Attending last week's G8 summit hosted by American President Barrack Obama, Prime Minister Stephen Harper characterized the Canadian economy this way: "Thanks to strong fundamentals, Canada's economy is performing exceptionally well by international standards."
The statement is simply not true. Economic fundamentals in Canada reveal growing inequalities, stagnant incomes, high unemployment, and for 2011, a 2.2 per cent economic growth rate (after inflation) that according to an agency popular in Canadian Conservative Party circles -- the CIA -- puts Canada 149th out of 215 countries in the world.
Among the G8 countries, this growth rate does place Canada ahead of France (164th), the European Union (167th), the U.S. (171th), the U.K. (182th), Italy (193th) and Japan (203th), though behind Germany (133th) and Russia (91th). But the CIA World Tables list 75 countries with a real growth rate of five per cent or better, over twice the Canadian rate.
In reality, by any standards, the Canadian economy has not performed "exceptionally well" since the mid-1960s, about the time the PM went off to Grade 1 in Toronto's Leaside neighbourhood. The decade of the 1970s featured economic stagnation and high inflation (thus characterized as stagflation), ushering in the unhappy Reagan revolution of the 1980s. The economic policy directions which captured the attention of University of Calgary student Harper were described by Pulitzer Prize-winning journalist David Cay Johnston as "remaking of government's relationship with private interests -- a vision of lower taxes, less regulation and maximum economic leeway for those at the top. In this view, the pursuit of wealth is the warp and weft of America; everything else will follow."
The re-making of America required the destruction of the U.S. labour movement's ability to protect jobs and incomes. Creating a new international division of labour by sending investment and manufacturing jobs off-shore was an important aspect of the assault on workers. As philosopher Robert Paul Wolf has observed: "Because of the globalization of production, even in the service industries, there are now tens of millions of Americans who are, in effect, surplus population. They are not needed by capital, not even as a 'surplus population of the unemployed' holding down by their existence wages for those employed."
NYT columnist and Nobel Memorial Prize in Economics winner Paul Krugman describes the U.S. economy as being in a long depression; and he has just published a book suggesting how to end it. His analysis has generated worthy critical commentary by knowledgeable readers such as Andrew Jackson, Fred Block, and Michael Hudson, but Krugman's main point goes uncontested: unless the austerity agenda promoted by G8 countries is buried, the economic outlook will remain bleak.
At the June 2010 Huntsville G8, and Toronto G20 summits, as host, Stephen Harper crowed success in establishing the need for deficit reduction by leading economies. Canada joined with the U.S. to defeat a bank tax proposed by the U.K. and France that would be very useful to have right now in staving off the looming defaults among Euro banks holding plunging sovereign bonds.
It is bad enough that the recent Canadian austerity budget (and the odious omnibus bill C-38) follows directly from the direction set at the 2010 summits, remembered here as the billion-dollar police riot in Toronto. It is even worse to think that the direction Stephen Harper was urging on the world economy was so wrong-headed.
By urging fiscal restraint and encouraging austerity, Harper and his summit colleagues in 2010 totally misread the direction of the world economy, and have made a bad economic situation much worse.
Duncan Cameron is the president of rabble.ca and writes a weekly column on politics and current affairs.
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