Saturday, December 26, 2009

Canada’s Lost Decade

Canadians headed confidently into the new millennium, but they are limping out of its first decade uncertain about the future and what their country stands for.

Living on the northern edge of Manifesto Destiny felt comfortable enough for most Canadians with Bill Clinton in the White House, notwithstanding his philandering ways. The 1990s was the age of the bubble, a decade when American economic pre-eminence was reasserted against Japan and Europe, and China had not yet staked out its role as a rising superpower.

But America lost its way in the succeeding decade, as did Canada.

In March 2000, with Clinton still in office, the bubble burst, succeeded by the housing bubble, to be swollen to the bursting point by the encouragement of the sub prime mortgage market by the administration of George W. Bush. Bush compounded his foolishness with a giant tax cut aimed principally at the rich and the invasions of Afghanistan and Iraq.

The United States was en route to the crash of 2008, which engendered the widespread recognition around the world that the U.S. was no longer the power it had once been. Despite the inspired choice of Barack Obama to succeed Bush at the end of the decade, the U.S. was condemned to years of economic crisis, layers of indebtedness, military overstretch, and a permanently diminished role in the world.

North of the border, Canadians floundered into protracted and enervating political deadlock.

It was not supposed to be that way. Paul Martin, Jean Chretien’s long-serving finance minister and deadly rival, had been waiting restlessly in the wings to move into 24 Sussex Drive. It seemed all but inevitable that Martin’s succession would lead to one or two fresh majority mandates for the Liberal Party. But the Sponsorship Scandal, one of those self-consuming orgies in which Liberals indulge from time to time, gravely wounded the newly crowned leader. In the 2004 federal election, Martin clung to office at the head of a minority government that was under fire from day one. The following year, with a push from Jack Layton’s New Democrats, the Martin Liberals were flung into another election.

The door was open for the arrival of the former head of the National Citizens Coalition, a man who had journeyed through the Reform Party and the Canadian Alliance to lead the newly founded Conservative Party of Canada.

Stephen Harper is as strikingly different from all of the former prime ministers of Canada as is Barack Obama from the U.S. presidents who preceded him. An ideologue who is as fiercely committed to his brand of neo-conservatism as Pierre Trudeau was to his rationalist-federalist liberalism, Harper is the most dictatorial prime minister in our history, even surpassing the tight-fisted R.B. Bennett who ruled during the Great Depression.

It is not difficult to imagine, with a different roll of the dice, Stephen Harper having ended up leading the forces of Alberta separatism. In Copenhagen, where dined and kept his mouth shut, he was not merely playing the role of the leader of the party that is the natural home of climate-change skeptics, he was being true to his conviction that Canada’s vocation is as an energy superpower catering to the needs of a petroleum thirsty America. Not even his personal philosophy that privileges the entrepreneur at the expense of the wage and salary earner is more important to Harper than his fealty to the petroleum industry. Doubling, trebling or even quadrupling the annual output of petroleum from the Alberta oil sands is the future to which he is devoted. Hundreds of billions of dollars are on the line. Harper and the petroleum companies are determined not to let environmentalists who worry about polar bears and melting glaciers stand in their way. No wonder the Conservative leader favours intensity targets---reducing the CO2 output per barrel of oil produced---to a hard cap on greenhouse gas emissions.

He has a two-winged approach to the economic crisis: cut government spending, bringing stimulus outlays to a speedy end, and letting nothing impede the rapid expansion of oil sands projects so that as U.S. demand for oil resumes and rises there will be plenty of product to export. Manufacturing, cities, green energy and technology, education, culture and the arts---all elements in the economic agendas of other people---are marginal concerns to this prime minister, matters best left to market forces to sort out. Stephen Harper prefers to limit direct government spending to the expansion of the military and the construction of prisons.

Harper once famously urged Albertans to construct a “firewall” around their territory to shut out the baleful influences of Canada, which he once wrote “appears content to become a second-tier socialistic country…led by a second-world strongman [Jean Chretien] appropriately suited for the task.” Now he proposes to enfold the whole country within the embrace of his firewall.

Not only will oil sands exports solidify the link with the U.S.---Harper’s spiritual homeland---the revenues from the oil sands will drive the reshaping of the Canadian economy and even its political system.

Harper’s Canada, as was the case with so many of the Canadas of the past, will centre on the latest staple product. Before the oil sands came the cod fishery, the fur trade, lumber, wheat, nickel, pulp and paper, and conventional oil and natural gas. This time though we are face to face with the staple that is generating North America’s funeral pyre---no more water, the fire next time---the energy source that uses natural gas and clean water in the pollution spewing industrial process that separates the bitumen from the sand. The dirty oil will keep SUVs on the road and will aid in pushing the global climate toward the tipping point.

Meanwhile, the opposition parties, still wounded by Michael Ignatieff’s decision to shaft the coalition, generate few ideas and less hope. Despite holding the majority of seats in the House, these parties have let Stephen Harper rule the roost as though he has a majority. The Liberals and their leader deserve the lion’s share of the blame for this unhappy state of affairs. It was, after all, Ignatieff who chose to support the Harper government in preference to the coalition.

A word about the NDP, the party I support. In past decades, when Tommy Douglas or David Lewis spoke, Canadians listened with respect. Even if they didn’t always agree, people felt that these were the progressive voices of the nation, pointing the way toward the future as it ought to be. If I tried to suggest to my students, most of whom are progressive, that Jack Layton and the NDP, remain that kind political force today, they’d smile indulgently, thinking their aging professor was living in the past, or worse still, had lost it completely. The NDP is now seen as a party like the others, more devoted to playing games in the House of Commons, than espousing a vision for the future.

Canadians entered the new century confident that theirs was a cool, progressive country, widely admired abroad. As the decade ends, Canada has become infamous as a polluter, more interested in oil industry profits than in the future of the planet. A year ago, I spoke with a young woman at a market in Edinburgh who was seeking signatures on a petition in support of a bill on the environment then before the Scottish Parliament. I explained to her that I couldn’t sign because I was from Canada. Without a pause, she mentioned Alberta, the oil sands and Stephen Harper, and looked at me with a hard, flinty gaze that said: “We don’t admire your country.” Make no mistake, they know about us. Gone are the days when people in other countries thought of Canada as the great land of lakes and forests that was inhabited by genial, generous-hearted people.

On the crucial global question of our age, we are the bad guys.

At the beginning of the last century, Prime Minister Wilfrid Laurier proclaimed that “the 20th century belongs to Canada.” He exaggerated, of course, but Canada did rise over the century from a semi-colony of five million people to a nation of thirty million, the country’s population and the size of its economy growing twice as quickly over the hundred years as the U.S. population and economy.

Now, however, we are unclear about whether we retain the capacity to do great things together as Canadians, the ability to conceive a new economy that is sustainable and meets the needs of the many, not the few. It’s up to us to shake off this pall. We can and will do better.

Monday, December 21, 2009


(In a question posted on my blog, Bill Bell asked me to explain why I believe that one of the basic causes of the economic crash of 2008 was the widening income and wealth gap between the rich and the rest of the population. Drawn from excerpts from my book Beyond the Bubble, here is my answer to that crucial question.)

The last thirty years have been the golden age of inequality. While that inequality was the incubator for multitudes of new billionaires, it was, as well, a principal cause of the Crash. In large part, the meltdown of the financial sector flowed from the labour market model that was the very heart of neo-liberalism. The financial meltdown flowed directly from the reckless decisions of financial managers to mine the economy for enhanced profits through the promotion of various kinds of debt and the promotion of variety of financial products whose common aim was to heighten the leverage of investors.

In sharp contrast to the period from 1950 to 1970, when the real incomes of the families of wage and salary earning Canadians, adjusted for inflation, doubled during the last several decades, real incomes in North America have remained essentially flat for most wage and salary earners.

In the period 1980 to 2006, what happened to the incomes of younger U.S. full-time, full-year wage and salary earners aged twenty-five to thirty-four is telling. Here is what happened to the incomes of younger full-time, full year wage and salary earners in the United States, aged 25-34 over the period 1980 to 2006. This cohort is extraordinarily important because it is made up of people already solidly in the work force for whom the pattern has been set and whose life journeys will be crucial in coming decades. In constant 2006 dollars, the median annual income of this crucial cohort in 1980 was $36,700; in 2006, it was $35,000. For men in the cohort, here are the median wage and salary figures for 1980 and 2006: $43,700 and $37,000 respectively; for women: $29,400 and $31,800; for whites of both genders: $38,200 and $37,400; for blacks of both genders: $29,400 and $30,000; for Hispanics of both genders: $33,000 and $28,000.

The median incomes for working-age U.S. households over the period from 2001 to 2007---the years in the lead-up to the crash---are also revealing. Household incomes are crucially important to economic well-being, including as they do the incomes of single-income households and the larger number of households that have more than one earner. In constant 2007 dollars, the median income of working-age U.S. households was $58,721 in 2001; in 2007, it was $56,545.

In Canada, the median wages and salaries of Canadian workers, adjusted for inflation have not grown for the past three decades. A study published by the Canadian Centre for Policy Alternatives resolves the different ways Statistics Canada has categorized the data to show that average real wages for Canadian workers, have not increased since the end of the 1970s. In constant 2005 dollars, the average weekly wage was just under $800 in the early 1980s, where it remained in 2005, with those working overtime earning more than those who did not. While there were minor fluctuations over the decades, what is remarkable is how little things changed. Rising levels of productivity in the economy were not passed on to the average worker in the form of higher wages. The study concluded: “Astoundingly…real wages have been stagnant for 30 years running.”

In recent years the relative income gap in the United States between the rich and the rest is wider than at any time since 1928 (the eve of the Great Depression.) In 2005, while the total reported income in the United States grew by nearly 9 per cent, the average incomes for those in the bottom 90 per cent of income earners actually declined slightly, by $172 or 0.6 per cent. The top 300,000 income earners took home a total remuneration that was nearly equivalent to the combined incomes of the bottom 150 million Americans. The privileged 300,000, per person, received 440 times as much as the average person in the bottom 150 million---the gap between the two cohorts having nearly doubled since 1980. In 2005, the top ten per cent of American income earners took home 48.5 per cent of all reported income, compared with roughly 33 per cent in the late 1970s. The all time peak for the top ten per cent was 49.3 per cent in 1928. The top one per cent took home 21.8 per cent of reported income, more than double their share of income in 1980. In 1928, the top one per cent peaked in its share of income at 23.9 per cent. In 2005, the top tenth of one per cent reported an average income of $5.6 million, and the top hundredth of one per cent an average income of $25.7 million. The word “reported” used in this paragraph is very important. The U.S. Internal Revenue Service (IRS) has reported that it is able to accurately tax 99 per cent of income from wages, but that it is only able to tax about 70 per cent of business and investment income, most of which goes to upper income earners. What this means is that the IRS doesn’t really know how much business and investment income is being earned in the United States. The consequence is that the real income gap is greater than reported in the figures above.

During an epoch when the top one per cent of income earners were squeezing ever more out of the economy for themselves, employers and governments, with the full support of neo-liberal economists and social scientists, were implementing a labour market model that marginalized an ever larger proportion of the work force. Particularly in the Anglo-American world and in countries that adopted the Anglo-American model, the dominant idea was to establish an ever more “flexible” labour market. The word “flexible”, chosen to seem modern and progressive, meant that the labour force would be segmented so that while its inner core would be made up of wage and salary earners with full time employment, benefits, and a degree of job security, around this core there would be an ever greater secondary labour force, made up of part-time or contractual employees, whose rate of pay was lower, a work-force with few benefits, without pensions, and with little or no job security. Over the past quarter century the rise of this secondary or precarious labour force has transformed the economies of the advanced countries.

For the most part, the precarious labour force has been made up of women, immigrants, people of colour, migrants to cities from rural areas and small towns, and those with limited education. The workers in the precarious labour force cost employers, whether they are in the private or public sectors, much less than do their employees in the inner or permanent labour force. Savings accrue in a number of ways. The hourly or weekly rates of pay of precarious workers are lower. Reduced benefits and the absence of pensions result in enormous savings. Of great importance, the members of the precarious work force can be hired or laid off at the pleasure of the employer, or to use the in-word, in the most flexible possible way. As the demand for goods and services rises in particular sectors, people can be hired, without long-term commitments being made to them, so that when demand declines, these people can be shown the door with little difficulty.

The rise of the precarious or secondary labour force also puts immense pressure on the permanent labour force, by threatening it with a less costly alternative. The permanent labour force is highly expensive for employers. Wages and salaries are much higher than in the precarious zone, benefits are substantial and costly and so are pensions. In addition, depending on labour laws in particular jurisdictions, as well as union contracts, dismissing an employee can be an expensive affair, often involving costly severance payouts. Highly significant, the permanent labour force is much more often unionized than is the precarious force.

Unions manage to increase the wage and salaries and the benefits as well as the job security of their members. All of these effects of trade unionism are thought to be undesirable by the proponents of a flexible labour market. Business school students are taught that trade unionism is old-fashioned. While it once played a useful role in winning higher wages and better working conditions for employees in the days of the rough and ready capitalism of the past, capitalism has been modernized and humanized and no longer needs unions, the story goes. Instead, students learn, unions are barriers that stand in the way of efficiency, increased productivity and the smooth evolution of the market economy toward ever more highly sought goods and services.

Neo-liberal economists contend that too much job security holds an economy back. Job security can block a company’s move into cutting-edge sectors of the future, tempting the enterprise to remain in mature sectors that may already be in decline. Over the long-term such a company is bound to lose out to more innovative companies that do not have to operate according these rules. In addition, job security, these analysts contend, forces enterprises to keep mediocre and aging employees on their payrolls, when they would do better if they could rid themselves of such workers and hire younger, better educated, more highly motivated people.

There is no doubt, as well, that competition and negative feelings between those in the permanent labour force and those in the marginalized work force act to the benefit of both private and public sector employers. Part time workers who are not unionized and who have little job security are often resentful of workers with full-time jobs who have substantial job security and the protection of union contracts. In neo-liberal societies, the media regularly depicts the elected officials of trade unions as “union bosses”, suggesting that their members work for the union rather than the reverse. In the public service, which is now relatively highly unionized, especially in Canada, employees are routinely described as lazy and inefficient, highly resistant to change and devoted to short-work weeks and long holidays. One consequence of neo-liberal assaults against unions is that many of those who work in the precarious sector resent full-time, unionized workers. When unionized workers go on strike, it is not difficult for the media to find lower paid part-time workers to complain that fat-cat union members should have to contend with the insecurities that are the lot in life of the majority. Employers have always benefited from resentments between different segments of the work force. Today’s division of the work force into the inner segment and the precarious segment suits them to a tee.

Important as well in dividing workers into competitive sub groups that bear resentments against one another, is the highly diverse character of today’s labour force. Race, ethnicity and gender are crucial lines of demarcation in the contemporary labour force. Resentments among workers on the basis of race, ethnicity and religion is no new thing.

The history of struggles within the working class is not pretty story to gladden the hearts of trade union militants. Resistance to immigrant workers who threaten to compete with and reduce the remuneration of the existing working force is a recurring part of the history of working people. Resentment among workers against the Chinese labourers who played a central role in constructing the railways in both Canada and the United States resulted in numerous brawls, beatings and lynchings and in popular support for laws restricting Chinese immigration to Canada and the United States.

The impact of the neo-liberal social model is one of the chief causes of the crash of 2008. This is because the suppression of wage and salary increases---the heart of the neo-liberal model---both in the advanced countries and throughout the world, has had the inexorable effect of limiting the size of the market for goods and services and consequently for increased profits. This is the old capitalist conundrum. While individual capitalists benefit from keeping the wages and salaries they pay as low as possible, collectively they benefit from making wages and salaries as high as possible. Keeping its own wage bill low obviously directly enhances a company's profits. There is simply more left over for the shareholders or owners. Paradoxically, a company is aided if its competitors have high wage bills for the simple reason that this means there will be more money in the pockets of consumers to purchase the goods and services of firms in general, including those determined to keep their own wage bills as low as possible.

This is an insoluble dilemma. Individual firms, concerned exclusively with their own results, are not prepared to raise wage and salaries as a way to serve the general interest, including the interest of other private firms. Indeed, they only raise the wages and salaries they pay in response to effective pressure from unions or from the existence of labour shortages to raise them. They also raise wages if forced to do so as a consequence of minimum wage legislation or as a consequence of full-employment state policies that succeed in keeping the pool of surplus labour as small as possible. During the Keynesian age of the post-war decades, wages and salaries did rise for a variety of reasons. Under pressure from electorates with keen memories of the privations of the Great Depression and the war, as well as of the effectiveness of wartime economic planning, governments made job creation and full employment top priorities.

Under conditions in which the pool of surplus labour was minimal, unions undertook highly effective drives to organize the unorganized. During the post-war decades, the trade union movements reached the peak of their economic and societal influence in Western Europe, Canada and the United States. In a period often described as a golden age, wage and salary earners achieved greater influence than ever before in the history of capitalism. Real wages rose, social programs were expanded, educational opportunities were widened. For the first time in history, the majority of wage and salary earners in the advanced countries were no longer poor.

During the period of the “great social compromise”, while corporations remained at the helm in directing the economy and reaping the benefits, workers had to be taken in consideration as never before. Of critical importance to the stability of these arrangements, this was also an era of national capitalism within the framework of the American centred Bretton Woods economic system. In this period of fixed exchange rates, as opposed to the system of floating exchange rates, with which we live, the U.S. dollar was the reserve currency of the world, exchangeable for gold at a rate of $35 an ounce, and exchangeable as well for other currencies. Despite rising trade and investment abroad on the part of multinational corporations, this was also an age of national capitalism, with the state in each advanced country playing a seminal role in steering the system. It was the age of the so-called “mixed economy”, a term that acknowledged the predominant role of the private sector but also the power of the state and its responsibility to steer the economy to achieve broad objectives, the most important being full employment.

Following the intermediate decade of the 1970s, whose economic storms and shocks led to the collapse of the Keynesian consensus, rising government deficits and debts, slower economic growth, and the existence of high inflation alongside high unemployment, the transition was rapid to the new age of globalization, de-regulation and neo-liberalism. The leading political stars of this new age of the right were Margaret Thatcher, elected to lead a Conservative government in Britain in 1979, and Ronald Reagan, who was elected President of the United States the following year.

Neo-liberalism dismantled the regulatory systems that had been in place during the post war decades. In the Anglo-American world, and in other nations as well, the doors were thrown open to the free movement of capital internationally. National governments lost their ability to control capital flows. Gigantic new corporate investments outside the developed countries tore away at the balance of power that existed between capital and labour. Able to access much cheaper labour on an enormous scale, corporations threw workers and their unions onto the defensive.

From the early 1980s to the present, corporations have been running away from labour in the advanced countries. …..In the United States and Canada, the income of the average worker, adjusted for inflation, has hardly grown over the past quarter century. In the United States, only 12 per cent employees were unionized in 2006; in Canada, the proportion is much higher at 31.4 per cent in 2007, but it too has been declining…..

How then has the neo-liberal model played a key role in triggering the crash?

The widening divide between a tiny minority at the top, especially in the Anglo-American world, and the rest of the population has limited the growth of the market for goods and services. When those at the top keep too much for themselves and hold wages and salaries down, they set themselves up for an economic crisis. The same was true in the 1920s on the eve of the Crash of 1929. This time, the financial capitalists who were at the centre of the meltdown spent the first decade of this new century trying to stave off the crisis---in the aftermath of the bursting of the bubble---with a whole series of new initiatives, in sub-prime mortgages, in the promotion of personal debt, and in the sale of a long list of financial products under the headings of securitization, credit default swaps and other derivatives.

From Stimulus to Austerity: The Next Chapter in Canadian Policy Making

Since the global economic crash in the autumn of 2008, Canadians have been jolted by reports about where we are headed that are by turns pessimistic and optimistic. It is bafflingly difficult for people to reach reasonable conclusions about the future of the country or of their community.

For much of 2009, the Bank of Canada made fairly optimistic predictions about the course of the Canadian economy. The Bank forecast economic growth in excess of 2 per cent for the third quarter of the year. Instead, growth in Canada came in at only 0.4 per cent, much below the projection, and lower than growth in the U.S. for the same quarter.

Despite the strong creation of jobs in November 2009, a sober assessment tells us that hundreds of thousands of jobs have been lost in Canada since the fall of 2008 and that thousands of people have been pushed into poverty and many more continue to fear the loss of their jobs. The youth unemployment rate in Canada and around the world is especially troubling. Sixteen per cent of Canadians between the age of sixteen and twenty-four are officially unemployed. And because the social safety net has been weakened in this country in recent years, youth unemployment is strongly linked to a descent into poverty.

In my view, the global economy is passing through a long-term crisis and transition.

Meanwhile, the federal government and provincial governments have made it clear that they believe they have done enough to deal with the crisis and it’s now time for them to get their fiscal houses in order. The members of the Harper government have never really wanted to use federal spending as a way to create jobs and, just as important, steer Canada on the path it needs to take over the next few decades.

Finance Minister Jim Flaherty has recently said that the federal government views stimulus spending as a temporary measure and plans no new initiatives in next year’s budget. He has made it clear that Ottawa does not intend to increase taxes. The subtext is evident---the Harper government plans to slam on the breaks and slash public spending as soon as it can. That can only mean sharp cuts to the budgets of many government departments, job cuts in the federal public sector as well as a pay freeze.

The same mindset is evident among the top members of the McGuinty government in Ontario. Both Dalton McGuinty and Finance Minister Dwight Duncan are looking for ways to slash spending to deal the province’s $24.7 billion deficit. The next provincial budget is likely to include sharp spending cuts, the elimination of public sector jobs and pay freezes. The alternative---a more equitable tax system in which the wealthy pay their fair share---is not being seriously considered.

Progressive Canadians need to halt the turn toward austerity. What federal and provincial governments have done over the past year is to bail out giant auto companies, and the banks. (Acting through the Canadian Mortgage and Housing Corporation, Ottawa pumped $75 billion into Canadian banks to take mortgages off their hands---a bailout anyway you cut it.)

Now that stock markets, including the TSX, have regained much of the ground they lost and the wealthy have been restored to economic health by government action, those same governments want to make public sector employees the victims of newly minted austerity policies.

One of the basic causes of the economic crash of 2008 was the widening income and wealth gap between the rich and the rest of the population. We need a new economic strategy, based on achieving greater income equality, not a return to the policies that brought on the crisis in the first place.

Meanwhile, the economic crisis continues.

The crash of 2008 has been widely recognized as the most severe global economic cataclysm since the crash of 1929 and the subsequent Great Depression. A compelling case can be made that the crash signifies the end of an economic epoch---the neo-liberal age of globalization and the American-centred global economy. What lends weight to this thesis is both the nature of the system of finance whose collapse is at the centre of the global crisis and the crushing problems that face the United States, making the re-assertion of an American-centred global economy exceedingly improbable.

The proximate cause of the crash of 2008 was the bursting of the sub-prime housing bubble in the United States whose immediate consequences were the collapse of major financial institutions and the freezing of credit. The crash brought into play the vast and multi-layered problem of American indebtedness. The three peaks of the American debt mountain were as follows: the national debt, owed by the federal government, which totaled about U.S.$11 trillion and was set to climb much higher with the prospect of annual deficits in coming years of more than one trillion dollars; the swiftly increasing net indebtedness of Americans to the rest of the world, totaling trillions of dollars; and the indebtedness of individual Americans, amounting to about eleven trillion dollars, centred on the explosive use of credit cards.

The U.S. national debt is financed in part by securities held by U.S. government accounts, among the most important, the Federal Employees Retirement Funds, and the Federal Old-Age and Survivors Insurance Trust Fund. At the beginning of 2008, 55 per cent of the debt was held by the “public”, meaning those who purchased U.S. treasury bonds. Forty-five per cent of these “public” purchases were made by foreigners, two-thirds of that total by foreign central banks. By far the most important of the central banks in making these purchases were those of China and Japan. When to the central banks of China and Japan are added the other purchasers from these two countries, about 47 per cent of the purchases by foreigners is accounted for. In total, foreigners have been financing about 25 per cent of the gigantic U.S. National Debt, a percentage that the Obama agenda could drive much higher.

Between them, the central banks of China and Japan hold over a trillion dollars worth of the U.S. securities used to finance the U.S. national debt They don’t buy them because they regard them as a good investment. Quite the contrary. They buy them to save the United States from the crippling consequences of its own internal weakness. This, they do, not as an act of generosity, but to safeguard their vitally important export markets in the U.S. and to prevent an even more calamitous global economic collapse.

In the dizzying run up to the crash, the debt mountain, swollen by the lax regulatory environment, and the gluttonous appetite of financiers, meant that Americans were enabled to live beyond their means. Now the time has come to pay the piper.
In place of the U.S.-centred economy of recent decades, the future global economy is likely to be multi-polar in character.
Other states that will play enhanced roles as power centres in the global economy include: China, India, Japan, the European Union, Russia, Brazil, Mexico and South Africa.
Canadians need to consider the choices they have in this volatile environment. In Ottawa and at Queen’s Park, policy makers seem intent on a return to the bad old days of wealth for a few and tough times for the many. For the first time in several decades, we need to seriously think through the ways to establish a progressive economic strategy for Canada, recognizing that labour is the source of wealth, and that the sustainable well-being of wage and salary earners should be the central objective of economic policy.

(This post is based on a recent talk I gave to the National Executive Board of the National Union of Public and General Employees in Ottawa. The post can also be found on the NUPGE website.)

Thursday, December 10, 2009

Harper Government Strategy on Torture: Talk out the Clock

Richard Colvin: "According to our information, the likelihood is that all the Afghans we handed over were tortured…We kept hopeless records, and apparently to prevent any scrutiny, the Canadian Forces leadership concealed all this behind walls of secrecy….Instead of winning hearts and minds, we caused Kandaharis to fear the foreigners…Canada's detainee practices in my view alienated us from the population and strengthened the insurgency." Testifying before the House of Commons Special Committee, November 18.

Peter MacKay: “Clearly the reality is there is no credible evidence, none, zero, to suggest that a Taliban prisoner transferred from Canadian Forces was ever abused.” Question Period, November 19.

John Baird: “I should remind members opposite that there has never been a single, solitary proven allegation involving a transferred Taliban prisoner.” Question Period, November 20.

Peter MacKay: “There has never been a single, solitary proven allegation of abuse of a detainee, a Taliban prisoner, transferred by Canadian Forces.” Question Period, December 2.

General Walter Natynczyk, Chief of Defence Staff: “I want to correct my statement made to the [Special Committee] yesterday…The individual who was beaten by the Afghan police was in fact in Canadian custody [on June 14, 2006]…” Press Conference at National Defence Headquarters, December 9.

Section Commander’s Report from Afghanistan, quoted by General Natynczyk: “We then photographed the individual prior to handing him over to ensure that if the Afghan national police did assault him as it happened in the past, that we would have a visual record of his condition.” Field Report, June 14, 2006.

Stephen Harper: "It's the opposition who is accusing our soldiers of committing war crimes -- not this government…this government has defended, in all cases, our Canadian soldiers' actions." In French in Question Period, December 9.

The record is clear. The ground on which the Minister of National Defence, Peter MacKay, was standing when he said there was “no evidence” to substantiate the testimony of ex-diplomat and intelligence officer Richard Colvin has been pulled out from under him.

Prior to the bombshell dropped on the government by General Natynczyk, MacKay had gone as far as to say on CTV’s Power Play on November 19 that Colvin’s accusations were based on information which may have been propagated by Taliban sources. In other words, Colvin was likely a Taliban dupe.

This is the hallmark of the Harper government. When its members are pushed into a tight corner, they lash out at critics and political opponents, labeling them unpatriotic cretins who prefer the Taliban to Canada’s brave soldiers. Meanwhile, they alone---the Conservatives---walk the lonely path of virtue, serving the nation in a difficult hour.

Even when they have been exposed as incompetents or liars engaged in a deliberate cover-up, the members of this government concede nothing. As far as they are concerned, there will be no independent inquiry into the detainee scandal.

Stephen Harper and Peter MacKay are cynically talking out the clock. The House of Commons is about to rise for the Christmas recess and will not sit again until the end of January. By that time, they hope, Canadians will have moved on to other concerns.

Watching Peter MacKay in Question Period and delivering testimony to the parliamentary committee has been instructive. He repeats the same answer over and over, stressing the virtue of our soldiers and the perfidy of the opposition parties. In the parliamentary committee, his opening statement went on so long that, aided by a couple of breaks for votes in the House, he only had to face a few questions from the committee members. In answering those questions, he typically returned to square one, describing the mission and its purposes, and saying next to nothing about the issues raised. Later, of course, the Conservatives will insist that they were compliant in cooperating with the committee, yet another reason why no special inquiry is needed.

The government is making the assumption that Canadians are too befuddled to follow the details of all of this. Harper and his colleagues believe that if they hunker down and stick to their line, nothing will harm them. They cynically believe that torture in Afghanistan is an issue that only concerns a few pointy-heads, not the majority of double-double drinking Canadians.

And then one fine day with another election, and a majority, the Conservatives won’t ever have to listen to the nobodies on the other side of the aisle in the irrelevant “talking shop” that is Parliament.

Tuesday, December 01, 2009

Obama’s Goldilocks Plan for Afghanistan

Barack Obama got mired in Afghanistan during his campaign for the presidency in 2008. To fend off attacks on him from Hillary Clinton and John McCain that depicted him as a geo-strategic lightweight, Obama talked tough about Afghanistan. To lend credence to his criticism of the U.S. conflict in Iraq, Obama said the war the Americans really had to win was in Afghanistan. To show how unflinching he could be, Obama said he would be prepared to launch attacks on Taliban and Al Qaeda leaders in Pakistan, along the Afghan border, even if the government of Pakistan withheld permission for this.

Now, following two months of lengthy consultations with his national security advisers in the Situation Room, the president has come up with his plan to handle the so-called “forgotten” war.

With West Point as his backdrop--- the academy from which such legendary figures as Robert E. Lee and Dwight D. Eisenhower graduated---Obama announced what is being depicted as an “extended surge” which will see an additional 30,000 troops deployed in Afghanistan. By the end of May 2010, the American force in that country will total nearly 100,000.

The goal of the surge is to downgrade the Taliban insurgency to the point where a trained and expanded Afghan military can handle the job. By July 2011, Obama pledged, the United States will begin to pull its troops out of Afghanistan.

While the president did not claim that the fight was to transform the Kabul regime into a democracy, he did lay down some performance targets, in the areas of good governance and the fight to rid the country of corruption, that he says that Afghan President Hamid Karzai must meet.

What leaps out of Obama’s speech is that this is not so much a plan to achieve victory in Afghanistan as a scheme to ensure the political health of the U.S. president. It is a Goldilocks plan, not too hot, not too cold, not too big, not too small.

While the planned surge is not as massive as General Stanley A. McChrystal, the U.S. commander in Afghanistan, wanted it to be, it is big enough to fend off Republican critics who are all-too-ready to accuse Obama of endangering American security by risking defeat in Afghanistan. By holding the line at 30,000 troops---additional cost, thirty billion dollars a year instead of forty billion if McChrystal had had his way---Obama shows that he’s concerned about keeping Washington’s deficit manageable. By announcing a firm date for the beginning of the troop withdrawal, the president is trying to placate Democrats who believe that the war is unwinnable, that America has had enough of war, and the government should spend to combat poverty and homelessness in the United States, instead of wasting money and lives on a forlorn crusade in Central Asia.

The more you look at Obama’s plan, the more evident it is that the White House strategy is designed to suit the American political agenda at home, not the geo-strategic realities in Afghanistan and Pakistan. The surge should have its maximum effect by the summer of 2010, just in time to hold off the Republicans in the midterm elections in the autumn of that year. The withdrawal of troops is to begin in July 2011, perfect timing as Obama seeks the re-nomination of his party and the ardent support of Democrats for the presidential election of 2012.

Does anyone in Obama’s inner circle actually believe that the plan will transform Afghanistan into a country that lives under the rule of law, with an effective non-corrupt central government, and a regime that respects the rights of women? Do any of them expect the Afghan army to become an effective fighting force? Probably not.

This porridge is being served up for the American people, not for the people of Afghanistan. Canadians, who have seen their soldiers suffer the highest casualties, per capita, of any NATO country in this war, should avoid this delicacy, and any temptation to continue our mission beyond 2011.