Federal Finance Minister Flaherty says the boom times are over. Now we are going to have to “adjust our expectations”and tighten our belts.
Most Canadians might ask – what boom is he talking about? And whose belts will he be tightening?
Even though the overall numbers for economic growth over the last decade weren’t bad -up to the 2008 crash – the benefits were not widely spread. While our manufacturing sector was being gutted, the boom was producing windfall profits in the resource and financial industries. While bankers and CEOs raked it in, most Canadian families had to run hard to barely maintain their living standards.
While real corporate profits and CEO pay rose by more than 50% between 2001 and 2008, the real income of the average family went up less than 7%.
With average earnings growing by less than 1% a year, Canadian families took on more debt. Consumer debt increased by 93% and mortgage debt by 95% between 2001 and 2008, making Canadians more vulnerable when the economy tanked.
The Canadian economic “boom” killed hundreds of thousands of good manufacturing jobs, replacing them increasingly with unstable part-time and contingent work, particularly for young people.
And that was in the good times, before the crash and our current 8%-plus unemployment rates (almost 12% if you include discouraged workers and involuntary part-timers).
Now Flaherty (and other governments) are saying that we can’t afford to reduce unemployment now, because of our budget deficits. We have to pay for our profligate ways.
But our ongoing government budget deficits are not the result of growing governments or overpaid public sector workers. By most measures, our governments have been shrinking. The current and projected budget deficits are the direct result of tax cuts for corporations and the wealthy.
In the last round of government budget-balancing in the 1990s, they did it by cutting public services and protections for workers like Employment Insurance benefits. The federal government even raided the EI fund for over $50 billion. At the same time, they cut taxes for corporations and the wealthy, helping fuel a growing gap between the rich and the rest of us, and directly creating our budget deficit “crisis”.
It looks like Flaherty and his ilk want to repeat history. Rather than reversing the regressive tax cuts, governments will make working families pay the price of government austerity measures – through pay restraints, higher taxes on workers, reduced public services, and growing inequality and insecurity.
While most Canadian families didn’t get much pleasure from the economic boom, they will be feeling most of the pain of the government response to the bust.