Sunday Morning Links

Assorted content for your Sunday reading.

- Joe Conason discusses the increasingly widespread recognition that inequality represents a barrier to growth. And Heidi Moore takes a look at Thomas Piketty's place in making that point:

This is a deep point. Many American households, if they are lucky, will grow their wealth at the same rate as the economy. But, because the wealthy are growing their fortunes at a much faster rate, no one else can ever catch up.

Let's repeat that: no one else can ever catch up.

This is where Piketty adds more nuance: it's not just inequality of wealth and income that we're struggling with, but inequality of opportunity. That's of far more concern. In essence, he is saying, we're lying to ourselves if we believe that hard work will lead to wealth. Mainly, wealth reliably leads to wealth. Everything else is chancy. The middle class is playing the economic lottery to improve their lot in life, while the wealthy have a sure thing.

- Ian Welsh nicely sums up what level of profit we should expect out a functional market economy. (Handy hint: it isn't "every dime that can be squeezed out of a powerless workforce".)

Sustained high profits, in free market economics, are considered the sign of an uncompetitive market.  ...[If] an industry or business makes high profits regularly, and certainly if they do so for more than a decade or so, the market is not competitive.

The response to that should be political: either make the market competitive, or if it’s the sort of market which can’t be or is too much trouble to be made competitive (most utilities, if you’re sane; certainly utility distribution; any insurance required of almost anyone; roads, etc…) then either make them government run, or heavily regulate them.
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The general level of profits in a society should, actually, be pretty low.  5% plus inflation is a good level to aim for.  If high profits are available in parts of the economy, every other business gets starved for cash, as money runs to the high profits.  Economics says that those opportunities should run out and there should be a regression to the mean, but in oligopolistic economies with strong protected works and vast amounts of government corruption, that doesn’t happen—until there is a crash, at which point the most profitable businesses are bailed out, because they used their profits to buy government.

Individual businesses want high profits, but societies want low profits, and should view sustained high profits as a sign of economic illness which requires intervention.

- Joseph Heath duly criticizes Gary Mason's unusually-explicit call to drive down wages in the name of greater corporate profits:

Mason circles around this point:

A weakening Canadian dollar is helping to offset our competitive disadvantage with the United States and others, to some degree, but it doesn’t look to be a long-term answer. And we know wage cuts aren’t likely to happen.

Notice the wistful tone in that last sentence. What he’d really like to see is everyone’s wages go down, but apparently that’s not realistic. I guess we can put that down to the unreasonableness of the working classes, unwilling to sacrifice their standard of living in the interests of securing… a higher standard of living. And why isn’t a weakening Canadian dollar a long-term answer? Depends what you think the problem is. If it’s correcting a balance of trade issue, then yes it is an answer. But if the “problem” is that our standard of living is too high, as Mason seems to think, then he’s right, a weakening Canadian dollar will not lead to a permanent reduction in national income. The fact that he, and the various business leaders he cites, regard this as a problem, suggests that they are either deeply confused, or else they harbour a fundamentally malevolent attitude toward the mass of the population.

- In case there was any doubt that the corporate lobby is firmly in the latter column, Cliff and Stephen Maher both discuss the abuse of the temporary foreign worker program to attack wages and working conditions for Canadian and immigrant workers alike. And the Alberta Federation of Labour looks in detail at the massive numbers of employers misusing the program.

- Finally, Wendy Gillis reports on Canada's increasingly-embarrassing (and damaging) obstruction of access to information.