Raising Those At The Bottom

                                          http://www.pilgrimagepodcast.com/

There has been a lot of discussion about the 1% of us who are fabulously wealthy. A new OECD report, In It Together: Why Less Inequality Benefits All, suggests that concentration of wealth at the top does not promote economic growth. And taking our cue from recent economic research, our current political discussion is focused on cutting the rich down to size.

But Clive Cook suggests that a careful reading of the report leads to a different conclusion. We need to  focus our efforts on raising the economic prospects of those at the bottom of the income distribution:

How does the growing gap between low incomes and average incomes hold back growth? The study ventures some plausible ideas. This one is top of the list:

A main transmission mechanism between inequality and growth is human-capital investment. While there is always a gap in education outcomes across individuals with different socio-economic backgrounds, the gap widens in high-inequality countries as people in disadvantaged households struggle to access quality education. This implies large amounts of wasted potential and lower social mobility.

That means we should be making major investments in public education at all levels and employment opportunities the improved schools would support:

The policy agenda this seems to recommend would focus on improving the schools that serve low-income families, and on raising the incomes of the households concerned — through lower taxes and higher wage subsidies. The study also backs efforts to get more women into the workforce and to enable people to move from irregular or part-time employment to proper jobs.

Quite simply, the neo-conservative agenda we have been living with for the last forty years has put the cart before the horse. Rather than rewarding the wealthy for creating mythical jobs, we should be helping those at the bottom get the jobs which keep the economy growing.

The Stupid Party

The late Irving Kristol -- the godfather of Neo Conservatism -- once referred to the Republican Party as "The Stupid Party." In today's New York Times, Maureen Dowd uses the same epithet to describe a party which has been thoroughly Kristolized.

The present party front runner, Rick Perry, boasts that he placed in the top ten of his high school graduating class of thirteen, while

Sarah Palin, who got outraged at a “gotcha” question about what newspapers and magazines she read, is the mother of stupid conservatism. Another “Don’t Know Much About History” Tea Party heroine, Michele Bachmann, seems rather proud of not knowing anything, simply repeating nutty, inflammatory medical claims that somebody in the crowd tells her.

It may be true, Dowd writes, that President Obama is an "over intellectualized professor."  But what can you say about a party which believes that true leadership doesn't require smarts? Perry believes that what Americans yearn for is

the kind of guy who goes jogging in the morning, packing a Ruger .380 with laser sights and loaded with hollow-point bullets, and shoots a coyote that is threatening his daughter’s dog.

One hopes that American voters are smarter than the people who presently run the Republican Party.

The Death Of "Compassionate Conservatism"

 When George W. Bush was elected president in 2000, he proclaimed that he was a "compassionate conservative." This week, during the second Republican candidates debate, it became clear that the party -- post Bush -- has rejected that moniker. When Wolf Blitzer asked Ron Paul if a hypothetical young man -- who refused to buy health insurance -- should still be cared for, Paul attempted to say that religious orders and other private charities existed for that purpose.

The audience, however, drowned out the good doctor. When Blitzer pressed further and asked if the young man should be left to die, the crowd enthusiastically answered, "Yeah!" The exchange, writes Paul Krugman, in this morning's New York Times, indicates that "at this point, American politics is fundamentally about different moral visions."

Modern conservatism  has come along way from one of its spiritual godfathers, Friedrich Hayek, who declared  -- in The Road to Serfdom -- that he favoured  "a comprehensive system of social insurance."  "Now," writes Krugman,

compassion is out of fashion — indeed, lack of compassion has become a matter of principle, at least among the G.O.P.’s base.

And what this means is that modern conservatism is actually a deeply radical movement, one that is hostile to the kind of society we’ve had for the past three generations — that is, a society that, acting through the government, tries to mitigate some of the “common hazards of life” through such programs as Social Security, unemployment insurance, Medicare and Medicaid. 

Conservatives argue that they are for old fashioned values. The truth is that there is nothing old fashioned about their values. Like Cain, they reject the notion that they are their brothers' keepers.

A Sense of Balance

In his recent book, A Fair Country: Telling Truths About Canada, John Ralston Saul writes of this country's deep aboriginal roots, which have profoundly influenced how Canadians view the world and themselves. One of the values Canadians cherish, Saul writes, is a sense of balance -- balance between man and nature, balance between us and others, balance between rich and poor.

It is precisely the balance between rich and poor which neo-liberalism -- and the Harper government -- threatens. Everywhere the economic policies of the Chicago School have been applied, there has been stark -- and rising -- inequality.

In a recent blog post, Alex Himelfarb reminds his readers of the work of Karl Polyani. Polyani understood the power of the word freedom. But freedom means many things -- and the problem with neo-liberalism is that it defines freedom as "economic freedom."

Polanyi warned some sixty years ago against a narrow economic definition of freedom that could too easily mean freedom from our obligations to others and, at worst, the freedom to abuse and exploit. For Polanyi, such an approach meant real freedom for the few, not the many, and was built on delusion, the pretense that earnings reflect only individual effort and merit, rather than the contributions of many and the investments of previous generations more willing than we to pay their taxes – not to mention the role of luck and inheritance. Polanyi rejected the notion that the economy, the market, was the basis for all human organization and freedom. Instead, he viewed the economy – and freedom as well – as embedded in society.

Polyani feared that such a narrow emphasis on economic freedom would lead to a deep social schism between those who were devoted to protecting their privilege and those who were protecting themselves from the privileged.

It's clear that Stephen Harper is profoundly ignorant of Canada's Aboriginal roots. His long term goal is to bury those influences and replace them with a more European -- and, frankly, a more American -- philosophy of government. Whoever wins the battle for balance will affect the long term future of this country.

Micawber's Progeny

Last week, Parliamentary Budget Officer Kevin Page released a report, estimating that the Conservative government of Stephen Harper -- a man who prides himself on his economic expertise -- faced a structural deficit of $18.9 billion. "The decline in the government's structural balance relative to potential income over this period," Page wrote, "is largely due to lower revenues."

Others have noted that the Harper government's two point reduction in the GST accounts for $12 billion of that negative number. Add to that the government's reduction of the corporate income tax rate from 22.12% to 15%, and the reason for the hole in the government's finances becomes pretty clear, The Great Recession notwithstanding.

The Finance Minister was unimpressed by Page's report. "I see speculation. I don't see a lot of evidence." he said. "I'm comfortable with the fact that if we have reasonable economic growth and we, if necessary, restrain the rate of economic growth of government program spending, then we will get to a balanced budget in the medium term."

Conservatives like to talk restraint. But they never seem to practise it. The across the board tax cuts which Mr. Harper and Mr. Flaherty initiated were followed by unparallelled growth in government spending. They are Wilkins Micawber's progeny. Some of the most famous words Dickens wrote came from the mouth of Micawber: "Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." The man became a literary joke simply because he did not practise what he preached.

The truth is that Mr. Harper and Mr. Flaherty have been mesmerised by what has become an economic joke, the appropriately titled Laffer Curve. In the 1970's, the American economist, Arthur Laffer, floated the theory that the tax rate that maximized government revenue was a rate that (at the time) was much lower than previously believed. Or, as Mr. Flaherty puts it, "Tax reductions are stimulus. The more money we leave in the hands of Canadian individuals and families, the more they have available to spend and help the economy expand and create jobs." That idea has become standard conservative boilerplate.

But, as economist James Tobin wrote, "the 'Laffer Curve' idea that tax cuts would actually increase tax revenues turned out to deserve the ridicule with which sober economists had greeted it in 1981." Despite that experience, the second Bush administration made the Laffer Curve the cornerstone of its economic policy, just as Mr. Harper and Mr. Flaherty have made it the cornerstone of their economic policy.

It's not as though Mr. Harper and Mr. Flaherty have no track record. Fifteen months ago, they insisted that Canada was going to skirt the recession and even run a small surplus. And those of us in Ontario remember the $5.5 billion deficit Mr. Flaherty bequeathed to those who succeeded him.

Einstein defined insanity as doing the same thing over and over again and expecting a different result. The patients are in charge of the asylum.

Petulant Children

In a recent column, Andrew Sullivan distinguished between two types of conservatives: "There are conservatives who are always girded for war or suspect all peace as some kind of hidden war; and those who are happy at peace, greatful for its blessings and hopeful that it will last. There are those who always see Hobbes and those who see Hobbes but are greatful for Locke."

Modern conservatives are fascinated with Hobbes. The past year has made their fascination with the man -- who held that life was, unfortunately, "nasty, brutish and short" -- abundantly clear. In the United States, the Republican Party has become a party of no policy; indeed, it is now just a party of "no." New York Times columnist Paul Krugman recently referred to a study, by political scientist Barbara Sinclair, which plotted the use of the senatorial filibuster -- a technique which for nearly 200 years was used effectively but sparingly: "In the 1960's, she finds, 'extended-debate-related problems' -- threatened or actual filibusters -- affected only 8 percent of major legislation. By the 1980's that had risen to 27 percent. But, after Democrats retook control of Congress in 2006, and Republicans found themselves in the minority, it soared to 70 percent."

In this country, the Harper conservatives have followed the same trajectory. As James Travers wrote in the Toronto Star:

Little now stands in the Prime Minister's way. Parliament's independent watchdogs are mostly mute, their collars drawn tight and leashes shortened. Parliament's committees, including the one investigating torture allegations, are rendered impotent by a confidential manual instructing partisan sabotage. Elected representatives sent here to safeguard the national treasury and restrain ruling party excesses are no longer able to fulfill those defining duties.

For years these folks whined about injustice, claiming that modern republican and parliamentary democracy had rigged the game against them. Now that they have been elected, even tenuously -- as were George W. Bush and Stephen Harper -- they have sought to dismantle those democracies, afraid that their time will never come again. They have operated on the Hobbesian principle that power can only be won and maintained by vanquishing one's enemies; that the world has always been a nasty place; and that the fundamental principle in any democracy -- that the best solutions are the products of debate, cooperation and compromise -- is idealistic hogwash.

They are, in truth, petulant children -- intent on getting their way. And, like the little boys in Golding's Lord of the Flies, they are quite content to burn down the island in their manic quest to rid themselves and their countries of contrary thinking.

The Canute Complex

There was a time when all Canadian school children studied British history. That was a long time ago; and I would hazard a guess that most students do not look back on the experience with a great deal of fondness. However, there was one incident which I am sure any student of British history remembers vividly. That is the story of King Canute's attempt to stop the ocean dead in its tracks.

According to legend, Canute had his throne bearers transport his throne -- with their master seated atop it -- to the seashore, for the purpose of providing his subjects with a demonstration of his divinely anointed status.

Sitting on the throne and raising his hand, he commanded the waves to cease and desist. Unfortunately, they had the audacity to ignore him. In the short term, Canute's failure didn't do his public image a lot of good. In the longer term, it did nothing to enhance his career prospects. In fact, the story is usually considered one of the first steps on the road to the Magna Carta.

I remembered Canute the other day when I read a small story in the Toronto Star. Stephen Harper had agreed to appear on the Mercer Report. But when the Harper team discovered that Mercer and Company had hired Dave Chan, a photographer who has worked for The National Post, The Globe and Mail and other newspapers for twenty years, they insisted that Chan be dropped from the project. It seems that during the recent evacuation of Lebanese Canadians from Beirut, Mr. Chan had offered the opinion that, if all media personnel were banned from the Prime Minister's plane, that ban should include the Prime Minister's personal photographer. After all, if the purpose of the ban was to clear as many seats as possible for the refugees, the PM's picture taker could fly back to Canada using other means.

Besides, said the Prime Minister's Office, they could provide the CBC with all the pictures they required. In fact, this strategy is part and parcel of the Prime Minister's press operation. Earlier in the year, Harper's office insisted that it had the right to choose, before any press conference, which reporters and which questions it would deal with. When the Parliamentary Press Gallery refused to operate by these rules, Harper simply stopped answering their questions.

The assumption that the Prime Minister's Office has the right to control the flow of information to the public is particularly arrogant. Behind the assumption is the conviction that if you keep feeding the public the same line, they will eventually believe it. But in this age of rapidly expanding communication technology, it is also a profoundly foolish assumption. If you shut down one method of communication, another will take its place.

Harper need look no further than his neighbour to the South. The Bush Administration has tried mightily to control the information coming out of Iraq and the government bureaucracy. And for awhile they succeeded. They refused the press's request to photograph the flag draped coffins of soldiers being shipped home for burial. And they leaked information to reporters from Time Magazine and The New York Times in attempts to silence critics of the war. But as Bob Woodward's new book, as well as recent books like Fiasco, by Tom Ricks and Cobra II, by Micheal Gordon and Bernard Trainor illustrate, trying to control and restrict information is like trying to control the oceans. The information always finds an outlet, even when it has been pent up for a long time. It either trickles out or bursts its levees in a flood of destructive proportions.

The new breed of conservative seems to operate in a fact-free universe. In such a universe, the act of articulation is tantamount to telling the truth. Saying so makes something true; and commanding that a policy be implemented gives it legitimacy. That seems to be the thinking underlying The Clean Air Act, a particularly Orwellian title, given the fact that, under its provisions, the government will not set standards for industrial pollution before 2050. As the late Senator Daniel Patrick Monahan said, in response to a senatorial colleague who stood steadfastly on his right to hold to his opinion, "You have a right to your own opinion; you do not have a right to your own facts." Likewise, Mr. Harper has no right to ignore the facts. King Canute tried that 1300 years ago. Like Canute, Mr. Harper's career prospects get dimmer with each passing day.