With today’s fiscal update, the Trudeau government has really shown itself to be at the forefront of global left neoliberalism. Taking nearly all his cues from his business-dominated Advisory Council on Economic Growth, the Finance Minister announced a new Canada Infrastructure Bank as the centerpiece of the fiscal update and the Liberals’ economic strategy. Don’t believe the fanfare that is bound to come from the Canadian and international press, this isn’t anything progressive. It’s a new elite consensus that might become one of our main exports, pumped via virtual pipelines across the globe.
Here’s how Dominic Barton, the managing director of McKinsey Global, one of the world’s largest business consulting firms and head of the Advisory Council, framed the impetus behind the new bank:
Barton said infrastructure aimed at improving productivity will be of huge interest to foreign investors in search of steady returns with record low or negative interest rates in many parts of the world. “Infrastructure is the new fixed income,” Barton said in a speech over dinner at the conference. The mix of public and private capital has the potential to “jolt the system.”
Note that while the fiscal update makes all the right noises about First Nations, the fight against climate change or public transit, the motivation for infrastructure investment is squarely to provide global investors with better returns in the new, low-growth, low-interest-rate reality.
Take a look at the main chart Morneau provides:
The great rentier give-away | Michal Rozworski
The Liberals plans for the economy are not just about being business-friendly today but about integrating government with business ever further, in ways harder for future governments to unwind. Theirs is a tweaked neoliberalism for an age of stagnation. The mantra remains the market and the state is there to support it.
Here’s the broad strokes of how the Liberals’ plans are shaping up on economics.
Freeing trade and expanding foreign investment.
First things first: today’s trade deal are less about trade, which is already largely free. For instance, while Canada and the EU just signed CETA, they rank 13th and 5th respectively on the World Economic Forum’s measure of the absence of trade tariffs. The Liberals have been immense champions of this deal and the Trans-Pacific Partnership (TPP) that links the Pacific Rim countries.
So why are these deals so important? They help cement pro-business regulation not only now but in the future. At 1000s of pages, the main thrust of an agreement like CETA is not lowering tariffs; trade is complex, but not that complex. The bigger aim is to entrench rules that can be used to put limits on and circumvent democracy. Today’s free trade agreements are not mainly about removing regulations for business but placing new regulations on government.
The Liberals are also planning to ease foreign investment rules, clearly signaled in last week’s update. The problem isn’t that liberalized capital is foreign, it’s the lack of control. Here is another example of the government abdicating its presence as an democratic check on major economic relationships. Relaxed rules will put more communities at the whim of investors who can fly as quickly as they land. And freely-moving capital has its twin in unfree labour…
Keeping temporary workers temporary.
Rather than revamping migrant workers programs in the name of justice—crucially, status on arrival with a clear path to citizenship—the Liberals are continuing and expanding the shameful temporary worker programs of the Harper government. Keeping migrant workers tied to one employer for the length of their contract opens the door to every possible violation of labour rights. Without the possibility to exit a contract, workers are at the mercy of bad bosses.
Rather than forcing employers to treat all workers equally and expand immigration, the Liberals are carving out more space for exemptions, whether for low-wage agricultural and service workers or high-end, fly-by-night professionals, something just introduced in the fall update. Here too, business gets the upper hand. Equal rights and status for migrants could revitalize entire communities, grow the labour movement and boost local economies. The Liberals would prefer to give business one more way to keep all workers in line by limiting the rights of some.
Privatizing and privatizing some more.
I wrote last week about how letting private investors fund infrastructure is effective privatization. I’ll just add that there is a whole cycle involved. Take a look at this helpful chart which shows how much the government will have to spend on this massive infrastructure program.
Five out of the next six years, they’re spending nothing! Why would a massive new infrastructure program cost the government effectively nothing after the first year? Not only will private investors be largely building and operating the new roads and utilities, existing public infrastructure can be sold off to the same private investors to get the government’s seed capital. Major airports have cropped up on the list of object first on the auction block. Rather than operate for public benefit, they will now be run for private profit.
Public infrastructure is easy to sell and very hard to buy back—just ask the British, who would love to have their public railways (by a 60% majority) or post service back. Once more, privatization will benefit business not only today, but bolster its hand far into the future.
Rationalizing the welfare state.
The federal Liberals are learning lessons from their Ontario counterparts who have perfected the art of reorganizing and repackaging existing benefits as exciting new programs linked to popular left demands: a single process for grants is now free tuition! Sure, one process or one benefit is better than ten but other than simplicity there is often little more to it than high-flung rhetoric. And while we’re just hearing the first whispers of it federally, talk of basic income falls under this rubric and could be much more dangerous, paving the way below poverty-line benefits to be normalized for a long time.
Keeping a lid on wage growth.
Both Justin Trudeau and his finance minister Bill Morneau have recently expressed an odd kind of “get-used-to-it” empathy with precarious workers. The best they can offer are palliatives, mostly re-training. What they won’t say is that the problem is much broader: it’s not just that jobs are more temporary—in fact, the amount of the actual temporary work may barely be rising—they are generally crappy. And the Liberals will not do the one thing that would help the most: put pressure on employers to raise wages. A federal $15 minimum wage and pressure on the provinces would be a relatively simple start.
Running deficits.
This plank of Liberal policy gets all the press, but it is really one of the least significant. The Liberals are propping up demand a bit in the next couple of years, but the neoliberal project of remaking the state in the interests of business, started decades ago and continued valiantly by Chretien, Martin and Harper, remains unchanged.
Putting the pieces together.
I’ve long argued that the Liberals are at the leading edge of rebuilding a centrist, neoliberal consensus for a low-growth world
read the rest......
Trudeau’s economic model is clear and it is not good | Michal Rozworski