Breaking News

Toronto Load More

OntarioLoad More

CanadaLoad More

Tuesday, July 30, 2013

Harper helped push world toward austerity

G20 effort was part of larger agenda that’s led to dramatic rise 

in inequality.

by Linda McQuaig
At the time, the transformation of the city’s downtown core into a 
pseudo war zone seemed like the worst aspect of the Harper 
government’s handling of the G20 summit in Toronto in June 
But perhaps just as insidious was Stephen Harper’s personal role at 
that summit in pushing the developed world to abandon stimulus 
spending and veer sharply towards austerity.
That embrace of austerity has led to deep government spending 
cuts, with devastating consequences particularly in some southern 
European nations. Canadians have suffered too.
The embrace of austerity at the 2010 Toronto summit was a dramatic reversal of the stimulus spending that the world’s rich nations had quite effectively adopted to counter the devastating 2008 financial crash.
Harper likes to boast that he’s shepherded the Canadian economy to a full recovery from the 2008 crash — even though 1.4 million Canadians remain unemployed. Our employment rate is stuck at 61.9 percent, down from 63.8 percent just before the crash, notes Jim Stanford, economist for the Canadian Auto Workers.
This explains Canada’s poor ranking in a 
recent OECD Employment Outlook report, where Canada ranks 
20th out of 34 
Similarly, Canada’s Parliamentary Budget Office estimated last fall 
that Ottawa’s spending reductions will cost Canada approximately 
125,000 jobs in 2016.   (Reports like that angered the Harper 
government, which last spring ended Parliamentary Budget Officer 
Kevin Page’s impressive stint in the watchdog job.)
The embrace of austerity at the 2010 Toronto summit was a 
dramatic reversal of the stimulus spending that the world’s rich 
nations had quite effectively adopted to counter the devastating 
2008 financial crash – in line with the lessons taught by the great 
20th century British economist John Maynard Keynes.
Keynes argued that, when businesses are unwilling to invest during 
a major downturn, the only solution is for governments to invest, 
and on a massive scale. This insight sharply contradicted the dogma 
of austerity that prevailed after the 1929 crash, prolonging the 
1930s Depression. Although fiercely resisted, Keynes’ insight was 
eventually accepted.
But right-wing economists, including Stephen Harper, have long 
bristled at Keynesianism — with its important role for government 
— and opposed its revival after the 2008 crash. (The minority 
Harper government only introduced a stimulus package in Canada 
because the opposition threatened to topple it otherwise.)
By early 2010, Keynesianism was losing ground on the 
scene. But it was the G20 summit in Toronto later that year which 
“above all” resulted in the world’s rich nations changing course and 
embracing austerity, according to a recent article by British 
financial journalist Martin Wolf in the New York Review of 

Harper played a key role in that lamentable change of direction. At 
his urging, the G20 nations agreed to commit themselves to halve 
their deficits by 2013 – a draconian approach that returned the 
developed world to obsessing about deficits and ignoring 
Ironically, the high unemployment produced by austerity reduces tax revenues and increases social spending, making deficit-reduction difficult.
(Ironically, the high unemployment produced by austerity reduces tax revenues and increases social spending, making deficit-reduction difficult. Much to its embarrassment, the Harper government has had to revise its deficit estimates upward. So far this year, Canada’s deficit is rising, not falling.)
But the fixation on deficits, which has dominated public discourse 
for much of the last thirty years, has helped divert attention from 
the fact that austerity is part of a larger agenda(including tax cuts 
and privatization) that’s redistributed money towards the top.  
While members of the public are guilted into believing they’re 
living beyond their means and must tighten their belts, they’ve 
been distracted from noticing the transfer of income and wealth to 
the rich.
Thaddeus Hwong, a professor of tax policy at York University, has 
calculated just how much inequality has increased in Canada.

Using the model developed by University of California professor 
Emmanel Saez, one of the world’s leading experts in income 
inequality, Hwong found that between 1982 and 2010, the top-
earning 1 percent of Canadians captured fully 60.3 percent of all 
the income growth in Canada.
That was even more dramatic than the US, where the top 1 percent 
captured 59.6 percent of income growth in the same period. This 
highlights that, while inequality is more extreme in the US, it is 
growing faster in Canada.
But with all those deficits to obsess about, who’s noticing the rich, 
slightly offstage, quietly getting richer.

About Linda McQuaig

Linda McQuaig is a journalist and author. Her most recent book is The Trouble with Billionaires, (co-authored with Neil Brooks). This column originally appeared in The Toronto Star. eMail:
Share This

comments powered by Disqus

No comments:

Post a Comment

Stay Connected

Enter your email address:

Delivered by FeedBurner

© The Toronto Post All rights reserved