For many, this is a depression

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.

Categories: Economics, Income Inequality

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6 replies »

  1. This elite at the top that are making all the decisions to influence our governments are exactly the problem. They are so removed from reality and coupled with the fact that most of them hate people, we will all fall down sooner rather than later unless this power is seized by the majority.

    Great post Norman.


  2. It is very difficult for one to say this and on many blog postings I have inferred it, but now I can see only armed revolution can stop this runaway economic train.

    We do not have government of the people, rather we have elected dictatorships that last 4 years, then are renewed or dissolved only to have another 4 years of elected dictatorship, where political cronies reap power and wealth from the backs of the populace.

    We have elected cabals, who gain power by bribing the electorate, with broken promises and lies. Canada is sliding down an ever steeper slope of political corruption mixed with dictatorial power, sprinkles with religious nonsense.

    We cannot change as we lack the method of change, Canada is on a head on collision with reality and I don't think government can withstand the consequences.

    The only way to change is to overthrow the government and the bureaucratic power behind the government. The time for peaceful change has come and gone and now the clock is ticking to a very ugly conclusion.

    We have squandered what precious time we had for peaceful change, and now, time advances closer and closer to our collective doom.

    As with all violent revolutions, there are no winners, only losers.

    Tick, tick, tick…………


  3. Rather than impose austerity measures affecting the masses – how about a higher tax on extraordinary bonuses and payouts to the likes of the Shaw family. My Shaw bill has increased 3 or 4 times since March 2010 (a total of 22% for unchanged service – basic cable, telephone & extreme internet).

    Or better yet, could controls be placed on publicly traded companies that ensure that shares rather than bonuses be paid out to executives and board members. Ever increasing wages and perks of persons that fill top positions in both government and publicly traded companies are a detriment.


  4. Canada stinks with corruption. BC stinks the worst of all the other provinces.

    When our own P.M. Harper rewards some-one as evil and corrupt as Campbell to High Commissioner to England, for doing his dirty work, we know this country is doomed. No-one in their right mind would do a stupid thing like that. Except Harper I guess.

    The climategate talks, were just another farce. Harper only attended, so he could con other country's into accepting the dirty tar sands grunge. There is no intention, to reduce carbon emissions, what-so-ever.

    What kind of idiots delay solutions for climate change? Are they, Obama and P.M. Cameron? Shame on the lot of them, for caving into a monster like Harper. Our Mr. Harper has been lying to people,just how bad the climate is in Canada. Would the morons allow a bag over their heads, and be hooked up to the exhaust fumes from their vehicles? Stupid, stupid idiots.

    2015, is far too long a time to reduce fossil fuels. There is acid in the ocean, right up to the shores of BC. Scientists were shocked, they thought the acid was, way out in the deeps. The acid will eat the shells off the crustaceans. The Great Barrier Reef will be dead within 20 years. Our oceans are dying. If the seas die, we die. The oceans are on an over dose of Carbon Monoxide.

    As they say. Man is the most destructive animal on earth, and the most stupid one at that.


  5. A person commenting at the NY Times offered words like these at Krugman's article:

    It is the systematic undermining of democracy over the last twenty to thirty years that has led to the economic catastrophe we are all experiencing.

    People are not now against democracy. They are against the current plutocracies in the West which call themselves “democracies”. They are against the nominal, formal democracies which have been hijacked by corporations and financial organizations.


  6. HST on my recent hydro bill came in at $52.84. Why is there even HST on hydro? So I can subsidize top management with their outrageous salaries? The blood squeezing going on from BC citizenry by the BC Libs is so ridiculous.

    This is why our family has decided to not purchase any Christmas gifts this year. The insanity must stop.


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