Transformative change in 2017 starts with community

As has been pointed out by too many people, 2016 was a devastating year for progressives (a homely term for all those who are want equality, democracy and ecological sanity). There is no need to repeat the list of atrocities, failures and disappointments, as we all have them indelibly marked on our psyches. One result of the annus horribilis is that activists everywhere have pledged to try harder — at what is clearly not working. There is even a sense of optimism rooted in the old left-wing shibboleth that “the worse things get, the better” — meaning, of course that if things get really, really bad, people will rise up (and overthrow the 1%).

But the truth is much simpler if less optimistic: the worse things get, the worse they are. There is no measure of misery beyond which revolution pops up out the ground. And if there is any popping to be done it is clearly not guaranteed, nor even these days remotely likely that it will be socialist. The victory of Donald Trump and the rise of right-wing parties across Europe demonstrate how much easier it is to play to fear, insecurity, hatred and retribution than it is to attract people to competing visions of the good life, rooted in science and delivered by the state — a state that has been openly complicit in making things worse for two generations.

It’s not that there is no good news on the social change front. Jeremy ­­Corbyn’s and Bernie Sanders’ unexpected successes were exhilarating. But the context in which they shone — political “leadership” in traditional party politics in the U.S. and Britain — severely limits the potential for future growth of broad-based movements. Why? Because beyond making activists feel temporarily less powerless and marginalized, they are still examples of why dependence on leaders is a barrier to the possibility of transformational change.

And let’s be clear. Today anything less than transformational change is simply not good enough.

Peter Block in his insightful 2008 book, Community: The Structure of Belonging, dissects the preoccupation of citizens with leaders and leadership:

“It is this love of leaders that limits our capacity to create an alternative future. It proposes that the only real accountability in the world is at the top…The effect of buying into this is that it lets citizens off the hook and breeds citizen dependency and entitlement.”

When citizens don’t feel accountable, they increasingly act as consumers. Beyond neoliberalism’s obvious imperatives such as free trade, privatization, tax breaks for the wealthy, etc., its most pernicious impact on society is the destruction of community. The greatest weapon the 1% has is our isolation from each other. And all efforts to defeat neoliberalism, no matter how valiant, inspired, smart or sustained, will fail unless they somehow ultimately contribute to the rebuilding of community. Unless and until that process begins in earnest, the systematic isolation of individuals and families from each other and from community will make garnering significant citizen power impossible.

Not difficult: impossible.

After 40 years of neoliberal social (and economic) engineering, we are at a stage where as consumers we have virtually endless choices — a mind-numbing variety of choices streamed at us at a speed and volume that leaves us stupefied — shell-shocked by choice, diverted from our possible lives by shopping. But our choices as citizens are now so constrained by the erosion and corruption of democracy and the endless promotion of small government that our citizenship has atrophied.

The dominant form of politics in fact reduces most people to passive consumers of politics just as they are consumers of goods. As consumers of politics rather than intentional citizens, we simultaneously abdicate responsibility and end up indulging in the culture of complaint. Says Block, “Consumers give up their power. They believe that their own needs can best be satisfied by the actions of others…” whether they be public service providers, elected officials or store managers.

For activists facing this entrenched political culture there is enormous temptation to sink into a nearly pathological attachment to failure — what Block calls “the joy of complaint, of being right.” The more powerless we feel, the more satisfaction we get from observing the next corporate or government outrage against the public good. It justifies our political stance and our critiques. How many dinner parties have lefties gone to where the whole evening is spent out-doing each other with stories that demonstrate things are actually worse than we thought they were.

It is hard to imagine how activists, who know people’s daily reality, can actually believe that scaring the bejesus out of people about the dozen tsunamis about to engulf them will actually motivate people to act. But we do. The new people the left wants to engage are apolitical for good reasons — they are bombarded by a media utterly complicit in designing their misery and their consciousness, they are cynical about the idea that government will ever provide for them, meetings about the latest crisis are depressing, and most people are working so hard as part of the precariate that asking them to come to a meeting is asking them to sacrifice the only two hours they would otherwise have with their families.

At a certain point, warning disengaged Canadians about the “fearful” consequences of doing nothing about climate change isn’t much different psychologically than the right telling them to fear crime and immigration. We can argue, of course, that our intentions are pure. But no one cares.

Block spends a lot of time repeating the core message of his book: that we have to radically shift the way we engage people and move away from presenting them with problems to talking about possibilities. Talking about possibilities is “strengthening interdependence and a sense of belonging.” It’s not about a vision of the future delivered whole cloth from above, but about transforming “self-interest, isolation and feelings of being an outsider to connectedness and caring for the whole.” It is not blind optimism but it is hopeful, emphasizing the assets, gifts and strengths of the community rather than the same old problems.

I confess I am a bit hesitant to recommend Block’s book given that it diverges so dramatically from my usual prescriptions. He eschews mega-analysis and even class analysis. He has nothing to say about neoliberalism. He mistakenly proclaims that government can’t be a force for good. But when it comes to shining a light on the critical issue of agency — of how transformative change will actually begin — his insights are invaluable.

‘All for ourselves and nothing for other people’: The takeover of economics by neoliberalism

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 VI. In declaring, “first let’s kill all the lawyers,” 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 25 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.”

Priests of neoliberalism

Economics is no longer a science, if it ever was. It is a religion whose priests bend every effort to make the dogma of neoliberalism 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 per cent. One million would face that circumstance if they rose by one per cent. The Canadian Payroll Association regularly tracks people’s financial stress and its recent survey revealed 48 per cent of people said “[i]t 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.”

Failed economic policies

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 per cent; 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 per cent 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 per cent) or disaster (by raising rates and popping the housing bubble).

The fact is, those trapped within the context of neoliberal 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 12-year trend. Sixty-one per cent of Canadian workers have seen their wage gap increase. These are the conclusions of a recent CIBC report which also concluded that only 15 per cent 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.

 

Welcome to CETA and the Liberals’ faith-based reality

“Sweep away the community of honest brokers in America [and] we’ll be left with a culture and public dialogue based on assertion rather than authenticity, on claim rather than fact.”

— U.S. journalist Ron Suskind, 2004

While you were going about your daily routines this week, the Trudeau Sunny Ways government was rushing Bill C-30 (the act to implement the Canada-EU Comprehensive Economic and Trade Agreement — CETA) through the House. Thirty of its 140 pages are devoted to amending The Patent Act, amendments which will increase annual drug costs for Canadians by up to 13 per cent. We already pay more for drugs than any other country except the U.S. Unless the rewards of CETA are very impressive, this “free trade” zealotry qualifies as a special kind of madness.

Faith over fact

In observing the Trudeau government and its media cheerleaders regarding CETA, I am reminded of U.S. journalist Ronald Suskind’s revelations about how the George W. Bush administration justified their decisions. One of Bush’s senior aides chastised Suskind for being part of the “reality-based community” in contrast to Bush’s “faith-based community.” He told Suskind:

“[You] believe that solutions emerge from your judicious study of discernible reality. That’s not the way the world really works anymore. … when we act, we create our own reality. And while you’re studying that reality …we’ll act again, creating other new realities.”

If those contrasting realities ring a bell, they should, because we have lived for 10 years with such thinking under Stephen Harper and there has been an almost seamless transition to the Trudeau government’s dissembling on international treaties. When it comes to trade and investment deals, the facts mean nothing. Chrystia Freeland simply refuses to answer questions and calls the deal “the gold standard” of trade agreements — full stop.

As in the U.S., we have assertion rather than authenticity, claim rather than fact.

The federal government makes its own “reality” by crafting “facts” to fit its policy objectives — no matter how outrageous they are when put to the test. Three numbers stand out in the talking points of federal governments under both Harper and Trudeau: that CETA will increase GDP by $12 billion, that it will create 80,000 jobs and that the newly created wealth will boost income by $1,000 per family.

But economist Jim Stanford debunked these numbers long ago — pointing out in 2012 that the federal trade department simply took the $12-billion figure (itself a highly dubious figure) “[a]nd divided it by the number of families in Canada. That assumes that every additional dollar of GDP translates directly into family income. In fact, higher GDP never fully trickles down into income…” The money that does find its way into income goes mostly to the wealthy.

The $12-billion figure came from a study commissioned by Canada and carried out by three EU economists. Stanford pointed out that the model used made some outrageous assumptions:

“[c]onstant full employment (so no one can be unemployed due to imports), balanced trade (so a country’s total output cannot be undermined by a trade deficit), no international capital flows (so companies cannot shift investment abroad), and no impact from fluctuating exchange rates.”

Stanford called the study “outrageous.” He was being far too polite. It was outright fraud. Anyone paying even cursory attention to the Canadian economy knows that not one of these assumptions holds. We haven’t had full employment for decades, we have been experiencing trade deficits for years, NAFTA resulted in the shifting of billions of investment dollars to Mexico and China, and our exchange rate has been all over the map.

But while the Harper/Trudeau axis trots out its faith-based “reality” others are thankfully stuck in the “fact-based” one. The latest are researchers from Tufts University’s Global Development and Environment Institute (GDEI) who in September produced the aptly named study “CETA Without Blinders.” The Tufts researchers used the Global Policy Model developed by the United Nations. That model, unlike the one commissioned by Ottawa, examined the likely impact of CETA on jobs, wages and inequality. It’s not a pretty picture:

  • “CETA will lead to a reduction of the labour income share. Competitive pressures exerted by CETA on firms and transferred onto workers will raise the share of national income accruing to capital and symmetrically reduce the share of national income accruing to labour.
  • By 2023, workers will have foregone average annual earnings increases of €1776 in Canada and between €316 and €1331 in the EU depending on the country.
  • CETA will lead to net losses of government revenue. Competitive pressures exerted by CETA on governments by international investors and shrinking policy space for supporting domestic … production and investment will reduce government revenue and expenditure.
  • CETA will lead to job losses. By 2023, about 230,000 jobs will be lost in CETA countries, 200,000 of them in the EU, and 80,000 more in the rest of the world [the study projects a loss of 23,000 Canadian jobs due to CETA in the first seven years].
  • CETA will lead to net losses in terms of GDP. [D]emand shortfalls nurtured by higher unemployment will also hurt productivity and cause cumulative losses amounting to 0.96 per cent of national income in Canada…”

As if to highlight the predictions of the Tufts University’s report, a recent Canadian study underlined just how grim things are already getting for Canadian workers and their families. Researchers at the University of Waterloo just released a national index of well-being which shows economic growth has not resulted in an improved quality of life since the 2008-2009 recession:

“The index shows the Canadian economy expanded 38 per cent between 1994 and 2014, while improvements in Canadians’ well-being grew just 9.9 per cent. …The biggest decline in that time is in leisure and culture — areas that can enrich lives, alleviate stress and build connections with others, such as socializing with others or taking a holiday.”

The start of this two-decade period coincides precisely with federal governments’ (starting with the Chretien/Martin regime) complete abandonment of enormously successful post-war industrial policies aimed at high wages and value-added manufacturing, and putting literally all their economic policy eggs in the external trade basket.

Why any reputable economist would expect a different result from signing CETA is inexplicable — unless you remember that it’s all about faith. Beginning with the original Canada-U.S. Free Trade Agreement (FTA), its promoters saw it as a leap of faith. Peter Nicholson, a former Scotiabank vice-president and later a personal adviser to Paul Martin, was one of free trade’s gurus. He acknowledged that supporters of the free-trade agreement thought it would “cause Canadian firms to pull up their socks … and compete in the North American market.” Instead, bemoaned Mr. Nicholson years later, many companies adjusted to the FTA “by simply moving across the border… taking the path of least resistance.”

Welcome to CETA, back to the future.

 

There are lessons for Canada’s elites in the U.S. election

Putting patient food in the hands of corporations reveals the trouble with normal

It’s amazing what we gradually accept as normal — even admirable — in how we treat each other in Canada. Practices that were once seen as a repugnant surrender to government indifference, like food banks, are now virtually celebrated as a high point of citizen engagement and promoted as such by our public broadcaster once a year. And other practices, like hospitals and seniors’ care homes that once had their own kitchens and cooking staff, are seemingly a thing of the past, a “luxury” that we have no hope of ever getting back.

As Bruce Cockburn’s song suggests, the trouble with normal, is it always gets worse.

The latter example demands of us that we somehow accept the notion that the food we eat is unrelated to our health or our healing. And I don’t mean just the calculation of the technical nutritional value of the meals — but their taste, their presentation, the choice amongst menu items; in other words, the sense that you have some power to choose what you eat. Before you guffaw, remember this was the old normal, and still is in a few hospitals and care homes across the country.

But the “rethermalized” slop that passes for food prepared by giant multinationals like the French multinational Sedexo ($6 billion in yearly revenue, 10,000 Canadian employees) should be against the law. I experienced this unfood some years back when I was hospitalized in Powell River. I should point out that in every other aspect the care was exemplary but my partner diligently brought me real food at mealtimes. I decided, however, that I would try the hospital soup. Less than a minute after the first spoonful I vomited it up.

I was reminded of my disgusting experience when I read a front-page story in our local paper, the Powell River Peak, headlined “Powell River seniors take stand on meals.” It was a grim account of what the elderly put up with in two seniors’ residences operating under the Vancouver Coastal Health Authority (VCHA) with food services also provided by Sodexo. Of course the appalling quality of the food was not really news. According to Elaine Steiger, secretary of the residents’ council at the Evergreen home: “For the last couple of years, most of our meetings have been taken up with the topic of food. Usually it’s the quality, but lately it’s been shortages.”

Steiger told the Peak that for the past few months there had been many instances of actual shortages, bad enough that she felt the food shortages “[b]order on elder abuse. … One day six residents went without a dinner and were given Boost…”

According to the Peak, the situation at the Willingdon Creek seniors’ facility was scarcely better.

Complaints about “food shortages, meals of poor quality, meals not served on time and small portion sizes” are commonplace: “Joy and Richard Hibberd … said the food is barely edible at times and not enough fresh food is served. ‘We haven’t been getting fresh fruit. We see a third of a banana maybe once in three weeks.'” Fruit juice is actually watered down flavour crystals.

And how did the Vancouver Coastal Health Authority respond to this gross corporate irresponsibility? Gavin Wilson, the VCHA’s public affairs director, acknowledged the Boost incident. But it turns out he knew about food shortages last June when complaints first arose: “In the following weeks we expressed our concerns [to Sodexo] based on feedback we were receiving that there were shortages of first-choice menu items.” That’s it? He expressed “concerns”? And he blithely accepted Sedexo’s “assurances” it was taking steps to improve food quality and quantity. He did not say what residents probably wanted to hear: “This is totally unacceptable and if it happens again we will cancel Sodexo’s contract!”

But Sodexo took care of such severe public criticism when it signed the contract back in 2004. According to Colleen Kimmett in a three-part Tyee series written in 2012, the contract “[s]tipulates that VCHA and Sodexo would coordinate their messaging around patient food services and agree on ‘standardized and uniform responses to questions from the media…'” So Mr. Wilson and the VCHA become contracted PR flaks for a giant French multinational.

But the VCHA’s protection of Sedexo goes beyond mealy-mouthed responses to the corporation’s outrageous behaviour. It is virtually impossible to find out what is in the food they prepare, where it comes from or to compare it — and its actual cost — to real food that is a prepared on site in other facilities. According to Kimmett’s investigative piece: “Both parties cited contractual confidentiality for what they couldn’t share about what’s being provided to the sick, injured and elderly in Vancouver’s hospitals.” It’s proprietary information, (Sodexo’s verbal claim that 21.6 per cent of the food came from B.C. suppliers is unverifiable.)

Wilson indicated that its contract with Sodexo did not even require that the company provide purchasing information. In other words, the VCHA, appointed by the provincial Liberal government, voluntarily ties its own hands when it comes to enforcing any real accountability by its corporate partner. This kind of secrecy is hardly new but its voluntary enforcement by a government board in an area as critical as health care is particularly offensive. A body appointed to ensure the best possible health outcomes of citizens chooses loyalty to a foreign corporation over caring for citizens.

How is it possible that we have arrived at this appalling situation? Of course the simple answer is that right-wing governments take care of their friends through privatization. But the rationale is found in the ideology of neoliberalism — in this case, in the words of political scientist Janice Gross Stein, the culprit is the “cult of efficiency.” The role of ideology is to give meaning to power — in other words to provide a persuasive rationale for doing something that is prima facie just profoundly wrong.

Stein writes in her book of the same name: “In our avowedly secular age, the paramount sin is now inefficiency. Dishonesty, unfairness, and injustice — the sins of times past — pale in comparison with the cardinal transgression of inefficiency.” She goes on to argue that “Efficiency, or cost-effectiveness, has become an end itself…” It is a “value” lifted from the private sector’s profit imperative and applied to the provision of virtually all public services, precisely where it should play a secondary role.

There are signs that this pernicious neoliberal edifice — tax cuts for the rich, privatization, cuts to services, deregulation, “free trade,” and austerity — is being challenged worldwide and even by its traditional defenders. But it won’t die on its own. What better iconic struggle to kill it off than demanding real food for seniors and hospital patients.

‘The world must jettison neoliberal ideology’: 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 neoliberal ideology. Some come close to sounding like virtual heretics — like Jonathan Ostry, the IMF’s deputy director of research and lead author of an article (“Neoliberalism: Oversold?”) in the IMF’s official publication. He stated, with a childlike innocence: “[s]ome 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 neoliberal 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 “neoliberal 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 neoliberal “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 “[t]he 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 U.S. housing bubble and the second the EU meltdown. Its solution sounds almost revolutionary, according to the London Telegraph:

“The world must jettison neoliberal 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 neoliberal 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 “[i]nto 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 U.S. 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 U.S.

Just this past week Deloitte Canada published a report which took Porter’s academic studies a step further by interviewing 1,200 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 per cent 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:

“[r]esearch 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 neoliberal policy: the reckless tax cuts for the wealthy and corporations which rob federal government coffers of $50 billion every year.

 

Trade deals’ investor-state provisions: A sub-criminal conspiracy?

There is a glaring disconnect in the world between economic growth, and trade and investment agreements.

At the same time that Canada and other countries are pushing hard for huge multi-national deals — the TPP, CETA and the U.S.-EU deal, the TTIP — all the evidence suggests that global trade is on a long-term downward trend. Nothing in the near or middle term future suggests that it will recover to anything like its China-driven peak.

Financial Times analyst Martin Wolf recently argued bluntly that globalization no longer drives the world economy.

He points out that “…ratios of world trade to output have been flat since 2008, making this the longest period of such stagnation since the second world war. According to Global Trade Alert, even the volume of world trade stagnated between January 2015 and March 2016…”

In addition, says Wolf, “The stock of cross-border financial assets peaked at 57 per cent of global output in 2007, falling to 36 per cent by 2015.” Foreign direct investment has also declined.

So if global trade isn’t going to pull the world economy out of its persistent doldrums, why are countries putting so much political energy into signing these agreements? They do little or nothing to enhance growth in global trade — trade is driven by global demand — also flat. Amongst the countries primed to sign these agreements trade is already virtually tariff free.

Even the government’s Global Affairs department’s recent analysis estimates the Pacific Rim deal, the TPP, would increase GDP by a minuscule .127 per cent ($4.3 billion in a $2 trillion economy) — but not until 2040! In short, we will gain virtually nothing.

If these deals don’t enhance trade or growth what do they do? Investment agreements like CETA, TTIP and the TPP are all aimed at making international investment by multinationals as risk free as possible. Corporations always try to externalize costs — but these deals and their ISDS clauses allow then to externalize risk — and it’s taxpayers who take the risk.

In a global economy that has virtually no prospect of recovering in the foreseeable future, one road to continued profitability lies in treaties that protect a company’s “projected future profits” against any government action in the public interest.

But it gets far worse. Over the past 10 years ISDS provisions in literally thousands of agreements have become tools for criminals, greedy law firms, and “investors” in ISDS cases.

In an excellent four-part series, Pulitzer Prize-winning investigative journalist Chris Hamby reveals that: “Companies and executives accused or even convicted of crimes have escaped punishment by turning to this special forum.”

Hamby cites several cases: “… an Egyptian court had declared a foreign company’s purchase of a factory corrupt and nullified the deal, court records show. But after the company filed an ISDS claim, the government agreed to pay $54 million in a settlement…”

In another, two financiers had been convicted of embezzling $300 million from an Indonesian bank but used an ISDS finding to force Interpol to back off, protect their investment, and “…effectively nullify their punishment.”

Hamby found more than 35 cases where “…the company or executive seeking protection in ISDS was accused of criminal activity, including money laundering, embezzlement, stock manipulation, bribery, war profiteering, and fraud.” One ISDS lawyer admitted privately: “You have a lot of scuzzy sort-of thieves for whom this is a way to hit the jackpot.”

If it’s it not criminals escaping justice, it’s corporations gaming the system, perverting it so that the profit comes not from a planned or existing investment but from the increasingly enormous settlements demanded of governments if they win an ISDS arbitration.

A Canadian example is the U.S. quarry company, Bilcon, whose application to build a quarry in Nova Scotia was rejected by federal and provincial environmental review panels. It sued and a NAFTA arbitration panel ruled in its favour. Bilcon is seeking $300 million (an appeal is pending) for lost future profits — many times the potential profit on an actual investment that it will never make.

But it goes beyond just large companies seeking out-sized awards.

Lawyers taking these cases can make millions on a single case. The fat rewards has led to ISDS lawyers creating ISDS business by linking companies with potential cases, but limited resources (cases can cost as much as $8 million to litigate), to investors willing to finance the case for a big cut of any award.

Burford, a U.S. financier increased its profits nine fold in 2011 as a result; Juridica, its British competitor, managed an increase of 578 per cent, based on ISDS business. A 400 per cent return on investment is typical.

Selvyn Seidel, a New York attorney heads up a firm exclusively devoted to promoting ISDS cases. He told Hamby: “Some lawyers monitor governments around the world in search of proposed laws and regulations that might spark objections from foreign companies.”

Then they identify potential client companies and offer to head up a challenge. Litigation lawyers handling ISDS cases for corporate clients also regularly end up on arbitration panels where it is in their interest to find for the complainant — to encourage other companies to try their hand at an ISDS windfall. This glaring conflict of interest has prevailed for over 20 years.

This sleazy perversion of the ISDS provisions (originally intended to stop rogue governments from actually seizing assets) is blithely ignored by the Canadian government, by provincial premiers, mainstream economists, business writers, legal scholars, and just about anyone else with any influence over public policy.

It is, quite frankly, a disgusting abrogation of responsibility in all these quarters. Whether it is rooted in sheer laziness, willful ignorance, deliberate obfuscation, opportunism or intellectual dishonesty hardly matters, the results are the same: our government is determined to sign agreements that will expose public policy making to aggressive assaults by the most powerful corporations on the planet.

This sorry state of affairs is in stark contrast with Europe where there is growing public opposition to ISDS provisions in CETA and the TTIP — and extensive, detailed media coverage of the debate.

Government ministers in Germany and France have denounced ISDS and basically declared CETA and TTIP dead in the water because of it. Australia in 2011 stopped signing agreements with ISDS clauses in bilateral deals, and many other nations — such as South Africa, Indonesia, Brazil and India — have done the same or are planning to.

But Canada? No, we continue to be eager patsies, willing victims of corporate greed and blasé about our sovereignty and our democracy.