- Murray Dobbin writes about the crisis of extreme capitalism:
(T)he "free economy" romanticized by Friedman and his ilk is anything but. Completely dominated by giant corporations whose wealth outstrips all but the richest nations, economic freedom does not exist for anyone else, including the vast majority of businesses who are at the mercy of financial institutions and mega-corporations. This is to say nothing of workers whose "freedom" to sell their labour now means they are free to compete with those who earn a few dollars a day thousands of miles away from their communities.- As a case in point, Dene Moore reports on Taseko's sheer glee at the prospect of a federal government willing to gut environmental assessment processes to facilitate the destruction of important lakes in the name of mining profits. And David Climenhaga points out the chutzpah of oil apologists who are willing to stand in front of a disaster scene and claim we should trust their judgment in how to avoid disasters.
A free economy has always been a euphemism for liberated capital, and globalization is its obvious expression. While the behaviour of genuine markets as envisioned by Adam Smith was actually rooted in the customs, mores and culture of communities, this is less and less the case. Market behaviour is now typically that of Goldman Sachs or hedge funds. Their coldly calculated and amoral decisions affect every community on the planet and everyone living in them.
One very concrete way of comparing the power of labour and capital is to examine the share of the proceeds of increased productivity each receives. This time capital took it all -- virtually every dime over a 25-year period. Had incomes grown at the same rate as productivity the median income would have been $56,826 in 2005 instead of $41,401. But they didn't. Capital took it all because it could, because year by year democracy and its constraints on the "market" were steadily eroded.
In that missing $15,000 a year you can find the crisis of consumption, Canadian chapter. If millions of Canadian workers and families had actually kept pace with productivity the astonishing level of debt they now face would be much lower and they would be spending money in the economy. Last October the debt-to-income ratio of Canadian families hit a new record of 163.4 per cent. The comparable figure in the U.S. -- where it is also considered dangerously high -- is 110 per cent. As if that wasn't bad enough, money borrowed against home equity totals $206 billion, equal to 12 per cent of Canadian GDP (it's 4 per cent in the U.S.).
This refusal of the federal government to collect adequate revenue to address this huge deficit in infrastructure is one of the best examples of just how perverse neo-liberal ideology has become. A modern economy cannot function efficiently with crumbling roads, bridges, mass transit systems and sewer and water systems, yet government policy continues to contribute to the crisis. And this is just one category of service that corporations rely on -- cuts to education and medicare, and the lack of investment in social housing and child care are equally irrational from a business perspective.
Yet the current management committee of capitalism will respond to its crisis based on the theory that got them here in the first place -- Milton Friedman's edict that democracy is the problem. The greater the crisis, the more democracy will have to constrained. If the medicine doesn't work, increase the dose. Inequality will not be addressed; it will be institutionalized.
- Joseph Stiglitz discusses how draconian intellectual property laws exacerbate inequality:
The Myriad case was an embodiment of three key messages in my book “The Price of Inequality.” First, I argued that societal inequality was a result not just of the laws of economics, but also of how we shape the economy — through politics, including through almost every aspect of our legal system. Here, it’s our intellectual property regime that contributes needlessly to the gravest form of inequality. The right to life should not be contingent on the ability to pay.- Paul Krugman comments on the Republicans' determination to ensure that less-wealthy Americans go hungry as further evidence of a political party genuinely dedicated to destruction for its own sake. And lest anybody consider the Cons any different, Lee Berthiaume finds that hundreds of millions of dollars budgeted for foreign aid have been held back for no apparent reason.
The second is that some of the most iniquitous aspects of inequality creation within our economic system are a result of “rent-seeking”: profits, and inequality, generated by manipulating social or political conditions to get a larger share of the economic pie, rather than increasing the size of that pie. And the most iniquitous aspect of this wealth appropriation arises when the wealth that goes to the top comes at the expense of the bottom. Myriad’s efforts satisfied both these conditions: the profits the company gained from charging for its test added nothing to the size and dynamism of the economy, and simultaneously decreased the welfare of those who could not afford it.
While all of the insured contributed to Myriad’s profits — premiums had to go up to offset its fees, and millions of uninsured middle-income Americans who had to pay Myriad’s monopoly prices were on the hook for even more if they chose to get the test — it was the uninsured at the bottom who paid the highest price. With the test unaffordable, they faced a higher risk of early death.
When the legal regime governing intellectual property rights is designed poorly, it facilitates rent-seeking — and ours is poorly designed, though this and other recent Supreme Court decisions have led to one that is better than it otherwise would have been. And the result is that there is actually less innovation and more inequality.
Indeed, one of the important insights of Robert W. Fogel, a Nobel Prize-winning economic historian who died last month, was that a synergy between improved health and technology accounts for a good part of the explosive economic growth since the 19th century. So it stands to reason that intellectual property regimes that create monopoly rents that impede access to health both create inequality and hamper growth more generally.
- Finally, Susan Delacourt discusses the relationship between the Harper Cons and the civil service - featuring an ideal case in point as to why we should be concerned about the Cons' short-sightedness:
Kenney, for instance, apparently told his officials that his political insights counted as much, if not more, than standard research and surveys. Griffith describes this tension as a challenge that needed to be overcome by the public servants — many of whom greeted the work-culture change with classic stages of grief: anger, sadness, denial and, finally, acceptance.
Griffith also notes that Kenney and the public service had different attitudes toward risk — while the public service was thinking in the long term, the minister was focused on the short-term, political calendar.