Tuesday Morning Links

This and that for your Tuesday reading.

- Alex Himelfarb offers a warning about Canada's current inequality trap:

In a society with just a few winners and many losers, a case can be made that everybody truly loses. When he argued for higher taxes on the rich, Buffett also said that the rich people he knows are generous and giving and want what’s best for the country and their kids. They too then pay a price when they live in gated communities, when they live in fear, when the distance between us turns us into caricatures or turns us against each other.

And of course we are all losers when too much inequality hurts our economic competitiveness. We know that extreme inequality throttles demand for goods and services, constrains the supply of skills and talent, and drives up household debt. Working families increasingly struggle from paycheck to paycheck and turn to borrowing and credit to maintain their quality of life. The super rich don’t pour their abundant and increasing levels of cash into the mainstream economy but rather drive up costs in niche luxury markets and invest in increasingly speculative ventures often far from home. And the human costs of inequality – poor physical and mental health and a host of pathologies – are expensive. They inevitably divert capital that could be better used for investment in our betterment and savings to strengthen our resiliency. And pretty much everybody loses.

And as inequality grows, unchecked, we become a meaner place.
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When governments say, as they often do, that they will focus on the economy, they will surely fail if that does not include a focus on inequality.

We have to be as demanding of our politicians to justify tax cuts and tax breaks as we are for spending. We need to ask of all government proposals – how will they help reduce growing inequality – or will they make things worse?

- Meanwhile, Ellen Russell points out how the "blame-the-debtors" theory in dealing with the global economic downturn only figures to make matters worse for everybody involved:

Neoliberal elites have been demanding reduced tax loads, which drains the public coffers of money. At the same time, governments had a hard time cutting expenses. A comparatively strong European working class limits the government’s ability to manage the budget squeeze by trashing social programs. Plus government spending helps lubricate other political difficulties: government contracts often reward business friends while buying support as they provide good jobs to potentially disaffected middle class workers.

Countries are caught in a budget squeeze between a militant working class, the necessity of appeasing the middle class, and a radicalized owning class bent on reducing state revenues. It’s not surprising that they manage the budget squeeze by borrowing.

Even in good times it is hard to handle the reduction of tax revenues while expenditures are politically tough to cut. But since the last financial crisis, it has not been the best of economic times for many.

In bad economic times, tax revenues are further reduced while the cost of social programs like unemployment insurance goes up and pressure mounts for the government to create jobs. Governments should increase their expenditures to soften economic downturns.

- Of course the Cons are planning to burn millions of dollars hiring private-sector consultants to try to slash the federal budget. Which, as has been amply documented, figures to lead to this future report...



- Finally, it likewise shouldn't be much surprise that the Cons are once again looking for any available excuse to attack labour rights. But the good news is that they won't be able to keep doing so without a fight.