Continued rant about capitalism and our imaginary democracy

But what can we do? Well, I may be pinned as an idealist, a socialist (as if that's an insult), a communist or worst for believing what I believe. But I firmly think there are several areas we need to change.


    1. Fair trading - The idea of fair trading is an interesting one to me, looks very appealing, but also feels a bit idealistic. If there was any way to introduce fair trading practices in the world, at least some of the issues raised on my last post would be considered. Fair trading would attempt to provide fair jobs in developing countries. Instead of having people working at almost slave conditions, we would trade with countries like India, China and Bangladesh in a way that may ensure the growth of a middle class, which is the only real driver of prosperity as seen in history. Sounds great, doesn't it? But I did say it also feels a bit idealistic. One of the problems with this idea, is that it would clearly cut down profits. If the main drive for outsourcing cheap labor to these countries is profit, fair trading would diminish the interest in the idea. I believe that this is the main reason the only time you see "fair traded" labels involves food and other exotic commodities. By that I mean, you can't produce coffee as easily in Canada, so we need to export it from the tropics, no other options there so the big players can afford to push for fair trading. With sweatshops, you don't get that. If all of a sudden local business owners in Bangladesh decided that their working conditions isn't good enough, hence they push for fair trade, Wal-Mart and Fresh Co will just go ahead and shop around other desperate countries to provide the same service for cheap.

    2. Rational protectionism - One other way to prevent some of the problems outlined in my last post is to introduce tariffs to products imported from countries like Bangladesh. I don't think a blanket protectionist policy is a good idea, but I do believe that using tariffs to regulate prices of goods that are coming from developing countries and are made from inhumane conditions can help. A capitalist economy has profit at the bottom line, not global or social prosperity. So they don't care if 300 people have to die in Southeast Asia in order to be able to make large profits. What they do care about is profit, and if these profits are getting chopped at the border because of tariffs, that will change their practices. Maybe implement conditional tariffs that try to enforce accountability, so for instance if a falling building would make it so that from now on, Fresh Co will have to pay significant tariffs to our government because of their negligence in choosing appropriate manufacturers. I hope this point isn't mistaken by people, and make them think I don't believe in globalization and free trade, I do, I just think it needs to be done responsibly. I also think accountability isn't a real factor in the free market, so this is one way to add accountability to the picture.

    3. Tax things we don't like - Another way the government can help this situation is by taxing things we don't want, and giving benefits to things we do want. In this situation, one approach would be to give more tax benefits to businesses that hire locally, and contribute fairly to the local economy. This would obviously impact commodity prices, but I just see it as a necessary evil. Nothing in this world is free, so when we pay so little for things, we have to wonder how this is possible. Efficiency is one possible explanation, but another very real explanation involves the fact that people cut corners. Corners that sometimes should not be cut. For instance, in Canada recently, it has made the news that big banking conglomerates have been firing local workers in order to hire, cheaper, temporary replacements from abroad. They use our government programs in order to increase profits while putting Canadians out of work. Again, this is where taxing or giving benefits comes in, our government is rewarding corporations for bad behaviour. To me this is even more of a problem when you start to talk about the whole "trickle down economic policies", which clearly, and I mean, CLEARLY, is complete rubbish. Businesses want to make profit, they don't give a crap about how they treat employees, or how the overall economy is doing. They just want to make money.

    4. Criminalize lobbying - This brings me to my last point. We do not live in a democratic country here in Canada or the USA. We just call it a democracy, but the truth is that when money is involved, the popular opinion isn't a factor. There are two things that move our countries towards changes. These two are money and power. The government and corporations have a complete monopoly of these two commodities, if you will. Corporations make huge loads of money, that they then turn around and pay for lobbying that furthers their agendas. Lobbying is essentially the exchange of dollars for political power. This is where politicians take corporate money, to not only fund their propaganda during election, but also this is the money that moves politics. Money that prevents stricter gun laws in the USA, when 90% of the population supports the motion. It really doesn't matter what people want, if politicians can just sell bits of their influence to corporations, so that they can fund their next election. Elections nowadays are a joke. It's basically a bunch of corporate puppets paying absurd amounts of money to tell us what we want to hear so that we vote for them next time. I mean, just look at the Conservatives in Canada, spending tax payer dollars on advertising to convince us that the Harper government is environmentally conscientious. While at the same time they are developing and destroying the Tar Sans, they are closing down research facilities in Ontario focused on environmental issues and global warming and they are trying to move us away from freedom of research by muzzling Canadian environmental research. So it really pisses me off to see my money being spent to convince me of a complete lie. So people, wake up! While we are all still comfortably employed, living a relatively comfortable life in Canada, our nation is moving in a very terrifying direction. The direction of a plutocratic nation, away from the democracy we like to say we have.

Why Japan is the most interesting story in global economics right now

I know reposting is lazy, but it's been a crazy semester with my masters and a full time job... also, it's a great article so it's not so bad.
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Posted by Neil Irwin on April 8, 2013 at 9:28 am

Through the last six years of rumbling global financial crisis, Japan has been an afterthought. In 2008, the world’s second-largest (soon to be third-largest) economy was still dealing with the consequences of its own banking crisis from the 1990s, its economy mired in a generation of economic stagnation and low-level but persistent deflation. If you had taken a snapshot of the Japanese economy in 2002 and again in 2012, you wouldn’t have missed much.

How quickly that has changed. A new government took office the day after Christmas, led by prime minister Shinzo Abe, pledging to, in effect, go whole-hog on the Keynesian remedies for Japan’s long recession, particularly by pushing for a combination of fiscal stimulus on a mass scale, and, through appointment of Haruhiko Kuroda as governor of the Bank of Japan; he has pledged to do “whatever it takes” to get annual inflation to 2 percent in a country where inflation has averaged -0.3 percent since 2000. The Japanese stock market is on a tear and the yen has been falling steeply on currency markets, exactly the kind of reaction the BOJ hopes to see.

There is a lot riding on Haruhiko Kuroda’s new leadership at the Bank of Japan–and not just for Japan. (Haruyoshi Yamaguchi/Bloomberg)

There is a great deal riding on their success, and not just for the 128 million residents of Japan. Because Japan has quite suddenly become perhaps the best natural experiment that economics could offer for weighing how the United States and Western Europe ought to respond to their own economic woes.

There are a series of open questions that have haunted those who argue for a more aggressive Keynesian prescription of easy money and fiscal stimulus in the United States and Europe. I’ll limit it to the two most important: Can a central bank always create higher inflation in a depressed economy, or will lots of money-printing just affect asset prices and the international value of the currency without affecting the real economy? And can public debt levels reach a “tipping point” in a large country that has its own central bank and considerable domestic demand for its bonds, which would in turn make fiscal stimulus risky when there is already high debt relative to GDP?
One of the great challenges of macroeconomics is that different countries and their economic situations are so different that it is hard to directly apply lessons from one to another. And crises in particular don’t happen all that often, so we have even fewer examples to go on as to how best to respond to them.

All the United States economy circa 2008 and Thailand circa 1998 really have in common is that both experienced some form of crisis; they are such wildly different countries economically, and their crises had such wildly different causes, that it isn’t particularly useful to judge what policies the U.S. should take on by what happened the East Asian crisis a decade earlier.
But Japan is a different story. It is a large, advanced economy, which has been grinding through the results of its own banking and financial crisis. Its story has been more one of year-after-year of stagnant growth than one of outright depression.  It has control over its currency, and its citizens’ demand for government bonds is deep enough that it simultaneously has the highest debt to GDP ratio in the world and the lowest interest rates (which is quite a trick).
In effect, Japan is a cautionary tale of  what the United States, Britain, and continental Europe could become if the major Western powers can’t jolt ourselves out of a long period of economic stagnation.
Shinzo Abe and Haruhiko Kuroda can’t magically make Japan’s corporate giants more competitive on the world stage, such as by making Sony competitive with Samsung in the market for smart phones or bringing back a world where Toyota could make significantly better cars that Hyundai. But their policies to depreciate the yen could give those companies a leg up in the global marketplace in terms of their cost structure that they have not had in ages; the yen has fallen from around 80 to the dollar in the runup to Abe’s Liberal Democratic party winning the elections to scraping 100 to the dollar (the exchange rate was 98.61 on Monday).

But it would be wrong to view this effort as riskless. On one hand, the efforts to return inflation could be too successful, increasing borrowing costs for the Japanese government and, in the process, making its huge debt of twice GDP exceptionally hard to maintain. On the other hand, the Bank of Japan’s easing could again prove to be not up to the task.

If everything works as planned, Japan’s industrial will return on the back of a weaker yen, an improving economy will improve its deficit picture, and the nation will soon have a goldilocks economy of prices rising about 2 percent a year and debt to GDP levels coming down. If things go awry, we could soon be staring at the mother of all sovereign debt crises. Whatever path the Japanese economy takes, it is one that will have lessons and implications for all of us.

A look into buying local

While doing some redditing, I came across an interesting chart looking at how much of your money spent locally stays within your community and how much stays when you don't spend your money on local business. Here is a different version of the chart I saw on reddit:

This was based study that took place in Michigan by "Local First", looking at the impact of local business on the West Michigan economy. I thought this was interesting and it shows how much of an impact there is when you buy things from local business.

I'm a bit of a supporter of some protectionist practices, so I obviously have some biases when it comes to interpreting these figures. I don't necessarily believe in protectionism like they have in Italy, which is destructive to the economy and full of problems. However, I do believe in governments intervening in the economy in an attempt to promote local manufacturing and services. Not only buying something made in your region may be better for your community, but it also saves money on transportation costs and associated administrative costs, which don't go into profit for the people producing whatever it is that your are buying. This in turn ends up affecting the consumer at one point or another.

If buying Peruvian oranges costs the same as buying a local orange, you need to ask yourself how come adding the cost of transporting your orange thousands of kilometers doesn't add to the price tag? Well, there may be several reasons for that, one of which could be that the conditions of the people collecting oranges are not very good. They probably don't make much of a salary. I think this is a fairly poor example, however I do believe in avoiding purchasing items that support unreasonable working conditions in places like China, or spending my money on products that take the money to a corporation, where people at the top are making many many millions of dollars. Dollars that are seldomly used to pay higher wages to employees or to invest in worthwhile efforts. I personally prefer spending my money in smaller businesses, that don't have humongous costs associated with CEOs, large administrative efforts and advertisements aimed to convince me that their product is better.

This certainly doesn't apply to a lot of things, and in no way I'm saying the CEO of a company like Google doesn't deserve all he has. That's not it at all. I just rather buy a car made in Canada, which pays Canadian employees a livable wage (this is debatable of course), over buying a car made in China by facilities with safety nets on the side of buildings to avoid workers from committing suicide. I rather buy a locally grown bell pepper, which may even be slightly more expensive than a Mexican pepper, because I know the people collecting my food are paid relatively decent wages, and my pepper doesn't contribute as much to my carbon footprint. 

The world economy is certainly shifting, and countries like the BRICK countries are becoming major international players. I think this would be an amazing development, if only I thought that this means that those countries are raising people from poverty, and that the condition people live around the world was improving. I highly doubt that's what is actually happening. More likely the first world countries are turning into stratified countries with more distinct social classes, and a much weaker middle class, while CEOs and big corporations in third world countries exploit cheap wages and sub-par working conditions in order to further separate themselves from the working class. The rich get richer, the poor stay relatively the same, and developed countries like Canada and USA slowly move towards becoming just another divided nation.

Stranger danger - a look into protectionism

Protectionism is often a point where I tend to disagree with a lot of people. I think the rise of developing nations into more significant roles in the world economy makes this topic come up more often. The BRIC countries (Brazil, Russia, India and China) have been growing and developing a new role in our globalized economy. This makes a lot of sense, when you consider the fact that globalization helps spread wealth around. Wealth that decades ago would have stayed in one region for much longer, all of a sudden can go between continents in the matter of seconds. Outsourcing manufacturing jobs is not new at all, however, we see more and more outsourcing of other services to different nations and the spread of money and knowledge just allows innovation to occur more often in new places. When you put all this into context, it makes sense. If you consider that there is a finite amount of wealth in the world (which isn't necessarily true but the analogy helps my point) and all of a sudden a lot of the wealth that use to be generated and spent in North America and Europe is being diverted to emerging economies.

Well, isn't that a good thing? Don't we want to spread the wealth? More often than not, I feel that the answer is yes but no. Yes, it's good to give the opportunity for other nations to develop, and more innovation to occur. That's good. We want struggling nations to be able to lift people from poverty and maybe even develop a middle class. These are all great things, I agree. However, I also feel that we need to look at what the side effects of these things are. For instance, think about why this money started to flow to developing areas. This happened mainly because companies realized that in order to stay competitive; they needed to lower costs, and one way to achieve that, is to outsource work to places with cheaper labor, cheaper land and maybe cheaper taxes. The bottom line is that jobs that use to be done within developed countries, moved abroad. Considering people can keep having cheap products, people that are employed in NA and Europe are happy.

It still doesn't look that bad, after all, they just eliminated unskilled work pretty much. People will just have to get more educated to do other types of jobs. On the other hand a big effect this has in the economy is that companies are making a lot more money, and that money isn't really trickling down to the bottom as politicians like to claim. Richer companies, can afford to be even more competitive, which smothers the little companies (ie. Walmart). This destroys reasonably paying jobs, destroy small companies and innovation from the little guys. A company that doesn't have to work hard to monopolize a market, has less incentive to innovate. On the other hand the developing nation which is now seeing a lot more wealth running around, isn't really used to this, and labor policies don’t always benefit the little guys either. Workers on average are making more there, but the wealth distribution is just becoming more segregating. So the nations that use to provide everyone with a great share of the wealth, now are doing less of that. While nations that always had larger wealth disparities, are just raising the lower class from the dirt while they fill up their pockets with money. 

The reason why North America in the middle of the 20th century was so prosperous was the fact that the economy worked for the people. There were always class differences, and I think there should always be such. But the bottom line was that the financial agenda was to keep the country running smoothly and efficiently, providing a piece of the pie for everyone. Capitalism was controlled and worked well. When Capitalism takes over everything else, and making money is the sole goal of a society, human greed affects how the system works. It begins to alienate the elite from reality, instead giving them the sense that capitalism wants them to make money no matter what. Once this infectious mentality spreads to governments, the real problem emerges. That's when democratic nations become plutocracies, and values go from being about the welfare of the people, to the welfare of this constructed concept of the economy.

That's why I think protectionism isn't all that bad. It's a bit like capitalism, in that it is an idealistic concept, but I think it is important. Going back to the idea that there is a certain amount of wealth available, I think a nation needs to ensure enough of this wealth stays within the borders, and even more importantly, is distributed well. Of course that means people can't have as much "stuff" that's made elsewhere, but ensures a healthy job market and a healthy economy, that is sustainable and fair. Individual governments only have power over their own policies, so they can't ensure that China or India treat their people fairly, however they have the power to try and make their own country as good as it can be. By making sure business practices are done responsibly, and with the people's welfare as a priority.

(I also wrote a little on free trade in the past if you are curious to see that)

Anonymous Message - OIWS

After nearly one week of protesting in Wall Street and other areas of the US, it seems that the media is finally unable to ignore the slowly growing movement happening right in their own backyards. The Occupy Wall Street protests have been happening, and including quite a bit of police abusing their power and in some cases even brutality to silence the emerging movement, which seeks to awake America to corporate greed and social injustice that has occurred for a while now, causing the 2008 recession and everything that followed. Personally I've been very frustrated with the lack of repercussion to the disgusting practices of financial institutions, and the seeming nonexistent response from Americans to white collar crimes happening right in front of their eyes. Well, it seems that we may finally see something happen, as broadcasting stations are beginning to show what has been happening and celebrities like Michael Moore have started to get involved. I'm not a big fan of Michael Moore, but I am happy to see support from people of influence. Just now I have also discovered that the hacking group ANONYMOUS will also be launching an attack on Wall Street on Oct 10th, here is their message to the people:

This should be interesting.

They have also sent the following message to the media:

Greetings, Institutions of the Media.
We are Anonymous.
The events transpiring within Wall Street have caught our eye.

It seems that the government and Federal agencies enjoy enforcing the law a little bit too much. They instate unjust laws as mindless automatons, blindly following orders with soulless precision.
We witness the Government enforcing the laws that punish the 99% while allowing the 1% to escape justice, unharmed, for their crimes against the people.
We have observed this same Government failing to enforce even the minimal legal restraints of Wall Street's abuses. This Government who has willingly ignored the greed at Wall Street has even bailed out the perpetrators that have caused our crisis.
We will not stand by and watch the system take over our way of life.
We the people shall stand against the government's inaction.
We the people will not be witnesses to your corruption and ill gotten profits.
We will not labor for your leisure.
We will not assist you in any way.

This is why we choose to declare our war against the New York Stock Exchange. We can no longer stay silent as the population is being exploited and forced to make sacrifices in the name of profit.
We will show the world that we are true to our word. On October 10th, NYSE shall be erased from the Internet. On October 10th, expect a day that will never, ever, be forgotten.

Vox Populi, Vox Anon.
The Voice of The People is The Voice of Anonymous.
We are Legion. We are the 99%.
We do not forgive. We do not forget.
Wall Street: Expect us.

Germany and their inflation phobia

We are and have been in the middle of a period of economic uncertainty. A lot of experts have warned that a double dip recession is a possibility and the ones that don't believe that, still agree that economic recovery in the industrialized world has been very slow since 2008.

The US was the main focus of the recession that started in 2008, despite the involvement of many other nations in its development. While the US is still a very similar country in terms of economic policies to what it was in 2008, this time around economists have indicated that economic instability for the next recession is likely to come from the EU. Countries like Greece, Spain and Portugal are some of the main problem nations, but there are a lot of other trouble makers as well. However, not all countries in the EU are in trouble, which may be the only reason their economy hasn't collapsed yet. Germany has had a strong economy for many decades, and despite the economic events in recent years, the nation still boasts of fiscal responsibility and economy stability.

Recently, as expected, a lot of the troubled nations have been approaching Germany for loans and other forms of help. Not only that but they have also been asking for help from the European Central Bank. One interesting bit of information about this central bank is the conditions in which it was created. Back when European nations decided a centralized bank would be a good idea, Germans were very hesitant, so in order to go ahead with the creation of the ECB, a clause in the contract said that the ECB could not engage in quantitative easing. This was a main condition in order to keep Germans comfortable with this unification.

The European systemic instability that we have been seeing has led some countries to ask the ECB for help, even though the help they are asking for is prohibited. The other interesting aspect of this story is the reason why Germany is so reluctant to allowing the central bank to print money.

This goes back to the 1920's and it has everything to do with inflation. After WWI the german government was in a lot of debt, so they had to borrow a lot of money from the rest of the world and often that wasn't enough. This led the government to issue an order to their central bank to print as much money as they needed. This obviously led to a massive loss in value of the Deutsche Marks (German currency), which is another way to say high levels of inflation ensued. The following decade of high inflation is thought to have enabled the Nazi party to gain popular support. Social distress caused by hyperinflation in Germany was not very different from the social distress in Italy that allowed for the rise of Fascism in that country. So it isn't hard to understand why Germans are so hesitant to break these rules established during the institution of the ECB. This is aside from the obvious fact that printing money to pay debt seems like a shortsighted solution to anyone with half a brain.

Invisible hand or imaginary hand?

This is probably one of the funniest things I've heard this week. Watching Bill Maher, he asked Bill O' Riley why he thought the rich were worth roughly 27% of the wealth in the US, where in the beginning of the 80's they only owned about 9%. O'Riley's response was that this was an effect from our technological advancements.

But anyway, I have been learning and reading a bit of "Capitalism and Freedom", which is a book by Milton Friedman. Seemed like an interesting book and let me say first that I am a true supporter of capitalism and all it has done for humanity. Having said that, I have to say I believe there is a fundamental difference between capitalism and free market. In some ways I feel Friedman uses the word capitalism when he is really referring to free market. So that was a flag right away that I wouldn't really agree with a lot of his ideas.

Friedman claims that humanity's biggest achievements were a result of individual genius and not as a result of governmental directives. He uses examples such as Newton, Shakespeare, Bohr, Edison and Ford. While those are examples of what he is trying to argue, I would mention the involvements of governments in the development of more recent achievements such as the understanding of nuclear physics, space exploration and the internet as being some of the most important achievements of the 20th century, all only possible due to governmental support. I know most of these examples are recent, but I would argue the progress in politics and the improvement in the way nations are runned are also part of the reason for that. Putting all that aside, I would also like to bring up that the quality of life should be seen as important as well, and that technological progress should not be used as the sole way to measure human achievements.

"Free market, not government, ensures the protection of individual rights and standards of quality and delivers extraordinary prosperity to those who seek it." I don't even know where to start on this statement. I think I may instead just mention, Sweat shops and social alienation that are clear consequence of greedy corporations doing anything possible to increase profits. These two examples illustrate how free market is able to exploit social and economical disparities between countries, lacking ethics and taking away work that could actually benefit the people of their countries of origin by providing more reasonable wages at the cost of increased profits. This fits a concept I always fall back to, that nothing comes from nothing. Increased profits come from the exploitation of less fortunate people to benefit those who don't need it.

Friedman also believes free markets are the basis of personal and political liberty. Friedman goes as far as saying that a healthy private economy naturally provides a check on the power of the state. While I don't necessarily disagree with this statement, I believe a free market with too much power doesn't stop at providing checks on the power of the state but at some point they begin to influence the state into making decisions to benefit those with too much power. I don't think there is much arguing that powerful corporation in many sectors spend a lot of resources on lobbying to make sure the state doesn't anything too drastic that could negatively affect their business. That's part of what makes me believe it is imperative to have a strong economy based on capitalist ideals, but a sustainable economy that benefits the people and is monitored by the state. I believe it is just as important for the state to keep checks on the power of the corporations as it is for the corporations to keep check on the power of the state.

In Capitalism and Freedom, the author also talks about the great depression. He says that the view it as a failure of the markets is false, arguing the depression was largely a failure of government. His argument is that the failure of the government to increase money supply in the wake of bank collapses is what caused the depression. However, and this may be just me, it sounds a lot like Friedman is blaming the government for the great depression for not doing something and saying at the same time that governments shouldn't try to control the economy. I know I have the perspective of someone living in a recession after the great depression, where a lot of funds were injected into the economy from federal funds in order to minimize the impact of the recession and seeing its effects. As much as I think the money allocation for the most part was a half ass response to what was wrong and continues to be wrong, I can't deny the effects it had on the economy. A lesson was definitely learned from the great depression, and that lesson was not to let it work itself out. I think the only aspect of this topic I agree with Friedman is that the money spent as stimulus packages are mostly inefficiently allocated.

Lastly, Friedman talks a lot about governments controlling people to act against their immediate interest to promote a "supposedly general interest". As much as he does have good examples of bad regulations that originated from governments in the past, I would always argue that his examples are clearly the error of the people in charge at the time but not of the government as a whole. The same way markets are highly modulated by individuals in good and bad ways, the government is also subjected to "bad calls" from the people in power. People are bound to make mistakes, but the error of the few should not invalidate the value of the whole. In the same manner influential individuals have the ability to destroy their company, individuals can also destroy their own political parties and open the way for a change in power. As I said there were some good examples of what he calls unjustifiable government regulations, there are many I'd like to say I strongly disagree such as relation of banks, pensions, minimum wages and public housing. Friedman claims minimum wage implementation simply increased unemployment; he says public housing concentrated poverty in pockets and social security created dependence for people who might have otherwise contributed to the economy. I feel most of his examples are circumstantial and simply point out flaws in the implementation of good policies rather than weaken the value of the policies themselves.

Its interesting to read Friedman's ideas and note that his right winged views are still used in politics today. I think he does bring a lot of interesting ideas to the table and he points out a lot of flaws in social programs and government regulations. It is important however, to look at his views with the knowledge that he lived in a different time without a lot of the advancements we've had in the understanding of economics in the last 30-40 years. It is similar to reading the works of ancient Greeks in the natural sciences and admiring their ingenuity for their time.

Instability hits the stock market

Interesting development in the stock markets yesterday, as most people know by now the TSX had a historically bad trading day yesterday which resulted in the loss of all gains in 2011, the situation south of the border was much better either. I've been waiting for our next recession for a few months now, but I didn't think we would see another crash for at least another year or two. What happened yesterday showcases that the recovery over the past two years may not be based on the actual stability of markets. Investors are turning away from North America and Europe as the two are now having to deal with serious debt issues. Unfortunately emerging markets like Brazil have also been having some slips as well, meaning even some of these options are starting to look less appealing. I may be thinking a bit negatively but I do believe we should get ready for another recession, I don't believe it will come from the housing market this time but I have no clue where it will come from, perhaps the energy sector? I don't know. But we will be seeing gold prices rising in the next while, the Canadian Dollar will finally drop a bit (which isn't terrible really) and we should see interest rates go down a bit.

Positive sorting or unequal distribution?

Ever since the election 9 days ago I have been considering the conservative majority win. I'm going to leave aside the fact that our democratic system allows for a minority (40%) of people to decide our nation's leader, instead I would like to focus on who this minority has chosen to be Canada's leader for the next 4 years. If it wasn't clear so far, I really did not want the conservatives to be in power.

To start, I think I need to recognize that 60% of voters were supporters of the left as we know the liberals lean somewhat to the left of the political spectrum and the NDP is an even more socialist party. So really I would like to challenge the 40% of voters who did cast a vote to the right on May 2nd. I can't really say anything about why the majority of these folks voted conservative, but I do know a significant portion of them voted on the idea that Harper was good for our economy. People believe he has been doing well handling the recession and his tax cutting tendencies are good for Canada's long term economical growth. Well allow me to explain why Harper's approach does not help the struggling class and in the long term it does not have Canadians in its best interest.

I think any Canadian would agree that what Canada needs during these tough economic periods is a plan that grows the strength and resilience of our economy. Our economy is not just banks and corporations, it is based on people and natural wealth. How we produce and distribute our natural wealth is key to the future strength of Canada's economy. Having said all this let me bring up a very strong period of economic growth. Between 1997 and 2007, Canada saw very healthy economic growth, up until the most recent recession. During this period the top 1% of the population got 1/3 of the gains of this prosperous period. This is not unexpected as we can find that historically prosperous periods often benefit mostly the wealthy, this is somewhat natural and it is usually balanced by a recession that reduces this gap to some extent. However, the last time we've seen this level of growth was in the 60's, back then the top 1% only got 8% of the share, so we're looking at a much more concentrated distribution of resources. Statistics say that in this decade the richest 1% doubled their share of the total income in Canada and the richest 0.1% tripled their share of the national income. Now the bottom third of the population only got 8% of the economic growth of the decade in question. This is very much an uneven distribution of gains, and they present a much deeper problem then the fact that the rich are getting richer a lot faster than the rest of us.

In order to really show how this unequal distribution affects everyone negatively, we might as well look at the middle class, since we Canadians like to claim it as our strongest class. The median income is the income where half the population makes more than that and half makes less than that. In 1976 this median was around 46k (adjusting for inflation) and in 2008 it was 48k. So during this entire 30 odd years, the average household has become more educated and in a lot of cases now, both parents need to work. So in this entire period of economic growth, we have not seen much in terms of progress in the middle class. To accompany this trend we have also seen jobless benefits and social insurance get watered down.

Since the beginning of this most recent recession, unlike what is seen historically, measures to get the economy back to it's feet have not affect the top earners. The fact that social assistance for the unemployed has been stripped down, people lose their jobs and grab what they can to stay afloat, including much lower paying jobs and self employment. This causes the % unemployment numbers to deflate despite the reality of the situation, which is people are earning much less than before. Not only this but there has been a lot of downward pressure on wages, pensions and benefits as if the middle class is what caused the recession. This isn't as apparent in Canada, but in the US there have been plenty of high profile debates on these issues, such as the teachers unions in Wisconsin. I don't understand how these kinds of measures are seen by the population as acceptable. I don't understand why more people are not completely outraged by what right leaning politicians see as valid measures to help the economy.

Maybe I'm too harsh on conservatives and republicans, but what do people on the right say about what drives this increase in social gaps? A lot of them like to point out marriage inequality, basically the rich marry the rich, and poor marry the poor and this is a social phenomenon that creates more inequality. This is often called positive sorting, and it is just a nice way to justify a problem they don't like to address. It's a way to avoid the real cause which is that during prosperous periods the rich gets richer and during recessions the poor gets fired. Statistics also show that the average household with children now works 200 hours more a year then they did a decade ago. The biggest increase in working time is at the bottom earners. This makes sense because if your new job doesn't pay enough to keep things afloat, then the parents have to work more. So despite the increased amount of hours worked at the bottom, the increase in wages happened at the top where there were no increase in hours worked during the same period.

What many people see as the strength of the conservative party is their measures to ensure economic success in Canada. What are some of these measures then? Well a very common right winged approach is to lower taxes. This is a great way to be popular among the general canadian, who is dumb enough to think that these lower taxes will help them. Apparently a couple of hundred dollars in their pocket will help them solve their financial troubles. I wonder if someone unemployed sees it that way too. To complicate the matter even further, there are these corporate tax cuts that have been occurring since 2007. Now where is the rationale for those?

The idea behind corporate tax cuts are to give to those who have more and they will give to those who need it. Tories say that cutting corporate taxes increases profit meaning more jobs may be created and not only that but foreign investors become interested in our country as a potential investment opportunity. It sounds good, but the reality is not quite as colorful. It turns out the CEOs of large companies are not as giving as conservatives might expect. The average income in 2009 of the top CEOs was 6.7mil, which makes them worth 155 times the average worker, while before the recession the top CEOs were worth 104 times the average worker. I may be reading too much into these numbers, but something about cutting taxes to the rich doesn't seem to be helping the general population. This trend of social gap increase during good times and decrease during recessions is not the case anymore. The top earners are getting benfits during tough times while the average family is keeping their salary in the best cases. Not only that but government deficit is growing at an alarming rate.

So people need to wake up, Harper's measures are not there to help the middle and the lower class. People voting for Harper need to be aware of this because tax cuts don't help the working class and if that's how they buy your vote, I have to tell you, you've been fooled. I worry for future generations, families are already working close to their full capacity. It is almost a necessity nowadays to have 2 working parents, and this obviously has implications on families, if this situation gets worst, how will it be possible for future generations to survive? How will this working class be able to buy a home, or save money for their children's education or even for their own retirement? This is serious, if we keep going in the direction our right wing politicians want we will see Canada become more and more segregated into rich and poor.