Politics and Entertainment: why focus on inflation when there is little evidence of a inflationary trend while there are abundant statistics revealing just how bad things are for both the unemployed and the underemployed.

One of the official goals of central bank monetary policy is supposed to be low employment fostered through what is known as an expansionary policy by lowering interest rates with the hope that low credit rates will encourage businesses to expand their operations by way of capital investment in hard assets or capital expenditures of some sort and new hirings. We’ve had this policy in place for quite some time now, and yet employment really hasn’t improved one iota. If anything it’s merely gotten worse along with – because of the incentive of low interest rates –  an astounding increase in personal debt to the unseemly tune of a 165% income to debt ratio.

While some businesses are moderately expanding their operations, they do not seem to be increasing employment. Instead, they are either retaining cash and letting it grow – Carney’s so-called hoarding ‘dead money’ – or off shoring/third-partying employment at lower wage standards. Using low interest rates to try to control both inflation* and encourage employment, in other words, simply isn’t working.
But why focus on inflation at all when there is little evidence of any sort of inflationary trend while there are abundant statistics revealing just how bad things are for both the unemployed and the underemployed.** The focus should clearly be on increasing employment, but since low interest rates appear not to be working, printing money to monetize our national debt is just about the only worthwhile option left for a central bank to consider, and just about every central bank in the developed world is doing just that with the exception of Canada. Why not Canada?  Because of a neurotic, ideological fear of inflation that might be generated by a larger money supply – too much money chasing too few goods and thereby raising prices and potentially distorting the price of some financial assets. We are ruled by true believers.
But with that twisted caveat in mind and bearing in mind that this would constitute only a technical solution, not the genuine transformation we really need, printing money for a determinant period of time is still a good choice; for it would allow the government to spend with a bit of comfort in order to build, say, infrastructure and other employment generating programs that both stimulate the economy and employ people as well as potentially lower the Canadian dollar and thereby increase exports.
The problem is that strategy is a political choice, one that would require an intelligent government interested in generating employment rather than imposing wage-suppression and sustaining asset stability.* But the new head of the Bank of Canada apparently plans on maintaining the same old failing monetary policies of his predecessor and his CEO, Flaherty, by privileging inflation over employment as a primary policy direction – albeit a mandated policy but one that nevertheless serves only the neoliberal investor class, not ordinary Canadians. This narrow, misguided perspective is no doubt the reason Stephen Poloz has been chosen as the new Governor.
‘Growth’ and ‘inflation’ are prominent in the news stories about the new Governor with a wish to increase employment nowhere to be found. He’ll get along just fine with Steve and Jim.
* Inflation is an enemy of neoliberalism for two reasons: it erodes the monetary value of already held assets such as bonds and creates pressure to increase wages. Quantitative easing of any sort is a no no under our strict neoliberal regime, though I would not be surprised to see it applied to private sector financial organizations should they need bailing out of some sort.

**  For example, “the number of temporary workers in Canada hit a record two million last year, according to Statistics Canada. That amounts to 13.6 per cent of the work force compared with 11.3 per cent in 1997, when such record-keeping began.

And since the recession, temporary work has grown at more than triple the pace than permanent employment – up 14.2 per cent for temp work between 2009 and 2012, versus 3.8 per cent for permanent workers.” http://goo.gl/DkBDm

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Politics and Entertainment: Why are governments addicted to neoliberal #austerity?

The key to deficit reduction is not austerity – reducing government spending by cutting programs and personnel – but good old-fashioned employment. Stanford’s argument is in the Krugman reformist, Keynesian tradition. He doesn’t seek a transformation, merely a technical economic readjustment, but, given our failure to transform capitalism so far – which can be brought about, in any case, only with a political strategy, not mere economic tinkering – it has value within the framework of a capitalist reality – a stopgap of sorts. 
As I’ve said many times in that context:
Without employment, no income; without income, no spending; without spending, no demand; without demand, no production; without production, no economy.
And thus no tax revenue to pay down the deficit. Frighteningly simple, especially when one realizes that government itself instead of firing people could be employing them and establishing employment programs in an effort to stimulate the economy when the private sector is failing to do so during these stagnating times.
Still, the question remains: why is it that so many governments continue to drink the austerity koolaid when it is so evident from countless global examples that it simply doesn’t work? Because of course, as the main partner in corporatocracies, they serve their corporate brethren and their plutocratic masters. Austerity always privileges this investor class, and, while it may seem counter-intuitive, recessions, as Robert Pollin has suggested, actually benefit this class*. Ontario is no exception in its allegiance to the financial sector – after all Bay Street isn’t in Boise –  especially since it necessarily controls so much of Ontario’s industrial economy too. As long as industrial economic activity is fulled by debt/credit, the financial sector and its capital will be in control.
We should nevertheless be grateful, I suppose, that the Ontario Liberals chose to ignore Don Drummond’s highly dubious classic neoliberal recommendations. Who knows the horrors they might have wrought.
* In the eyes of the investor class, austerity presumably generates confidence by working to maintain government solvency and asset value, especially long-term government bonds, by way of keeping inflation in check through reduced spending. Thus Canada’s neoliberal fiscal policy complements the Bank of Canada’s monetary policy of low interest rates, which also keep inflation in check. This is important to the investor class because government is of course the final guarantor of the plutocrats’ investments and their banking institutions. The outsourcing of government services if they happen at all under austerity is only an incidental benefit as is increased neoliberal freedom in the “marketplace,” for spending, whether intended by the policy or not, is also seriously inhibited in the general economy..
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Politics and Entertainment: The issue is not #capitalism under new management, but the transformation of #capitalism itself. #neoliberalism #cdnecon

More and more I tend to agree with George Monbiot that it is not neoliberalism in and of itself as an ideology or economic theory that is the root cause of our economic/political/social woes, but the ruling oligarchy’s alibiing use of that model to further their own wealth no matter the harm that results from that quest. (Is it any wonder they’re called “the feral rich.”) The distinction is important because it shifts the strategic focus to the plutocratic investor class itself and in turn their banking, regulatory, and corporate institutions – their agents of destruction –  which are served of course by compliant governments everywhere and nowhere more so than right here in Canada. Our banks are now “too big too fail.” This is, sad to say,  the point to which the financialization of the Canadian economy has descended: 80% of  financial assets are held in these institutions. Be prepared for the socializing of bank debt down the road now that the framework’s in place; that is, you’ll pay for any bailouts.

More and more too I find myself in agreement with both Greg Albo and Leo Panitch, who have argued persuasively that progressives groups here (including the Council of Canadians) and elsewhere are very big on tactics and “micro-politics” but woefully lacking in overall strategy and considerations of  long-term consequences. I would add to their basic argument that the self-interest of the progressive groups each with its own agenda determined largely by their executives – as is the case with political parties – will no doubt continue to inhibit any collectivizing co-operative movement towards a larger, focused pragmatic goal of institutionalizing social democratic controls.

For a brief moment, there was a ray hope with the establishment of CommonCauses, but apparently all they wish to do is replicate the actions of other progressive groups and to replace the Harper Regime. The issue of course is much larger than that simplistic goal. The issue is not capitalism under new management, but the transformation of capitalism itself. Else all is lost.

Is it hopeless? Perhaps not. Perhaps all that is required is patience, As Richard Wolff has said, “As has happened often in human history, what provokes change is less any clear vision of where we go next and more the intolerability of where we are. Capitalism is no longer “delivering the goods” for most people. The circle of its beneficiaries grows smaller and richer and more out of touch with the mass of people than ever.”

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Politics and Entertainment: To begin the process of democratizing the economy step 1 is to restore the banks to their status as public utilities

More at The Real News

This is Part 2 of a three part discussion with James K. Galbraith and Leo Panitch on whether any sort of New Deal is now possible in America. This segment crystallizes for me the difference between Keynesian reformers like Galbraith and Krugman, say, and revolutionaries like Panitch. Galbraith  continues to have faith in regulation and the government institutions that are capable of controlling economic and financial policies, claiming in effect it’s just a question of reform, of having the right personnel in those institutions and a reasonable government in power. Panitch recognizes that the problem isn’t a mere issue of personnel or government.  It’s a structural problem because these institutions are embedded in Wall Street, maintaining the financialization of the economy and undermining thereby a real industrial economy based on supply and demand. These institutions in fact serve Wall Street. 
What we need, Panitch argues – and I  could’t agree more – is to begin the process of aggressively democratizing the economy. The first step would be to restore banks to their status as public utilities, for it is the oligarchical control of banking corporations with their destructive neoliberal policies that is the root cause of all our social and economic malaise. 
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Politics and Entertainment: A 516.7 billion increase in personal debt and 140 billion in federal debt since Flaherty took over

Whatever economic movement we’ve had has been fuelled by essentially personal debt, an astonishing  516.7 billion increase since 2006, at a staggering 165% debt to disposable income ratio. Only #banksters and the investor class benefit from such a financialization of the economy. And we’re 140 billion deeper in federal financial debt since Flaherty took over with a net debt balance of 650 billion and a stagnating global economy – the effects of which will be hard to escape since, lacking a diversified domestic economy,  all our economic growth eggs are in export markets and in particular commodities – namely oil and mining. The classic neoliberal agenda has failed miserably. Time for Drummond, Hyder, O’Leary and Co. to wake up from the dream.


Where is the $14-billion from the GST rate cut now? #cdnpolisoa.li/MOQwOlB
— barrie mckenna (@barriemckenna) March 25, 2013


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Politics and Entertainment: This will be the Regime’s Primary Alibi followed by the EU crisis when the Canadian Economy Sinks into Recession

Canada faces near-recession if U.S. plunges over ‘cliff,’ Carney warns 

“Carney warns of risk from U.S. Bank of Canada Governor Mark Carney has warned that a failure by U.S. politicians to reach a new budget agreement before time runs out would push Canada close to another recession… the bank warned that Canadi

ans are still borrowing at a faster pace than their disposable income, making them more vulnerable if they lose their jobs or home prices tumble. The ratio of household debt to gross domestic product now stands at a record high 163 per cent, up from 161.5.”

Let us not forget, however, that the Canadian economy in and of itself has not been managed well by this extreme neoliberal government that has consistently placed investors, the financial sector, natural resource exports, and free trade before the real industrial domestic economy. wage fairness, and job creation for the middle and working classes. A 163% household debt/GDP ratio is also indeed worrisome as is the fact that whatever equity most Canadians have is inextricably bound to their still mortgaged houses. Get ready.

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