Austerity programs cause suffering in Europe, as cashless-consumers stop spending.
by Mel Watkins
Stephen Harper tells us that the “new norm” is that the world economy is in trouble and things look bad. Big chunks of Europe are in recession. America is flat, constipated. China’s slowing.
Now you might imagine that Harper, who is rarely so candid, would use the occasion to outline a serious plan for limiting the damage to the Canadian economy, to try to maintain, even raise, its rate of growth and its level of employment.
So here’s what he actually said: Cut government spending. Gut environmental protection. Sign more free trade agreements. Increase foreign ownership in telecommunications.
Cutting government spending will, however, slow the Canadian economy and destroy jobs. It’s almost impossible to find anyone in the world who doesn’t know that. It’s a no-brainer.
Believe whatever fairy tale you want about how less government liberates capitalists in some longer-run, in the here and now cutbacks hurt the economy. Austerity is wreaking its vengeance on much of Europe, pushing that continent into recession and its people on to the streets. Why would Canada choose to go down that route — when it’s nowhere near having a debt level that would cause lender or bond rating agencies to require it to do so?
Harper may have signed the most free trade agreements but there’s no reason to expect doing this to trigger economic growth in any significant way.
In Harper’s world, decreasing environmental regulation is code for building pipelines fast and furious to move dirty oil. Putting aside the morality of all this for the health of the planet, building pipelines just is not going to happen in time to get us out of our current economic troubles. Trample on aboriginal rights, as this will, and even Harper will find that the courts and protests put limits on what he can get away with.
Harper may get us into Guinness World Records for signing the most free trade agreements but there’s no reason to expect doing this to trigger economic growth in any significant way. Harper says we’re “open to what’s going on in the world,” meaning other countries’ economic difficulties. He says that’s where our problems are coming from — and then he wants to make us even more open to diversity abroad. This does not make sense.
It’s not like we don’t have a track record to look at. Two decades after we began all this by signing a free trade agreement with the USA that was supposed to make our manufacturers competitive, we are more of a resource based, unbalanced, staple economy, than before.
Harper is playing the same old game, striding backwards, lurching rightwards, eyes wide shut, into a future that is increasingly darkening. Harper’s solution for his so-called new norm looks distressingly like the old norm. Call it Tea Party North.
Canada, albeit along with most of the rest of the world, is locked into an export strategy as the one and only way to grow the economy. There is an alternative: it’s to grow the domestic economy.
Cutting government spending is no way to do that. Nor is signing free trade agreements that open up that spending to bids from foreign suppliers.
The main moral of this tale is to take the domestic market seriously by increasing purchasing power. The best way to do that, in the short-run and in the long-run, is to put more money in the hands of those who are inclined to spend it — because they need to — rather than hide it in tax havens.
The idea is called redistribution. This being Canada, not the USA, it won’t be confused with socialism — though, now that I think about it, it may need a social democratic government to make it happen.
Harper’s final policy solution, opening the telecommunications sector to foreign ownership, is most baffling. Even my overactive mind is hard put to see how that creates jobs, at least in the fast and furious way we need.
The entire deal sounds less like sane policy than like stale ideology, which may, of course, be the real explanation for the whole package.
About Mel Watkins
Mel Watkins is Professor Emeritus of Economics and Political Science, University of Toronto. He is Editor Emeritus of This Magazine and a frequent contributor to Peace magazine. He is a memer of Pugwash Canada and former President of Science for Peace.
Website: http://www.progressive-economics.ca/author/mel-watkins/.
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[…] Source Share this:TwitterFacebookLike this:LikeBe the first to like this. Written by communistwarrior Posted in Economy Tagged with Austerity, Canada, Conservative, Economy, Harper, Politics […]
The Euro crisis is simply a bank crisis brought on by the banks themselves by making loans that any prudent bank would not have made to a country that was unlikely to be able to repay the loaned amount. But since the banks are in control of the finances, they have chosen to make ordinary people bail them out rather than take the loss for their bad management.
The other aspect is that these banks like the IMF and the World Bank are simply tools of the super wealthy. They operate by making loans that can't be repaid to countries which are then put under adverse conditions like privatizing public services which privatizing is the key to making sure they can't repay, thus creating a crisis which they hope to benefit from by demanding ever more harsh conditions.
Read Naomi Klein's "The Shock Doctrine" to get a full understanding of how such things work. Shocking conditions are then the excuse for really putting the screws to ordinary people.