No Man Is A(n) (Economic) Island

There is a bit of gallows humour that goes something like this:

Q: What is the difference between a recession and a depression?
A: A recession is when your neighbour loses his job; a depression is when you lose yours.

Yesterday, the firm I work for laid off some 300 people. I worked with at least nine of those people. I consider three of them to be friends.

Somehow it feels like a depression to me.

The Great Right-Wing Media Elite Conspiracy of '09

I am getting tired of the consistent right-wing stance of the Canadian media. Everyone -- including that bastion of left-wing liberalism, the Canadian Broadcasting Corporation -- seems to be taking the side of York University in the strike which has gone on for three months.

You don't believe me? Consider this -- the media outlets have not been afraid to inform the public that the CUPE union members rejected the University's offer of a 10.7% increase over three years. Nor have they been loath to report that the union is holding out for a 15.8% increase over two years. Taken together, these statements make the union seem pretty darned greedy.

Obviously, the right-wing media elite has conspired to keep the public unaware of all the additional work and value-added services that the union must be offering to justify their expectations. After all, they couldn't possibly expect a raise of 15.8% to provide the same levels of work, could they?

Book Review: The Shock Doctrine

We live in a world that loves conspiracy theories. Conspiracy theories were critical to the success of Fox's The X-Files that dominated the television scene back in the 1990s. Conspiracy theories were a critical element of the blockbuster novel The DaVinci Code. Conspiracy theories are at the heart of many accounts of the mysterious events that occurred at Roswell, New Mexico. Detective Munch's belief in conspiracy theories is a recurring element of the Law and Order character's personality. And a conspiracy theory of monumental proportions is at the heart of Naomi Klein's new book The Shock Doctrine, The Rise of Disaster Capitalism.

Conspiracy theories are often discounted as products of overactive imaginations and that, it seems, is the response that some critics in the "serious" business press seem to have taken when reviewing Klein's book. Having just finished the book, though, I think she may be onto something -- and it ain't pretty.

The Shock Doctrine details case after case of situations where governments took advantage of natural and man-made disasters to manipulate the kinds of whole scale economic changes advocated by Milton Friedman and the so-called "Chicago School" of economics. The changes included privatizing state-owned enterprises, reducing controls on capital, reducing wages and eliminating protection for workers, and vastly increasing the ranks of the unemployed. Although Friedman and friends argued that these kinds of economic transformations would lead to a "trickle-down" of wealth as the efficiency of the market took over from the inefficiency of controlled economies, the reality is a world where the Haves have more and the Have Nots have less.

On the whole, I find Klein's arguments that neo-liberal politicians have taken advantage of disasters to further their political and economic agenda to be convincing. I am less comfortable with Klein's assertion that the gross violation of human rights such as torture, institutionalized murder, and "disappearing" regime critics are directly related to the Chicago School's economic theory. Having said that, there is no doubt that the violations which Klein chronicles did occur after attempts to radically restructure the economies of countries as diverse as Chile, Argentina, China, and Iraq.

I must confess that at times I found The Shock Doctrine a bit depressing. Happily, the final chapter provides a glimmer of hope. Unlike many conspiracy theories, the villains in Klein's book do not have to prevail in the end.

The Shock Doctrine, The Rise of Disaster Capitalism
Naomi Klein
Alfred A. Knopf, Toronto, 2007
ISBN: 978-0-676-97800-1

I Got the Work Man's Blues

Who has the most depressing job in the economy? If the US Government's Substance Abuse and Mental Health Services Administration is to be believed, that dubious distinction goes to people who take care of the sick and the elderly. According to a survey released Saturday, 10.8% of personal care providers experience depression that lasts two or more weeks. The next highest job category, at 10.3%, consisted of people who cook or serve food. Production jobs, which presumably include factory work, reported a 5.9% depression rate.

That information is good to know the next time government spokespeople brag about many new jobs have been created in any given period. Hopefully, the journalists covering the story will dig a bit deeper to find out how many jobs are in production and how many are in the more depressing service sector.

And Today's High Loonie Is Valued At ...

... $.9864 US.

That's right, folks, the Canadian dollar finished the day off 1.36 cents higher than it started. (And at one point in the day, it had even hit the $.9874 mark.) It looks as if the dollar at par might come a little sooner than had been predicted.

Up, Up, and Away

The Canadian dollar reach a high of 96.58 cents (US) earlier today, marking a thirty-year high. To be sure, the loonie closed the day at 96.52 (US) but that was still more than half a cent higher than yesterday's close.

The strong dollar is attributed to a number of things: a robust Canadian economy buoyed by record commodity prices and a strong housing market, a widening interest rate gap between Canada and the US, and a sluggish US economy.

It looks like the people who predicted the dollar at par within 18 months may be onto something.

Cleaning Up - II

I saw a web page the other day that talked about the firms that are profiting the most from the Iraq war. KBR Inc., a division of Halliburton, leads the list with over US $17 billion in war-related revenue in the period between 2003 and 2006. Most of KBR's revenue comes from repairing oil fields and participating in infrastructure projects.

The article limited itself to the top ten American companies, so I don't know how the top 10 Iraqi-owned companies compare, but I somehow suspect that their combined total does not beet KBR's revenue during this period.

To see the entire top ten list, click: http://finance.sympatico.msn.ca/investing/stocks/article.aspx?cp-documentid=5399485

The High Price of Talent

There was a news article yesterday about the incredible (growing) gap in salaries between the CEOs of America's biggest companies and the workers. According to the report, top executives at Fortune 500 companies earned an average of US $10.8 million last year, while the average worker made just over $29,500. In other words, the executives made more in one day than the average worker did all year.

I know I sound like an unrepentant socialist who has troubles fitting into the "new world order", but this is just plain wrong. Call me old fashioned, but there is no place in a just or democratic world for inequities like this.

Shilling for Naomi Klein

Yesterday morning I was listening to CBC One and I heard an interview with Naomi Klein, who has just published her third book. The Shock Doctrine: The Rise of Disaster Capitalism is a look at how so-called "neo-liberal" economic policies such as privatization of government services, clear cut social spending, and free trade have been implemented in countries as diverse as Chile, Russia, and Iraq. It is also a look at how neo-liberal policies are tied to deliberate strategies to destabilize the cultures of the economies being transformed.

I have not read the book yet, but I can guess that the neo-liberal (i.e. radical right wing) apologists will complain that Klein's arguments are either too far fetched, too simplistic, or too reminiscent of the paranoid conspiracy theories that drove The X-Files into the ground. That doesn't mean she is necessarily wrong in her argument that proponents of bully capitalism (my phrase, not hers) manufacture and encourage the undermining of foreign social structures and the destruction of national economies.

These arguments are not, of course, entirely new ground for Klein. A few years ago she wrote a very interesting article in Harpers that examined some of the same ground. If you are interested, you can find that article by clicking on the following link: http://www.harpers.org/archive/2004/09/0080197.

96 Cents for Your Thoughts

It's funny how things you used to take for granted can change.

Take the Canadian dollar, for example. For most of my adult life the Canadian dollar traded well below the US dollar, usually in the 80-cent range. It was less than six years ago -- in January of 2002 -- that the Canadian dollar had fallen to less than 62 cents US. The Loonie was considered such a lightweight currency that people would refer to US dollars as "real dollars" when quoting prices. Boy, have times changed.

Today, the Canadian dollar was valued at over 96 cents US. The last time it was worth so much was back in 1977, and it was on its way down in value back then. Now there is even talk of the Canadian dollar reaching parity with its US counterpart within the next two years. This would not be great for exporters or, for that matter, for companies that provide outsourcing services to American firms like my old company does. However, most people seem to think it would be a good thing.

The only thing that bothers me about this whole story is the one that people don't seem to be talking about. Changes in comparable value between currencies either occur because one currency gains value or because another one loses value. I am no economist, but I suspect that our more muscular Loonie has more to do with a weak US dollar than it does with the Canadian economy.

Book Review: Hitler's Beneficiaries

I am a Canadian. I was born here. I was raised here. I hope to die here. I have no loyalties to other nations and desire to be anything other than a Canadian. I am also the son of a woman who was born in Hitler's Germany and a father whose family came to Kanada from the Hapsburg Empire. Not surprisingly, I have struggled with trying to understand how a cultured nation, a people that produced great artists and brilliant scientists, could have followed an evil megalomaniac like Adolph Hitler.

Thousands of books have been written about Hitler and National Socialist Germany. (When I searched Amazon.com with the search words "Adolph Hitler" I got 70,996 results.) Some authors try to demonize Hitler; others try to explain him. Some books focus on the dictator as the willful architect of the great world catastrophe that was the Second World War; others show more ambition and expand the discussion to include Nazi Party functionaries, generals, industrialists, and other "great men". Very few look at the average German, "Johann Q. Öffentlichkeit" who lived under the regime.

Hitler's Beneficiaries: Plunder, Racial War, and the Nazi Welfare State goes a long way to explaining how average Germans benefited materially from the Nazi state's imperialistic forays. We are all familiar with how high ranking Nazi officials looted museums and private collections of valuable works of art, but author Götz Aly suggests that individual Germans played their roles too.

But instead of stealing Vermeers or Rembrandts, German soldiers in occupied countries used local currency that had been converted at very favourable rates to pay for food, clothing, and luxury goods that were no longer available in Germany itself. The goods were then shipped back to Germany. The net result was to strip the de facto colonies of their resources while ensuring that Germany itself did not suffer from inflation.

Similarly, Adolph Hitler -- like other, more contemporary politicians -- attempted to wage an expensive war without raising taxes. Despite the huge demands for armaments and the resources to produce them, the Nazis avoided increasing taxes for the vast majority of Germans. (Unlike today's populist politicians, however, the Nazis limited their tax increases to the wealthiest Germans, a nod, no doubt, to the "socialist" element of National Socialism.)

One of the more bizarre, if interesting, policies pursued by the Nazi government was the lavish system of pensions and income supplements they put into place to ensure the support of the people. The German government provided the wives and families with such rich benefits that a woman could make 80% of her pre-war income by staying home to look after die Kinder. (National Socialists obviously believed that "Der Platz einer Frau ist im Haus.") When the family benefits were combined with the money that soldiers were forced to save, some family incomes increased.

So how was the Nazi state able to bankroll such lavish benefits? Simply put, they plundered and enslaved their victims. Hitler's Beneficiaries goes into sickening detail how Nazi Germany relied first on Jewish resources and then on the riches of occupied countries to bankroll both the war effort and the personal prosperity of individual Germans. In fact, Aly makes the argument that Nazi Germany was forced by its very economic foundations to continue wars of aggression in order to maintain average Germans in the standard to which they had become accustomed.

Perhaps the most horrific stories in a volume filled with horrific stories were also the most banal. Aly repeatedly quoted older Germans who had lived through the war years as they fondly recollected how well off they had been in the war. The most chilling moment in the book, for me at least, was when an elderly German lady mentioned that she did not lack for material comforts during the war. It was only after the war, when the victorious Allies instituted rationing, that things became scarce.

Hitler's Beneficiaries: Plunder, Racial War, and the Nazi State
Götz Aly (translated by Jefferson Chase)
Metropolitan Books, New York City, 2005
ISBN: 0-8050-7926-2

Another Sign of the Endtimes?

Boy, am I pissed off today!

You see, Saturday saw one of the most disgusting displays of arrogant affluence that I can recall.
40 of the world's wealthiest gourmands and their guests gathered in Bangkok for what has been dubbed "the meal of a lifetime". The meal -- which was prepared by six three-star Michelin chefs from Europe -- cost diners $25,000 each and featured truffles, live Brittany lobsters, caviar, and some of the best vintages of wine in the world.

I know that my recent posts have been a bit political in nature, but things are just so buggered up these days that it is hard to limit myself to comments on how cold it is or what music I am listening to. Events like this are just not right!

I realize that the guests have the money to afford the meal. They also have the money to pay for private jets to get to Thailand and to afford private islands, expensive cars, and watches that cost tens of thousands of dollars. The problem is that there is no way in the world that anyone can justify spending this much money when people are still dying of AIDS and other diseases, when children die of starvation or thirst, and when the world is faced with what could be catastrophic climate change.

$25,000 dinners are just another sign that something has got to change -- and change fast. I know that communism died with the Soviet Union, but these people have got to understand that there will be a revolution against such excesses unless they get their shit together.

This Ought to Motivate the Staff

There is an article on the CTV.ca site this morning which addresses a serious issue that will probably be ignored by all but a handful of activists.

The article, which was about compensation levels for Canadian CEOs, claimed that the highest paid CEOs had already earned an average Canadian employee's annual salary earlier this morning (at 9:46, to be exact). The figure, which comes from a study by the Canadian Centre for Policy Alternatives, was derived by taking a look at the 100 highest paid CEOs and then comparing their compensation to the average Canadian salary of $38,010. To get an even darker picture, consider the fact that the top 100 CEOs made the annual average minimum wage salary ($15,931) on New Year's Day.

I think it is a very telling piece of information. I think people should be concerned about the gap between the most and least successful performers in our economy, since relying on figures such as "average household income" skews the great disparities addressed in the article. What I don't understand is why more people are not concerned with the "winner-take-all" mentality of 21st Century capitalism.

I have no problem with the idea of fair compensation. I have no problem with the idea of "pay for performance". I have no problem with the idea that people who have invested their capital in a company should get a decent return on their investment. I do, however, have a problem with gross inequality of the sort that we are talking about here. I find it hard to believe that the top 100 CEOs provide so much shareholder value that they should get paid 150 times the annual salary of the average Canadian.

I know that people are sometimes worried about the future of this country's economy. We think about globalization and automation and increasingly scarce resources as potential threats to our way of life. Somehow, though, I think we are ignoring an even more important threat -- today's capitalism is inherently unfair.

We have become a culture that rewards its economic winners with a disproportionate share of the resources instead of making sure that there is enough for everyone. No wonder recent studies have indicated that the number one aspiration of teenagers is to become rich and famous.

Now I am not going to blame this all on highly paid CEOs -- over-rich, under-employed celebrities like Paris Hilton play their role, as do professional athletes who earn enormous salaries for playing games. The difference, however, is that most people understand that rich celebrities and elite athletes are aberrations. In effect, they have won the lottery of life. CEOs, on the other hand, are people who conceivably earned their positions through merit and hard work.

In other words, we could be them if we had the desire and the drive, and that is why ultimately we don't raise concerns about the gap between richest and poorest. Forget about factors like education, family connections, or corporate mentors. Forget about factors such as gender, ethnicity, or regionalism. Forget about the fact that even if they have and do work hard, it is difficult to quantify why they are worth tens of millions of dollars each year. And while you're at it, forget about the fact that they make enough money to pay one hundred people minimum wage and still have enough left over to live quite comfortably.