Wednesday, November 29, 2006

Fools Parade

On November 27th, the House of Commons voted on a resolution proclaiming that "the Quebecois are a nation within a united Canada." The vote was overwhelming --266 in favour, 16 against. Both the resolution and the vote are deeply problematic.

From the moment he entered office, Stephen Harper has displayed a breathtaking ignorance of the province of Quebec, even though he intends to solidify his and his party's future by finding enough votes in la belle province to win a parliamentary majority. To those of us who grew up in Quebec, who were there during the October Crisis and who voted in the 1980 referendum, Harper's motion ignores that history and lets loose all the centrifugal forces that have threatened this country since its inception.

Harper and his supporters claim that the resolution is essentially meaningless because Quebecers are given "nation" status "within a united Canada." They claim that the latter phrase negates the former and that the resolution is essentially a sleight of hand (or, more precisely, word.)

However, the word "nation" -- in either French or English -- has profound connotations in both the context of Quebec history and in international law. One need only recall Quebec political parties of the past -- the Union National and the Bloc National -- and their platforms, to understand what the word means. And when Gilles Duceppe and the Bloc Quebecois cheerfully support the resolution that, in itself, should raise red flags. Clearly, when Duceppe and his allies read the resolution, what they read is "the Quebecois are a nation within a united Canada for now."

And that is the point. The long term consequences of the resolution are catastrophic. For, not only will an increasing majority of Quebecers demand their sovereignty as a nation, the door will be open for others to make the same demand. Canada's First Nations have already complained about being left out of the resolution -- although no one should be surprised at this oversight -- given the fact that the Harper government scuttled the agreement which Paul Martin signed with them over a year ago.

And, in some ways, perhaps no one should be surprised at this turn of events. As Jim Flaherty's recent economic blueprint makes clear, the Conservatives have a radical vision for Canada. If they get their way, theirs will be a Canada which rewards individual initiative, not group accomplishment, which downsizes government, eschewing government investment in national infrastructure in favour of private investors and which leaves social policy to the provinces or -- as they would prefer -- to individuals. In short, they are bent on breaking the ties that have bound these disparate entities north of the 49th parallel together. In truth, they are not Conservatives at all. With the same linguistic sleight they displayed in Monday night's resolution, they have camouflaged the fact that have no wish to conserve Canada. They are really radical Libertarians. The late Milton Friedman would be gratified.

What is even more disturbing is that a majority of the Liberal members of the House and all of the New Democratic members apparently cannot see through this sleight of hand. Without careful analysis, and with eyes that only see as far as the next election -- probably in the spring -- they are afraid to rock the boat, oblivious to the storm which awaits them. Apparently only sixteen members -- one of whom is Michael Chong, Harper's Intergovernmental Affairs Minister -- have the courage of their convictions.

Harper, we are told, graduated at the top of his high school class. Like Jacques Pariseau before him, he has proved that the possession of several academic accolades does not immunize one from folly. Harper is a fool. Two hundred and sixty-six members of the House of Commons followed his lead this week. Democracy may be rule of the people and rule by the people. But there is no guarantee that it is rule for the people. Sometimes it is merely a fools parade.

Monday, November 20, 2006

Economics as Theology

Milton Friedman died last week. His was a remarkable story. Born in Brooklyn, of Hungarian immigrant parents, he earned a scholarship to Rutgers and a doctorate in economics from Columbia. Like his chief academic rival, John Kenneth Galbraith, he worked for the Roosevelt administration, helping draft and implement many of its New Deal policies. Both men became public intellectuals, with Galbraith taking up long term residence at Harvard, while Friedman found a home at the University of Chicago.

In later years, unlike Galbraith, Friedman rejected the theories of John Maynard Keynes, and found salvation in the theories of the founding father of the dismal science, Adam Smith. He moved from Liberalism to Libertarianism, convinced that the lot of man would be greatly improved if government kept its meddling fingers out of the lives of all folk, particularly the common folk.

His chief claim to fame was that he correctly predicted the period of stagflation of the early 1970's; and for his work he was -- deservedly -- awarded the Nobel Prize. His policies were, in large measure, adopted first by Margaret Thatcher in Britain and then by Ronald Reagan in the United States. And they worked. By following Friedman's dictum that the only economic lever a government should possess is control of the money supply, both leaders started long periods of economic growth; and they wrung -- after much pain -- inflation out of their economies.

In the process, Keynesianism -- and its chief proponent in North America, Galbraith -- were relegated to the Museum of Irrelevant Luminaries. Galbraith saw economics at the centre of history, power and human nature. And, when it came to human nature, he tended to agree with Mark Twain that "the closer you get to the human race the more you find layers and layers of nonsense." This nonsense he labeled "the conventional wisdom." Never far from his boyhood on a southwestern Ontario farm, he referred to classical economics as "trickle down," where the economy's principal assets were introduced at the front end of the cow and what remained for the common man was what came out the back end.

Galbraith believed that the function of government was to establish "counterveiling forces," so that what came out at the back end was at least of more value and more quantity than the classical economic model allowed. Government could mitigate the traditional boom and bust of economic cycles and thereby create some equity between citizens -- so that the cow's digestive system produced more value for the common man -- and put an end to "private wealth and public squalor."

These views were heretical in the 1920's; but the Great Depression forced western democaries to give heresy a try; and for forty years the prescription worked. But in the 1970's, in reaction to Israel's victory in the 1967 War in the Middle East, Arab oil producing states formed OPEC and established a monopoly on oil prices, which increased from a dollar and a half a barrel to thirty-four dollars a barrel. The result, in the West, was that ecomomic activity ground to a halt. Interest rates soared to a high of eighteen percent in 1980. Unemployment also hit new highs. Keynes policies no longer seemed to work.

Up until the oil shock of the 70's, Friedman was what Keynes had been a generation before -- a pariah. But, just as extreme conditions in the '30's forced a re -examination of the conventional wisdom, Friedman's prescriptions became the order of the day and -- like Keynes theories a generation before -- dogma. Essentially, the Friedman dogma held that, if an economy was to work well, Galbraith's counterveiling forces had to be dismantled in the name of freedom. If Galbraith viewed human nature skeptically, Friedman viewed the nature of that human institution -- government -- skeptically. His has been the prevailing economic paradigm for the last thirty years.

The problem in this new century is, however, that -- once again -- the policy is not working. Just as Keynes had never factored in a global oil cartel, Friedman's thought did not make room for globalization. In the Friedman paradigm, individual central banks exercise control over separate national economies. But now those central banks are, to some degree, hostages to international economic forces. They certainly are hard pressed to deal with a world where capital crosses international borders at the spead of light and the economic shifts which the flow of captial cause can be just as swift and brutal. Workers can lose their jobs as quickly as capital moves. Finding new and similarly remunerative employment takes a long time -- if such employment can be found at all. One simple lever is not enough to deal with a globalized economy. Once again, the cow is eating well; but not much of either quantity or quality is coming out the back end. Or as Jane Yellen, the president and chief executive of the Reserve Bank of San Francisco put it in a recent speech," much of the gain for macroeconomic performance has gone to just a small segment of the population -- those already in the upper part of the distribution."

In other words, while Friedman's policies encouraged economic growth and low inflation, they also encouraged tremendous economic inequality. According to Executive Paywatch, an AFL-CIO website, the pay differential between executives and their employees went from 80 to 1 in 1980 to 411 to 1 in 2005. And during this time, Yellan says, not only were many low wage jobs eliminated by technology, but "wages in the middle not only rose far more slowly than those at the top, they also rose more slowly than those at the bottom of the distribution." The folks who have felt the inequality most are the folks in the middle.

That record needs to be set alongside the thirty years from the beginning of World War II until the Great Downturn of the 1970's. According to Richard Parker, the author of a recent biography on Galbraith, from 1940 until 1970 median household income (adjusted for inflation) doubled, while from 1970 until 2000 the growth in the economy "made for a radical income and wealth distribution, as the fortunes of the rich increased, the poor stagnated, and the middle class suffered through the longest drought of real income gains since the Great Depression."

What all of this suggests is that it is dangerous to turn economists into high priests who speak eternal truths. Both Friedman and Galbraith are dead now. But, considering their humble origins, this development is more than a little ironic. Both men had far reaching influence in their time -- although Friedman's libertarianism returned us to a more brutal universe. However that may be, the point is that times change and dogma doesn't. Dogma is an appropriate subject for theology. But it has no place in economic theory. Once economics becomes theology, we are all in trouble. To find solutions for our times, we would be wise to begin looking to today's economic heretics.

Wednesday, November 15, 2006

If Ye Break Faith

This past Saturday, I listened yet again to In Flanders Fields at eleven o'clock on the eleventh day of the eleventh month. It is a poem which I have heard, read and taught for over fifty years. And still, after all that time, I choke up when I get to the last three lines:

If ye break faith with us who die
We shall not sleep, though poppies grow
In Flanders fields

"We are the Dead", John McCrae wrote, unable to foresee his own fate, while admonishing us not to forget his and his contemporaries' sacrifice. But, it seems to me, if we are not to break faith with the dead, there are a few things which we need to remember about the nature of War and its consequences.

First, all wars are cloaked in soaring rhetoric. McCrae's war was the "war to end all wars." The American Civil War was fought to ensure that "government of the people, by the people and for the people [should] not perish." The French Revolution was all about, "liberty, equality and fraternity." However, as Wilfred Owen -- McCrae's poetic ally -- recognized, whatever the slogan, it is an "old lie."

Second, it is a lie because wars are not fought for ideals; they are fought for strategic resources. Land (living space, Hitler called it), opium, oil -- the list is almost endless. But, however long the list, these resources are presented to the public as the equivalent of oxygen. They are the things upon which the survival of the combatants depend. Take them away and we -- however "we" define ourselves -- will cease to exist.

Third, those who lead the charge on both sides suffer from terminal certitude. They are incapable of performing that "trick" which Atticus Finch, in To Kill a Mockingbird, calls "getting inside a man's skin and walking around in it." Once one looks at the world through the eyes of one's enemy, it is impoosible to demonize him. We can only kill those we truly don't understand.

And, finally, most wars have something to do with revenge. World War II had a lot to do with the terms of the Treaty of Versailles, just as present conditions in Iraq have much to do with centuries old rivalries between Sunnis and Shias. On the other side of the ledger, much of the suceess of Western Europe can be traced to the path the Allies pursued after The Second World War and the implementation of the Marshall Plan.

There is a moral imperative every November 11th to remember those who, in Lincoln's words, gave "the last full measure of devotion." But we do the dead no honour if we forget the nature of war itself. It is, as William Tecumseh Sherman -- one of Lincoln's generals -- said, "hell." Anybody who tries to sell it as anything else is selling snake oil.

Wednesday, November 08, 2006

The Voice of the People

If you are a Republican, there was little to celebrate last night. Unless, like certain classic conservatives, you understand that the folks who claim to wear Ronald Reagan's mantle are actually Richard Nixon's illegitimate children. And, if you are a Democrat, there is some reason to hope that the agenda will change -- if your party can ignore its own centrifugal forces and not listen to those voices who claim that the President -- like Saddam Hussein -- should be hanged.

As things stand this morning, the Democrats have firm control of the House; and they might just control the Senate. What does that mean? It means that Americans have rejected the neo-conservative vision of a benevolent Pax Americana, where America makes the world, in Woodrow Wilson's phrase, "safe for democracy". The concept was foolish when Wilson, with the best of intentions, articulated it in 1919. It was equally foolish when the folks at the Project for the New American Century rearticulated it in 1996. As the twentieth century proved repeatedly, democracy and safety do not necessarily go hand in hand.

What Ronald Reagan, like his hero Franklin Roosevelt, understood is that -- in the end -- fear leads a nation to a hole in the ground. A nation can accomplish great things if it "has nothing to fear but fear itself;" or if its citizens believe it is "morning again in America."

The present occupant of the White House, supported by his Vice President and his Secretary of Defense, like Mr. Nixon, functions in a constant state of paranoia, suspecting that his enemies are everywhere. But there is a big difference between suspecting who your enemy is and seeing who he is. The difference is the difference between Osama Ben Laden and Saddam Hussein. It is the difference between victory and resignation.

This administration's response to their situation has been, like Nixon's, to claim executive privilege and extra constitutional authority. What they have failed to understand is that the erosion of presidential authority after Watergate, a phenomenon they lament, was a direct response to abuse of that authority. They also have not understood what Roosevelt, Reagan and Bush the Elder understood: that political success is about building political coaltions, both domestic and international which, taken together, are greater than the sum of their parts.

Bush the Elder has what Bush the Younger lacks -- a sense of history, combat experience and experience at the United Nations. Until now he has resisted giving his son advice. Now would be a good time to change that policy.

The question is, has the present administration heard the voice of the people? Recent interviews have suggested that Mr. Cheney is deaf and is committed to more of the same. But, ultimately, the ball is in Bush's court. Now would be a good time to have a serious talk with his father.

Wednesday, November 01, 2006

No Sale

Mercifully, this American election cycle is just about over. What that means for those of us who live on the northern shores of Lake Ontario is that the deluge of political calumny that thunders like Niagara from television stations in New York State will soon come to an end. With the help of professional consultants, modern political candidates have discovered that the way to win elections is to plaster the airwaves with wall to wall negative propaganda.

Joe Kennedy is said to have told his son John, before he won the presidency, "It's not who you are that's important. It's who people think you are." That advice seeems to have morphed into the corollary: "It's not who you are that's important. It's who people think the other guy is." And the other guy is always someone who, as Hugo Chavez said of George W. Bush, leaves the distinct whiff of sulphur whenever he exits the room.

I noted with sadness that the Ontario Liberal Party invited James Carville to its annual conference this past weekend to offer advice on how to win the next election, which is now about a year off.

I also saw the ad which the Republican National Committee is running against Harold Ford in Tennessee -- the one in which the blonde, shot from the shoulders up, appears to be in her natural state, and asks Harold to give her a call. Some naive commentators suggest that her invitation is a comment on Ford's religous hypocrisy. Those of us who have spent some time in the South know that the accusation goes much deeper than that.

Politics has never been a polite profession. And my own generation has not made it any politer. George Bush and Bill Clinton represent the schitzophrenic face of baby boomers. We split on the war, on the counterculture and on civil rights. And we tended to view our heroes and foes as characters from a comic book world. They were either virtue or evil incarnate. And, frankly, it was easy to think of them in such absolute terms when Geroge Wallace proclaimed, "Segregation then, segregation now, segregation forever!" and Richard Nixon informed us that, "when the president does it, it's not illegal."

But both men are dead now. And, to his credit -- before he died -- Wallace admitted the error of at least some of his ways.

It is time to admit the errors of our ways. Barak Obama is right. It is time to move beyond the catagories of the sixties. It is time to stop fighting old battles. There are enough new battles to occupy us.

The first sign that we have moved on will be when the deluge of negative ads dries up. The next sign will be when political hopefuls stop calling on folks like James Carville to offer them professional advice. The third sign will be when we actually have a debate between candidates, rather than television events where reporters pitch questions and the audience waits to see if the batters can hit them out of the park. And, finally, we'll know that we live in a functioning democracy when every candidate knocks on every door in his or her riding and talks to at least one person behind every door.

A pipe dream? Probably. But what we have at the moment is a nightmare. And if nightmare scenarios are all we can generate, how many citizens will continue to vote?