The prevailing logic around the recession in Ontario is completely backwards, according to a nationally recognized economist.
Dr. Jim Stanford, an economist with the Canadian Autoworkers union (CAW), was at the Local 27’s office on First Street in London Wednesday evening (Jan. 30).
His presentation, which packed the building’s upstairs hall with more than 100 people, represented the second installment of the London and District Labour Council’s anti-austerity agenda series.
“My main point is that we have reversed the logic of the whole debate,” Stanford told London Community News after his presentation. “We’ve been debating a (provincial government) budget deficit as if it is the source of all our economic problems. But in fact it’s backwards. The economic downturn is the source of the budget deficit. The best way to solve the deficit is to put Ontarians back to work, generating income and paying taxes.”
He joked on several occasions that his “PhD” level economics boil down to elementary ideas and math: if more of us are working, contributing to the GDP, buying things and paying taxes, the economy will grow and the government will reap the rewards.
“The numbers I showed tonight show just by getting back to the decent level of employment we had before 2008, we could automatically erase the deficit with the incomes that would be generated.”
He said given the number of people in the province that should be participating in the labour force, Ontario is missing out on $70 billion of productivity annually. The taxes generated from that amount would be in the range of $12.4 billion, and the deficit is about $11.4 billion.
He said at the outset he “loved” what the labour movement in London was doing to debunk the “austerity myth,” that being the idea that the cure to all of our ills is to defund social programs, claw back collective bargaining rights, impose wage freezes and decimate the benefit and pension packages earned by public sector employees such as teachers.
“I’m inspired by the passion and the commitment with which community activists like the people here tonight are working to defend public services, to defend living standards and to defend the poor. The argument that they always encounter is ‘Oh, we just can’t afford it, times are tough, we have a deficit. So if my presentation gives them a little more confidence to push back against those arguments, and to say ‘Hold on, we can afford it as long as we put people back to work,’ I feel I’ve done my job.”
Speaking matter-of-factly to a friendly crowd, Stanford supported his argument with examples from Europe, where he said austerity agendas in countries with flagging economies such as Greece and Spain, represented by deep cuts to social programs and public sector wages and employment levels have actually made things worse.
He said Greece, where austerity measures are tied to billions in bailouts from the European Union, lost seven percent of GDP in 2012 alone.
He argued idea that the Canadian and Ontario governments and economies somehow skirted the global recession sparked by the 2008 housing/credit bubble collapse is bunk.
He said Canadian banks, though less scathed than those of other nations such as the United States, were still bailed out to the tune of $120 billion in one way or another.
He said the financial elite is a big reason the economic reforms he espouses haven’t been adopted. Simply put the rich get richer under the current system, and it tends to be the well-off who occupy decision-making positions in government.
“I think there is a bit of an issue over whose interests are promoted and whose aren’t,” he explained. “The reality is even though we say times are tough and we have to tighten our belts, there are segments of society that have profited immensely from the way we are managing things.”
He said data released by Statistics Canada last week showed the top one percent of society saw their median income increase 50 percent in the last quarter-century, while the rest of ours have remained stagnant.
“For some powerful segments of society, the way things are going are quite fine, thank you very much,” he said. “They’re quite happy to make the case to cut back services even further because they’re not the services that they count on themselves or that they believe in. In that regard, I think there is the politics of vested interest at play. You always have to interpret what governments are doing from that perspective.”
High school teacher and OSSTF federation services officer Evelyn Daly recalled Stanford speaking at a teacher’s union event in 2012. She attended the CAW event with OSSTF District 11 (Thames Valley) president Colleen Canon.
“I think he’s fantastic,” she said. “Everyone should be following him on Facebook. It’s real economics that makes sense. He should be on the front page of every newspaper everyday.
“His whole presentation speaks from the high economics that he studies, and brings it down to everyday interpretation and application. That’s what I think is great.”
Doug Butler went back to school when he lost his job in 2000 when Bud Automotive in Kitchener was shut down. He recalled being part of the grassroots movement that urged the McGuinty Liberals to increase minimum wage.
“Now I’m part of the numbers Jim was talking about, unemployed and not on unemployment anymore,” he said. Stanford had mentioned he doesn’t like unemployment rates as an official statistic, because when people stop “looking for work,” they disappear from the numbers. He prefers employment rates. “I’m looking for work in my old field or my old field. I thought it was awesome, it’s great information that needs to get out there to as many people as possible and educate our politicians as to how we want things to go.”