Arbitrate This!
Does anyone else find it odd that a free-market-worshipping government can happily leap into the fray to micro-manage a labour market outcome (deciding, for example, that postal workers must get 1.75%, not 1.9%, in the first year of their new contract), yet pleads powerlessness when it comes to interfering with market outcomes that are genuinely harming our economic trajectory?
Here’s my take from today’s Globe and Mail on that particular piece of one-sided reasoning. Of course, market fundamentalists will think I’m truly loonie for encouraging government intervention in sacrosanct fields like energy prices and interest rates. That just goes to prove my point: a good arbitration is in the eye of the beholder! Here’s the column:
Now that the mail is being delivered again, Canada’s economic prospects have brightened considerably. That is, if you believe the Harper government’s claims that the phony shutdown of Canada Post by its own management indeed constituted a real and present danger to the national recovery.
Here, once more for posterity, is the synopsis of the whole melodrama: Canada Post’s management wanted to cut wages for new hires, and ultimately abolish the company’s defined benefit pension plan. The union, naturally, resisted. But fearing back-to-work legislation, they organized rotating job actions, rather than an all-out strike. So management shut down the whole operation, precipitating the desired government intervention. And the resulting legislation, with tag-team precision, then imposed a wage settlement lower than what Canada Post had already offered.
The Harper government, flexing its new majority muscles, justified the whole Machiavellian drama with the need to protect the economic recovery. Never mind that management’s argument for cutting wages and restructuring pensions was precisely that the post office’s importance was in historic decline. It seems that management and government alike are allowed to argue that the post office is either really important, or else not very important at all, depending on the moment. (The same flexible double-speak applied to the Air Canada strike, as well.)
I don’t know any economists who were losing sleep over the impact of either work stoppage on the national GDP. But many economists, myself included, are increasingly preoccupied with several bigger threats that really could undo the recovery – fragile and halting as it has been.  (Last week’s dismal GDP reading reinforces the validity of my concerns.)
The government has indicated its willingness to interfere in normal contractual relationships between private parties, even dictating contractual outcomes, in the interests of preserving Canada’s economic momentum. That opens up a lot of terrain for a very hands-on approach to shepherding our fragile recovery. So let’s assign Ottawa’s control freaks to some truly important economic protection work.
1. Gasoline prices. Even at a mere $1.25 per litre, gasoline prices will rip $40 billion from the pockets of Canadian consumers this year. Soaring gas prices are a big reason why consumer spending has stopped in its tracks – an alarming development that could genuinely precipitate a recession. And you can’t invoke “market forces†to explain gasoline prices. In reality, they’ve been driven up by speculation, fat oil industry profits (which could reach $50 billion this year), and the continuing power of OPEC.Â
2. Interest rates. The Bank of Canada is holding its prime rate at a historically low level, fearing the “headwinds†buffeting the global and national economies. But the gap between that rate (which chartered banks pay on their own borrowing), and what the banks charge their own customers, has widened substantially. For example, a 5-year mortgage currently goes for about 4.5 points above the Bank of Canada rate – half again as high as the average spread during the decade before the financial crisis. Spreads on credit cards, small business loans, and other forms of credit are even wider. No wonder the Big Six banks made $20 billion in profit last year – but no wonder borrowing (and spending) by consumers and businesses alike is stuck in its tracks.
3. The loonie. According to the Organization for Economic Cooperation and Development, the fair value of our dollar (based on purchasing power) is about 81 cents (U.S.). Currency traders have pushed it 25% higher – jeopardizing Canada’s ability to sell anything (other than oil) to world markets. Again, savings on imports aren’t passed on to consumers (instead, importers have fattened their profit margins by billions). But the pain to our export industries, and the threat to our future growth, is real.
All these issues reflect contractual dealings between private parties that are genuinely jeopardizing Canada’s continued economic growth. All reflect the working of power and policy, not the “pure†forces of supply and demand. And all are amenable to myriad forms of government intervention to attain different, better prices (for energy, credit, and our currency itself) in the interest of continued recovery.
Why is the government so quick to intervene to suppress compensation for the humble folks who deliver our mail, yet stands on the sidelines while truly powerful people enrich themselves at the expense of our national prosperity? Perhaps it’s not the economy they’re concerned with after all.
Nice one Jimbo, you better watch it, or they will regulate you out of a media column.
I’m concerned about the environmental effects of cheap gasoline. For that reason, I cheer, not rue, higher gas prices.
Slantendicular, if there are going to be high gas prices it should be because governments are collecting carbon taxes and royalties, not because producers get to charge five times what the stuff costs. Then government will in turn have the cash to defray the costs for poorer Canadians, to improve transit so it’s less of an issue, etc., instead of producers having the cash to buy government.
But in any case, gasoline demand is fairly inelastic. I don’t think high gas prices are actually the best way to lower use. Again, cheap fast transit, better urban design, promotion of rail over trucking and so on probably have more of an impact than consumer choice; even in the consumer choice arena, building the incentives into car prices, or simply regulating fuel efficiency standards, is probably more effective (and way cheaper) than high gas prices.
> ‘And you can’t invoke “market forces†to explain gasoline prices.
Really? And you are supposed to be an economist? I don’t believe it. OPEC is barely relevant any more as their last meeting and its aftermath has demonstrated. High oil company profits, regrettable though they may be, are an effect of high prices and not a cause. Speculation is fundamental to the normal operation of the market.
Or is it some kind of joke? I mean you can’t seriously expect the government of Canada to be able to do anything about global oil prices. On the other hand, intervening in the currency market is somewhat reasonable and within their power, so if it’s meant as a joke I don’t get it.
What the Harper government says has no bearing on what it does. Unfortunately people listen and don’t watch. That’s why Harper & Company repeat things over and over even while they do the opposite in plain sight. We watchers know there’s no hidden agenda: Harper acts in the open and denies, denies, denies. He’s fooling a lot of people all the time.
They wouldn’t even need to “intervene in the currency market”. They can just print some money. That’d drop the dollar a bit. And if anything, we could use a bit of inflation. And it’s not like the government couldn’t use the money.
If Air Canada is that important to the national economy that it requires legislative intervention into the collective bargaining process then it should be nationalized.
By all accounts it used to work better when it was nationally owned anyway.
@PLG
Please do not mention the war. This is pragmatic politics where the numbers really do not matter. If they go your way then cite them, if not do not mention them. I mean people have built careers here we can not just over throw them with facts!
“All these issues reflect contractual dealings between private parties that are genuinely jeopardizing Canada’s continued economic growth. All reflect the working of power and policy, not the “pure†forces of supply and demand.” Which bad intentions may say something about the ideology being followed. Maybe rightwing, market fundamentalism ideology is nothing more than a tool for mafia capitalists?
I will arbitrate this gleefully!!! because it is very easy to do so.
1. Oil Prices
In the 1970s the last time speculators were in fact pushing prices up. However speculation is there because the price is going up due to inflation. “High oil company profits, regrettable though they may be, are an effect of high prices and not a cause.”
We could impose laws or the US or any country on the futures markets at their exchanges to take delivery of their contracts, anywhere between 20-80%. However this would only lead to higher prices, as the investor began to take physical delivery. Why’ will investors/speculators take delivery, because the prices will be marching higher agaisnt as Shan said speculators are not the cuase.
Paul Vockler in the 1980s raised the cost of borrowing to 20%. This induced a rescession, we saw deflation. In hindsight it was the correct choice. Speculators were unable to push prices up under his tenure of the Federal Reserve. Gold the yellow metal, and its younger sister silver collasped, and all the gold bugs went into hibernation.
2. Harper
The most critical from the perspective of a young canadian, with no formal education, of all the mud you commentators have slung is hat the Harper administration is SIMPLY not capitalist.
A true capitalist would go bankrupt, would allow private parties to settle any dispute without any intervention on any parties behalf from any entity using the rule of law.
This adminstrations as with most develpoed goverments have acted in a state most captured on pg.15 of the DOCTRINE OF FASCISM
“Fascism is therefore opposed to Socialism….Fascism (Think Harper actions here are;) is likewise opposed to trade unionism as a class weapon. But when brought within the orbit of the State, Fascism recognises the real needs which gave rise to socialism and trade-unionism, giving them due weight in the guild or corporative system in which divergent interests are coordinated and harmonised in the unity of the State” (p.15)
Harper clearly forced the unions to act in unity to accept his harmonised interests with private parties.
3. Interest Rate we’ll obviously I think they should be heading higher. I want deflation. The stronger are currency the more goods and services we can bid for worldwide. Some currencies, or weak currencies that have fallen the most like the zimbabwe dollar at one point could not bid on any good or service worldwide.
How is a little bit ole’inflation good, when wages are not rising. Prices are rising faster then wages. Can someone say stagflation yet? At this point, for wages to rise it would take base inflation rising the price of everything for everyone. Housing Prices to Healthcare costs to Tutuion rates, would continue to rise.
Maybe if wages were leading the price increases at this point. They are not.
The author posed this question “Why is the government so quick to intervene to suppress compensation for the humble folks who deliver our mail, yet stands on the sidelines while truly powerful people enrich themselves at the expense of our national prosperity?”
“The Fascist State lays claim to rule in the economic field no less than in others; it makes its action felt throughout the length and breadth of the country by means of its corporate, social, and educational institutions, and all the political, economic, and spiritual forces of the nation, organised in their respective associations, circulate within the State” (p. 41).
Fascism and not Capitalism are at fault. THE FACT GOVERNMENT intervened on behalf of a few interested parties.
@Paul T, Travis, Erin, PLG Marc Lee. This is why it cannot be ever capitalisms fault for the troubles we have today. No companies went bankrupt but the too small tooo save.
We need a Paul Vockler at the central bank of Canada.
Brandon said:
“This [Volcker’s action] induced a rescession, we saw deflation. In hindsight it was the correct choice.”
For the bourgeois, yes, since it helped also break the collective back of a then getting-feisty North American working class.
“This adminstrations as with most develpoed goverments have acted in a state most captured on pg.15 of the DOCTRINE OF FASCISM ”
>sigh!<
If Harper and his party were indeed fascists, I seriously doubt that you'd have anyone here to talk to. We'd be dead, in jail, on the run, or in another country. Depending on your politics, you might be too.
One doesn't need to be a fascist to want to bust unions; it's been going on in North America, with or without government aid/sanction/blessings/silence certainly since before WWI.
"I want deflation."
What on Earth for, considering how weak inflation has been?
A reasonable, useful definition of fascism, in my view, is: *The political class and the capitalist class conspires to run the country without, conveniently, any meaningful input from the people who are in the majority and who provide the labour needed for the prosperity of the exploiter class.*
No need to be afraid of the word ‘fascism’, unless one is automatically afraid of words that one doesn’t see others using much. If I was such a person, I’d never come here and learn things about the economy.
I contend that fascism is, besides what I laid down above, not expressed solely by any one point on a range of expressions of that reality. That range of expressions can include various characteristics, such a groups wearing black or brown shirts, or a strong nationalistic component. Or Canada today.
Others have made the point that you can have a nation that consists of fascism alongside democracy.
I certainly think that democracy everywhere is under intense assault. Are democrats doing the assaulting?
Here’s a few thoughts on fascism today that Todd and others might find interesting:
“The Frightening Face Of American Fascism,” by Murray Dobbin (http://bit.ly/cysVUq)
“Remembering Fascism,” by Noam Chomsky, which article I had a hard time finding, when I just noticed my Truthdig link to it, on my blog, was broken. I see snippets. This looks okay: http://bit.ly/bEzwzs
“Fascism Then. Fascism Now,” by Paul Bigioni (http://bit.ly/hLqh56)
Sigh Travis.
Nice Hit on Vockler that kept unemployed labor from punishing higher Cost of Living. I guess you want people to face higher prices for education, energy, healthcare, food, shelter!!!
Secondly I want prices for the above to fall. Price Increases have been greater then wages or income which is flat or falling. I would like those prices to fall faster then my wages as they did under again Paul Vockler.
Thirdly you equate fascism to mass murder, when communism also as such traits. Goerge Orwell has defined fascism, where in he left out – concentration camps – death squads. Harper is a fascist – he uses the powers of his administration, powers vested through him from government to favor private parties property over another individual property his labor. That screams fascism.
How can we be sure Harper is a fascist. Without a doubt by claiming the national interest was at risk. @ Travis I did not say Harper was to bust the union, he would rather control the union. Keyword Harmonious
“Fascism Then. Fascism Now,†by Paul Bigioni
“The vast bulk of legislative activity favours the interests of large commercial enterprises. Big business is very well off”
“Canadian and U.S. governments, of whatever political stripe, have made this their primary objective for at least the past 25 years.”
“exaltation of big business at the expense of the citizen was a central characteristic of government policy in Germany and Italy”
“These facts have been lost to the popular consciousness in North America. Fascism could therefore return to us, and we will not even recognize it”
“From 1923 to 1935, in Germany … nation was so organized – everyone had to belong either to a squad, a regiment or a brigade in order to survive. The names given to … were cartels, trade associations, unions and trusts. Such a distribution system could not adjust its prices. It needed a general with quasi-military authority who could order the workers”
“I suspect that to most readers, Arnold’s words are bewildering. People today are quite certain that they know what fascism is. When I ask people to define it, they typically tell me what it was, the assumption being that it no longer exists. Most people associate fascism with concentration camps and rows of storm troopers, yet they know nothing of the political and economic processes that led to these horrible end results”
Its extremely funny this was written in 2005. I have never read it. Todd has never read it. Yet Todd is so clear of will that he can define or equate fascism to mass muder then stating since I do not live in such an environment today, no need to fear the morrow.
Paul Bigioni used the Goerge Orwell approach to debating those who think they can define fascism. Goerge Orwell classic essay on “What is fascism”is a great read that may leave you with the understanding that there is more to fascism then concentration camps – death squads – mass murder.
Arby, the basic problem with that definition of fascism is that it perfectly describes bourgeois democracy, especially before WWI. What, then, was the political, social, and cultural milieu that existed roughly between the 1930s and the 1950s in various parts of the world that’s been called “fascism” for some time now? We simply don’t have the political and social violence that marked the times before and during fascist regimes. No politician has been openly using exclusively “anti-liberal democracy” words (something fascists were well known for). I don’t think there’s even a fascist party in Canada.
“Others have made the point that you can have a nation that consists of fascism alongside democracy.”
Given that historical fascism has always derided democracy as weak and effeminate and worked to destroy it where it could, I find this idea highly suspect; do you have an actual example?
“I certainly think that democracy everywhere is under intense assault.”
The democracy we’ve been used to since about the 60s, yes. I think what we’ve been seeing is an attempt to go back to a variant of the liberal political-economic status quo of pre-WWI. It’s still a bourgeois democracy except that the bourgeois are gettting back to the way they used to run things before the rise of the threat of the USSR, the militancy of labour unions, and Third-World nationalism.
“Are democrats doing the assaulting?”
Yes. Because those democrats are either the bourgeois themselves, their representatives, or they simply believe that bourgeois democracy is the only kind of democracy that’s possible or even desirable.
Brandon wrote:
“Nice Hit on Vockler that kept unemployed labor from punishing higher Cost of Living. I guess you want people to face higher prices for education, energy, healthcare, food, shelter!!!”
??
My God, man: your cure is worse than the disease!
So instead of having some poor people (who could’ve been helped by a more-generous-than-now welfare state) and workers who knew that their services were in demand and could bid accordingly, we should instead have even more poor people, and workers who are left with too many hostages to fortune to even think about demanding more from employers?
“Price Increases have been greater then wages or income which is flat or falling. I would like those prices to fall faster then my wages as they did under again Paul Vockler”
Leaving aside the big question of demanding more from bosses (and using collective action to get it), those prices are at least partially used to supply wages. If prices fall, there’s a good chance that workers in those industries will be shed in order to make those industries profitable again, leaving us once again with a bunch of poor workers (now more than before) and fewer employed workers who are being made to work for less. The bosses would be pleased.
“Thirdly you equate fascism to mass murder, when communism also as such traits.”
And so does liberal capitalism; what’s your point? Besides, where am I equating fascism to mass murder?
“That screams fascism.”
See my comment to Arby above.
“I did not say Harper was to bust the union, he would rather control the union.”
What’s the difference between having no union and having one that simply accepts what the bosses dictate? (I could say “dues” but that’s not the point I want to make.)
“Keyword Harmonious”
And social harmony has been a clear theme of liberal democratic discourse at least since the 19th century.
Re. Bigioni: most of the quotes fit very well in a pre-WWI liberal democratic setting as well as now. As for the last one, I’m afraid Harper doesn’t have us quite _that_ organized.
Neither Dobbin nor Chomsky are specialists on fascism, and I’m not familiar with Bigioni’s work; however, I urge you to read this stuff by actual researchers on fascism:
http://www.publiceye.org/eyes/whatfasc.html
(at that website, look also for anything written by Chip Berlet)
Here’s also a good summary:
http://www.hnn.us/articles/122469.html
See also the links at the end of the article.
(The whole lot is the ripping apart of the bullshit “anyone to the left of George Bush is a fascist” meme promoted by vermin just like Jonah Goldberg. As such, it lays out quite nicely what fascism is as opposed to what people like Goldberg would like it to be.)
I find the mail useless as everything is done online these days but if you want to hear postal workers make wild claims about how central their jobs are to the well being of Canada economy talk to them about layoffs. Its funny that all these unions want to tell everyone how important their jobs are to our nation when they’r looking for government money yet don’t like having being legislated back to work when striking even though…without these people working our economy will supposedly come crashing down around us. Its the exact same in the auto industry with the unionized d3 workers. Apparently, the caw claims and always while seeking yet more taxpayer handouts, if any of those workers get laid off all of western civilization will crumble yet when they bargain irresponsibly and make themselves the highest cost producers of vehicles in the world and refuse to take the neccessary cuts to remain competitive they don’t want the government having anything to do with their labour negotiations. Even if their irresponsible bargaining costs this country thousands of apparently crucial manufacturing jobs, ie;the oshawa truck plant.
cnp said:
“Its funny that all these unions want to tell everyone how important their jobs are to our nation when they’r looking for government money”
What government money?