The Books of My Life: Shooting the Hippo

 

The story of the rise and dominance of laissez faire liberalism, the rise of credit practises and institutions, periodic capitalist booms and busts (my favourite remains the exemplary and exceptionally looney tulip boom and bust) and recessions, Keynesan and social liberal responses to the Great Depression of the 1930s, the dominance of Keynesian or variations of Keynesianism until the 1970s, and the revival and dominance of laissez-faire liberalism in the form of neo-iiberalism in economic and political policy in Canada, the United States, and Great Britian after the oil crisis of the 1970s has been told before. No one, however, has told aspects of this tale more approachably and more succesfully than Canadian journalist and scholar Linda McQuaig.

In a profession and discipline that tends to be abstract and ahistorical in the same way that dogmatics with its polemics and apologetics and systematic theology are abstract and ahistorical, McQuaig brings a much welcome historical and humanistic sensiblity to the study of post-World War II economic theory and practise. McQuaig explores the history of credit in Great Britain, Keynesian critiques of free market ideologies, Keynesian economic and poltical policy, the impact of the oil crisis of the 1970s on Canada, the resulting Canadian recession, and the religious like revival of laissez-faire ideology and its triumph in certain economic and political circles but with an important purpose, to show empirically how neoliberal ideology has privileged fighting inflation over fighting unemployment and decreasing tax revenues, both consequences along with recession of Canadian neoliberal economic anti-inflation theology and dogma.

As McQuaig notes, contemporary neoliberal theology has become popular in the wake of the oil crisis with Canadians in general who, though they are not privy to the deep structural mysteries of economic theory and practise that only the high priesthood of neoliberal economics seem to be able to penetrate, trust that the economic priesthood when it stresses the need to bring down the deficit through anti-inflationary manipulations of interest rates and cuts in social programmes, which they blame, in large part, for balooning deficits. Many Canadians have become convinced of the need to deal with deficits thanks to institutes, like the C.D. Howe Institute with its carefully cultivated simulation of a non-partisan academic institute despite the fact that it is funded, in large part, by economic elites and corporations with a vested interest in maintaining high interest rates since the bondholders they polemicise for and who often pay their salaries want the bonds they hold to maintain value. 

As McQuaig notes these neoliberal theologians see the economy in such abstract terms that they no longer, if they ever did--I guess Ebenezer Scrooge eventually saw the light though Mister Potter did not--recognise the harm that their economic policies have on real people, the economy, and the much needed community social safety net. They are also inconsistent, as McQuaig notes. While the cheerleaders of austerity pontificate about the need to bring down the deficit they favour tax cuts, tax cuts that ultimately benefit the elites. In terms of apologetics and polemics and pied pipping the masses the high priests of high finance appear to have been more skillful and much more successful at getting people to buy their situational dogmatics than were the situational ethicists of the 1960s.

The media, as McQuaig notes, also plays a major role in the dissemination of neoliberal rhetoric. Apart from the fact that most of the media is corporate owned they tend to rely on think tanks like the Howe for information about economic theory and the economy without investigating whether these institutes have a vested interest in polemicising for particular economic policies. Journalists often, particularly when it comes to the abstractions of economic policy (not to mention foreign policy), simply ignore whether something is true or not in favour of the need to get both sides of the story, something that became prominent in journalistic practise after the countercultural 1960s and Ralph Nader's campaigns against dangerous consumer goods, a practise that many trace back to corporate strategies in the wake of Nader. They also tend to limit the range of discourse on economic theory and practise in the media by selecting, based on specific ideologically correct criteria, who does and does not appear on media news and public affairs programmes.

By controlling the discourse neoliberals have successfully manufactred moral panics around the issue of the deficit using it to inculcate an apocalyptic sky is falling fear among the masses who apparently never wonder if it is more Chicken Little than reality. Moral panics, of course, have long been a tried and true method of manipulation used by fear mongering demagogues to pursue their interests while hiding these vested interests in the shade of a the rhetoric of the common good.

The problem with neoliberal anti-inflationary economic theory and policies are several as McQuaig notes. McQuaig convicingly points out that zero-inflation anti-recessionary policies put into practise by the Bank of Canada in the 1980s and 1990s have not only raised unemployment, not only cut tax revenues because of unemployment and underemployment, not only led to cuts in social programmes, not only caused problems for some businesses, not only impacted Canadian and American trade, and not only affected cross border shopping, but that they didn't work. Inflation remained a problem even after years of anti-infationary policies, and the deficit and the interest paid on it by the state have increased, leading, of course, in that wonderful Alice in Wonderland style logic that is so common in our increasingly Orwelian world, to further calls for anti-inflation campaigns and even more cuts in social programmes.

McQuaig advocates for another, and I would argue saner mainstream approach to the inflation versus unemployment issue. McQuaid urges an acceptance of a low rate of inflation, say around 4%, in order to keep unemployment down, economic growth up, and tax revenues coming in to pay for social programmes which, as she notes, aren't the main reason for the deficit in the first place, and the deficit itself. The main culprit is, as McQuaig points out, recession.

Though McQuaig's book at the time was, as the cover of the paperback tells us, a national bestseller, it seems to have had limited long term impacts on Canadian perceptions of economic theory and practise and the polemical and apologetic campaign to fight inflation. In late January (or was it early February?), for instance, I saw an article in the Toronto Star referencing poll data showing that Canadians were most concerned, as they began the New Year, with inflation and the deficit. Ironically, the very next day The Star had an article on how inflation benefits CEO's, particularly the best paid CEO's who saw their salaries increase by 26%. And so it goes...