From Left to Right
This article appeared in the Minden Times in October 2023.
I have long thought that economics is a pseudo-science, the necromancy of divining the entrails of a chicken wearing the three-piece suit of credentialism. The notion arose when the quivering of The Market was featured in the daily news, with The Market personified as a slightly hysterical bimbo who reacted to Events: scared by this, encouraged by that, mystified by the other. Now that the internet tells everyone everything about anything that happens anywhere, the media has stopped specifying the culprit of the day, substituting generalized big-sweep explanations in which anyone can find a grain of truth.
Most of what twitches The Market are not acts of god or nature, but rather the thrashings of man-made monsters. Like OPEC, the Organization of Petroleum Exporting Countries, formed in 1960 by primarily Middle East countries to control the production and therefore price of oil worldwide. It flexed its muscles in 1973 to force the return of lands occupied by Israel, cutting back production by 5% which almost overnight raised the price of oil by 70% and set off a panic that the world was running out of oil. Canada hustled to protect itself by prioritizing development of its own resources, giving the nod to explore the Tar Sands, as they were known then, to meet our future need. That the golden egg lay in the nest of the West emboldened them to seek the federal influence they long felt was unjustly denied them. (And still do – to wit the current battle between Alberta Premier Danielle Smith, cheered on by Saskatchewan Premier Scott Moe, and the federal government about control over energy development.)
Papa Trudeau’s response in the fall of 1980 was the NEP, the National Energy Program, which sought national ownership, self-sufficiency, and internal equity over all things oil. The federal government created Petro Canada to ensure national ownership, taxed oil production to create national revenue, and froze the in-country price of oil at lower than the international price to ensure internal equity. I lived in Alberta at that time: the signs everywhere were ‘Let the Eastern Bastards Freeze in the Dark’. When the NEP came into law, spring 1982 as I clearly recall, the imminent sale of our home stopped in its tracks as the oil industry left town overnight, and abandoned workers abandoned their homes for greener pastures. Houses could be bought for $1, occupied for free until the bank came to foreclose, and then gutted for anything with resale value. We gave thanks daily that our house secured a renter for the following four years, until it eventually sold – at a fire-sale price.
Why am I talking about this? Because Inflation is the man-made monster that is rocking our boats at present. Jim Stanford, CEO of the Centre for Future Work, (and rogue economist, in the opinion of some) has been saying from the giddyup that raising interest rates to quell inflation, as per classic economic theory, will not work. (He does not say, as I do, that economics is smoke and mirrors.) The intent of a borrowing rate hike is to discourage people from spending. And as Stanford predicted, it hasn’t, because the market elements that have remained inflationary are the things we cannot do without: shelter, food and transportation. With cost structures far beyond individual influence. We feel, and are, largely powerless.
The concern about instituting structural inflation in the form of higher wages is laughable: the Wizard behind the curtain, the capitalist necessity to grow and keep on growing no matter what, has in its hands all the levers of the economy, an international web of structure that far out-powers organized labour. And the government plays whack-a-mole with its flyswatter.
And why is it that the government has naught but a flyswatter? Its role in traditional economic theory is to support essential resources when the economy is in its cyclical downturns, and refill the coffers when the economy is humming. That formula got smashed with Maggie Thatcher and Reagan and neoliberalism, which decreed that government should butt out. Or if it wants to play, be businesslike. Citizens became customers who must pay for what they use so taxes to fund the common good are minimized. Government must invest in business which will then do all that is necessary. Remember the trickle-down theory?
We are playing a life-and-death game using a rule-book based on a bogus science that has led us inexorably and more or less blindly to a sad state of affairs. The rich get richer and the poor get poorer and together we desecrate the earth. Apologies for being a Debbie Downer; for next time I have some thoughts about what we mere mortals might do to reclaim humanity.
I’m reluctant to blame this column on the book that shook these thoughts loose, but I want to honour it for messing with my mind; it’s From Left to Right: Saskatchewan’s Political and Economic Transformation, by Dale Eisler, University of Regina Press, 2022.
