Sunday, March 04, 2007

Conventional (un)Wisdom


Last week a leftsided think tank, the Canadian Center for Policy Alternatives, published a study which concluded that the rich have gotten richer and the poorer have gotten poorer in Canada over the last few decades.

And the Globe and Mail (gasp!) actually ran a follow-up piece by Webber and Bonoguore which agreed that much of the data the CCPA based its conclusions on were, in fact, verifiable.

Which of course, couldn't be left to stand.

Even by the Globe itself.

So, the very next day, along came John Ibbitson to lay on the codswallop, the pungent odour of which hits the nostrils, hard, even from the relatively safe distance of the lede:

A new study suggests that Canada has become a mean and brutal place, in which the wealthiest are becoming ever wealthier, while the rest are barely hanging on.Who would want to live in such a society? I would, and so should you. Most think tanks in Canada are a waste of time. Those on the right twist and distort data to prove the country is overtaxed and underproducing. Those on the left use the same data to prove that society is increasingly unequal and unjust.

Unfortunately (or fortunately, depending on how you look at these things) the rest is hidden behind the subscription wailing wall.

But Declan of 'Crawl Across The Ocean' has liberated just enough of Mr. Ibbitson's pungent prose to keep everyone's eyes watering:

Governments that took this report at its word would increase upper-income taxes, raise the minimum wage, bolster union rights, and increase subsidies to manufacturers.

Throughout the 1970s, 1980s and early 1990s, governments did all those things. In the process, inflation, unemployment and deficits grew, while recessions came and went and came again.

Desperate, governments began cutting taxes, reining in inflation (through the central bank) and balancing budgets. The results were spectacular. Growth took off, along with the incomes of those who were responsible for that growth: entrepreneurs and highly skilled workers who added the most value to the economy.

The left-wing think tanks ignore this reality.

Hmmmmmm....... there's that term 'reality' again.

Which, when it comes from one with Neanderconnish tendencies, should, especially at this point in history, always make one wonder the following:

Just how real is this so-called reality of theirs anyway?

Well, based on a thorough fisking from Declan it looks like it is about as close to the real thing as cool whip is to the stuff you used to lick off the eggbeater when your Mom was making white stuff from scratch to plop on top of your pumpkin pie.

For example:

....far from rising gradually over time as a function of pro blue-collar policies, inflation was introduced into the system in a pair of shocks in the 70's primarily related to oil prices....


.....rather than being an event which occurred in the mid-90's and triggered growth, as Ibbitson argues, the decrease in inflation was clearly brought about via the two recessions in which interest rate increases (by the central banks) drove up unemployment lowering workers wage claims and reducing total demand, thus leading to lower prices - i.e. less inflation.


.....contrary to Ibbitson's argument that economic growth in the late 90's was caused by cutting taxes, the record shows that taxes were steady during this period.

and, saving the best for last..... we can see from this report, the 'low growth' period was marked by substantial decreases in the minimum wage, whereas the 'spectacular results' period was when governments arrested the decline in minimum wage rates and began to increase them again.

So there you have it - once again the notion that we have to screw ourselves and make the rich richer to keep the price of George Foreman grills cheap at 'Best Buy' and our healthcare system intact is proven to be nothing more than rubbish.

Which is very important, indeed.

Because getting people to vote and rail against their own best interests in the name of prosperity b/w security are keystones of the Big Blue Slime Machine's election/governance strategy.


Oh, and by the way, Declan has charts and everything to make his points.
Oh , and by the way the second; It's not just income inequality that we are screwing ourselves with. It's hours worked as well. From the Globe's first piece: “Year by year variation makes it hard to say whether they (families in the top 10% of income) unequivocally worked fewer or the same number of hours over this nine-year period; but it is clear that they are not working more over time,” the study said. (In contrast, the study found that the average Canadian household put in nearly 200 hours more a year in 2004, compared with nine years earlier.


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