FacebookTwitterGoogle+RedditEmail

A Globalization Wake-Up Call

If recent mainstream economic reports are to be taken seriously some of the big brains managing global capitalism these days are starting to lose faith in their neo-liberal ideology. Some come close to sounding like virtual heretics. Like Jonathan Ostry, is the IMF’s deputy director of the research and lead author of an article (“Neoliberalism: Oversold?”)  in the IMF’s official publication. He stated, with a childlike innocence: “…some aspects of the neoliberal agenda probably need a rethink. The [2008] crisis said: ‘The way we’ve been thinking can’t be right’.” No point, I suppose, in dwelling on the past – that is, the millions of lives made miserable by decades of IMF structural adjustment programs.

The lack of mea culpas notwithstanding, the IMF bravely identifies two aspects of neo-liberal policy for scrutiny: the elimination of capital controls (allowing for capital flight to be used as a political weapon against poor countries) and fiscal austerity. While “cheering” aspects of the “neo-liberal agenda”  according to the Financial Times he also acknowledged some “’disquieting conclusions’ including that they resulted in increased inequality that undermined economic growth.”

That report came out in May but just last week the annual report of the UN Conference on Trade and Development (UNCTAD) has leapt ahead of any cautious “rethinking” and calls for a virtual reversal of the whole neo-liberal “edifice.” The report contains some of the most alarming warnings UNCTAD has ever issued. And that warning relates, in part, to the near-zero interest rates developed countries are using to try to restart their economies.

There are unintended consequence of low interest rates, says the report: “Alarm bells have been ringing over the explosion of corporate debt levels in emerging economies, which now exceed $25 trillion. Damaging deflationary spirals cannot be ruled out.” And later: “The benefits of a rushed integration into international financial markets post-2008 are fast evaporating. If policymakers fail to mitigate the negative impacts of unchecked global market forces …a significant share of developing-country debt incurred since 2008 could become unpayable and exert considerable pressure on the financial system.”

UNCTAD’s analysis also attacks Western governments’ obsession with austerity which has starved global demand but it more broadly blames “… the entire edifice of liberal market finance…”  As far as the UN is concerned this development is the “third leg” of the global financial crisis – the first two being the US housing bubble and the second the EU meltdown. Its solution sounds almost revolutionary according to the London Telegraph: “The world must jettison neo-liberal ideology, and launch a ‘global new deal’ with a blitz of investment on strategic sectors. …a return of the ‘developmental state’, commanding a potent industrial policy, and backed by severe controls on capital flows.”

The report also highlights the fact that global corporations – which designed the neo-liberal  Washington Consensus explicitly to reverse the old social contract and the ’development state’ – have failed utterly to deliver on the quid pro quo: their promise of growth and prosperity. The global corporate sector is characterized by management captured by ”activist funds” which focus almost exclusively on shareholder value, the maximum extraction of profit and mergers and acquisitions rather than the reinvestment of their profits “… into production capacity, jobs, or self-sustaining growth.”

This latter criticism describes the Canadian corporate sector in spades. Instead of investing its record profits – and its tax break windfall in the billions – it is sitting on over $600 billion idle cash. But the situation with Canadian corporations is actually much worse than in most OECD countries, particularly compared to their main competitors in the US. In previous columns I have quoted past studies done by Harvard Business School’s Michael E. Porter. He concluded: “The U.S. is just much more entrepreneurial (than Canada)… Research uncovered key weaknesses in the sophistication of (Canadian) company operations and strategy.” He went on to describe Canadian business as cautious and risk-averse, unwilling to spend money on research and development, and addicted to exporting almost exclusively to the US.

Just this past week Deloitte Canada published a report which took Porter’s academic studies a step further by interviewing 1200 Canadian CEOs regarding their willingness to takes risks and invest in the future of their companies. The results of the study – entitled The Future Belongs to the Bold – paint a pathetic picture. The poll concluded: “At a time when Canada needs its businesses to be bolder and more courageous than ever before, almost 90 per cent aren’t up to the task.” The companies fell into one of several categories: 15 per cent of CEOs were “fearful,” 43 per cent were “hesitant,” 30 per cent were “evolving,” and 11 per cent were “courageous.”

The result? “Investments aren’t made. New ideas aren’t explored. And Canadian companies slowly fall further and further behind.” Companies have actually reduced spending on training by 40 percent since the mid-1990s. As Porter earlier observed, where Canadian companies are successful it is mostly due to access to cheap labour and natural resources.

And this week the Conference Board of Canada published an op-ed in the Globe and Mail decrying the lack of investment in manufacturing innovation, observing: “…research and development spending in the sector is generally very low. Indeed, investment has been so weak for a number of years that many manufacturing segments have actually become less capital intensive. The result is an erosion in the global competitiveness of Canadian manufacturing.”

Once again we see the folly of placing our economic future in the hands of “fearful” and risk averse CEOs while giving them every possible advantage from suppressed wages, huge tax cuts, and privatization, to deregulation and endless idiotic “trade” deals. Corporate Canada signed a contract and broke it. It should be forced be back to the negotiating table. And this time it should focus on the domestic economy.

The Liberal preoccupation with trade deals looks increasingly ill-considered. In yet another warning about the state of global trade Roberto Azevêdo, the World Trade Organization’s director-general declared : “The dramatic slowing of trade growth is serious and should serve as a wake-up call.”  The question for the Trudeau Liberals is what to do if they do wake up. Instead of more oil and gas infrastructure (in a world already awash in both) it should itself be “courageous” and use bold fiscal policy to launch a serious transition away from fossil fuels and at the same time actually take the Paris climate accord seriously. But that would require “rethinking” another neo-liberal policy: the reckless tax cuts for the wealthy and corporations which rob federal government coffers of $50 billion every year.

More articles by:

MURRAY DOBBIN, now living in Powell River, BC has been a journalist, broadcaster, author and social activist for over forty years.  He can be reached at murraydobbin@shaw.ca

January 22, 2019
Patrick Cockburn
On the Brink of Brexit: the Only Thing Most People Outside Westminster Know About Brexit is That It’s a Mess
Raouf Halaby
The Little Brett Kavanaughs from Covington Catholic High
Dean Baker
The Trump Tax Cut is Even Worse Than They Say
Stanley L. Cohen
The Brazen Detention of Marzieh Hashemi, America’s Newest Political Prisoner
Karl Grossman
Darth Trump: From Space Force to Star Wars
Glenn Sacks
Teachers Strike Dispatch #8: New Independent Study Confirms LAUSD Has the Money to Meet UTLA’s Demands
Haydar Khan
The Double Bind of Human Senescence
Alvaro Huerta
Mr. President, We Don’t Need Your Stinking Wall
Howard Lisnoff
Another Slugger from Louisville: Muhammad Ali
Nicole Patrice Hill – Kollibri terre Sonnenblume
The Scarlet “I”: Climate Change, “Invasive” Plants and Our Culture of Domination
Jonah Raskin
Disposable Man Gets His Balls Back
Thomas Knapp
Now More Than Ever, It’s Clear the FBI Must Go
January 21, 2019
W. T. Whitney
New US Economic Attack Against Cuba, Long Threatened, May Hit Soon
Jérôme Duval
Macronist Repression Against the People in Yellow Vests
Dean Baker
The Next Recession: What It Could Look Like
Eric Mann
All Hail the Revolutionary King: Martin Luther King and the Black Revolutionary Tradition
Binoy Kampmark
Spy Theories and the White House: Donald Trump as Russian Agent
Edward Curtin
We Need a Martin Luther King Day of Truth
Bill Fried
Jeff Sessions and the Federalists
Ed Corcoran
Central America Needs a Marshall Plan
Colin Todhunter
Complaint Lodged with European Ombudsman: Regulatory Authorities Colluding with Agrochemicals Industry
Manuel E. Yepe
The US War Against the Weak
Weekend Edition
January 18, 2019
Friday - Sunday
Melvin Goodman
Star Wars Revisited: One More Nightmare From Trump
John Davis
“Weather Terrorism:” a National Emergency
Jeffrey St. Clair
Roaming Charges: Sometimes an Establishment Hack is Just What You Need
Joshua Frank
Montana Public Schools Block Pro-LGBTQ Websites
Louisa Willcox
Sky Bears, Earth Bears: Finding and Losing True North
Robert Fisk
Bernie Sanders, Israel and the Middle East
Robert Fantina
Pompeo, the U.S. and Iran
David Rosen
The Biden Band-Aid: Will Democrats Contain the Insurgency?
Nick Pemberton
Human Trafficking Should Be Illegal
Steve Early - Suzanne Gordon
Did Donald Get The Memo? Trump’s VA Secretary Denounces ‘Veteran as Victim’ Stereotyping
Andrew Levine
The Tulsi Gabbard Factor
John W. Whitehead
The Danger Within: Border Patrol is Turning America into a Constitution-Free Zone
Dana E. Abizaid
Kafka’s Grave: a Pilgrimage in Prague
Rebecca Lee
Punishment Through Humiliation: Justice For Sexual Assault Survivors
Dahr Jamail
A Planet in Crisis: The Heat’s On Us
John Feffer
Trump Punts on Syria: The Forever War is Far From Over
Dave Lindorff
Shut Down the War Machine!
Glenn Sacks
LA Teachers’ Strike: Student Voices of the Los Angeles Education Revolt  
Mark Ashwill
The Metamorphosis of International Students Into Honorary US Nationalists: a View from Viet Nam
Ramzy Baroud
The Moral Travesty of Israel Seeking Arab, Iranian Money for its Alleged Nakba
Ron Jacobs
Allen Ginsberg Takes a Trip
Jake Johnston
Haiti by the Numbers
Binoy Kampmark
No-Confidence Survivor: Theresa May and Brexit
FacebookTwitterGoogle+RedditEmail