Canadian economy
heading into crisis
(The
following article is from
the January 16-31,
2008
issue of People's Voice, Canada's leading communist newspaper. Articles
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This analysis of
some recent trends
in the Canadian economy is from the main political report adopted by
the Dec. 8-9 meeting of the Central Committee of the Communist Party of
Canada, presented by CPC leader Miguel Figueroa.
First, let us turn to the current
state of the Canadian economy which, according to Finance Minister Jim
Flaherty and most Bay Street analysts and sycophants, is humming along
just fine. Indeed, a superficial reading of key economic indicators
appears to sustain such a conclusion. Official unemployment remains at
a relatively "low" 5.9%; inflation stands at 2.4%; and the value of
exports continues to grow, driven primarily by high energy and other
commodity prices (precious metals, agricultural products, etc.). What
is conveniently overlooked in these rosy assessments however is that
according to the composite index of 10 leading indicators, the economy
is slowing at a significant, if not a precipitous, pace. The index has
been falling every month since the beginning of the year, and the
annual index now is lower than at any time since 2001.
Most notable
is the deepening
crisis in the manufacturing sector, which has shed almost 300,000
full-time jobs since 2002, mostly in Quebec and Ontario. Between
November 2002 and February 2007, the proportion of the workforce
employed in manufacturing declined from 18.6% to 14.4% in Quebec, from
18.2% to 14.8% in Ontario, and from 9.4% to 8.8% in the rest of Canada.
Job losses are now spreading beyond the auto, steel, appliance and
textile industries into other sectors such as forestry, where the
downturn in the U.S. housing market combined with the impact of
tariffs, the high Canadian dollar and high energy prices, has resulted
in a slew of lay-offs and shutdowns throwing tens of thousands of
workers unto the unemployment rolls in Quebec, Ontario and B.C.
While
employment in other
sectors has mostly made up for jobs lost in manufacturing, most of the
jobs created in recent months have been low-wage, part-time, and/or
self-employed positions and other types of precarious employment as
opposed to full-time higher-wage jobs. The percentage of new employees
working in temporary jobs practically doubled in recent times (from 11%
to 21%).
The Bank of
Canada's high
interest rate policy and related fiscal policies of the Harper
government, intended to maintain low inflation and attract foreign
investment capital to Canada, are largely responsible for the
appreciation of the value of the loonie vis-a-vis the U.S. dollar. The
soaring Canadian dollar, in turn, has contributed to the current
manufacturing crisis, a sector heavily dependent on exports to the U.S.
market.
But the root
causes of this
crisis Go well beyond interest or exchange rates; they are based in
changes in the international division of labour brought about by the
frenzied dispersion of capital around the world in search of low-wage,
high yield investment opportunities. That increased mobility of capital
has been facilitated by the imposition of neoliberal "globalization"
policies by U.S. imperialism and the international financial
institutions it largely controls (the IMF, World Bank, World Trade
Organization, etc.) - policies which have actively been supported in
Canada by both Conservative and Liberal governments alike, and driven
by the monopoly capitalist interests they serve.
While
workers in all capitalist
countries stand exposed to these impacts, the specificities of the
Canadian economy, characterized by exorbitantly high levels of foreign
corporate ownership, make it particularly vulnerable. That is why any
genuine attempt to reverse de-industrialization must be based on a
comprehensive program to restore Canadian political and economic
sovereignty, including steps to extricate our country from trade pacts
and agreements, such as NAFTA and the Security and Prosperity
Partnership agreement, designed to serve the interests of finance
capital rather than the Canadian people. And it must include policies
that challenge corporate domination of the economic, political,
cultural and social life of our country, and expand the public sector.
Two other
quick notes on the
economy... The first relates to the fact that the rosy economic reports
conceal the extent of the concentration of wealth and the growing class
disparities within Canada. Soaring profits for the corporations and the
rich have come at the expense of the further immiseration of the bulk
of the working class. A recent study entitled "The Rich and the Rest of
Us: The Changing Face of Canada's Growing Gap" by the Canadian Centre
for Policy Alternatives (CCPA) reports that in 2004, the richest 10% of
families earned 82 times more than the poorest 10% - almost triple the
ratio of 1976, when they earned 31 times more. The CCPA report also
notes that with respect to work time, all but the richest 10% of
families are working more weeks and hours in the paid workforce (200
hours more on average since 1996) yet only the richest 10% saw a
significant increase in their earnings - 30%.
The most
vulnerable Canadians,
those forced to survive on social assistance, have fared the worst. The
National Council on Welfare recently reported that all welfare incomes
in Canada - affecting the lives of 1.7 million Canadians, half of whom
are children - have declined in the last decade, dropping further below
the poverty line. And last week, the United Way released its "Losing
Ground" study showing that incomes in Toronto, Canada's largest city,
have fallen significantly over the past 15 years, especially for
single-parent families and among new immigrant workers, reflecting the
increasing racialization of poverty, particularly in the main urban
centres.
These and
similar reports
confirm the reality experienced by working class Canadians every day -
that we are working harder and making our bosses richer, while we are
getting poorer ourselves.
Found at:
http://www.peoplesvoice.ca/articleprint10/Canadian_economy_heading_into_crisis.html