Keynes is Back!

On Monday I tuned in to the CBC to listen to the first public speech by Bill Morneau, the new Minister of Finance in Justin Trudeau’s Liberal government. The speech was given to the Toronto Region Board of Trade for the benefit of the Bay Street crowd. I have to admit, that I was favourably impressed.

Bill Morneau and Justin Trudeau

Morneau is a very successful Toronto businessman with a very good academic background in economics. Of all Trudeau’s cabinet appointments, this was the one which concerned me the most. Morneau had also been chairman of the C. D. Howe Institute, a right wing pro-business “think tank” that is firmly committed to the agenda of free trade and the free market economy.

Morneau remarked that at his first meeting with a group of government economists he sat alone across a long table facing a dozen of them. When he stated that the new Liberal government would not put a high priority on balancing the budget, he reported that smiles broke out among those across the table. They knew full well that the Canadian economy is going through a very rough period, and with the collapse of the markets for oil and minerals, the immediate future was not all that great. As a result, the weakened economy was providing all governments with less revenues.

The Bay Street crowd heard Morneau report that there will be a string of budget deficits, and they were starting with a $3 billion deficit left by the Conservative government of Stephen Harper. But the goals of the new government started with restoring economic growth. The Liberals would proceed with their promise of major government spending on infrastructure, a pledge of $125 billion over a decade. The tax cut for the middle class would also boost spending and help create jobs.

Despite their campaign promise, an annual federal government deficit could possibly exceed $10 billion. The plan was to revive the economy so that the debt-to-gross-domestic-product ratio would be reduced. The hope was to be able to balance the federal government’s budget by 2019, the year of the next election.

There would be no structural adjustment policies. Instead, the economic policies identified with John Maynard Keynes would drive the agenda. The Liberals could see the complete failure of the alternative, the structural adjustment programs pursued by European governments.

To top it off, Morneau’s presentation was outstanding. He was very clear in both English and French. He gave a well organized speech without consulting notes or reading a text. He looked straight at the audience and spoke with conviction.

What happened to the New Democrats?

Thomas Mulcair and the NDP

In contrast, there is the disaster of Thomas Mulcair and the New Democratic Party. What happened? At the beginning of the 2015 election campaign, the polls showed support for the NDP was slightly ahead of the other two parties. An NDP-led government seemed possible.

In his first speech to the Bay Street crowd, given at the Economic Club of Canada on June 16, 2015, Mulcair made it very clear that his social democratic party stands strongly for balanced budgets. This was the tradition of NDP provincial governments in Canada, he argued. Special praise was given to the Saskatchewan NDP  government of Roy Romanow, who came to office in 1991, balanced the budget and paid down the provincial debt. No mention was made of the fact that this was done by slashing health and social programs and raising consumption taxes which fell heaviest on those with low incomes.

Mulcair noted that there was one exception to this tradition: the Ontario NDP government headed by Bob Rae, who, he noted, had turned out to be a Liberal. Bob Rae’s NDP government confronted an economic recession in 1990-1 by cutting taxes on low income earners, raising taxes on those with higher incomes, and expanding a range of social programs designed to assist the weaker members of society. His government and its policies were praised by a long list of Keynesian economists.

Then came the shock from Quebec. In June 2015, in the middle of the election campaign, journalists in Quebec posted a video clip from the Quebec legislature, a speech Thomas Mulcair made in 2001, when he was a member of the provincial Liberal government. Mulcair praised the free market policies of Margaret Thatcher, criticized the Labour governments in Great Britain for “putting their nose in everything” while declaring that “government interventionism is a failure.” He declared: “let the free market thrive and get off the backs of businessmen and women.”  He was also very critical of the trade union federations in Quebec for their politics of the left, backing the Parti Quebecois. Mulcair brushed this off. He refused to say he had been wrong. 

Looking to the Saskatchewan NDP
Mulcair’s NDP was determined on this issue. In August 2015 he chose Andrew Thomson, former NDP finance minister in Saskatchewan, to be a star candidate in the Ontario riding of Eglington-Lawrence. Thomson had been elected to the Saskatchewan legislature in 1995 while Roy Romanow was premier. When Lorne Calvert became NDP premier Thomson joined the cabinet, serving as finance minister in 2006 and 2007.

Thomson is best known for his determination to reduce the province’s royalties on the oil and gas industry. He also cut corporate taxes and corporate capital gains. He took substantial amounts from the Financial Stabilization Fund – a pool of revenues held in the bank by the government, termed “a rainy day fund” – in order to balance the provincial budget. Thomson was used by Mulcair to stress the NDP’s commitment to their primary election promise, to run four straight balanced budgets. They would do what Stephen Harper’s government could not.

Recent public opinion polls show that Canadian support for the Trudeau Liberals stands at 52%. Support for the NDP stands at just 14%. It appears that Mulcair is in full control of the party, as he has announced that he expects to lead the NDP in the next federal election. So far there is no indication that there is any opposition to Mulcair within the federal NDP caucus or party.

It seems to me that the Canadian electorate made the right choice in the recent federal election. The Harper gang is gone, and the large majority of Canadians are happy with that. But it also appears that they made the right decision when they shifted their support from Thomas Mulcair to Justin Trudeau. With the world experiencing economic stagnation, Keynes is the correct road to take, not structural adjustment.

I Am Not Dead Yet

Our farm at Bulyea.

What happened? I have not posted on my blog since last June. That would seem to suggest that I am no longer around. But I am still here. However, I have been negligent in letting my readers know what is happening. I do have some excuses, but they may seem a bit lame.

The Farm
At the farm this summer, I once again had to face the problem of flooding and my inability to win the war with the beavers. We would take the major dam down, and they would just build it up overnight. There were too many beavers around, and the eradication process was unsuccessful. We made some tries.

The beavers have built a huge lodge in the lake which has formed in our back yard. Beaver experts (trappers) who have seen it say it is the largest they have ever seen. You cannot use dynamite any more since the events of September 2001. Then there once was the old tried and true farmer explosives made from ammonia nitrate and diesel fuel. Again, it is not a good idea to use this method for it will likely bring down the forces of law and order on your head.

So we went to the local gun shop and bought the latest explosives for destroying beaver dams and lodges. It is a chemical mix which comes in a relatively small plastic jar. The ingredients are carefully mixed simply by rotating the jar which is then placed on the dam or lodge. At a distance of more than 100 yards you shoot the jar with a 22 rifle. I checked it out on the Internet, and videos show that it is supposed to work. The experts do get impressive results.

Not having a good 22 rifle, I asked a farmer I know who does a lot of hunting to help me out. He obliged. We launched his fishing boat in our back yard and paddled out to the beaver lodge. The new lake at this point is about six feet deep. We set the plastic jar with the explosives, paddled back to shore, and my friend got out his 22 rifle with long rifle shells and a scope. A few shots that he took hit the jar, it jumped up, but did not explode.

So we went back in the boat to see what happened. One shell went right through the jar and out the back, but no explosion. We agreed that it probably did not go off because there was not enough force behind the shell. My friend went home and got his deer rifle and we tried that with a new jar of supposedly explosive materials. However, his scope was off and at that distance he failed to hit the jar after about 10 rounds. So we put off further action until next spring.

In addition
In any case, day to day coping with the flooding, and work finishing off the bathroom in the renovated residence,  took a great deal of my time over the summer and fall. I have also been doing research on my new project, the impact of climate change on agriculture and food. I have done quite a lot research and written drafts, but to date I have not published any of it.

I returned at the end of October to Peterborough, Ontario where I will be spending the winter; I will return to Saskatchewan and the farm in early April 2016. Right now I am reconstructing my web page, and the new program I am using is much more complicated that the one I originally used, and it is taking me a lot longer to learn how to do the work. But I will be done soon, and in early January I will once again be posting on my blog. If you are on Facebook, you will see that I am still commenting on the world of war and political economy.

The big change                                                                                             

Saskatchewan Wheat Pool No. 1, Bulyea

Stephen Harper and his gang of mean spirited conservatives are gone. He told an American right wing group one time that “you will not recognize Canada when I am finished.”  He tried his best to move Canada into the right wing conservative camp. But Canadians are basically middle of the road liberals who are not really interested in making the rich richer and getting tough with the poor. While the large majority of Canadians come from a Christian background, most want to have a generally secular society. The mainstream is not interested in fundamentalist religions and their politics. It seems to me that the majority of Canadians are satisfied to just follow along with the Americans as long as the Democrats are in office.

I am one of the solid majority of Canadians who are quite happy that Stephen Harper and his gang are gone and has been replaced with a modern liberal. Right now I am enjoying the Justin Trudeau honeymoon. I am actually quite pleased with the people he has put in the cabinet, especially the women. They are such a contrast and improvement over what we just experienced. .It is going to be a pleasant Christmas this year. The new Trudeau seems to be ready to lead and has indicated that his government is going to do what it pledged in the election campaign. His government will find the money to provide adequate support for the 25,000 political refugees from Syria. As he has said, “Canada is back!”

This is all bad news for the New Democratic Party which is stuck with Thomas Mulcair as leader. He is too much of a neoliberal. They are now down to 14% in the polls. The only way they are going to recover is to get rid of Mulcair and move back to being a traditional democratic socialist party. It wouldn’t hurt if they shifted to being an anti-war party.

In Saskatchewan there will be a provincial election in April 2016. The NDP has a very weak,  neoliberal leader, who follows the precedent set by Roy Romanow, Lorne Calvert and Dwaine Lingenfelter. All across the advanced capitalist world, electors are turning against the social democrats for moving to the right to embrace the neoliberal agenda, including structural adjustment policies. Until the Saskatchewan NDP faces up to this reality, they will be a weak opposition. They are down to 30% in the polls and are currently looking at another major defeat in April.   

Why We Need Good Libraries

For the past two years I have been researching the impact of climate change on food and agriculture. The other day I searched the University of Regina Library for five serious books that I wanted to read. They had none of them. I checked out Amazon, and of course they had them, but the cost of the books ranged between $100 and $200. It is not at all unusual to find that the science books cost even more – up to $400 to $500. That’s why we need good libraries.

However, the trend across Canada is for libraries to buy fewer and fewer books. Some seem to have virtually stopped five or ten years ago. Libraries are also getting rid of books, or putting them in warehouses where access if very difficult. I noticed last year in Peterborough that I was almost the only person in the stacks at Trent University looking for books. Everyone else was on the Internet, which apparently has all the info that anyone needs to have.

Then of course there is the Stephen Harper government which is shutting down and destroying science libraries and research programs. Book burners.

The Library of Congress

Main Reading Room, Jefferson Building.

Here is a real library, from Margaret Truman:

“The Library of Congress ... houses more than 115 million ‘items’ on 532 miles of bookshelves in three large buildings: more than 17 million books. ... There are 2 million recordings, 12 million photographs, 4 million maps and 47 million manuscripts. ..The LC has holdings in 460 languages. It has four thousand employees, some of whom serve overseas in offices in Rio de Janeiro, Cairo, New Delhi, Islamabad, Jakarta and Nairobi, in acquisition offices in Moscow and Tokyo.” (Yes, I am re-reading her Murder at the Library of Congress.)

The LC has a huge staff of professionals and scholars whose job it is to search anywhere in the world for good collections and try to acquire them. Even purchase them. But then, the USA is the centre of the unipolar world.

I am pleased to report that when I was a graduate student in Washington, D.C. I worked full time in the LC, 1957-61. I started working in the stacks, then moved up to the Reference Department in the Main Reading Room of the Jefferson Building, the only one at the time. From there I advanced to the Manuscripts Division, where I worked in the Presidential Papers section. It was charged with cataloging all the Presidents’ papers which were part of the LC collection. I worked as an Archivist-Historian on the papers of Grover Cleveland, Calvin Coolidge and Abraham Lincoln. Not a bad job, eh? Left it to join the U.S. Foreign Service and work at the Department of State.

What is Really Going on in Ukraine?

On June 10, 2015 the Pew Research Center, based in Washington, D.C., released the results of a major public opinion poll it had undertaken on the conflict between the US/NATO west and Russia over the conflict in Ukraine. The poll results, ignored by the mass media in the NATO countries, presents a picture that is quite different from that of our mass media and our political leaders.

Ukraine right demonstrates

Canadians might not be surprised to learn that public support by Russians for President Vladimir Putin has soared to 88% and the view of Russians toward NATO and the west has plummeted. Support for Putin’s policies towards Ukraine stands at 83%.

In contrast, support for the US/NATO policy on Ukraine has been falling among the general public in the six European NATO countries surveyed. The strongest opposition to the US/NATO policy is in Germany. For example, in the NATO countries surveyed only 41% supported sending military aid to Ukraine, with only 19% support in Germany.

Even more surprising, only in Canada and the USA did a majority of those surveyed support sending military forces to defend a NATO member if engaged in a military conflict with Russia. The lowest support for such action was in Germany at 38%.

The survey taken in Ukraine excluded Crimea, now once again a part of Russia, as well as the Eastern Oblasts of Luhans’k amd Donets’k, the centre of military conflict. Overall, the survey revealed increased hostility to Russia and a greater belief that the future of Ukraine is with the European Union and NATO.

However, the survey revealed growing majority opposition to the government in Kiev, which has had strong support from the governments of the United States, Canada and NATO. The economy is in collapse. Only 3% of those surveyed said the economy was “good” while 66% said that it was “very bad.” Over the past year support for the NATO-backed government has declined substantially. The Pew poll found support for the Kiev regime at only 32% with 59% having a negative opinion.

Only 33% of those surveyed approved of the performance of President Petro Poroshenko while 43% disapproved. The poll found that 60% disapproved of the performance of the Prime Minister, Arseney Yatsenyuk. 

On  President Poroshenko’s major government policies

* 57% disapproved of the military conflict in the east,
* 57% disapproved of the policies towards Russia,
* 61% disapproved of the policies towards corruption in government, and
* 62% disapproved of the general economic policies.

For Canadians the most important question was how to solve the situation with the rebels in the Eastern Oblasts. The Petroshenko government has refused to negotiate with the rebel governments. They have insisted on a military solution. NATO claims that it supports the Minsk agreement for a negotiated solution, but member states are beefing up military support to the Kiev regime. Both the President and the Prime Minister have made very disparaging comments about the people living in the Eastern oblasts who speak Russian as their everyday language. At the same time,  Putin has made it very clear that Russia will not allow the Kiev regime to crush the rebels, and this position has very strong popular support among the Russian public. If the Kiev regime were able to more successfully pursue the civil war, Russian military intervention would be expected.

It is here that the Canadian government and the opposition political parties are out of step with public opinion in Ukraine. The Pew poll found that 47% in Ukraine support a negotiated settlement and only 23% support the Kiev government’s military solution. A much better policy would be for the Canadian government to support a negotiated solution to the conflict and the proposals by the Eastern rebel governments for modifications in the existing Ukraine constitution.

NOTE: This first appeared as a guest comment in the Leader Post.

Is Democracy Possible?

     It seems to me that the rich and powerful have managed to convince a large majority of the people around the world that there is nothing they can do to change or even influence their governments. We face the prospects of a dire future with climate change, and everywhere majorities want their governments to take action. But they refuse. People want cuts to military spending and a halt to endless wars. But it goes on. In Europe, majorities want policies that promote employment, but everywhere governments demand more austerity programs. The growth of inequality of income and wealth continues unabated; people want much more egalitarian societies, but governments refuse to change the status quo.
    The other day the new Syriza government in Greece proposed a few very moderate social policies designed to help the poor and the unemployed, but the European Union vetoed the legislation. In office, it is hard to see any difference between the parties which formally represent big business and the social democratic parties which used to represent the common people. Do countries and their governments have any sovereignty today?
    The political elite everywhere seems to be firmly on the side of the big international banks and the other financial institutions. In the USA, the Federal Reserve created $4.5 trillion through quantitative easing (printing money) and it all went to the big banks, not to the people losing their homes. The newly created capital also served to push up the stock markets.

The official view of democracy
    Our political scientists declare that democracy is giving citizens the right to vote in elections every four years. Governments increasingly declare that democracy exists when there is a free market economy. The Anglo-American version of this liberal version of “representative democracy” normally produces governments which have a majority of seats in the legislature even when they receive less than 40% of the votes. Elections are deemed to be legitimate where voter turnout is less that 50% of the citizens.
    What do kids learn in school? How many know that the British parliamentary system, like we have in Canada, was designed for a time in history when the government was run by a very small group of rich white men? How many understand that the US system of government was founded on the liberal model  where the goal was to prevent the development of democracy?

Election day in Greece January 2015

Democracy requires mass, direct participation
    Modern democracy first developed in Athens and other Greek city states. If you go back and read some history, you will quickly discover that Greece at this time (500 - 300 B.C.) was characterized by continuous class war between the oligarchs, the large land owners who used slave labour to produce the products and profits, and the democrats, almost all of the rest of the people, the small farmers, serfs, artisans, and the few free labourers. This was a pre-industrial era, with a very small proletariat.
    Of course, in a fundamental way these societies were not really democratic. Slaves did not have the status of citizens, but they could buy their freedom, and some were able to do so. The people who were not born in Greece, the metics, were denied citizenship status.  Then at the very bottom were women who had no citizenship rights; they were the property of men, and those married to the oligarchs were confined to the house. It appears to be the case that the only prominent women were courtesans.
    Nevertheless, Athenian democracy grew as the growing popular classes challenged the oligarchs. Final legal authority rested in the Assembly; its decisions could not be overturned by some non-elected court or high official. It consisted of all the citizens, met 40 times a year, and had a quorum set at 6,000. Decisions were made by a majority vote of all citizens present. When the oligarchs were in power, they tried to change the balance of power by setting property qualifications for citizenship.
    There were also the law courts. The judges in the courts were chosen by lot from all the citizens, and they were changed each year. The top ten generals in Athens were elected. The armed forces were a citizens’ militia. The oligarchs were able to fill most of the state’s administrative positions because most of the popular classes could not take these positions because they had to work for a living. The democrats forming government responded by introducing pay for government work.
    As we know, Greek democracy was repressed by the local oligarchs, often with the support of armed forces from other cities or foreign states. Then democracy was suppressed by the Macedonian empire followed by the occupying Roman empire. The first attempt to create a democratic society and state was replaced by various versions of rule by the propertied classes.

What can we do?
    This is the big political question. In the January 2015 election Greece became the first major state where the population stood up and said “we have had enough.” The turning point, I believe, was when the unionized working class, which had historically supported the social democrats (PASOK), decided to break with tradition and shifted their support to the progressive, democratic left.
    Across Europe all of the governments and mainstream political parties, including the social democratic formations, have stood firmly with the capital class. They insist that there is no alternative to the neoliberal model. If this first attempt to move towards a democratic state and society is to survive, it needs strong support from its political and ideological allies, beginning in Europe.

What is Terrorism? It depends on whose ox is gored

As we watch Stephen Harper's Conservative government push through new "anti-terrorism" legislation, a few dissenters like myself would like to ask:  "Who is a terrorist? What is terrorism?" The comment below is published as an appendix in my book, Creating a Failed State: The US and Canada in Afghanistan. In Afghanistan there are the locals who detonate bombs in public places resulting in the deaths of many innocent people. Most people would agree that these people are "terrorists." But it also seems to me that when the NATO forces bomb and shell villages in the rural areas, also killing many innocent people, these are also acts of terrorism. In more recent years, this would include the use of predator drones as well.

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My Webster’s New Collegiate Dictionary (1961) defines terror as a “State or instance of extreme fear.” Terrorism is defined as an “Act of terrorizing, or state of being terrorized; specifically, a mode of governing, or of opposing government, by intimidation.” It is common to identify this with the Reign of Terror in France (1793-4). This definition makes it clear that terror is used by both governments and those opposed to a particular government. Individual or group activities (like bombing a subway) are crimes and not acts of war. 

This definition was created before President Ronald Reagan declared his “war on international terrorism” while launching the Contra war of terrorism against the Sandinista government in Nicaragua. It was made before the U.S. government and its NATO allies were fighting wars in countries that we used to call `Third World.`

George Orwell argued that governments use the power of language as a weapon. He concluded in 1946 that “In our time, political speech and writing are largely the defence of the indefensible.” In his novel 1984 Orwell argued that “war is waged by each ruling group against its own subjects, and the object of the war is to keep the structure of society intact.”

This brings back memories of the Vietnam War. When the National Liberation Front killed local government officials appointed by the U.S.-backed military regime in Saigon, they were described as ``terrorists.`` But when B-52 bombers flew in the night and carpet bombed areas under the control of the NLF, this was called “pacification.”

The U.S. law on international terrorism includes activities which are designed to “(1) intimidate or coerce a civilian population; (2) influence the policy of government by intimidation or coercion; or (3) affect the conduct of a government by mass destruction, assassination or kidnapping.”  Elsewhere it is defined as “the calculated use of violence or threat of violence to attain goals that are political, religious or ideological in nature through intimidation, coercion or instilling fear.” The post-9/11 Canadian law is similar.
 

Pacification

The United Nations can`t define terrorism
The United Nations has not been able to agree on a definition of terrorism. In 1999 one UN resolution proposed that terrorism consisted of “criminal acts intended or calculated to provoke a state of terror in the general public.” Many questions were raised in the debate. Is it legitimate for individuals and groups to attack military forces which occupy their own country?  Is it not legitimate to use whatever force is available to resist colonial domination? Cannot individuals and groups use violence to try to remove a criminal dictatorship? The closest the debate came to consensus was the general agreement that the targets of terrorism are usually civilians.

Michael Stohl and George A. Lopez point out that there was no agreement at the United Nations because of ideological and regional differences of opinion. There were three basic positions on terrorism:
 
(1) Terrorism is defined by criminal acts by individuals and groups against existing governments. This was the general position taken by the advanced industrialized governments and some Latin American dictatorships.
(2) Terrorism should be defined by acts, so that actions by governments could be included. This was the position taken by the African governments.
(3) Terrorism should be identified by the motivation of the actor and the context in which it takes place. 

Under the narrow definition proposed by the advanced industrialized countries, actions by national liberation movements against imperialism and colonialism would be labeled terrorism. This argument was made by many governments from less developed countries.

Edward Peck has recalled his experience on the White House Task Force on Terrorism in 1985, under President Ronald Reagan. Asked to come up with a definition of terrorism “we produced about six, and in each and every case they were rejected because careful reading would indicate that our own country had been involved in some of those activities.” The Congress defined international terrorism as “activities that appear to be intended to affect the conduct of a government by mass destruction, assassination or kidnapping.” Peck concluded that “you can think of a number of countries that have been involved in such activities. Ours in one of them. Israel is another. And so, the terrorist, of course, is in the eye of the beholder.”

State terrorism certainly did not start with the Reign of Terror in France. A few years ago I did some research on Irish history. In their attempt to pacify the Irish rebel movements demanding independence, the English Tudors regularly carried out a systematic “war of terror,” and they called it that. This included the routine burning of crops, homes and villages, killing of all the cattle, destroying food resources, and killing all men, women and children in certain cases. There was a bounty paid for Irish heads. Under orders from Queen Elizabeth, Francis Drake massacred the entire population of Rathlin Island to teach the Scots not to support their Celtic allies. Sir Humphrey Gilbert, head of the English forces, had the heads of the Irish killed during the day piled up near his camp for the Irish to see. He argued that this “policy of terror” would convince the Irish to give up their rebellion and shorten the war.

Stohl and Lopez try to distinguish between the different kinds of violence used by a state. They define oppression, where “social and economic privileges are denied to whole classes of people regardless of whether they oppose the authorities.” Repression is used by the state, “coercion or threat of coercion against opponents or potential opponents in order to prevent or weaken their capability to oppose the authorities and their policies.” Many examples are used from Latin America to illustrate these positions. They argue that in this differentiation of state power, terrorism is “the purposeful act or threat of violence to create fear and/or compliant behaviour in a victim and/or audience of the act or threat.” The goal of an act of state terror is the creation of fear in an audience, to change behaviour or potential behaviour. They cite a Chinese proverb to illustrate their point: “Kill one, frighten ten thousand.”

See Michael Stohl and George A. Lopez, eds. The State as Terrorist: The Dynamics of Governmental Violence and Repression. Westport, Conn.: Greenwood Press, Congressional Information Service, 1984.

The EU Message to the Greek Population: “There is no alternative” to making you suffer even more

    What’s going to happen in Greece? As I write this, the new left-wing Syriza government is trying to come up with an economic plan that will end the five years of hardship that has come with the austerity program that has been imposed on Greeks by the International Monetary Fund, the European Union and the European Central Bank. The previous Greek governments, by the right wing New Democracy Party and the social democratic PASOK party, surrendered control over their economy to the technocrats from the Troika. The result has been a steady decline in the economy, an enormous government debt, the rapid rise in unemployment to over 26%, and the imposition of draconian social policies that have devastated the working class, seniors on pensions and the poor.

    Those on the political left have kept a close eye on what has been happening in Greece in recent years. In many ways the crisis mirrors what has happened to a whole host of underdeveloped countries who have experienced “structural adjustment” imposed on them by the World Bank, the IMF and the World Trade Organization. The Keynesian Welfare State is no more. Governments are not to create or maintain social programs that try to help the poor. Countries are not to have public ownership of essential public utilities. It is morally wrong for governments to tax corporations and the elite. Governments should not be introducing regulations to protect health, welfare and the environment.
   
The failure of previous Greek governments
    We have heard for years that “Greeks don’t pay their taxes.” But as Christos Laskos and Euclid Tsakalotos point out in Crucible of Resistance, it is really the rich and powerful who don’t pay their taxes. During the boom period from 2004 to 2008, corporate profits increased by 35%, but at the same time taxes received from private firms fell by 2 percent. Corporate tax evasion is rampant. In 2010 the 900,.000 private corporations “contributed only about 4 percent of total tax revenues.” There is a long history of the upper classes hiding their income and wealth in tax havens and Swiss banks. Independent professionals, like doctors, lawyers, accountants, etc., only declare a small percentage of their income on which they are taxed. The same is true of the small business sector. The new Syriza government has pledged to change all this. We will see.

    There were some attempts to impose the neoliberal model on the Greek population in the 1980s. But the big push for change began in 1996 with the election of a government under Kostas Simitis, the new leader of PASOK. He followed the trend of the social democratic parties in Europe, like those of Tony Blair in Great Britain and Gerhardt Schroeder in Germany. “Modernization” meant the repeal of the Keynesian welfare state. The new program of the social democrats emphasized “reform,” which in Greece included reduction of the taxes on corporations, the privatization of public enterprises and services, the implementation of “labour market reforms” and the liberalization of the financial system. The social democrats boosted casual and precarious labour in both the public and private sectors.

    Nevertheless, the Greek economy produced higher growth rates than the European Union as a whole between 1996 and 2008. New industrial sectors were developed. Investment was high. Profits for the private sector rose steadily. The decline in remuneration for the working class was offset by a significant increase in household debt. Public sector employment was at the average for the EU. Employment in the primary and secondary private sectors was 33.2% of total employment compared to 28.7% in the EU.

    Where Greece has differed from the EU is the extent of self-employment: in 2008 it was 35% in Greece compared to 14% in the EU. The high level of self-employment in the agriculture accounts for much of the difference. There are also many craftsmen and technicians who work on their own instead of with a business. Labour market “flexibility” has added to this number, the disguised unemployed.

    The other major difference is the size of the small business sector. In 2010 only 15% of Greek employees worked in firms with over 50 employees; in the EU as a whole, this figure is 31%. Part of the persistence of small firms has been their ability to avoid paying taxes. Many of these small businesses have disappeared in the post-2008 crisis.

The debtor nation
    The crisis of 2008, which was triggered by the collapse of the financial sector and the housing bubbles that had been created, revealed the extent to which the new capitalist system was linked on an international level.
    The New Democracy government held on until the general election of October 2009, when it was defeated by PASOK under the leadership of George Papandreou. Greece was reprimanded by the European Community when its budget deficit rose to over 12%, The PASOK government responded with cuts to wages and salaries and “reforms” to pensions and taxes.
    In May 2010 the Eurozone countries and the IMF provided a $110 billion loan, and PASOK promised to cut the budget deficit to 3%. In December the parliament voted for wage cuts for both the public and private sector. The second “bailout package” from the Troika came in July 2011. The government responded with spending cuts and tax increases, cuts in the public sector, cuts in pensions, and labour market “reforms.”
    In desperation, Papandreou formed a new coalition government under the leadership of Lucas Papademos. More omnibus bills were passed boosting restructuring. In early 2012 there were two general elections, and Greece ended up with a three-party coalition government headed by New Democracy. More cuts and restructuring followed.

The popular left mobilizes.
    Canadians could hardly believe the political changes that were taking place in Greece at this time. There was mass resistance from the victims of the economic crisis. It began in December 2008 with riots in Athens. The political leadership in parliament urged restraint. But the grass roots resistance spread. The new red-green party, the Coalition of the Radical Left (Syriza), actively supported all the grass roots political actions. The Communist Party (KKE) did not.
    The trade union leadership was reluctant to take extra-;parliamentary action because “their party” (PASOK) formed the government. But the grass roots members demanded action. The first general strike was held on May 5, 2010. Through the end of 2012 there had been 30 general strikes and many individual strikes, 500 in 2011 and 700 in 2012.
    In the fall of 2011 the Papandreou government imposed a new property tax which was tied to people’s electricity bills. Non payment would result in the loss of electrical power. There seemed to be no limit to what the social democratic government would do to try to placate the gnomes of Zurich.
    The other major development was the rise of Syriza as a serious political party seeking government power. In 2009 it received only 4.5% of the vote. In the May 2012 election it received 26.9% of the vote. In the campaigns of 2012 the party stressed popular assemblies in local towns and neighbourhoods with strong public participation and debate. In this class struggle, PASOK collapsed as its working class members fled to Syriza. There was no increase in support for KKE, which refused to embrace the new politics of the democratic left.
    In the election in January 2015. Syriza won 36% of the vote and under the strange Greek electoral system was able to form a majority government with the support of the Independent Greeks, which received 5% of the vote and 13 seats.
     PASOK, the social democratic party, received only 4.7% of the vote and 13 seats. They had been abandoned by their trade union allies. As Laskos and Tsakalotos point out, in the era of neoliberalism there has been a convergence between the social democratic parties and the traditional parties which represent big business. Greece is the first instance where their traditional supporters, the members of the mainstream trade unions, had shifted in mass, to a party on the left.

What will Syriza do?
    What will happen next? The leadership of Syriza confronted the Ministers of the European Union last Friday. The united front took a tough stand, forcing the new Greek government to surrender the major thrust of their political agenda, ending the control of the Troika over the Greek economy and the imposition of the disastrous austerity program. Syriza is up against the wall. Government funds were expected to be completely depleted by the end of February. They asked for a bridging loan for four months to work out their alternate plan. The EU ministers agreed, but only if Greece abandoned almost all of its election platform.
    It is reported that there is great disappointment and anger among Syriza supporters and members of the parliamentary caucus. Commentators are suggesting that the leadership will not be able to get their agreement through the parliament. What will the grass roots movement do? The party leadership had insisted that Greece stay in the European Union, a position supported by 70% of the Greek population, as reflected in public opinion polls. But an exit from the EU may be the only alternative to complete surrender of sovereignty to the Troika. It is also the best hope of breaking out of debt bondage.
    \

“I’ve seen the future, brother: it is murder.”

The Collapse of Western Civilization; a View from the Future. By Naomi Oreskes and Erik M. Conway. New York: Columbia University Press, 2014. 90 pp.

I guess a lot of people who read feel like they have had enough of the climate change issue. There are thousands of scientists working on the issue, and reports come out every day. A survey of literature in the scientific journals finds that 97% of those doing the actual research know that global warming and climate change is caused by humans burning fossil fuels.

The international organizations confronting this issue have set an arbitrary limit to the increase in temperature that we can tolerate: 2 degrees Celsius. That level of increase is often cited as “the tipping point” which will trigger disasters that cannot be stopped or reversed. The World Bank in its 2012 report argued that if things continue as they are going by the end of the 21st Century the rise would be around 4 degrees. They warned that it is not certain that we can adapt to such a climate. The International Energy Agency, an arm of the western capitalist states, which promotes the extraction and burning of fossil fuels, warned in 2011 that we are actually heading towards a 6 degrees Celsius increase.

We also know only too well that our governments are unwilling to take any serious steps towards reducing greenhouse gas emissions. All the international conferences on the issue repeat the conflict between the industrialized western states and the less developed countries. Our governments are not impressed with arguments that our industrial revolution created the mess, so why should the poor countries of the Third World be called on to take a heavy economic hit? Why don’t we set up a system based on per-capita consumption of fossil fuels? And so on.

It is easy for those of us who have followed this issue over the years to conclude that it seems highly unlikely that our governments will adopt any policies that seriously try to mitigate the problem. Naomi Oreskes and Erik Conway believe this to be the case. Thus their small book looks back at the Period of the Penumbra (1988 - 2093), which produced the Great Collapse and the Mass Migration (2073-2093). Why did this happen?

Oreskes and Conway are highly respected historians of science based at U.S. universities. In 2010 they authored the widely acclaimed Merchants of Doubt. They exposed the influence of a small number of right wing neoliberal scientists whose crusade was to cast doubt on the science which exposed the dangers of tobacco smoking, acid rain, the questions about the ozone layer, and climate change. They were aided by corporations and conservative “think tanks.” The strategy was to deny the mainstream scientific data, delay any government action, and to present misleading evidence. They were aided by the mainstream media, which gave them equal coverage under their demand for “balanced reporting.”

Neoliberal hegemony
The key to the lack of action by governments was the ideological hegemony of neoliberal political economy. The scientists were on the political right: they strongly resisted any government intervention into the free market. These advocates were relatively few in number, but they had the support of political and economic power.

As I read their prediction of what would happen without a significant effort to reduce the burning of fossil fuels, I was reminded of the study done for the Pentagon on what to expect from the advance of climate change. It was the only study to seriously predict major loss of food crops, food riots, mass migrations, wars for the control of resources, the outbreak of diseases, and the inability of governments to deal with the crisis. The result, they predicted, would be highly authoritarian governments and increased militarism.

Oreskes and Conway project the arrival of the Great North American Desert in 2041, which spread up from the High Plains in the USA through the breadbasket states and the Canadian prairies. In response to food riots and widespread looting, the U.S. government imposed martial law. The two countries formed the United States of North America to try to share resources and help the mass migration of American citizens into Canada. Similar moves were made in Europe and Russia. The populations of Australia and Africa were obliterated by the warming climate and the inability to grow food. The country that dealt best with the crisis was China, which had an effective authoritarian government, a very large military/police establishment, and a citizenry used to following orders.

“Where they said REPENT, REPENT, I wonder what they meant.”

Thanks, Leonard.

Free Trade Benefits Canada, eh?

General Motors in Oshawa

Every time I pass through Oshawa, Ontario I think of the Free Trade Agreement between Canada and the USA. Oshawa is the home of General Motors of Canada, the largest producer of motor vehicles in Canada. Not that long ago Canada was the fourth largest producer of cars and trucks in the world.

During the government of John Diefenbaker, the Canada-US Auto Pact was signed. For every car that the US Big Three sold in Canada, they had to build one car here. That agreement preserved the manufacturing industry in Canada. It was replaced by the Canada-US Free Trade Agreement of 1988. Canadians, we were told, should have the option of buying any car wherever it is built, without any government interference.  With the adoption of the North American Free Trade Agreement in 1994, Mexico was added. The Big Three began shifting production south to take advantage of Mexico’s low wage economy.

The goal of the “free trade” agreements was never to free trade. Trade was already free for most products with only a few having low tariffs. Quotas were virtually unknown. As the organizations of big business all stressed, what they really wanted was freedom for capital. Freedom of business organizations to invest in any country without government interference and the freedom to repatriate their profits as they so wished.  

The auto industry today
Michael, a friend of Susan’s, has worked on the assembly line at GM in Oshawa for 25 years. Working conditions have steadily gotten worse. Now they have two 10 minute breaks per shift and only 20 minutes off for lunch. New workers start at $20 per hour, a reduction from previous contracts. Pension contributions from the company have been cut. Now it is nearly impossible for a new worker to buy a house; down the road they may be able to save enough for a down payment on a one-bedroom condo for $350 grand in one of the new 50 storey high buildings.

GM will not say what its plans are. The production of its Camaro automobile is presently being shifted to Lansing, Michigan which will result in the loss of around 1,000 jobs. It is also rumoured that GM plans to shut down its CAMI assembly plant located at Ingersol, Ontario. Within the industry, it is widely believed that GM plans to shut down the Oshawa operations in 2019. Michael says the workers in Oshawa are expecting this.

All the automobile companies now demand  handouts from federal, provincial, state and local governments before opening new plants. They get additional government grants and loans by threatening to close existing operations. We know that only too well in Canada.  Between 2010 and 2013 automobile corporations have invested $29 billion in the USA, $20 billion in Mexico, and only $2 billion in Canada. We are, as one editor of Maclean’s Magazine once pointed out, “Puerto Rico North.”

Free trade and the NDP
I lived in the Toronto area in 1971. Oshawa was a thriving city. The auto workers’ union was strong. Wages and benefits were very good. The city was represented in Parliament by Ed Broadbent, MP for the New Democratic Party.  In 1988 he was leader of the New Democratic Party. In the famous “Free Trade Election” that year Broadbent and the NDP were virtually silent on the proposed FTA. The opposition to the agreement was led by John Turner, leader of the Liberal Party.

I remember well that election. The trade unions linked to the NDP set up an election headquarters where the unions called their members, urging them to support the NDP. They reported that their members overwhelmingly stated that the proposed Canada-US free trade agreement was the number one issue, and that they were opposed to it. But Broadbent and the leadership of the NDP ignored this issue and instead stressed environmental issues.

The NDP has never opposed free trade agreements. At best, like Thomas Mulcair, they ask for some modifications. But free trade agreements are bad news for working people, and they know it.

These days we take the Go Train to Toronto. A Go Train bus (a city bus no less) takes us from Peterborough to Oshawa, where we switch to the commuter train that goes to Toronto. We travel from Oshawa (150,000) through Whitby (130,000) and Ajax (110,000). When I lived here before they were independent cities. They are now suburbs of Toronto, part of the six million people crammed into this area of southern Ontario. Endless massive high rise condos. Nothing that could be described as a community. Bedrooms for Toronto workers. This alienating mess, tied together by the 12-lane 401 highway, travelled by over 500,000 vehicles every day, is the result of capitalist planning. It is hard to believe that we live in one of the largest countries in the world with endless open space.

Capitalism and Climate Change

On Sunday I entered Beit Zatoun community centre on Markham Street in Toronto to sit in on a discussion of Naomi Klein’s new book:  This Changes Everything; Capitalism vs. the Climate. Around 300 people were stuffed into this nice older building, mostly long time left wing political activists.

A three-person panel kicked off the meeting. Umair Muhnammad argued that this was an important book, for Naomi Klein, now an internationally known journalist, had legitimized the role of socialists in this debate on the disaster of global warming and climate change. Klein had made it clear to a wider audience that capitalism must have constant growth and the production of profit to survive. At present, those dominating the system were deeply committed to the continuation of the fossil fuel economy. Climate change could not be brought under control without confronting capitalism.

Beit Zatoun Toronto

Building alliances for change
Ellie Perkins stressed that a popular movement for serious change had to be tied to all the broad issues concerning social justice. She pointed to the leadership provided by the Aboriginal and women’s movements. There had to be a clear link with the anti-war movement. Broad based alliances were necessary.

Many of the criticisms I had when reading Klein’s book were emphasized by Sam Gindin. Klein’s book had left out the reality of the enormous power of the political state, which was closely aligned to the capitalist class. There was no discussion of the modern version of capitalist imperialism, the U.S. government leading NATO’s world wide crusade in opposition to all popular efforts for change.

Gindin stressed that Klein’s book had opened the door for us. It was time to boldly put forth the egalitarian and democratic alternative to capitalism in all our discussions. Capitalism has not served the interests of the people we represent. He noted, as one example, that under the free trade agreements the number of employees at General Motors had declined from 800,000 to 100,000.

Much of the discussion from the audience focused on how to try to build coalitions. I recognized a number of people in the crowd from the days of the Coalitions for Social Justice and the national coalition formed to oppose the free trade agreements. We had some successes back then. Central to that effort was the trade union movement, which had the resources, the organizations and the base to give the coalitions. Could this be revived?

Gindin was refreshingly frank on the issue of organizing for change. We have to recognize that since the onslaught of neoliberalism beginning around 1980 we have faced a long period of steady defeats. At the federal and provincial level the welfare state is being whittled away. The free trade agenda had resulted in the loss of a great many manufacturing jobs. Real incomes have declined for most workers. Income and wealth inequality was steadily rising.  People were discouraged, with a growing percentage not even wanting to vote. As Gindin argued, “it is as if we are having to start all over from the beginning.”

No one mentioned the fact that the political parties that we used to support, and who brought us the welfare state after World War II, now fully embraced the broad neoliberal agenda and U.S - led imperialism.



Can capitalism save the planet?
One member of the audience rose to put forth an alternative view. He declared that the science is clear on global warming, and there are many studies showing what has to be done and how to do it. We do not have to have a socialist alternative: the capitalists can make the changes. After all, we all know that capitalists can make major adjustments, as they did to deal with the Great Depression. Leo Panitch agreed that it was possible for capital to make the necessary changes, but it would just lead to other contradictions. He cited one example: Germany is praised for bringing in a green program for producing electricity, but no one mentions that they have expanded their export of coal.

I didn't agree. It might be possible for the capitalists in the G-7 countries to accept a plan to shift to Green Capitalism. But would it be possible to get the rest of the world’s capitalists to take a similar stance? Gindin asked: "What would happen if the North agreed to shift wealth to the South? The mass of people in the South want the consumer lifestyle that they see in the North. In addition, most of the governments of the states in the South seem to be worse than ours. Would they agree?"

One problem I had with Klein’s book is that the alternative strategy she promotes is the model we associate with the Occupy movement. But these spontaneous actions all seem to fade away rather quickly as they have no structure. Capital yielded on trade unionism and the Keynesian welfare state after World War II because they were confronted with the mobilized power of the popular classes through their organizations and political parties



Will Greece show us the way?
Naomi Klein wrote this book over the past five years during which a mass struggle was going on in Greece. Yet there is no mention of this in her book. But that is exactly where we need to look to see what strategies work. The mass struggle in Greece, characterized by a great many general strikes, served to educate and politicize the general population. It has resulted in the rapid rise in support for Syriza, the Left Green opposition party, which now has a chance of winning the general election on January 25.

On the bus trip down to Toronto, my colleague, Susan Ferren, who went with me to the meeting, remarked at the major change that had occurred in the Greater Toronto Area since she had lived here in her youth. From Oshawa through to Toronto there is now one great alienating example of market-designed suburban sprawl, the home to six million people, many forced to live in sky high condos. The 401 highway is twelve lanes wide with seemingly millions of vehicles going back and forth, 24 hours a day. She asked: “How could this be sustainable?”

As we walked down Bloor St. West to go to the meeting, we saw where the capitalist class does its shopping. She reminded me that “consumerism is the ideological essence of personal capitalism, and it is deeply entrenched in our culture.”

Before we headed back to Peterborough we went to the cinema to see Selma. Don’t miss it. I remember this struggle well. We have won battles in the past. It is possible to mobilize people. Organization is essential. Martin Luther King knew how to do this.  As Sam Gindin pointed out at the meeting, it is through local struggles on important issues that people come to understand how the system works. Not through reading books.

Peterborough Is Not Regina

Quaker Oats on the Otonabee River

I am spending part of the winter in Peterborough, Ontario, a city of 80,000 just outside the Toronto commuting area. It snowed last night, and by 8 am this morning our residential street had been plowed. Within the next  hour  machinery came and plowed and then sanded the sidewalk. By 9 am a city truck had sanded the road. All streets receive this service. The city has a budget for snow removal  and expect it to snow every year. This is a hockey town.

The city has a vibrant downtown, the result of city planning and the domination of the city council by traditional conservatives (not Harperites) who use their political power to support small Canadian-owned businesses. They have excluded the big American and Canadian chains from the downtown area.  They required the Galaxy Theatre, the only movie theatre in the city, to be in the core area.

Special tax incentives were given to encourage local businesses in the core area and to create residential rental spaces in their second and third floors. The downtown area has two large grocery stores, three large venues that host live stage events (former movie theatres), two boutique hotels,  a wide variety of small retail stores, restaurants, bookstores, coffee shops, and numerous pubs. There are 20 places in the downtown area which have live music.

The big box stores are here, stretched out in a line on a highway leading out of town. But there is not the congestion and despair that one gets when being forced to drive through the free market mess that is found on the east end of Victoria Avenue.

Everything is not rosy, however. The North American Free Trade Agreement (NAFTA) hit the city hard. Many of the large American corporations downsized as they shifted production back to the United States and then abroad. Canadian General Electric, the largest employer, saw its workforce drop from 6,000 to 1,500. Quaker Oats, bought by Pepsi Cola, downsized to 700. Outboard Marine Corporation of Canada, once the second largest private employer, shut down. The major employers are now government services, Trent University, and Fleming college. 

One result is that Peterborough has one of the highest unemployment rates for cities of its size. It also has one of the highest poverty rates and the problem of inadequate low income housing.

One final positive note: I have yet to find a pot hole on a city street.

Looking Forward to 2015

    Yes, as a political economist I tend to be more of a skeptic than my friends the economists. But I have no fundamental commitment to capitalism as an economic system. I see it as the primary barrier to the development of a democratic and more egalitarian society.

    So given the state of the world, it is not surprising, to me, that my predictions for 2014 were more on the mark than those who used to share an academic department with me. And there is no reason to expect that there will be any significant change in 2015.

Flood waters moving up towards our house.

    (1) The European Union remains in economic dire straits, and the governor of the European Central Bank is now about to desperately try to avoid a collapse into deflation. Everyone expects the ECB to begin quantitative easing, even though there does not appear to be any legal basis for doing so. Placing economic sanctions on Russia has only made things worse; a recession in Russia, which appears to be certain, will have a very negative impact on the EU.

    (2) Japan still is fighting deflation. Nothing that the government has done has made any difference. One still has to ask, is this the future of mature capitalism?

    (3) China. Last year the general concern was a slowdown in their economy and the large debt in the housing market. Those issues remain. What is new is the decision by the Chinese high command to shift the general direction of the economy away from the focus on providing cheap manufactured exports to serving the needs of the domestic market.  China is also taking a strong lead in building a political-economic alliance with Russia. This includes developing a new currency exchange system to bypass the U.S. dollar.

    (4) Commodity prices continue to be in decline. The major story for 2014 has been the collapse of the price of oil and gas. Analysis indicates that this is not due to a USA/Saudi conspiracy to stick it to Russia, but in general is due to the decline of consumption, the result of the general stagnation in the world economy.

    The one good news story for 2014 was the economic recovery in the United States. So the $4.5 trillion of quantitative easing created by the Federal Reserve did have some impact other than just boosting the stock markets and lining the pockets of those who were already rich. The USA has the advantage of “Military Keynesianism,” as defined by Joan Robinson: massive government spending in a country which claims to be a “free market.”

    The US economy has sagged in December, but overall economic growth will be close to 3% rather than the 2% that I suggested. Can the USA continue to grow with the world economy going in reverse?  It should be noted that the recovery has not been great in the employment area, and wages and salaries of workers have not been rising anywhere near 3%. In the past, lower gasoline prices have not led to increased consumer spending. A significant correction in the stock markets, predicted by many business economists, would likely lead to a decision by Americans to pay down their debts and reduce spending.

    Canada. And then there is Canada. Economic stagnation is the general trend. It is hoped by everyone that the recovery in the USA will have a positive benefit, given the fact that we are now even more dependent on exports to that market.

    But there is the major collapse of the oil economy. And as many people know, over the past ten years the manufacturing industry in Canada has been in decline, while there has been a shift to depending on petroleum and other raw material exports. No one these days mentions the term Dutch Disease. It is hard to see how this development will be a positive benefit for the country as a whole. Alberta, Newfoundland and Saskatchewan will feel the hit. The experts believe that the low oil prices are to be around for a good while – at least a year.

    As for me, the biggest concern is the flooding that is happening on the Canadian prairies. It has been a hard reality for the past three years. The last thing we want to see is a heavy snow fall this winter. Like yesterday.