Found at:
http://www.peoplesvoice.ca/articleprint/Prescribing_a_crisis_to_cure_inflation.html
Prescribing a
crisis to cure inflation
(The
following article is from
the July 1-31,
2007
issue of People's Voice, Canada's leading communist newspaper. Articles
can be reprinted free if the source is credited. Subscription rates in
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ON, L8P 2H3.)
By Jason
Mann
Vancouver labour economist Emil Bjarnason used to tell a story about a
man named Stanford Kingsley Claunch.
Claunch was
best known for pioneering his own
idea of medicine. His theory was that disease was a person's best
friend. The purpose of germs, he argued, was not to cause ill health,
but to produce the diseases that cured illness. He was especially fond
of malaria which he claimed was "guaranteed to burn up all the poisons
that make people sick," provided that an ignorant doctor didn't
prescribe medicines that would interrupt the fever before it had done
its job.
Fortunately,
this nut was discredited before
he could harm anyone.
Unfortunately, the Bank of Canada is putting
Dr. Claunch's theory into practice. Instead of dealing with the crisis
in manufacturing jobs, the Bank of Canada is fighting a made up
bogeyman: "out of control inflation". Their suggested cure? Increase
interest rates to create job losses.
As part of
the twisted logic of capitalism,
the Canadian Imperial Bank of Commerce (CIBC) recently celebrated this
Dr. Claunch style strategy of creating a manufacturing jobs crisis to
reduce inflation.
"The Bank of
Canada, eying an economy
operating above its non-inflationary speed limit, will welcome the
dampening influence of an even stronger currency on both economic
growth and inflation. A couple hundred thousand additional factory job
losses, while far from derailing domestic economic growth, might be a
route to opening up a bit of slack in today's ultra-tight labour
market, forestalling a more serious wage threat."
Another way
to say this is:
"The Bank of
Canada will be happy that the
skyrocketing loonie will cause more factory closures and job losses
because this may dampen inflation. Throwing another 200,000
manufacturing workers out of a job, far from being a bad thing, is a
good thing because far too many workers still have a job, and this will
help us reduce wages."
Another
31,000 manufacturing jobs were lost in
April and May. If the big banks like CIBC get their way, another
200,000 are to come.
Although he
never got much respect in the
medical community, it appears that the Bank of Canada is dedicated to
keeping the name of Dr. Stanford Kingsley Claunch alive.