Feedback loops, austerity & Tim Hudak's Ontario

Many of us, no doubt, have begun to hear about "positive feedbacks" or "feedback loops" over the last few weeks. This has been in regard to the increasingly alarming ecological situation that we all globally face with the far more rapid than anticipated melting of the arctic permafrost and the release of methane into the atmosphere that this is causing.

The "positive feedback" consists of the fact that, as methane gets released, it acts as a greenhouse gas and drives up global temperatures. This increase in temperatures causes greater polar melting which, in turn, releases more methane. After a certain point the cycle becomes self-perpetuating and irreversible and its effects become more consequential as the cycle unfolds. In this case, of course, in truly catastrophic ways.

If, as some climatologists feel, a "runaway" feedback loop has actually begun, then the best that we can hope for is to mitigate its consequences. There will be absolutely nothing we can do to undo or stop them.

Oddly, and ultimately for analogous socioeconomic reasons,  there is a similar process at work in many advanced capitalist economies. These economies, due to self-perpetuating consequences that are the result of tax-cuts, austerity measures and a societal propensity to accumulate debt to offset and finance a decline in production that corresponded with an increase in consumption, are now facing an unprecedented period of perpetual stagnation, gradual decline and persistent systemic risk, in addition to dramatically increased social inequality and instability,  despite the reality that most of them remain nominally very "wealthy".

If they slip into a period of  rapid decline due to the collapse of one-or-another speculative  sector of their economy, countries can descend into an economic situation where the systemic risk is realized and where a downward spiral becomes basically irreversible as long as the fundamental market and capitalist conditions that triggered it continue.

The most obvious component, and the easiest to demonstrate, of economic "feedback loops" is what could be termed the "austerity loop". The austerity loop, which has been an ongoing process in parts of Europe for several years now, is relatively simple. Due to the increasingly speculative (as opposed to productive) nature of the Western capitalist economy, many Western economies were experiencing highly inflated "growth" due to financial "paper-tiger" empires and other non-productive "stimulus" that bankrolled the ability of various governments to maintain lifestyles that had no basis in national production (in capitalist terms). When this financial bubble burst, these same governments were unable to stem the tide of the burst without either abandoning the system that had led to it in the first place, (which, of course, they did not do) or by seeking to keep the system in place by attempting to offset the now disastrous debts that they were facing by adopting austerity measures to allegedly placate international financial concerns and lenders.

These austerity measures generally consisted of massive cuts to social spending, to the numbers of government employees and to the wages of those who kept their jobs. They also usually included deep cuts to infrastructure spending. The primary, and worst examples of this are Greece and Spain.

In all cases, needless to say, the "pain" of austerity was felt almost entirely by those in the economy that had had the least to do with the conditions that led to it: the working and lower middle-classes.

These initial austerity cuts, as widespread as they were, had entirely foreseeable consequences that were, ironically, the opposite of their intent. They directly resulted in lowering, not raising, the social wealth as a whole and the money available to government. The reasons for this are obvious. Rather than placating foreign financial concerns, the cuts meant that citizens had less money to spend, less wages to pay taxes on and that national businesses and government departments received fewer projects and less government subsidy both directly and indirectly (such as workers being hired to pave roads, issue birth certificates, maintain historic sites, etc.). Lower wages and fewer jobs meant less socially disposable income, leading to less spending by citizens, leading in turn to more business failures, yet lower wages and yet fewer jobs. This had a further depressing effect on the economies in question, and the cycle repeated, getting worse with each wave of austerity and its consequences.

With every round of austerity measures, the same financial concerns whose confidence was supposed to be restored by the measures,  ended up lowering the credit ratings of the countries in question, thereby exacerbating and accelerating the very process which austerity was supposed to prevent.

Austerity measures compounded the problem, they did not alleviate it. They acted as a positive feedback mechanism.

In the case of the U.K., where the austerity measures were entirely unwarranted and "preemptive", they, in fact, have induced a recession, and the economy has now undergone three quarters of  GDP contraction. The U.K.'s GDP is projected to shrink by 0.7 per cent this year. Still, the U.K.'s Conservative PM David Cameron has vowed to stay the course on policies that are manifestly hurting the economy, not to mention the citizens of his country.

The illusions and ideological blinders of  neo-liberal politicians are so great, that they cannot accept that the models they hold dear are false. Akin to those who deny climate change, they deny the economic outcomes of their theories in action over the last thirty years.

The same process may soon be coming into play in Ontario courtesy of our own Tories, very much inspired by Cameron, despite the results "across the pond".

Now, as the province's economy was just beginning to show some signs of recovery from the 2008 North America wide government stimulus bailouts, a government intervention that obviously prevented economic collapse and that should have put an end to the ideas of austerity and unregulated, "free market," Chicago School economics forever, we find instead that governments continue to play into the fallacies of the failed models.

It is bad enough that the Ontario Liberals have set the process in motion by shifting the focus from economic recovery to deficit fighting and by implementing the first steps of austerity with wage freezes and  setting the ideological tone through the commissioning of the Drummond Report, which was little more than a blueprint for social collapse.

Much worse, the Tories have recently released an economic plan which is basically guaranteed, despite its title "Paths to Prosperity: An Agenda for Growth", to stall, if not reverse economic growth, especially should it be implemented to coincide with the possible collapse of the housing bubble in Canada.

The plan calls for the reduction of ALL government spending by 10% outside of health and education (allegedly), which means the removal of billions of dollars in direct stimulus from the economy. It promises further "tax relief", despite the clear, and easily demonstrable fact that not only does "tax relief" not create jobs, it also necessitates greater spending cuts that act as a brake on growth.

The Tories would "support a mandatory public sector wage freeze -- saving Ontario $2 billion over two years." What they fail to mention is that this means removing $2 billion from the pockets of citizens and consumers, (and public sector workers are citizens and consumers) and thus directly from the economy. It also means that these citizens will have $2 billion less in income to pay taxes on; an unfortunate side-effect to wage freezes that the Liberals are already running into.

In addition to removing this $2 billion from the economy, they would further remove an additional $2.5 billion by ending "corporate welfare." But, despite the seemingly leftist overtones of this slogan, stealing a phrase popularized by NDP leader David Lewis in the 1970s, what they are proposing is the massive slashing of subsidies that will unquestionably lead to the slashing of jobs and closing of plants, businesses and, in some cases, the demise of entire communities.

Yet somehow we are to understand that the cumulative withdrawal of billions and billions of dollars from the economy that is outlined above, all to take place in a very short period of time, will actually result in economic and job growth?

Further, rather farcically, during his recent press conference on how his plan would create jobs, Hudak said "We actually will have to have fewer people working in government...There's no doubt about that.", presumably indicating his firm belief that the province has to throw people out of work to ensure that they can then find work.

The Tory plan is also explicit in its commitment to suppress wages generally, taking yet more disposable income out of the economy, by calling for dramatic and very broad anti-union measures in the private sector; measures that he openly admits are inspired by American anti-union laws. He advocates the end of the very notion of public sector unionism with his ridiculous proposal to open many basic government services up to competitive bidding, presumably in the fantasy that the private sector can deliver these essential government services efficiently with the cut corners and costs and the low wages it would take to do so and still turn a profit. Profit being the basic motive force of private enterprise after all.

Their platform pits public and private sector workers against each other by stating, entirely disingenuously,  that "it’s only fair to ask public sector workers to share in the sacrifices their private sector colleagues have already been making" without noting that the "sacrifices" of the private sector workers came through recessionary economics and the appalling fiscal irresponsibility and greed of the private sector. The two have absolutely nothing to do with each other, and the "sacrifices" of private sector workers, (lost jobs, lower wages and so on), are what need to be reversed to create true economic growth.

The notion that the public sector should copy the proven incompetence and inability of the private sector in providing stable jobs and living wages would seem at best misguided.

Of course, despite all of its populist rhetoric,  Hudak's policies would also  accelerate inequality in Ontario. Wage suppression, anti-unionism, public sector job cuts, deregulation and deep cuts to social spending and social services are not only certain to increase the economic instability and threats faced by workers and some elements of the middle class, they will also directly benefit the upper middle-class and the wealthy and many, though not all, corporations and their profits in the short term.

Given that millions of Ontario residents are a couple of paycheques away from missing credit card and mortgage payments, and given the government created and backed housing bubble and personal debt crisis, the Tory plan to "create" growth and jobs by taking wages, benefits and either the actuality of or possibility of union rights out of the pockets of these same citizens is a recipe for disaster.

While McGuinty may have got the ball rolling, Hudak's vision, if implemented, would set the austerity loop loose. Once unleashed, Greece and Spain are only a housing bubble burst away.

A plea to Ontario's citizens: Support your teachers and their union.

As many of you are no doubt aware, there is a struggle occurring in Ontario between the Liberal McGuinty provincial government and Ontario's teachers and their unions.

Not content to allow negotiations to take their course, McGuinty and his Education Minister, Laurel Broten, manufactured a "crisis" by implying, entirely falsely, that the start of the student school year was in jeopardy due to alleged union "intransigence" around issues like wage freezes, sick days, etc. They then implemented, with the support of the Tories, Bill 115, a new low in Ontario collective bargaining history that renders teacher strikes temporarily illegal and that imposes the settlement that the McGuinty government wanted all along.

This Bill is being challenged in the courts by, among others,  the Canadian Civil Liberties Association. At a press conference they held Sukanya Pillay said "We are concerned that this bill violates the right to meaningful collective bargaining. Why is it necessary, for instance, to remove the right to strike before any job action has occurred or even been contemplated? Collective bargaining enhances the dignity of workers and is a constitutional right, in part, for this reason. This isn’t only about the pocketbook, it is also about participating in the governance of the workplace.”

The government, obviously, has pushed its erstwhile allies into a corner.

The fact is that the teachers, their unions, and their basic collective bargaining rights are under full frontal assault. This is part of a broader trend in Canada to override the rights of citizens who are members of unions by claiming that the exercise of these rights, namely the power that they have to withdraw their labour and services, is somehow an infringment on the "rights" or "needs" of others. In this case the right-to-strike has been taken away prior to the act itself, rendering the right null and void and, in addition, preventing the teachers from being able to collectively exercise their power and rights as workers in the face of the government.

Usually the attack on unions is framed in a disingenuous and folksy way. And usually this is done by the Right. Hence the absurd naming of Bill 115 as "Putting Students First", an obvious attempt to court the pseudo-populist nonsense that by striking or demanding their fair share and their union rights, somehow teachers are being greedy or are "hurting students".

This right wing rhetoric is hauled out in every strike, public or private sector. The lies of the government and capitalist forces are always that the actions of unionized workers are harming students, the public, the economy, people who "really want jobs", those who depend on their services, etc. The "victim" of the union may change, depending on the situation, but the false narrative is always the same.

Unions, don't you know, should not make life hard for anyone. And striking or "work-to-rule" supposedly does that.

The teachers have responded to McGuinty by a "work-to-rule" campaign where they are no longer doing the unpaid after school work that so many parents take as somehow "a part of the job".  They are using the last tool available to them, a tool as old as Unionism itself, given that their usual bargaining rights have been negated. They are doing this to show the public just how valuable their work actually is and to push the public to realize that they take much of what teachers do in helping to raise our children for granted.

So imagine the shock, here on the pages of Rabble, when we hear Gerry Caplan  telling us that, if the teachers continue with their work-to-rule campaign "Surely teachers, not the government, will take the brunt of the criticism. Take even me, a teacher and union booster. I have a granddaughter in public school. I'm angry at Dalton McGuinty, but if she's punished for his sins, I'm sorry but I know who I'll blame."

After saying that they should simply be happy about Catherine Fife's victory and wait for the next election (assuming, as I guess he does, that the NDP would advocate for teachers despite the fact that Fife singularly failed to do so when asked at a debate ) to see their objectives realized, he then goes on to say "I appeal to teachers not to withhold any of their services from their students. I appeal to the leaders of the teacher unions to disavow their directives to their members. I urge them to assure the public they will never use students as pawns in their legitimate struggles with the government."

An interesting choice of words and strikingly reminiscent of Chicago mayor Rahm Emanuel's statement, in his attempt to break Chicago's teacher's union that "students are being used as pawns.” This same logic has been used for thirty years by Liberals and rightists to help to destroy unions and their popular support. They have been very successful in making people think that their own immediate self-interest or selfishness is more important than broader struggles against austerity and injustice and their their own personal interests and those of unions are divergent.

What, one must ask Caplan, would have happened had the teachers in Ontario been allowed to use their right to collective action and had they gone on strike? A real full out strike which is the instrument of basic union power. Would this not have been, according to Caplan's logic, using the "students as pawns"? There would have been no classes at all. Would a legal and constitutional exercise of their fundamental rights as workers to strike have made him blame them as he had a granddaughter in the "system"?  

I have three children in the system and I am on the side of the teachers. I am not on the side of the teachers as long as it does not inconvenience me and my children for a few weeks, I am on their side totally and I support their rights completely. And I know who I blame; I blame the McGuinty government. And I equally blame all those who embrace the idiocy of populist anti-union rhetoric.

I also know that using the rhetoric of the right and the capitalist class to continue to disregard the basic rights of the unions and workers that so many fought and died for is wrong. There is no doubt as to whose side we should be on here. The students know who is in the right, and showed this with their walkouts, and so should we. And this is an opportunity for us to teach our children and grandchildren about why we support unions, and what they mean to our society and the history of the fight against injustice and poverty as well as the fight for worker's rights. Gerry, if your granddaughter is missing an after-school class, maybe you should tell her why, and why she should be on the side of those who will educate her for the rest of her formative years.

This is a teachable moment.

In a strike the students are not "pawns", they are the point. The government and Globe and Mail columnists do not teach children, the teachers do. They are the front line workers and they deserve the full, absolute and complete solidarity of everyone on the Left.

Their tactics are not what should be in question, the tactics of the government are.

I urge all citizens and parents to remember that teachers are our "heroes" as Caplan says, by defending their constitutional rights, their right to strike no matter who it "inconveniences", their right to have unions and to exercise collective action and their right to oppose the appalling legislation of McGuinty and his Tory allies not only, supposedly,  at the ballot box one day, but right now in the streets and on the picket lines.