Does living luxuriously in secure compounds and travelling the world first class, richly clothed and dining extravagantly in the company of hired sycophants, qualify a person to determine or advise on social and economic policy? Or, does it encourage the individual, convinced by material success, to join or fund those who lobby government to structure the economy in ways that ensure that income continues to flow upwards.
If a man or woman is denied no conceivable need, pleasure or whim for want of cash, can that person understand inequality or even define poverty? The latter point may seem inane but today I read this characterization of poverty by an American writer who claims it exists now only in the third world:
“Real poverty – where families starve to death, and have no shoes or proper clothing, and no medical care, and infants have a high death rate does exist in the world today, in the Third World. Real poverty used to exist in the West in the past. But it does not really exist any more.”
I’m sure nearly every Canadian considers a family to be living in real poverty if they cannot afford winter clothing, healthful food and recreation, medical and dental care, access to education, communication services, safe housing and transportation.
A person who measures annual income in six, seven, eight or more figures is likely to have a distorted view of poverty. Would an immensely wealthy business leader of the I’m all right Jack! variety consider that poverty is a critical issue, or even worse, that the world may be descending into a serious economic depression?
Paul Krugman wrote this week in a New York Times Op-Ed:
“It’s time to start calling the current situation what it is: a depression. True, it’s not a full replay of the Great Depression, but that’s cold comfort. Unemployment in both America and Europe remains disastrously high. Leaders and institutions are increasingly discredited. And democratic values are under siege.”
The Nobel laureate economist says demands for ever-harsher austerity, without efforts to foster growth, have created an atmosphere of bitter acrimony. This is made worse with anger over the heavy-handed exercise of German economic power. Krugman says nobody familiar with history can look at Europe’s renewed hostilities without feeling a shiver.
He says there are other political happenings in Europe, fuelled by unemployment and wealth disparities, even more dangerous than disruption of the Euro common currency.
“Taken together, all this amounts to the re-establishment of authoritarian rule, under a paper-thin veneer of democracy, in the heart of Europe. And it’s a sample of what may happen much more widely if this depression continues.”
Dean Baker, an economist with the Center for Economic and Policy Research, has a similar view about the inevitability of depression, without changed fiscal management:
“In policy circles, there seems to be an absurd faith that demand in the economy will arise out of nowhere if we are just virtuous enough in reducing the deficit. That is not the way the economy works. Demand must come from some discrete source and it is very difficult to see where that might be if the country continues on a path of deficit reduction.
“To see why this is the case, first note that nearly 70 percent of demand in our economy is from consumption, but consumption has been growing slowly for two reasons. The first is that the economy has been creating few jobs. Furthermore, in a weak labor market workers do not have the bargaining power to push up their wages. The slow growth in jobs and stagnant wages mean that most families, who get nearly all their income from working, are seeing little growth in income. Slow growth in income means slow growth in consumption.”
Canada, with abundant natural resources, has so far avoided extraordinary unemployment levels but we are trending toward trouble. Wages for most workers have been flat, income and wealth disparities are rising steadily, unions have lost influence and manufacturers are moving their capabilities overseas. Federal and provincial governments aim to impose austerity.
Starved for fuel, Canada’s economic engine will sputter and die.