Yesterday, Greece defaulted on its creditors. We are in yet another financial crisis. Jim Stanford writes:
No one can predict how the European drama will unfold next. Or how other after-effects of the 2008-2009 crisis (such as the coming rise in U.S. interest rates) will shake still-fragile economies around the world. What is certain, however, is that globalized, financialized, polarized capitalism is incapable of finding the stable and efficient equilibrium fantasized by conventional neoclassical economists. Repeated outbreaks of credit-fuelled, speculative exuberance are inevitably followed by panic, retrenchment, and recession. This will keep happening. We don't know precisely when the next crisis will occur, nor its precise proximate cause. But we do know another crisis will occur, with 100 per cent certainty. And we do know that the 99 per cent of humanity who do not possess enough financial or business wealth to support themselves without actually working for a living, will be asked again to bear the brunt of the subsequent pain and dislocation.
On this Canada Day, we need to remember that those who presently hold the reins of power are manically devoted to the same neo-classical economics that has caused our recurring financial crises. And it doesn't have to be that way:
This pattern of repeating crisis and growing polarization is hard-wired into the DNA of modern capitalism: an economic system organized around the self-serving decisions of a surprisingly small and privileged segment of society. This crisis, no different from the last or the next, was not an unpredictable, unpreventable, one-off occurrence: a "black swan" event. Rather, it was the predictable, preventable result of an economy that puts the interests of financial wealth above the interests of the vast majority in working and supporting themselves. And it will happen again, unless and until we change the fundamental rules of the game.
Stanford writes that, just as Naomi Klein suggested in The Shock Doctrine, these crises are organized for the benefit of the fabulously wealthy few:
She showed how ruling elites regularly take advantage of moments of fear and confusion, arising at moments of economic, social, or even natural disaster, to enforce painful changes that they were preparing for years -- but that most people would not tolerate under "normal" circumstances.
Today is a day to reflect on what we've become. And what we've become -- particularly in the last decade -- is an ongoing tragedy.
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Our modes of organization - economic, political, industrial, even societal - have outlasted their utility. They were all devised to meet conditions in a far different world than we find ourselves in today. Even Adam Smith foresaw that the economic growth model of neoclassical economics would have a limited lifespan - two centuries at most - and he had no inkling of the coming industrial revolution.
We have gone too far, plain and simple. There are too many of us and our per capita consumption levels are also steadily growing even as the resources needed to sustain such numbers and the economic activity associated with consumption are faltering and, in some critical cases, on the verge of collapse.
In March, the UN Food and Agriculture Organization warned that most of the world's topsoil could be gone, exhausted by excessively intensive, industrial agriculture, within 60-years. That report noted that it takes nature about a thousand years to generate 3 cm. of topsoil, barely more than one inch. Our response to that plainly dire warning has been to ignore it.
There are ways to live viably but they begin by adopting "steady state" or "full Earth" economics, arresting growth and matching production/consumption to the the true limits of the nation's environment. That would be an entirely sane but, in today's society completely radical notion that it would be rejected by any of Canada's major political parties, the NDP included. Any party that proposed the end of perpetual, exponential growth-based economy would see its membership rolls collapse. A good percentage would know that our present course is terminal but would still not support change.
Rather than rebuilding society through an orderly process of change that preserves as much as possible, we'll take the default option - chaos. Our relentless assault on biodiversity of itself imperils mankind. Add to that all these other layers - global warming, climate change, ocean acidification, overpopulation, over-consumption, the collapse of groundwater resources, desertification through the exhaustion and degradation of our farmlands and all the knock-on effects of these powerful forces and you're left with the end of liberal democracy (already well underway), the rise of failed states and the destabilization of the least impacted, and a world of constant conflict. Add it all up and you've got the perfect conditions for disaster capitalism sucking the final drops of life force out of our civilization.
Meanwhile all our major political parties still want to govern as though we were back in the 80s.
"She showed how ruling elites regularly take advantage of moments of fear and confusion .....to enforce painful changes that they were preparing for years -- but that most people would not tolerate under "normal" circumstances."
Ah yes, the terrorist are coming, the terrorists are coming said Harper as he took away our rights and freedoms......
If there is hope, Rural, it lies in the fact that you can't get away with crying wolf forever.
Even as the West Coast bakes, Mound, and forest fires darken the skies in Alberta and Saskatchewan, we continue to ignore the collapse which has been telegraphed many times over.
I read some of Joseph Stiglitz's work and he is against austerity big time because in his educated opinion it does the exact opposite of what it claims it is achieving. And opens the door of a country to corporate sharks that buy up everything for pennies on the dollar after things blow-up. Stiglitz argues convincingly that is the game plan all along. By the likes of Word Bank IMF and BIS [THE Bank of Banks in Switzerland - The Bank of International Settlements] their capitalist cronies and corporate vultures end up gutting the country when they sign up for loans and can't possibly repay them because of the 'austerity measures' they have to agree to in-order to get the loan. They also have to open up their financial markets to international players privatize all government services like health care education waterworks, everything the government was minding. Also privatize the Nations Natural Resources code words for giving them away to Transnational and Multinational Corporations like what Harper is doing on his own he is their 'darling' I'll have to go and wretch now excuse me.
http://time.com/3939621/stiglitz-greece/
http://www.theguardian.com/business/2015/jun/29/joseph-stiglitz-how-i-would-vote-in-the-greek-referendum
http://www.huffingtonpost.com/joseph-e-stiglitz/argentina-greece-default_b_7697838.html
Stiglitz has been saying for a long time that Austerity is folly, Mogs. But the movers and shakers have been ignoring his message.
Mogs:
Your point re the IMF is one of the main reasons I forgave the Chretien Libs for tacking so hard right fiscally after the first year in office, because I would much rather see our programs weakened by Canadian politicians than gutted altogether by the IMF. I hear a lot of progressives these days when I make this point argue that the IMF was never any real threat and therefore nothing we needed to worry about and therefore Martin and Chretien were simply selling us out pure and simple. Me, I was not only alive and adult aback then, I also was a close political watcher of a couple of decades by that point, and me, I thought at the time the threat was very real, indeed more so because there were clearly certain interests that would have LOVED to gut our social programs to keep them from being an example for others.
I have watched throughout my adult life as corporations have been gaining more and more overt power over us all, governments have been systemically gutted of oversight authority both moral and legal especially over said corporations, and how whenever someone makes these points they get denounced as some sort of raving socialist loon. Me, I always thought one of the worst moments in modern history was when corporations got the legal rights of citizenship without all the equivalent duties, obligations, and penalties for malfeasance of citizenship. That, along with shifting the language of politics away from citizens and citizenship towards taxpayers only counting I think to be two of the more significant key points in how we got where we are today.
In our American neighbour they have returned to a new gilded age with even worse abuses it seems. The question I have is when the correction hits and will it make the pain of the 1930s pale by comparison, first for the poor and middle, and then for said 1%ers as the modern new deal political movement gains power and acts. I do believe that pendulum is getting ready to swing back, the problem is though it has gone so far one way and for so long now that the swinging back and finding new equilibrium will be correspondingly violent/traumatic. You cannot build up that kind of energy without once it is released it causing a lot of damage in its wake. We shall see, and within the next several years at that I believe.
The longer the juggernaut lasts, Scotian, the more traumatic the reaction will be.
I remember when greed used to be long term in its thinking, that the concept of enlightened self interest was understood to in part facilitate long term greed being viable. One of the worst aspects of the Reagan revolution was the change in how greed was thought of by those in power and wealth, it went from long term to short term in its thinking, and so much of the worst problems I believe comes out of that one particular paradigm shift. There used to be the understanding that the building and maintenance of infrastructure, both hardware and human, facilitate the continued generation of wealth for all, especially those at the top, which is in part what I mean by long term greed thinking or enlightened self interest. What we have today for the most part within the 1% is short term greed dominating, although there are still voices within the 1% who understand the dangers of short term greed and are trying to shift things back, even if currently they seem much like voices in the wilderness.
So I am hoping that once that pendulum starts swinging that those voices gain power and credibility within their class, and are seen by the desperate within that 1% in that period as the saviours, because as much as we may be contemptuous of the current way our top classes approach wealth creation and their inability to share any of it that they can help, we still need that engine to work, we just need to have it far better regulated and controlled to protect itself as well as the rest of us from its excesses and from burning itself out.
Back in the Cold War years I was always an advocate of the mixed economic approach because I saw how either too much government or too much raw capitalist thinking was clearly dangerous and destructive in the long term for us all, that dynamic balance was the key. While terms and such may have changed, I still believe fundamentally that is the right approach to take, and when we start seeing the correction hit we need to watch out for over-correction because it will also be damaging in both short and long terms. I just hope we all are smart enough, informed enough, and capable enough when the time comes to do so, but recent history alas does not leave me hopeful, especially with the levels of anger and ideological fervour I am seeing from far too may "progressives" these days. Their intentions may be pure or mostly so, that does not magically make their solutions so, yet I fear they fail to see that and see anyone cautioning them as just one more sellout or worse class traitor.
We shall see.
There was a time, Scotian, when the term "mixed economy" seemed perfectly normal. There were some activities which did not have a viable market, but they were considered necessary. That's how we got Air Canada and the CBC.
Now markets and profits drive everything. And we are so much poorer in so many ways.
The problem with profits by the corporation is they flee Canada they are not reinvested in Canada. The second problem started when PE-Trudeau decided to borrow from private bankers in 1975 instead of The Bank Of Canada. When we borrowed from the Bank of Canada the interest belonged to us through the government so we were not losing that money it stayed in the economy. Since 1975 we have lost Hundreds of billions of dollars this is money that also flees the economy:
"Canadian taxpayers provide billions of dollars annually in interest payments to private banks and their shareholders. We paid $37 billion on interest at the federal level in 2002. Not bad pay for bookkeeping, but Canadians have to wonder if they are getting as much value for this expenditure as they might. Over the years, these interest payments, along with interest on unpaid interest, have added up to hundreds of billions of dollars - an amount almost equal to the entire national debt. It is to pay the interest on this debt that health care, education, social services and other programs were cut back."
From: http://www.sustainwellbeing.net/money_creation.html
Also: http://paulgrignon.netfirms.com/MoneyasDebt/Incorrect_Diagnosis.pdf
&: http://moneyasdebt.net/
So not only our taxes siphon money away from our economy...
We could sure use that money that our politicians and corporate extractors take out of Canada. Not only is Harper not an economist he is brain dead and lost. The hydro-carbon industry is crippled the economy is the worst ever and Harper has his head in the sand. He would rather attack his political opponents than do something worth while. Well he is now become like Nero fiddling while Canada's economy goes up in smoke.
If we have one more month of negative growth, we'll officially be in a recession, Mogs. That's an idea that doesn't fit with Harper's election pitch.
The Bank of America already says we are in a recession...
http://business.financialpost.com/investing/canada-is-already-in-a-recession-says-bank-of-america-and-the-loonie-is-set-to-get-hammered?__lsa=4a9a-bd87
http://ottawacitizen.com/news/national/canada-in-recession-heading-to-70%C2%A2-dollar-analyst
It's getting harder and harder for Harper to claim that he is a superb steward of the economy, Mogs.
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