Canada Labour Day 2015: Workers should not pay for recession
2015Barry Weisleder 2015-08Read it in the scan (PDF at ETOL), page 12 →
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12 SOCIALIST ACTION AUGUST 2015 Workers didn’t create this mess. Nei ther did Stephen Harper, at least not exclusively—although his policies have made it significantly worse.
It’s true that Ottawa’s over-reliance on the energy sector, its reduced pub lic spending—and virtually no govern ment action to sustain, let alone bolster, manufacturing—have hastened Cana da’s economic decline. But this occurs in the context of a world economy in chaos.
China’s stock market saw nearly $3 trillion (USD) of wealth obliterated in a matter of weeks, panicking investors. The stock market rout quickly spread to commodities, accelerating declines that had already been hammering resourceproducing countries. Copper, an indica tor of global economic health because of its use in so many industries, plunged to a six-year low. The price of iron ore fell 11 per cent in a single day, lead ing one analyst to note that the price of steel in China—of which iron ore is a key ingredient—was “cheaper per tonne than cabbage.”
Capitalism in China, increasingly foreign-controlled, is no different than capitalism elsewhere in that it is ut terly reckless, wasteful, and anarchic. Once the poster-child for global recov ery from the Great Recession of 2008, China is now the harbinger of doom for North America, Europe, and the world.
Back in Canada, the collapse in oil prices crushed Alberta’s energy boom more quickly and deeply than anyone expected. In mid-July, Bank of Canada governor Stephen Poloz trimmed the benchmark lending rate by a quarter point to 0.5 per cent, the second such cut in six months, and slashed the cen tral bank’s growth outlook for the re mainder of 2015. The bank effectively admitted that the economy had entered a recession by noting that “real GDP is now projected to have contracted mod estly in the first half of the year.”
While Canadian consumers have so far helped offset the damage by borrowing and spending, the resulting debt that households have taken on now repre sents an economic risk in itself—par ticularly if job and wage growth weak en. Moreover, much of that borrowed cash has been sunk into real estate, a relatively non-productive sector of the economy, resulting in home prices that are as much as 63 per cent overval ued, according to Deutsche Bank. It’s a case of a resource economy that’s been blown apart sitting on top of a housing bubble.
Now, economists debate how long and deep Canada’s downturn could be. Federal Finance Minister Joe Oliver de nies that the economy is in a recession. Prime Minister Stephen Harper blames (continued on page 11, in “Hands off the CBC!”)