Austerity Policies Don't Work
But, it must be considered as a clear warning that the austerity program, even after many months, is not working. How could it possibly work when, by definition, full employment for all at reasonable living wages is a prerequisite for a well-functioning market economy. The current modus operandi is instead continuing to further decimate the very fundamentals of a healthy system. One would expect that Waterloo -- not long ago declared as the most intelligent city in the world, drawing from its three universities, and two highly esteemed private think tanks -- should have been able to produce a single "academically validated" proposal on how to resolve this country's unemployment crisis.
That is not to say that there have been no realistic solutions offered before. To the contrary. Throughout the years, there have been many proffers prepared by less famous private think tanks and forwarded to this country's hierarchy. But apparently, none of them have passed the "ideological test" of the establishment.
That is to say that, according to currently enforced protocols, proposals must be acceptable to the social-economic wing of the establishment. This does not normally include "labour", a term management often condescendingly uses to refer to their employees. This latter segment of society doesn't have very much clout, if any, with the decision makers. Labour's place is primarily to follow orders, otherwise they could readily be replaced by plenty of other hungry workers. The whole current environment is getting more and more reminiscent of the Dickensian era. And, at this moment, labour is again ordered to tighten its belt and silently endure the hardships, until it becomes debt free.
Oddly enough, no one seems to be concerned about the reasons for the high rate of indebtedness among the low income segment of society. Are they afraid of facing the truth; i.e. that there might be a direct correlation between poverty line wages and the overuse of credit cards, just to survive?
Another Viable Solution
In this context, one may be tempted to ask, what really is the logic behind the current austerity program? Especially when a few prominent, realistic, corporate executives and others in-the-know, have made it perfectly clear that economic expansion, coupled with full employment is the only way to stop this long, ongoing and self-destructive process. At this point, The Buerger Alliance makes another effort to present one more job-creation program, in addition to two earlier suggested proffers, detailed in our blog in:
- Point 5 under the "Potential Solutions" section of our "A Comprehensive Proposal for Economic Revival" blog article.
- Our solution described in the article, “Full Employment without Any Loss of Income is not a Pipe Dream"
- If the federal government -- applying a small portion of the $20 billion E.I. Budget, parceled out to the unemployed -- would offer a $5,000 to $10,000 tax credit as an incentive to employers for each additional employee they hire, for a minimum of one year period; and
- If employers would strategically revise the pay rate of low-wage earners of up to $35,000 per annum, as per Table 1 below, such a measure would result in an economic (business) expansion rate of ca. 3.4 %, and generate over 500,000 jobs in the process; plus
- If provincial governments would introduce our "Full Employment Without Any Loss of Income" Plan, the economy of this country would gain an almost unprecedented level of strength, and would be on the path of resolving most of its crises in short order.
Table 1
Effects of increasing pay-rate for low-wage earners on the Canadian economy
| 1 | 2 | 3 | 4 | 5 | ||
| Total Income Class | Number of | Percent of | Total income assessed (in millions) | Total pay-rate increase recommended | Effect on the economy | |
| Taxpayers | in % | in millions | ||||
| up to $10,000 | 3,811,740 | 15.27 | $19,657.4 | 30% | $5,554.6 | 0.54% |
| $10,000 - $15,000 | 2,597,000 | 10.40 | $32,468.4 | 25% | $8,117.1 | 0.80% |
| $15,000 - $20,000 | 2,443,640 | 9.79 | $42,665.7 | 20% | $8,553.1 | 0.83% |
| $20,000 - $25,000 | 1,820,630 | 7.29 | $40,733.5 | 15% | $6,110.0 | 0.60% |
| $25,000 - $30,000 | 1,547,270 | 6.20 | $42,508.4 | 10% | $4,250.8 | 0.42% |
| $30,000 - $35,000 | 1,579,550 | 6.33 | $51,253.5 | 5% | $2,562.7 | 0.25% |
| Total | 13,799,830 | 55.28 | $229,286.9 | n/a | $35,128.3 | 3.44% |
Footnote: Data in columns 1, 2, and 3 were sourced from the CRA "Income Statistics 2010 - 2008 tax year".
Interpreting the data: these calculations illustrate that an across the board pay-rate increase of 30% to 5% for low-wage earners in Canada with incomes of up to $35,000 per year (55.3% of the total taxpayers), would create a 3.4% economic expansion rate, generating over 500,000 new employment.
In Summary
In the opinion of an increasing number of experienced thinkers, the current austerity based socio-econo-fiscal policies in Canada are not working for the benefit of over 50% of society.
These policies are outright punitive, destructive, and must be replaced with an economic program capable of delivering full employment, paying "wages of decent living", having the capacity to gradually minimize and ultimately eliminate (in 3 to 4 years) our country's socio-econo-fiscal crises.
In fact, in terms of effectiveness, the establishment's austerity program is very similar to an allegorical physician giving counsel to an undernourished, weak and underweight patient to go on a lengthy weight-loss diet.
A Few Words of Wisdom
- "To balance budgets, or to run a budget surplus in the public sector makes little sense when an economy is underutilized, but it is the course of wisdom when there are no idle resources to absorb additional expenditures." - Dr. Robert L. Heilbroner, Professor of Economics
- "Capitalism works when there is a large middle class. There is no free market solution to today's problems." - Jonathan Kay, Author, and Columnist
- "Austerity doesn't work." - David Miliband, U. K. Foreign Affairs Minister
- "Where wages are high, we shall always find the workmen more active, diligent, and expeditious, than where they are low." - Adam Smith, Economist and Philosopher, Author of "The Wealth of Nations" and "Theory of Moral Sentiments".
- "And by living wages I mean more than a bare subsistence level, I mean the wages of decent living." - Franklin D. Roosevelt, former U.S. President.
- Part 13 - Only Management, Labour and the Public Working Together Can Solve Our Country's Socio-Econo-Fiscal Crises
