On Our Failing Economy

As I listened over breakfast to University of Toronto Economist Peter Dungan talk about the ‘grocery payment’ announced in the spring federal budget as a response to inflation in food prices, I cringed.  The analysis was out of touch with reality and especially with the reality of 80% of Canadians.  Giving money to the poorest Canadians, we were told, was self-defeating because it would add to inflationary pressures.  “Any expenditure will make the Bank of Canada’s job harder in terms of cooling down the economy, which is what needs to be done to mitigate inflation.”

This is a pathetic echo of the absurd, reality- ignoring views like those of Pierre Poilievre who, while inventing rabble rousing arguments to make the poor angry, ignores the truth that our recent round of inflation was the result of:

• collapsed supply chains caused by the pandemic;
• oil price profiteering sparked by the war in the Ukraine;
• food profiteering sparked by food price increases resulting from the war in Ukraine;
• the grasping of inflation as a cover for large corporations to impose price increases above their rising costs to fatten their profit margins for shareholders (inflation as an opportunity for the rich). 

For this economist and Bank of Canada Chair Tiff Macklem, what is fueling inflation is the spending of the poorest 50% who own 1.2%of all the wealth in Canada.  They recommend policies that reign in the supposedly irresponsible spending on food and shelter.  They recommend destroying the jobs of thousands of Canada’s poorest on the altar of the ‘war on inflation’.   This is economic policy that flows from the idea that if your only tool is a hammer then every problem must be a nail.

They never stop to ask, ‘might the problem be the lousy decision making that has resulted in the richest 20% who owning (according the Parliamentary Budget Officer) close to 75% of all the wealth in Canada’.  The richest 1% control the economy. They set the incomes of the poorest and decide what prices the poorest 50% will pay.  They set their own often wildly inflated salaries and arrange the hyper windfall profits they will gather for themselves.  Their decision making does not merit their huge salaries.  

They tell governments what the rules should be.  If government interferes with them, their response is to threaten economic chaos.  Their threats are a form of economic terrorism.  They adhere to a school of economics that sees the poor buying food and paying rent as the problem.   

Inflation, this absurd school of economics believes, is caused only and in all circumstances, by government spending.  Far better to let the children of the poor starve.  Far better to let the poor cut back on food or medicine or live in the street.  Perhaps it is time to invite this lot of economists and the phony populist politicians to be quiet. Perhaps it is time to ask why our economy can produce enough wealth for space programs, ballooning billionaire wealth and record corporate profits, but is unable to provide:

• Health care with 4.8million Canadians without a family doctor and long waiting lines for everything from emergency to cancer and orthopedic surgery.
• Housing people can afford, resulting in an epidemic of homelessness
• For the wellbeing of the almost 20% of our children living in poverty (Campaign 2000)
• Adequate food,  with the result that 5.8 million Canadians, including 1.4 million children, lived in food-insecure households in 2021¹.
• Education. “In 2018, student debt contributed to more than 1 in 6 (17.6%) insolvencies in Ontario[1]. Extrapolate this Canada-wide, and that means that roughly 22,000 ex-students filed insolvency in 2018 to deal with their student debt.   1.9 million Canadians owed the federal government a total of $23.5 billion in student loans as of July 2022 (CBC News 18 June 2023)

The list could go on to include transportation, care for the elderly and much more.  It is a long list of failure.  It is increasingly clear that the purpose of our economy is not to provide people with the goods and services they need to live rewarding or satisfying lives but to ensure the very wealthiest get more and more and more.  That is the purpose of the investor driven corporations that dominate our economy. So is the Trudeau government’s “grocery payment” a Godsend?  Decidedly not.  It is a short term band aid that helps today but is a useless long run remedy.  But make no mistake, ensuring the poorest among us can eat for a month is not a bad thing to do, yet, its impact on inflation compared to the never ending spending spree of the richest 20% is minimal and far outweighed by any sense of human decency.  The “grocery payment” is charity.  “Charity is love for a moment.  Justice is love extended into the future.”  (Rev Mark Sandlin)

What the economist the CBC chose to provide us with is warped expertise, and what most Liberal and Conservative leaders will not tell you, is that our economy is broken and getting worse.  Even many in the NDP are afraid to tell you that those who control our economy are making self-serving, disastrous decisions to benefit a small very wealthy minority – decisions that may doom our grandchildren and will certainly make the lives of most people around the world more miserable.  

Our economy is dominated by very large corporations including banks and companies providing oil and gas, medicines, internet, news, communication, social media, retail, entertainment – everything we consume.  They are owned by shareholders (keeping in mind that the wealthiest 20% own almost 75% of all Canada’s wealth[2]) who seek to maximize their profits from their investments.  To accomplish this they hire CEOs, managers, accountants and lawyers, many of whom are paid many millions of dollars per year.  If these highly paid servants do not deliver on maximizing profits they are dismissed and replaced by more determined servants.

If maximizing profit means paying small fines or continuing to pollute, the fines will very likely be paid and the pollution will continue.  If the cost of an unsafe workplace is less than a safe workplace, safe workplaces become less likely.  If the quickest way to respond to a bad business decision is to lay off thousands of people, it will almost always happen.  If stranded oil industry assets will lead to billions of shareholder losses, then many millions of dollars will be spent on lies and misinformation telling us: ‘Climate change is not a problem’; or ‘We are not responsible’; or ‘We can fix it and burn more oil and gas and coal’.  Corporations and the wealthy deluge government with highly paid lobbyists.  If governments need to be threatened with massive job losses and economic turmoil, it will be done. 

And sadly, in case after case, governments will obey.  That is why tax rates on the super-rich and corporations have been lowered, even if it means cutting services to 80% of the population.  It is why improper CERB benefits for poor workers were clawed back, while benefits to corporations that went to management bonuses and dividends were ignored by the government.  It is why SNC Lavelin’s displeasure led to the dismissal of Canada’s first indigenous Attorney General.  It is why corporations rather than workers are the key players in writing trade agreements. 

Our governments do what huge corporations want.  It is why Canada has the worst performance on emission reductions among the G7.  From 1990 to present, the US and Japan have managed to slightly lower their emissions.  The European Union countries have lowered their emissions by an average of 29%.  Canada’s emissions are up a whopping 14%![3]

What is difficult to understand is why the CBC with its ‘balanced reporting policy’ reports on wild fires, and fails to mention the oil companies as the major cause.  When the millions of annual deaths due to pollution from burning fossil fuels are reported, again no mention of the oil companies.  Is it simply because the purpose of an oil company to produce profit, regardless of the cost, is regarded as the over-riding right in our political economy?  I understand why for profit media self-censor reporting critical of corporations.  They want to avoid offending advertisers and they are largely owned by the same 20%.   

With regard to advertising the CBC has some of the same tension.  The revenue from gas guzzling truck and SUV advertising tearing apart the wilderness must be hard to jeopardize.  Corporate censorship of the media flows from ownership and advertising.  That said, all of us, at times, self-censor when saying what we see as truth is not the dominant public perception.

Corporations, driven to maximize returns on invested capital, are destroying the ability of our beautiful earth to support life.  They are destroying our democracy and human rights.  The very idea that we could base our economy, and structure its dominant organizations on the right to greed, should have been obviously seen as a terrible mistake.  The idea that our economy should be driven by profit maximization as the objective that overrides all others is absurd and self-destructive.  But criticism of that idea is almost always a victim self-censorship.  

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[1] https://www.hoyes.com/press/joe-debtor/the-student-debtor/

[2] https://www.pbo-dpb.gc.ca/web/default/files/Documents/Reports/RP-2021-007-S/RP-2021-007-S_en.pdf

[3] Barry Saxifrage | Analysis, Climate Solutions Reporting | May 12th 2023

#2221 of 2229 articles from the Special Report: Race Against Climate Change