Sunday, January 11, 2009

The nation is waiting, maybe without bated breath but at least waiting, for the new Conservative budget due to come out later this month. The Harper conservatives are in something of a bind. The seriousness of the economic situation, which they once denied for ideological reasons, has dawned even in their rusty craniums. No more of a "turn around by July" or "this is a good time to buy". Doing nothing is no longer an option, but what can they do ? Following the lead of the USA is the easy option. Take every bit of free money thrown at the corporations down south, divide it by 10 and you have "Canadian policy". Yet, simply bailing out corporations may turn out to be politically unacceptable. The governments of both the USA and Canada have to be at least seen to be doing something for ordinary people, whatever the substance of what they are actually doing. The latest polls put the Liberals ahead of the Conservatives in voting intentions. Perhaps not far enough ahead for Sneaky Stevie's Liberal doppelganger Infamous Iggy to actually dare to pull the plug, but it is a sign of caution for SS. No matter what he might feel like doing he has to make at least some sort of theatre of concern for the public rather than his corporate friends.

Molly has previously presented the program that the Canadian Labour Congress would like to see instituted. Here is another alternative economic plan, this time from a collection of 20 western Canadian economists, compiled by the Canada West Foundation. Like the CLC program this set of recommendations emphasizes help for ordinary people over help for the corporations. Once more, I do not necessarily agree with all of the proposals. Things that are conspicuously missing include:

***A job creation strategy based on subsidies, tax breaks and changes in legislation aimed at the expansion of the producers' cooperative sector, a sure fire way to create maximum employment (and purchasing power) for every dollar spent. Employment that is not dependent upon a weak international trade system. This is especially important in the concept of "infrastructure" as many of such projects would be best and most efficiently undertaken by local coops.

***Basing any bailouts for the auto industry (and others) on the provision of equity in the industry, both for the Canadian public and the workers in said industry. In terms of the workers such equity should give them an increased say in how the industry was run. The economic benefits of this are obvious- increased efficiency as the workers actually have a stake in the enterprise. It is my opinion that all future government support to any industry should be premised on such conditions. Should the industry fail despite infusions of government money the way would be open to reestablish it as a producers' cooperative with minimal disruption.

***An emphasis on the domestic economy rather than the international trade system. Enterprises whose customers are local are far less vulnerable to fluctuations in international financial systems.

***An emphasis on the system of credit unions, properly regulated to avoid speculation. Unlike the large banks such institutions are basically local and thus insulated from the vagaries of international finance. Legislation should favour such institutions over the banks, and it should properly restrict their operations to avoid speculation on the part of their managers, a class whose interests are often at variance with that of the members.

***A reinvigoration of the 'Labour Sponsored Funds' via increased tax breaks for same, and an interprovincial agreement to restrict their operations to local industry rather than speculation. A re-examination of the legislation governing same to ensure transparency and prevent influence peddling such as led to the collapse of the Manitoba Crocus Fund.

***A guarantee of assured funding to munipalities, not just provinces. The amendment of provincial legislation, once more by an interprovincial agreement, to assure that such funding was, once again, more transparent and open to democratic control by municipal electors.
***Amendment of labour legislation, hopefully with provincial agreement, to 1)raise minimum wages nationally, 2)make union organization easier and 3)improve workplace safety and health standards. This would provide increased purchasing power as assuredly as a tax cut would and it would actually improve competitiveness as business would be induced to concentrate on actual improvement in production rather than on trying to squeeze labour costs.
One could go on and on about such proposals, and I will probably do so in the future. What is important to note here is that there is an "undiscovered continent" beyond the classical social democratic nostrums for correcting economic crises. It is also important to note that pretty well all of such reforms would not be granted by the goodwill of any government, especially the present Conservative one. What is important, at this point, is to raise the possibility of such reforms. Whether they are implemented or not depends not on the machinations of political parties but on demand from below. Molly hopes she can do her little bit to stimulate such demand.
The following article which led to this overly long "introduction" is from the online news magazine Straight Goods.
West urges Harper to act quickly:
Twenty-five Western economists send PM budget advice.

by Gillian Steward
If Stephen Harper is inclined to listen to anyone, other than himself, perhaps he should lend an ear to some western economists bursting with suggestions about how his government can best help Canadians weather the recession.

They want him to act quickly and be bold — no more dithering, no patchwork programs and no more fussing about whether to run a deficit.

"The first thing governments should do is stop talking about deficits and change the message to being willing to do 'whatever it takes' to save jobs," wrote William Kerr of the University of Saskatchewan in a report compiled by the Canada West Foundation, a Calgary-based think-tank.

"Getting more funds into the hands of individuals who most need support and will quickly spend the money should take priority over cutting personal or business taxes."

The 25 economists from the four western provinces want Harper to deliver a stimulus package that is national in design rather than targeted to particular regions, sectors or firms. But they also agreed, somewhat reluctantly, that the federal government will likely have to extend a helping hand to the auto sector.

"With the US government poised to introduce a package for the Big Three, Canada may have no choice but to do the same. The emphasis should be on structuring the package to include conditions that require it to be repaid, perhaps in the form of loans and/or loan guarantees," said Ken McKenzie of the University of Calgary.

Marlo Raynolds of the Pembina Institute suggested the government should support the auto sector with public funds only if the sector is willing to accept a fleet-wide fuel efficiency standard of at least 45 miles per gallon by 2020.

There was also a consensus that the feds should quickly inject money into the hands of consumers and businesses by strengthening Employment Insurance and other programs designed to act as a safety net during difficult times. The unemployed, pensioners, students and others more likely to spend than to save should be on the top of the list. Federal support for provincial social programs should also be increased as a short-term measure.

"Getting more funds into the hands of individuals who most need support and will quickly spend the money should take priority over cutting personal or business taxes," said Jonathan Kesselman of Simon Fraser University.

As for infrastructure projects, the group suggested that they be undertaken quickly and be evenly spread across the country. Among those on the top of the list: refurbishment of existing infrastructure, green public transit, transportation projects that facilitate trade such as a new Windsor-Detroit bridge and West Coast port facilities, affordable housing, and mental health and addiction facilities.

Tax cuts didn't get much play in this report mainly because participants couldn't reach a consensus on what kind of cuts would be the most effective. Some favoured temporary or permanent cuts to the GST while others preferred cuts to personal income taxes; others suggested reducing EI premiums for employers.

The economists agreed there wasn't much the federal government could do about the slump in commodity prices, which has hit the West hard. But they suggested an economic stimulus package should include measures to enhance credit financing in the energy sector, particularly for small to mid-sized producers. They would also like to see the reinstatement of the accelerated capital cost allowances for oil sands upgrader projects.

So there you have it, Mr Harper. Never let it be said there isn't a wealth of ideas being sent your way as you and your team craft that January budget.

Gillian Steward is a Calgary writer and journalist, and former managing editor of the Calgary Herald.


Larry Gambone said...

The items that are missing - which you have so graciously listed for us - are the very ones that are needed to protect the people. These economists better wake up - the tepid right wing social democracy they propose is not going to do much for the people and is going to get pushed aside by the type of left-wing populism you are proposing.

mollymew said...

I would only hope so, but I have my doubts.