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.

Tuesday Morning Links

This and that for your Tuesday reading.

- In case anybody held out hope that the Harper Cons might follow up on their residential school apology with some concrete action to change First Nations relations for the better, here's the predictable result: a gratuitous ultimatum on land claims which seeks to force First Nations to take whatever is on the table now or risk being left with next to nothing.

- Ellen Russell comments on how the corporate right has turned financial crisis into a way of life for its own benefit:

Because the appetite for risk is so pervasive (#4), financial instruments and practices are so complex (#5), regulations are so inadequate (#6), and markets are so interdependent (#7), the "contagion effects" of a panic in one market or country can spread to far-flung and unexpected places. Thus the problems in Greece may spread to other EU countries, to the banks and other investors holding the debt of eurozone countries, to those exposed directly or indirectly to these banks and other investors, to any entity that provided financial "insurance" on anything sucked into the crisis, and anywhere else that financial panic touches down.

Awareness is growing that the arcane workings of financial markets have big impacts on their lives. No one is exempt from the devastation once a financial tsunami gathers momentum -- especially since economic contractions and government downsizing often follow closely behind the financial wreckage.

Financial crisis do not have to become a way of life. Ultimately, financial crisis is a political problem. It will take a massive shift in political mobilization to counter the current hegemony of financial interests.

Democratic financial reform must be a cornerstone for all of our agendas for economic change. Since we ultimately bail out these financial titans when crisis hits, we are entitled to make sure that finance is serving the public interest. Neoliberalism has made financial crisis a way of life. To move beyond neoliberalism, we need crack down on the financial sector so that a different way of life is possible.

- Yes, the shift to an HST model is all about benefitting the well-connected. But it's quite thoughtful of the B.C. Libs to serve up Exhibit M just in time for the referendum.

- Which offers all the more reason to answer "Absolutely!" to Rafe Mair's rhetorical question.

- Finally, Digby reminds us of the dangers of cult conservatism.

Saturday Morning Links

Miscellaneous material for your weekend reading.

- Brian Topp's take on the debates is worth a read in full. But particularly interesting is his evaluation of the Harper Cons' failings throughout the campaign:

Stephen Harper's "approach march" to the debates was foolish. His campaign misunderstood its opportunity to make a mainstream appeal to Canadians – something that is apparently not in the DNA of those who run it. And so Mr. Harper spent the first two weeks ranting angrily about the opposition...(T)he bad news, for Conservatives, was that there was nothing in the angry, outraged and isolated Tory Leader to appeal to mainstream (notably female) voters. As a tactical proposition, the first phase of Mr. Harper's campaign fed perfectly into the Liberal "we are entitled to your vote" narrative. It's a neat trick, for the Conservative campaign to be that bad all at once: missing your golden opportunity; undoing your establishing (sic) work; and providing much of the fuel one of your opponents is running on.

- Ellen Russell discusses the harm done to Canada's federal finances by the Cons' boutique tax slashing:

Tax cuts give Harper "announceables." He can look like he is doing something by announcing attractively named tax cuts, regardless of whether these tax cuts actually have any reasonable chance of achieving their stated purpose. If you really wanted to promote public transit or fitness there are much more efficient ways to do it. These quirky tax cuts have nothing to do with solving genuine problems and everything to do with buying votes.

Even if you qualify for some of these tax cuts (and many of us do not) they are not really much help to most Canadians. I know the Conservatives argue that every bit helps, so you should be grateful if you save $40 here and $15 there on your taxes. But that is not the point. Consider how much better off you would be if all of the money used up by those tax cuts were put towards something truly meaningful -- like a national childcare or pharmacare program.

Harper markets these tax cuts to Canadian families who are struggling to make ends meet, but they are often useless for lower income households. To get money back on your taxes you have to have the upfront cash to pay for your public transit pass or child's fitness program. Many households can't afford to pay for stuff now and wait until tax time to get a little something back. And if you are so poor that you don't have enough income to pay taxes, these tax credits give you zippo.

For a guy that is supposedly committed to smaller, less in intrusive government, these tax cuts are dripping with hypocrisy. Every time Harper makes the tax system more complex with a designer tax cut, more bureaucrats are needed to manage it. Somebody has to answer the calls from taxpayers wondering if Junior's attendance at "graffiti for beginners" class is eligible for the Children's Arts Tax Credit. So with each new tax gimmick, our tax returns become more complex to fill out. After years of this foolishness, you will never throw away receipts for anything, and even folks with simple tax returns will resort to hiring professionals just to make sure they are filling in the forms properly.

Tax cuts are also hard to get rid of, even if they serve no useful purpose. Government spending measures are reviewed constantly, ostensibly to verify that taxpayers are getting value for their money. But tax cuts stay in force indefinitely, with virtually no scrutiny to check if they are actually achieving anything for the forgone tax revenue.

- The Star provides its English debate response counterpart to yesterday's report from the French debate. And it may be most striking in revealing that pitches for a majority government, for more cooperation and for specific policies (without any particular statement as to who will be involved in those efforts) both proved fairly popular with viewers who were often annoyed by the balance of the debate:

Interest and happiness, on the other hand, was highest when the politicians talked about specific policies. And, perhaps notably, happiness was highest among the four clips when Harper said in his closing remarks: “I hope Canadians do elect a majority government.”
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Viewers registered strong opinions about the presence of Canadian troops in Afghanistan, becoming highly “disturbed” and “annoyed” when Ignatieff spoke about an extended commitment. They liked when the leaders talked about working together, though they were also happy and interested when Layton slammed the Liberals for arrogance.

- Toby Sanger points out how Canadian finance and insurance companies are abusing tax havens more and more to avoid paying their fair share at home.

- And finally, Erin rightly questions Jeffrey Simpson's bizarre distinction between a corporate tax rate of 18% (in the Libs' platform) which he finds to be acceptable, and one of 19.5% (in the NDP's platform) which he uses as an excuse for typical corporatist hand-wringing.

Thursday Morning Links

This and that for your Thursday.

- Ellen Russell is the latest to highlight how right-wing governments see deficits as a plus in their efforts to minimize the potential for future public action:

It is obvious that Harper is not too upset when it comes to the deficit. Despite his claims to be a fiscal conservative, he cannot give away money fast enough in corporate tax cuts or military spending. Parliament can't even get a straight answer out of him about the price tag of his anti-crime campaign or his F35 fighter jets. I guess that standards of fiscal accountability and transparency only apply when Stephen says they should.

Harper wants to spend freely on his political agenda, while having an excuse for refusing to implement the sorts of government programs that would make a real difference for Canadians who are struggling after the latest economic downturn. Better yet, he wants to portray his refusal to help Canadians in need as a virtue.

- Which leads nicely to Marc Lee's post on what factors actually matter in boosting the economy that Harper claims to be focused on:

So much of “competitiveness” (whatever that means) policy is focused on the supply side (tax cuts, deregulation) to induce additional gains on the margin (forget that investments made under a high degree of uncertainty, and other factors like environmental problems). But are not these microeconomic gains on the margin almost always swamped by macro forces, and in fact, investment is more determined by demand conditions, anyway. That is the one robust conclusion of a review of econometric analyses from the IMF I read a few years ago.

That is, if the economy is booming and demand is strong, business will invest even in the face of tax and regulatory hurdles. But eliminate those taxes and regulations in the midst of a recession, and they will have no meaningful effect because business won’t invest anyway due to weak demand. This is basic stuff, for anyone who’s thought about Keynes I know. But it is a big reason why most economists, business commentators and politicians that focus on supply side gains and neglect demand conditions get it wrong.

- But then, Matthew Yglesias is right to note the effect of corporate solidarity in distorting any debate about budgets (which goes a long way in explaining why useless supply-side policy is always the first to be considered):

This brings to mind the phenomenon that’s sort of the obverse of union decline—the extraordinary level of solidarity manifested by the corporate executive class in the United States of America. There are plenty of individual firms that benefit from this or that public sector spending stream, but essentially all business organizations are solidly united in opposition to essentially all possible ways to enhance government revenue. On financial reform, it’s not merely that the big banks opposed the Dodd-Frank bill, but there was absolutely no counter-lobbying from firms in the non-financial economy in favor of it. And that’s not to say that Dodd-Frank was the greatest thing since sliced brad, but there were no proposals coming out of corporate America for any financial regulatory overhaul of any kind. Yet clearly something went badly awry in 2007-2008. But the business class united behind TARP, then united to oppose any regulatory reforms, and is now united against any return to pre-Bush levels of taxation on rich people.

We’re so accustomed to this kind of thing that we take it for granted, but I don’t think it’s obvious ex ante that business lobbying should be such a simultaneously solidaristic and nihilistic venture. Presumably most American firms would, in fact, benefit from the existence of a sensible and sustainable financial regulatory scheme. But there’s no lobbying activity whatsoever dedicated to creating it.

- Scott Reid points out why it's exceedingly dangerous to let a "people don't care about politics" message take hold - particularly if we're headed into an election in the near future:

But the question remains: Why don't voters care?

Well, first of all, let's not be quite so (condescending). Actually, many people care. But Harper's team argues they're not the right people. Those offended by Harper's machine-like assault on the principles of honest conduct and fair play are already part of the Ottawa scene. Or worse, they're dedicated voters of the other parties.
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It is (the media), in particular, who tell us repeatedly that "no one cares." And all too frequently, there is little, if any, suggestion that part of the media's function is to serve as a check on abuse of authority. Put another way, if Woodward and Bernstein had followed the same method we sometimes witness in Ottawa, they would surely have shrugged off Deep Throat, explaining that no one cares about such a technical, complicated story and that, in any event, Nixon's triumph over McGovern rendered the matter moot.
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People don't give a tinker's damn if Harper is rotten to his political opponents. They care if he's rotten to them. And so far, the Liberals have not convincingly made the case that Harper's contempt of Parliament translates into a threat that resonates personally with the public.

If the Liberals hope to make Harper pay a price for his misbehaviour by forcing an election campaign, they have — to say the least — much labour left ahead. Standing double digits back of the Conservatives, falling behind in Ontario and floating somewhere between 23 and 26 per cent in popular support, it seems a peculiar time to call the question. Indeed, it could well make things worse.

Because, IF Harper were to wage and win an election campaign this spring, you can be certain that he — and others — would be quick to claim that he was right all along and that no one really does care.

- And finally, a special St. Patrick's Day edition of what thwap said.