of the environment to be overturned.
In Canada, the parliamentary system allows for a minority to usurp the power of the majority by transferring political power to the party that wins the greatest of electoral districts. In practice, neither of the two principal parties can expect to win this contest if it promises action to fight climate change since private interest will devote its considerable resources to counter any serious attempt to enact environmental legislation that would somehow limit economic growth. What makes this situation completely at odds with democratic principles is that the will of the majority can be overturned by even a minority government.
In the US, the will of the majority is thwarted by the disproportional power given to the smaller states, each state has two senators regardless of its population, and the supra majority (60%) required to adopt legislation. For example, it takes 60 votes in the Senate to break a filibuster on controversial legislation, and 41 votes is in effect a blocking minority. In fact, states that together hold about 12 percent of the US population can provide that many Senate votes. So, if you are thinking that we can expect to see effective climate change legislation to be adopted in the US this year, think again.
In summary, the territorial bias that grants representation to those who control a territory at the expense of its inhabitants renders both systems profoundly undemocratic.
Yet, representation should not be qualified by whether one’s vote belongs to the winning side. Each and every vote should be given relative equal weight regardless of where it is cast. However, the first-past-the-post voting method does not allow this to occur. It was conceived to transfer to transfer the sovereignty from the masses to the most powerful. If the demos wants to assert its legitimate claim to political power, it must force the political class to change the electoral laws. Otherwise, a privileged few will continue to rule.
Thursday, January 14, 2010
Recalibrate the Economy: Abandon the Obsession with GDP and Get Back to Work
Indeed, with the issue of climate change becoming ever more urgent and a growing recognition that economic growth does not make people any happier, there are growing calls for growth and the endless consumption of ever more material goods to be downgraded as political goals.
According to the Prime Minister, proroguing Parliament would allow for the recalibration of the economy. It seems that we have one zombie idea that refuses to die giving justification for an equally zombie-like political manoeuvre.
Now that the lost decade of the zeroes is over, we should be moving away from the ideological cant that got us into such a mess. Notwithstanding that continued economic growth is incompatible with a sustainable environment and that once a certain level of material well-being has been reached, as is the case with Canada, increased material wealth does not translate into greater happiness for the population, thinking we can just grow our way back to economic health is a remnant of an outdated economic approach.
In fact, the last decade saw robust economic growth as measured by GDP in North America despite the onset of the recession in the last quarter of 2008. However, there was no increase in the number of private sector jobs in the US despite a growing population; the median income dropped; the Standard&Poors 500 Stock Index had a negative return over the decade, and this is before inflation is factored in; there were more than a million mortgage defaults during the last year; two of the big three car makers went bankrupt; private and public pension funds encountered huge losses; and Canadian and US governments ran the largest deficits in their history.
Its time we exorcise the idea that GDP growth alone brings about increased prosperity from the land of the dead economists and move on to political-economic goals that can be demonstrated to lead to an increased well-being of the general population and not simply the top 1% of revenue earners.
It should also be clear that the globalization of world’s economies has led to previously unseen levels of volatility, where no nation controls its economic levers. What happens in one part of the world can have significant impact on another with little or no warning.
Given such conditions, the pursuit of economic growth as an objective in itself should be downgraded in favour of policies that promote economic stability and resilience. Consequently, increases in the GDP that are a result of increased levels in public and private debt, or the substitution of economic activity in the financial sector to replace lost activity in the manufacturing sector due to the offshoring of manufacturing jobs should not be taken as indicators of better economic performance no matter what our politicians would have us believe.
Certainly, we should be concerned with what the Parliamentary Budget Officer, Kevin Page, has identified as Canada’s structural deficit. According to Mr. Page, economic growth without an increase in existing tax rates or a significant decrease in expenditures will not generate sufficient revenues to eliminate the deficit.
I for one would like to see the imposition of a financial transaction tax and a capital gains tax tied to the length of time one holds a security as possible measures to generate new revenues and to bring stability to the real economy.
However, for this type of political debate to take place in a meaningful way Parliament must be in session, for it is here where the people’s elected representatives can legitimately work to tackle the problem of structural deficits head on. Instead, with Parliament prorogued, we can expect to see a show and sell tour leading to the tabling of a budget, with a strong possibility that we will plunged into yet another general election, which will resolve nothing considering how votes are distributed regionally.
Constitutional convention anyone?
According to the Prime Minister, proroguing Parliament would allow for the recalibration of the economy. It seems that we have one zombie idea that refuses to die giving justification for an equally zombie-like political manoeuvre.
Now that the lost decade of the zeroes is over, we should be moving away from the ideological cant that got us into such a mess. Notwithstanding that continued economic growth is incompatible with a sustainable environment and that once a certain level of material well-being has been reached, as is the case with Canada, increased material wealth does not translate into greater happiness for the population, thinking we can just grow our way back to economic health is a remnant of an outdated economic approach.
In fact, the last decade saw robust economic growth as measured by GDP in North America despite the onset of the recession in the last quarter of 2008. However, there was no increase in the number of private sector jobs in the US despite a growing population; the median income dropped; the Standard&Poors 500 Stock Index had a negative return over the decade, and this is before inflation is factored in; there were more than a million mortgage defaults during the last year; two of the big three car makers went bankrupt; private and public pension funds encountered huge losses; and Canadian and US governments ran the largest deficits in their history.
Its time we exorcise the idea that GDP growth alone brings about increased prosperity from the land of the dead economists and move on to political-economic goals that can be demonstrated to lead to an increased well-being of the general population and not simply the top 1% of revenue earners.
It should also be clear that the globalization of world’s economies has led to previously unseen levels of volatility, where no nation controls its economic levers. What happens in one part of the world can have significant impact on another with little or no warning.
Given such conditions, the pursuit of economic growth as an objective in itself should be downgraded in favour of policies that promote economic stability and resilience. Consequently, increases in the GDP that are a result of increased levels in public and private debt, or the substitution of economic activity in the financial sector to replace lost activity in the manufacturing sector due to the offshoring of manufacturing jobs should not be taken as indicators of better economic performance no matter what our politicians would have us believe.
Certainly, we should be concerned with what the Parliamentary Budget Officer, Kevin Page, has identified as Canada’s structural deficit. According to Mr. Page, economic growth without an increase in existing tax rates or a significant decrease in expenditures will not generate sufficient revenues to eliminate the deficit.
I for one would like to see the imposition of a financial transaction tax and a capital gains tax tied to the length of time one holds a security as possible measures to generate new revenues and to bring stability to the real economy.
However, for this type of political debate to take place in a meaningful way Parliament must be in session, for it is here where the people’s elected representatives can legitimately work to tackle the problem of structural deficits head on. Instead, with Parliament prorogued, we can expect to see a show and sell tour leading to the tabling of a budget, with a strong possibility that we will plunged into yet another general election, which will resolve nothing considering how votes are distributed regionally.
Constitutional convention anyone?
Sunday, January 10, 2010
Only the Courts Can Bring an End to the Regime of the Strongman in Canada
In a previous post, I put forward the idea that Canada’s system of governance is simply a more sophisticated version of the rule of the strongman to be found in medieval Britain. In short, the winner-take-all format of elections in Canada, embodied by the first-past-the-post method, puts aside any notion of the democratic governance in favour of the rule of those who can muster the necessary resources to win the most territorial fiefdoms (electoral districts). In other words, the electoral system’s bias toward territorial representation at the expense of the fundamental democratic principle that all votes should count and count equally allows a well-heeled minority to usurp the power of the majority.
During the last decade, the number of citizens who have come to realize that our present system is fundamentally flawed grew exponentially. Indeed, there were four referendums, two in B.C., one in Ontario and one in P.E.I. that were organized around the question of changing the voting system. Importantly, each of the referendums was set up in a fashion to ensure that reform would not come about. Essentially, the ballot question was reduced to, "is the suggested model the way to change the system."
Our politicians know all too well that it is much easier to gain a majority by uniting the opponents to a single option than to convince a majority of its merits. As a result, this type of referendum has the effect of saying no to a particular manner of solving the problem, but leaves in place the set of conditions that gave rise to the referendum in the first place, which is exactly what the politicians who arranged these bogus forms of public consultation desired.
This desire to perpetuate the status quo arises from the way in which the spoils of electoral victory are to be divided in the present system. True to our medieval past, the control of the public purse is perhaps the easiest way to personal profit. Our political system is rife with patronage in its various forms: appointments, contracts, tax benefits, and favourable legislative intervention, to mention just a few.
When a small minority controls the public purse, the spoils are divided amongst fewer supporters, which create great institutional incentives in keeping the system in place. Indeed, if the majority were to gain control, the financial pie would no doubt be distributed more equitably, but the portion size for the well-connected would be reduced. Given the choice between having a more efficient, equitable, and effective government sensitive to the well-being of the general population and having an inefficient, inequitable, and ineffective government that rewards the chosen few handsomely, it should not come as a surprise that the latter wins the day.
The other thing to keep in mind is that changing the electoral system from within the existing system is practically impossible. The political class, supported by the business sector and the media, enjoys an institutional lock on political power.
Essentially, the electoral system reduces effective voting to choices between two government options, the government of the day or the opposition. Other voting options do exist but they do not lead to any qualitative change of the distribution of power. Thus, many voters who would otherwise support a third option are forced to support either one of the warring factions and have their vote count or vote for their authentic choice and have their votes rendered completely ineffective. Keep in mind that after 143 years of forming federal governments in Canada, only two clans have been successful, the Conservatives and the Liberals.
Faced with the prospect of creating a more equitable electoral system that would allow other ideological options to participate in the exercise of political power – which would break the monopolistic control of the patronage machine that the ruling party enjoys – and staying with the status quo – which guarantees periodic control through alternating roles of forming the government or the opposition – it should not also come as a surprise that despite the obvious flaws inherent to the electoral system the ruling tandem is not inclined to change the system.
It is often said that the prospect of changing the system places those who are elected by it in a conflict of interest since they are the ones who profit the most. In other words, the fervour to make qualitative change is inversely proportional to the proximity to power. The closer you are, the less you are interested in changing the system.
If the question of how we are to govern ourselves were simply a question of political interest, the prospects of getting out from under the thumb of the strongman regime would be very bleak. Fortunately, with the adoption of the Charter of Rights, the question also carries with it matters of principle. In particular, the formation of a provincial or federal government must adhere to the fundamental principles of democracy and these principles cannot be put aside for reasons of political expediency. Moreover, in Canada, parliament is no longer supreme. Statutory law is subject to judicial review, and if legislation is found to contradict the values enshrined in the Charter, the Courts can render the offending legislation null and void.
At first glance, it would appear that the first-past-the-post does not conform to the substantive equality guarantees of the Charter; however, it will be up to the Courts to decide, most likely the Supreme Court.
With regard to section 3, the right to vote, the Supreme Court has defined this right as the right of effective representation and the right to participate meaningfully in the electoral process. In both instances, first-past-the-post discriminates against the right to vote for certain individuals.
Regarding effective representation, the formula used to turn votes into seats favours the political parties which offer the electorate the possibility of forming a government. Since majority governments are most often formed with less support than 50% of the electorate, it stands to reason that the voting power of some groups is being unduly diluted. As well, the system awards the power of majority to a minority, sometimes the party that did not garner the most votes, thereby undermining the rational connection between the means and the ends of the electoral legislation.
Regarding meaningful participation, the electoral system puts into place significant disincentives to vote for third parties. In fact, legislation that has the effect of reducing the number of votes that candidates from certain political parties would otherwise receive has already deemed to be the antithesis of the values of a free and democratic society and was determined to be unconstitutional. What remains to be done is to place the question of the constitutionality of the present voting system before the Courts.
In March of 2004, four Quebec residents deposed a motion at the Quebec Superior Court to have Quebec’s use of the first-past-the-post method to be declared unconstitutional. Having passed the test of admissibility, the case went to trial in December, 2008. Unfortunately, the trial judge did not rule in the plaintiffs favour, but he did so without commenting on any of the expert testimony or historic evidence that the plaintiffs brought to the trial. As a result, the case will go to appeal in December, 2010. We can anticipate that one or the other side will appeal the pending decision, which will eventually place this historic case under the purview of the Supreme Court.
Certainly, having the present voting system declared null and void would have major consequences for the manner in which we are governed. It should be pointed out that having first-past-the-post declared unconstitutional does not necessarily mean that a proportional voting system would replace it. Legislatures may opt for a different form of majoritarian rule brought on by the alternative vote or multiple-round voting.
That being said, it has yet to occur in public consultations in Ontario, British Columbia, and Quebec that significant interest was expressed for such alternatives. Importantly, during the process leading up to the adoption of a new voting system proponents of control and domination voting systems would have to play on an even playing field with the proponents of proportional voting systems, no supra majority requirement would impede the implementation of a new system, and the status quo will have eliminated as the default alternative. Within this context, it could be expected that the regime of the strongman would finally come to end in Canada.
If you are interested in learning more or in supporting the case, you can drop me an e-mail at bgibb17@yahoo.ca.
During the last decade, the number of citizens who have come to realize that our present system is fundamentally flawed grew exponentially. Indeed, there were four referendums, two in B.C., one in Ontario and one in P.E.I. that were organized around the question of changing the voting system. Importantly, each of the referendums was set up in a fashion to ensure that reform would not come about. Essentially, the ballot question was reduced to, "is the suggested model the way to change the system."
Our politicians know all too well that it is much easier to gain a majority by uniting the opponents to a single option than to convince a majority of its merits. As a result, this type of referendum has the effect of saying no to a particular manner of solving the problem, but leaves in place the set of conditions that gave rise to the referendum in the first place, which is exactly what the politicians who arranged these bogus forms of public consultation desired.
This desire to perpetuate the status quo arises from the way in which the spoils of electoral victory are to be divided in the present system. True to our medieval past, the control of the public purse is perhaps the easiest way to personal profit. Our political system is rife with patronage in its various forms: appointments, contracts, tax benefits, and favourable legislative intervention, to mention just a few.
When a small minority controls the public purse, the spoils are divided amongst fewer supporters, which create great institutional incentives in keeping the system in place. Indeed, if the majority were to gain control, the financial pie would no doubt be distributed more equitably, but the portion size for the well-connected would be reduced. Given the choice between having a more efficient, equitable, and effective government sensitive to the well-being of the general population and having an inefficient, inequitable, and ineffective government that rewards the chosen few handsomely, it should not come as a surprise that the latter wins the day.
The other thing to keep in mind is that changing the electoral system from within the existing system is practically impossible. The political class, supported by the business sector and the media, enjoys an institutional lock on political power.
Essentially, the electoral system reduces effective voting to choices between two government options, the government of the day or the opposition. Other voting options do exist but they do not lead to any qualitative change of the distribution of power. Thus, many voters who would otherwise support a third option are forced to support either one of the warring factions and have their vote count or vote for their authentic choice and have their votes rendered completely ineffective. Keep in mind that after 143 years of forming federal governments in Canada, only two clans have been successful, the Conservatives and the Liberals.
Faced with the prospect of creating a more equitable electoral system that would allow other ideological options to participate in the exercise of political power – which would break the monopolistic control of the patronage machine that the ruling party enjoys – and staying with the status quo – which guarantees periodic control through alternating roles of forming the government or the opposition – it should not also come as a surprise that despite the obvious flaws inherent to the electoral system the ruling tandem is not inclined to change the system.
It is often said that the prospect of changing the system places those who are elected by it in a conflict of interest since they are the ones who profit the most. In other words, the fervour to make qualitative change is inversely proportional to the proximity to power. The closer you are, the less you are interested in changing the system.
If the question of how we are to govern ourselves were simply a question of political interest, the prospects of getting out from under the thumb of the strongman regime would be very bleak. Fortunately, with the adoption of the Charter of Rights, the question also carries with it matters of principle. In particular, the formation of a provincial or federal government must adhere to the fundamental principles of democracy and these principles cannot be put aside for reasons of political expediency. Moreover, in Canada, parliament is no longer supreme. Statutory law is subject to judicial review, and if legislation is found to contradict the values enshrined in the Charter, the Courts can render the offending legislation null and void.
At first glance, it would appear that the first-past-the-post does not conform to the substantive equality guarantees of the Charter; however, it will be up to the Courts to decide, most likely the Supreme Court.
With regard to section 3, the right to vote, the Supreme Court has defined this right as the right of effective representation and the right to participate meaningfully in the electoral process. In both instances, first-past-the-post discriminates against the right to vote for certain individuals.
Regarding effective representation, the formula used to turn votes into seats favours the political parties which offer the electorate the possibility of forming a government. Since majority governments are most often formed with less support than 50% of the electorate, it stands to reason that the voting power of some groups is being unduly diluted. As well, the system awards the power of majority to a minority, sometimes the party that did not garner the most votes, thereby undermining the rational connection between the means and the ends of the electoral legislation.
Regarding meaningful participation, the electoral system puts into place significant disincentives to vote for third parties. In fact, legislation that has the effect of reducing the number of votes that candidates from certain political parties would otherwise receive has already deemed to be the antithesis of the values of a free and democratic society and was determined to be unconstitutional. What remains to be done is to place the question of the constitutionality of the present voting system before the Courts.
In March of 2004, four Quebec residents deposed a motion at the Quebec Superior Court to have Quebec’s use of the first-past-the-post method to be declared unconstitutional. Having passed the test of admissibility, the case went to trial in December, 2008. Unfortunately, the trial judge did not rule in the plaintiffs favour, but he did so without commenting on any of the expert testimony or historic evidence that the plaintiffs brought to the trial. As a result, the case will go to appeal in December, 2010. We can anticipate that one or the other side will appeal the pending decision, which will eventually place this historic case under the purview of the Supreme Court.
Certainly, having the present voting system declared null and void would have major consequences for the manner in which we are governed. It should be pointed out that having first-past-the-post declared unconstitutional does not necessarily mean that a proportional voting system would replace it. Legislatures may opt for a different form of majoritarian rule brought on by the alternative vote or multiple-round voting.
That being said, it has yet to occur in public consultations in Ontario, British Columbia, and Quebec that significant interest was expressed for such alternatives. Importantly, during the process leading up to the adoption of a new voting system proponents of control and domination voting systems would have to play on an even playing field with the proponents of proportional voting systems, no supra majority requirement would impede the implementation of a new system, and the status quo will have eliminated as the default alternative. Within this context, it could be expected that the regime of the strongman would finally come to end in Canada.
If you are interested in learning more or in supporting the case, you can drop me an e-mail at bgibb17@yahoo.ca.
Subscribe to:
Posts (Atom)