Inequality, Democracy and Trade Unions

Over the past year or so the public finally discovered that inequality of income and wealth in Canada and the United States has been steadily increasing. The short-lived Occupy Movement had one lasting impact: they had little trouble convincing the general population that the top 1% of our societies included the people who actually make the major decisions on political and economic matters.

Given the fact that the mainstream media has been in the back pocket of the 1% for a great many years, and our political leaders have all embraced the neoliberal agenda, it is interesting to discover that a majority of citizens still feel that rising inequality is an affront to democracy and steps should be taken to correct the problem. Public opinion polls even indicate that the majority is willing to accept an increase in taxes.

For those who want to seriously look at this issue, I highly recommend reading and studying Gregg Olson’s Power and Inequality: A Comparative Introduction. Olson is a professor of sociology at the University of Manitoba and has written extensively on the welfare state.

From egalitarian democracy to hierarchy and inequality
For around 90% of our existence, human beings lived in small groups, where the prevailing culture stressed collective, egalitarian values. These democratic societies were based on the concept of intrinsic equality – the right to existence with material and cultural support simply because we are human beings and residents of a community.

This changed with the development of agriculture and sedentary living. The creation of an economic surplus permitted the development of structured inequality based on castes, slavery,  class systems, gender, race/ethnicity, age and ability. Privilege was usually inherited.

As the Chinese philosopher Mencius wrote: “Those who are ruled produce the food. Those who rule are fed.” Western political philosophers like Plato and Aristotle, so revered in North America, did their best to produce political theories to justify inequality and hierarchy and denigrate democracy.

The rise of capitalism and liberalism
With the development of industrial capitalism, beginning in the 18th century, we have the solidification of society based on hierarchical divisions of social class. In all capitalist societies we have the capitalist class at the top (among the 1%), the owners of the large productive assets. As sociologist Max Weber stressed, they are supported by a strata of the “propertyless upper class,” top managers and administrators who are very well paid. The third class is the petit bourgeoisie, small scale property owners and those professionals capable of making a living with their own skills. At the bottom is the majority who are the working class, those who do not own the means of production but are required to sell their manual and mental labour to survive.

Capitalism brought with it the political philosophy of liberalism and individualism. This new world system is based on competition among individuals and among private businesses. Classic liberalism, viewed in a Herbert Spencer/social Darwinian manner, is the survival of the fittest with the winner taking all.

While we identify liberalism with basic political rights and liberties against state oppression, the most basic right is deemed to be the right to own private property. Thus, the early liberals forming constitutions and establishing liberal democratic representative governments limited political rights to men who own property. While more recent liberal ideology has argued for “equality of opportunity,” the followers of Adam Smith have been strongly opposed to any taxation system that redistributes income and wealth from rich to poor, and this includes inheritance taxes. The reality, of course, is that human beings are who they are largely because of the accident of birth. Should a person be condemned to a short life with hardship because of a basic condition over which they had absolutely no control?

Thus the democratic movement against liberalism has historically insisted that all human beings have an equal value and communities must provide basic supports necessary for a life of well being. As Olsen points out, the equality of outcome requires “a greater sense of community, solidarity, co-operation, and self-fulfillment beyond that of only individual gratification.”

Which Road for the Saskatchewan NDP?

Act Up in Saskatchewan 
Friday, 16 November 2012

The campaign for the new leader of the Saskatchewan NDP takes off this Saturday in Regina with the first public debate among the four candidates. There are thirteen debates scheduled between November 17 and February 16, 2013. This will allow NDP members and others to see the differences between the candidates. The leadership convention is scheduled for the weekend of March 9, 2013 in Saskatoon.

As everyone knows, the provincial NDP is in dire straits at this time. Their support among voters has dropped from 275,000 in 1991 to only 127,000 in 2011. Their membership has dropped from 46,000 in 1991 to around 8,000 today. The turnout at elections has dropped from 75% of eligible voters in 1991 to only 50% in 2011. The provincial Liberal Party has all but disappeared, which means that the NDP will likely have to win close to 51% of the vote to once again form the government. They now face Brad Wall and the Saskatchewan Party whose government has had an approval rating of 70% in recent public opinion polls.

The leadership candidates
The four leadership candidates are all young white men. Trent Wotherspoon, the MLA from Regina-Rosemont, appears to have the most support at this time. However, he was a strong supporter of bringing Dwaine Lingenfelter back to lead the party in 2009, and this proved to be an absolute disaster.

Cam Broten, the MLA from Saskatoon Massey Place, supported Deb Higgins for leader in 2009. Higgins had been a cabinet minister in Lorne Calvert’s NDP government but finished last in the leadership race. Because of their status as Members of the Legislative Assembly, these two candidates are the best known among party members. But because they are closely identified with the present NDP caucus, they are seen to be less likely to lead the party in a new direction.

The third candidate is Ryan Meili, a doctor and social justice activist from Saskatoon. He contested the leadership against Dwaine Lingenfelter in 2009 and finished second with 45% of the vote. He appears to have the support of many of the traditional “left” within the provincial party.

The youngest candidate is Erin Weir, an economist who has taken leave from his job with the United Steelworkers Union and the Canadian Labour Congress in Ottawa. He also spent 2010-11 with the International Trade Union Confederation in Europe. He has some public recognition from his appearances in the television media representing the political left.

A New Football Stadium for Regina?

To: The Mayor and City Council   
October 29, 2012

RE: Memorandum of Understanding on the proposed new stadium

Dear members of the City Council:

The Memorandum of Understanding on the financing of the proposed new football stadium adopted on July 19, 2012 was not final and needs to be re-assessed by the new City Council. There are a number of important reasons to revisit the issue of whether to build a new stadium or renovate the existing Mosaic Stadium. These are as follows:

(1) Some have stated that the recent municipal election settled the issue in favour of building a new stadium. However, the citizens of Regina were not given a clear choice on the issue. The three leading and serious candidates for Mayor all supported the building of a new stadium; there was no choice for the alternative. The same problem carried over to voting in the wards. Even in ward 3, where I live, there was no candidate who openly stated that they opposed the proposal for building a new stadium. There was no referendum. The election did not resolve the issue.

(2) The previous City Council did not make a serious effort to look at the option of renovating the existing stadium. The public was kept in the dark about this option. It was often stated that a renovation would cost $150 million. This was the figure supposedly put forth by a consultant’s report done for the Saskatchewan Roughriders. But both the football club and the City Council have refused to make this report public. We have no idea how the consultant came to this conclusion.

On February 8, 2008 members of the City Council, meeting as the executive committee, received a report done by Santec Architecture on the state of Mosaic Stadium. This report was not released to the public. But it has been obtained by the Canadian Taxpayers Federation, which posted it on their web site. After a careful examination of the stadium, the technical consultants concluded that it was in pretty good shape, and with the expenditure of $3.4 million, it could be made to last at least another ten years. The report detailed the renovations that were recommended.

The Saskatchewan Roughriders are currently carrying out significant renovations to Mosaic Stadium, which is to cost them $14 million. Among other things, this will expand the seating capacity to 50,000. There is no reason why these renovations cannot be maintained with some additions, which could include new seats, more washrooms and more refreshment sites.

(3) The previous City Council asked Praxis Analytics to survey public opinion as to what they think is the single most important public issue facing Regina as a community. Their survey found that 30.4% felt that the question of the availability of affordable housing was the most important issue. Only 3.2% indicated that they thought the issue of the stadium was the most important issue. The City Council did not release the results of this public opinion survey until after the Mayor and City Council had signed the Memorandum of Understanding.

These reasons may explain why there was such a low turnout in voting in the recent municipal election, only 33% of eligible voters.

The Regina Municipal Election: A flood of candidates is one sign that residents are fed up

Act Up in Saskatchewan

The Regina municipal election will take place on October 24. In contrast to the election three years ago, there has been a remarkable increase in the number of candidates running for seats on City Council. Furthermore, there are nine candidates running for the position of Mayor. We may see a much higher turnout of voters this time and perhaps a different city administration.

Regina used to be a solid NDP town. But in the last municipal election the turnout of voters fell to 25%, which always benefits those with higher incomes. As a result, the political right re-elected Mayor Pat  Fiacco, a known Stephen Harper and Brad Wall supporter. Judging by their voting record on key issues, it quickly became apparent that the political right also swept City Council. However, a revolt against the incumbents began in 2011 when the Mayor and his business friends produced a plan to build a new football stadium.

The fallout from Regina’s boom economy
Over the past five years Regina has experienced a major boom, a reflection of the fact that people  have flooded into the province to work at the major expansions being undertaken by the existing potash mines and the new Bakken oil play. This has resulted in a serious housing shortage. The market price of existing single family dwellings has doubled over this time period. New houses are being build in new subdivisions, but almost all of them are in the range of $500,000, which is unaffordable for the majority of families and individuals.

Furthermore, rental alternatives are virtually non-existent, with the city having the lowest vacancy rate (0.6%) in the country. With virtually no direction from city planners, builders have constructed very few apartments over the past 20 years. Many existing apartments have been converted to condominiums. As a result, rental rates have skyrocketed, and it is now virtually impossible to find a one-bedroom apartment for less that $850 per month.

On top of this, the number of social housing units available has been declining for a number of years, as both the provincial and city housing authorities have been selling them off. There is now a desperate need for social and affordable housing. But this crisis situation has not led the Mayor and his passive supporters on City Council to take any serious action.

The media has named the stadium design "The Toilet Bowl."

We Need a New Football Stadium!
On the other hand, the Saskatchewan Roughriders want a new football stadium. Mayor Pat Fiacco needs a legacy project as he is not seeking re-election. The builders and developers want more land on which to build houses. Realtors want more houses to sell.

On April 19, 2011 Mayor Fiacco surprised everyone, including planners at City Hall, by announcing his own project, the Regina Revitalization Initiative. This was to include a replacement for Mosaic Stadium, expected to have a retractable roof. It would be built on the CP Rail lands on Dewdney Avenue, with links to the downtown area. Mosaic Stadium would be torn down, and the private sector would begin to build market housing on the Mosaic land sometime within the next fifteen years.

Ailing NDP Must Return to Its Historic Roots

Leader-Post

The Saskatchewan New Democratic Party is facing the most crucial decision in its history when it chooses its next leader. They have gone from being the “natural governing party” to a weak opposition party. Without a serious change of direction, it is doubtful if they will ever form the government again.

The vote in support of the NDP has fallen from 275,000 in 1991 to 127,000 in 2011. They are now down to only nine seats in the legislature. With the collapse of the Liberal Party in the 2011 election, their share of the votes cast fell to 32% while that of the Saskatchewan Party rose to 64%.  NDP membership has fallen from 46,000 at the time of the 1991 election to around 8,000 in 2011. The party is no longer even dominant in Regina.

The disillusionment of the population with the NDP is reflected in the turnout in the elections. In the 1991 provincial election, where the NDP received a majority of the votes, 83% of those who were enumerated went to the polls. This fell to 66% in 2011. But many people are no longer enumerated. Of those eligible to vote in 2011 (citizens 18 and older), only 49% voted.

This is not an unusual development. Similar trends can be found in all the advanced industrialized countries. Many former supporters of the social democrats are refusing to vote or shifting to new parties of the left, the Greens, and neo-fascist parties of the right.

The most important reason for this is the shift to the neoliberal right by the social democratic parties. Almost all of them have abandoned their historic social justice agenda for the free market and free trade policies advocated by big business.

Under the leadership of Roy Romanow and Lorne Calvert (1991-2007), the Saskatchewan NDP led the political change of direction in Canada. The new policies included cutting taxes on corporations and those in the higher income brackets, lowering the royalties and taxes paid by the corporations extracting our resources, privatizing state owned enterprise, deregulating the economy, and cutting and eliminating social programs.

The NDP surrendered the vote in rural Saskatchewan when they supported rail line abandonment and the closing of grain elevators, closed 51 hospitals under the “wellness model,” cut grants to municipalities and school boards, abolished the Gross Revenue Insurance Plan, and shifted their support from the co-operative movement to corporate agribusiness.

Secondly, they adopted an authoritarian, liberal party system. The leader set the policy agenda, and everyone else was to toe the line. Open public debates on important issues were no longer tolerated. The platform for elections was set by the leader and professional spin doctors. There was a strong move away from the democratic process.

The NDP was ready for a serious renewal following their defeat in the 2007 election and the resignation of Lorne Calvert as leader. Instead, the party’s caucus and a few key trade unions brought back Dwaine Lingenfelter from Nexen Corporation and mobilized to get him elected leader. Everyone knew that he represented the old neoliberal order. The results were a disaster for the party.

If the NDP is to seriously try to win enough votes to form the government it must make a clean break with the Romanow-Calvert years. We already have one party representing big business, the Saskatchewan Party. The NDP must once again become a broad democratic party pushed from the bottom up. It must return to a policy agenda that represents the interests of the large majority, the “Saskatchewan Way,” which was the co-operative social democratic agenda.

John W. Warnock is a Regina political economist and political activist and author of Saskatchewan: The Roots of Discontent and Protest.

What Happened to Social Democracy?

Anyone who has followed the current economic and financial crisis in Europe knows that social democratic governments and parties have consistently lined up on the side of the banks and the rich in the ongoing political conflict. The policies they have implemented while in government have been nearly identical to those advanced by the traditional right wing parties and governments. In several counties, the social democrats have formed political alliances to govern with the right wing parties. What is going on here?

It is hard to get answers from social democrats who hold office. The leaders of the larger trade unions make excuses or remain silent. Those who have traditionally voted for these parties, or taken out memberships, are mystified. But you can find some answers in a new book edited by Bryan Evans and Ingo Schmidt: Social Democracy After the Cold War, recently published by Athabasca University Press.

The Third Way  - revised
I can remember when Sweden was referred to as the “Third Way” – the alternative to the Anglo-American version of unfettered and rapacious capitalism and the totalitarian version of state socialism that was the Soviet Union. Sweden was a deeply democratic country with the great majority of workers in trade unions, a solid base of democratic social organizations, where the Social Democratic Workers Party formed the government between 1932 and 1976. With a progressive system of taxation, they had created a society with a comprehensive, universal welfare state that had all but eliminated poverty.

Now the Third Way is identified with the neoliberal package of policies implemented by the same social democratic parties. This includes greatly reduced taxes on corporations and the rich, major cuts to universal social programs, privatization of state-owned enterprises, deregulation of the economy and the backing of the “free trade” treaties as advocated by the largest corporations and financial institutions. US President Bill Clinton and British Prime Minister Tony Blair led the way in deregulating the financial sector and refusing to regulate the new derivatives markets, directly leading to the financial collapse and the Great Recession which began in 2008.


Social democratic parties as we know them emerged after 1919 with a split in the broad working class  movement. Parties which backed the new Soviet Union formed the Third International Workingmen’s Association. They wanted to replace the capitalist system with a government of the working class, implementing a socialist alternative. The remaining parties stayed in the revised Second International. While some of these parties hoped to create a socialist society through the electoral route, most sought simply to reform the system, to create a “capitalism with a human face.”

The high point for this reformist social democratic vision was the period between 1945 and 1975. The world economy was booming, workers were expanding the trade union movement, and governments were introducing the new welfare state. This boom period ended when Paul Volker and the central bankers raised interest rates and created the major world recession of 1980-2. The election of Margaret Thatcher’s government in 1979 and Ronald Reagan’s presidency in 1980 turned the tide, leading an all out war against the Swedish Third Way.

Apple, Steve Jobs and Capitalism in the Era of Free Trade: A Note for Labour Day

On August 20, 2012 the business press announced that Apple Inc. had become the largest company in history based on a market capitalization of $665 billion. Its long time CEO, Steve Jobs, was widely seen as a technological genius and had become the popular personification of the modern American capitalist. But as Labour Day approaches, Apple’s success also explains why the organizations which represented large corporations and their political and academic supporters have been so determined to push through the “free trade” agenda.

Apple is a classic American success story. Founded by three friends in 1976, it went public in 1980, sold its first Mackintosh computer in 1984, and it first portable computer in 1989. It has held its own in competition with Microsoft. Today it leads the technological industry with its Mackintosh computers and its personal electronics: the iPod, iPhone, and iPad.

In the early days Apple proudly proclaimed that its products were “Made in the USA.” But this has changed with the competitive drive to maximize sales and profits. Production was shifted abroad. By 2002 it only had one production unit in the USA, the plant at Elk Grove, California. Its call centres are still based in the USA, and its head office remains in the Silicon Valley. Today it reports 43,000 employees in the USA and 20,000 overseas. But through contractors for the production, it employs another 700,000, all of them overseas, mostly in China.

Foxconn workers for Apple. Inc.

Using offshore tax havens
 Walter Isaacson’s biography of Steve Jobs has been on the best seller’s list for a long time. Strangely, it ignores the importance of utilizing the features of the “free trade” agreements to the economic and financial success of the corporation.

Apple established subsidiaries in well-known tax havens: Ireland, the Netherlands, Luxembourg and the British Virgin Islands. The headquarters for Apple’s operations in Europe, the Middle East and Africa were established in Cork, Ireland. Like other large transnational corporations, Apple has used all the tricks to maximize its profits in these countries and to get around paying taxes on its profits. In the business this has been referred to as “A double Irish with a Dutch sandwich.”

Shifting production to China 
Apple does not own production facilities abroad. Instead, it uses contractors. The most important by far is Foxconn International, a Taiwanese corporation with extensive operations in Shenzhen, China and elsewhere. Foxconn has around one million employees and produces around 40% of the world’s consumer electronics.

The reasons for the shift in production to China are clear. In 2010 the Asian Development Bank reported that the iPhone cost $178 to manufacture and sold in the United States for $500. This produced a gross profit of 64%. Overall, the profit rate for Apple has been around 40%, compared to the 10% to 20% which is the range for other high tech corporations. Recently the Chinese government raised the minimum wage for Shenzhen to the equivalent of US$238 per month, with employees working six days a week. Foxconn is now moving its factories to other areas of China and South Asia where wages are lower.

In February 2011 President Barrack Obama had dinner with Steve Jobs and other key figures in the high tech industries in Silicon Valley. Obama asked Jobs why this industry could not be brought back to the USA. “These jobs are not coming back,” he replied. Much lower wages are a major factor. But as the New York Times reported, “Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that ‘Made in the U.S.A.’ is no longer a viable option for most Apple products.”

 Of course this was what the “free trade” agreements have been all about. Trade in itself was already largely free, as tariffs had been radically reduced as had other barriers to trade. What corporate executives wanted was the freedom to invest anywhere in the world and to repatriate profits without government interference. The results were as expected: the steady decline of manufacturing in all of the advanced industrialized countries.