Monday Morning Links

Miscellaneous material to start your week.

- Paul Krugman theorizes that our recent pattern of economic instability can be traced to a glut of accumulated wealth chasing too few viable investments:

On the surface, we seem to have had a remarkable run of bad luck. First there was the housing bust, and the banking crisis it triggered. Then, just as the worst seemed to be over, Europe went into debt crisis and double-dip recession. Europe eventually achieved a precarious stability and began growing again — but now we’re seeing big problems in China and other emerging markets, which were previously pillars of strength. 

But these aren’t just a series of unrelated accidents. Instead, what we’re seeing is what happens when too much money is chasing too few investment opportunities.

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What’s causing this global glut? Probably a mix of factors. Population growth is slowing worldwide, and for all the hype about the latest technology, it doesn’t seem to be creating either surging productivity or a lot of demand for business investment. The ideology of austerity, which has led to unprecedented weakness in government spending, has added to the problem. And low inflation around the world, which means low interest rates even when economies are booming, has reduced the room to cut rates when economies slump.

Whatever the precise mix of causes, what’s important now is that policy makers take seriously the possibility, I’d say probability, that excess savings and persistent global weakness is the new normal.

My sense is that there’s a deep-seated unwillingness, even among sophisticated officials, to accept this reality. Partly this is about special interests: Wall Street doesn’t want to hear that an unstable world requires strong financial regulation, and politicians who want to kill the welfare state don’t want to hear that government spending and debt aren’t problems in the current environment.

But there’s also, I believe, a sort of emotional prejudice against the very notion of global glut. Politicians and technocrats alike want to view themselves as serious people making hard choices — choices like cutting popular programs and raising interest rates. They don’t like being told that we’re in a world where seemingly tough-minded policies will actually make things worse. But we are, and they will.

- Paul Weinberg reminds us that Canada is losing billions of dollars each year in tax avoidance, and hopes that our opposition parties can agree to combat the problem.

- Dean Beeby reports that the Cons know full well that Canada's retirement system is woefully inadequate compared to other development countries - even as they defiantly stand in the way of anybody trying to ensure income security for seniors. Sharon Murphy points out that the Cons' budgets have consistently worsened poverty and inequality. And Jerry Dias recognizes that the NDP's plan for a $15 federal minimum wage represents an important step in the right direction.

- Aaron Wherry traces both the origins and the spread of the Mike Duffy scandal to Stephen Harper's need for total control. Mohammed Adam argues that voters need to hold Harper accountable for both the crimes and the cover-up emanating from his office. And Don Butler reports on how the Cons steamrolled over any public discussion about an anti-communism memorial.

- Finally, Yves Smith contrasts rhetoric and reality when it comes to free trade, and points out that economic development in the U.S. and elsewhere has resulted from smart planning rather than laissez-faire dogma.