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At bottom, Trudeau and others were doing the same thing as the 'money creationists'... which is not so different as say engineer and financiers who wanted to build dams across the Bay of Fundy for tidal power. "Yes we know the siltation behind even smaller dams in the Bay is massive. We'll figure out how to deal with that when we get there. It will work"
The manifestation among 60s and 70s governments was to construct social programs without a resolve to do what it takes to fund them. Creating them and running them the first X number of years is the easy part.
The difference with the money creationists is that its a massive Ponzi scheme- but one that can run for a very long time on creating 'new financial wealth'. There actually are limits, but they arent as hard or near as the ones faced by governments.
Trudeau was just lucky to be PM during the heyday of 'progress on free money'. When the mythology of the 'free' part evaporated, Liberals werent so eager about social programs any more. There would be no place for a Pierre Trudeau now- at least not the one of 30-40 years ago.
The Liberals in Canada and Democrats in the U.S. are required to walk the narrow path of a capitalism that has undergone a sea change, beginning in the 1970s - even as Trudeau (and Nixon as well) consulted Galbraith on how to break the hold of stagflation. It was the Chicago school that solved it, finally, by making credit easily accessible to all, and, politically, by requiring government at all levels and in all regions to lower corporate taxes...or the corporations would take up residence elsewhere. It was the appearance of the economic imperative in business and its effect on politics, whereby all other considerations played second fiddle to the maximization of profit, and corporations that did not achieve acceptable showings on the market were gonzo. Suddenly all had to walk the line. It was also the moment of decline for unions and social welfare generally (at least there was no more expansion...except where the neo-cons wanted to leave the state ever-deeper in the debt trap.
Robert Reich describes all of this in Supercapitalism: The Transformation of Business, Democracy, and Everyday Life.
- 'had to' is not correct - chose to is what they did. They had options then, as they do now, options which would NOT have resulted in the massive national debts that all countries now claim dictates their actions. This would, of course, been against the wishes of the bankers and other wealthy elite which are the real rulers of the country, and trouble may have ensued - but if we had, then or now, some politicians with the courage to put the real options in front of the people - well, who knows. We'd probably lose, but at least we'd understand what was happening.
To say the Chicago school 'solved' anything is somewhat misleading - to say they solved the problem of how to make the dismantling of western democracies sellable, would be accurate, by turning the power of money creation over to private banks, cutting taxes, and thus running up great debts that would soon justify slashing programs that give democracy strength (healthy, well-educated, well-informed citizens are pretty necessary in a democracy).
THe decline of unions could be attributed to either their failure to understand what was happening or, more likely, their selling out to corporate-banker power. Like all of our other quisling leaders then and since.
- incorrect, I think. The social programs were begun in the 60s, and money was not a problem. The growing strength of democracy got the elite rulers worried, and they determined to roll these advances back (check out some Trialateral Commission stuff). This could not be done openly. So they bought some politicians - lower taxes, turn the money creation power over to private banks, and suddenly borrowing becomes necessary to support those social programs. But if the corporate taxes were maintained, and the minimal government money needs supplied by the Bank of Canada, as they had been previously - no massive debt. Did you know that the governments of Canada have paid over two trillion dollars in interest over the last ~30 years? Imagine if that money had of been used for social programs instead of padding the bank accounts of the already wealthy. Everything was, and is, affordable - if we want it. Obviously others want the wealth more than we do, and have taken it.
Money creation is only a ponzi scheme when run by crooks, for their benefit - as we have been seeing for the past 30 years. If the government created money, responsibly for the good of the country as a whole rather than the benefit of the elite - all would be fine.
- thanks for the support - spamming certainly is not my intention. I was just a couple of days ago accused of spamming on one of the other threads, and earlier this year I was told by Rabble admin to "stop spamming" their news stories when I was suggesting the same as I do here - if anyone is interested in a longer explanation of the things I am talking about, they could check out the full essay.
Repeating my political economy assessment: money at and near the time programs were created was not the problem. Nor was availability of the funds to sustain the problem. But that is not what I said.
It wasnt just the elites campaigning against social programs. Sustaining the programs over the longer term- especially while more were being added- was more expensive than adding them on. and the Liberals- as very much an itegral part of the elites- were never willing ot go there. They didnt back down when explicitly conservative propaganda gained currency... they were only ever willing to go where they did without looking to the future consequences. Like I said earlier, when that looking at the government manifestation of 'free money' was discredited, and continuing the same approach was going to require steady ramping of taxes.... that was for the Liberals and obvious choice. And their choice was to refuse increasing government revenues [unlike in Europe even among conservative governments]... which was the first step down the road we find ourselves well down now.
Yes, but not with your painless [for the people] recipe focused on a different role for the Bank of Canada. Continuing on the social program trajectory of the 60s and early 70s- and which continued in Europe and even Thatcher's Britain- required, and still requires, a fundamentally different taxation regime. More taxes for most people, not merely the foregoing of the corporate tax cuts that we got.
The Liberals did not change- they never went there.
The NDP is at least 'genetically disposed' to going there. But only keeps the possibility alive, 'in principle' [in rhetoric]. There is no examination of what is required, so of course there are no substantial steps taken.... and even the rhetoric slowly fades as the NDP gets more questions about how will we pay for those promises.
- I don't distinguish between the Libs and Cons since the 80s - two branches of the Bay St party, they play 'we really hate each other!!!!' games for the public circus, but they do the same stuff in power ....
- it *could* be relatively painless, in theory - in practice, of course, as I have noted, the Rulers are not going to give up their great privilege easily, so will certainly be very dog-in-the-manger-ish if 'we the people' ever try to depose them - but that's another story.
I think the restructuring of the entire economic system that would result from getting the banks out of the money creation game would have benefits many cannot even imagine yet. Taxes for one - along with the bankers, the capitalists will soon follow, as the support of the banks is required to establish and maintain large capitalist fortunes - when money is created for 'we the people' purposes, rather than maintaining capitalist power, the 'excess wealth' created by a very productive society will accrue to those who create it - we the people, not they the capitalists. This great fortune will, somehow, be collectively *ours* - and for that reason alone, taxes can probably be discontinued almost altogether. Also, a LOT of current tax money, going back 30+ years, has been collected for no other reason than paying interest on national/provincial debts - that can be forgotten once we get out of letting private banks create our money. As far as I can see, taxes are just a modern incarnation of titheing - and when we depose the kings, we no longer need to tithe them.
When I say a new world is possible, I really mean something so far outside the capitalist dystopia it is hard to imagine. We are in Plato's cave, and what we see is nothing more than shadows on the back wall, compared to what we could have.
I certainly agree with that goal.
I'll say again that I dont buy and will never buy the thesis about BofC and money creation and the role that changing that could play.
But I hope that is something we dont need to agree on to exit the capitalist dystopia.
Obviously, at some point on the exit ramp road, the money and BofC thing is a question that would have to be resolved. But in my books, we are nowhere near that point.
- we do appear to have the same ultimate goal, which is why, no doubt, we can continue to talk. But I myself am completely convinced that this money creation stuff is *the key* to getting rid of the capitalist dystopia - everything they do revolves around money, and allowing the banks to create and control the money is the key to everything. If you do not believe this, I would be curious to learn why you do not see any fault with the current money creation system.
If you have not done much research on this, as most people seem not to have, and might be open to a bit of new info without going to my essay, you might ask your local library to get you a copy of Ellen H Brown's 'Web of Debt', or check out a guy called James Robertson, a brit but he's around 70 and has been doing this a long time and has a lot of good stuff on his website - downloadable PDFs free - or a Cdn film called Oh Canada, or another called Money as Debt.
The thing is, to me, once you understand the money creation process, the theft of literally trillions of dollars is so obvious that I think even the average pretty apathetic Cdn citizen might be galvanized to action if they understood this - and also it is so obvious that the national debt is so unnecessary, that claiming the necessity of dismantling our country in the name of this unnecessary debt is also an obvious and blatant lie that can be used to expose these people completely for the criminals they are.
David, your idea of reform from within the monetary system is exactly correct, I believe...except that it is not reachable without the prior dismantling of all capitalist institutions. Which places your "solutions" up there with the second coming.
The idea of an "economic imperative" was the most demoralizing revelation with the appearance of the Chicago School in the mid-70s. From that moment the "ideas" of we reformers became only something to try to hold on to, to keep from destruction by the new forces that were giving people seemingly limitless credit, and workers could fly the family to the Dominican Republic in February.
The unions? You can't have read of their destruction by private/public industries' movement of jobs around the world or within the country of their birth. Your explanation:
"THe decline of unions could be attributed to either their failure to understand what was happening or, more likely, their selling out to corporate-banker power. Like all of our other quisling leaders then and since." ...comes from the purely romantic political assessments of people who are not familiar with the economic forces at work in recent history.
In your own case, the lack of understanding of the concept "economic imperative" seems strangely out of place for one so knowledgeable about the history of our monetary system. But then specialization will do that.
And of course, you are not alone in not understanding the causative effects of changes in capitalist institutions - particularly financial - and globalization's meaning for all those investment funds, with meaning for so many hereabouts. Some days, it's almost as though people are simply tilting at the windmills of an unreal world, something out of the past. That's when the morality machine takes over.
I'll just say what I hope is obvious: that I have significant disagreements with your thesis doesnt mean that I see no fault with the current money creation system.
If what you really mean is that I think we can do radical reforms that challenge capitalism and better peoples lives, while still living with the current moneary system [reforemed but not torn down].... yes, we can. In fact, we must.
But thats the end point [more or less driven by what we have to do], not a starting point.
I'm more than skeptical of all agendas that begin with "if/when people understand _____ ...." Even analysese I agree with, let alone ones I dont.
People can beleive as me. Believe as you. Even more of them are going to be inclined to flat out irrational conspiracy theories of how we're being robbed.
All that is required is a common "this doesnt work for me /us." That is all we will get to work with, and all that is necessary.
And just on a persoanl practical level, you might think that our experiences over the decades would make one rather gun shy of subtextual formulations that are variations of: "when people understand ________ , it can only be obvious that blank, and hopefully this will galvanize them to action."
Now virtually everyone recognizes that the third part is highly contingent- 'hopefully this will galvanize them to action'. And when it doesnt and we are of course disspointed [again].... this is where the failure is seen. And that analysis, as far as it goes, might extend back to the failure of people to 'understand'.
But the failure is in the whole doomed formulation- the three parts and how interdependent they are.
I dont entirely agree with George on this. But close enough. And totally on the part that the "reform" of the monetary system being advocated requires or would amount to the abolishing of capitalism.
So there's a basic cognitive dissonance in saying things like 'there's no reason the Bank of Canada cant just issue money for program X.... after all, they let the banks do the same thing on our dime.'
We are still a LONG way from getting started on what can be done within the parameters of the system more or less as it is. You know, all those things on the economic and social program front that we are held back about because the NDP "doent have the guts" to talk about them.
Now you may think that such efforts, when and if they get underway, will be doomed unless the fundamental power of the system is at least "understood" if not challenged. And to a point, I agree.
But first we have to go there. Let alone we are not even in pre-'go there' yet. The main point, is that we'll talk about that when we get there.
Plenty of us can and should talk about it before we getting there. But positing that is necessary that people first 'understand' [what we dont yet agree on].... or that if it isnt necessary, that it is the key to 'waking people up'.... that is the road of sorrows and failure we've down more than enough already.
How could the banks be taken out of the money creation game?
Are you saying the banks should be nationalized?
More like, simply put out of business. No place for anything resembling the institutions we call chartered banks.
Sort of swept aside in the process.
Long thread a problem for my dial-up connection.
Continuing at Economic Agendas- theirs, ours, whatever
I have read Dave Patterson's web page "What Happened?" and I'm not really sure what to think of it. My expertise in economics and particularly monetary theory, just isn't up to the task. As well, the sources cited there don't seem to include any recognized economics professionals, even clearly left wing ones. (OK, there is one picture of John Kenneth Galbraith, with a quotation as caption.) Most of the people quoted seem to be amateurs. This doesn't mean that they are wrong, just that it is hard for me to feel confident that they really know what they are talking about.
However, there is one point Dave makes which, if true, would refute rather strongly those who, like George and Ken, think that a significant change to the money creation process would require the abolition of capitalist institutions. Dave says that in the 1970s there was a major change in the relative functions of the Bank of Canada and the commercial banks. He claims that before this time, most government borrowing was from the Bank of Canada, at low or no interest rates, and any interest paid would go back into the public purse in any event. He says that this change explains why huge interest payments on government debt have become a major component of budgets since that time.
Dave seems to believe that we could fix the problem by simply going back to the way things were between the passage of the Bank of Canada Act in 1934 and 1970. Now, I presume we can all agree that capitalism was the economic system during that period, so if Dave is correct in this assertion, then we could make very significant change to the money creation system without getting rid of capitalism. I have spent an hour or two wandering around the internet looking for details on this change in the 1970s, but without much result. Was there a bill passed by parliament? An order in council? Changes to administrative rules? I haven't been able to find an answer.
I would welcome any light that Dave, or any other babbler can shed on this matter.
Edited to add: Cross posted with KenS. I will re-post this in his new thread.
- I guess the only thing left to say is that you seem to be a TINA person, following Ms Thatcher and Friedman et al, and I'm more of a Dylan Thomas 'rage, rage against the dying of the light' sort. You're no doubt on the side of the winners - but your prize is going to be pretty dry and joyless, I predict. The capitalists aren't known for their beneficence to their sycophants. (see C Dickens, U Sinclair, etc - you seem to be one of the ones here who at least reads things over a few hundred words, although for some reason you appear to be avoiding my essay like the plague, within which most of your concerns are addressed..) Your apparent lack of understanding of anything I am talking about is a bit puzzling (note difference between 'had to', as in 'economic imperative', and 'chose to', as in 'sold out' or 'gave up'..), but you seem a bit hubristic, so perhaps you assume you are looking somewhere behind you when you talk to me, without realising I have, as they say, perhaps lapped the field and you should be looking far, far ahead somewhere, where new things happen.
I'm not on the side of finance capital's reformers, dave. They're the enemy. Point to a single entry where I have said not just that such and such has occurred, but that that was good.
But you cannot distinguish the normative from a simple recitation of what has occurred, and why the powers that be made it happen. It's all bad, of course, and made worse by people like yourself who refust to recognize it as you tinker with your monetary system.