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. (more…)

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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. (more…)

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Jason Kenney gets a growth portfolio

Jason Kenney has long been one of Stephen Harper’s trusted lieutenants and after yesterday’s cabinet reshuffle, he is now Minister of National Defence. In Harperland, this is a decisive promotion: from the “ugh, why are we still doing this?” of Employment and Social Development to the prestigious, patriotic defence portfolio. While the Conservatives promote an image of sound economic and fiscal management, it is clear that they will attempt to frame the upcoming election in large part in terms of security and terrorism — and Jason Kenney will now be instrumental in their fear-mongering campaign.

For Kenney this is a move to a more prestigious post, one likely to be even more visible as election campaigning heats up.  Yet, Kenney is perhaps best known as a dedicated believer in small government — a belief that brought him the leadership of the Canadian Taxpayers Federation before he became an MP. Yesterday, in becoming Minister of National Defense, he has inherited a portfolio where more spending is encouraged by the Conservatives. (more…)

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Yanis Varoufakis on the Greek elections plus the state of the left in Poland

 

I’ve been visiting family in Poland for the past few weeks so, fittingly, this week’s podcast deals with the situation of the left at two opposite ends of the European periphery: Greece and Poland. My first guest is Yanis Varoufakis, professor of economics at the University of Athens and candidate for SYRIZA in this Sunday’s parliamentary elections. Syriza is the main Greek left party and is poised to take the most votes, potentially even form a parliamentary majority, on Sunday. Yanis spoke with me about Greece’s economy on the eve of the elections and Syriza’s economic program.

My second guest is Jakub Dymek, Polish academic, journalist and editor. Jakub is, among other things, the Polish correspondent for Dissent Magazine and a member of the editorial collective of Krytyka Polityczna (Political Critique), the major journal of Poland’s “New Left”. Unlike its Greek counterpart, Poland’s electoral left is currently at its lowest point since the post-Communist transition. I spoke with Jakub to get a sense of this electoral decline, the situation of left social movements and the future prospects of Poland’s left.

Very briefly, I say that Greece and Poland are at the opposite ends of the European periphery for two reasons. First, Greece has undergone years of recession and brutal austerity in response to the global crisis of 2007/8; Poland, on the other hand, has managed to grow through the crisis, at least according to the major economic measures. Greece and Poland are also opposed when it comes to the fortunes of the electoral left. It is in Greece that the left has may well take government this Sunday or at least become the largest force in parliament, whereas in Poland the electoral left is currently virtually non-existent. Looking at these two lefts and the political economic conditions that led to their different fortunes makes for a fruitful juxtaposition.

syriza

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Looking towards childcare in Canada, with lessons from Sweden

 

This week, the federal NDP reignited a national debate over childcare by proposing a universal $15 per day childcare program. This is the focus of today’s episode, which features two guests. First up, Angela MacEwen. Angella is an economist with the Canadian Labour Congress and has long been a strong advocate for public childcare in Canada. I spoke with her about the economics of universal childcare.

My second guest is Petter Nilssen, who is the press secretary for the Left Party in the Stockholm municipality and is a board member of the Institute for Marxist Social Studies, also in Stockholm. I spoke with him about the recent history of the Swedish model of the welfare state, something he wrote about recently in Jacobin Magazine under the title, “Sweden Without Illusions“.

Remember, you can now also subscribe to the podcast on iTunes, directly via this link.

141016 Childcare poster

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Actually making the carbon tax revenue neutral could fund a fair education settlement

As the teachers’ strike continues, the BC Liberals have turned to an old stand-by: fear-mongering that they will have to raise taxes if they are to fund a settlement that includes key demands like class size and composition limits. Ignore the fact that the government has shown itself consistently unwilling to even consider any such settlement; ignore also that there is nothing inherently evil about taxes. Even taking the government seriously here, there’s one source of education funding that the BC Liberals aren’t talking about, the carbon tax.

While debate rages about whether BC’s carbon tax is regressive or progressive, there is another aspect of the tax that has not received enough attention: the carbon tax has been used to actually justify cutting taxes by stealth. Indeed, the additional tax cuts being made under the cover of the carbon tax are estimated to amount to an average of $293 million per year for the next three budgets, according to the government’s own projections. That’s more than enough to fund the projected annual cost of class size and composition limits, projected to be $225 million per year.

The BC Liberals have pushed the carbon tax as a revenue-neutral measure. This means that all the tax collected in the form of the carbon tax is supposed to be offset by tax cuts elsewhere. Whatever our opinion of the carbon tax itself, the government has consistently overshot how much it cuts taxes to make up for collecting carbon tax revenue – and this overshooting has consistently been in the tens and hundreds of millions of dollars, or 10 to 20 percent of carbon tax revenues. Not learning from the past, the government is budgeting overshooting to continue into the future. (more…)

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Hudak’s plans to cut teachers in statistics and politics

It’s election time in Ontario and that means graphs and statistics, facts and factoids, some stale, some new come out of the woodwork. Take the tweet below as an example, one that riffs on the old theme of an exploding public sector encapsulated in Tim Hudak’s promise to cut 100,000 public service jobs:

Let us even take the author’s word that he is non-partisan and found some seemingly interesting data; the focus is the chart, not him. There are two issues. The first is much simpler: the graph is a misportrayal. It uses data from a Statistics Canada sample-based survey to proxy for teacher employment and population data to proxy for student enrolment. While using proxies for missing data can be acceptable and justified, in this case, there is absolutely no reason for it. Both teacher employment data and enrolment data are exhaustively compiled by Ontario’s Ministry of Education. Here is the same graph with correct data:

140513 Teachers vs Enrolment
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Questioning the legacies of Flaherty and the PQ

This week’s podcast takes on government economic policy.

First, Armine Yalnizyan looks back at the tenure of Jim Flaherty as federal Finance Minister; the interview is based on an article she recently published in the Globe and Mail. Armine is a senoir economist at the Canadian Centre for Policy Alternatives. She is also a founding member of the Globe and Mail’s Economy Lab feature and the Progressive Economics Forum. You can find her on Twitter @ArmineYalnizyan.

I then talk to Eve-Lyne Couturier about the legacy of the last PQ government in Quebec and the economic debates going into the upcoming provincial election. Eve-Lyne is a researcher at the Institute de recherche et d’informations socio-economiques (IRIS). IRIS produces consistently excellent economic analysis (not only on Quebec) and is far too little known in the rest of Canada.

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Ontario is no California when it comes to debt

The Toronto Star just published an article I wrote in response to claims made by the Fraser Institute and the Toronto Sun that Ontario has a runaway debt problem worse than California’s.

The short version: I call BS. The slightly longer version: California has constraints, such as limits on the size of debt and difficulties in raising new taxes, that have severely hampered its ability to take on and manage debt. It has a smaller debt than Ontario on all measures but much worse credit standing. Ontario, on the other hand, still has a lot of flexibility to deal with debt. The “solutions” proposed along the Fraser Institute’s alarmism actually seek to create similar, harmful constraints in Ontario. “There is no alternative” becomes true only if we allow alternatives to be removed.

Read the full piece here.

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