Part 16 - WANTED: An All Inclusive Economic Model

Introduction

Just over a year ago, in our first blog titled, "Can We Revive the Canadian Economy?", we theorized that, "In the view of the dismal state of this country's affairs... one might infer that in spite of all its best efforts to revive the economy, the establishment must realize that is in a catch-22 situation, in so far as:

• On the one hand, the Canadian marketplace is severely handicapped by the extremely limited purchasing power meted out, to near or below poverty-line wage recipients, and doled out to the unemployed masses.
• On the other hand, governments cannot balance their respective budgets, due to this country's rapidly shrinking tax base, and the simultaneously increasing need for all types of welfare services.  One might also add that, Controllers and Treasurers -- looking for solution to deal with the problems -- appear to favour cutting vital services, as opposed to finding ways and means to increase their respective revenues."

A Year in Review

So what has changed over the past year?

• Literally all sectors of the economy, private and public, have been busy eliminating tens of thousands of jobs and management positions monthly.
• Many industries, previously proudly showcased as the jewels of the country, are either still being off-shored, on the chopping block, disintegrating, or vanishing altogether from the theatre of Canadian economy.
• Concurrently, the shrinking tax base is unable to keep up with the increasing demands placed on the social safety net, and is being dismantled, under the aegis of lack of affordability. 
• All in all, people are suffering tremendously and needlessly. Needlessly, because in spite of the potentially catastrophic situation, the ideologically bent establishment still turns a deaf year to realistic and scientifically proven proposals. Proposals that have the innate capacity to stop the downward economic trend and revive the economy.

But, Why Can't the Economy Recover?

There are a variety of contributors to explore:

• One reason is the fact that the economy has reached its saturation point and there is no incentive for further expansion.
• Another reason is that, throughout the years about 50% of consumers, that have an annual gross income of less than $30,000, have been steadily losing their purchasing power. As a result, the economy no longer requires as many workers to produce and deliver goods and services to the marketplace.
• Yet another reason is the ill advised entrepreneurial effort to reduce labour cost; not realizing that there is a direct correlation between the rate of wages and purchasing power.
• Let alone the fundamental reason, which is that the country's largest demographic group, labour/employees are totally excluded from the socio-econo-fiscal policy and decision-making process.
• On top of all of this, there is a deferential indifference in the public arena toward the economy.

So, What Should Be Done?

Several groups have struggled to address this question:

• Pro-establishment policy advisers, in response to this question, would adamantly insist that the economy is looking just fine and it should be left to its own devices to recover.
  To substantiate their claim, they would typically use an average statistical data, like the one that was published on July 17, 2012 in the "Folio, Net Worth" section of the Globe and Mail. This article indicated that, "the average Canadian household has $363,291 in net worth". The policy advisers hope that such answers will suffice. After all, the quoted amount of wealth should appear impressive to the casual observer.
• Independent analysts, however are not going to be impressed by the latter figure. They want to gain access to the entire spectrum of the "net worth folio". But such data is normally not available for the general public to scrutinize.
  Nevertheless, these no-axe-to-grind professionals know very well, that a percentile based "net worth" data set would reaffirm what their research, based on "income class" statistics has long revealed. Namely, that 50% of the active workforce, due to its limited purchasing power, is literally banned from the marketplace. Therefore, they suggest that it is time to seriously think about establishing an all-inclusive economic model, or face the possibility of an economic implosion.

In Search of a New Economic Model

For those who are resolutely committed to creating a new, all inclusive or socially responsible economic model, the concern is not about how to formulate such a model, but whether or not the subject is at all legitimate for public discussion.

So, in order to clear the decks, they intend to put the following question to this country's legal scholars: Is Canada democratically governed, or constitutionally ruled?

Are We Governed, or Ruled?

If Canada is democratically governed, then all segments of society – labour/employees, the unemployed, retirees, the disabled and other significant social groups, just like businesses/employers, professionals – should all equally have the right to form their own associations, to represent their respective members' interest directly, and to participate in the econo-political decision-making process as equal partners.

However, if labour/employees et al. – representing about 70% of society – are denied the right to form their respective association, then society cannot be considered free, and to all intents and purposes the excluded groups are discriminated against. And that, one would think, is patently illegal.

Competitive vs. Cooperative Model

Reviewing the history of business, it's difficult to understand why a century or so ago, presumably prudent leaders sitting at the helm of gigantic corporate empires, had not collectively decided to phase-out the competitive business model and phase-in a cooperative one. A model that is void of the combative "dog eat dog", "winner takes all", destructive conduct that has been responsible for innumerable catastrophic events… and even for international conflicts. As a result, who knows what's next in store?

An All-Inclusive Economic Model

To formulate an all-inclusive economic model, one might be tempted to look for inspiration from around the world, and synthesize such a model from some of the existing ones. In doing so, it might prove worthwhile to look at the examples of Switzerland's referendum system, Sweden's welfare arrangement, along with the socio-econo-fiscal policies of Singapore, Norway, Germany, France, Austria, and Australia. We could review this data to see how these countries have succeeded in creating an across-the-board, comfortable, and healthy standard of living for their respective citizenry.

Codetermination Difference

While remarkably, all the aforementioned countries have achieved their current, cut above, social economic status through rational and Democratic Ways and Means, some states have even to one degree or another, incorporated the principles of codetermination into their constitutions.

In essence, the Codetermination Law, as it has become known, has elevated these countries from a constitutionally ruled status to an all-inclusive and truly democratically governed one.

Mechanics of Reviving the Economy

In order to effectively revive the Canadian economy, the socio-econo-political establishment should:

• Abandon all of its costly efforts of competing on the global market, since by applying "2010 average hourly compensation costs in manufacturing" (aka labour costs) – as per US Bureau of Statistics – the odds are 35.67 to 1.36 against Canada.
• Formulate and implement a Codetermination Law. This law would guarantee the rights of all segments of society – including labour/employees, retirees, the unemployed, the disabled, and significant others – to become active participants in the econo-political decision-making process of this country.
• Phase-out the current economic model, which is based on competition, and phase-in a cooperative one, starting on the home front and then making a case for its international acceptance at the UN. Especially, since it is common knowledge that competition fosters domination, exploitation, destruction ... And all around waste. In contrast, cooperation delivers mutually acceptable and equitable results at a high degree of efficiency, through planning and division of labour.
• Concentrate on economic self-sufficiency, geared to the full use of the natural and human resources of this country, while keeping environmental protection always at the forefront – at least until the age-old "divide and conquer" system is replaced with a "divide and cooperate" policy.
• Diversify the economy to its fullest extent.
• Seek out markets for our surplus raw, semi-finished and finished products. This should be an organized carefully calibrated activity, but only as a sideline to the points above.
• Eliminate poverty and unemployment by:
• Applying the power of volunteerism to make home ownership affordable for the masses. Furthermore, this method could also yield many on-site job training and job creation opportunities.
• Putting EI funds into productive use by creating meaningful public or private contractual job creation programs.
• Increase the pay rate of low-wage earners by 30% to 5% across six lowest income classes to a maximum of $35,000 gross annual income. This measure alone, has the capacity to expand the economy and generate about 500,000 jobs within one year, without a significant change in the inflation rate.
• Introduce our scientifically proven plan for creating "full employment without any loss of income".
• Reject and renegotiate unfair trade agreements that interfere with codetermination principles and self-determination rights.

But, What If This Country Is Constitutionally Ruled?

If the legal scholars find that Canada is constitutionally ruled, then of course laborers/employees, the unemployed, the retirees, the disabled, and other significant social groups have no direct decision-making power to speak of.

That is to say that, about 70% of the public should just submit to whatever the ruling class decides for them; which may or may not include a gradual return to an era of slavery.

Summary

The "a year in review" section above clearly reinforces the initial findings of The Buerger Alliance, namely that the establishment is still in a catch-22 situation. And, the ongoing austerity program does not appear to have helped either.

However, the situation could easily be turned around and remedied by adapting an all-inclusive economic model, and by applying the principles of  the "codetermination and cooperative management model", aided by a host of mechanics to revive the economy, defined in detail through the articles published on our blog at buergeralliance.blogspot.com.

Read More

• Eric Reguly's article "Legends of Sleepy Hollow" – Report on Business, The Globe and Mail, July 2012. 
• Derek DeCloet's article "Clear the Track" – Report on Business, The Globe and Mail, July/August 2012.
• "The Unfair Trade: How our Broken Financial System Destroys the Middle Class", by M.J. Casey.
• "Power Inc." by Dave Rothkopf

Food for Thought

• On Free Trade: "The potential for abuse of the system is enormous" – Anthony Fell, Pres. of Dominion Securities Inc. 1987 – Report on Business, The Globe and Mail, July/August, 2012.
• On the US - Canada Free Trade Agreement: "This deal may be quite beneficial to business, especially to multinational corporations. But greater returns to business might not necessarily be in the best interest of the country." – Frank Stronach, Chairman, Magna International Inc. – RoB, The Globe and Mail, July/August 2012.
• On the Issue of Who Creates Jobs: "Customers create jobs. Middle-class customers with proper purchasing power" – Nick Hanaver, US Venture Capitalist – Fareed Zakaria, GPS, CNN, July 8, 2012.
• On the Subject of Tax Evasion: "Wealthy individuals may have been hiding as much as US$32 trillion offshore", according to Tax Justice Network, a UK-based organization – AFP/ Report on Business, The Globe and Mail, July 24, 2012.
• On the Topic of Recession: "Increase consumer purchasing power and the recession is over", Bill Moyers, Broadcaster - Aid to former US President, Lyndon Johnston.  – Public TV KCTS9, August 5, 2012.

Part 15: A Manifesto for Economic Recovery in Canada

There are a couple of conflicting theories, not counting the radical ones, floating amongst the experts, as to how to restart this country‘s economy -- which has been hard hit by the last three years of recession -- that is on a very slippery slope.

Nevertheless, the official verdict is that Canada is on the right track. Apparently the austerity program is working and it should stay in place until the country purges itself of all its deficit and debt-loads.

Strangely enough, no one appears to be concerned much about the plight of over 1.5 million registered and unregistered unemployed in this country. This significant demographic should be working, receiving a "living wage", paying their bills, and normally would even be paying taxes. But, the policy-enforcers don't seem to be bothered by creating major collateral damage; they just soldier on and keep cutting many indispensable budgetary items. Slashing 5% here, and 10% or more elsewhere, in order to make up for the self-induced revenue shortage, regardless of the consequences.

Meanwhile, out in the real world -- under the auspices of The Buerger Alliance -- a group of experienced, independent, out-of-the-box thinkers and problem-solvers have taken every measure to convey their message to the establishment.  This message is namely this: "There are much more humane, effective and painless ways to solve our country's socio-econo­-fiscal problems."

We're wondering, what exactly does it take to get auditioned?

Observations

At this juncture, in order to break the current deadlock and produce a realistic economic policy that would benefit all the stakeholders, the establishment must take action. They need to apply the "levers" of  Near-Full-Employment, Living Wage, Increased Tax Revenue, and a Productive Expenditure. Then, and only then, will it become possible to effectively and expeditiously deal with the Debt/Deficit, Economic, Education, Energy, Environment, Healthcare, Housing, Infrastructure, Poverty, Transit and the Unemployment Crises.

As to the questions of who has the capacity to extract this country from the worst recession since the 1920s, the answer is, Employers, Employees, and Government, conceivably working together as equal partners. Incidentally, it's difficult to fathom how a meaningful, expeditious and permanent economic recovery could ever occur without such a prerequisite.

Taking the latter observation one step further, one might even infer that, generally speaking, the establishment appears to view the citizenry and employees as subordinates chattels, rather than equal partners. What's needed is a system where the objective is to work together in unison, toward a better tomorrow for one and all.

Recommendations

In the interest of creating a favourable and collaborative environment for an effective and expeditious economic recovery, and subsequently resolving this country's numerous Socio-Eoono-Fiscal Problems, The Buerger Alliance puts forward the following recommendations:

1. All Employers, private and corporate, must urgently recognize that,
• Employees have an innate, parallel role to play in the economy, inasmuch as they are not only workers but also consumers in the same person; and that
• Low-paid Employees have very limited purchasing power at their disposal and therefore cannot become full participants in the marketplace.
  Furthermore, realistically speaking, a combination of Minimalist Wage and Benefits Policies:
• Do not really serve anyone, not even the investor class, "we all work for"; and
• Should be considered as the primary causes of the current crises, manifested by high Unemployment, Stagnant Economy, Private and Public Debts/Deficits.
• A Reasonably Well-Paid Workforce -- in its collective role as Consumers - on the other hand, is enabled to fully participate in the marketplace to satisfy its personal needs, without resorting to public assistance, or being overtaken by unmanageable personal debt.
  But like it or not, in both of the latter instances, the unsettled debts are absorbed by the public, either at the cash register or through taxes, or very often both.
• All Costs incurred in the process of the Production and Distribution of Goods, and for Providing Services, is paid directly or indirectly by no one else, once again, other than society as consumers;
• An across the board Pay-Rate Increase of 30% to 5% for Low­-Wage earning Employees with incomes of up to $35,000 per annum (i.e. 55.3% of the total taxpayers), would create a 3.4% economic expansion rate, generating over 500,000 new employment opportunities in Canada, described in our article "Mr. Scrooge Can't Fix the Economy"
2. Governments, in lieu of their Regressive Austerity Program, should:
• Partner with Employers and Employees, and participate in the overall planning of the economy, to maximize the utilization and efficiency rates of our human and natural resources. This needs to be done equitably and with the ultimate objective of revitalizing the economy and eliminating poverty and unemployment in the process;
• Revise the Corporate Taxation Policy by linking the tax rate of each corporation to the performance rate of it's respective efforts to revive the economy and in dealing with the unemployment and poverty crises;
• Reallocate 25% - 50% of the $20 billion Employment Insurance Budget toward funding a series of provincial job-creation programs. Do this by offering 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. Full details in "A Comprehensive Proposal for Economic Revival"
• Reduce the Working Hours, aimed at literally eliminating unemployment, without any loss in personal income. Full details in "Full Employment Without Any Loss of Income is not a Pipe Dream"
• Establish a series of Volunteer Corps Programs. These programs have the built-in capacity to effectively assist with specific issues like; the lack of affordable housing; the plight of the innumerable unemployable school dropouts -- who need training -- and the problem of high poverty rates in every province across this country. (See Option 3 in our article on "Rescuing the Canadian Economy")
3. The Bank of Canada should urgently reconsider and modify its Low Prime Interest Rate Policy. Clearly, this policy destroys the value of RSPs and RIFs, which provide financial security for millions, and discourages certain forms of savings. A possible remedy would be to set up two categories of Prime Rates:
1. One category for business/personal loans and mortgages at a low rate; and
2. The other perhaps 3% higher than the first one, for RSP investors and RIF annuitants.

In Conclusion

Throughout the previous six months, our group has posted 14 articles, and revealed many techniques to effectively, expeditiously and painlessly resolve this country's socio-econo­-fiscal problems.  However, judging from the responses, one might wonder if the establishment is aware of or truly concerned about, where its regressive policies are leading.

It‘s no secret that the austerity program is not working. For sure, hollowing out the country's natural resources and selling them as unprocessed raw material is not going to provide sufficient revenue to cover the cost of even sustaining the already dismal and unacceptable status quo, let alone the need for restoring some level of normalcy.

Other efforts, like offering indiscriminate corporate tax-reductions for setting up shop here in return, have proven to produce negative results in Canada, between the years of 1950 and 1995. (See our chart in the "Corporate Tax Rate Reduction vs. Unemployment Rate" section of our article on "Some Indicators on Canada's Socio-Economic Health")

Then there is this often repeated credo, that this country‘s economic success depends on Canadians' ability to compete with low-wage-paying enterprises the world around. Or that the average person on either side receives huge benefits from such exchange. However, if one considers the shoddy quality of the merchandise we receive in return, added to the horrendous waste problem that the whole world is engulfed in, then the entire dogma becomes a nightmare.

But to begin with, is it realistic to engage in a lifelong, non-stop, marathon style competition, as a condition to gain economic success? Especially since, in competition there is only one winner, and the rest are literally losers! How about applying the principle of coexistence, based on cooperation and division of labour? In this latter model, there are no losers, no animosity, no waste, but with realistic planning, the chances are that full employment, with good pay doesn't appear to be out of reach for all countries' citizenry.

In contrast, the current practice in Canada, manifested by trying to rely on a single tier industry and expect that it will endlessly support this country's economy, is extremely risky and harmful. The reality is that there is no substitute for implementing a well planned industrial diversification program. This mitigates the impact on the entire economy, in the event that the output of a single industry should reach the saturation point of its market.

While more and more are ready to chastise the millions of low-income people for getting into debt, not many seem to question the practice of paying wages that are grossly inadequate.  Wages that do not even cover the basic costs of living, in supposedly the best country in the world.

Finally, witnessing the recently increased and accelerated efforts to "cut and slash" wages and social benefits -- even by as much as 50% and eliminating all benefits, in order to make this country internationally more competitive -- one might wonder how far the establishment is willing to go down the path of recreating a Dickensian era, as opposed to utilizing well-tested, productive techniques to rebuild the economy?

Quote of the day

• On the question of how to revive the economy: "We need a growth rate of 5% and we got to get the jobs back-" -- Jack Welch, former CEO and Chairman of General Electric Co., in an interview with Piers Morgan of CNN, on January 9, 2012.

Read More:

• "Pawns to a big CAT" - The Toronto Star, IN4, January 28, 2012

Part 14 - Mr. Scrooge Can't Fix the Economy

Austerity Policies Don't Work

According to the latest business reports, the Canadian economy "sheds jobs", apparently in an effort to reduce costs and in response to the diminishing consumer demand. This is very bad news, that cannot be excused or ignored as simply a temporary adjustment. This is particularly problematic for this time of year, when peak business activities normally result in nearly full employment.


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" 

 In essence this additional proffer is based on the premise that:

1. 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 
2. 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
3. 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.

Read More

• Part 13 - Only Management, Labour and the Public Working Together Can Solve Our Country's Socio-Econo-Fiscal Crises

Part 13 - Only Management, Labour and the Public Working Together Can Solve Our Country's Socio-Econo-Fiscal Crises

Inadequate Solutions to the Current Crises

Considering the gravity of the current socio-econo-fiscal crises that are seriously affecting a large segment of the population, the current establishment needs to realize that it's not enough to just:

• Confide in the financial institutions, the stock markets and the investors' good vibes, hoping that they will take care of the financial, and by extension, the economic affairs of our country. Historical evidence totally discredits such belief.
• Seek out only the views of the business class and their proxies, in the course of the decision making process. In a democratic country, the interest of all segments of society should be equally considered.
• Cut the prime interest rate and keep it low for a few years, trusting that entrepreneurs will borrow to expand their operations or invest in new ventures. In this way everything will somehow turn out all right. The reality is, in the absence of significant increase in consumer demand, business has no compelling reasons to expand, let alone hire more employees.
  By the way, the current low interest rate policy runs contrary to earlier calls for reduced spending and increased saving. In fact, this ‘policy’ destroys the value of guaranteed investment certificates, including retirement income and savings plans, and thus impedes economic growth.
• Let the financial institutions practice unreasonably strict ­money-lending policies to a point that they are even refusing to bridge-finance important projects, even when 100% collateral is offered.
• Sit by and claim that there are no precedents to draw applicable lessons from. No valid solutions for how to climb out of the proverbial quagmire. This attitude results in a "wait-and-see" approach.  Let's allow the entrepreneurial class decide on how far a "cut and slash" and outsourcing style of modus operandi will be tolerated by the public. 

Moreover, it sounds incredible that amidst the grim socio-econo-fiscal climate -- evident by increasingly high unemployment, under-employment, poverty, debt, deficit and bankruptcy rates -- the establishment still keeps on defending these hard-line policies. That is to say that:

• Governments, obsessed with decreasing expenditures, are cutting essential social programs, thereby punishing the victims of this fiscal crisis, by selling out major, publicly owned assets and resources, and offering tax havens for internationals whose interest is global, not local.
• Businesses, in pursuit of maximizing their bottom line, keep on reducing their operational costs by laying off personnel and slashing wages and benefits. They are not realizing that lower wages result in less consumer spending, which in turn will decimate sales and revenues. Let alone that this latter process will further increase poverty and the already looming unemployment rate.

Come to think of it, one can only wonder, what is the definition of "enough" in corporate circles? Especially, in terms of top executive compensation vs. the average worker's pay. While most industrial countries may be characterized by a 75 to 1 ratio, this figure is over 400 to 1 in Canada. But apparently, even that is not enough.

The Key to Recovery: Economic Expansion

In view of Canada's very gloomy state of affairs, and in the absence of an effective recovery plan, the Premier of Ontario or the Minister of Finance should urgently call an Economic Conference. They should invite five delegates each from Corporate, Labour and Public Affiliates -- representing all major sectors of the economy -- and seek out their brief solutions to the ever-deepening socio­-econo-fiscal crises.

It's important to keep it mind that, within the framework of the free market economic system, the key to recovery from these periodic crises is economic expansion. This can only be achieved through significant reductions in poverty, caused by low wages and high unemployment/underemployment rates. In doing so:

• Consumer spending will increase and so will the volume of tax revenue; then, automatically
• Governmental expenditure will substantially decrease along with the size of the deficits across the board.

In order to make the conference meaningful at all, delegates should:

• Redefine the meaning of the 'new economy'. Is it "a system of producing and distributing the material needs of society?" Or, is it "a system of transferring goods, produced in low-wage-paying countries to relatively high-income-earning countries, primarily for monetary gains?"
• Prepare and present a series of mathematically proven practical proposals -- along the lines of our analytical summary in the article, "Full Employment Without Any Loss of Income is Not a Pipe Dream"  -- aimed at:
• Creating full employment without any loss of income; and
• Eliminating poverty by:
• Raising the purchasing power of poverty line wage earners
• Providing affordable housing based on home ownership, utilizing the power of volunteerism in the process.
• Keep in mind that paying low wages, and ignoring high unemployment and poverty rates invariably will continue to result in;
• Low purchasing power and diminishing sales revenue, on the one hand, and;
• Decreasing tax revenue, increasing budgetary expenditure, deficit and debt, on the other hand.

Once the summit has reached a consensus, a special legislative procedure should ensure that a series of realistic, remedial proposals will be enacted, without further delay.

In Summary: There is an urgent need for a Comprehensive Economic Expansion Program to counter Canada's Socio-Econo-Fiscal Crises.

Further Food for Thought

• Deloitte Centre for Financial Services on this country's millionaires: "In Canada there are 1.7 million millionaires, whose collective possessions amount to $3.3 trillion, not counting real estate." - The Globe and Mail, Page A15, October 31, 2011
• Dr. Jim Stanford, economist on Canada's Billionaires: "While the average billionaire became $100 million richer in 2010, the average Canadian became $524 richer." - October 14, 2011
• Jeffrey Immelt, CEO of General Electric, and Chairman of U.S. Presidential Job Council, on who we all work for: "We all work for the investors." 
• Federal Reserve Bank chairman Ben Bernanke‘s take on the high U.S. unemployment ratio: "We need to do whatever we can to move toward maximum employment as long as the tools are efficacious."
• Pierre Lassonde, co-founder of Franco-Nevada Mining Corp., on the subject of international competition: "If you try to compete against China on wages, you are gonna be a poor oountry."
• Dr. R. L. Heilbroner, Professor of Economics, regarding the issue of the maldistribution of income: "Incomes paid out to the lower-paid strata of the labour force do, indeed, return to the stream of purchasing power, for the worker tends to spend his or her wages quickly, but profits or high individual compensations may not."
• Christine Legarde, IMF Managing Director, on how to recover from the socio-econo-fiscal crises: "We need growth that produces jobs and that is inclusive." - The Toronto Star, Page N6, November 12, 2011
• Paul Krugman, MIT Professor, on the issue of competitiveness: "Competitiveness is a meaningless word when applied to national economies. And the obsession with competitiveness is both wrong and dangerous."
• Jennifer Granholm, former Governor of Michigan, on lowering taxes for corporations: "I have offered 0% corporate tax for corporations as an incentive to settle in Michigan. They said, we already have that in Mexico along with $1.50 an hour labour cost!" - CNN, GPS, November 13, 2011
• Tom Gorman, MBA, Author and Consultant on poverty and its effects on society: "It's income inequality that creates poverty in an economy. Poverty generates crime, broken families, drug addiction, illness, illiteracy and more poverty."
• Mickey Drexler, CEO of J.Crew in reference to economy and competition: "The economy now is zero sum. The only way you're going to get business today is to take it away from somebody else"

 Recommended Reading

• "Canada has more University Graduates earning very low incomes than any other country in OECD." - The Globe and Mail, Page A4, September 26, 2011
• "The sad demise of the one-income family." - The Globe and Mail, Page B2, October 19, 2011
• "Standard of Living; A generation under pressure" - The Globe and Mail, Page A3, October 19, 2011 
• "ls this the new normal?; Staying on the job" - The Globe and Mail, Page A3, October 27, 2011
• "Canada must address economic threats" - The Globe and Mail, Page B9, October 20, 2011
• "A millionaire's tax is all the rage, but it's another thing to collect." - The Globe and Mail, Page A15, October 31, 2011
• "Full Employment Without Any Loss of Income is Not a Pipe Dream" - Straight Talk About.., August 8, 2011
• "Rescuing the Canadian Economy" - Straight Talk About.., August 8, 2011
• Part 12 - Hope for Upcoming Graduates - The Cooperative Business Model
• Part 14 - Mr. Scrooge Can't Fix the Economy

Part 12 - Hope for Upcoming Graduates - The Cooperative Business Model

For the last few decades higher education has been presented to the young generation of this country  as a "sine qua non" to gain employment within the high tech and the, "so-called", knowledge-based industries. Just in case the message didn't sink in, a materialistic incentive was quickly attached to it. The promise was that those who heeded the former advice would, over a lifetime, earn one million dollars more than their counterparts, who didn't follow this advice. That was enough to convince  some, but it still wasn't enough for the educational authorities who were eager to expand their ‘facilities’ and accommodate their potential ‘customers’ at an exponentially increasing price.

Later on, some college and university administrators came up with quotas and target dates. They  suggested that within just a few years, 70% of all high school graduates will require a college or an university degree, even for entry-level jobs, and the rest will most likely be cast aside as the new class of unemployable.


Curiously enough, this higher education program doesn't seem to follow the pattern of economy of scale. As the cost of education is rising, the 'market' value of a B.A., B.Sc., etc. degree is going down to the point that an increasing number of employers consider only hiring applicants at the level of M.Sc. and PhD. To add insult to injury, according to OECD data, 18.5% of university grads earn incomes at, or below, half the median income of $37,000 per annum in Canada, — as reported by The Globe and Mail recently.

Since the establishment doesn't seem to be able, or willing, to provide employment for the unemployed masses — in particular the young generation of graduates — it's time to consider a somewhat rarely practiced alternative, the Cooperative Business Model.

The Cooperative Business Model operates very much on the principles of a "partnership", but on a larger scale, and in the interest of efficacy and autonomy it may involve a number of participants of several different, complimentary backgrounds.

There are numerous advantages of this model versus others, namely:

• It requires less start up capital;
• It is owned and operated jointly by its members;
• Its modus operandi is based on cooperation, as opposed to competition;
• Its operational costs and proceeds are shared among members of the cooperative.

The Cooperative Business Model is adaptable, able to function proficiently, independently, or jointly with other organizations within any sector of the economy, whether agriculture, art, fishing, forestry, manufacturing, mining, services, and trade or commerce. As to the question of how a group of graduates should approach the task of setting up a cooperative, very briefly, our recommendation is as follows:

1. Assemble a small team of three to four compatible, business-minded friends, dedicated to the cooperative principles; 
2. Develop a business plan;
3. Contact an appropriate professional association, trade association, union, or credit union, and ask for their advice, requesting their mentorship for implementing the business plan;
4. Seek a moderate amount of financial assistance — "seed money" — potentially from family members, friends and/or credit unions;
5. Convert the business plan into a pilot project, initially in a home-based setting;
6. Develop the project into a full-fledged cooperative business and job-creation program;
7. Reach out to leading cooperatives, countrywide and across the globe, that are involved in green energy production and affordable housing construction related projects, to examine the possibility of participating in joint venture operations. 

While it's true that getting involved in a new venture, such as establishing and operating a cooperative business model, is not for the faint-hearted, the risks far outweigh the alternative of:

• Not being able to achieve one's dream for a better life;
• Earning below poverty-line wages; 
• Being subjected to the often erroneous actions of some powerful decision-makers, whose collective ineptitude, irresponsibility and greed have led to this ongoing catastrophic situation; and/or even
• Accepting the prospects of unemployment. 

Working toward and achieving a prosperous future should be worth all the initial hardships.

All considering, since the establishment has for decades expressed its unwillingness to provide equal opportunity for all to achieve an equitable standard of living, it's time to embark on a new business model. It's time to prove to the world that there is life beyond the current profit motivated system. It's time to seriously consider a model that has the built-in capacity to satisfy the needs of the entire population equitably: the Cooperative Business Model.

Read More

•  ‘What's Your Degree Worth?" -- The Globe and Mail, September 26, 2011
• Part 11 - A Review of Popular Current Economic Proposals
• Part 13 - Only Management, Labour and the Public Working Together Can Solve Our Country's Socio-Econo-Fiscal Crises

Part 11 - A Review of Popular Current Economic Proposals

The debate as to what it takes to recuperate from the three year, no end in sight, economic crisis is slowly warming up in intellectual circles. This crisis has engulfed the U.S. and to a lesser extent its trade partner Canada. For a while now, the public has been bombarded with a number of conflicting, if not altogether confusing tenets, presented by some of the North American Illuminati.

In this article, we'll scrutinize four of the most noticeable ones, to see if these were followed through and what could be expected as a result:

1. The first tenet advocates implementing drastic public spending cuts, combined with deep tax reduction for corporations, in order to reduce governmental deficits and create a conducive environment for business investment. In other words, stay on course and hope for the best that everything eventually will pan out. So far it doesn't seem to work. In the meantime, the millions of unemployed, — including those whose Employment Insurance account had run dry — should just hunker down, tighten their belts a notch or two, and line up at a food bank, if that's what it takes. Because, buddy — in accordance with that Darwinian notion, characterized by ruthless competition for survival  — you are on your own.
    
2. The second tenet pushes for more fiscal stimulus to entice the private sector — ‘the job-creators' — to hire more workers. The trouble is, although as a rule, businesses respond to consumer demand only. No demand, no supply! Furthermore, since increased automation is all the rage, there is no need for extra personnel. If anything, most employers are exploring ways and means to reduce labour cost and increase the profit margin. They don't realize that they are directly or indirectly decimating their own and others‘ consumer base in the process.
    
3. The third tenet heralds a new awakening among a few powerful American business executives. These realists are recognizing the need for governments to prepare macroeconomic plans, in order to effectively deal with the current social-economic disaster, and avoid future ones. Apparently, some major international corporations — drawing from their three decades of experience with the Chinese economy — are in favour of shared governmental participation in running the economy.
   
   They say, such a rapport creates certainty and reduces the risks of getting involved in major projects. These projects have the capacity to resolve the economic stagnation, and thus the current unemployment crisis in North America. At this point, it remains to be seen if the majority of U.S. and Canadian businesses are ready to buy into an idea that has been erroneously branded on this continent. An concept that interferes with their right to self-determination and the principles of the free market economy.
    
4. The fourth tenet has to do with a hint from a high level U.S. official who, just days ago, suggested that some corporations have expressed their willingness to repatriate, ‘if the price is right‘. But the offer appears to hinge on labour's acceptance of a general wage range between $15 to $20 per hour.
   
   The reason behind the latter proposal is based on ‘newly discovered‘ statistical data that ranks North American workers three times more productive than their offshore counterparts. Add to this the cost of transportation of these imported products, these repentant companies presently produce elsewhere, plus a few other factors, then it becomes clear that repatriation makes a lot of sense.
   
   Inasmuch as the offer looks tempting — especially if one considers that half a loaf is better then none — it does not seem to address a major issue. The issue is: how are those lucky, future employees able to cope with their financial responsibilities, such as mortgage, car payments, and the huge cost of higher education for their offspring, without cutting back on essential purchases that keeps the neighbourhood businesses operating?

From these few classic examples alone, it's easy to size up the huge divide between intellectuals, as to what to do about the three years old social-economic crisis. A crisis that unnecessarily wrecks the lives of millions and drains the public purse. This divide, of course, paralyzes members of the decision making class who entirely rely on the latter group of masterminds to manage the "people's business".

The task does not involve the deciphering of some kind of an unknowable esoteric subject, requiring supernatural knowledge. Every part of the problem can be identified, measured, calculated, analyzed and using age-old problem-solving techniques to alleviate, and even eliminate the same. Admittedly though, it requires a few experienced, multidisciplinary, out-of-the-box realistic thinkers to do the work.

All the establishment needs to do is: change its current exclusionary protocol and open up the channel of communication and invite the few and far in between no-ax-to-grind, creative elements of society, and the entire country shall equitably harvest the benefits.

Read More

• Part 10 - Political Party-based vs. Social-based Government Systems
• Part 12 - Hope for Upcoming Graduates - The Cooperative Business Model

Part 10 - Political Party-based vs. Social-based Government Systems

Political-Party Based Government

Once again it is provincial election time in Ontario. All political party candidates are geared up to make their case to the electorate as to why they deserve to be elected.

The problem though, is that many promises are made hastily and very often, once in government, some of the most significant ones might not even be kept. Add to this the vagueness of the entire electioneering process, combined with the, “what's the use" and "who cares" attitude of about 40% of the electorate that refuses to vote, then the relevancy of the whole time-honoured practice becomes questionable. Let alone the fact that eventually, the party receiving only about 30% of the eligible electoral votes can create policies that could deeply inconvenience, or even afflict the lives of millions

So, what could be done to make the debates, the election process, and the government system as a whole, more relevant, credible, and responsible to all its citizenry?

Well, for one thing, each Political Party Leader should prepare and present to the electorate a clear, well-defined, comprehensive program at the start of the campaign. Specifically, the program should contain:

• A tabulated summary and prioritized account of all the socio-econo-enviro-fiscal problems of the day; plus 
• A formula as to how, to what degree, when, by what means, and at what cost, these burning problems would be addressed.

This well-defined program could then become a base for a series of serious discussions and debates between the party leaders, as opposed to the current method of engaging in personal attacks, rhetoric, and elusive retorts. Most importantly, this latter format would clarify the party leaders' positions regarding the issues in question, resulting in election campaigns that may even draw more attention and higher participation rates by the voters.

Then, in this era of deep socio-econo-enviro-fiscal crises, disunity, and mistrust, shouldn't the very nature of the current government system be also part of the discussions?

Furthermore. could it be that the current political party-based regime has reached its apogee. That it's too divided to come to a consensus on any issues, due to the leaders' doctrinarian and adversarial mindset? This woeful situation, of course, still leaves Canada with 1.367 million, and Ontario with 541.9 thousand unemployed, plus hundreds of thousands of others who had either withdrawn from the 'labour' market or have joined the 'temps corps'. Not to mention the plight of the many "over qualified," who are unable to find their 'niche'.

Therefore, an independent onlooker might just suggest that the current party-based government system has outlived its usefulness, without anyone within the inner circles even realizing it.

But what about the private enterprise, the other half of the establishment, the 'job-creators', who ran the economy into the quagmire?

Well, they had decided to set up shops, at any place, where the cost of operation is much lower and the profit margin is five to tenfold. So much for solidarity toward the folks of the country in which they reside.

Be that as it may, in this context there is the following food for thought:

Social-Based Government System

Since neither the private enterprise, nor the government has been able to come to grips with society's fundamental problems, due mostly to its “keep out" protocol and a “we know what's the best for the public" platitude, it's probably time to look for options. Options that would allow direct input from concerned, experienced, out-of the box thinkers who are capable in alleviating and even resolving many of today's problems.

One such option is a social-based system -- in essence a Government of the People, by the People, for the People -- wherein government representatives would be elected from all three social entities: Management, Employees (Labour) and the Public. Therein lies the guarantee that everyone's interests are equally represented and dealt with, as opposed to the current practice where the governing party follows the dictates of one segment of society.

In practical terms, citizens of each social entity would form a number of federally/provincially incorporated associations and from their respective membership would, every four years, elect and send into the Parliament/Legislative Assembly an equal number of members, or a total of 90 highly qualified representatives at the federal level, and 60 or less at the provincial level, to manage the country's affairs.

Members of the Cabinet, including the Prime Minister would be elected by, and from, the elected members of the Parliament. The position of the P.M. would be filled on a rotating basis from the elected representatives of the aforementioned three social entities.

Cabinet portfolios would also be equally distributed and would be rotated with each term. Thus, all three entities, Management, Employees, and the Public would each have its own turn.

It is envisaged that this government concept would fulfill most of the qualitative requirements of an ideal system, especially in democratic terms, inasmuch as it would:

• Become the most direct system of representation. Literally, all three social entities would be represented by the best and the brightest, public-spirited elements of the country.
• Replace the current multi-party representation system that does not serve all segments of society equitably, and whose modus operandi is divisionary and adversarial in its nature.
• In all probability, fit a substantial number of countries around the world very well, especially in the view of the recent socio-econo-political developments

This system would provide a more seamless operation of the economy through the new level of cooperation between government and business.

We conclude this topic with the following thoughts:

• "That government is the strongest of which every man feels himself a part" -- Thomas Jefferson, former U.S. President
• "From the beginning, capitalism has been characterized between laissez-faire and intervention. Laissez-faire representing the expression of its economic drive, intervention its democratic orientation. That tension continues today, a deeply embedded part of the historic character of the capitalist system." -- Dr. Robert Heilbroner, Professor of Economics.
• "Never underpay or overcharge, and your business will thrive" - Anonymous

Read More

• Part 9 - The Key to a Thriving Economy: Eliminate Poverty
• Part 11 - A Review of Current Popular Economic Proposals