Sunday, March 27, 2011

Capitalism Needs Public Spending

As the United States and UK pull back on government spending they are cutting their noses to spite their face. Austerity measures caused by bank and corporate bail outs as a result of the financial crisis of 2008 are not going to create jobs, nor are they going to increase productivity.

They are counter productive. Modern capitalism requires government to spend on infrastructure in order to function as this analysis by Michael Hudson points out.

The logic of public investment is to upgrade economies and make them more competitive

Nations that today have the highest incomes recognize that rising productivity should enable costs and prices to fall – and that public investment is needed for this to occur. U.S. development strategy was based explicitly on public infrastructure investment and education. The aim was not to make a profit or use its natural monopoly position to extract economic rent like a private company would do. It was to subsidize the cost of living and doing business – to make the economy more efficient, lower-cost and ultimately more fulfilling to live and work in.

At issue is the idea that capital investment is inherently private in character. The national income and product accounts do not recognize government investment even in infrastructure, to say nothing of subsidies for the research and development that led to much space and aeronautics technology, information-processing and the internet, pharmaceuticals, DNA biology and other sectors that enabled private companies to make hundreds of billions of dollars.

Simon Patten, the first professor of economics at the nation’s first business school – the Wharton School at the University of Pennsylvania – explained that the return to public investment should not take the form of maximizing user fees. The aim was not to make a profit, but just the reverse: Unlike military levies (a pure burden to taxpayers), “in an industrial society the object of taxation is to increase industrial prosperity”[7] by lowering the cost of doing business, thus making the economy more competitive. Market transactions meanwhile would be regulated to keep prices in line with actual production costs so as to prevent financial operators from extracting “fictitious” watered costs – what the classical economists defined as unearned income (“economic rent”).

The U.S. Government increased prosperity by infrastructure investment in canals and railroads, a postal service and public education as a “fourth” factor of production alongside labor, land and capital. Taxes would be “burdenless,” Patten explained, if invested in public investment in internal improvements, headed by transportation infrastructure.

“The Erie Canal keeps down railroad rates, and takes from local producers in the East their rent of situation. Notice, for example, the fall in the price of [upstate New York] farms through western competition” making low-priced crops available from the West.[8] Likewise, public urban transport would minimize property prices (and hence economic rents) in the center of cities relative to their outlying periphery.

Under a regime of “burdenless taxation” the return on public investment would aim at lowering the economy’s overall price structure to “promote general prosperity.” This meant that governments should operate natural monopolies directly, or at least regulate them. “Parks, sewers and schools improve the health and intelligence of all classes of producers, and thus enable them to produce more cheaply, and to compete more successfully in other markets.” Patten concluded: “If the courts, post office, parks, gas and water works, street, river and harbor improvements, and other public works do not increase the prosperity of society they should not be conducted by the State. Like all private enterprises they should yield a surplus” for the overall economy, but not be treated as what today is called a profit center (loc. cit.).

Public infrastructure represents the largest capital expenditure in almost every country, yet little trace of its economic role appears in today’s national income and product accounts. Free market ideology treats public spending as deadweight, and counts infrastructure spending as part of the deficit, not as productive capital investment. The only returns recognized are user fees, not what is saved from private operators incurring interest charges, dividends, other financial fees, as well as high executive salaries.

As Patten showed, the relatively narrow scope of “free market” marginal productivity models applies only to private-sector industrial investment, not to public investment. (What would the “product” be?) The virtue of this line of analysis is to point out that the alternative is to promote a rentier “tollbooth” economy enabling private owners of infrastructure or other monopolies to charge more than the “marginal product” actually costs. Stock and bond markets increasingly aim at extracting economic rent rather than earning profits by investing in tangible capital formation to employ labor to increase output, not to speak of rising living standards.

In the United States, Alaska and Wyoming pay their residents a “citizens’ dividend” out of their resource rent receipts. Alaska’s Senators Stevens and Murkowski, as well as its Governor Sarah Palin, did not believe that it is proper for government to upgrade, educate and provide the population with social services. So Alaska has used its oil revenue to pay each resident a few thousand dollars – and to abolish property taxes. This policy leaves Alaska among the lowest-ranking states in terms of literacy, education, support for the arts and technology, while avoiding progressive taxation.

The state’s neoliberal anti-tax, anti-government ideology condemns its residents to send their children out to work rather than educating them and investing in their improvement.

It is a bankers’-eye view of the world, not that by which Britain, France, Germany and the United States built themselves up to global leadership positions. The focus is on financial returns, not on lowering the cost of living and production or upgrading the quality of work. It views government spending as a deadweight cost, not as productive investment.

Alberta Deficit Created By Auto Bail Out

Not only is the deficit in Alberta not about overspending on infrastructure, which had been put on a decade long hold as the result of the cuts and privatization of the Klein era, but because of royalty holidays to big oil and the corporate bail out of the Auto-Industry.

The final chapter in the stormy marriage and divorce of Daimler-Benz AG and Chrysler Corp. will provide a $1.5-billion (U.S.) windfall to the deficit-ridden federal, Ontario and Alberta governments.

Daimler AG as the maker of Mercedes-Benz cars is now known, will pay the three governments $1.5-billion to settle a dispute over 11 years of Chrysler taxes that began in the mid-1990s and lasted until Daimler unloaded the No. 3 Detroit auto maker in 2007.

The bailouts of Chrysler and General Motors Corp., which total about $12.7-billion, were partly responsible for the record-setting deficits the two governments racked up to fight the recession. Those governments are still fighting to stem the red ink.

The federal deficit for the April-December, 2010, period was $27.4-billion (Canadian). Ontario is on track to post a deficit of $18.7-billion in the fiscal year that ends March 31. Alberta, meanwhile, tabled a budget last week that forecasts a deficit of $3.4-billion for 2011-12.

So not only did Chrysler get tax breaks from the Liberal and Conservative Federal governments and then get bailed out but they avoided paying taxes for over a decade.

Corporations don't need tax breaks, they take them anyways whether you give them to them or not.

If a Canadian fails to pay their income tax over ten years they not only go to court they go to jail.

But not if they are a corporation.

Whose Canada


This election the issue is simple; whose Canada do you want?
Yours or Harper's.
He re-branded the government and now he wants to re-brand Canada as his.

Saturday, March 26, 2011

Jack Layton For PM

There is no question in Canadians minds who is the most trusted and respected party leader in Parliament and it's Jack Layton of the NDP. Therefore while Harper and Iggy were parcing the nuances of what is or is not a coalition, Jack announced he wants to be YOUR PM.

In this election, you can elect a Prime Minister you can count on. A Prime Minister who will help your family get ahead. Someone who will put aside the political games and work with others to get things done.

I’m running to be that Prime Minister.

Because I want to bring some Canadian leadership to Ottawa. The leadership I saw in my Dad. He was a Progressive Conservative cabinet minister. And he taught me the value of bringing people together. Of seeing the good in everyone. Of building a better country for our children and grandchildren.

My Dad and my Mom were committed to leaving this country better off for their kids. That’s a value I share. It’s a value that so many Canadians share.



And this election he could very well have a chance to win the position. He kicked off his campaign outlining what Canadians want and what he and the NDP can deliver, either as a majority or minority government. And he did it Obama style.

With the Liberals and their leader in terrible shape in the polls, Jack could come up the middle. He has made it a clear choice between himself and Harper's Conservatives.

He also made it clear he was Canadians best choice as a Canadian leader, Mr. Harper of course influenced by Republican strategists from the U.S., Mr. Ignatieff being a dual American Canadian citizen, and Elizabeth May of the Green Party having been born in the U.S.

Subtle but effective sideswipe that.

Contempt

It was a motion whose time had come, perhaps not soon enough. The Harpercrites have been in contempt of Parliament since they first became a minority government in 2006, it just finally caught up with them. And they have not been scandal free since. Once in power they threw out the last vestiges of their Reform Party platform for the expediency of maintaining power at all costs.They had become the very Mulroney Conservatives that Reform had been formed against.

Canadian Government, Beset by Scandal, Collapses

C. E. S. Franks, an authority on Canadian parliamentary practice who is professor emeritus of political science at Queen’s University in Ontario, said it was the first time a Canadian government had been found in contempt of Parliament. Eight individuals have been found in contempt, he said.

Professor Franks said the Conservatives deserved credit for their economic record and for governing “reasonably competently,” but he was very critical of the government’s approach to politics.

“It’s treated Parliament like the enemy,” he said.

Walkom: Yes, contempt of Parliament does matter

But there is a bitterness to this prime minister that has infected his entire caucus. All politicians are partisan by definition. Harper’s partisanship is over the top. He not only disagrees with Canadians who are liberals and left-leaners. He seems to despise them.

All of this was manifest before he took over the merged Conservative Party. In those days, he disparaged what he called the moral failings of liberals, calling them nihilists bent on the destruction of western values.

In power, his rhetoric was often more restrained. But as former nuclear regulator Linda Keen found, those he believed tainted by Liberalism could expect no mercy. Keen was axed in 2007 because she insisted that Canadian nuclear plants have back-up power systems — systems we now know that Japan’s ill-fated Fukushima reactors famously lacked.

But her real sin was to have been appointed to by a previous Liberal government. That, Harper suggested, made her inherently untrustworthy.

Opposition MPs and others who had the temerity to disagree with the government were given equally short shrift. Canadians who questioned Ottawa’s handling of Afghan prisoners were treated as traitors. Richard Colvin, the veteran diplomat who testified to this mistreatment, was savagely and personally attacked.

At one point, when it looked like his government might be defeated, Harper simply shut down the Commons.

And while Harper flippantly dismisses the contempt charges against his governance and government, he continues to abuse his power by claiming as the outgoing PM that any form of Minority coalition government is 'illegitimate', in particular the one formed in 2008 after the fall election when he and his government refused to accept there was a recession and that they had to do something about it.

"Canadians need to understand clearly, without any ambiguity: unless Canadians elect a stable, national majority, Mr. Ignatieff will form a coalition with the NDP and Bloc Québécois," Harper said. "They tried it before. It is clear they will try it again. And, next time, if given the chance, they will do it in a way that no one will be able to stop."

"Imagine a coalition of arch-centralists and Quebec sovereignists trying to work together," Harper said. "The only thing they'll be able to agree on is to spend more money and to raise taxes to pay for it. We've all got too much at stake. Now is not the time for political instability."


Of course that was 2008 and he was in power. In 2004 then Liberal PM Paul Martin had a minority government and a coalition was formed by Harper, Duceppe and Layton against the Martin government. It was legitimate and legal then but not now says Harper.

Harper wanted 2004 coalition: Duceppe

Duceppe says Harper lying

OTTAWA - Stephen Harper is warning that the Liberals will form a coalition with the NDP and Bloc Quebecois if the May 2 federal election results in a minority government. But when he was Opposition leader, Harper didn't seem to mind the idea of governing with the support of the NDP and Bloc. Here's the text of a letter Harper and his fellow opposition leaders sent to the Governor General in 2004:

September 9, 2004

Her Excellency the Right Honourable Adrienne Clarkson,

C.C., C.M.M., C.O.M., C.D.

Governor General

Rideau Hall

1 Sussex Drive

Ottawa, Ontario K1A 0A1

Excellency,

As leaders of the opposition parties, we are well aware that, given the Liberal minority government, you could be asked by the Prime Minister to dissolve the 38th Parliament at any time should the House of Commons fail to support some part of the government's program.

We respectfully point out that the opposition parties, who together constitute a majority in the House, have been in close consultation. We believe that, should a request for dissolution arise this should give you cause, as constitutional practice has determined, to consult the opposition leaders and consider all of your options before exercising your constitutional authority.

Your attention to this matter is appreciated.

Sincerely,

Hon. Stephen Harper, P.C., M.P.

Leader of the Opposition

Leader of the Conservative Party of Canada

Gilles Duceppe, M.P.

Leader of the Bloc Quebecois

Jack Layton, M.P.

Leader of the New Democratic Party


Harper has always had contempt for Parliament, when he was a Reform MP and even more so as spokesman for the right wing business lobby NCC, but no more so than over the past five years in power when he acted like he had a majority not a minority.

Now he tries to run an election campaign to become King of Canada with a Conservative majority that does not reflect the values of the vast majority of Canadians.


Coalitions OK say Conservatives

For the bombing of Libya

Canadian general to take command of NATO mission in Libya

But not to be government.

To be sure, the Harper Conservatives are already circulating talking points to their candidates that refer disparagingly to the "coalition opposition." And you can expect to hear more about the evil coalition as the election campaign unfolds in the weeks ahead.


Why a Canadian?

First because we were the only country in NATO whose Parliamentary parties, left, right, centre and separatist voted unanimously to support the No Fly Zone.

Second because the Canadian General is also a NORAD commander, making this still an American mission.

Bouchard, a native of Chicoutimi, Que, had been deputy commander of NATO's joint forces command, based in Naples, Italy. The former Canadian air force commander has been a member of the Canadian Forces since 1974 and graduated as a helicopter pilot in 1976. He has worked at key posts within Norad operations and has served at U.S. military bases on several occasions. He was awarded the United States Legion of Merit in 2004


And well, because we are after all polite....even in war.

Two Canadian CF-18 fighter jets took part in a mission over Libya on Tuesday morning, but returned to base without attacking their target because the risk of collateral damage was too great.

"Two CF-18s were tasked for a ground attack mission against a Libyan airfield," Lawson told a news conference in Ottawa.

"I can confirm for you that the air crew returned not having dropped their weaponry. Upon arrival on the scene of the target area the air crew became aware of a risk they deemed too high for collateral damage."

Lawson said the risk was not related to any threat to the CF-18s, but rather potential damage to civilians or important infrastructure such as hospitals, on the ground.

Lawson said the decision was in compliance with the rules of engagement that NATO forces have been given, and proves "the system works."

PMO PO Danny Williams

Slightly overwhelmed by all the election coverage yesterday was news that Danny Williams was not going to attend the crowning of the new leader of his provincial PC party, his replacement. Party brass all were shocked and dismayed.

Shocked that Williams won't attend tribute: premier


While some have suggested it was because of this;

Former aide to Danny Williams backs away from oil board


I think this had more to do with it

Tories, Quebec ink oil exploration deal

The Conservatives are getting rid of a long-standing irritant with the Quebec government just days before an expected election call, signing a deal that opens the door to oil exploration in the St. Lawrence and fuels hopes for economic development in poor parts of the province.

The agreement to be unveiled on Thursday in Gatineau, Que., will lead to exploration for billions of barrels of oil and natural gas in the Old Harry field in the Gulf of St. Lawrence, which straddles Quebec’s boundary with Newfoundland.

A 1967 Supreme Court of Canada ruling upheld the federal government’s ownership of offshore resources.

A joint secretariat will be set up to oversee federal-provincial responsibilities regarding the management of the offshore resources and an independent tribunal will mediate potential conflicts, including an overseas boundary dispute between Quebec and Newfoundland and Labrador. Millions of dollars in royalties are at stake.

The Old Harry site straddles a boundary defined in 1964 by Quebec and the four Atlantic provinces. The boundary places most of the Old Harry oil and gas reserves on Quebec’s side of the line. Newfoundland and Labrador is challenging the boundary, and the announcement gives the province an equal say over the makeup of the tribunal.


Another interesting point about this deal was that it was done in private, days before the election call, and it resulted in this....

Federal Tories buy the silence of the Quebec Liberals

And it was hard to believe Christian Paradis, who is Prime Minister Harper's Quebec political lieutenant as well as natural-resources minister, when he said Thursday's agreement on the Old Harry offshore oil and gas deposits had nothing to do with the federal election.

It was easier to believe Quebec's natural-resources minister, Nathalie Normandeau, who said that "never have the planets been so well aligned" for what looked like the hasty settlement of a 12-year-old difference between Ottawa and Quebec.

And the agreement on Old Harry is only one sign of an apparent political arrangement between the federal Conservatives and the Quebec Liberals.

The arrangement was apparently made between Harper and Premier Charest in a private meeting last week, when the prime minister came to the provincial capital to announce an airport expansion.

In the deal, the Quebec Liberals would refrain from criticizing the Conservatives, the party most likely to form the next government, possibly a majority government, until the federal election is over.In return, the Conservative government would sign agreements giving Quebec more money.

On Wednesday, Charest defended the Harper government against criticism from the sovereignist parties in Ottawa and Quebec City over the absence of a harmonization settlement in the federal budget.

And he said that in this federal campaign, h...e will not publish an open letter asking the parties to state their positions on issues of particular concern to his government, as he had in the past. Charest said "the idea of a letter is a bit passé," even though his intervention in the 2008 campaign to criticize the Conservatives for culture spending cuts had proven effective

Friday, March 25, 2011

1984 And Now Election 2011

Warren Kinsella who used to be a Liberal Party Insider, and of course therefore a HACK, now works for the right wing conservative mouthpiece; Quebecor/SUN media, so today he declares that the election campaign is over before it begins.

Nineteen Eighty-Four wasn’t just the title of a good book by George Orwell.

It’s also a useful reminder of what may be about to happen to the Liberals and NDP in the coming election campaign.

You remember: Sept. 4, 1984, and Brian Mulroney sweeps to a massive parliamentary majority. The once-great Liberal Party — the Natural Governing Party, no less — is reduced to a paltry 40 seats.

Conservatives, up to 43%. Liberals, down to 24%. NDP, unchanged at 16%.

And if you just look at voting preferences of those absolutely certain to trek to polling stations, according to Ipsos, the Cons go up to 45%, and the Grits slide to 23%.

To put it in context, that gap is perilously close (or identical) to the 22 points that separated Mulroney and John Turner in 1984’s Gritterdammerung. Result: Tories, 211 seats, NDP 30 seats, and Grits the aforementioned 40.

So, is Michael Ignatieff this generation’s John Turner?

Of course he is but the political differences of the times are also significant. And Kinsella's prognosis is also questionable.

First in 1984 there was a great debate, a big issue that the election was to be fought over; nothing less than Free Trade.

There is no big issue in this election.


Second there was the appointment of Liberal hacks to the Senate just before the election call, which gave Mulroney his chance to defeat Turner in the debates when he challenged him to simply not appoint the Liberal hacks to the senate. "You had a choice Mr. Turner'. It was the zinger in the Leaders debate.

The NDP, the CLC trade unions and the Left had made Free Trade the issue for the election and had for two years prior. The Liberals seeing an issue which carried votes, opportunistically decided to become Anti-Free Trade hoping to get votes from the Left as the only Natural Governing Party.

In the Leaders Debate the NDP Leader Ed Broadbent carried the day as statesman, while Mulroney and Turner went at it hammer and tong. It was Mulrony who got in the election zinger.

What Kinsella fails to aknowledge is that in 1984 the NDP got enough seats, in fact increased their seats to 30, that had there been a minority government it would behoove them to ask for their support.

And even more importantly in 1984 there was NO Bloc Quebecois. In fact the BQ would originate out of the Mulroney Conservative government, a fact the current Conservative Government would like you to forget, even as they carry on in Mulroney's footsteps when it comes to gaining support in Quebec.

The Conservatives and Liberals want to have two party politics, ala the Republicans and Democrats in the US ,Conservatives and Labour in the UK.

Unlike the 1984 election this election is not about three parties but four parties. Three in English Canada and an additional Quebec based Party. By having four parties, with Quebec solidaly BQ,


The Harper Conservatives have decided to focus on the rural township votes, as they have in Western Canada, that is where their base is.

The urban cities is where the fight goes three ways, if not four. The NDP is currently more popular in Quebec than the Liberals, a historic first.


This election is about Leadership, and that is the only thing it has in common with 1984, Turner was weak, Mulroney was brash and Broadbent was conciliatory.

With the BQ there will be no repeat of 1984, we will once again have a minority government. But will it be Conservative or Liberal? The NDP is then the best place to park your vote, since Layton shows he is PM material, even more that his opponents, and if Harper has any chance so does Layton, even if it is as Leader of the Opposition.

The Liberals under Ignatieff, as they were under Turner, are toast and on that Kinsella and I agree.


Michael Ignatieff was once hailed in Liberal circles as the second coming of Pierre Trudeau. Now his challenge is to shake off the perception he's an outsider interested only in adding another ornament to his well-adorned resume.

The Reason For Alberta's Deficit-Big Oil

Just like back in the nineties when Alberta gave big tax breaks to big oil, we went into a deficit. And Deja Vu if it didn't happen again.

Canadian Energy Research Institute (CERI) paints a picture of declining production and royalties from Alberta's natural gas industry for the rest of the decade, but sharply rising oilsands royalties.

Royalties from natural gas and the oilsands totalled more than $8.8 billion in 2009, but just over $4.6 billion in 2010 -a big cause of the provincial deficit.

"The government is running a province which assumes they will take in $6 billion to $8 billion a year, and this is not happening," CERI CEO Peter Howard said.

Premier Ed Stelmach has said the province aims to balance its budget by 2013. CERI's estimates suggest that will be a challenge if they are depending on royalties.

The institute estimates Alberta will be back to 2009 royalty levels by about 2016, when oilsands royalties will be more than $7.2 billion, with just $1.1 billion coming from natural gas.



Yep Big Oil gets Royalty breaks that resulted in the deficit and schools get cuts!

Alberta Premier Ed Stelmach says school boards may have to "hold some of their labour costs low" in coming years as the province looks to rebuild its coffers, but critics blame the Tory government for looming teacher layoffs.

Why Canada is in Libya; F-35

Even Harper's original Political Military advisor Derek Burney questions Canada's role in bombing Libya. Burney is also a lobbyist for the Military Industrial complex in Canada so if he doesn't know why we are bombing Libya he is either being disingenuous or he no longer has the confidence of the PMO.

The man who once led Stephen Harper's transition team is questioning the government's military entanglement in Libya.

"We have jumped into Libya with our eyes wide open but does anyone know where it will lead or why Canada is so directly engaged?" Derek Burney, who headed the transition team when the Conservatives took power in 2006, writes in a new paper for the Canadian Defence & Foreign Affairs Institute.

"The emotions and humanitarian instincts to do 'something' are understandable but so, too, are arguments advocating prudence."

Burney, one-time chief-of-staff to prime minister Brian Mulroney and former ambassador to the United States, even wonders whether the Harper government committed air power to Operation Odyssey Dawn to regain global ground after last year's embarrassing loss in the bid for a seat on the UN Security Council.

"Is it because we were snubbed for a Security Council seat and want to re-establish our credentials for 'peacekeeping'?

"Is it because we regard ourselves as an architect of the (UN) Responsibility to Protect concept?" which obligates states or the international community to protect civilian populations.


Well the straight forward anwser is that it might have something to do with the Harper Government (c)(tm)(r) wanting to buy F-35's which are stealth combat planes, not really what Canada needs for Defense of its claims to Arctic sovereignty, or for its defense of North America. But certainly what would be needed to change our role from Peacekeeping, to 'peace-making' which is simply Orwellian Harper speak for war making.

Only a handful of fighter interceptors remain of the many U.S. and Canadian squadrons once available. NORAD’s founding raison d’être, standing by to fight a vast air defence battle, is also gone. Long gone. Those arguments for retaining NORAD are not strong, though, and it is even harder to argue that NORAD is functionally essential for Canada-U.S. defence co-operation. In other words, Canada does not need to be part of a binational aerospace defence command. Nor is a binational homeland defence command necessary.

As Canada uses its outdated CF-18's to bomb Libya it gives the Harpocrites justification to say that they need to upgrade to F-35's.

The other reason is that it is good for his masculine tough guy image. Just as he did in 2006 after first getting elected, he donned his Khaki's and went to Afghanistan for a photo op.

And with a pending federal election being a tough guy internationally helps his tough guy image at home. Of course that means he probably won't be wearing sweater vests this election campaign, unless they are Khaki.