We have been doing something unusual in Canada in recent weeks. We’ve been having a substantive debate about the basic direction of our economy. That’s what happens when there are real parties facing each other in Parliament, who have real disagreements about real issues.
In that sense, we can say that the Canadian political system is finally maturing, after a long post-colonial history of elite accommodation. Federal politics used to focus on symbolic issues, and on two legacy parties who alternated in office but shared the same approach to public affairs. Things are different now.
For the time being at least, conservatives have reconsolidated around the Reform Party, currently governing Canada with the former Progressive Conservatives as junior partners. Canada’s progressive majority is reconsolidating around the team that Jack Layton led into Official Opposition last May.
If this holds, you’ll be able to vote next election to maintain the status quo into a second decade. Or you’ll be able to vote to actually change it. Who knew you could do that in a Canadian federal election?
So back to the national debate we’ve been having about our economy. Check out this interesting report issued by the United Nations in the wake of the collapse of the world economy – a collapse that shows little sign of ending any time soon.
Paragraphs 7 to 41, starting on page 16, are a crisp, pointed, and convincing explanation of how industrial economies got themselves into the trouble we’re in. It’s all there. The folly of financial deregulation, leading to the mortgage meltdown in the United States. The folly of misplaced faith in unregulated markets to solve overwhelming economic challenges. And, critically, the folly – and disastrous fiscal, economic and social consequences – of growing inequality.
“In most advanced industrial economies, median wages stagnated during the last quarter century,” the UN report argues, “while income inequalities surged in favour of the upper quintiles of the income distribution. In effect, money was transferred from those who would have spent to meet basic needs to those who had far more than they could easily spend. This created a tendency toward reduced levels of aggregate effective demand.”
So then, the report’s authors argue, for a time “the negative impact of rising income inequality on aggregate demand was largely offset by increasing indebtedness of households, especially in the United States and some other developed countries such as the United Kingdom. But the high level of indebtedness was not sustainable. ... In advanced countries such as in the European Union social protection systems compensated for stagnating income in a context of high unemployment, but were accompanied by increasing public deficits and public debt.”
Prime Minister Stephen Harper claims that Canada stands aside from all of this. In truth, income inequality in Canada has returned to its 1920s levels. In consequence, household debt is higher in Canada than in the United States. Our economy is paying the same price other advanced economies are paying for the same folly. But we have developed our own special way of masking the issues, for as long as China is buying. We are selling the world ever more raw unprocessed natural resources – our rocks, our trees, and our energy (carbon and hydro-electric).
Is this the road we want to stay on? Or do we want to set a different course, towards a greener, more diversified, value-added economy whose benefits are much more widely shared?
There is a debate fit for a national Parliament.