Private Wealth Versus Public Health

Once upon a time there was a global economic crisis. It was followed by a world war. Once upon a time we realized that if we could make that kind of a mess together, we might be able to get together to do something better, too.

Who doesn't want a better life that offers less risk, more opportunity, and the promise of economic mobility. That's what my parents' generation fought for, in a thousand different ways; and the sum of these parts forged a new direction.

Those struggles also fit into a new frame: Keynesianism. After years of reflecting on the causes of the Great Depression, British economist John Maynard Keynes showed, in 1936, how governments can offset wild fluctuations in the market; stabilize purchasing power ("aggregate demand"); and intervene in ways that create a foundation for even greater growth. What's not to love? Less uncertainty, less instability, less inequality, more growth. It was an approach that was widely adopted after the Second World War ended, and it worked for decades.

Then along came the 1970s, a decade in Canada that was racked with high inflation, high unemployment, and plummeting profits. The neo-liberals, backed by the Chicago School of Economics, trumpeted: "There's not enough growth! Here's how to get it!" The framework shifted from a focus on managing domestic economies by fine-tuning demand and coordinating international exchange, to a focus on accelerating corporate growth by freeing supply chains and global trade.

"Liberated capital," they told us, "is how wealth gets created." Government regulations and taxation are just big, pointless bothers, getting in the way of money's natural flow to where it gets the biggest return. The dazzlingly simple solution? Less government, more market. But the "less government" nostrum didn't end with simply liberating capital flows. It meant reducing public services and supports; privatizing public assets; and getting rid of rules that protect workers,consumers and environments. And the "more market" prescription wasn't just about the globalization of capital. It was about taking advantage of poor nations with undeveloped capital and legal systems, including writing new global rules for the ownership of property and ideas, and dreaming up new ways to create credit, and encouraging ever more risk. After all, no pain, no gain. But the pain was asymmetrically delivered, as bargaining power started shifting from workers and communities to corporations.

Many of us bought into the slogans "a bigger economic pie;" "the rising tide lifts all boats;" "trickle down economics;" "more stuff more cheap;" "because the lowest price is the law." But, after three decades, the promises are ringing hollow. The evidence shows the game plan just didn't deliver, at least for most of us. Still, we were running too fast to gripe about it. Then, along came a global financial meltdown. That turned the "less government, more market" mindset on its head, at least for a time, with corporations and banks demanding government intervention on their behalf. But now that we've spent $66 billion in Canada stabilizing what we have repeatedly been told is the world's best financial system, that damn "less government" mantra is back; just in time to remind the people who are the collateral damage of neo-liberalism what we cannot afford to do: help them.

Let's take a moment to remember what we really can no longer afford: the discredited, corrupt idea of neo-liberalism. It didn't deliver prosperity to the majority of Canadians. Instead, it brought about:
a)a huge tax shift, from corporations to households, from richer to poorer (income to consumption), from those with savings and capital gains to those without;
b)the smallest federal government presence since the late 1940s regarding spending and revenues as share of the economy;
c) a vastly smaller safety net;
d) more expensive access to basics like education and housing;
e) less collective action: Our union base is now at same level as in 1946: 29.5 per cent. Our peak was 36.5 per cent, in the mid- 80s. (Only about 18 per cent of private sector workers are covered by collective agreements; it's still about 75 per cent for the public sector);
f) a shrinking share of jobs from the two traditional sources of decently-paid employment, manufacturing and the public sector, with nothing else yet in sight;
g) stagnant average wages for 30 years; and an attack on wages, pensions, and benefits in the wake of the recession;
h) the bottom 40 per cent of Canadian families raising kids being worse off now than their counterparts were 30 years ago, plus record household indebtedness; only the top 10 per cent saw gains;
i) less regulation and oversight on investments and credit creation;
j) more foreign ownership of our enterprises (and more Canadian capitalists owning stuff offshore);
k) climate change, and disregard for it!;
l) economic collapse;
m) workers hating other workers more than the people who wrecked the system: "I don't have what you have, so why should you have it?"

How we respond to the insane idea that we should stay on this track is our choice: Do we continue on this race to the bottom or join the battle (and an admittedly uphill battle) for a decent life for all.

It's true we may not be able to reverse the relentless pursuit of globalization, privatization, and deregulation; but we sure need to kick up a fuss about the upside-down redistribution that neo-liberalism breeds. We should not quietly accept that it is normal for the rich to take the lion's share of economic gains and tax cuts. We should raise questions about where the good jobs will be for the next generation. We should protest loudly as a growing number of Canadians get drawn into the ranks of the working poor. After all, isn't a job supposed to be the best social policy? It certainly is close to the only social policy these days.

We need to start now because the corporate agenda is far from completed. We are heading towards greater corporate consolidation - bigger market share in the hands of a smaller number of players, whether in mining, or banking, or media - which leads to bigger risks, more instability, and less choice. This unfolding global dynamic produces more jobs (and consumers)every year in industrially-emerging nations while actively eroding the standard of living of many workers (and consumers) in older industrialized nations.

Whether they run multinational companies or not, Canadian bosses are telling their workers to tighten their belts and get real about what they can expect in this new global order. Class warfare has morphed in the course of the past year: now workers are pitted against other workers. Public sector workers, with their relatively good job security and benefits, are easy targets for envy and resentment. "Why spare them the pain just because they had nothing to do with the disaster?" the logic goes. "After all, I just lost my job/my house/my retirement savings, and my taxes pay for their privileges."

Meanwhile, while the recently impoverished began to bash the still-employed, bonuses at Canada's Big Six banks soared by 18 per cent in 2009, to a record $8.3 billion. Finance Minister Jim Flaherty was quick to reject calls by Britain and France for a new international tax on bankers' bonuses. If there was a class war, the rich clearly won.

So, we're fighting with ourselves as we tighten our belts, while the rich get much richer. What's up with that? That's what they want! That's how we lose. Remember: there's enough money around for everyone to live a better life. It's time to push back and stake our claims.

It's time to protect our rights, as workers, as consumers, as citizens, as humans. That means organizing, as workers, as communities, as activists. It means seizing greater control over our time, including demanding improved rights for caring for our families (young and old); for learning; and simply for having time off. It means demanding living wages for all, which will mean significantly more money for those at the bottom if a little less for those at the top. It means saying "no" to the two-tiering of wages, benefits and pensions for young and old. It means fighting for improved public pensions for all.

It's time to step up the pace of social bargaining. It's not just about our wages and benefits; it's about the affordability of a decent quality of life. It's about better public transit and child care. It's about more preventive measures to improve health, from food security and a good place to live, to free dental check-ups at school, to timely access to counselling.

It's about cheaper access to post-secondary education. It's about having the time and the place for recreation and play, and the ability to re-create (re-creation) and rejuvenate ourselves and our dreams. It's time for us to raise expectations, by showing what is possible.

Divided, we'll be dismissed; united, we'll get what we want. At this moment in time, no single union is powerful. If it's just about your wages, your pensions, your jobs, you'll lose. But that doesn't mean we can't gain ground. Our history of winning unemployment insurance, medicare and pensions for all shows us what we can achieve when we pull in the same direction. More recently, some of you were part of the fight to get the $10 minimum wage; and now we are on the cusp of important improvements to the Canada Pension Plan, led by labour.

What will be our next win? Child care? Housing? Transit? The more we win, the more we win. We don't have to accept defeat if we act together.

Our country can definitely afford it. What we can't afford is reckless tax cuts. We can restore our capacity to do more together if we just stop giving money away to those who least need it: the big corporations and the highest-income earners. At the federal level alone, the corporate income tax rate is scheduled to drop to 15 per cent in 2012 from 19 per cent in 2009. Simply returning to the 2009 corporate tax rate would bring back about $3.35 billion to public coffers. With that injection back into public hands we could, as just one example of improving our quality of life, hire over 40,000 registered nurses. GST cuts total $76 billion in foregone revenues over the five-year horizon. Reversing the GST by one per cent would free up over $6 billion a year - more than enough to finance a child care and national housing strategy.

Corporations have made clear what they mean by globalization: one world. But not our world.

The internet and climate change offer different lenses for viewing global change. If progressives around the world linked up, we could do more than just look at globalization differently. We could shape it. There are more of us than them.

There is no time like the present to look past the dangling carrot of more economic growth/more money/more stuff and consider a more forward-looking spirit and purpose. As the saying goes, the horizon isn't as far as we can see; it's as far as we can imagine.


Given the fragile economic recovery and weak job market in Canada, now is not the time for public spending cuts, says a new study by the Canadian Centre for Policy Alternatives (CCPA).

"It would be a huge mistake to significantly tighten the fiscal screws," says economist Andrew Jackson, author of Big Train Coming: Does Canada Really Have a Deficit and Debt Problem?

"While debt has risen due to the recession, there will be a major human and economic cost if deficits are eliminated before a real recovery has been achieved."

Jackson, who is senior economist with the Canadian Labour Congress, points out that debt in Canada, even after two years of stimulus, remains at low levels compared to other countries and compared to the mid-1990s.

He warns against repeating the major spending cuts of the 1990s, which shredded social programs and public services. "Cuts will shrink rather than raise our economic potential. We need to maintain high rates of public and private investment to boost our future rate of growth," says Jackson. He argues that balancing the books can be done without spending cuts or raising taxes. Deficits and debt will shrink rapidly so long as interest rates are lower than the rate of economic growth. They are at historically low levels today, he adds. Once the economy has recovered, Jackson says, changes in taxation should be made to address the small structural deficit that remains and to meet the costs of an aging population. - CCPA

Armine Yalnizyan is an economist with the Canadian Centre for Policy Alternatives.

This article is an edited version of the talk she gave to the Toronto and York Region Labour Council's Public Sector Leadership Summit in 2010.