The Reality of the Senate

So, in the wake of Auditor General Michael Ferguson’s report that thirty senators made questionable expense claims, a few of those senators came out swinging — and by “swinging,” I mean saying all sorts of ridiculous things about the Auditor General and then rejecting his findings despite the fact that the Auditor General is an Agent of Parliament and operates with absolute independence from the executive.  As if the Senate didn’t need another round of calls for reform after the circus ignited by the spending habits of Conservative and Liberal senators, that is what it got anyway.  Certainly, the reports surfacing about newly ex-Conservative senator Don Meredith’s tryst won’t help the Senate’s image, especially considering that he (1) was one of the thirty senators who Ferguson flagged in his report, (2) has been calling himself “Dr. Meredith” even though he obtained that title from an “institution” that has no authority to grant degrees, (3) allegedly acts like a tyrant towards staff in his office, and (4) showed up to a cultural event hosted by Iran’s embassy.  (As an aside, how exactly the Prime Minister’s Office can say that Meredith wasn’t representing the Canadian government at Iran’s event with a straight face is rather amazing!)

However one may feel about the future of the Senate, there needs to be a reality check about the purpose of the Senate.  First and foremost, the Senate was established at Confederation to do the prime minister’s bidding.  In theory, the Senate is supposed to perform the function of regional representation.  In practice, the Senate’s regional representation function went out the window in 1867 thanks to Sir John A. Macdonald’s vision for a centralized Canada, which meant the prime minister selects senators and the governor general appoints them on his or her advice.  Throughout Canada’s political history, the provinces’ premiers and governments and, at times, sitting MPs have been the ones to advance and defend the interests of Canada’s provinces and regions, not the Senate.  If the Senate did fulfill its regional representation function, then it surely would have approved Bill C-290 in 2012.  Though forgotten, C-290 proposed the legalization of betting on single games in pro sports; it was unanimously approved in the House of Commons and a majority of the provinces wanted C-290 to become law.  Furthermore, the Senate had been intended by Macdonald to act as a conservative voice in Canada’s political system and it has done so with aplomb.  The Senate defeated the first Old Age Pensions Bill in 1925; it refused to repeal section 98 of the Criminal Code, which was passed during the Winnipeg General Strike of 1919 and used to harass labour organizations and Left groups in general, until 1936 even though it clearly violated Canadians’ rights; and it rejected the Climate Change Accountability Act in 2010.  This conservative orientation is not surprising in light of the fact that the Constitution Act of 1867 requires a senator to own a minimum amount of property.  The intent of property qualification in 1867 was straightforward: the Senate would act to protect the interests of the propertied minority in case the popularly elected House of Commons ever threatened them.  While the property qualification was never constitutionally indexed to inflation — the minimum $4, 000 requirement in the Constitution Act of 1867 would be around $65, 000 in 2015 — its effects on the institutional behaviour of the Senate cannot be underestimated for it continues to be the house that is the most sympathetic to business interests.  Indeed, it is not unusual for senators today to sit on boards of directors.  For example, in 2009, Pamela Wallin was appointed to the Senate while sitting on the boards of directors of Gluskin Sheff and Associates and Porter Airlines.

So, what does all of this say about the Senate?  It is a decrepit institution that was specifically designed to be undemocratic.  While all three of Canada’s major political parties have recognized that the Senate is a problem, perhaps the most ridiculous statement comes from Justin Trudeau and the Liberal Party.  Somehow, Trudeau and his Liberals begin with conclusion that the Senate is a noble institution and it became corrupted over the years due to “the party structure” (whatever that means).  According to Trudeau and the Liberals, “The Senate is broken, and it needs to be fixed.”  Actually, the Senate is working just fine and it doesn’t need to be fixed since it’s working exactly as Macdonald intended — and a reality check on the Senate shows that’s the real problem.

Minister of Defence and Iraq’s Armchair General Jason Kenney

Minister of Defence Jason Kenney put his military prowess on full display earlier this week when commenting on Iraqi forces’ efforts against ISIS.  Kenney’s sage advice was: “They need to do better.”  That’s it!  Iraqi forces just need to do better.  Maybe Ottawa can send Don Cherry over to Iraq to lecture Iraqi forces on the importance of grit and heart in warfare.  After all, wars are only won when troops fight with a “hockey mentality.”  Ottawa might as well be doing that given Kenney’s ridiculous and embarrassing statement.  One of the first posts here pointed out that Harper does not take ISIS seriously and Kenney’s comment further confirms this.  Never mind that Iraq is a failed state.  Never mind that George W. Bush and Dick Cheney started a pointless war and didn’t bother with reconstructing Iraq’s administrative and security capacities.  Never mind Barack Obama’s irresponsible withdrawal from Iraq in the midst of a mess that still needed cleaning up.  Never mind that ISIS has been effective because it has supplemented its success on the battlefield with an administrative organization based on sharia law that can collect fees and taxes, provide judicial rulings, and collect information on its territories in order to enforce its repulsive rule so that an invisible man in the sky will be satisfied.  Of course, the military mission is a success according to Kenney because if it wasn’t for the Middle East Stabilization Force, ISIS would have more territory.  That sort of amazing logic is the stuff of comic book storylines where alternate universes definitively play out a scenario.  Besides, Kenney’s thoughtless remark is made interesting (for all the wrong reasons) given ISIS’s recent successes in Ramadi and Palmyra.  It’s important to note, though, that Kenney downplayed ISIS’s victory in Ramadi, suggesting that it was a setback but not a loss.  Ask any general and they’ll definitely say if an opponent takes territory, it’s a loss rather than a setback.  But hey!  Iraqi forces just need to do better and everything else will be fine!  Now let’s all go down the rabbit hole with Jason and visit Alice to see how she’s doing in Wonderland.

Try Again, Justin!

As much as I try to be serious and avoid profanity on this little read blog — and that’s a very generous description of this blog, if I do say so myself — it’s hard to be serious when the subject of Justin Trudeau comes up.  I mean, what is it with this guy?  Can he please fuck off out of here yesterday, today, and tomorrow?  He’s a smug and insincere prat who is little more than a wandering tool.  Look at the guy’s history!  He went for a literature degree, ended up in education, decided to dabble in engineering before doing a Master’s in environmental geography — because why not? — followed by a stint as a spokesperson for the Katimavik program, which was established by his father — thankfully, the Conservatives stopped funding that maudlin program of Canadian unity in 2013 — and finally going into politics because he’s Pierre Trudeau’s son.  Anyway, since the media is too busy drinking the Kool-Aid that tastes like the finest nothing from the Justin Trudeau Fountain of Saving Canada, no one seems to have publicly pointed out that he never held a heavyweight position in the Liberal shadow cabinet before they became the third party in the House of Commons.  That’s not surprising since he can’t seem to function without anything being scripted.  What’s more, a fully grown Justin Trudeau sounding the same as an 18 year old Justin Trudeau probably didn’t help matters.  In any case, the point of this post is to look at Trudeau’s latest, painfully contrived advertisement promoting the Liberal Party’s milquetoast platform.

Trudeau’s latest ad situates him in a room full of middle class people who need help and pronto since, as he proclaims, “the sky was the limit” when they were growing up.  That’s pretty interesting because the sky was the limit for the baby boomers in the room.  For everyone else sitting in the room with Trudeau, the sky started falling when they were growing up.  (I’m willing to bet that a few of the baby boomers, a.k.a. the Most Selfish Generation, in that room helped that situation along by making sure as few people as possible will get all the advantages that they enjoyed growing up, but that’s another matter.)  Again, he touts his wonderful magical tax cut for the middle class that will provide them with life-giving oxygen.  Since 2/3 of the working population make less than $44, 701, how much “help” would someone who just qualifies for Trudeau’s tax cut get?  It turns out that Trudeau’s tax cut for someone making $44, 701 would only net that person $55.87 a month.  Yes, everyone would love an extra $55 a month in their pocket, but that’s a poor substitute for any kind of national effort that might take pressure off of working people of modest means by building a truly national daycare program, improving public transportation, putting Canada in line with the rest of the developed world and establishing a national affordable housing strategy, or laying the foundation for a national pharmacare program so that Canada will no longer be the only country with a public health care system that doesn’t cover the cost of prescription drugs.  Also, Trudeau’s pledge to reduce the second income tax bracket — remember, the working poor in the first tax bracket are doing just fine and don’t need any help if we follow Trudeau’s logic of reducing taxes on those who need the most help — is enormously misleading.  Yes, it is a 7% reduction, but the tax rate is only going down by 1.5 points, which isn’t much as evidenced by the extra $55 a month saved in personal income taxes by Trudeau’s arbitrarily defined middle class.  All in all, this new ad serves to show how utterly useless Trudeau and his nauseating platform are.  Then again, we are talking about Trudeau here and in his Canada, style is always more important than substance.

What Ontario’s NDP Government Can Teach Rachel Notley

So, Alberta officially has an NDP government.  Despite a previous post that outlined why the Alberta NDP’s victory shouldn’t have been that much of a surprise for anyone with historical memory, Rachel Notley’s loss in the next election won’t be a surprise either.  This isn’t a matter of uniting the Right in Alberta for even if the Wildrose and the PCs merge, there is no guarantee that those who supported the PCs will still vote for a new party of the Right.  Rather, it’s about Notley’s pledge to work with Alberta’s businesses.  Frankly, this is an insane strategy.  The business sector has no inclination whatsoever to co-operate with the new NDP government — and why would they?  The PCs have provided business interests with a comfortable environment for the past 45 years: embarrassingly low corporate taxes, provincial campaign finance laws that would be the worst in the country if they weren’t rivalled by Newfoundland’s laws, and royalties on barrels of oil that are the laughing stock of the petroleum world.  What the Notley government is going to be dealing with is a bunch of spoiled brats who will be throwing temper tantrums because they’re no longer getting their own way.  If Alberta’s NDP wants a lesson on why a new NDP government shouldn’t be too concerned with business interests, it should look to the experiences of Ontario’s NDP.

One would swear that Queen’s Park was stormed by Bolsheviks after Bob Rae unexpectedly won and became Ontario’s first NDP premier in 1990.  For those who aren’t so inclined to both breathe through their mouths and drink the bilge water offered by business interests and their hacks, social democratic governments are quite supportive of capitalism.  The issue for social democratic governments, however, is how to harness the dynamism of markets and improve outcomes for the general public instead of hoping that good things will happen.  Rae’s government had the misfortune of having governed during the deepest recession since the Great Depression.  On top of that, technological innovations and the free trade deal with the United States presented Ontario with a rapidly changing economic environment.  So, what did the Rae government do when it realized that Ontario could no longer continue down the path of business-as-usual?  It decided that Queen’s Park needed to get together with labour and business and work towards a solution that would put Ontario on much firmer economic ground.  The biggest problem for Ontario then — and now too — was that its business community was quite lazy and thus unwilling to make the necessary investments, i.e. spend money instead of letting it pile up, to modernize their operations.  This was resulting in an economy that needed (1) firms to update the technology in their facilities and (2) to stimulate the development of a more highly skilled labour force. Otherwise, Ontario was going to become the Tennessee of the North by depending on low wages and low taxes to attract investment, often of the kind that could easily play multiple jurisdictions off of each other.

The Rae government’s solution to Ontario’s problems was the Ontario Training and Adjustment Board (OTAB).  Among other things, the OTAB would bring business and labour together to modernize the province’s economy through workplace-based training.  As Rae recounted in his political biography From Protest to Power, Ontario’s business community was aghast at the idea that they have to take some responsibility for modernizing the provincial economy.  Indeed, Rae pointed out that he told Ontario’s business community that the OTAB would be the best thing for them because they would be ready to supply markets with cutting edge goods if they took advantage of what the OTAB had to offer them.  What was the result?  Business refused to participate in the OTAB and a capital strike occurred.

The idea that Ontario’s NDP government was unconcerned about business is ridiculous for its very first act was to go to Wall Street — yes, literally go to Wall Street — and meet with key players in the bond markets to assure them that Bob Rae wasn’t Vladimir Lenin in disguise.  The Rae government then established the OTAB to help business modernize the provincial economy by pointing out that this was the best thing for business.  If this doesn’t say, “What’s good for business is good for Ontario,” then I’m not too sure what says it.  Nevertheless, for all of this, Ontario’s NDP government got kicked in the teeth by business, who then went on a concerted effort to make Rae and his Cabinet look incompetent when they were, in retrospect, probably one of the most forward looking governments in recent memory.  Ontario could conceivably have been a leader in selling green technologies if business had participated in the OTAB.  Now, Ontario has to buy green technologies to modernize its economy.  Rather than using provincial revenues to buy wind turbines from Samsung in South Korea, that money might have been able to buy made in Ontario wind turbines if Ontario’s business community wasn’t so reactionary.  Yet, Ontario’s business community was reactionary and that is where Ontario is today.  Given the Ontario NDP’s experiences with power, then, Notley would do well to forget about her pledge, however sincere, to work with business.  Put simply, you can’t work with someone who doesn’t want to work with you.

Remembering Alberta’s Progressive Past and Why It Voted NDP

There were quite a lot of similarities between Rachel Notley’s victory on Tuesday and the NDP’s historic ascent to the Official Opposition in 2011.  No one expected the NDP would ever make a breakthrough in Alberta or Québec and they did.  Polls showing gains for the NDP were soundly dismissed.  (Apparently, a 12% lead for the NDP means an upcoming election will be tight!)  Ridiculous pronouncements were made.  Albertans and the Québécois would somehow realize that they were going to vote for the NDP and then select one of Canada’s traditional parties at the very last second.  Voting for the NDP would mean a cratered economy.  All of this was silly.  What’s not silly, though, is that Alberta has an NDP government.  In an editorial, Danielle Smith, the ex-leader of the Wildrose Party cum floor-crossing Tory MLA, has pointed out that former premiers Ed Stelmach and Alison Redford have made past decisions that reflect the NDP’s positions.  Yet, these Leftish actions were taken in recent memory.  If one has a longer historical memory, then the quite wrongful caricaturing of Alberta as a province full of Right wing fanatics who hate Canada would be replaced by an Alberta that questions power and rejects the status quo whenever powerful interests try to get their way.  Naturally, there isn’t anything here that suggests this is genetic to the Canadian Left.  The Canadian Right has a long history of doing this too as evidenced by the now defunct Social Credit and Preston Manning’s Reform Party which, during its manifestation as the Canadian Alliance, eventually absorbed the Progressive Conservatives to form the now governing Conservative Party of Canada.

While Saskatchewan and its favourite son Tommy Douglas are associated with Canadian social democracy, how soon Canadians forget that Alberta was central to the formation of Canadian social democracy.  One of the most important but forgotten figures for Canada’s Left is William Irvine, a Scottish preacher who moved to Alberta and believed that doing social justice meant doing the work of Jesus Christ.  Moreover, Irvine was instrumental in motivating farmers’ movements in Alberta to become more political, thereby germinating a more organized Canadian Left.  Indeed, it was Irvine who convinced the United Farmers of Alberta (UFA) to become more political.  What this eventually translated into was the election of the very first social democratic government in North America in 1921.  In fact, members of the UFA were crucial for the formation of the Co-operative Commonwealth Foundation (CCF), which was the NDP’s predecessor.  And how soon it is forgotten that the CCF had been founded in 1932 in Calgary.  The fact is that without Alberta, Canada’s progressive tradition would look very different for the basis of the early agrarian movements was to direct the energies generated by political dissatisfaction towards defeating entrenched power and privilege at the ballot box.

Now, what is the point of this historical remembering?  The 2015 election in Alberta is in step with Canada’s progressive tradition that finds many of its roots there.  Jim Prentice demanded austerity from Albertans while protecting business interests.  These same business interests, i.e. the energy sector, have not been paying their fair share for far too long.  The average royalty on a barrel of oil is $100.  In Alberta, the royalty on a barrel of oil is $7.  How Prentice could be surprised by a $7 billion deficit in light of this has to be a feat unto itself.  Indeed, Alberta does not have much to show for its oil wealth.  Albertans do not have better health care, lower poverty rates, lower post-secondary tuition fees, and more modern infrastructure than the rest of Canada as a result of the oil boom.  Yet, now that the party for oil is over, Albertans were being told to tighten their belts by the Tories and the business sector.  For the last few decades, the PCs have squandered Alberta’s oil wealth.  Compare this with Norway where every Norwegian would have an extra $177, 000 in their pockets if the government decided to disburse its sovereign wealth fund today.  If Alberta decided to disburse its fund, Albertans would only have $4, 300 — and that’s with producing more barrels of oil than Norway over the last forty or so years.  Furthermore, scare tactics were employed by Prentice and business.  Business even went as far as threatening Albertans with ending charitable donations to a children’s hospital if they elected an NDP government.  Albertans did not like being told that they were beholden to Central Canadian business interests when they started to elect UFA MLAs in 1919 and eventually have them kick out Ottawa’s Liberal puppets in 1921.  Albertans did not like being told during the election by Prentice and to a somewhat lesser extent by Brian Jean of the Wildrose that they are are beholden to the oil industry.  The lesson in Alberta is clear: any party that seeks to protect powerful interests at the expense of the many will go down in defeat.  It isn’t a coincidence that this was the message contained in the early Left movements that first found expression in Alberta.

Justin Trudeau’s Plan to Help the Middle Class, or How to Polish a Turd

So, Justin Trudeau finally released his plan to help Canada’s middle class and it’s a joke.  How Trudeau’s proposals translate into a progressive platform for “the middle class” is beyond me. This isn’t a surprise.  Trudeau once defined the middle class as anyone who earns a paycheque.  The absurdity of that definition is clear since a cashier and a bank executive both earn paycheques and they hardly belong to the same class.  He later defined the middle class as someone living paycheque to paycheque.  A lot of people live paycheque to paycheque for different reasons.  A professional couple making six figures who are spendthrifts and can’t pay their bills is very different from a Wal-Mart cashier who can barely make part of the rent — let’s be real here, minimum wage workers cannot afford to live alone — because of a meagre paycheque.  For someone who claims to know what “the middle class” goes through, he sure doesn’t know who counts as middle class.  Of course, that’s not his concern for he believes it’s up to economists to argue through that definition.

There is absolutely nothing in Trudeau’s proposals that address growing inequality in Canada, which is most deeply manifested at the community level.  In fact, too bad if you’re working poor.  Justin Trudeau doesn’t care about you even though in his radio advertisements, Trudeau’s job interview voice said the Liberals want to help the middle class and those aspiring to join it.  What’s the first point of order for Trudeau’s plan?  A tax cut for middle income earners, which means anyone who falls into the second tax bracket will see their personal income tax rate reduced to 20.5%.  Someone who makes between $44, 701 and $89, 401 is now middle class in Justin Trudeau’s Canada.  Trudeau’s advisors might have wanted to open up the stats on this because the 2011 census, as useless as it is thanks to the elimination of the mandatory long-form, shows that the median individual income in Canada is $27, 600.  That means 50% of working Canadians are guaranteed to be ineligible for Trudeau’s tax reduction.  When the number of Canadians who make less than $44, 701 are added up, Trudeau’s plan excludes 2/3 of income earners.  Nothing wins elections like a party platform that excludes 2/3 of the working population!

So, what about Trudeau’s pledge to help those who want to become middle class?  That, I suppose, comes in the form of a new Canada Child Benefit that replaces the current system of multiple benefits for people with children.  The Benefit is no longer taxable, it is income-tested, and, as the Liberal website says, it is “targeted to the middle class.”  Apparently, making $44, 701 to $89, 401 was middle class but suddenly everyone became middle class under the Benefit scenarios provided by the Liberal website.  In any case, how much help would Trudeau’s proposed Canada Child Benefit provide parents who need child care?  Well, if you’re a single mother making $30, 000 in Toronto who would get $533 a month, it does very little.  The average monthly cost of daycare in Toronto for an infant, a toddler, and a pre-schooler in Toronto is $1, 676, $1, 324, and $998 respectively.  There isn’t much else to say here other than children of the working poor aren’t getting much help as the greatest predictor of poverty in adulthood is poverty in childhood.  A lack of affordable daycare is a key obstacle in getting single mothers, who make up the greatest proportion of the working poor, out of poverty since it affects their labour market outcomes.

The final point of Trudeau’s plan is the elimination of income-splitting and adding a new tax bracket.  How exactly does this help “the middle class”?  While I am in favour of eliminating income-splitting and a new tax bracket — Canada currently has four while the US, for comparison’s sake, has seven and requires married couples to file jointly — this doesn’t do much for income inequality.  As it stands, most wealthy Canadians derive their incomes from sources other than paycheques.  These sources of income generally fall under the category of capital gains and they are taxed at rates far below that of personal income tax rates.  If Trudeau was going to be serious about a more just distribution of income, then this would be tackled.  Yet, it isn’t and nor should anyone expect Trudeau to do so anytime in the future.

Here is the fact of the matter with Trudeau’s plans.  No amount of cutting taxes will alleviate the financial pressures facing low-income Canadians and increasingly squeezed middle-income Canadians.  The elimination of income-splitting won’t improve Canada’s horrendous labour market performance.  Trudeau’s Canada Child Benefit won’t father national and affordable daycare to help working poor families improve their income.  Where is the plan to work with provinces to develop an active labour market policy?  Where are the plans figuring out how to deal with the almost 50% of the labour force who work precarious jobs?  Where are the plans for a new national social floor that reflects changed labour markets?  Where are the plans to confront the high housing costs that are a source of financial stress for many households?  Trudeau’s plan isn’t providing “the middle class” with a fair and real chance.  It provides them with illusions.  Really, as I have stated in a previous post, this is about Trudeau’s politics of nothing since that is exactly what this plan gives all Canadians: nothing.

Harper Hasn’t Locked Canada Into Anything

Sure, the budget was last week, but I’ll still write on it.  In any case, Konrad Yakabuski of the Globe and Mail has echoed a sentiment that’s been running around for quite sometime now, namely that the Harper Conservatives have made it virtually impossible for any opposition party to expand the role of government.  This is bunk because there is quite a lot that the opposition parties can do.  Of course, I don’t expect the Liberals to follow through on any social justice measure that they promise given their history, but that’s a subject for another post.  Nonetheless, this idea that Harper has made irreversible changes is flannel.  Harper has not frozen Canadian society by any stretch of the imagination.  Canada is still an open and plural society and that means voters can swing to the Left or the Right on a whim.  What voters prioritize today may not be prioritized tomorrow and vice-versa.  Besides, however long they may last, voter shifts to the Left or the Right are never permanent.  Just ask the Alberta NDP.

Now, what can opposition parties do?  In order to raise revenue for new programmes, the opposition parties can get rid of the Conservatives’ boutique tax credits, many of which are either a de facto subsidy for personal consumption or business costs; neither should be partly paid for by the public purse.  Anyway, there you go.  No tax has been raised and Ottawa suddenly has a few extra billion in its pockets without even having raised a nickel in taxes.  Another thing that the opposition could do is to change priorities.  “Big government” means different things to the Left and the Right.  In fact, according to the Parliamentary Budget Officer, the size of government has grown under the Harper Conservatives.  Naturally, their priorities were reflected in this expansion as public safety and corrections saw a surge in the number of staff.  Yet, this isn’t “big government” according to Harper and the Conservatives.  This points to a simple fact: spending priorities matter for the kind of government that voters select.  Whatever isn’t a priority goes into the column of big government.

There is also the matter of corporate tax cuts: raise them.  Whenever business taxes go down, the tax burden shifts onto individual income taxes.  Business needs to pay its fair share for the services that give them the stable environment to conduct their affairs.  Business owners, of course, will bleat about how this will kill jobs, but seeing how corporate Canada is currently sitting on $630 billion after seeing their taxes go down ever since Harper was elected in 2006, they can take their doomsday scenarios and go pump salt given the sluggishness of the Canadian economy and the decrepit state of the Canadian labour market.  The fact is that taxes do not figure into a company’s decision to invest in a jurisdiction.  Skills, pools of capital, and access to consumer markets are what matter.  There is a reason why China and not Mongolia is receiving a ton of investment.  Besides, if taxes are going to be the way that a country plans on being competitive, then there are some serious underlying structural problems with that economy.

Despite the measures mentioned here, voters’ attitudes remain the most important part of the problem of and the solution to establishing new programmes.  Undoubtedly, the Canadian political spectrum has shifted to the Right.  Over the past three decades, Right wing politicians and politicians pretending to be progressive — *cough* Liberals — have somehow gotten away with the lie that good government can be done on the cheap.  No one does more with less.  Less is done with less.  If you don’t believe me, try buying $20 worth of groceries with $10 and then let me know how that worked out.  The wisest thing that people could do to dispel themselves of the ridiculous notion that equates good public policy with low cost government is to walk into a top local tattoo shop and read the following sign that should be hanging: “Good tattoos aren’t cheap and cheap tattoos aren’t good.”  Much like tattoos, the same applies to governments.  The sooner this is realized, the sooner Canada’s public problems can be addressed.

Justin Trudeau is Listening to Lawrence Summers? Nothing Bad Can Happen!

A few weeks ago, the Globe and Mail reported that Trudeau and his Liberals are listening to Lawrence Summers’s idea of “inclusive prosperity.”  I suppose this could be dismissed as another attempt by Justin Trudeau to appear as if he’s a deep thinker and it should be.  While Trudeau’s insistence that the Liberals will reveal their platform as the 2015 election nears isn’t problematic — election platforms aren’t something that should be treated nonchalantly given the nature of politics — it is nonetheless incredible that after being the leader of the Liberals for the past two years, the public should have some conception of what the Liberals want to do.  Finding a unicorn while blindfolded seems easier at this point.  In any case, the gist of Summers’s “inclusive prosperity” is as follows: rather than pursuing lower taxes and balanced budgets, governments should instead focus on investing in infrastructure, fight climate change, and invest in education.  Who would be against this?  Well, I would be against it given who authors inclusive prosperity.

Lawrence Summers has held a number of impressive posts during his career.  However, the policies that he has pushed have been anything but inclusive.  As Treasury Secretary from 1999 to 2001, Summers was the guy in the Clinton administration who ripped up the Glass-Steagall Act, thereby allowing commercial and investment banking to come together, further deregulating American financial markets.  The follies of Summers’s act was clear by 2007 when the American economy began to implode and US banks got into hot water thanks to their insistence that the sub-prime mortgage securities that they were both buying and selling — thanks to Glass-Steagall’s death since they wouldn’t have otherwise been allowed to sell securities of any sort — were perfectly fine.  Had Glass-Steagall stood, the US banking system may have been sounder than it was by that point, a liquidity crisis may not have emerged to the extent that it did, the US and many other economies may not have experienced a pointless recession, and the potential for foreseeable sluggish economic growth may not have happened.   Still, Summers’s decision to repeal Glass-Steagall had a more subtle but no less insidious effect: the further financialization of the US economy.  The consequences of financialization for American workers cannot be overstated.  Anything and everything was looked at as a liquid asset and the relentlessly short-term orientation of a financialized economy deepened throughout the US economy.  Bankers’ solutions for generating profits are fairly simple and very narrow-minded: cut labour costs or raise prices.  In the highly competitive American marketplace, the choice is often the former.  A lot of perverse incentives to make money materialize under highly financialized economic environments too.  Profitable and productive companies are worth more if they are dissected and destroyed.  Companies that should go under because they are effectively dead wood become highly valued because the promise of revived profitability offers excellent returns.  In effect, the paradigm that Summers helped shore up is one of an abused workforce who has to perpetually ratchet down their expectations because they labour in an economy that values unproductive finance over industry.  How these circumstances open the door to inclusive prosperity is about as clear as mud.

Investing in infrastructure, fighting climate change, and investing in education — whatever “investing in education” is supposed to mean — are all long-term solutions for an economy that is oriented to the short-term.  How does “inclusive prosperity” propose to occasion a paradigm shift?  It doesn’t!  Inclusive prosperity assumes that tacking these measures onto the existing paradigm will magically improve people’s lives.  At best, inclusive prosperity is an easy slogan that avoids answering the hard question of how to put an end to a destructive paradigm that relies on inequality to generate growth.  To be sure, the 2008 economic meltdown bucked the trend of everyone’s income falling during a recession as only top earners saw their incomes rise.  That this actually happened indicates something is seriously amiss with how economies now operate.  For Trudeau to import and consider the ideas of a man who helped deepen inequality is a clear demonstration of his lack of imagination.  Then again, the reason why he would do so was already given earlier in this paragraph: inclusive prosperity is an easy slogan that avoids answering the hard question of how to put an end to a destructive paradigm that relies on inequality to generate growth.  Perhaps, then, Summers’s inclusive prosperity is perfect for Trudeau: since it says absolutely nothing, expect it to do absolutely nothing.

Justin Trudeau and the Politics of Doing Nothing

Saying that Justin Trudeau is at it again would be an enormous lie.  In reality, Justin Trudeau isn’t at it again.  In fact, he has never been at “it.”  Rather than saying anything of substance, Trudeau has emphasized platitudes and sloganeering ever since he became the cardboard cutout leader of the Liberal Party.  Let’s not be stupid here for the opinion polls have been favourable to Trudeau simply because of his last name, though there are signs that this may no longer be enough.  Perhaps Trudeau’s current place in the polls is due to the fact that he is talking a bit more than usual?  Now, however, he’s talking even more as the Liberals have released radio ads with Trudeau outlining his plan for the Canadian economy.  A quick synopsis of what Trudeau and the Liberals have to offer can be found here.

What do the ads say? Not much other than empty rhetoric, myths about Canada being a country of social justice, and pointing out that Harper is a big meanie.  The same goes for the plan on the Liberal Party’s website.  Apparently, Trudeau wants to give the middle class “a real and fair chance to succeed.”  That’s good because there is nothing worse than a fake and unfair chance!  What’s his plan?  Well, Harper is bad and Trudeau will repeal income-splitting and improve pensions.  Beyond that, his announcements contain nothing and it ought to raise a series of questions.  Would Trudeau use the revenue recouped by repealing income-splitting to fund infrastructure?  Certainly, that could generate good jobs.  Yet, according to the Federation of Canadian Municipalities, Canada has a $123 billion municipal infrastructure deficit that increases by $2 billion every year.  Even though income-splitting is bad public policy, in no way would repealing it even make a dent in Canada’s municipal infrastructure deficit unless Trudeau’s plan going forward is to keep changing the bandages on infrastructure.  If that’s the case, improved employment opportunities would be minimal.  How, then, does Trudeau intend on reversing the more than thirty year old trend of stagnant and declining wages?  On this matter, Trudeau says nothing.  Would giving a tax cut to the middle classes, who Trudeau can’t even define, help?  Taxes as a percent of GDP have fallen in Canada over the past decade, so it is hard to see how that could help.  Rising wages are, in fact, the key here, but Trudeau doesn’t have the courage to say so.

Trudeau also promises to fix Canada’s public pension plan.  The age of eligibility will revert back to 65, which isn’t a bad idea since Old Age Security is a perverse road out of poverty for low-income Canadians.  So, rather than poverty being fine until 66, poverty would go back to being acceptable at 64.  I won’t get into too many details here, but the Liberals were the party that attacked the universality of public pensions by introducing clawbacks to the OAS, not Harper and his Conservatives.  Compared to what Canada’s social safety net looked like once Chrétien and Martin were done reworking it, Harper’s changes look mild.  In any case, there is at least a pretence of doing something here.  But hold on a minute!  Trudeau pledges to work with premiers to reform the Canada Pension Plan.  Here, Trudeau is clearly trying to take credit for something that is supposed to happen anyway: Ottawa needs the approval of 2/3 of the provinces with at least 2/3 of the population in order to change the CPP.  Besides, what would these reforms look like?  Would the CPP be enriched?  Would the CPP be privatized?  Could individuals opt out of the CPP and plough their CPP deductions into private pension plans instead?  There are all potential reforms to the CPP and Trudeau doesn’t say a word about a very important pillar of Canadian social policy.  Even more worrisome is Trudeau’s silence on Ottawa’s stance.  Would Ottawa present itself as the protector of public pensions like it does with health care or would Trudeau cave in to the premiers and give them whatever they want?  This is not an unimportant question as Manitoba has the only social democratic government in Canada and Greg Selinger’s NDP is badly trailing Brian Pallister’s Progressive Conservatives at the moment.  By 2016, it is entirely conceivable that social democracy could be dead right across Canada.  Had it not been for the presence of the Parti Québécois and NDP governments in British Columbia and Saskatchewan when the Chrétien Liberals last raised CPP reform in the late 1990s, the CPP would look radically different today.  Even if Selinger pulls off a miracle and overcomes the 15 point lead that Pallister is currently enjoying, Manitoba alone couldn’t ward off an attack on the CPP’s public and universal character.

That Trudeau has released a (badly drawn) sketch of the Liberals’ economic plan might bode well for the Conservatives and the NDP.  It offers absolutely nothing to concerned voters on the Left or the Right.  Using a job interview voice and acting pensive can only carry a person so far.  However, if Trudeau does succeed in the 2015 election, whether winning power or becoming the Official Opposition, that will be an indictment of Canadian voters who would clearly be happy with nothing.

The CBC Has Problems? Which Broadcaster Doesn’t?

As usual, the only series that seem to be in perpetual syndication are the series of cuts at the CBC and the series of calls to get rid of it.  Quite unfairly, the Conservative government has been branded as an enemy of the CBC given its longstanding antipathy towards an institution that was created in the 1930s by Conservative Prime Minister R.B. Bennett to check America’s cultural influence and to provide a pan-Canadian broadcaster.  Cuts to the CBC’s budget have been ongoing since 1996 under Jean Chrétien’s Liberal government.  How the Liberals’ cardboard leader Justin Trudeau can credibly pledge to restore the CBC’s budget in light of that party’s contribution to this mess is worthy of a chuckle or twenty.  If the Liberals are a friend of the CBC, then the CBC needs a new friend unless it has come down with Stockholm syndrome.

Whatever criticisms may be made towards the CBC, pointing out that it has produced far more memorable television in the past than, say, CTV is hardly a stretch.  Granted, the quality of CBC programming has gone downhill and past and present shows have not always given Canadians a good reflection of their broader social environment.  The quite terrible and embarrassing — indeed, embarrassingly terrible — Little Mosque on the Prairie is a case in point given that the vast majority of South Asians settle in major urban centres, not rural Saskatchewan, which, like the rest of rural Canada, is undergoing depopulation.  Then there is the loss of Hockey Night in Canada to Rogers that has led the CBC’s critics to proclaim that it is now facing the end times.  (Never mind the fact that the CBC has an agreement in place with Rogers that allows it to broadcast Saturday night games until the end of the 2017-2018 season.)

So, how has the CBC been managing?  Local newscasts have been bearing the brunt of these financial hits and the CBC has been replaying series ad nauseam.  If the agreement between the CBC and Rogers isn’t renewed, then even tougher times could be on the horizon for the former; live sporting events are pretty much the only reason to keep watching TV-as-usual.  Worse, the CBC is aiming to grab a share of the “younger demographic.”  This makes about as much sense as MTV deciding that it should try to grab a share of the 65+ demographic.  A specific audience watches the CBC, just like a specific audience watches any other channel.  Alienating the core audience that keeps a broadcaster alive in order to attract a wider, fleeting audience isn’t the best business strategy moving forward.  Nonetheless, with an increasing number of Canadians cutting cable and obtaining content through the Internet, the CBC has some serious issues retaining viewers.  Yet, this situation isn’t specific to the CBC.

Every Canadian broadcaster is trying to deal with the shakeup in TVland.  Viewership is down everywhere and it’s getting harder and harder to keep an audience.  Layoffs aren’t only happening at the CBC either.  Bell and Rogers have contained costs by laying off staff.  A fair amount of programming on channels owned by Bell, Rogers, and other broadcasters are reruns being passed off as original content too.  How many more Big Brother or Survivor marathons will it take for viewers to finally figure out that broadcasters are trying to pass off their shit sandwiches as fine roast beef?  Of course, this is ignored — the private sector always innovates, after all — and the usual trope of the CBC being funded by taxpayers is trotted out to discredit its existence.  To be perfectly honest, this argument is tired and deserves nothing more than the following response: “So what?”  Private broadcasters have consistently failed Canadians by purchasing the distribution rights for American programmes and then underinvesting in original Canadian programming, only to proclaim that no one wants to watch it.  Airwaves are a limited public resource and holding a license is a privilege.  The obligations that are attached to a license haven’t been taken seriously by private broadcasters, but they keep getting a free pass on this.  Moreover, any change to the existing regulatory environment — an environment that cocoons Rogers, Bell, and the rest of Canada’s decrepit broadcasting landscape from competition in the name of protecting Canadian ownership — that might threaten the monopoly profits of private broadcasters is generally met by their executives running to Ottawa so they can howl about the inevitable American cultural invasion that only they can nobly fend off.  The CBC and its counterparts in the private sector depend on government for their existence to a considerable degree.  Pretending otherwise is the stuff of fairy tales.