Juxtaposition

In 2008, a floundering candidate for public office made a fool of himself by turning serious economic danger into an opportunity to showboat, only to find that nobody was buying his self-proclaimed leadership (Heilemann & Halperin, Game Change at p. 384-385):

McCain set off back to the Hilton. In the car he called Bush and informed him of his decision, and asked if the president would hold a meeting at the White House for him, Obama, and congressional leaders to discuss the bailout bill. Bush feared such a meeting would inject a destabilizing dose of politics into a fragile situation. He told McCain that his intercession would undercut Paulson and wasn't likely to help solve the problem. After hanging up, Bush instructed his aides, Find out what's going on here. But before they had a chance, McCain was on TV, standing at a lectern at the Hilton, announcing the suspension and calling on Bush to convene a conclave.
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The news of McCain's suspension drew gales of derision from the press. No one was willing to give him the slightest benefit of the doubt...that his motivations were anything less than craven...

McCainworld had assumed that the suspension would be viewed as an authentic, characteristic act of putting country first. But...McCain was now seen as a typical, and faintly desperate politician - and his campaign a campaign of stunts.

In 2015, the same is happening in Canada:

Was there any concrete economic reason for Stephen Harper to call Stephen Poloz yesterday, as global stock markets continued their gyrations?  And then to have his office subsequently issue a cryptic and rather foreboding statement about the conversation?

Of course, Prime Ministers and central bank governors talk to each other every now and then — but these conversations, for obvious reasons, are rarely publicized.  And since we are in an election campaign, the meeting was all the more odd.

Poloz himself has no control over the actions of the markets.  And his response to any macroeconomic damage that results is limited to monetary policy adjustments (the next Bank of Canada interest rate decision is September 9), over which the Prime Minister is not supposed to have sway.

The Prime Minister himself can’t do anything about the market chaos, either.  Once the writ has dropped, the government switches into “caretaking” mode, and has no discretionary policy-making authority.

And there was nothing in yesterday’s gyrations, stomach-churning as they were for the buy-low-sell-high crowd, that indicated a need for emergency action by either the government or the Bank.  If anything, it was “par for the course” for speculative markets which are always driven by alternating waves of greed and fear.

So what was the point of the call?  Political optics, obviously — which explains why the PMO’s subsequent spin effort was more important than the phone call itself.

Politicians always follow the “look busy” rule: when bad things happen, they have to be seen to be responding, even if there is little likelihood their actions will have any effect. 

Which raises the question: who will be cast as Sarah Palin and Joe the Plumber as the Cons' campaign follows the McCain path?

Covering for Recession Stephen

Shorter Stephen Poloz:

Economic reality has a well-known anti-Conservative bias. So in the interest of neutrality, I refuse to apply common terminology to reality.

Thursday Morning Links

This and that for your Thursday reading.

- Robert Reich offers a long-form look at the relationship between inequality and policies designed to extract riches for the wealthy at everybody else's expense:

The underlying problem, then, is not that most Americans are “worth” less in the market than they had been, or that they have been living beyond their means. Nor is it that they lack enough education to be sufficiently productive. The more basic problem is that the market itself has become tilted ever more in the direction of moneyed interests that have exerted disproportionate influence over it, while average workers have steadily lost bargaining power—both economic and political—to receive as large a portion of the economy’s gains as they commanded in the first three decades after World War II. As a result, their means have not kept up with what the economy could otherwise provide them. To attribute this to the impersonal workings of the “free market” is to disregard the power of large corporations and the financial sector, which have received a steadily larger share of economic gains as a result of that power. As their gains have continued to accumulate, so has their power to accumulate even more.
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The answer to this conundrum is not found in economics. It is found in politics. The changes in the organization of the economy have been reinforcing and cumulative: As more of the nation’s income flows to large corporations and Wall Street and to those whose earnings and wealth derive directly from them, the greater is their political influence over the rules of the market, which in turn enlarges their share of total income. The more dependent politicians become on their financial favors, the greater is the willingness of such politicians and their appointees to reorganize the market to the benefit of these moneyed interests. The weaker unions and other traditional sources of countervailing power become economically, the less able they are to exert political influence over the rules of the market, which causes the playing field to tilt even further against average workers and the poor.

Ultimately, the trend toward widening inequality in America, as elsewhere, can be reversed only if the vast majority, whose incomes have stagnated and whose wealth has failed to increase, join together to demand fundamental change. The most important political competition over the next decades will not be between the right and left, or between Republicans and Democrats. It will be between a majority of Americans who have been losing ground, and an economic elite that refuses to recognize or respond to its growing distress.

- Meanwhile, Katrina vanden Heuvel worries that the Trans-Pacific Partnership only stands to further entrench corporate domination over democratic politics. David Dayen observes that the Obama administration's arguments for the TPP are entirely recycled from broken promises surrounding NAFTA. And Dave Johnson observes that unenforceable token mentions of labour and environmental issues can't come close to making it worth handing further power to business.

- Julia Smith notes that the Cons have utterly abandoned any principles in their foreign policy as they chase profits through arms sales and human rights abuses.

- Don Curren writes that economists think Bank of Canada governor Stephen Poloz is being too optimistic in presuming Canada's economy will improve in the absence of any evidence. Which naturally means the Cons are spending every available opportunity trying to badger Poloz into declaring that all is rainbows and ice cream.

- Finally, Chris Hannay interviews Joseph Heath about the messaging challenge facing Canadian progressives. And Geoff Dembicki reports that there's plenty of work to be done in rallying young voters behind the best possible alternative.

Friday Morning Links

Assorted content to end your week.

- Jessica McCormick and Jerry Dias respond to Stephen Poloz' view that young workers should be happy to work for free, and note that he of all people shouldn't be pointing the finger at individuals to address problems with systemic unemployment:

The most infuriating aspect of Poloz's statement is that he himself could do more than virtually any other Canadian to help put young people into real, paying jobs. Monetary policy is one of the most potent tools to stimulate spending power and job-creation. The Bank of Canada could do much more to create real jobs for young people (using conventional and unconventional policies regarding interest rates, monetary expansion, and exchange rates). But instead, it puts more priority on orthodox financial goals (like inflation targeting and non-interference in foreign exchange) than on full employment. Poloz is left to advise young people on how to "adjust" to this grim reality, instead of doing more to solve the underlying problem.

When there are far fewer jobs than job-seekers, there is a natural tendency for individuals to do whatever they can to personally survive. Individual actions such as preparing better resumés, developing good networks, and -- yes -- doing volunteer work, might increase one person's chance of landing a rare paid job. But those individual coping strategies hardly constitute an adequate policy response to a genuine social crisis. Poloz, and his counterparts in the federal government, need to develop and implement real solutions for youth unemployment, instead of issuing insulting platitudes to job-seekers.

- Meanwhile, Mike King and Edward Woolley examine (PDF) the effect of public investment on research and development, and find that it actually tends to "crowd in" more private innovation than would have happened otherwise. And SOS Crowns discusses the Sask Party's stubbornness in pushing private ownership and profit regardless of whether it makes any sense to do so - with liquor retailing serving as just the most recent example.

- Scott Sinclair and Stuart Trew ask why we're not seeing any meaningful discussion of the CETA now that we know exactly what's included. And Aaron Cosbey looks at the risks of the CETA and other new trade deals, including wording which may require that complicated issues be regulated simplistically:

There are also some areas that give cause for concern around sustainable development objectives. The chapter on domestic regulation obliges parties to make their licensing requirements – which could include environmental permissions and approvals – “as simple as possible” in their application to all economic activity of each other’s nationals or firms. This is an unqualified requirement that could be disastrously interpreted.

- The Economist offers a handy summary of the dangers of Dutch disease.

- Finally, Frances Webber notes that the Harper Cons are far from the only right-wing government looking to undermine the idea of human rights, as the UK Conservatives are looking at declaring that rights can be removed from anybody who falls out of favour with the government.

New column day

Here, arguing that while Stephen Poloz is indeed thoroughly out of touch in suggesting that people entering the workforce should take on unpaid internships as matters stand now, we should in fact make sure that unpaid work (or study, or other activity) is a viable option for young workers.

For further reading...
- The CP reports on Poloz' comments here, while Tavia Grant expands on the story here. CBC follows up with a Saskatchewan perspective here. And Elizabeth Lane looks at the issue as one of the workers who's been unable to find a job despite ample training and effort. [Update: Alison's response is also well worth a read in linking Poloz' advice to Scotiabank's massive job cuts.]
- Miles Corak points out here (PDF) that a systemic lack of employment for young workers has been one of the defining labour trends over the past few years.
- Unifor and the Broadbent Institute (PDF) each make the case for a substantial jobs program as another means of ensuring there's a place for young workers to build experience without going hungry.
- But the principle behind the Globe and Mail's discussion of a guaranteed income seems particularly compelling to me in the case of unemployed or underemployed young workers. Given the choice between trusting employers (who have plenty of money to hire more workers if they wanted to) in planning for workers' long-term well-being in exchange for a tax credit or direct job funding or in the workers themselves to determine how best to plan their careers given a secure income, the latter seems far more likely to generate positive outcomes.