In grade 9 or 10 French class, we had an assignment to write a page of text in French and accompany it with some graphics. I chose to write about the French Revolution, and for the picture, I cut out magazine photos of Margaret Thatcher, Ronald Reagan and Brian Mulroney
Continue readingTag: Recession
drive-by planet: Capitalism is self-destructing: Richard Wolff on the ways
It doesn’t require a Trotskyist or a laid off worker to tell you that capitalism isn’t working. Not only does it not work, it is destroying societies… it is destroying lives, incomes and empowering a tiny elite, who never seem to fail, go broke or go to jail. Well, when
Continue readingThe Disaffected Lib: Will Climate Change Drive Britain Back Into Recession?
Britain’s Tory government is hoping desperately to avoid a “triple dip” recession on its watch. The Cameron government eked out a 0.1% growth for the three months ending March 1st, about as slender a margin as they come. Recently, however, the British Isles have been plunged into a deep freeze
Continue readingThe Scott Ross: Cold Conservatism & Canada Without A Jacket
Most Canadian kids don’t leave home without their mother telling them, “Don’t forget your jacket.” Always offering the reminder so her child doesn’t catch a cold. Canada may not have a mother looking out for us, at least on this continent, but Stephen Harper is a big boy and he
Continue readingThe Scott Ross: If A Fiscal Cliff Kills, Canada Should Tax Death
“In this world nothing can be said to be certain, except death and taxes.” – Benjamin Franklin The fiscal cliff in the United States did not just endanger its own country’s economy but the world’s, including Canada’s heavily dependent one. But in the American problem lies, at least partially, a
Continue readingThe Progressive Economics Forum: State of the BC Economy
As we close out 2012, BC finds itself in some precarious economic waters. To recap, a massive housing bubble that built up through the naughties (2000s) finally burst in 2008, feeding a financial crisis, as extremely loose (some would say fraudulent) lending practices pushed housing prices up to spectacular, never-seen-before
Continue readingYappa Ding Ding: A Keynesian Cliff
When we have a recession and there’s a call for stimulus, a lot of people – especially on the right – dispute the effectiveness of Keynesian economics. People like Prime Minister Harper and Finance Minister Jim Flaherty were so ideologically committed to small government that as we entered recession in
Continue readingPolitics and Entertainment: Canada’s economy in a stall, StatsCan reports
There’s every chance we’ll have at least a technical recession in the fourth quarter given these statistics:
“The economy slumped to 0.6 per cent in the third quarter — below even the gloomy 0.8 consensus and about one-third what t…
Continue readingdrive-by planet: N14 anti-austerity ‘day of protest’ across Europe: pictures and video links
Millions across Europe turned out November 14 in an anti-austerity ‘day of protest and solidarity.’
The coordinated protests are happening at a time when Europe is headed back into recession as determined by economic indicators, although there have…
Continue readingRedBedHead: Why Are The Tories Pushing Canada Into Recession?
Remember how the Tories are the party you want to vote for in tough economic times because they’re great managers and willing to make the tough decisions? Remember all that stuff? Yeah, well, the Tories are poking holes in the Canadian economy faster than the rest of us can bail.
Continue readingCuriosityCat: This recession has cost you $12,000 per year
Vicious circle? Very interesting article which puts into numbers the cost of the financial meltdown and the recession: In much of the industrial world, what started as a financial problem is becoming a structural one. If growth in the US and Europe had been maintained at its average rate from
Continue readingCuriosityCat: Mitt Romney’s failure: The Recession is Not Enough
Seems American voters want more than simply I am not the other guy from their presidential contenders, even when the country is suffering from a deep recession with high unemployment, which should doom the incumbent president: In their seminal book, This Time Is Different: Eight Centuries of Financial Folly, Harvard
Continue readingCanadian mythology: Bob Rae, NDP and socialists to blame for Ontario’s deficit.
A common article for the Toronto Sun outlines this:
Rae tripled Ontario’s deficit to $9.7 billion and raised taxes in his first budget in 1991, saying he was proud to fight the recession rather than the deficit.
But, to be fair, Rae was facing a recession, just as Harper did in 2008 when the federal Conservatives blew the budget on economic stimulus (albeit at the insistence of the Liberals, NDP and Bloc in a minority Parliament).
To be fair, it was an international recession – keenly happening in America, which invariably and inevitably will affect us so long as NAFTA ties us – and to put the brunt of the blame on the NDP is absurd. A Premier of a province can’t control the international market, but even in this article it lobs the blame on Bob Rae quite thoughtlessly.
It’s post hoc ergo propter hoc with a convenient ignorance of what governmental action actually exacerbated the recession in Canada. The early 90s recession, by the way, which caused the deficit in the first place. Hundred of thousands laid off, diminished tax base, money being paid for EI, money being paid for welfare – these things lead to governmental debt.
The government action that worsened the already terrible recession wasn’t from any socialist or left-leaning peoples, but actually a right-wing government with many business interests: the Progressive Conservatives under Brian Mulroney.
The reason this recession hurt particularly in Canada can indeed be blamed on John Crow and the Brian Mulroney Progressive Conservatives. John Crow was the then-Governor of the Bank of Canada – Canada’s central bank which controls and regulates the financial market – from 1987 to 1994. He was appointed by Brian Mulroney.
One thing the Bank of Canada does is regulate, and to a degree, control interest rates. When your borrow money from a bank, or store your money in a bank, our Bank of Canada decides the limits on what you can earn and what you can lose in terms interest payments.
John Crow’s grand idea was to end inflation, supported by then Progressive Conservative Finance Minister Michael Wilson,
Like [John] Crow, [Michael] Wilson had a staunch, almost obsessive commitment to fighting inflation, and the two men agreed in the spring of 1987 that the battle should be stepped up. (1)
How could this be done?
…perhaps the most potent method – a method which, if applied with sufficient force, could stop inflation dead in its tracks – was to raise interests rates. (2)
Raising interest rates means it’s more expensive for most Canadians to pay for their personal loans – such as a mortgage or a line of credit. Raising interest rates, which Jim Crow did, caused significant damage to a substantial amount of Canadians,
Exerting such a strong influence over interest rates was like exercising a life-and-death power over the economy. In a sense, controlling interests rate was like controlling the country’s supply to fresh air. Money was the economy’s oxygen; it allowed the system to function, to breathe. If oxygen became scarce, the economy would start gasping for air. This is exactly what higher interest rates did; by driving up the cost of borrowing money, higher interest rates made it harder to get access to money. Thus, businesses couldn’t expand their operations and perhaps couldn’t even pay their employees, consumers couldn’t buy houses and cars and large appliances, and perhaps could no longer even afford even little expenses like having their clothes dry-cleaned or their hair cut. If their interest rate lever was cranked up high enough, and oxygen became sufficiently scarce, the economy would start choking in a desperate struggle to breathe.
…the significant result of all this was a recession. (3)
Another problem that raising interest rates caused was driving up the Canadian dollar, which made it more expensive for manufacturers to invest in Canada (4). The reason our dollar increased was that high interest rates attracted wealthy people looking to invest and make a return, as high interest rates disproportionally benefit the rich*. Reminds you of something?
The worst year of the John Crow rule was the same year the NDP was elected to government in Ontario: 1990,
He jacked up interest rates sharply in the spring and summer of 1990 – until they were five to six percentage points higher than the U.S. rates. This plunged the economy into a deep recession, which turned into the longest period of economic stagnation [in Canada] since the thirties. (5)
And academics agree that this recession was the main cause of Canadian debt:
These findings are in line with those of other well-known mainstream economists. As we’ve seen, Pierre Fortin concluded that roughly $30 billion of the total deficit for all levels of government in 1992 could be attributed to the recession, which Fortin blames largely on an over-tight monetary policy. Ernie Stokes, head of WEFA Canada and a former Finance department economist in Ottawa, also concluded that Canada’s deficit would have been much smaller – by about $25 billion in 1991, for instance – if it had followed the looser monetary policy of the U.S. during the Crow years. (6)
Thanks to the right-wing, business-dominated Canadian print media (and otherwise) Bob Rae and the NDP get the blame for the Ontario deficit, while the Progressive Conservatives (and the business community that backed them) seem to remain immune for accusation. Take action, dispel these myths and put the blame where it ought to be on: the wealthy and greedy business elite who back the policies which would benefit themselves at the cost of the majority of Canadians lives and well-being. Progressives, liberals and socialists are seldom the problem in Ontario, or Canada, or even anywhere else; rather, it’s the capitalists to blame. These sneaky bastards are so dastardly they’ve managed to subdue the population and shift the very blame onto those who would rather liberate us from their grip. We’ve been duped.
Fight the power.
Because the power is fighting you. And winning.
To end, the book (Shooting the Hippo: Death by Deficit and Other Canadian Myths) where I got the majority of this information, I would give two thumbs up and recommend it to you all.
* Just to flesh out an example, high interest rates overwhelmingly benefit the already wealthy:
In 1991, Canadians with income between $10,000 and $15,000 received interest income averaging $1,500 per person – an amount that largely reflected the interest collected by seniors and low-income groups. But rich Canadians, with incomes over $250,000, enjoyed interest income that year averaging #51,000 per person… thirty-four times the size of that received by the lower-income group. (7)
(1) McQuaig, Linda. “John Crow and the Politics of Obsession.” Shooting the Hippo: Death by Deficit and Other Canadian Myths. Toronto: Viking, 1995. pag 73. Print.
(2) Ibid. Page 76
(3) Ibid. Page 78
(4) Ibid. Page 103
(5) Ibid. Page 109
(6) Ibid. Page 115
(7) Ibid. Page 84
Canadian mythology: Bob Rae, NDP and socialists to blame for Ontario’s deficit.
One of Canada’s enduring mythologies is that during the NDP reign in Ontario from 1990 to 1995 a whole plethora of woe was inflicted as the result of Bob Rae and his mismanagement. Most people point to the fact that during that time the deficit of Ontario increased quite a
Continue readingThe Progressive Economics Forum: Incomes Flat in “Recovery Year” of 2010
Today’s Statscan release of income data for 2010 allow for a backward glance at the state of the recovery. What is most striking is that – following two years of flat income growth in 2008 and 2009 – there was no meaningful economic recovery for most Canadians in 2010. Median
Continue readingArt Threat: Ghosts with Shit Jobs – Is this $4,000 “lo-fi sci-fi” the future of Canadian Filmmaking?
It is the year 2040. China is the world’s dominant economic power, while North America’s decline has forced most of its citizens into degrading and menial jobs. In Toronto, two “silk-gatherers” collect and sell “spiz,” the remnants of secretions from giant arachnoids. Other jobs of the future include “digital janitor,”
Continue readingThe Progressive Economics Forum: The Big Banks’ Big Secret
The CCPA today released my report: “The Big Banks Big Secret” which provides the first public estimates of the emergency funds taken by Canadian banks. The report bases its estimates on publicly available data from CMHC, the Office of the Superintendent of Financial Institutions, US Federal Reserve, the Bank of
Continue readingCanadian Progressive World: Canadian family finances still under stress: Report
For many families in Canada, income security is an elusive dream, according to a new study released by the Vanier Institute for the Family. The report, The Current State of Canadian Family Finances, shows that income inequality is increasing. Canadian … Continue reading →
Continue readingRed Tory v.3.0.3: Defending “Rae Days”
Unlike his two immediate predecessors who unwisely allowed themselves to be negatively defined by relentless campaigns of character assassination from the Conservatives, Bob Rae is making it clear that he’s not going to sit idle and simply allow attack ads by Harper’s mufti-million dollar smear machine to go unanswered. Instead,
Continue readingThe Progressive Economics Forum: BC isn’t broke: putting teacher bargaining in perspective
Last Monday, BC teachers held a Day of Action in communities across the province to protest the BC government’s decision to legislate a contract and put an end to their collective bargaining process. I was invited to speak to teachers at the Surrey rally, where I had the opportunity to
Continue reading