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GEORGE: Has our society failed our economy?"

Chris George
Image Credit: Submitted
August 22, 2017 - 12:00 PM

 


OPINION


I think it is time to acknowledge that our society has failed our system of political economy and the growth it requires to thrive.

The Second World War was traumatic for Western economies. Afterward, they needed significant help from governments to get their feet back under themselves. Throughout the 1950s, tax rates were kept high to rebuild treasuries and growth was an anemic 4.2 per cent. Luckily our governments were smart enough to see that lowering tax rates would spur growth, even if we did pile up more debts for our children and their children to pay. Society worked hard to make these decades better for the economy, even cheering as business and government won a huge victory over the scourge of higher wages by sucking the life out of unions. This made 1971 the peak of personal income for all workers, which along with lower taxes freed up more capital on an ongoing basis to spur more growth.

The 1980s saw another great initiative take shape. Voters elected Thatcher, Reagan, and here in Canada, Mulroney. We learned about how "austerity" and lower taxes for those at the top would help the economy. We began to fully embrace the idea that if people weren't coddled by the government that they would work harder for less and do their part to help the economy grow. It is here that society began to actively work against the economy. During the tumultuous early eighties, society created an innovation that was to go on to become an institution; the food-bank. The first one in Canada arose in Edmonton and was touted as a temporary measure to just help people get through the current recession. Food-banks went on to become a serious impediment to lower wages, as people found they could hold out for more money and not immediately starve. Today they feed as many workers as non-workers, allowing many businesses to contribute to growth by paying less than people need to survive. The growth economy successfully overcame this hurdle by turning it into a benefit.

Society now began to find itself more and more at odds with both governments and the economy. The drive to increase minimum wages and the environmental movement were challenges that needed to be overcome if the economy were to continue to grow and prosper. Growth in the eighties was slower than the preceding two decades, even as tax rates continued to fall. All of these social factors must have been conspiring to keep us from reaping the benefits of austerity and trickle down economics.

Growth remained steady through the 1990s. After the recession in the early part of the decade, things started picking up. The Canadian government continued the austerity/tax cutting program and really delivered on debt reduction and the elimination of many government programs. Former Keynesians, the Liberal governments of Chretien and Martin fully embraced the tenets of Hayek that their predecessors had begun to put into play on the side of the economy. The inequality in wealth began to diverge more than it ever had and central banks brought a new tool to the fight; lower interest rates. The vast amounts of capital available to the top of the pyramid and the newly lowered interest rates led to an investment boom. This time it wouldn't be factories or other productive infrastructure, this time the growth was all in finance, technology, and real estate.

Growth in the 2000s was less than half of what it was in the 1950s, even with the crushing of labour, the cutting of taxes, the innovations of austerity and low interest rates, and the new technologies that increased productivity in every economic sector all working towards the goal. Society began another program to oppose growth, commonly known as the tent city. Coupled with "the fight for $15," this looks like the end of the heroic efforts by government and industry to keep wages down and growth robust. In British Columbia they had only managed to depress median family income by 7.4 per cent in the preceding 35 years, so providing alternatives to hunger, exposure and poverty aren't helping.

Luckily we aren't quite at the point of making the tent cities permanent, with amenities like water, pit toilets and garbage disposal, but many are beginning to make noises in that direction. As long as people are still being dehumanized by being forced to strike their tents and spend their days on the streets, few of the workers would see this as a desirable place for them, no matter how many are being forced out of their homes by the wonderful new growth bubble in real estate and the decades of austerity from governments. The age old motivators of starvation and exposure have certainly taken a beating lately, but they are still doing their job of keeping wages down and people motivated to take low paying jobs.

Our society has failed our economy. You'd almost think that we believed the economy was created to serve people. It wasn't. People are here to serve the economy and its time we hopped to it.

— Chris George believes one measure of a just society is found in how well it balances fiscally conservative economics with social responsibility and environmental soundness in all of its living arrangements.


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