Get News & Views Updates
Most Popular This Week
Popular content
Today's Top News
The Harper Government and Republican Economics
The Harper Conservatives model their economic policies on beliefs held dear by American Republicans: just lower taxes, and reduce government, and business will create the wealth.
With this approach, not only is income becoming less equal as the OECD just noted, Canadians and Americans are not becoming wealthier. The "give business a tax break" and the "let the invisible hand of the market do the rest" policies are not improving life for Canadians or Americans.
As creation of real full-time jobs dries up, and precarious employment increases, more Canadians and Americans drop out of the fabled middle class each year. The loss of well-paying manufacturing jobs has seen to that, along with union busting, and attacks on minimum wages, and unemployment insurance.
The increase in the percentage of women in the paid labour force since 1980 has been the means by which some Canadian and American families have held on to a standard of living that used to guaranteed by one unionized manufacturing wage.
The major corporations who dominate the world economy have been shifting production off-shore for three decades, replacing relatively well-paid employees in the U.S., and Canada with low-paid employees in Asia, and other low-wage jurisdictions. Low wages once meant off-shore incomes insufficient to absorb offshore production, leading to sluggish business conditions. But lower cost goods were welcomed in North America where chronic high unemployment, and low wages reduced family purchasing power.
The change is that the U.S.-based corporations that dominate both the Canadian and the American economies now focus on sales growth in Asian consumer markets. The idea that goods produced abroad in low-wage markets would have to be sold in North American or European markets has been dead for some time. Corporations are making new profits as a result.
The industrial corporations getting Conservative tax breaks in Canada are not producing here, or even focusing on serving a Canadian market they see shrinking.
In the last decade the industrial policies developed by China, and India, in particular are leading to the emergence of a new middle class in those countries. When one person in one thousand joins the consuming class, in those two countries, they replace the equivalent of 2.5 million people losing their middle-class status in the U.S. and Canada.
China has a population of 1.3 billion, India has a population of 1.2 billion. Over a number of years, a one per cent overall increase in workers from each country moving into the middle class, adds 25 million new customers for the major corporations that dominate world trade and investment. Compare that with the about 150 million Americans in the labour force.
For China and India alone, a combined one per cent increase in the number of middle class consumers is a higher number of people than the official populations of the 10 largest cities in the U.S. combined. Current estimates suggest that India could go from having five per cent of its population as middle class to 40 per cent in two decades. It is suggested China could reach 40 per cent by 2025.
AS U.S. and Canadian families lose ground, household debt is increasing in both countries. The capacity to earn income is growing slower than consumer debt, in part because of excess costs of credit card debt, and in part because of negative wage growth.
Families go into debt to make ends meet, and then watch debt grow. The only thing worse is not being able to make ends meet, which is the case for about one-third of Americans, and about 25 per cent of Canadians, the poor and the near poor. And of course, the poor or near-poor Americans have no health care, except for the over-65 age group.
There is an obvious need for re-distribution of income through spending to reduce poverty and inequality. What is less well understood is the need for a new relationship between government and business.
It is wrong to assume as does the Republican model that business can be left unattended to create wealth in the U.S. or Canada.
There is a role for active government in creating wealth, working with trade unions and using knowledge invested in the workforce, and local resources to create new relationships between employers and communities.
Setting out performance criteria for business, taxing business income, and re-investing in businesses that create wealth in Canada is the way to go. Of course to get there is going to require a change in government, and a new approach by the next Canadian government. The American Republican growth model hold out little hope for a better future in Canada.
Comments
Note: Disqus 2012 is best viewed on an up to date browser. Click here for information. Instructions for how to sign up to comment can be viewed here. Our Comment Policy can be viewed here. Please follow the guidelines. Note to Readers: Spam Filter May Capture Legitimate Comments...
21 Comments so far
Show AllAnd in a Bizzaro-land twist, the Harper Government just announced it's 'approval rating' has jumped, showing more Canadians are satisfied with what the Harper Junta is doing. Or so he would have you believe.
I live in Canada, and happen to think that Harper is even worse than his mentor Brian Mulroney.
Stephen Harper is a dyed-in-the-wool full on Fascist, a bully, and most worrying of all, an Armageddonist Christian, who believes he can commit any offense, any degrading crime, and still be lifted bodily into Heaven(tm) during the upcoming Rapture(tm).
It's because of this insane dominator religious view that Harper silences Government scientists who speak out about Climate Change or depleting resources. He is firmly in the denial camp, and knows he will have plenty of Corporate money to wage his political wars and pro-Corporate policies and propaganda.
The only way I could see Herr Harper getting a positive approval rating from most of the people I know was if he suicided live on national TV.
Harper's ratings are contrived by the same media owners who own Harper and many other politicians.
Just as we see banksters taking over European governments in order to implement a US style fascist government, the banksters are taking over the Canadian government.
I really don't get it. I just don't. The US has been headed down this road to destruction for 30 years now. Wages have flatlined for the 99 and tripled for the 1. The cost of healthcare, education, food, and energy have all increased, and nobody but the super rich has seen a real increase in pay. What is wrong with Canada?! Why would they want this!?!
Fascist Propaganda. That's the only reason.
Most Canadians who are not connected to the Corporate RP machine, or who aren't paid millions by the Corporations, the average person thinks that Harper is a dangerous bully.
Great article Duncan. It regenerated my thoughts on how to pay for government services.
Whether it's a tax on business, income or investment, it should always be incrementally higher.
Let's say a million dollars is taxed at forty per cent, and a billion at ninety per cent. Detailed rates can be worked out by an actuary, or an average high school student.
But the principle should ALWAYS be:
No matter how much tax you pay on the the first dollar, you should ALWAYS pay more on the second.
Here is a little nit-picking - about something that is important. From the article, in paragraph 5: "The major corporations who dominate the world economy "
The word "who" implies that the corporations are people. They are not, regardless of what the Neanderthals in the Supreme Court contend. The word should be "which."
"Current estimates suggest that India could go from having five per cent of its population as middle class to 40 per cent in two decades. It is suggested China could reach 40 per cent by 2025."
I'm hard-pressed to see how that level growth would be achievable given the current strain on natural resources - oil, metals, water, etc. Assuming "middle-class" means consumption of goods comensurate with what we understand to be a developed-nation concept of "middle-class", I don't think it can happen. And if it was to happen the result would be ecological catastrophe. Wars on a global scale resulting from competition for scarce - and declining - resources seems more likely. I'd love to be wrong.
In India and China the definition of middle class is: living in a big city and working in a sweatshop or other business that serves sweat shop workers.
The alternative is living and working in subsistence agriculture, scrounging or begging.
Stupid conservatives bet their asses (and ours) on invisible hands and invisible men.
In booming Saskatchewan the lure of fossil fuel $$$ is creating a view out of context and the larger picture is ignored.
As the consequence of increased fossil fuel extraction continues we all know we are destroying the future for a huge number of species, not to mention our own.
But try selling that notion at the family Thanksgiving dinner where most of the men are making big bucks in the oil patch.
There is an important psychological component to this transfer of wealth (and employment markets), and the MSM uses its considerable influence to
"market" it via the memes of personal choice and personal responsibility. Anyone who reads CD on a daily basis notices there are always a few people strategically placed in the comment threads who endlessly reinforce those messages. By displacing to the individual, the fall-out that naturally occurs when entire segments of the economy get shipped overseas, in the place of a collectively catalyzing political response, the matter ends up internalized as personal failure. This meme works especially well with the new version of Calvinism, for it, too, blames the individual for the state in which they find themselves.
Notice how some in this forum pushed the "choice" meme when it came to homeowners who got caught up in loans that ended up under water. They don't blame the corrupt system that artificially bloated home prices only to later see them deflated like the balloon that goes up, only to inevitably fall back down. They don't blame the robot-mortgage stampers, or the way banks were deregulated to catch as much debt as they could in drift-net equivalents, all the better to bet on later... with the U.S. taxpayer as ultimate creditor. What's there not to like... for uber: capitalists.
In any case, we ought to remember that a lot of psychological propaganda was put in place to allow for the displacement of wealth that's now hitting U.S. and Canadian former middle class citizens so hard. Hence the advent of OWS. Of course with commodities brokers also having fun raising the price of wheat, corn, and barley by a penny here and there, the impoverished multitudes have no recourse but to hit the streets in formidable protest movements of their own. The new pharaohs want us ALL to be slaves.
So true and so frustrating! Just last night I engaged in a brief but explosive conversation with a friend of many years over just such issues as this article presents. His frustration stems from being a white man in his early thirties who, due to personal choices, is finding himself unepmloyed, lacking employable skills, and trying to map out his future hoping that he can find two months of work here and there at minimum wage to keep his EI (Canada) going perpetually. He is considering a paperroute to help make ends meet. At the same time he is virulently attacking those, primarily aboriginal in my community, who "supplement their income with food hampers" and "soup kitchens." When it was explained to him that this is neccessary because even people with jobs often fall below the poverty line he became incredbily hostile, as he always does.
He is dealing with the frustrations of being a white male and not having the promises he was told come true. Rather than work to change his views or perhaps even the system that is relentlessly turning all people in serfs he falls back on racism, accusations of laziness in others, and hostility towards those who try to explain it to him. We have had these conversations before; they begin civil enough, with a particular news story generally getting them started, this time it was a reserve that required Red Cross intervention. A discussion ensues, he asks how the situation could possibly be, it gets explained and he immediately refuses to consider things like intergenerational trauma, systemic racism or any other of a million factors. He falls back into us vs. them thinking, primarliy on racial grounds. It's a sick form of libertarianism to my eyes. Everyman for themselves, except when he needs help, to deal with his very ill father for instance. He has no problem taking him in for government paid medical attention, but god forbid that someone else needs to access a soup kitchen. He also espouses Harper's tough on crime agenda, without considering that it's far more expensive to incarcerate someone than get them help. He's been duped, lock, stock and barrel; willfully in some ways due to his long standing racism and belief in white exceptionalism. Where do we go as a society when people like this refuse to see that we are in it together? Straight down, and quickly as evidenced all around us. Damn.
The robot-mortgage stampers, the equity available from rising house prices, and the larger houses in the sprawling subdivisions were temptations that appealed to our greed and other failings. We can admit this while chasing after those who calculated for it and appealed to it. We can also have some compassion for those of us who were were caught in the trap set by those who deliberately targeted us for our greed. In a sense it is a situation similar to that of the elderly woman who is bilked of her savings by a gigolo who knows what he can get away with because he knows the loopholes and inefficiencies of the law as he has been living like this for years and he knows what choices he wants the woman to chose to make. Few would claim that the woman should be destitute and the gigolo get away with it because the woman made bad choices, but without changing and enforcing the law it is difficult to get him to pay some restitution and to stop him from continuing his career.
MEMENTO: Interesting analogy, but I find your post cagey. A lot of people went into mortgages with good faith, and maybe they HAD jobs. Then the economy, aided and influenced by big money, sent those jobs overseas. Now what? And some of the people DO pay their mortgages, but their neighborhoods had others who did not, so the overall value of their homes fell much lower than the prices they paid for them due to the environment of foreclosures. Then there are the medical bankruptcy cases. Your post sets up a very odd equivalency between the buyer/elderly woman and the gigolo/banksters. Or is your post a masked attempt to push the "blame Acorn" line, that too many who were unqualified got loans? I live in a modest, and I think quite nice, mobile home... my mortgage was $215, and before I purchased this little piece of privacy, I put all my furniture and books into storage. That cost me $130 a month. So I figure for the $85 difference, I get a shower and a toilet. Greed may work on some people, and may have factored into their home choices, but it hardly holds true for all. Plenty of people, like myself, have elected to downsize specifically so that we don't have to work for The System. Right now, the gigolo sounds better to me than the banker...
Siouxrose: I am definitely not attempting to push the "blame Acorn" line or to let the banksters off the hook with respect to responsibility for the problem. And I well know that many of those who got caught in this mess made reasonable and intelligent choices. I have a friend who was taken advantage by a couple of gigolos. There was on some level some awareness of the danger in both cases and some magical thinking was involved in the trust that was extended in order to believe the stories that appealed to her better nature. So my friend was not entirely without blame in the matter. But the gigolo was far more responsible for the situation having occurred as he watched for opportunity and set the trap and took the money. He got away with it. The system gives these women very little support. I was attempting to compare certain bankers to gigolos and to point out that while both sides of the transactions bear some responsibility and guilt, that the far greater guilt and responsibility lay with the gigolo/bankers who laid the trap. And with the system that lets them get away with it. I think that the responsibility for repairing the system needs to be shared, that while many of those who got caught on the mortgages should do their share to fix the problem, that the larger responsibility for fixing the problem needs to be assigned to the bankers and others in our system that caused and allowed the problem to occur.
If far more people thought like you and looked for more modest, reasonably priced housing we would not be in as serious a mess today assuming that the housing industry would have attempted to meet the demand. But there are also problems here with supply and demand as the bigger, often poorly built, more expensive to maintain and heat houses are more profitable for the builders, financiers, and energy industries than more prudent housing. Mostly it is not easy to find more modest and practical housing in safe neighborhoods, near schools, job, family and friends.
MEMENTO: Thank you for your response. In your first paragraph you spell out a thesis I can agree with. Let's talk numbers. Homeowners 25% responsible, banksters cum loan sharks, 75%. What do you think? Then in your second paragraph, you become more illusive and once again put the problems on those greedy home purchasers. I made the decision a long time ago that I could work 8-10 hours a day as a teacher or journalist and then afford a fancier home. Or stay home and do what I feel I was put on this earth to do: write visionary material. Because it IS visionary, it doesn't sell, although I've made over $250,000 in published articles & columns during my professional life. That's allowed me to keep good credit, now own a modest place, and put 2 children through college (they had financial assistance & scholarships). However, just because I aimed low on the housing totem poll doesn't mean that I fault those who wanted a place in the $250,000 range. Most of these people forfeit all their waking hours to jobs that afford them little time to BE in these homes. We're living in such uber: materialistic times that a great many people think their worth in the human pecking order is established by the home they live in, the car they drive, and owning the latest (soon to be obsolete) electronic devices. I see the illusion for what it is... FREE time is priceless. I made my choices in favor of it. Had I sold a script, I may have opted for a different home... but to me, my little place is a wonder, and sometimes my Fortress of Solitude.
Siouxrose: I aimed low on the housing totem poll in order to be able to afford time to think, explore ideas, and experiment. For the most part I would be happy to own a rooming house and live in one of the rooms but ended up selling the house and putting the resources towards current researches.
In my second paragraph I was trying to make the point that the problem of people buying big houses is not all about the buyer's greed, that we are both encouraged and to some extent coerced to buy big houses because that makes more money for various interests in the system. More money for the bankers, builders, material suppliers, road and sewer builders, real estate interests, insurers, energy suppliers, and the like. Part of this encouragement is done by not making the more affordable houses in decent areas as readily available. In other words there are other interests involved in this mess besides the buyers and the bankers. For the most part the house buyers (greedy or not) do not write the zoning laws, speculate on land for future subdivisions, approve subdivisions, build gated communities, allow the inner cities to decay, nor do they build the infrastructure needed for urban sprawl, move offshore the jobs and industries, or change the laws governing banking and commerce.
To talk numbers for this financial mess we can try as a starting point for discussion: Homeowners 24%, Others 24%, Banksters cum loan sharks 52%. If we want to talk about the problem of overconsumption of resources, of which big houses are but one example, then the Banksters' share of the responsibility for the problem will be lower.
Rule #1 -- like most countries, Canada gets the government the corporatists want - not the one people want. Harper might have the support of 1/3 of Canadians but that's not how the winner is decided.
Harper is the Tea Party -- he just got his majority and he's on a tear - implementing his brain-dead right wing agenda at break neck speed. I am a Canadian - I despair but it's obvious, it's going to get a lot worse before anything gets better. If power cannot be wrested away for the corporatists - it will be the Tea Party for ever - not that the Liberal party was much better - we all know how that goes.
Could this be good news for Canada's First People?
No. In fact, some of the First Nations were just bent over a Tarsands pipeline and anally raped by Enbridge for PR purposes. Enbridge is one of Harper's biggest Corporate donors.
Rubbish. Canadian politics is the politics of personal envy. Canadians are the most envious people on the face of the planet. The one thing that really galls a Canadian is when someone else does better than they do. So the Government not only controls their lives, the Government employees are utterly mendacious in their abuse of the entrepreneurial class [hey, not their job they wreck, eh?]. Canada is the country that anybody with talent ends up leaving. Wayne Gretzky is one example. They head for the USA for unfettering the shackles of Canadian society; the USA is no great shakes, but still far better than Canada.