Calling The Kettle Black

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.

More Of The Same

In Europe, resistance to CETA -- the Comprehensive and Economic Trade Agreement -- is growing. The reason? The Investor Dispute Settlement Mechanism. Linda McQuaig writes:

The Harper government insisted that the IDSM be part of the agreement. The Trudeau government has altered that mechanism slightly. But special privileges for investors are still at the heart of the deal:

Investors will still be able to bring lawsuits over government policies they don’t like, and their lawsuits will still be decided by special tribunals where they will enjoy stronger legal protections than are available to any other group in domestic or international law.

Thus, despite the revisions, CETA will undermine Canadian democracy, handing foreign corporations a powerful lever for pressuring our governments to, for instance, abandon environmental, health or financial regulations, while leaving Canadian taxpayers potentially on the hook to pay billions of dollars in compensation to some of the wealthiest interests on earth.

Gus Van Harten, who teaches law at Osgoode Hall, has been warning about the IDSM for years:

The absurdity of that special privilege is highlighted by Van Harten. He notes that, under CETA, a foreigner tortured by Canadian authorities wouldn’t be able to bring a lawsuit against Canada – unless he was also an investor with assets in Canada, and the torture negatively affected his assets.

But the Trudeau government is not inclined to take on corporate interests. It's more of the same.

Image: euractiv.com

Not For You

                                                 http://www.ipolitics.ca/

Stephen Harper tells us that there are lots of things we can't afford -- like veterans affairs offices, lawyers to check the proposed constitutionality of legislation, and home mail delivery. But last week we paid the tab -- $300,000 -- to fly two European representatives round trip to celebrate the Canada European Trade Agreement.

Linda McQuaig wonders what, exactly, there is to celebrate:

According to Harper government hype, routinely repeated uncritically in the media, the trade deal will be a boon for all Canadians, boosting our economy by $12 billion, generating 80,000 jobs and adding $1,000 a year to the incomes of Canadian families.

But as economist Jim Stanford has pointed out in a concise analysis, these big economic gains were calculated by a computer model — based on a series of assumptions that are “not remotely realistic.”

For instance, they assume Canadian companies will sell as many services in Europe as European firms do (despite being thousands of miles away), and that Canadian firms will then invest these profits in new capital here – even though Canadian firms have notoriously hoarded profits in recent years rather than re-invest them. Yet this wildly optimistic assumption about re-investment accounts for more than half of the $12-billion economic boost.

As for job gains, well, the models actually showed productivity gains, not job gains. But knowing the public has little interest in something as esoteric as productivity gains, these somehow morphed into more politically popular job gains, in a sleight-of-hand by government spin-doctors that Stanford dubs “intellectually dishonest.”

Most far-fetched is the claim that the deal will boost the incomes of Canadian families by $1,000 each. As Stanford notes, the government simply took the $12 billion economic boost – a specious number at best – and divided it by the number of Canadian families.

That last calculation is mind boggling. Our prime minister claims to be an economist. But he's obviously math challanged. The last Conservative minister who suffered from the same disability was Bev Oda. When she started ordering $16 glasses of orange juice, she disappeared.

What has Harper bought? He's bought a legal regime to protect investors from Canadian law:

This could mean, for instance, that if a future Canadian government wanted to create a new public program – such as universal pharmacare or national child care – it could face lawsuits from disgruntled European firms objecting to the way the program limited their opportunities to sell drugs or child care to Canadians.

Imagine the outrage if a Canadian government had negotiated a trade deal that gave such an extensive set of rights to labour unions, allowing disgruntled unions to sue the Canadian government for millions of dollars. And then, to top it off, the government had spent $300,000 so that foreign officials could attend an exclusive soirée with Canada’s “union bosses.”

Mr. Harper's is a proud Thatcherite:

Over the past 30 years, virtually all the gains of economic growth have gone to the top 10 per cent of Canadian families. If this pattern of the past three decades continues, there will be no gains from the trade deal for ordinary Canadian families. Really only for the corporate sector are the gains significant. Indeed, the trade deal is, above all, a kind of constitution that enshrines corporate rights above the reach of national laws, that is, above the reach of democratically-elected governments.

During the last election campaign, Mr. Harper accused Michael Ignatieff  of not coming back to Canada "for you."  While it's true that Harper has always been here, it's clear that whatever he does, it's not "for you."