We live in the Age of Misplaced Faith. A stunning example of what this means for ordinary people is CETA -- the Comprehensive Economic and Trade Agreement. Murray Dobbin writes:
The federal government makes its own "reality" by crafting "facts" to fit its policy objectives -- no matter how outrageous they are when put to the test. Three numbers stand out in the talking points of federal governments under both Harper and Trudeau: that CETA will increase GDP by $12 billion, that it will create 80,000 jobs and that the newly created wealth will boost income by $1,000 per family.
But economist Jim Stanford debunked these numbers long ago -- pointing out in 2012 that the federal trade department simply took the $12-billion figure (itself a highly dubious figure) "[a]nd divided it by the number of families in Canada. That assumes that every additional dollar of GDP translates directly into family income. In fact, higher GDP never fully trickles down into income..." The money that does find its way into income goes mostly to the wealthy.
The $12-billion figure came from a study commissioned by Canada and carried out by three EU economists. Stanford pointed out that the model used made some outrageous assumptions:
"[c]onstant full employment (so no one can be unemployed due to imports), balanced trade (so a country's total output cannot be undermined by a trade deficit), no international capital flows (so companies cannot shift investment abroad), and no impact from fluctuating exchange rates."Stanford called the study "outrageous." He was being far too polite. It was outright fraud. Anyone paying even cursory attention to the Canadian economy knows that not one of these assumptions holds. We haven't had full employment for decades, we have been experiencing trade deficits for years, NAFTA resulted in the shifting of billions of investment dollars to Mexico and China, and our exchange rate has been all over the map.
A recent study from Tufts University took a long look at CETA and arrived at these conclusions:
- "CETA will lead to a reduction of the labour income share. Competitive pressures exerted by CETA on firms and transferred onto workers will raise the share of national income accruing to capital and symmetrically reduce the share of national income accruing to labour.
- By 2023, workers will have foregone average annual earnings increases of €1776 in Canada and between €316 and €1331 in the EU depending on the country.
- CETA will lead to net losses of government revenue. Competitive pressures exerted by CETA on governments by international investors and shrinking policy space for supporting domestic … production and investment will reduce government revenue and expenditure.
- CETA will lead to job losses. By 2023, about 230,000 jobs will be lost in CETA countries, 200,000 of them in the EU, and 80,000 more in the rest of the world [the study projects a loss of 23,000 Canadian jobs due to CETA in the first seven years].
- CETA will lead to net losses in terms of GDP. [D]emand shortfalls nurtured by higher unemployment will also hurt productivity and cause cumulative losses amounting to 0.96 per cent of national income in Canada..."
Mr. Trudeau lambasted Mr. Harper for his misplaced faith. It was the pot calling the kettle black.