Canadian Pugwash Group



Global Markets, Inequality and the Future of DemocracyReflections on the Group of 78 Policy Conference By Peter VentonIntroduction The Group of 78 Policy Conference on “Global Markets, Inequality and the Future of Democracy” (Conference) was held at the University of Ottawa on September 27 and 28, 2019. The Conference was sponsored by the Canadian Pugwash Group and seven other NGOs: the Broadbent Institute, the Universities of Ottawa and Carleton, the Canadian Labour Congress, the Canadian Union of Public Employees, the Canadian Union of Postal Workers and the National Union. As lead of the Canadian Pugwash Group’s Global Issues Project, I participated in the Conference planning and organizing committee over a period of three months from December 2018 through February 2019 and acted as a moderator of the first of three panels of the Conference, “Global and macroeconomic policies that drive increasing inequality and challenge democracy”. The Conference engaged some 16 Canadian economists, political scientists, sociologists and other expert presenters who were joined by U.S economist and author, Robert Kuttner as the key-note speaker. Kuttner is the author of twelve books including Can Democracy Survive Global Capitalism? in 2018 and The Stakes: 2020 and the Survival of American Democracy published in 2019. The latter book is an assessment of the state of American democracy, which is “in serious disrepair”, and how it can be revived (Kuttner 2019 xiv). Kuttner was introduced by former long-serving parliamentarian and leader of the New Democratic Party of Canada, Ed Broadbent, who is founder of the Institute that bears his name. The purpose of the Conference was to explore the hypothesis that the root causes of the explosive growth in inequality and economic insecurity over the past four decades were neoliberal economic policies that led to the rise of a global financial system that is no longer regulated in the public interest and the rise of an international trading system that has dramatically undercut the ability of labour to share in productivity gains. A further hypothesis was that these economic policies were the result of the power of corporate capital over governments, regulatory agencies, trade unions and civil society organizations. Corporate power was enabled by a politically-weak public largely possessed of a deeply individualistic ideology. The aims of the Conference were to explore the most promising avenues for reversing neoliberal economic policies to reduce economic inequality; to increase the bargaining power of workers; to increase worker wage growth; and to achieve more secure long-term employment. A Conference Report and Policy Recommendation was prepared in April 2020 (G78 2020). Conference theme of deregulation of finance For the past four decades, neoliberal economic policies have “hyper-commodified” housing and labour and deregulated institutions in the financial sector of the economies in the United States, Europe and Canada. As a consequence, the financial sectors of these economies have grown to huge sizes that now sit top of their relatively stagnant real economies. Neoliberal economic policies have resulted in stagnant wages of labour over the last four decades. During this period, high rates of profits of large monopolistic and oligopolistic corporations have been maintained owing to the hyper-globalization that set in starting in the 1970s. As a consequence of stagnant wages and the related reduction in purchasing power of the public, fractions of high corporate profits (after taxes) were not invested in real productive capital (e.g., machinery, equipment, factories, computers and telecommunications infrastructure) in real economy. Rather they were transferred into the FIRE sector of the economy; FIRE is an acronym that represents the finance, insurance and real estate sectors. More specifically, the FIRE sector includes depository institutions; non-depository credit institutions; insurance carriers, agents and brokers; real estate businesses; holding and investment offices; and security and commodity brokers, dealers, exchanges and services (Chen 2020). In Canada, the FIRE sector grew to $387 billion in fourth quarter 2019 which represents 19.5% of Canada’s GDP. Ontario, accounts for half the FIRE sector GDP in Canada. Within Ontario, finance and insurance makes up 40% of GDP while real estate makes up 60% of GDP. The most lucrative products of the banking subsector are household credit (particularly mortgages) and business credit (Canada 2020). In the wake of stagnant wages since 1980, household debt has grown dramatically to compensate for declining purchasing power. Interest rates on credit card debt are now at the usurious rate of just under 30% per annum. The foregoing concern over the growth and deregulation of finance led to Conference recommendation 1.1 “Deregulation of Finance”: Rein in finance through capital controls, extensive re-regulation and a tax code that is biased against – not in favour of – speculative investment. The next sections elaborate on the definitions of democracy, inequality, globalization that pertain to the macroeconomic policies that drive increasing inequality which was the subject of Panel 1. They will be followed by an elaboration of the definition of national microeconomic policies that drive inequality with particular reference to Canada. Democracy: What is It? The institutions and principles of democracy include: A social contract balancing positive freedom of citizens to organize for the production and distribution of public goods and services with negative freedom from responsibilities for others through the tax expenditure system for providing public servicesA constitution and the rule of law about which all are informed that provides for free speech and the right of assembly and property rightsPrinciples of equality, equal opportunity and social justice Equal right to participate in the process of legislationEqual treatment of all groupsFreedom to periodically elect political representatives who are expected to serve the interests of at least a majority of citizensA majoritarian electoral systemPublic education that informs citizens how to participate in deliberations about public issues Media institutions that keep the citizenry informed with news about the operation and policies of the legislature, the government and their political representativesThe ultimate purpose of democracy in a nation state is the achievement of the “common good” which is a collection of positive elements such as peace and security, health, secure full employment, leisure time, equality in the distribution of wealth and income, quality of environmental resources and the absence of “negative” elements such as: the incidence of crime, family breakdown, pollution of air and water and poverty (Venton 2020, pp. 217-218). Democracy and Inequality In the late 1930s, former United States Associate Chief Justice Louis Brandeis famously said “We can have democracy or we can have wealth concentrated in the hands of a few, but we cannot have both” (quoted in Freeland C 2012 p. 277). The significant point about this statement is that it refers to wealth rather than income. The relevance of this distinction is found in French economist, Thomas Piketty’s work, Capital in the Twenty First Century. This best seller presents a massive empirical analysis of the dynamics and structure of wealth and income in countries with capitalist economies since the late 18th century. The result is a discovery of an empirical law that produces an ever-increasing growth in wealth relative to national income in democratic states such as France, Britain and the United States. This ever-increasing wealth leads to extreme concentrations of wealth in the hands of the wealthiest 10% and also income earned by the highest 10% of income earners in the population. The concentration of wealth is so great that much of it is passed on to the next generation in inheritances so that, eventually, economies tend to be dominated by a high proportion of inherited wealth and the income generated by that wealth. On the basis of past trends, Piketty projected the share of income (from employment and capital) of the middle and poor class in the US which was 72% in 1970 and 50% in 2010 will fall further to 40% by 2030. More specifically the share of income of the middle class is projected to fall from 30% in 2010 to 25% in 2030 while the share of the poor is projected to fall from 20% to 15%. This outcome of the concentration of wealth violates the “meritoric” value of democracy - that the increase in the concentration of wealth is only just if it is the result of hard work and skill. Higher income on the other hand is considered to be the result of, or at least justified by the assumption that it has resulted from hard work and skill. In Piketty’s work, wealth is defined as “capital” which comprises largely financial assets of bank accounts, bonds, mortgages, stocks as well as the market value of real estate, particularly housing. These are the elements that banks and financial advisers typically use for determining the personal net worth of individuals after deducting their debts. Income from capital in Piketty’s analysis includes income from the assets in the FIRE sector: interest, rents, dividends, and capital gains respectively from bank accounts, owned bonds, mortgages, stocks and real estate. Of course, it also includes labour income and profits in the real economy. This capital income from wealth is not regarded as meritorious because it is not earned from human effort and skill. Note that the rate of return on capital is a “pure” rate which is the actual rate minus the imputed costs of time spent by the owner in managing the portfolio of financial capital assets (Piketty p. 205). The concentration of wealth in the hands of a small minority also violates the [Rawlsian] democratic principle of social justice that states that any increase in wealth or authority that does not result in a benefit for the rest of the society and particularly, the least advantaged in society, is unjust. Piketty argues further that “There is absolutely no doubt that the increase of inequality of wealth in the United States contributed to the nation’s financial instability. The reason is simple: one consequence of increasing inequality was virtual stagnation of the purchasing power of the lower and middle classes in the United States, which inevitably made it more likely that modest households would take on debt especially since unscrupulous banks and financial intermediaries, freed from regulation and eager to earn good yields on the enormous savings injected into the system by the well-to-do, offered credit on increasingly generous terms (297).” These debts of course are assets for the wealthy and are all part of the financial sector of the economy as opposed to the real sector of the economy. The real economy is about the market value of expenditure on consumption and investment in productive real capital in corporations and businesses such as machinery, equipment, building, and land etc. which is used in the process of production and distribution of goods and services that are purchased and consumed. Piketty’s analysis of financial wealth and his empirical law about the rate of return on capital relative to growth in the national income (which includes employment income, corporate profits before taxes plus capital consumption, net interest, rental income) with a special focus on financial wealth sets the stage for Robert Kuttner’s book and the main theme of the Conference. The theme is about the massive growth in the financial sector of the economy where finance has been transformed from an essential service underpinning relatively less risky investments in the real economy into an increasingly speculative search for increasing financial wealth by trading in financial assets. Piketty is intrigued by the one exception to his two-century pattern: the middle of the twentieth century when economies became more equal (Kuttner 2018, p. 62). Kuttner chronicles the fortuitous events that made the post war economic miracle of “democratic globalism” that lasted for almost three decades after World War II. (Kuttner 2018, p, 11). In this period, financial capital was mostly “direct investment” – that is investment in the real economy – not investment in the financial sector. Much of the investment in the financial sector is speculative because it is in high-risk complex private securitization of mortgage loans, leveraged buy outs, and made by private equity and hedge fund firms taking advantage of tax loopholes. (Kuttner 2018, pp. 39-40) US Democracy 1935 to 1970 The 1935 to 1970 period was marked by an increased share of national income going to wages, a more equal distribution of wage and salary income and greater equality of capital income all of which promoted full employment. US Democracy 1970 to 2010 Starting in 1973, as a laissez-faire capitalism and global monetary disorder returned, unemployment rose and wages came under pressure. Also incomes at the top took off again … taxes were cut, especially for the well-off … and labor protections were reduced. By the roaring 1980s heyday of Reagan, Thatcher and their followers, the income distribution in a number of countries “was already reverting to a pattern that looked more like that of the 1920s (G78 2020 pp. 7,8). In this period governments sought to deregulate capital. The Glass-Steagall Act (1933) was repealed (Kuttner 2018, pp 74-96). By 1995, after 15 years of lobbying, rebranding and publicity campaigns by the banking industry, a non-tariff barrier was understood to mean mainly foreign and domestic financial regulation. US trade diplomacy changed from a token effort to pry open foreign consumer markets for American-made goods to a full-court press to deregulate global banking (Kuttner 2018, p.194). In the US, the political roots of economic inequality were a major increase in corporate power and influence on political representatives and public opinion made possible by insufficient countervailing political power of much of the American public who were largely apathetic, disinterested in politics and possessed of a highly individualistic ideology focused exclusively on consumerism. This culture of the citizenry emerged around the 1960s and was explained by University of Toronto political scientist C.B. Macpherson in his 1962 book The Political Theory of Possessive Individualism: From Hobbes to Locke. “In this culture, individuals see themselves as the proprietor of their skills and owe nothing to society. Their skills are a commodity to be bought and sold on the open market. They demonstrate a selfish and unending thirst for consumption which is considered the crucial core of human nature (Wikipedia on C.B Macpherson).” Similar ideas about individualism were evident in the 1970s and 1980s in the United States. In Gordon Woods’ 1969 book, The Creation of the American Republic, 1776-1789, he stated that the architects of the US constitution were animated by a passion for civic virtue as well as liberty. They prized equality and justice as the ends of government and they framed the U.S. constitution for those purposes. Woods concludes his analysis by claiming that the promise of civic republicanism, which required individuals to balance self-interest against the interests of the community, was betrayed almost immediately by a rapacious individualism that quickly supplanted virtuous citizens’ concern with the common good. Variations on Woods masterful theory appeared in the 1970s and early 1980s and transformed debates about the Constitution in law schools across America that influenced, among others, Barack Obama (Kloppenberg 2011, p. 42).Business interests captured political representatives with propaganda and lobbying through a succession of economically and politically inept presidents and congressional representatives starting notably with the administrations of President Ronald Reagan and continuing with Presidents Clinton, the two Bushes, Obama and now Trump. “Today corporate and financial elites have substantially captured the machinery of the state and neutralized the nominally center-left party as a source of systemic reform. [John Kenneth] Galbraith’s idea of democratic government, trade unions and citizens’ organizations as countervailing forces against private corporate power (a theory proposed in 1952 during the flush of the postwar boom) doesn’t work when corporate power dominates the state too (Kuttner 2018, p. 286).” Globalization Globalization is a phenomenon comprising one or more of the following elements: The volume of international trade as measured by the volume of exports and imports among countries The flow of financial capital (including foreign direct investments) across national bordersA substantial degree of human migration between countries A substantial degree of exchange of ideas and information among countries Hyper means more than normal. There are certain periods in history in which the process of globalization expanded rapidly – that is hyper globalization. Perhaps the first acceleration can be found in the 15th and 16th centuries when several European countries expanded their navies and roamed the Earth conquering, colonizing and developing commercial trade on an unprecedented scale. The Industrial Revolution which involved an accumulated process of self-propelled technological advance was initiated in England during the 18th century from where it expanded towards Continental Europe and a few other areas. Between 1850 and 1914 the process of globalization involved not only international trade but economic migration. During the period from 1820 to 1920, sixty million Europeans emigrated: three fifths to the United States, many others within Europe and a significant percentage to Latin American countries especially Argentina. Internationalization extended to standardization of almost everything from weights and measures to the postal service. The adoption of the gold standard was the expression of this process on a monetary level. Between 1850 and 1914, the process of globalization played a fundamental role in wage convergence between high wage countries in the Americas (including the developing nations of Argentina and Canada) and the low wage labour intensive countries of Europe. The cosmopolitan world of the late 19th and early 20th century was destroyed by World War 1 and the Great Depression. World War 1 created a profound disappointment regarding the democratic system and internationalism. The decade of the 1920s brought protectionism, inflationary spirals and devaluations. And the Great Depression destroyed the confidence in capitalism and competition and placed the State in the center of the economic scene. The most prestigious universities from around the world replaced the Liberal orthodoxy thinking (classical economic ideas) that had supported globalization and embraced the pragmatic ideas of Marx’s communism and Keynesian interventionism. Globalization in terms of international trade and investment took a big step backwards during the two world wars and the interwar Great Depression and to the 1960s when European and Asian countries recovered from the Second World War. Towards the end of the Second World War, work by politicians led to the Bretton Woods Conference of 1944 where an agreement by major governments was made that laid down a framework for international monetary policy, commerce and finance, and the founding of several international institutions intended to facilitate economic growth and reduce tariff and non-tariff barriers to trade. These included the General Agreement on Tariffs and Trade (GATT). GATT's successor was the World Trade Organization (WTO) which was created to manage the trading system. Hyper Globalization 1970 - 2010 Starting in the 1970s international trade and investment expanded greatly and the term globalization saw increasing use by the 1980s. In this period globalization was largely on international trade and investment with little inter country migration compared to that in the 1815 to 1914 period (Venton 2013b). Seven rounds of GATT multilateral negotiations which occurred from 1949 to 1979 concentrated on further reducing tariffs and non-tariff barriers. After the Uruguay round of trade negotiations in 1986 to 1994, agreements on multilateral trade stalled and GATT’s successor, the World Trade Organization, was established. Many countries then shifted to bilateral or smaller multilateral agreements. These included the Canada-United States Free Trade Agreement (CUSFTA) in 1988, the North American Free Trade Agreement (NAFTA) in 1993 and the South Korea-United States Free Trade Agreement in 2011. (Wikipedia 2020 b) Ronald Wright’s New World Order on International Trade Systems Around the world, in both ancient and modern times there have been two main kinds of imperial systems: tribute (or hegemonic) empires in which client states are dominated but not integrated by an overlord and centralized (or territorial) empires which aim to incorporate their subjects into a great whole with a single economy, government, official language and religion. Tribute empires are protection rackets: exploitive, unstable, usually short-lived. So long as wealth and loyalty flow upward, client states are left to run their home affairs which means squeezing their own people to pay the overlord. Subject people receive no benefits beyond survival and are kept in line by fear of a military harrying or a palace coup if the flow of tribute falters. Centralized empires on the other hand see themselves as civilizing and benevolent extending public works, education and citizenship to what Rudyard Kipling called “lesser breeds without the law”. Rome and Britain began as tribute gatherers but later became centralized. During the Cold War, both the United States and the Soviet Union behaved as tribute empires beyond their heartlands, manipulating quasi independent states in Europe, Latin America and the rest of the Third World. If the Aztec empire was a textbook case of a tribute system, things were very different in the Inca Empire which called itself Tawantinsuyu, the “United Four Quarters” and had its capital at Cusco in the highlands of southern Peru. The Incas were great organizers and builders, the Romans of the New World (Wright 2009, pp. 25-26).Almost all western democracies used their wartime experience to build modern welfare states along Keynesian lines in the 1940s and 1950s. Big business, especially in Europe, learned to get along with big governments – with redistributive taxation and social programs such as national health care (Wright 2009, p 193). But General Douglas MacArthur stated in 1951 that “Our country is now geared to an arms economy which was bred in an artificially induced psychosis of war hysteria and nurtured upon an incessant propaganda of fear (Wright 2009, p. 194). Both Cold War superpowers needed worldwide economic empires to pay for their military machines and home prosperity. So, they opted for the cruder type of imperialism where quasi-independent vassal states are dominated and milked of their surplus through compliant local elites. Both Washington and Moscow reinvented the Aztec Empire. The superpowers overthrew baulky regimes, installed puppets, exploited labour and resources yet shouldered no obligation for the welfare of the populace indirectly under their control (Wright 2009, p. 201). By 1974, when President Nixon resigned in disgrace, many Americans had forsaken the view that the fight against communism justified any means. Nixon’s successor was Jimmy Carter, the best intentioned if not the most effective president in recent times. Conservative ideologues such as Irving Kristol complained that there was far too much talk “about the need for Americans to tighten their belts … even resign themselves to an economic philosophy of no growth. It is dangerous and irresponsible” they said. Carter had the bad luck to hold office during the energy crisis and the Iran hostage affair. He lost the 1980 election to the B-actor Reagan who told folks what they wanted to hear: there was lots of oil and no need to turn down the furnace. It was “still morning in America.” (Wright 2009, p. 202). The economic problems of the 1970s – “stagflation,” falling shares, soaring gold – were caused mainly by the Vietnam War and Middle Eastern politics (just as a similar set of problems has now arisen from the war in Iraq) . But the right seized its chance to blame the New Deal and the Keynesian consensus and try to undo them. Conservatives wanted a return to laissez fair capitalism, rebranded as monetarism or Reaganomics. “Their guru was Milton Friedman, a far-right economist at the University of Chicago who revived the ideas of Keynes’ old foe Friedrich Von Hayek. Instead of subordinating businesses to the public good through democratic institutions, as Keynes had argued, Friedman wanted to let the stock market run the world. There was no need to tax and redistribute wealth: so much money would be made that it would “trickle down” to the poor. (Wright 2009, p. 203). What is remarkable is how easily these shop-warn ideas were touted as new. Friedman was not an original thinker but a salesman. His recipe of deregulation, free trade and tax cuts for the wealthy was simply a revival of the late Victorian status quo – the laissez fair chariot race that ended in the wreckage of 1914-15 (Wright 2009, p. 203). Since 1975 says the CIA’s Factbook on the United States, practically all gains in household income have gone to the top 20% of households: While America’s streets filled with beggars, the ratio in salary between the shop-floor worker and a CEO in the top U.S. corporations climbed from thirty-nine to one in 1970 to more than a thousand to one by 1999. When the Cold War ended and the Berlin Wall came down, there was talk of a peace dividend but it was squandered during the Clinton years, partly because of pressure from Republicans – both in Congress and through the Federal Reserve chairman, Alan Greenspan. Once the communist alternative had given up, the full arrogance of monopoly capitalism returned. (Wright 2009, p. 204) The worldwide spread of free trade agreements known as globalization is the modern version of nineteenth century world market dominated by the British empire (Wright 2009, p. 205).Mario Seccareccia on Free Trade in Canada Mario Seccareccia also weighed in on the Conference hypothesis that Canada’s bilateral so-called free trade agreements that were part of the rise in international trading system after 1970 undercut the ability of labour to share in productivity gains. He started with the point that the policy makers who promoted free trade, whether the Canada-United States Free Trade Agreement (CUSFTA) or the North American Free Trade Agreement (NAFTA) argued for a win-win situation whereby both consumers (because of lower prices) and workers (because of more jobs in the export sector) would benefit the three countries. However, it is well known already from Ricardo in the nineteenth century that the “theory” makes sense only by assuming that an economy is at full employment/full capacity, so that an increase in the production of one good can be done only by giving up the production of some other good. As soon as we dispense with that assumption to fit the real world where overall demand is constrained, the international trade principle of absolute advantage rules. (Seccareccia 2019) In this context of absolute advantage trading systems, international trade can become economic warfare, as Keynes pointed out, when nations attempt to export unemployment by subsidizing the exports of goods and services on unwilling neighbours (Kierans 1983, p. 326). By removing the barriers to trade, the theory of comparative advantage predicts two macroeconomic outcomes (1) overall productivity or output per head in an economy will rise over time as a result of increasing specialization and (2) exports and domestic output will rise with trade liberalization; that is total output ought to rise with the growing share of exports because of the changing sectoral composition of output in favour of the relatively more high productivity traded goods. The evidence over the last 50 years from 1970 to 2020 shows that this was a period during which the trade shares (of GDP) rose consistently on average across the three NAFTA countries, with a sharp acceleration during the 1970s, as there was increasing trade liberalization following the collapse of the Bretton Woods system, and then again in the 1990s. On the other hand, overall growth rates continued to decline significantly. Except for some outlier years (mainly in the late 1990s), overall demand among the NAFTA countries was growing ever more slowly (from around 4? % average in the 1960s to around 1? % average for the first decade of the 21st century), with a concomitant long-term rise in the unemployment rate and long-term decline in the growth rate of productivity. (Seccareccia 2019)Seccarecci’s conclusion from the evidence is that the post-Bretton Woods System actually revived what in essence is an inverted form of neo-mercantilist structure, in which the hegemon or core country, the United States (as purveyor of a global reserve currency), must run a chronic trade deficit with the rest of the world. This deficit is counterbalanced by a large constellation of countries seeking to achieve trade surpluses based on a strategy of a hybrid neo-mercantilist model of “export-led growth”, especially the two NAFTA countries owing to their geographic proximity. Instead of amassing precious metals as was done during the old mercantilist era of the seventeenth and eighteenth centuries, the more successful countries in the export led growth game were now accumulating “paper reserves” in the financial centres of the imperial core. The export-led growth model was formalized in the original CUSFTA and NAFTA but had already begun to emerge slowly after the breakdown of the Bretton Woods system in the 1970s at a multilateral level. (Seccarecia 2019) The percentage shares of exports in GDP of the three NAFTA countries (US, Canada and Mexico) during the 1960s averaged 6.4 % but increased to 9.0% in the 1970s and 10.2% in the 1980s as a reflection of hyper-globalization that set in starting the 1970s. After the CUSFTA in 1988 and NAFTA in 1993 matured, export shares increased to 13.6% over the period from 1996 to 2010 (Seccareccia 2019, Slide 4). The important point is that, to be successful in achieving chronic trade surpluses through the competitiveness game, one must pursue policies domestically that suppress wage growth with internal demand growing less quickly than exports. So, trade liberalization starting in the 1970s had two effects. The first was to spread deflationary pressures in the labour market that most directly and negatively impacted unskilled labour because of competition with foreign “cheap labour”. The second indirect effect was to condition macroeconomic policy discourse about fiscal and monetary policies, because of concerns with “competitiveness” and the consequences on a country’s ability to export. Specifically, fiscal tax policy was to cut corporate taxes to create jobs or attract scarce jobs [from foreigners]. This was especially evident during the administration of Prime Minister Stephen Harper [from 2006 to 2015]. Fiscal public spending policy gutted certain social programs, like Unemployment Insurance (UI) which was renamed Employment Insurance. More generally spending was cut by “combating” deficits that arose from cuts in corporate taxation that started back in the 1970s, especially cuts in discretionary spending, such as public investment, transfers to provinces and municipalities, especially during the Chrétien and Martin years from 1993 to 2002 as Ed Broadbent noted at the Conference. (Seccarecia 2019) The 2010 Harper Government “Canada’s Economic Action Plan Report # 6” showed that the impact of corporate income tax reductions on GDP and employment was less than one fifth the impact of government spending on infrastructure. On the basis of Department of Finance estimates economist Jim Stanford showed that a proposed $3 billion of expenditure on infrastructure would generate 53,000 jobs whereas a $3 billion in corporate tax cuts would generated just under 10,000 jobs. The employment multiplier for corporate income tax cuts is so weak (in the Department of Finance estimations) because of the extensive leakages from stimulus injections that occur when government resources are funded through tax cuts to businesses which are already hoarding cash in the finance sector of the economy. The decision to cut corporate taxes by $3 billion rather than invest $3 billion would result in a loss of 43, 000 jobs (Stanford 2011). Global and macroeconomic policies that drive increasing inequality The conclusion is that globalization (i.e. free trade agreements) and macroeconomic policies drive increasing inequality for three reasons. First unregulated free trade enables offshore production to countries with lower wages. Offshore production increases unemployment and/or wage reductions of domestic workers. Secondly, to compete for increasing exports or to attract foreign direct investment to create more domestic jobs, domestic taxation and fiscal policies of reduced corporate taxes require austerity in high-employment impact Keynesian infrastructure spending which further tends to increase unemployment and/or pressure for wage compression to balance the aggregate demand with the aggregate supply of labour. Thirdly, some of the increase in after-tax corporate income resulting from corporate tax reductions leaks into the financial sector of the economy as wealth of the shareholders who do not spend much of it. The Global Financial System Liberalization of international investment enables speculative investments in cross border finance. These can lead to nation state austerity to accumulate foreign exchange reserves in $US to counter the speculation. This effect is related to the breakdown of the global financial system that was contemplated in the meetings of the architects of the post-World War II financial system at Bretton Woods in 1944. The Bretton Woods plan called for exchange rates that would be fixed but were periodically adjustable if fundamental misalignment arose. Debtor nations would be able to borrow money to prevent temporary national financial crises from aggregating to general austerity. There was a third institution whose job was to reconcile relatively liberal trade with decent labor standards and full employment. To that end, discrimination against imports was expressly permitted when necessary to keep down domestic joblessness and there was a commitment to domestic policies to promote high labor standards. (Kuttner 2018, p. 57) The key features of the early global financial system helped nations to pursue recovery programs from World War II free from the deflationary pressure of speculative finance. These features were capital controls and fixed exchange rates. In addition, the US acted as a residual market and source of capital. These features managed to suppress the political power of the New York bankers until the 1970s. After the 1970s New York bankers regained political power under investment liberalization policies (Kuttner 2018, pp 44-48). The IMF was supported with advances that allowed nations to defend currencies against private speculation. In practice the IMF did little and later became a leading instrument of the very austerity it was intended to contain (Kuttner 2018, pp. 44-48). For a generation, the most important legacy of the Bretton Woods system was fixed exchange rates and a constrained speculative movement of cross border capital. (Kuttner 2018, p. 57).Central Bank monetary policies Mario Seccareccia agreed with economist Lars Osberg’s critique that Canada’s central bank has an obsession with the rate of inflation (at the expense of full employment and the wages of labour). In Seccareccia’s view, the monetary policy of targeting inflation leads to inequality between the wages of labour and the interest of the rentier class of bond holders. Specifically, when prices (and wages) start to exceed the target inflation rate, central banks raise interest rates thereby raising the income of the rentiers who earn interest and suppressing wages associated with the suppression of prices. The banks action to increase the interest rate prevents the growth of income of wage earners. In light of this analysis the Conference made Recommendation 3.1:The Bank of Canada should not focus solely on inflation targeting, but as was once the case, should be concerned with high quality employment Seccareccia also identified the key indicators of the rising inequality in the distribution of income between wage earners on the one hand and income of corporate shareholders and rentiers on the other as reflected in the “barbaric” drop in the wage share of GDP from around 70% in 1991 to less than 64% in 2015 (G78 (2020), pp. 11-12). Dani Rodrik presentation: “Globalization and Populism: Is There a Way Out?” US international trade economist Dani Rodrik argues that United States is in a mess because it has failed to sufficiently trade off “hyper globalization” (i.e., the accelerated increases in international free flow of capital and the accelerated increase in unregulated free trade) to maintain sufficient national sovereignty that is essential for democracy in America. He argues that hyper globalization over the past 30 years has disintegrated the social standing of certain groups (e.g. white males without college degrees) and led to growing inequality and a decline in democracy.? The US failed to increase its investment in infrastructure and education and it failed to adopt industrial policies and maintain the progressive tax expenditure policies of the great contraction (circa 1935-45) that could have created better employment and social mobility and prevented what has turned out to be the huge growth in economic inequality in the United States. Their sovereignty over economic management policy was compromised by self-imposed adherence to global governance rules of unregulated free trade and investment liberalization – rules that represented an abandonment of the Bretton Woods philosophy that explicitly recognized that the operation of the global economy should respond to the social and economic needs of individual nations rather than the other way around.? The other way around was the historic adherence to the gold standard that had compromised national sovereignty over economic management in the 19th century and first third of the 20th century that led to, among other things, the formation of the US populist Peoples Party that was active in the period from 1891to 1904.?The failure to make the trade-offs between hyper globalization and the need for domestic full secure employment and shared prosperity has elicited populist movements of two kinds: economic and cultural.? The right-wing populists are angry about the decline in their social status that is associated with the negative economic factors.? The left-wing populists are angry about the bankers and the financial elite who were bailed out in the financial crisis of 2008-2009.??In this light, Robert Kuttner proposed a new Bretton Woods II, which would include a Tobin tax on financial transactions, strict enforceable international labour standards (including the right to unionize) and a new highly regulated world trading system. While Kuttner’s proposal was not presented as Conference recommendation, Conference recommendation 1.1 Deregulation of Finance did address Rodrik’s critique of the self-imposed adherence to investment liberalization that abandoned capital controls. Rein in finance through capital controls, extensive re-regulation and a tax code that is biased against – not in favour of – speculative investment. Further, Kuttner criticized the US acceptances of free trade with Japan, South Korea, Taiwan and later China because their trade was subsidized and sheltered (Kuttner 2018, p. 180). In other words, trade with these countries was not an example of free competitive trade. Joseph Stiglitz says, trade agreements have been neither free nor fair. Making trade fair is far more complicated. (Stiglitz 2006). In any event the purpose of regulation of international investment is to enable countries to retain their sovereignty over domestic economic policies at least for full employment and economic equality. National Micro Neoliberal Economic Policies Panel 2 of the Conference was about the analysis of national microeconomic policies that contribute to growing income inequality and global and macroeconomic policies that contribute to economic inequality. The analysis of national policies is framed by Robert Kuttner’s three points. First, national economies of the United States, Europe and Canada are a mix or hybrid of capitalist and socialist economic systems. Secondly, neoliberal capitalism is simply a recent or modern version of 19th century laissez-fair capitalism. Thirdly, both the capitalist and socialist economic systems must be democratically restrained. Neoliberal capitalismNeoliberal capitalism simply means a new or recent version of laissez-fair capitalism that developed from the mid nineteenth century when market forces became increasingly disembedded from society to post World War II when they were re-imbedded in markets via regulations, a welfare state and a full-employment economy (Kuttner 2018, pp. 57,58). The United States, like most developed economies in the West, is a mix of capitalism and socialism. That is, the mixed economy comprises a system of capitalist economic institutions and a social democracy also called socialism (Kuttner 2018, p. 295). The hybrid economy of capitalism and socialism can be democratically harnessed whereby the capitalists as a political class are constrained for the general good of the democracy. But, in order to have such a democratically-constrained mixed economy, almost everything has to break right. Success requires fortuitous historical circumstances, movements that mobilize citizens against elites and inspired democratic leaders. Though ideas matter, they are no substitute for political movements (Kuttner 2018, pp. xxiv, 295). The analysis is facilitated by defining the capitalist and socialist economic systems in the Canadian context as follows. Capitalism Capitalism is an economic system for organizing the economic affairs of a society that is comprised of four interrelated institutions: private capitalist firms engaged in the production of goods and services for profit. The second institution is markets where these goods and services are sold at money prices and thus distributed amongst the population. The third institution is a monetary system based on bank credit that is integral to the financial sector of the economy where financial assets are traded in markets at money prices. The fourth institution is the government whose role is to coordinate or manage the other three institutions. It is not specified what the purpose of the capitalist economic system is. However, the goal is implicit in the paramount policy objective adopted by the democracies of the United States, United Kingdom, Australia and Canada at the end of World War II, namely growth in real per capita GDP – an objective unrelated to the purpose of democracy (Venton 2020, pp. 216, 221,222). Socialism The socialist economic system includes non-profit collective institutions as well as federal, provincial and local governments. These collective institutions include crown corporations, public sector education, health, social welfare, public transportation organizations that provide useful services and products. According to the Oxford English Dictionary, socialism is an [economic] system of organization based on state or collective ownership and/or regulation of the means of production and distribution for the common benefit of all members of society (Ferguson 2019). The common benefit includes the elements of the common good of all the citizens listed in the previous definition of democracy plus the outcomes derived from the principles of equality, equal opportunity and social justice. The common benefits are the defined in the social contract as I previously described it under the section Democracy: What is It? In a genuine democracy there is a social contract to which all are believed to understand and subscribe to. What are Neoliberal Economic Policies in National Economies? US neoliberal economic policies are about changing the mix of the hybrid economy by reducing the size of the socialist economy and increasing the size of the capitalist economy and deregulation of capitalist firms. Specifically, these include:making major tax cuts that increase disposable income (after tax income) of the wealthy and affluent financed by reduced public spending benefits that disproportionately accrue to the middle class and the poor subsidizing capitalist firms/businesses, privatizing government operations to increase demand for more capitalist firms reducing regulations on capitalist firms in the real sector of the economy reducing regulations on capitalist firms in the financial sector of the economy Neoliberal Economic Policies in Canada Canada was not far behind the US neoliberal capitalism that was launched by the Reagan administration and its antecedents as far back as the early 1970s. The Canadian Federal government’s massive austerity measures in the middle 1990s to balance its budget reflected what political scientist Mat Fodor described as a “solidification of the neoliberal counter revolution in Canada” (Fodor 2013 pp 109-112). Indeed, at the Conference, Ed Broadbent stated most emphatically that the neoliberal philosophy was embraced during the federal Liberal regime of prime minister Jean Chretien and his finance minister Paul Martin, from 1993 to 2002. In particular, Broadbent pointed to the 1995 federal budget which he said accomplished the “biggest cut in social spending in Canada since World War II” (G78 2020, p.6) The antecedents of Martin’s austerity began around 1970 with reductions in taxation since then that included: A 59% reduction in federal corporate income tax rates from 37% in 1970 to 15% in 2012Repeal of the federal estate tax on inheritances in 1971 An average 54% reduction in the 1969 highest marginal personal income tax rates for the 1 % of the highest income earners and a much lower 32% reduction in the rates for middle income earnersLimit of capital gains to 50% of tax rates on employment income and complete exemption of capital gains taxation on owner- occupied principal residences By the 1990s, these reductions and exemptions took their toll in increased national debt and large annual deficits which precipitated the major austerity initiatives in the Martin 1995 budget (Venton 2020, pp 220-221). Conference economist Toby Sanger estimated that, if annual government revenues were today at their 50-year long-term average as a share of the Canadian economy, they would be $50 billion higher. Sanger added that, to make matters worse, the tax cuts made by Liberal and Conservative governments in Canada have largely benefited corporations and top incomes (G78 2020, p. 21).In 2013, I analyzed the distributional impact of Prime Minister Stephen Harper’s Conservative government tax cuts which included a reduction in the GST rate from 7% to 5% and reduced corporate income tax rates. The estimated annual losses in Federal Government revenues in 2011 were $14 billion in GST revenues and $12 billion in corporate tax revenues. The total loss of tax revenues of $26 billion amounted to $1,952 for each of Canada’s 13.321 million households that year. Table 1 on the next page shows the impact of these changes for Canadian households in different income groups – assuming government sector expenditures were reduced in proportion to their distribution in 20061 in order to completely finance the lost revenue of $26 billion – a hypothetical assumption, given the fact that a significant portion of the tax cuts were financed by increases in the federal and provincial government debts.Table 1: Estimated Net Benefit From Conservative Government Tax Rate Reductions and Government Expenditures in 2011Household Income GroupReduced TaxesPer HouseholdReduced ExpenditurePer HouseholdNet Benefit per HouseholdHighest 20% $4,372$1,903$2,469Middle 60% $1,600$2,082-$482Lowest 20% $585$1,635-$1,049All Households $1,952$1,9520Source: Venton 2013 a. Note 1. Source: Canadian Centre for Policy Alternatives (2009) Canada’s Quiet Bargain: The benefits of public spending. by economists Hugh Mackenzie and Richard Shillington who utilized a series of formulae to estimate how the benefits of government spending by all levels of government in Canada (federal, provincial and local) were distributed among Canadian households in different income groups for the year 2006. The large net cost to the lowest 20% income group would have included the reduced expenditures in social housing and expenditures on affordable housing policies of the federal, provincial and local governments that occurred subsequent to the major spending cuts by the Martin government in 1995. Major policies that lead to increasing inequality are the reduction in the progressivity of income tax, reductions of the rate of taxation of corporate income and more importantly the reduction in other taxes such as sales taxes. The impact on redistribution from the less progressive sales tax is great because of its large revenues and, as sociologist John Myles pointed out in his presentation to the Conference, most of the redistribution takes place through government spending of the tax revenues rather than the tax side. In other words, what matters most for fiscal redistribution is the quantity of tax revenues rather than the progressivity of the tax mix itself (G78 2020, p 13). Reversals of the foregoing policies of reducing the progressive taxes are found in Conference recommendation 3.3 Marginal tax rates on the highest incomes, and on capital gains, should be raised substantially and a wealth tax should be introduced. Once current, extreme levels of inequality have been moderated, indirect sales taxes could carry a substantial burden of financing a high level of public services enjoyed by most citizens. Most ‘special interest’ tax loopholes should be closed and restrictions on the use of offshore tax havens should be strengthened and more strictly enforced. Increasing the federal government GST tax rate in 2011 from 5% to 10% would generate more than $35 billion in federal government annual revenues. The resulting combined harmonized GST/HST rate for Ontarians, for example, would have been 18% which is equal to the rate of the Value Added Tax in the UK today. The $35 billion could be used to finance the items in Conference recommendation 2.1. To restore the fraying social contract, Canada must: extend health care coverage to drugs and to dental care; and extend education support to include universal child care – to deal with an egregious source of gender inequity – and lower university tuition fees – to deal with the growing problem of student debt DecommodificationThe briefest summary of the Conference is found in the word decommodification and the phrase financial re-regulation (G78 2020, p. 4). Commodification is defined as the sale of man-made useful goods that are bought and sold typically in so-called free markets at prices based on the forces of supply and demand that are set by the suppliers to clear those markets. In these markets, supply is provided by capitalist firms that operate for the purpose of making a profit. Decommodification is then about the production and distribution of goods and services in the socialist or non-profit sector of the economy where there are no prices or prices which are established as user fees to cover the costs of administering them. Decommodification of Housing Decommodified services, like housing, should be public goods because they are “basic services” to which all citizens have equal access (G78 2020, p.4). In the economic subfield of public finance, urban housing can be viewed as an inherently “public good” that should not be bought and sold in so-called free markets for profit for the following reason. If they were sold in markets, the purchasers would reap “economic rents” in the form of increased appreciation in the market value of the property owing to the scarcity of land in a large city. Such appreciation is not earned by the owner but is generated by the demands of the public at large as well as government policies and other factors that affect the supply and demand for housing in different locations of the city. Moreover, it requires no effort whatsoever by the owner to realize this appreciation. This unearned appreciation represents economic rent or, in other words, a free lunch. It was the view of 19th century classical economists that government regulators should get rid of such free lunches either by price controls, or by nationalizing/owning the land but not the man-made structures, or by taxation (e.g. taxation of capital gains) or by expropriation (Hudson Michael 2008). To put it another way, scarce land has an “intrinsic” value which can be much higher than the market price. The extra between the intrinsic and market price should be shared with all of the public. UN Special Reporter on the Right to Housing, Leilani Farha simply pointed out that steel is a commodity and housing (which comprises land) is not. In her view, it should not be “financialized” (G78 2020, pp. 14,15). In other words it should not be treated as a financial asset to be traded for capital gains, or offered as collateral for a debt to pay for goods and services or investment in other assets such as a second residence or stocks or bonds. Conference recommendation (1.2) addressed her views: Reverse the hyper-commodification of shelter by building more social housing and by heavily taxing unoccupied and short-term rental housing. Presumably building more social housing would enable rents to be lower and affordable for those with the lowest incomes. However, the recommendation does not appear to address private housing as opposed to social housing. Presumably the hyper-inflation in private detached owner- occupied housing would not be identified as social housing and would not be affected by this recommendation. The problem of hyper-inflation in private housing is that it increases the concentration of wealth as outlined in the resolution on affordable housing in the following chart. Background on a Resolution for a National Affordable Housing StrategyWHEREAS since 1987, rising house prices combined with stagnant median family incomes have resulted in huge increases in shelter costs of housing (e.g., for standard two-story detached houses) relative to median pre tax income in cities such as Montreal ( 39% to 55%), Toronto (43% to 60%) and Vancouver (40% to 94%); Source: Wright, Craig and Robert Hogue. 2011. “Housing Trends and Affordability”. RBC Economics Research, November 2011. Charts on pages 4,5 and 6.This phenomenon reflects the increasing concentration of income and wealth in Canada over the last 25 years which has reduced the affordability of housing for low income and some middle-income citizens. At the same time, higher wealth combined with built in tax advantages of the federal, provincial, municipal tax system for the wealthy have contributed to extra demand for housing (e.g., investment in larger interior spaces in detached houses, more opulent status features). Also, the increasing wealth may be used for investment in gentrification of older housing stock in urban cores that reduces the stock of lower quality, less expensive housing. Source: Venton 2013a Decommodification of LabourAt the Conference, Canadian progressive economist Armine Yalnizyan put decommodification squarely on the table and raised the related issues of wage stagnation and precarious work associated with the expanding gig economy (G78 2020, p. 10). The gig economy features non-standard full-time employment that involves fewer hours and lower pay that is implicitly designed to clear the market for labour time. These are included in the following list of approaches of United States corporations for reducing labor income to increase profits (Kuttner 2018, pp. 99-104):Offshoring production to lower wage countriesShifting from standard-full time jobs with benefits to non-standard and contingency-work with fewer hours and lower pay and fringe benefitsShifting to more casual labor and contract work on demand only at a time when required Privatizing government jobs featuring lower pay and less professionalism Non-standard employment arrangements are examples of the commodification of labour time which is bought and sold at prices that tend towards clearing the market. The idea that labour was a commodity like any other, whose price should be set purely by market forces had been discredited by terrible events in the 1930s and by new economic insights (Kuttner 2018, p. 5). In so called free markets, the price of labour may need to decline to clear the markets and realize full employment. Note that there is no such thing as a free market. This is the first of 23 things they don’t tell you about capitalism. Every market has rules and boundaries that restrict freedom to choose. These are not just minimum wages but include immigration control, workplace safety regulations, standard hours of work, license requirements, labour legislation on collective bargaining. All of these are determined by politics, not economics and market forces. (Chang 2012, p.1). In a genuine democracy, labour time is not priced in labour markets. Rather prices are established based on the labour theory of value developed by classical economists with the result that all labour is paid at its value which is a sort of average or standard hourly rate in the community with adjustments related to time requirements for education and training to achieve the skills and qualifications required for the jobs. (Venton 2017, pp 248, 249). Further, in a genuine democracy, based on the principles of equity and social justice, changes in hourly wage rates are equal to changes in the productivity of labour. Capitalist firms that introduce technical changes or capital investments that lead to a reduction in the need for labour will tend to reduce their employment of labour either by not replacing employees who voluntarily quit or who retire or through layoffs or terminations of labour. The mathematical result of the reduced labour is an increase in the productivity of the labour that remains in the firm as shown in Table 1. Table 1: Hypothetical Example of Calculating a Change in Labour ProductivityPeriod 1Period 2ChangeOutput1001000Labour Hours 7064-6Labour Productivity = Output/Labour 1.4281.5625+0.1345The increase in labour productivity of +.1345 represents a 9.85% increase = 0.1345/1.428 = 9.41%. .At the macro level, of the Canadian economy, the wage share of GDP, which is similar to the reciprocals of the Output/Labour Hours ratio in the above table, has fallen from 70/100 in 1991 to less than 64/100 in 2015 according to Conference economist Mario Seccarecica (G78 2020, p. 11). French economist Daniel Cohen, winner of the Prix du livre d’economie, 2012, provides some institutional history on changes in compensation over the last half of the twentieth century in the US. The so-called Detroit treaty signed between the United Auto Workers (UAW) and General Motors guaranteed workers’ salary increases at the pace of productivity gains. Non-unionized workers profited from it too since company directors wanted to prevent unionization where it had not already occurred. Thus, in the 1950s, workers caught up to a good share of their salary compared to office workers. This was the golden age of managerial capitalism, which was incarnated in France in the Thirty Glorious Years of prosperity after the end of the Second World war. Starting in the middle of the 1980s, the process that accelerated inequalities in wages has widened to affect those with college degrees. Individuals who are a priori close in their years of education or professional experience sometimes see their fates diverge in totally unpredictable ways. According to the sector of activity or the firm where they started work, the salary gaps might become considerable even for two graduates of the same school and of the same age. This phenomenon of ‘residual inequalities’ seems to relate to life chance more than to academic achievements. In the course of the 1990s, this process explained two-thirds of the rise in salary gaps. (Cohen 2014, pp. 30, 31) The exhortations for the young to go into debt to attend university on grounds that their lifetime earnings over their careers will be far greater than their classmates who will leave secondary school to go to work have turned out to be wrong. The state is now advised to forgive the debts of the college graduates who are in so-called precariat employment or who are unemployed. Cohen goes on to say that, starting in the 1990s, inequalities broke through another threshold with the arrival of the hyper-class. While the richest one-hundredth of Americans earned seven per cent of the total income at the start of the 1970s, they now earn almost a quarter of the total income in the US. At the start of the twenty-first century they outstripped the share that had been theirs a century earlier, in the Gilded Age. The work of Thomas Philippon on the US and Olivier Godechot in France show that the rise of these inequalities is intimately tied to the role played by finance in the national economy and particularly the “working rich” who receive pay without performance. (Cohen 2014, pp. 30, 31) Conference economist Lars Osberg and others show that the continued tendencies toward the commodification of labour based on supply and demand is linked to unemployment. He argued that the rate of unemployment of 5.8% in 2018 is substantially higher than the stated 4.7% full-employment objective of the federal government of Canada that prevailed in the 1946 to 1975 period. Further, he pointed out that the the full-employment rate objective today should be even lower than 4.7% owing to the following trends that have emerged since 1975 that have generally reduced the average time that it takes for those who are unemployed to find new work: less seasonality, the prevalence of internet job searches, and larger percentage of the labour force in the groups of workers in low incidence unemployment types such as older workers and those who are much better educated. Osberg went on to argue that a high unemployment rate acts as a “worker disciplining device” for holding down wage demands. On the other hand, conditions of full employment shifts power both politically and economically to workers because it gives them a greater range of options. Conference economist Ellen Russell described some of the factors that reduce workers’ bargaining power: the threat effect that employers can easily relocate abroad, threats to workers in precarious employment, high levels of worker personal debt and neoliberal policies such as cutting and limiting access to unemployment insurance that make workers fearful of losing the job that they have. The following Conference recommendations addressed the unemployment, precariat employment and related economic inequality Conference recommendation 1.3 Increase the bargaining power of workers, promote better employment standards for workers in the gig economy, and encourage sectoral bargaining and pay transparency Conference recommendation 3.2 Fiscal policy should not be narrowly focused on balanced budgets, but should use tax structures, and levels, to promote long-term employment and wage growth, to enhance human welfare and to strengthen social solidarity Conclusions Robert Kuttner described the social contract that was implicit in post-World II America as follows. Workers will work hard on the understanding that they will be paid a decent wage for their work and prosperity of society arising from technological change and capitalist dynamism will be shared with workers and the middle class by ensuring that wages and employment income will increase commensurate with productivity in the economy. The goal of full employment in the social contract will be achieved by democratic government tax and fiscal policies including social welfare to the extent required. The story of the lost social contract of the postwar era in the US has two essential elements. One was the liberation of finance; the other was the undermining of labor power Kuttner (2018, p 97). Neoliberal national tax and expenditure polices, and the commodification of housing and labour and the liberation of finance have led to the major increase in the inequality of wealth and income over the last 50 years. The major elements of the social contract call for full employment, the equitable distribution of labor income and, most importantly for democracy, the equitable distribution of wealth to reverse these policies. Since 1970 the return to Thomas Piketty’s empirical law that the rate of return on capital (especially profits of corporations) has exceeded the national income has been manifested in an ever growing increase in wealth in the financial sector in the American economy and advanced nominally democratic economies around the world. As Leilani Farha reports, the sheer volume of wealth, with housing accounting for much of the growth, far outstrips the real economy. The real economy comprises productive capital investment, consumption, exports less imports and government spending on socially useful goods and services. The presence of the financial assets that are wealth, which represents extraction from the real economy, leads over decades to higher debts of governments and stagnant growth in the real economy. The high concentration in wealth is anti-democratic. It is not only useless for the real economy, but it is periodically destabilizing. That is, it tends to speculative investments that result in periodic bubbles that burst and create damage in the real economy in larger-than-normal business recessions. Therefore, it should be either taxed or regulated away. It occurred to me that this invites taxation policies such as the extension of capital gains taxation to owner-occupied housing. Another alternative is to change local taxes to apply separately to the land component (which is inherently a public good) of housing and the structures which are man made and not inherently a public good. Other alternatives are the municipal ownership of land that is leased to home-owners at a capitalized market value of the land component.The two most important elements of the public good of democracy are arguably full and secure employment and an equitable distribution of wealth and income. In the last chapter of his famous 1936 book, The General Theory of Employment, Interest and Money. Keynes pens the line “The outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and income.” (Krugman 2014). The remedies for the fragility of democracy require compulsory voting and compulsory education of the masses for participatory democracy to enable them to have equal access to the process of legislation in lieu of elected representatives. For the last 240 years of the industrial revolution, the inclinations and competencies of political representatives to represent the interests of the large majority that underly the implicit social contract of democracy for the common good have largely been missing. One of the very few exceptions was the period between 1935 when leadership combined with a of circumstances to produce what Robert Kuttner calls “A Vulnerable Miracle” (Kuttner 2018, p 26). That, I would submit, is the exception that proves the rule. October 25, 2020File G78 Policy Conference Report 5 References Canada (2020) Finance, Insurance, Real Estate, Rental and Leasing: Ontario 2017-2019. Government of Canada Chang Ha-Joon (2012) 23 Things They Don’t Tell You About Capitalism. Bloomsbury Press, London Chen James (2020) What Is the FIRE Economy? Accessed Oct 13 Cohen Daniel (2014) Homo Economicus: the lost prophet of modern time. Translated by Susan Emanuel, Polity Press, Cambridge UK Ferguson Niall (2019) Young Americans need to learn what socialism actually means. Globe and Mail, May 18 Fodor Matt (2013) Taxation and the neo-liberal counter-revolution: the Canadian case. In: Himelfarb A, Himelfarb J (eds) Tax is not a four-letter word: a different take on taxes in Canada. Wilfrid Laurier Press, Waterloo, pp. 101-117Freeland, Chrystia (2012) Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else. Toronto, Doubleday Canada G78 (2019) Annual Policy Conference program G78 (2020) Conference Report and Policy Recommendations Global Issues Project (2019) Michael (2008) A Black Agenda Report, The Fictitious Economy. Transcript of a Guns and Butter Radio Interview with Bonnie Faulkner, June 25 https//2008/06/a-black-agenda-report-the-fictitiouseconomypart1 Kierans Eric (1983) Globalization and the Nation-State. The Lost Massey Lectures, Anansi Press, Toronto, 2007, pp. 293-383Kloppenberg James (2011) Reading Obama: Dreams Hope and the American Political Tradition. Princeton, Princeton University PressKrugman Paul (2014) The Euthansia of the Rentier. New York Times, January 22 Kuttner Robert (2018) Can democracy survive global capitalism? W.W. Norton, New York Kuttner Robert (2019) The Stakes: 2020 and the Survival of American Democracy. W.W. Norton, New York Minsky Hyman (2008) John Maynard Keynes. McGraw Hill, New York Myles John (2019) Income Inequality. Presentation of slides and speaking notes to the Group of 78 Policy Conference, Global Markets, Inequality and the Future of Democracy. University of Ottawa, September 28 Rodrik Dani (2018) Globalization and Populism: Is There a Way Out? Presentation at the Rotman School of Management, University of Toronto, December 4. Notes by Peter Venton who attended Rodrik’s presentation on the occasion of the launch of his book, Straight Talk on Trade: Ideas for a Sane World Economy. Princeton University Press, PrincetonSeccareccia Mario (2017) Which Vested Interests Do Central Banks Really Serve? Understanding Central Bank Policy Since the Global Financial Crisis. Journal of Economic Issues Vol. LI No.2 June 2017, pp 341-350Seccareccia Mario (2019) Globalization and Monetary Policy of Targeting Inflation. Power point presentation to the Group of 78 Policy Conference, Global Markets, Inequality and the Future of Democracy. University of Ottawa, September 28 Stiglitz Joseph (2006) Making Globalization Work. W.W. Norton, New York Stanford Jim (2011) How Corporate Tax Cuts Can Actually Destroy Jobs. Posted on the Canadian Centre for Policy Alternatives website January 27, 2011Piketty Thomas (2014) Capital in the Twenty-First Century. Belknap Press of Harvard University Press, Cambridge. Translated by Arthur Goldhammer Venton Peter (2013a) Background on the “National Affordable Housing Strategy” Resolution Presented to the Toronto Region LPCO Policy Prioritization Meeting, November 20. Venton Peter (2013b) Globalization and the Edge of War. Presentation to the Canadian Peace Research Association, Brock University, June 6 unpublished. Venton Peter (2015) A Review of Capital in the Twenty-First Century by Thomas Piketty. Piketty-Thomas-10-pdfVenton Peter (2017) Pope Francis’s Ethics for Democratic Capitalism and the Common Good. In: Westra L, Gray J, Gottwald F-J (eds) The Role of Integrity in the Governance of the Commons: Governance, Ecology, Law, Ethics. Springer Nature Publishing AG, Switzerland, pp. 237-253 Venton Peter (2020) The Political Economy of Managing Without Growth. In: Westra L, Bosselman K, Fermeglia M (eds) Ecological Integrity in Science and Law. Springer Nature Publishing, Switzerland, pp. 213-226Wikipedia (2017) C.B. Macpherson The Political Theory of Possessive Individualism: From Hobbes to Locke Wikipedia (2020) World Trade Organization (WTO) Wright Ronald (2009) What is America? A Short History of the New World Order. Vintage Canada, Toronto, paperback edition with an afterword ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download