Friday, June 06, 2014

Friday Morning Links

Assorted content to end your week.

- Simon Enoch discusses the costs of turning over a profitable system of public liquor stores to corporate control - as Brad Wall has finally admitted to wanting to do:
A privatized liquor market is very likely to evolve into an 'oligopoly', where only a few corporations dominate and are able to exert monopoly-like power. Local, independent liquor retailers would likely find it difficult to compete. An oligopoly would have the supposed disadvantages of a monopoly, high prices and restricted supply, but lack the major advantage of public ownership, profits that flow in to public coffers...

Like any business, private liquor will seek to advance its economic interests through public policy. Indeed, Alberta-based private liquor companies have been consistently contributing financially to the Saskatchewan Party since its election. The reality is that the interests of the private liquor industry will almost certainly come into conflict with that of the public interest. Currently, under our public system, concerns such as public health can take priority in public policy. Will we be able to continue to make such issues a priority in the face of an economically powerful opposition determined to advance its own interests?
- Meanwhile, Joyce Nelson wonders why the combination of waste and scandal generated by massive privatization in Ontario isn't receiving more attention in the ongoing provincial election campaign. And the Globe and Mail reports on the Ford brothers' use of a privatization campaign supposedly based on efficiency to give publicly-funded handouts to their own personal business partners.

- Charles Pierce writes about the U.S. Democrats' quixotic efforts to restore some ability to regulate campaign finance in the wake of court rulings equating unlimited money with free speec

- David Dayen discusses how the roots of the 2008 crash run deeper than we often presume - and how consumer debt relief remains a necessary step in both boosting growth and reducing inequality:
By reviewing other economic downturns, Mian and Sufi discover two recurring features: a buildup of household debt before the crash, and an extreme decline in consumer spending afterward, as households cut back, hoarding money to pay off those scaled-up debts. The normal channels of fiscal and monetary policy have difficulty dealing with highly leveraged household balance sheets. House of Debt correlates these features of recessions, and really targets debt as the core problem, arguing that it needs to be restructured during crises and prevented during better times.

This critique — about the destructive power of debt and the need to forgive it — has in recent years come from far more radical circles, not from two economics professors trained in the classical tradition. “When we pitched the book, one publisher said, this is the intellectual justification for Occupy Wall Street,” said Professor Sufi in an interview. “We didn’t set out with that agenda. But one of the points we make is that the position we’re taking is not that radical if you look at history.”
Sufi and Mian detail in the book how credit growth, particularly to low-income, high-risk households, fueled the housing bubble. Thanks to securitization, lenders could extend shaky credit and then pass off the risk to investors around the world, disconnecting themselves from any price drops. That’s before you get into how they ignored underwriting standards in a rush to lend, and fraudulently sold mortgage-backed securities without divulging the poor quality of the underlying loans. “Lenders should be held accountable for their actions,” Sufi said.
- And finally, Don Pittis writes about the need for a strong policy response to tax evasion techniques which are exacerbating inequality.

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