Sunday, December 16, 2012

Sunday Morning Links

This and that for your Sunday reading.

- Bill Curry reports on Jim Flaherty's arbitrary choice to declare that Canadians can't have any more CPP retirement security than the most callous provincial government in the country is willing to grant them. And Martin Regg Cohn rightly responds that our reaction should be to pressure Flaherty to instead look out for the interests of retirees present and future:
The real scandal is that, after two years of delay, concrete reforms are finally within reach. Yet Flaherty seems determined to sabotage the process.

A 30-page discussion paper obtained by the Star lays out a clear path for affordable action. Prepared by federal officials after a year of painstaking consultations with their provincial counterparts, the document is remarkably clear-minded:

Canada can, in fact, afford to shore up its disappearing pension system. A “modest” expansion of the solid but paltry Canada Pension Plan could plug the gaping holes in our outdated retirement security framework, the document shows. Ottawa and the provinces are well positioned to boost the CPP because current retirement payroll costs are far lower than in other industrialized countries — yes, including the U.S.

Most Canadians probably don’t realize the CPP pays only 25 per cent of the average industrial wage (currently about $50,000) — capping pension payments at a mere $12,500 a year. For the vast majority who lack private pensions, and who have not saved adequately, the gap is growing.
Instead of limiting CPP payouts to $12,500 a year currently, middle class Canadians could effectively double their annual pension down the road — virtually wiping out the shortfall in savings.

This could be achieved with a relatively modest increase in premiums of about $1,000 a year for the highest-paid employees (employers would pay half of the cost through payroll taxes), or about $540 a year (cost-shared with employers) for workers earning about $50,000 a year.
Cynically, Flaherty is now insisting on unanimity amongst the provinces for any CPP reforms (the actual requirement is only two-thirds of the provinces representing two-thirds of Canada’s population). That leaves Alberta with an effective veto, given its traditional resistance to reform.

After two-and-a-half years of huffing and puffing and procrastinating, it’s time for Flaherty, always with his elbows up, to stop ragging the puck and passing the buck. It’s also time for the provinces — and working Canadians — to put him on the spot.
- Mark Sumner discusses how the corporate sector's interests conflict with those of mere people - and why we thus shouldn't assume that policies aimed at boosting corporate profits actually have any social value:
(I)n Washington,...the wealthy have been able to use their accumulated power to see that the system encourages rather than corrects, the increasingly out of balance system. Because of this, thirty years of supply side economics has done more damage to our nation than every socialist, communist, or anarchist who ever lived. It's done what none of them could ever do. It's brought capitalism to the brink of failure.

That's where we are, on the brink. The wealthy have made a meal of the nation's economy. They've raided the larder. They've devoured the seed crop. Now they are searching for crumbs.

Take housing. The collapse brought on by speculative trading of mortgage derivatives left many Americans unable to afford their homes and flooded the market with foreclosures. However, in many of those areas where the foreclosures were most common, would-be home buyers have observed a strange phenomenon. Despite what should be a glut of houses on the market, prices on the homes actually put up for sale remain high. Real estate agents in many of the same markets complain that they are actually seeing a shortage of homes greater than when home sales were at their highest. Also, banks are forcing homebuyers to jump so many hurdles in the name of security, that they are often unable to make an offer in time to win a home. As a result, many Americans who are employed and have good credit, are still not able to find a house after months or years of searching. That might not be what you would expect from a perusal of classic economics texts, but it is what you would expect in our current system.

How can this be possible? It's possible because the same banks that homeowners must depend on to secure a loan are in direct competition with them. Hedge fund managers in the investment arms of banks are snatching up homes indiscriminately, buying them in bulk lots that swallow up potential homes by the hundreds and simply take them off the market. Why do this? Because, as institutions empowered to make money through almost any form of speculation, investment banks can optimize the availability of homes to maximize what they can bring in from rentals, sales, and long term holding. Not selling you a home is often a better bet. Bulk buys of homes allow banks to manipulate the housing market to their benefit across whole cities for a span of years. Why should they do anything else? It's not as if there's a barrier in place to separate banks that provide loans from banks that create speculative instruments. We took care of that.

What's happening with banks is just a part of the wealth shift that's taken place over the last thirty years. A shift that's allowed a fraction of a fraction of a percent of the population to control so much capital, that this financial black hole stands a very good chance of simply ripping the system apart.

It's a monopoly on everything.

In this monopoly, you have nothing that they want. You own nothing that they value. You make nothing they desire. Your knowledge, your experience, your willingness to work... mean nothing. There are cheaper hands available. They see no issue with holding out until you give up on a decent wage, on decent working conditions, on a decent life. You want financial institutions to think long term? They are. They're thinking that, long term, you'll give them anything they want in exchange for almost nothing at all.
- But there are still promising signs of resistance to that perpetual corporate overreach. And Doug Cuthand's column on the Idle No More movement points to one example which could significantly shape Canada's future at a time when some of the best checks on a Con majority determined to run roughshod over anybody outside the resource sector may come from First Nations' consultation rights.

- Finally, Bruce Stewart suggests that if the Cons wanted to feign the slightest interest in their own accountability, some consequences for ministerial incompetence might be an important start.

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