All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.
— Adam Smith, Wealth of Nations
In these days of economic stagnation, misery and insecurity, housing bubbles and the growing precariate it seems appropriate to speculate on what Shakespeare might have written today were he penning a modern rewrite of Henry the Sixth. His character was voicing support for Jack Cade whose revolutionary vision cast lawyers as paper shuffling parasites ruining the lives of the common people. In the past twenty-five years that ignoble role has been usurped by economists. I liked them better when economics was called the dismal science – now the profession is simply a self-satisfied apologia for the plunder of society’s wealth by the greedy and ruthless 1% – the ‘masters of mankind.’
Economics is no longer a science, if it ever was. It is a religion whose priests bend every effort to make the dogma of neo-liberalism impervious to its disastrous outcomes. If it were a science the facts would long ago have prevailed and they would have denounced the ideology from the rooftops.
But, no, instead we get articles on a weekly basis about Canadians’ staggering debt load and the only attempt at explanation is so-called ‘human nature’ i.e. “Gee, people just don’t seem to be worrying – they’re ignoring the warnings.” Then there’s the ingenious concept of “recency bias” developed by someone in the field of ”behavioural finance” (who knew?). Recency bias means, according to the Globe’s Rob Carrick, “People are looking at recent events and projecting them into the future indefinitely.”
That’s it? That’s the best the economics profession can come up with to explain Canadians’ indebtedness catastrophe? It’s all about human behaviour, written in stone, so I guess we might as well just sit back and observe the meltdown in the comfort of our economist’s middle class lifestyle.
But of course that’s the very thing they should be examining – people’s determination to live the middle class life style that our entire culture is based on and which the sophisticated marketing machine tells us we must have – or we are losers. They need to explore this classic bait-and-switch: manipulate people to buy stuff and then suppress their incomes so they can’t.
Carrick’s article detailed just how serious the problem is – repeating numbers that have been quoted numerous times: over 700,000 people would be financially stressed if interest rates rose by even a quarter of one percent. One million would face that circumstance if they rose by 1 percent. The Canadian Payroll Association regularly tracks people’s financial stress and its recent survey revealed 48 per cent of people said “..it would be tough to meet their financial obligations if their paycheque was delayed even by a week. Almost one-quarter doubted they could come up with $2,000 for an emergency expense in the next month.”
I’m sorry, but that’s insane in a country that creates as much wealth as Canada does. But don’t expect “the profession” to shed any light on this situation. Why? Because economists suffer from SIB – Self-Interest Bias, a condition rooted in their elitist role in society. Actually it’s not unlike “recency bias” – they’ve been doing fine for the past 25 years rationalizing this madness so they will just project that success “… into the future indefinitely.”
Except that there really is still a problem: the economic policies they keep endorsing are a disaster for all but the few. The middle class can only sustain its standard of living through ever-increasing debt; the vast majority of the new wealth created every year (such as it is) goes to the top 5%; the working class has been largely relegated to service jobs (we have lost 540,000 manufacturing jobs since 2000) with no security, lousy pay, no benefits and – increasingly – part-time work. There is not a single minimum wage in the country that comes anywhere near a living wage. The gap between rich and poor is now the same as it was in 1928. Young people’s university degrees are both outrageously expensive and often worthless.
And small and medium businesses are virtually all struggling because the government’s obsession with foreign trade leaves them (over 90 percent of whom export nothing) on their own to cope with the stagnant incomes of their customers. And what do economists say about all this? Not much. They observe and then move on, waiting for the next batch of statistics proving, once again, that the brave new world of unfettered markets and unregulated corporate power cannot and will not deliver the goods. Of course, if they were honest they would acknowledge it was never intended to: these outcomes were predicted from the start by the handful of heretical economists who choose not to join the courtiers of masters of mankind.
To distract us from our grim present and grimmer future the priesthood talks endlessly about the Bank of Canada’s interest rate as if changing it could actually improve peoples’ lives. But the Bank of Canada can accomplish one of only two possible results: nothing (by keeping rates below 1%) or disaster (by raising rates and popping the housing bubble).
The fact is, those trapped within the context of neo-liberal policies don’t have a clue what to do.
But everyone knows it’s going to get worse. The quality of jobs in Canada continues to fall with low-paid jobs making up an increasing proportion of the total (we are already second in the OECD) with those earning less than the average wage falling furthest behind. This is a continuation of a twelve year trend. Sixty-one percent of Canadian workers have seen their wage gap increase. These are the conclusions of a recent CIBC report, which also concluded that only 15 percent of people aged 15-24 can be defined as genuinely “employed.”
If economists and politicians (NDP – please note) actually want to change this situation before it descends into full-on dystopia they must, as a UN report recently recommended, “…jettison neoliberal ideology.” That would include a long list of policies but let’s just take one: “labour flexibility.” Inequality, flat incomes, work-life imbalance, and unsustainable debt can all to a large extent be traced to this deliberate government policy. Just reversing it would start a recovery. That means returning EI to an actual insurance program, reinstating the federal Canada Assistance Plan which provided strings-attached (read humane rates) money to the provinces for social welfare, increase the minimum wage to living-wage levels, enforce and enhance labour standards and their enforcement, and make it easier, not harder, for unions to organize.
But don’t expect economists to get on side.