Category: Canada

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Canada First Nations Political Eh-conomy Radio

Truth, reconciliation and restitution

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The summary report of the Truth and Reconciliation Commission of Canada was released last week. The work of the Commission took seven years, gathering public and private testimony from survivors and families of survivors of Canada’s state- and Church-sanctioned residential school system—a system that forcibly removed from families, assimilated and often killed Indigenous children. The Commission’s conclusion was stark: Canada committed cultural genocide on Indigenous peoples.

My first guest is Indigenous scholar Vanessa Watts-Powless. Vanessa is Mohawk and Anishnaabe and teaches in Indigenous Studies at McMaster University. With Hayden King, a previous guest, she penned an important article in the Globe and Mail calling for action on restitution in the wake of the TRC report. The meaning of restitution was the topic of our conversation.

As my second guest, I’m happy to finally have the chance to talk with Greg Albo, who teaches political economy at York University and is the co-editor of the Socialist Register. I spoke with Greg to get a sense of how the arguments for restitution made by Vanessa fit into the context of Canada’s political economy.

As always, you can subscribe to the podcast on iTunes.

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Categories
Canada Finance

Bay St. isn’t back, it never left

The New York Times reports that Wall St. is back in a big way since the 2007 crisis: profits, salaries and confidence have returned in the US financial industry. As often happens when I see something intriguing like this about the US, I wanted to quickly see whether a similar dynamic is taking place in Canada. Turns out that Bay St. is doing better than ever too…though it never really went away.

To illustrate this, consider two of the charts used in the Times piece, both augmented with Canadian data. First up, employment in the financial sector. While the US saw the number of securities and investment workers flatline after the crisis, Canada has continued to see more growth, only plateauing more recently. Today a greater percentage of total employment is in the investment subsector than in the US.

Source: Statistics Canada Labour Force Survey, US Bureau of Labor Statistics.
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Austerity Canada Government

Canada’s Austerity Consensus

I have a longer piece out in Jacobin today on tracing the roots of today’s austerity consensus in Canada to the 1990s. In a way, it’s me coming to terms with the last twenty years of Canadian political economy.

How exceptional is Prime Minister Stephen Harper and his crop of Canadian conservatives? For not just large- and small-l liberals, but also some leftists, the last decade has been an aberration — particularly compared to the alleged synthesis between responsible government and economic expansion that occurred during the 1990s. Yet while both public and elite consensus has shifted even further to the right since the ’90s, too often Harper and the current Conservatives are portrayed as an anomaly rather than a continuation.

The ultimate irony of the last two decades of austerity may be that Harper’s Conservatives have been able to rest comfortably on their laurels because of previous attacks on working-class power and livelihoods, even temporarily increasing public spending to save a system in crisis.

While the 1980s had laid some of the groundwork in Canada, the Right’s counterrevolution was not as successful as it had been under Ronald Reagan in the US or Margaret Thatcher in the UK. It was up to Canada’s Liberal Party, the centrist, “natural governing party,” to cement it.

PM CHRETIEN AND DEPUTY PM GRAY APPLAUD FINANCE MINISTER MARTIN

In his 1994 budget speech, Paul Martin — then the finance minister, later the prime minister — encapsulated the Liberal message:

It is now time for government to get its fiscal house in order. For years, governments have been promising more than they can deliver, and delivering more than they can afford. That has to end. We are ending it . . . Over the next three years, for every one dollar raised in new revenues we will cut five dollars in government expenditures.

The subsequent austerity drive was one of the most severe in the Global North, and remains the foundation for the Right’s strategy of death by a thousand cuts.

Taking this longer view of the political economy of Canadian austerity — and the nature of Harper’s conservatism — isn’t just crucial to making sense of the present. It provides more stable ground to fight for a less austere future.

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Austerity Canada Government

Budget 2015: A tale of austerity past, present and future

I’ve been banging the drum of “slow-motion austerity” for a while and little in the 2015 federal budget suggests any change from the pattern of death by a thousand cuts. This budget is another is a series of unspectacular austerity budgets. Taken together, however, the cuts rapidly add up and budgets become more remarkable for the tenacity with they’ve made us pay to get to the present.

A long-term view focused on austerity is very different from much of the mainstream coverage of the budget with a tawdry focus on “goodies” for this group or that. While the media should be criticized for too easily swallowing government talking points and dividing people into opposed special interest groups, it would be naive to think of this budget outside the context of electioneering to carved up demographics. On the one hand, this reinforces a neoliberal narrative of each for themselves; on the other, this is also the reality of the on-going neoliberal transformation.

So while this budget may be more politicized than average in light of the fall election, I won’t write about goodies for groups. Instead, I’ll take the opposite tack: look at the election year budget as a continuity of slow-motion austerity past, present and future.

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Austerity Canada Government

The Conservatives’ balanced budget legislation: Silly economics, smart politics

I wrote up the Conservatives’ new balanced budget law for Ricochet. In short, the law is really silly in terms of economics, but simply pointing out its economic stupidity is not enough, because the whole point is to shift the political consensus. Politically, it’s not that dumb. So rather than play games about who cut better and balanced budgets faster as many are doing, we need to look at the balance of economic power that drives these moves. The full piece is below:

The Conservative government’s balanced budget legislation is a classic attempt to shift the boundaries of acceptable public debate. In terms of economics, it is a silly exercise in arbitrary rule-making and its rules are bound to be broken. In terms of politics, it is another step in consolidating a consensus that puts punitive cuts to the many in the service of ever-larger gains for the wealthy few.

The legislation set to be introduced by the federal Conservatives along with the upcoming budget has been attacked as myopic and the result of twisted logic. Pundits left and right agree that the legislation will be unenforceable and thus unsuccessful in the long run. The problem with the law, however, is the already visible success of those pushing Canadian politics wholesale to the right.

16258234155_2e00d7cd29_zWhile details are still scant, the legislation aims to force subsequent federal governments to refrain from deficit spending except in as-yet-undefined “exceptional circumstances.”

We’ve seen this movie before. In Canada’s largest province, Ontario premier Mike Harris introduced balanced budget legislation only to have it repealed in 2004 and replaced with a softer version that does not stipulate outright balance every year. Most Canadian provinces have balanced budget legislation, but not surprisingly all suspended it at some point in the aftermath of the global financial crisis of 2008.

Even the Eurozone, the current poster child for austerity, has a limit on national government deficits (equal to 3 per cent of GDP) rather than a ban on them. Like other rules of this type, though, the number itself is not as important as the lack of flexibility and the push for spending cuts as the default response to crisis. The Eurozone rule has certainly contributed to Europe’s inability to escape stagnation and prolonged crisis since the financial crash — despite being broken by various countries, largely those powerful enough to get away with it.

Arguments like these, however, do not get at the heart of the matter. It’s good to have a few of them out there, but balanced budget legislation is most dangerous not because it’s bad economics, but because it is good politics.

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Categories
Austerity Canada Tax

Transfers, taxes and who pays for austerity

The question of who pays for austerity and how is an enormous one. Promoters of austerity often claim that cuts to universal services are fine if they’re offset by transfers to those who can’t pay for newly-marketized services. The same goes for expanding services – why give everyone childcare if you could just give those at the bottom the money to pay for it the same as those who can afford it?

There are many arguments for why services should be public and universal that do not simply rely on whether everyone is able to pay for them privately. However, even on their own terms, the argument for ramping up transfers to the bottom of the income distribution hasn’t held up in recent times.

I was intrigued by a post from Matt Bruenig that compares the US and Finnish tax and transfer systems, arguing that while the Finnish system looks less progressive by some measures, this is due precisely to higher and universal transfers. I’ve been looking at lots of data on the latest phase of austerity in Canada that began at the federal level with the election of the Chretien Liberals in 1993. Here, I’ll steal some of what Matt does and apply it to the Canadian tax and transfer system since then.

For starters, here are average gross government transfers by quintiles in Canada. This is how much money people receive in the form of cash benefits and credits from all levels of government. This is thus only a rough picture of what’s happened at the federal level, but most transfer income is federal. The first chart is for 1993 and the second is for 2011 (the last year of publicly-available data); everything is adjusted for inflation to constant 2011 dollars.

150402 Govt transfer 1993

150402 Govt transfer 2011

What’s striking is how similar the two charts are. While the economy has grown – 35% growth in real GDP per capita between 1993 and 2011 – government transfers have essentially stagnated for everyone. The bottom 40% have actually lost in transfer income and only the fourth quintile saw any kind of sizeable increase gaining just above 10%.

Next, let’s add income taxes into the mix. Here are the same two charts, but this time showing net government transfers. This is the difference between the transfers above and income tax paid to all levels of government.

150402 Net transfer 1993

150402 Net transfer 2011

Again, we have little change over almost two decades except for a lower net transfer to the richest 20%, though this is likely a reflection of the growing inequality in market incomes, especially higher top incomes (and hence higher income taxes). Remember too, that this shows a more progressive structure than if we took all taxes including those on consumption as well as user fees (again, paying more with stagnant transfers) into account. This total tax structure is far less progressive – somewhat regressive even in some provinces.

Here is another way to look at the changes in same net transfer data, showing the trends in time over the entire 1993-2011 period.

150402 Net transfer series new

We can divide what’s happening into a few distinct periods at the federal level (provinces do more direct spending). Clearly visible are

  1. a main phase of Liberal austerity from 1993 and 2000,
  2. a short upturn after the 2000-era tax cuts (since net transfer = gross transfer minus taxes, a reduction in tax means the net transfer goes up)
  3. a general stabilization since then, only punctuated by
  4. the fall in incomes and short-term fiscal expansion after the 2008 crisis (with a clear trend back to the stabilization or lower in the last years of data).

Finally, here is a last chart that takes net transfers and divides them by market income. That is, it shows what percentage of market incomes is received on average by each quintile as net government transfers.

150402 Net transfer percentage series

This last chart is combines the picture of growing inequality with transfer stagnation. Economic growth is not translating into shared resources, whether in the form of existing or much-needed new public programs or even simply being pooled for redistribution. This certainly points to austerity falling disproportionately on the backs of the poorest.

Note: all data comes from Statistics Canada, CANSIM Tables 202-0703 and 202-0704.

Categories
Canada Inequality Political Eh-conomy Radio

Inequality, global and Canadian, with Branko Milanovic and Armine Yalnizyan

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I have two guests to talking about inequality today. First up is Branko Milanovic, who speaks with me about global inequality as well as the rise of a global plutocracy. One of the world’s foremost experts on inequality, Branko is professor at the CUNY Graduate Centre, where he also heads the local affiliate of the Luxembourg Income Study Centre, former chief economist at the World Bank’s research unit and author of the The Haves and the Have-nots: A Brief and Idiosyncratic History of Global Inequality. He blogs regularly; it’s always interesting.

I’m also happy to have Armine Yalnizyan back on the show as my second guest. Armine is a senior economist at the Centre for Policy Alternatives in Ottawa. The Centre has done extensive research into inequality in Canada and that’s the topic of our conversation. To wit, Armine will be introducing the inaugural Sefton-Williams Memorial Lecture on March 19 in Toronto, which will be given by Miles Corak and also focus on Canadian inequality.

Cartoon by Chris Slane.
Cartoon by Chris Slane.
Categories
Canada Precarity Unions Workers

Some notes on precarious work

Here’s a few more notes on a point that seems to be made with increasing frequency: working for a wage has always been precarious. The current focus on precarity as a defining feature of our age is not unwelcome; indeed, its popularity shows that it clearly harmonizes with the everyday experience of many. The question is whether that everyday experience is so new; can a focus on precarity as novelty be crowding out important features of the transformations we’re seeing and what we can do about them?

Perhaps most generally, precarity is what it means to have nothing to sell but your labour power, to use Marx’s turn of phrase. Taken in this sense, precarity is wide-spread: today, the bottom 40% of Canadians today own a measly 2% of national wealth and the bottom 60% own just over 10%. The fact of owning relative peanuts gives precarity an important part of its meaning – it’s certainly nicer to live in a rich country, but the “outside option” remains the wage with all its attendant risks.

The fight against precarity is also the foundation of the welfare state. The welfare state provides a social wage in addition to the working wage and thus undermines precarity. Its genesis was an experiment in social compromise. On the one hand, it gave workers greater security – a springboard to potentially fight for more. On the other, it gave elites a tool to manage labour unrest, especially the wave coming out of the late 19th and early 20th centuries, and the means to incorporate workers into new cycles of accumulation. For now, however, this experiment is sputtering. The last several decades have seen the breakdown of the compromise and, perhaps unsurprisingly, have brought precarity back to the fore, if for now in a more limited sense.

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An argument along these lines is crystallized and developed in greater detail in a recent article by Kim Moody. It’s a rare piece because it takes seriously the empirical data that shows modest rises in what most people consider to be precarious work, while at the same time building a broader perspective on precarity that links the present with the past. His comments, while based on the UK experience, apply more generally across Northern economies and are worth quoting at length:

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Canada First Nations Political Eh-conomy Radio

First Nations and the political economy of land

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This episode looks at the political economy of land in Canada and the Canadian state’s relationship with First Nations as mediated by land. I’m happy to bring together two guests who deal extensively with these issues and pose challenges to rethink the way land is governed.

My first guest is Hayden King, Anishinaabe from Beausoleil First Nation in Ontario and director of the Centre for Indigenous Governance at Toronto’s Ryerson University. He joined me to discuss his recent piece in the Globe and Mail on land and the institutions that govern it.

My second guest is Lynn Gehl, an Algonquin Anishinaabe researcher, writer and activist with a PhD in Indigenous Studies. We discuss her recent article in Ricochet, written with Heather Majuary, on how the current Algonquin land claims process may be undermining those First Nations. It is based on her book The Truth that Wampum Tells: My Debwewin on the Algonquin Land Claims Process.

640px-Ottawa_Valley

Categories
Canada Workers

Stagnant wages for over 80% of Canadian workers

Are wages in Canada stagnant or growing? The short answer is another question: do you live in an oil boom province? There’s a fairly common meme that while Canada, like the US, saw wages stagnate, this is no longer true. Indeed, overall wage growth has picked up since the last crisis.

The baggage that comes with this meme is that we here in reasonable, responsible Canada shouldn’t care about all those things that the US and European lefts are alarming about: no need to worry about inequality, austerity doesn’t concern us and so on. But while it’s a truism that we shouldn’t wholesale import analysis of another economy into the Canadian context, we are not immune to global trends. Yes, the US is a large economy with huge internal markets and this is a big difference; however, as a small, open economy, we cannot escape larger trends, especially with ever greater economic integration through free trade, freer movement of capital and international financialization.

One example of a phenomenon we haven’t really escaped is precisely wage stagnation. Here is a pair of charts showing wage growth since the end of the last recession in June 2009. They separate the three oil boom provinces (Alberta, Saskatchewan and Newfoundland and Labrador) from the rest of Canada. The first chart is from the survey of employers and shows the change in average real weekly wages . (It and all others are smoothed out to show the underlying trend, adjusted by provincial CPI and weighted by the size of the workforce in each province.)

120225 seph short

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