rabble blogs are the personal pages of some of Canada's most insightful progressive activists and commentators. All opinions belong to the writer; however, writers are expected to adhere to our guidelines. We welcome new bloggers -- contact us for details.

Class warfare: An economic primer

Please chip in to support more articles like this. Support rabble.ca for as little as $5 per month!

Photo: VJ Beauchamp/flickr

"There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning." -- Warren Buffett

When I hear the word austerity, I think of something else: class warfare.

It is not really about budget deficits or government debt; it is about cutting workers' wages, taxes, social programs and environmental regulations. And, last but not least, it is about selling off the commons -- our public goods like hydro, hospitals, schools and roads, often in the form of public-private partnerships.

This is done all in the interests of corporate profits, regardless of the impact on workers, citizens and the environment.

We do not have an economic problem or a debt problem; we have a political problem -- managing the economies of the wealthiest countries in the history of the world when our elected governments treat profits as their highest priority.

How to pay for the debt other than attacking the income of workers and taking apart the public sector?

As of 2012 Canadian companies had piled up more than $525 billion in cash reserves -- almost a third of the entire economy. According to a recent analysis by the Gandalf Group, at least 45 per cent of Canada's biggest companies are hoarding cash rather than investing in employment or capital. $525 billion is roughly the equivalent to total federal debt.

Harper's answer is to cut taxes and implement austerity.

The current so-called public debt crisis in Canada is a false alarm. Public debt as a percentage of the Gross Domestic Product (GDP) in Canada was significantly higher in 1947 than it is today. That debt was reduced dramatically by the 1970s, not by cutting taxes and reducing spending but, in part, by increasing spending on education, infrastructure, health care and research and development. The effect was to increase GDP, expand revenues and consequently reduce the debt to a fraction of what is was before.

Cutting taxes and public spending is problematic, since a major disadvantage of cutting the taxes of the wealthy and corporations is that it often results in cash hoarding, deadweight financial speculation, investment outside our borders or increased consumption of luxury goods from abroad.

By contrast, economists estimate that infrastructure investment will have five times the positive impact on GDP as corporate income tax cuts. Virtually all such government spending occurs inside our borders and improved infrastructure contributes both to long-term productivity and to reducing public debt. Capital gains tax cuts would have less than one-quarter of the positive effect on GDP that government spending on infrastructure would have.

More tax cuts mean more speculation, hoarding, capital flight and luxury consumption, and falling government revenues.

How much tax is available? Well there is the $525 billion of uninvested Canadian corporate profits that we are aware of that could be used for health, education, a living wage, research and investment in a green economy.

And then there is the breathtaking report produced for the Tax Justice Network. "The world's super-rich have taken advantage of lax tax rules to siphon off at least $21 trillion, and possibly as much as $32 trillion, from their home countries and hide it abroad -- a sum larger than the entire American economy." (The Guardian/Observer July 21, 2012). Total world GDP is approximately $70 trillion.

Like this article? Chip in to keep stories like these coming!

Photo: VJ Beauchamp/flickr

Thank you for reading this story…

More people are reading rabble.ca than ever and unlike many news organizations, we have never put up a paywall – at rabble we’ve always believed in making our reporting and analysis free to all, while striving to make it sustainable as well. Media isn’t free to produce. rabble’s total budget is likely less than what big corporate media spend on photocopying (we kid you not!) and we do not have any major foundation, sponsor or angel investor. Our main supporters are people and organizations -- like you. This is why we need your help. You are what keep us sustainable.

rabble.ca has staked its existence on you. We live or die on community support -- your support! We get hundreds of thousands of visitors and we believe in them. We believe in you. We believe people will put in what they can for the greater good. We call that sustainable.

So what is the easy answer for us? Depend on a community of visitors who care passionately about media that amplifies the voices of people struggling for change and justice. It really is that simple. When the people who visit rabble care enough to contribute a bit then it works for everyone.

And so we’re asking you if you could make a donation, right now, to help us carry forward on our mission. Make a donation today.


We welcome your comments! rabble.ca embraces a pro-human rights, pro-feminist, anti-racist, queer-positive, anti-imperialist and pro-labour stance, and encourages discussions which develop progressive thought. Our full comment policy can be found here. Learn more about Disqus on rabble.ca and your privacy here. Please keep in mind:


  • Tell the truth and avoid rumours.
  • Add context and background.
  • Report typos and logical fallacies.
  • Be respectful.
  • Respect copyright - link to articles.
  • Stay focused. Bring in-depth commentary to our discussion forum, babble.


  • Use oppressive/offensive language.
  • Libel or defame.
  • Bully or troll.
  • Post spam.
  • Engage trolls. Flag suspect activity instead.