The Argentine Crisis
Len McLaughlin
Some of the grievances coming out of there sound a little familiar which
means we may have a little Argentine in our future.
Think how handy our anti-terrorism legislation would be in such a situation.
Does globalization come into this picture?
Its a big subject and I certainly don't have all the facts but unlike some
people I try to read between the lines. (:-) For example when a certain
politician was asked how the government managed to put this anti-terrorism
legislation (it is extensive) together in such a short time, the answer was
that it was no big deal because "most of it had been on the books for some
time." Think about that. Why was it already in the works? Was 9.11 then
just the excuse to push this legislation through
because to oppose now it almost made one a traitor?
--
Then I read that Nortel has a plant in China where doing exactly the same
job as here in Canada takes one twentieth the labor cost. When Nortel had
to lay off x thousands of employees, not one was laid off in China If this
is repeated year after year , what is the end result? Globalization may
have some drawbacks for the average person. So if I was the government, I
get the people disarmed and anti - terrorism legislation in place with NO
sunset clause. That "no sunset clause" set off alarm bells in my mind.
Maybe my info is outdated and if so I'm sure to be corrected...but thats why
we're here, isn't it? (:-)
Regards...
--
The "melting pot " can result in a united and enriched country, whereas
"multiculturalism" produces exactly the opposite results.
RES
Len McLaughlin wrote:
>
> The Argentine crisis may be something we should be paying attention to.
> Some of the grievances coming out of there sound a little familiar which
> means we may have a little Argentine in our future.
> Think how handy our anti-terrorism legislation would be in such a situation.
> Does globalization come into this picture?
> Its a big subject and I certainly don't have all the facts but unlike some
> people I try to read between the lines. (:-) For example when a certain
> politician was asked how the government managed to put this anti-terrorism
> legislation (it is extensive) together in such a short time, the answer was
> that it was no big deal because "most of it had been on the books for some
> time." Think about that. Why was it already in the works?
October 1970. RES
Was 9.11 then
> just the excuse to push this legislation through
> because to oppose now it almost made one a traitor?
> --
> Then I read that Nortel has a plant in China where doing exactly the same
> job as here in Canada takes one twentieth the labor cost. When Nortel had
> to lay off x thousands of employees, not one was laid off in China If this
> is repeated year after year , what is the end result? Globalization may
> have some drawbacks for the average person. So if I was the government, I
> get the people disarmed and anti - terrorism legislation in place with NO
> sunset clause. That "no sunset clause" set off alarm bells in my mind.
> Maybe my info is outdated and if so I'm sure to be corrected...but thats why
> we're here, isn't it? (:-)
> Regards...
>
> --
You're a bit late Len. This battle was fought and lost during NAFTA. RES
Len McLaughlin
RES <resc...@shaw.ca> wrote in message news:3C229265...@shaw.ca...
>
>
> Len McLaughlin wrote:
> >
> > The Argentine crisis may be something we should be paying attention to.
>> time." Think about that. Why was it already in the works?
>
> October 1970. RES
==
RES, You do live in a simplistic world. I really should know better that
waste my time and others by responding to the simplistic attacks of an
egomaniac. I had you on my block list but I changed out my computer and
haven't updated that listing yet. As of now, you're back on. Smart ass
replies, with no redeeming value, I can do without.
--
> Was 9.11 then
> > just the excuse to push this legislation through
> > because to oppose now it almost made one a traitor?
> > --
> > Then I read that Nortel has a plant in China where doing exactly the
same
> > job as here in Canada takes one twentieth the labor cost. > >
> > --
>
> You're a bit late Len. This battle was fought and lost during NAFTA. RES
==
A North America FTA type deal can work if you have countries with similar
standards such as Canada and the US. I know Mexico isn't there yet but its
in America's interest to bring Mexico up to standards because of border
problems, etc. The last time I checked China wasn't in North America, but
it does come under globalization, which is current. Good-Bye REZ.
Regards..
--
Russil Wvong
> The Argentine crisis may be something we should be paying attention to.
Yes, definitely. My sketchy understanding of the crisis:
The biggest problem is that the currency is fixed to the US dollar (to
control inflation and avoid capital flight). Since 1998, the economy
has been in deep trouble, because the currency has been overvalued,
causing high unemployment. So the government can't make payments on
its debt (currently 45% of GDP). To avoid defaulting, the government
needs to borrow money from the IMF, but the IMF is telling the
government to reduce its deficit, which it can only do by cutting
social spending. Hence the rioting.
What could the government have done differently? Devalued the currency,
to revive the economy. It might then have been necessary to introduce
capital controls, as Malaysia did in 1998, to prevent domestic and
foreign capital from panicking and leaving the country.
See Paul Krugman's July 2001 column in the New York Times, "A Latin
Tragedy":
... why is Argentina's economy depressed? Basically it comes down
to the currency board, which pegs the value of the peso at one
dollar and ensures (technicalities aside) that each peso in
circulation is backed by a dollar in reserves. When it was
introduced this system offered a welcome guarantee that
hyperinflation would not return, and contributed to a stunning
economic recovery. Now, however, the system's fatal flaw has
become obvious. Argentina's international competitiveness has
been undermined by devaluation in neighboring Brazil and by the
weakness of the euro; domestic demand has fallen as consumers
and companies lose confidence; but because the currency board
allows no flexibility in monetary policy, policy makers cannot
respond, Greenspan-style, by opening the monetary spigots.
Mr. Cavallo, whom I know and admire (though I can't claim to
have a sense of his soul) understands this very well. Yet he is
understandably unwilling to abandon his creation. It would be a
humiliating blow to his and his government's credibility. Also,
because much of the debt of Argentina's private sector is in
dollars, any devaluation of the peso would risk major financial
disruption.
Yet if the latest desperate round of belt-tightening does not
succeed, something will have to give.
... Two years ago Brazil was forced into a devaluation that many
predicted would lead to economic ruin. It didn't. I hate to
suggest that Argentina should emulate Brazil; indeed, I have been
reluctant to say anything that would make Mr. Cavallo's job
harder. But he and his country are rapidly running out of options.
[http://www.pkarchive.org/column/71501.html]
Two lessons for us:
(a) It's important for Canada to maintain a floating currency.
If we adopted the US dollar, interest rates would be set based
on the *US* unemployment level; we could end up with very high
levels of unemployment in Canada.
(b) It's important for Canada to reduce its public debt.
> Does globalization come into this picture?
I don't think trade is the issue. It's more like a combination of
exchange-rate policy (so as to avoid capital flight) and debt.
> Then I read that Nortel has a plant in China where doing exactly the same
> job as here in Canada takes one twentieth the labor cost. When Nortel had
> to lay off x thousands of employees, not one was laid off in China If this
> is repeated year after year , what is the end result?
Workers in China shift from manufacturing consumer goods to manufacturing
electronics, and workers in Canada shift from manufacturing electronics
to other industries, which may be either higher-paid or lower-paid. I'm
working as a software developer; my wages are about 2/3 of a comparable
programmer in the US. Others may end up working in lower-wage jobs.
> Globalization may have some drawbacks for the average person.
Agreed. I think the problem isn't so much higher unemployment as
*greater inequality*. People who do well make a lot of money;
people who don't do well end up making a lot less. I was talking
to a university classmate who graduated from computer science at
the same time I did (1988) but decided to work as a high school
math teacher. After eight years, she's making less than half of
what I'm making.
That's why it's important to have progressive income taxes and income
transfers, to reduce this kind of income inequality. See Brad DeLong's
review of Dani Rodrik's book "Has Globalization Gone Too Far?"
[www.j-bradford-delong.net/Econ_Articles/Reviews/Globalization_too_Far.html]
I think it's pretty farfetched to think that the security legislation
has anything to do with globalization. The Liberals don't have any
problem with handing out money to displaced workers. :-)
> For example when a certain
> politician was asked how the government managed to put this anti-terrorism
> legislation (it is extensive) together in such a short time, the answer was
> that it was no big deal because "most of it had been on the books for some
> time." Think about that. Why was it already in the works? Was 9.11 then
> just the excuse to push this legislation through
> because to oppose now it almost made one a traitor?
The legislation would have already been in the works because bin Laden
had already attempted to blow up the WTC, and did attack the US
embassies in Kenya and Tanzania. But it wasn't urgent because nobody
thought bin Laden would be able to pull off a successful attack on
the US.
Russil Wvong
Vancouver, Canada
www.geocities.com/rwvong
Dennis G.
>"Len McLaughlin" <len...@nbnet.nb.ca> wrote:
>> The Argentine crisis may be something we should be paying attention to.
>
(...)
>That's why it's important to have progressive income taxes and income
>transfers, to reduce this kind of income inequality. See Brad DeLong's
>review of Dani Rodrik's book "Has Globalization Gone Too Far?"
>[www.j-bradford-delong.net/Econ_Articles/Reviews/Globalization_too_Far.html]
>
(...)
It may be very important to look at Argentina's tax laws as an example
for Canadians. I would really appreciate if someone could post a
direct comparison with Canadian taxes.
The little I could learn on the net was that personal tax rate at
$120,000 was 33% and that the VAT(GST) was 21%.
Criticism of the tax system I read was that the increasing deficit was
supported by taxes of the workers while corporations and wealthier
individuals were taxed more lightly.
The damage done by the currency peg is clear. Question 2:
Did Argentina also take up deficit financing to stimulate the economy
while shifting more of the tax load down the income scale?
Dennis
Ivan Satori
> "Len McLaughlin" <len...@nbnet.nb.ca> wrote:
> . . .
> > Globalization may have some drawbacks for the average person.
>
> Agreed. I think the problem isn't so much higher unemployment as
> *greater inequality*. People who do well make a lot of money;
> people who don't do well end up making a lot less. I was talking
> to a university classmate who graduated from computer science at
> the same time I did (1988) but decided to work as a high school
> math teacher. After eight years, she's making less than half of
> what I'm making.
>
> That's why it's important to have progressive income taxes and income
> . . .
It's a bit off topic (if you preferred to move it into a new thread,
fine) but that's something that intrigues me and the topic comes up
quite often.
I wondered what is wrong with inequality of income?
I can see what is wrong with poverty and can understand why people
would look for ways to eliminate or at least reduce it.
But inequality?
If everybody is reasonably well fed, housed and clothed, why is it so
important to look for ways how to prevent some from being extremely
well fed, housed, clothed, and probably have some expensive toys and
hobbies?
(Of course, I can understand why people don't like inequality at the
emotional level. What I am trying to figure out is if there are some
rational arguments that would support the notion that reducing
inequality of income would be somehow functionally beneficial to the
society.)
Russil Wvong
> It may be very important to look at Argentina's tax laws as an example
> for Canadians. I would really appreciate if someone could post a
> direct comparison with Canadian taxes.
Hmm. It's hard to do a direct comparison, because of the differences
in exchange rates and average income.
There's a tax table for Argentina at
http://www.kpmg.com.ar/paginas/taxhighlights.html
which gives the following income tax rates for 2000:
20,000 2,300 12% overall
30,000 4,200 14%
40,000 6,500 16%
50,000 8,800 18%
60,000 11,100 19%
70,000 13,800 20%
80,000 16,500 21%
90,000 19,200 21%
100,000 22,300 22%
110,000 25,400 23%
120,000 28,500 24%
The top marginal rate is 35%. All amounts are US dollars. There's no
capital gains tax. There's a basic personal deduction of 4,080.
GNP per capita in Argentina was US $8,000 in 1998.
In Ontario, the tax rates for 2001 are given in
http://www.deloitte.ca/en/pubs/tax/QuickTax/QuickTax2001_en.pdf:
20,000 2,794 14%
30,000 5,014 17%
40,000 8,068 20%
50,000 11,192 22%
60,000 14,433 24%
70,000 18,541 26%
80,000 22,882 29%
90,000 27,223 30%
100,000 31,564 32%
110,000 36,205 33%
120,000 40,846 34%
The top marginal rate is 46.41%. All amounts are in Canadian
dollars. GNP per capita was US $19,000 in 1998, which I think
was roughly C$ 28,000.
From what I can tell, Argentina's income taxes are also progressive
(the rate increases as your income increases), but generally lower
than in Canada.
> Did Argentina also take up deficit financing to stimulate the economy
> while shifting more of the tax load down the income scale?
Not as far as I know. The economy has been in trouble since 1998,
and I think the government's has been trying to reduce the deficit
since then. In the December 1999 budget, the $4,800 personal
exemption was reduced to $4,080, but the budget also increased the
income tax rates at each level, and added an emergency high-income
surtax for people with incomes over $120,000 (20% of your 1999 tax).
Russil Wvong
Vancouver, BC
www.geocities.com/rwvong
Stephen H. Kawamoto
anymore, due to collapse of trade infrastructure, despite what the media or
CIA factbook states.
When I initially was in contact with her, she mentioned that Argentina is in
poverty.
However, this does not mean that raw materials and manufactured goods are
not leaving the country or that imported goods are not entering, but that
Argentina is cut out of the picture i.e. the revenue stream to the
government is being intercepted.
Indeed, it is likely de la Rua and other aristocrats in power including
Menem are still funnelling tax dollars and IMF aid into offshore accounts,
and bribing investigators to prevent justice from being served.
The resigning of the coalition government indicates that they are afraid of
being exposed.
Thus it is IMF regulations that caused the ruin of Argentina, regulations
that did not allow for an independent audit of the initial $13.7 million
loan in January 2001 and the $30 million loan in May.
For it is quite possible that the auditors too were bribed.
--
Overgrow the State!
White hat hackers: keeping the worldwide web secure...
PGP: 0x8C656D0E :: 7F49 566F DB34 DC11 5BEA 0BC3 C47A A982 8C65 6D0E
--
"Len McLaughlin" <len...@nbnet.nb.ca> wrote in message
news:EvlU7.6197$ud.7...@news-nb00s0.nbnet.nb.ca...
lawrence day
On a trip to Buenos Aires in 1978 I saw both the top and bottom
of Argentinia's economic ladder. At the top end was a fellow
living in the castle Mussolini had built in case things got too hot in
Italy. The ground floor was like a museum, old Greek statues, Persian
rugs on the floor. The couple lived on the 2nd and 3rd floors and
their son
had the top floor, about twelve rooms. One held a billyard table,
another an organ, another a telescope, the big one was reserved for
his chess club.
He was 30, but still lived at home; sensible. He also had his own
yacht and troup of dancing girls to entertain him on trips to Rio.
At the other end of the ladder was a fellow who had built himself a
tent suspended from the lower branches of a tree. It was constructed
entirely
from twisted bits of tin foil taken from abandoned cigarette cases.
This sort of gap does not seem like a good idea.
Argentina is like Enron, praised by those who then fleeced it.
The top executives made a half-billion over four years.
The people at the bottom lost their jobs and pension funds.
Deregulation will do that.
Lawrence Day
Dennis G.
Thank you for good information.
It seems that giving higher wage earners a better tax break did not
result in a stronger economy in Argentina.
Why would it work here ?(Rhetorical)
Dennis
Dennis G.
(...)
>The biggest problem is that the currency is fixed to the US dollar (to
>control inflation and avoid capital flight). Since 1998, the economy
>has been in deep trouble, because the currency has been overvalued,
>causing high unemployment. So the government can't make payments on
>its debt (currently 45% of GDP). To avoid defaulting, the government
>needs to borrow money from the IMF, but the IMF is telling the
>government to reduce its deficit, which it can only do by cutting
>social spending. Hence the rioting.
>
>What could the government have done differently? Devalued the currency,
>to revive the economy. It might then have been necessary to introduce
>capital controls, as Malaysia did in 1998, to prevent domestic and
>foreign capital from panicking and leaving the country.
>
Argentina's experience makes it pretty clear that adopting the US
dollar in Canada would have a devastating effect on our economy
because that would be the same as pegging.
Unless, as in Europe, a new union was formed first which made the
borders completely open to movement of goods, services, and labour.
Even then, Canada might not be able to draw the investment to make it
competitive with attractive opportunities in the USA.
Argentina's experience also is a sharp warning about deficit
financing. The BC Liberals are already committed to that for the
coming year but Argentina is a prompting to sober second-thought for
Paul Martin, IMO.
Dennis
Patrick Coghlan
>>In Ontario, the tax rates for 2001 are given in
>>http://www.deloitte.ca/en/pubs/tax/QuickTax/QuickTax2001_en.pdf:
>>
>> 20,000 2,794 14%
>> 30,000 5,014 17%
>> 40,000 8,068 20%
>> 50,000 11,192 22%
>> 60,000 14,433 24%
>> 70,000 18,541 26%
>> 80,000 22,882 29%
>> 90,000 27,223 30%
>> 100,000 31,564 32%
>> 110,000 36,205 33%
>> 120,000 40,846 34%
You're only looking at individuals.
Note that the taxes on a couple in which each spouse earns $60K are
$27,840 (23%).
The single-earner family pays 50% more taxes than their dual-earner
equivalent.
>Thank you for good information.
>It seems that giving higher wage earners a better tax break did not
>result in a stronger economy in Argentina.
>Why would it work here ?(Rhetorical)
Can you tax a country into prosperity? Wealth comes from innovation,
so if you don't encourage the innovators to stick around, there goes
your country's prosperity.
If you accept the above tenet, then answer the question whether higher
or lower taxes on innovative, creative people will help a country's
prosperity?
Russil Wvong
> Argentina's experience makes it pretty clear that adopting the US
> dollar in Canada would have a devastating effect on our economy
> because that would be the same as pegging.
Agreed. Note that things might be fine for a while, but become
unhinged a few years later (which is what happened in Argentina).
> Unless, as in Europe, a new union was formed first which made the
> borders completely open to movement of goods, services, and labour.
Yes, that would be a precondition. Politically, I think it'd be
difficult to sell, both in Canada and in the US. Given the
disparity between the sizes of the two countries (unlike in Europe),
it would amount to a US takeover of Canada. And there'd be a *lot*
of issues to work out (for example, how many seats would Canada get
in the US Senate?), resulting in prolonged political and economic
uncertainty. Nobody would invest in Canada while this was going on.
A little like Quebec attempting to separate from Canada, only in
reverse.
> Argentina's experience also is a sharp warning about deficit
> financing. The BC Liberals are already committed to that for the
> coming year but Argentina is a prompting to sober second-thought for
> Paul Martin, IMO.
It's somewhat ironic that the BC NDP (the left-wing party) balanced
the budget, while the BC Liberals (the right-wing party) decided to
cut taxes and run a deficit, in the belief that the economy will
expand and make up for the deficit. That's not fiscal conservatism,
that's fiscal optimism.
RES
Len McLaughlin wrote:
>
> RES <resc...@shaw.ca> wrote in message news:3C229265...@shaw.ca...
> >
> >
> > Len McLaughlin wrote:
> > >
> > > The Argentine crisis may be something we should be paying attention to.
> >> time." Think about that. Why was it already in the works?
> >
> > October 1970. RES
> ==
> RES, You do live in a simplistic world. I really should know better that
> waste my time and others by responding to the simplistic attacks of an
> egomaniac. I had you on my block list but I changed out my computer and
> haven't updated that listing yet. As of now, you're back on. Smart ass
> replies, with no redeeming value, I can do without.
>
I'm surprised to hear my reference to the FLQ terrorists was construed
as 'simplistic'. How did you know I was an egomaniac. I was hoping to
keep it under wraps.
The fact is that October 1970 revealed that the War Measures Act was an
inadequate piece of legislation dealing with an internal threat in the
form of terrorism, and I'm sure there were various drafts dealing with
recently proposed measures as far back as 1971. There is also the view
that given terrorism was an international problem, various government
departments were reasonably ready with possible solutions even if the
overrated government wasn't. I guess I'm being simplistic. RES
> --
> > Was 9.11 then
> > > just the excuse to push this legislation through
> > > because to oppose now it almost made one a traitor?
> > > --
> > > Then I read that Nortel has a plant in China where doing exactly the
> same
> > > job as here in Canada takes one twentieth the labor cost. > >
> > > --
> >
> > You're a bit late Len. This battle was fought and lost during NAFTA. RES
> ==
> A North America FTA type deal can work if you have countries with similar
> standards such as Canada and the US.
Similar standards? Really? And one country with the lower standards
being disproportionate in terms of economic and market strength? Oh,
sorry. There I go again being too simplistic. RES
I know Mexico isn't there yet but its
> in America's interest to bring Mexico up to standards because of border
> problems, etc.
As in the Maquiladoros where Mexican labour is 80% as productive as
Canadian labour at a fraction of the labour cost. Yes, US and other
transnational corporations prefer paying higher wages and adhering to
more stringent environmental standards in the US & Canada. They also
would never use these standards to pressure on US and Cdn Governments to
maintain lower standards. <sarcasm>. Damn, there I go again. RES Hoping
two-headed babies born in the Maquilodoros are paid double.<sardonic
wit>
The last time I checked China wasn't in North America, but
> it does come under globalization, which is current. Good-Bye REZ.
> Regards..
> --
Under NAFTA your elected representatives have no say in the application
of many of these standards. You want to outlaw a pollutant? Sorry, as
Californians found out, you have to reimburse the company for its losses
in forcing its product off the market under its property provisions.
Those battles were fought in the early 80's and lost. RES
Ivan Satori
> > . . .
> > (Of course, I can understand why people don't like inequality at the
> > emotional level. What I am trying to figure out is if there are some
> > rational arguments that would support the notion that reducing
> > inequality of income would be somehow functionally beneficial to the
> > society.)
>
> On a trip to Buenos Aires in 1978 I saw both the top and bottom
> of Argentinia's economic ladder. At the top end was a fellow
> living in the castle Mussolini had built in case things got too hot in
> Italy. The ground floor was like a museum, old Greek statues, Persian
> rugs on the floor. The couple lived on the 2nd and 3rd floors and
> their son
> had the top floor, about twelve rooms. One held a billyard table,
> another an organ, another a telescope, the big one was reserved for
> his chess club.
> He was 30, but still lived at home; sensible. He also had his own
> yacht and troup of dancing girls to entertain him on trips to Rio.
> At the other end of the ladder was a fellow who had built himself a
> tent suspended from the lower branches of a tree. It was constructed
> entirely
> from twisted bits of tin foil taken from abandoned cigarette cases.
>
> This sort of gap does not seem like a good idea.
I am not sure if this answers the question.
I can understand why to look for ways how to solve the problem of
people having to live in tents suspended from trees (and often times
much worse in many places around the world). What I don't understand,
and I don't think this reply provided any answers in that regard, is
why somebody having a lifestyle as lavish as the rich fellow mentioned
above should be considered a problem at all, if the living conditions
of the rest of the population were decent.
> Argentina is like Enron, praised by those who then fleeced it.
> The top executives made a half-billion over four years.
> The people at the bottom lost their jobs and pension funds.
> Deregulation will do that.
I've seen statements like that before.
So far, I haven't seen much of sound reasoning supporting such
statements.
Dennis G.
(...)
>Can you tax a country into prosperity?
The connection between taxes and prosperity is not direct although tax
policies are an important tool. You can find countries that have low
or high taxation,that are prosperous and that are poor.
>Wealth comes from innovation,
Some does. But more often it comes from successful marketing or
successful control of markets. Conrad Black and Lord Thompson are not
seen as innovators and the man who gave us the World Wide Web made
little or nothing from that innovation.
>so if you don't encourage the innovators to stick around, there goes
>your country's prosperity.
An innovator who develops a cost effective means to generate
electricity from ocean waves will not stay in Saskatoon, no matter
what the tax laws.
>If you accept the above tenet, then answer the question whether higher
>or lower taxes on innovative, creative people will help a country's
>prosperity?
The tenet is not based on observable facts so it is not acceptable. In
fact, like the Canada Council grants, reduced taxes for 'innovaters'
would necessarily be a public subsidy for a self-selected group based
on unmeasureable definitions.
I am in favour of using tax policy to encourage business investment
and developement. Federal tax laws already provide for that as well as
providing free services, forgiveable loans, and tax shelters for
investment.One can argue about the suitability or appropriateness of
the measures in place but a blanket reduction in taxes to all business
would result in the transfer of excess business earnings into other
economies where rates of return on investment are higher, such as the
USA and China.
Dennis
Ivan Satori
> Patrick Coghlan <cog...@sympatico.ca> wrote:
>
> (...)
> >Can you tax a country into prosperity?
> The connection between taxes and prosperity is not direct although tax
> policies are an important tool.
It might be not as much that the connection is not direct as that
there are often other factors in play making the direct connection
less transparent. The time lag between introducing (or getting rid of)
some policies and the manifestation of the effects would be very
likely one of them.
> You can find countries that have low
> or high taxation,that are prosperous and that are poor.
If we talk about prosperity or lack thereof as a snapshot picture, we
might see quite different picture than when looking at trends. If a
prosperous country with a healthy and highly productive economy starts
moving in the direction of overspending and living above its means, it
might take decades before some significant changes in absolute
standards of living, etc., start manifesting themselves (such as, for
example, the current health care situation in Canada). For a poor
country moving in the right direction, it's not very likely that
tangible improvements would become obvious any sooner than in a
decade.
The trends would be probably discernible much earlier. Whether people
would be willing to take notice of undesirable trends and do something
about reversing them, that's a different story.
> >Wealth comes from innovation,
> Some does. But more often it comes from successful marketing or
> successful control of markets. Conrad Black and Lord Thompson are not
> seen as innovators and the man who gave us the World Wide Web made
> little or nothing from that innovation.
You might be confusing the issue of wealth creation as production of
valuable goods, services, technologies, etc., with some particular
people getting rich. While the two are not unrelated, they are by far
not the same thing.
> >so if you don't encourage the innovators to stick around, there goes
> >your country's prosperity.
> An innovator who develops a cost effective means to generate
> electricity from ocean waves will not stay in Saskatoon, no matter
> what the tax laws.
It is certainly possible to make up plenty of special cases in which
the general rules would apply less transparently. But they would still
apply. For example, in the particular case you mentioned, while the
innovator probably wouldn't stay in Saskatoon, indeed, the tax laws
still can make a differnce in whether he goes to Maritimes or BC, or
whether he has to move to Maine or California for his cost effective
method to be still cost effective when evaluated in terms of after tax
dollars.
> >If you accept the above tenet, then answer the question whether higher
> >or lower taxes on innovative, creative people will help a country's
> >prosperity?
> The tenet is not based on observable facts so it is not acceptable. In
> fact, like the Canada Council grants, reduced taxes for 'innovaters'
> would necessarily be a public subsidy for a self-selected group based
> on unmeasureable definitions.
If you doubt the ability of any bureaucratic body to correctly select
genuine innovators, or even the extent to which this is truly their
primary concern, I am afraid you're quite justified in your doubts.
That's why we need across the board policies. (Or rather across the
board getting rid of many of the policies now in place.)
> I am in favour of using tax policy to encourage business investment
> and developement. Federal tax laws already provide for that as well as
> providing free services, forgiveable loans, and tax shelters for
> investment.
Well, you seem to have shaken off your doubts. As for myself, I remain
afraid that as long as the free services, forgivable loans, tax
shelters, etc., are selectively provided through a bureaucratic body,
the odds for qualifying would remain in favour of contributors to
party coffers building fountains in Shawinigans over inventors of
World Wide Webs.
> One can argue about the suitability or appropriateness of
> the measures in place but a blanket reduction in taxes to all business
> would result in the transfer of excess business earnings into other
> economies where rates of return on investment are higher, such as the
> USA and China.
Unless, of course, they help make rates of return on investment higher
in Canada, so that not only excess business earning might be
profitably reinvested domestically, but our economy might actually
become attractive for foreign investment, even outside of the raw
materials industries.
Russil Wvong
> I can see what is wrong with poverty and can understand why people
> would look for ways to eliminate or at least reduce it.
>
> But inequality?
>
> If everybody is reasonably well fed, housed and clothed, why is it so
> important to look for ways how to prevent some from being extremely
> well fed, housed, clothed, and probably have some expensive toys and
> hobbies?
Hmm. Good question. According to Paul Krugman (in "The Age of
Diminished Expectations", a good introduction to economics), the
three most important attributes of the economy are (1) productivity,
(2) unemployment, and (3) inequality, in that order. But are we
just using "inequality" as a synonym for "poverty"?
I guess that to me, it seems unlikely that we'll ever be able to
completely eliminate poverty, no matter how rich and productive
our society becomes. There'll always be some people who are
poor, whether it's because of factors outside their control or
because of factors within their control. If we focus on reducing
inequality (through progressive income taxes and transfers), we
can at least try to improve the situation.
The other advantage of thinking about inequality rather than poverty
is that it's straightforward to measure inequality (using something
called the Gini coefficient), and to tell whether it's increasing
or decreasing. It's not at all straightforward to measure poverty.
Everyone seems to use Statistics Canada's LICO measurements, which
are a relative measure, even through StatsCan itself says that LICO
is *not* a poverty line.
I certainly don't think absolute equality is desirable. On the other
hand, I appreciate the fact that in Canada, people who are wealthy
generally don't flaunt their wealth; it's seen as inappropriate
behavior. We were talking to a friend from Colombia yesterday, and
he was saying that you can live with poverty, knowing that someone
else has more than you do; what you *can't* stand is when that person
rubs your face in it. (Which is often the case in Colombia.)
> (Of course, I can understand why people don't like inequality at the
> emotional level. What I am trying to figure out is if there are some
> rational arguments that would support the notion that reducing
> inequality of income would be somehow functionally beneficial to the
> society.)
Here's what Krugman has to say. (The first argument is based on the
idea of marginal benefits: an extra $1000 is much more valuable to
a family with an income of $10,000 a year than it is to a family
with an income of $100,000 a year.)
There are at least two reasons for arguing that increased
inequality changes *overall* welfare for the worse. First, most
Americans do care at least a little bit about how well-off others
are, and it is hard to argue with the conclusion that an extra
thousand dollars of income matters more to a poor family than to
someone whose income is already in six digits. Second, the
income distribution colors the whole tone of society: A society
with few extremes of wealth and poverty is a different, and
surely more attractive, place than one with a yawning gulf between
rich and poor.
And in "An Unequal Exchange", a review of Edward Wolff's "Top Heavy":
... consider this simple parable: there are two societies. In one
everyone makes a living at some occupation--say, fishing--in which
the amount people earn over the course of the year is fairly
closely determined by their skill and effort. Incomes will not be
equal in this society--some people are better at fishing than
others, some people are willing to work harder than others, but
the range of incomes will not be that wide. And there will be a
sense that those who catch a lot of fish have earned their
success.
In the other society, the main source of income is gold
prospecting. A few find rich mother lodes and become
wealthy. Others find smaller deposits, and many find themselves
working very hard for very little reward. The result will be a
very unequal distribution of income. Some of this will reflect
effort and skill: those who are especially alert to signs of gold,
or willing to put in longer hours prospecting, will on average do
better than those who are not. But there will be many skilled,
industrious prospectors who do not get rich and a few who become
immensely so.
Surely the great majority of Americans, no matter how
conservative, instinctively feel that a nation that resembles the
second imaginary society is a worse place than one that resembles
the first.
The reason [income distribution is a politicized subject] is
obvious: the question of inequality is relevant for
policy-making. In the fisherman society, for example, people might
feel that only invalids, widows, and orphans deserve public
support. In the vastly unequal prospecting world, however, it is
easy to imagine a broad public demand that those who have been
lucky enough to find gold be required to share a significant
fraction of their winnings with those who have not.
Since I like to look at both sides of an issue, here's a
*counter-argument* from George Kennan ("Around the Cragged Hill"):
By my own observation, and much of it from life in socialist
countries, I know of no assumption that has been more widely
and totally disproved by actual experience than the assumption
that if a few people could be prevented from living well
everyone else would live better. I have seen village after
village in Russia where the wealthy landlord and his family
had been driven out, killed or dispossessed, where the ashes
of the ruins of his house stood as mute and tragic evidence of
his elimination, but where the prevailing misery could not have
been greater than it was. I have, to be sure, seen welfare
states where a wide improvement in living standards for the
mass of the people indeed went hand in hand with the
disappearance of most evidences of ostentatious prosperity on
the part of the few. But this had been achieved not so much
by the impoverishment of the wealthy as by the prevalent
egalitarian social spirit that had caused the latter to conceal
the evidences of their prosperity rather than to flaunt it. In
itself this was, perhaps, not a bad thing. But it did not prove
that the impoverishment of the few was essential to the
advancement of the living standards among the many.
The plain fact, which I believe will be confirmed by many
economists, is that the luxuries of the very rich are of
relatively little importance as a factor in the general economy
of the modern advanced country. Much of what the rich own must,
after all, be invested in ways which, while indeed they are
normally profitable to one degree or another for the rich
themselves, also benefit, by the very fact of the investment,
the general economy. Which is better?--that the rich should
themselves invest their surplus income or that the government
should take it by taxation, and then, after passing it through
the sticky substance of its own bureaucracy, spend it in its own
favored ways? The government would claim that it spends it (or
what is left of it when the bureaucrats have taken their cut)
for the public good. The rich would say that they themselves
use it, and invest it, more wisely and economically than the
government could. There is much to be said, it seems to me, for
the latter view.
My own opinion is that the point isn't to "impoverish" the rich.
I think the Canadian welfare state does a reasonably good job of
providing public education, public health, and income transfers to
the poor and the elderly; and by the marginal benefits argument, it
makes sense to finance the welfare state through progressive income
taxes, so that people who are better off pay more income tax.
That's why I pay my taxes cheerfully each year.
Of course, our social spending can't be unlimited; it has to be
limited to a level that people are willing to pay, e.g. some
fixed percentage of GDP.
lawrence day
But in Argentina, in 1978 they weren't decent. People working at
minimum
wage needed at least two, maybe three jobs to survive. Men carried
purses because a three-inch thick wad of bills was needed to buy
stuff. The
very rich hid their money outside the country to avoid taxes and
inflation.
Elections didn't matter because P-2 had infiltrated both parties. The
rich got much richer while the middle class gradually became poor. In
short the
country was being fleeced. Trying to understand Argentine economics
without
a basic knowledge of how P-2 functioned (functions?)is not possible.
There are examples of successful countries with high taxes,
high minimum wages and high welfare payments;
Denmark and Holland come to mind.
They do not have these enormous discrepencies between billionaires
and paupers.
>
> > Argentina is like Enron, praised by those who then fleeced it.
> > The top executives made a half-billion over four years.
> > The people at the bottom lost their jobs and pension funds.
> > Deregulation will do that.
>
> I've seen statements like that before.
>
> So far, I haven't seen much of sound reasoning supporting such
> statements.
Well you will have to wait until, as I recall, February for the
US gov't investigatory committees to chew on Enron. It appears
that lobbying (big $) got them exempt from normal regulatory
oversight. Then they did all sorts of shady deals to pump up
their stock, then the super-rich at the top cashed out their stock
and made mega-bucks while everyone else got fleeced.
This is called a 'pump and dump' scam. During the 'pump'
phase Enron is lauded as a wonderful innovative exemplar of
the 'new economy'. This causes the stock to soar.
When the big boys cash out, then there is no more 'pump'
and the stock plunges.
Likewise when Argentina pegged their peso to the dollar,
and thereby cured inflation, the (insider) economists lauded
the idea, made Argentina the exemplar for other countries,
pumped the country up like a bubble, then when the insiders
cashed out the whole thing collapsed.
There were more riots in Buenos Aires yesterday.
The people seem to have figured out that changing
the puppet 'head of state' will not suffice
if the puppet master remains the true power.
As you say, 'reasoning' well, 'power corrupts' eh.
But 'observation' may be a better tool for
understanding the current situation.
Historically extreme variance between a few rich and
great numbers of poor leads to revolution;
eg., France, Russia, Cuba, etc.
Lawrence Day
Ivan Satori
> isa...@cogeco.ca (Ivan Satori) wrote:
First of all, thank you for taking the time to respond.
> > I can see what is wrong with poverty and can understand why people
> > would look for ways to eliminate or at least reduce it.
> >
> > But inequality?
> >
> > If everybody is reasonably well fed, housed and clothed, why is it so
> > important to look for ways how to prevent some from being extremely
> > well fed, housed, clothed, and probably have some expensive toys and
> > hobbies?
>
> Hmm. Good question. According to Paul Krugman (in "The Age of
> Diminished Expectations", a good introduction to economics), the
> three most important attributes of the economy are (1) productivity,
> (2) unemployment, and (3) inequality, in that order. But are we
> just using "inequality" as a synonym for "poverty"?
Well, I'd think that would quite significantly confuse the issue.
They're definitely not the same. If everybody is starving, it's
poverty but not inequality.
> I guess that to me, it seems unlikely that we'll ever be able to
> completely eliminate poverty, no matter how rich and productive
> our society becomes.
I am not sure why that would be? I think it is fairly safe to say that
poverty has been eliminated in much of Western Europe, and it could
have been in North America if what has been and is being done here was
done more rationally.
> There'll always be some people who are
> poor, whether it's because of factors outside their control or
> because of factors within their control. If we focus on reducing
> inequality (through progressive income taxes and transfers), we
> can at least try to improve the situation.
About the likelihood of essentially eliminating inequality, I have
serious doubts. A certainly can't think of any lasting historical
precedens.
> The other advantage of thinking about inequality rather than poverty
> is that it's straightforward to measure inequality (using something
> called the Gini coefficient), and to tell whether it's increasing
> or decreasing. It's not at all straightforward to measure poverty.
I am not sure if I understand why that would be so.
While I can imagine that inequality might be easier to deal with in
the realm of economic analyses, models and projections, defining
poverty, for any practical purposes, doesn't seem to me as some
extremely challenging task. That is not to say that it wouldn't take
some serious work, just it doesn't seem to me as something way way out
of the ordinary.
Where do you see the difficulties?
> Everyone seems to use Statistics Canada's LICO measurements, which
> are a relative measure, even through StatsCan itself says that LICO
> is *not* a poverty line.
It seems to me that if we talk about essentially relative measures,
we're not talking about poverty at all, or at the very least, we are
seriously clouding the issue. Poverty to me is by and large a matter
of absolute realities. A definition of poverty in a particular country
or region at a particular time would probably reflect prevailing
living condintions and standards in some way to some extent, but apart
from that, essential human needs seem to be fairly definite and
constant.
Am I missing any substantial part?
> I certainly don't think absolute equality is desirable. On the other
> hand, I appreciate the fact that in Canada, people who are wealthy
> generally don't flaunt their wealth; it's seen as inappropriate
> behavior. We were talking to a friend from Colombia yesterday, and
> he was saying that you can live with poverty, knowing that someone
> else has more than you do; what you *can't* stand is when that person
> rubs your face in it. (Which is often the case in Colombia.)
While I can understand that, I am afraid it's a bit off topic here. My
question wasn't about inequality between poor and rich. What am trying
to find out what arguments are there for trying to reduce inequality
between the reasonably well off and the rich.
> > (Of course, I can understand why people don't like inequality at the
> > emotional level. What I am trying to figure out is if there are some
> > rational arguments that would support the notion that reducing
> > inequality of income would be somehow functionally beneficial to the
> > society.)
>
> Here's what Krugman has to say. (The first argument is based on the
> idea of marginal benefits: an extra $1000 is much more valuable to
> a family with an income of $10,000 a year than it is to a family
> with an income of $100,000 a year.)
>
> There are at least two reasons for arguing that increased
> inequality changes *overall* welfare for the worse. First, most
> Americans do care at least a little bit about how well-off others
> are, and it is hard to argue with the conclusion that an extra
> thousand dollars of income matters more to a poor family than to
> someone whose income is already in six digits.
I am afraid, I can see several problems with relevancy of that
argument:
- it seems to deal with poverty rather than inequality;
- I suspect that there are some much more powerful factors at play
affecting the overall welfare than people's preferences. Productivity
and effectivity would be probably among the prominent ones;
- it's a static snapshot of a dynamic system. While the difference in
relative benefit to the individual families is quite clear, the long
term effect on the economy (and thus overall welbeing of the society,
including the low income family) of the different ways in which each
of the families would use the money is completely out of the picture.
> Second, the
> income distribution colors the whole tone of society: A society
> with few extremes of wealth and poverty is a different, and
> surely more attractive, place than one with a yawning gulf between
> rich and poor.
I am afraid, I am not completely convinced. I suspect that the
absolute standards of living of the middle and low income part of
population (in other words, the worst case scenario) would be to many
people looking for a place where to live much more important feature
than a comparison between the low and high income layers in relative
terms.
Maybe it would help if you could give some specific examples.
The comparison that comes to my mind is between the USA and the USSR:
From what I know, Soviet Russia would fit the description of a society
with few extremes of wealth and poverty much better than the USA,
while with the gulf between rich and poor, it would be rather the
other way around. If we judged attractiveness by migration patterns,
the yawning gulf would win big time.
> And in "An Unequal Exchange", a review of Edward Wolff's "Top Heavy":
>
> ... consider this simple parable: there are two societies. In one
> everyone makes a living at some occupation--say, fishing--in which
> the amount people earn over the course of the year is fairly
> closely determined by their skill and effort. Incomes will not be
> equal in this society--some people are better at fishing than
> others, some people are willing to work harder than others, but
> the range of incomes will not be that wide. And there will be a
> sense that those who catch a lot of fish have earned their
> success.
>
> In the other society, the main source of income is gold
> prospecting. A few find rich mother lodes and become
> wealthy. Others find smaller deposits, and many find themselves
> working very hard for very little reward. The result will be a
> very unequal distribution of income. Some of this will reflect
> effort and skill: those who are especially alert to signs of gold,
> or willing to put in longer hours prospecting, will on average do
> better than those who are not. But there will be many skilled,
> industrious prospectors who do not get rich and a few who become
> immensely so.
>
> Surely the great majority of Americans, no matter how
> conservative, instinctively feel that a nation that resembles the
> second imaginary society is a worse place than one that resembles
> the first.
I am not sure, again, to which extent this is relevant.
I certainly don't object to the method of explanation by illustration.
But the gold digging parable seems to be artificial and unreal in
relation to any larger scale functional economy to the point of making
no practical sense. While the effect of the luck factor might be
astonishing when looked at in a case of a particular individual, those
incidents, on the scale of the economy as a whole in the long term,
would probably be of little significance.
As for the fishing parabel, while much more realistic, leaving out the
possibility of somebody rising incomewise far beyond others by means
of inventing a fundamentally better method of fishing seems a serious
oversimplification to me.
>
> The reason [income distribution is a politicized subject] is
> obvious: the question of inequality is relevant for
> policy-making. In the fisherman society, for example, people might
> feel that only invalids, widows, and orphans deserve public
> support. In the vastly unequal prospecting world, however, it is
> easy to imagine a broad public demand that those who have been
> lucky enough to find gold be required to share a significant
> fraction of their winnings with those who have not.
Well, it seems to me that if we talk about economy (as opposed to
media painted sensationalist picture of the society), we actually do
live in the fisherman society. And as far as the requirements to share
go, it is quite easy for me to imagine public demand of the kind quite
regardless of where the wealth to be shared comes from.
I am afraid I am of a different opinion. From what I can see, it's
chaotic, patchy and wasteful. The same could be accomplished for much
less money, or for the amount of money spent, much more should be
accomplished.
> and by the marginal benefits argument, it
> makes sense to finance the welfare state through progressive income
> taxes, so that people who are better off pay more income tax.
> That's why I pay my taxes cheerfully each year.
Well, personally, I would pay them much more cheerfully if they were
used reasonably effectively and efficiently for legitimate puposes.
But it's not that much about you and me.
I wonder if you considered the likely impact of progressive taxation
on trends in investment, and likely long term consequences of those
trends for the overall welfare of the society?
> Of course, our social spending can't be unlimited; it has to be
> limited to a level that people are willing to pay, e.g. some
> fixed percentage of GDP.
Personally, I would like to see the analysis and projection of actual
need to be included in the picture, explicitly and as the starting
point of any further deliberations.
Len McLaughlin
Some good posting guys, interesting read.
-------------------------------------------------------------------------
lawrence day <ld...@pathcom.com> wrote in message
news:cf87c73f.01122...@posting.google.com...
Ivan Satori
> isa...@cogeco.ca (Ivan Satori) wrote in message news:<26a55c7f.01122...@posting.google.com>...
> > ld...@pathcom.com (lawrence day) wrote in message news:<cf87c73f.01122...@posting.google.com>...
> > > > . . .
> > > > (Of course, I can understand why people don't like inequality at the
> > > > emotional level. What I am trying to figure out is if there are some
> > > > rational arguments that would support the notion that reducing
> > > > inequality of income would be somehow functionally beneficial to the
> > > > society.)
> > >
> > > On a trip to Buenos Aires in 1978 I saw both the top and bottom
> > > of Argentinia's economic ladder. At the top end was a fellow
> > > At the other end of the ladder was a fellow who had built himself a
> > > This sort of gap does not seem like a good idea.
> >
> > I am not sure if this answers the question.
> >
> > I can understand why to look for ways how to solve the problem of
> > people having to live in tents suspended from trees (and often times
> > much worse in many places around the world). What I don't understand,
> > and I don't think this reply provided any answers in that regard, is
> > why somebody having a lifestyle as lavish as the rich fellow mentioned
> > above should be considered a problem at all, if the living conditions
> > of the rest of the population were decent.
>
> But in Argentina, in 1978 they weren't decent. People working at
> minimum
> wage needed at least two, maybe three jobs to survive. Men carried
> purses because a three-inch thick wad of bills was needed to buy
> stuff. The
> very rich hid their money outside the country to avoid taxes and
> inflation.
Well - this is pretty much my point.
If living conditions in absolute terms are difficult, what is the
benefit of reducing relative inequality rather than improving absolute
standards on living of the population as a whole?
If there are some arguments that would support the notion that efforts
in the direction of the former can facilitate and/or accelerate the
latter, I am still waiting for them to be shown and the mechanism of
how that would work to be outlined.
> . . .
> There are examples of successful countries with high taxes,
> high minimum wages and high welfare payments;
> Denmark and Holland come to mind.
> They do not have these enormous discrepencies between billionaires
> and paupers.
I have no doubts that countries like that could be found. That still
doesn't prove, and certainly doesn't explain, any alleged cause-effect
relationship.
BTW -
- it is not unreasonable to expect that relative inequalities in a
free society might be affected by the size of the economy - that
smaller countries, with smaller domestic market, would have smaller
differences,
- in the case of Holland, the extent of emigration from the country
might be a phenomenon worth of closer examination.
> > > Argentina is like Enron, praised by those who then fleeced it.
> > > The top executives made a half-billion over four years.
> > > The people at the bottom lost their jobs and pension funds.
> > > Deregulation will do that.
> >
> > I've seen statements like that before.
> >
> > So far, I haven't seen much of sound reasoning supporting such
> > statements.
Sorry, I should have been more specific - my comment was not
reflecting the whole paragraph, only the last sentence. In other
words, I wasn't questioning the existence of the problems. What I was
looking for were arguments supporting the assumption that the problems
of either Argentina or Enron were due to deregulation.
> Well you will have to wait until, as I recall, February for the
> US gov't investigatory committees to chew on Enron. It appears
> that lobbying (big $) got them exempt from normal regulatory
> oversight. Then they did all sorts of shady deals to pump up
> their stock, then the super-rich at the top cashed out their stock
> and made mega-bucks while everyone else got fleeced.
Winning exemptions from normal regulatory oversight through lobbying
doesn't seem to me to be the same thing as deregulation.
It could be argued that actually only regulation being in place can
allow for any exceptions from it to be granted to selected few. The
relative freedom of the selected ones might be not as important a
factor per se as the unfair advantage it gives them over their not
exempted competitors and the rest of the players in the industry.
> This is called a 'pump and dump' scam. During the 'pump'
> phase Enron is lauded as a wonderful innovative exemplar of
> the 'new economy'. This causes the stock to soar.
> When the big boys cash out, then there is no more 'pump'
> and the stock plunges.
Well - if something is being sold as new economy, it doesn't
necessarily mean it is new economy.
If I sell vitamin C and call it Tylenol, what is being sold is not
Tylenol but vitamin C. And whatever the effects, or lack thereof, of
vitamin C being consumed in false belief that it is Tylenol, it might
tell us something about vitamin C, it might tell us something about
the ethics of the marketers, but it doesn't tell us anything about
Tylenol.
Now, Tylenol might have its own sets of problems. But those don't have
anything to do, and we can't gather any useful knowledge about them,
from a fraudulent scheme in which something else is being provided
under the misappropriated name of Tylenol.
> Likewise when Argentina pegged their peso to the dollar,
> and thereby cured inflation, the (insider) economists lauded
> the idea, made Argentina the exemplar for other countries,
> pumped the country up like a bubble, then when the insiders
> cashed out the whole thing collapsed.
>
> There were more riots in Buenos Aires yesterday.
> The people seem to have figured out that changing
> the puppet 'head of state' will not suffice
> if the puppet master remains the true power.
>
> As you say, 'reasoning' well, 'power corrupts' eh.
> But 'observation' may be a better tool for
> understanding the current situation.
I am afraid, to consider reasoning on one hand and observation on the
other hand, if I understood correctly the paragraph above, as two
unrelated tools, of which one might be preferred to the other, is a
bit aftificial and misleading concept. It seems to me that each of the
two represents an indispensable part of a whole set of tools.
Observation without analysis and interpretation doesn't seem to me any
more useful than reasoning without facts.
> Historically extreme variance between a few rich and
> great numbers of poor leads to revolution;
> eg., France, Russia, Cuba, etc.
Again, with all due respect, this to me seems more like a from the hip
statement than a point made.
The inequality in France existed for several centuries before the
revolution. I can certainly see that the arrogance and recklessness of
the French nobility adding insult to the injury might have been a
factor in the French revolution, but so far, I haven't come across any
convincing argument that it was primarily the relative inequality,
rather than the absolute, and worsening, conditions of starvation and
desperation (nothing to lose anymore), that led to the uprising.
The extent of inequality in Russia is fairly debatable. Russia was a
fairly poor, backward country. Apart from St. Petersburg a Moscow,
there wasn't all that much of luxury to be seen across the country. I
guess, a pretty good argument could be made that the oppressive
tzarist regime, the mass disruption of societal order and the famine
caused by war, the fact that significant segments of population found
themselves armed (due to the war again), and certainly not least the
political genius of Lenin to steer the forces at play, were more
powerful factors than the extent of relative economical inequality
within the society.
It is my understanding that while in Cuba, the relative inequality was
quite out of the ordinary, and quite visible and pervasive, the living
conditions of broad masses of population were rather extraordinarily
poor in absolute terms as well. So again, unless there are some more
detailed and specific arguments that would indicate that the
inequality, rather than poverty, was the leading cause, it's rather
something offered to be believed than demonstrated.
Ivan Satori
> russi...@yahoo.com (Russil Wvong) wrote in message news:<afe9ed76.01122...@posting.google.com>...
> > isa...@cogeco.ca (Ivan Satori) wrote:
> . . .
> > Of course, our social spending can't be unlimited; it has to be
> > limited to a level that people are willing to pay, e.g. some
> > fixed percentage of GDP.
>
> Personally, I would like to see the analysis and projection of actual
> need to be included in the picture, explicitly and as the starting
> point of any further deliberations.
>
Sorry for poor wording - I didn't mean here to request that you
provide an analysis of needs for this debate. I wanted to say that, in
general, I would find a method how to establish the amount needed for
social purposes that would start with an analysis of needs, and took
it from there, preferable to an approach based on estimates of how
much society is willing to spend.
(Because if people are willing to pay more than needed, it's not
completely fair, and might backfire, to take from them more, and if
need is greater than willingness, a solidly researched and well
defined vision might help increase the tolerance.)
Russil Wvong
> First of all, thank you for taking the time to respond.
You're welcome! You're definitely making me clarify my thinking. :-)
In particular, I should probably be talking about *income distribution*
rather than inequality.
> > I guess that to me, it seems unlikely that we'll ever be able to
> > completely eliminate poverty, no matter how rich and productive
> > our society becomes.
>
> I am not sure why that would be? I think it is fairly safe to say that
> poverty has been eliminated in much of Western Europe, and it could
> have been in North America if what has been and is being done here was
> done more rationally.
Hmm. Let me try to explain what I mean.
From what I can tell, the average wages for unskilled workers are
going *down*, perhaps because of increased automation and increased
international trade: high-paying jobs in fields like mining and
manufacturing are disappearing, leaving low-paying, low-status jobs in
retail, fast food, private security, etc. At the same time, wages for
skilled workers, whether white-collar (computer programmers) or
blue-collar (plumbers) have been going up. This would tend to make
the distribution of income (before taxes and transfers) more bimodal,
with incomes clustering around two peaks:
* * * *
* * * *
* * * * * * * * * *
* * * * * * * * * * * * * *
Second, I think there'll always be a significant number of unskilled
workers. We can try to make training and education as widely
available as possible, but I don't think everyone's going to be able
to become a computer programmer or a plumber.
If I'm correct (I may not be), and the incomes of skilled workers
(before taxes and transfers) are going up, while the incomes of
unskilled workers are going down, then I think we'll get an increasing
number of unskilled workers who are poor, i.e. who can't afford to pay
for a reasonable level of food, clothing, and shelter without
receiving income transfers from skilled workers. (What constitutes
"reasonable" is, of course, a very subjective and political question.)
The fact that *average* incomes are going up doesn't help them.
I don't think unskilled workers would end up starving, since food's
pretty cheap these days, but I do worry about rising shelter costs
(i.e. housing prices and rents), as housing prices get bid up. In the
San Jose area, where my brother and sister live, the skyrocketing
salaries and stock options of people working for high-tech companies
have bid up the price of housing to amazing levels. A small house
costs US $600,000 or so, and rent is $2000 a month. My brother says
that nobody working at a service job can afford to live in the area.
A local paper printed a story about a guy who built himself a sleeping
area underneath somebody's back stairs (for $300 a month).
Things aren't as extreme in Vancouver, where I am; you can still get a
townhouse for $250,000. But it is a very tight rental market. It's
more profitable for developers to build condominiums than to build
rental housing -- skilled workers, who buy condos, have more money
than unskilled workers, who rent -- so that's what gets built.
> ... defining poverty, for any practical purposes, doesn't seem to me as
> some extremely challenging task. That is not to say that it wouldn't take
> some serious work, just it doesn't seem to me as something way way out
> of the ordinary.
I think the big problem is deciding what constitutes poverty.
Determining the distribution of incomes is straightforward. But
saying who's living in poverty and who's not -- that is, setting a
poverty line -- is a very political and subjective statement. Is it
the bare minimum required to pay for food, clothing, and housing?
What kind of housing -- an apartment, a basement suite, a shared
apartment? Would transportation and telephone expenses be included?
What about child-raising expenses?
Plus, because housing costs are volatile, the poverty line will
itself be volatile as well. So the number of people below the
poverty line may fluctuate quite a bit. That's why I think it's
probably better to think about the income distribution, which is
going to be more stable and easier to track over time, instead
of just looking at the poverty rate.
> While I can understand that, I am afraid it's a bit off topic here. My
> question wasn't about inequality between poor and rich. What am trying
> to find out what arguments are there for trying to reduce inequality
> between the reasonably well off and the rich.
I see. Perhaps our views aren't so far apart. I don't see this
(inequality between the reasonably well off and a relatively few
rich people) as a big issue. I'm more worried about the size of
the gap between the working poor and the reasonably well off.
> > There are at least two reasons for arguing that increased
> > inequality changes *overall* welfare for the worse. First, most
> > Americans do care at least a little bit about how well-off others
> > are, and it is hard to argue with the conclusion that an extra
> > thousand dollars of income matters more to a poor family than to
> > someone whose income is already in six digits.
>
> I am afraid, I can see several problems with relevancy of that argument:
> - it seems to deal with poverty rather than inequality;
Fair enough.
> - I suspect that there are some much more powerful factors at play
> affecting the overall welfare than people's preferences. Productivity
> and effectivity would be probably among the prominent ones;
> - it's a static snapshot of a dynamic system. While the difference in
> relative benefit to the individual families is quite clear, the long
> term effect on the economy (and thus overall welbeing of the society,
> including the low income family) of the different ways in which each
> of the families would use the money is completely out of the picture.
True. (Krugman says that productivity is more important than anything
else.) Here Krugman's making an "other things being equal" statement:
*if* transferring $1000 from a high-income family to a low-income
family would not have any other effects, then it would increase overall
welfare, because the marginal benefit to the low-income family is much
greater than the marginal loss to the high-income family.
> I am afraid, I am not completely convinced. I suspect that the
> absolute standards of living of the middle and low income part of
> population (in other words, the worst case scenario) would be to many
> people looking for a place where to live much more important feature
> than a comparison between the low and high income layers in relative
> terms.
I think you're right. What Krugman points out is that the absolute
standard of living of the lower 40% of the US population has *gone
down* since 1973, even as the average standard of living has
increased.
> The comparison that comes to my mind is between the USA and the USSR:
>
> From what I know, Soviet Russia would fit the description of a society
> with few extremes of wealth and poverty much better than the USA,
> while with the gulf between rich and poor, it would be rather the
> other way around. If we judged attractiveness by migration patterns,
> the yawning gulf would win big time.
Fair enough. Again, though, if you compare two societies in which
everything else (productivity, unemployment) is the same *except* for
the few extremes vs. the yawning gulf -- say Germany vs. the US --
would this comparison still hold? The US doesn't get too many
immigrants from Western Europe these days.
> I certainly don't object to the method of explanation by illustration.
> But the gold digging parable seems to be artificial and unreal in
> relation to any larger scale functional economy to the point of making
> no practical sense. While the effect of the luck factor might be
> astonishing when looked at in a case of a particular individual, those
> incidents, on the scale of the economy as a whole in the long term,
> would probably be of little significance.
I think Krugman's point is that the gold-digging and fishing economies
are two extremes, one in which luck is extremely important and one in
which luck isn't important at all, and that the real economy may be
moving one way or the other. (The high-tech sector of the US economy
resembled Krugman's gold-digging example for the last few years,
IMHO.)
> Well, it seems to me that if we talk about economy (as opposed to
> media painted sensationalist picture of the society), we actually do
> live in the fisherman society.
Sure, but Krugman points out that the US appears to have been moving
towards a more unequal society since 1973. Nearly all of the income
gains since then have gone to the top 20% of the population, while
the income of the bottom 40% has declined.
> I am afraid I am of a different opinion. From what I can see, it's
> chaotic, patchy and wasteful. The same could be accomplished for much
> less money, or for the amount of money spent, much more should be
> accomplished.
Do you have particular suggestions for improvement? I think it's
certainly chaotic and patchy, but my impression is that improving
welfare programs will require *more* money, not less. For example, I
was impressed by William Julius Wilson's argument in *When Work
Disappears* that social breakdown is primarily caused by
*unemployment*, particularly among young men, not poverty per se;
which is a strong argument for workfare programs. But such programs
are probably more expensive than simply handing out cheques.
> I wonder if you considered the likely impact of progressive taxation
> on trends in investment, and likely long term consequences of those
> trends for the overall welfare of the society?
It's certainly true that if the overall tax burden, or the top marginal
tax rate, are too high, it'll reduce our incentive to invest, and this
will reduce productivity growth. And if we can reduce our taxes, *all
else being equal* (e.g. without screwing up public education and health),
this should increase productivity. But I'd argue for gradualism rather
than radical change.
> > Of course, our social spending can't be unlimited; it has to be
> > limited to a level that people are willing to pay, e.g. some
> > fixed percentage of GDP.
>
> Personally, I would like to see the analysis and projection of actual
> need to be included in the picture, explicitly and as the starting
> point of any further deliberations.
Sure, I think a bottom-up analysis would certainly be useful. But I
suspect that when it comes to complex social problems, e.g. aboriginal
issues, there's probably a huge number of potentially beneficial
programs, and they can't all be funded, so a top-down budget
constraint (forcing decisions to be made about priorities) is necessary
to have as well.
Stephen H. Kawamoto
apt...
--
Canada’s Anti- Terrorism Laws- Bills C36, C22, C35, C42
Presentation by Rocco Galati at a forum sponsored by the Scientists For
Peace Toronto, December 2001
(Canada’s Globalization, Militarization, Police State Agenda)
My name is Rocco Galati. I am a constitutional lawyer. I was a lawyer for
the Crown for a few years before I went into private practice cases against
the government. I was the counsel who brought the MAI case up through the
courts to the Supreme Court of Canada, and argued the Quebec city injunction
perimeter fence case up to the Supreme Court of Canada. I have been doing
CSIS terrorist certificate cases under the Immigration Act, the so called
secret trials that are now going to be part of C36 secret trial mechanism.
In a nutshell, what is in Bill C 36, and is undoubtedly not open for debate,
what Bill C36 does is as follows. It has very little to do with terrorism.
Terrorism is very easy to define. I have defined it for clients of mine
appearing before parliamentary and senate committees.
Terrorism is a very simply definition. It is the application of terrorism
that is all the problem. I define terrorism as the threat of or use of
violence and arms by an armed group or individual against an unarmed group
or individual for political, racial, religious, social, or economic reasons
including state terrorism. You can take any other armed conflict whether it
is two people dueling at dawn over a woman 200 years ago, or two groups in
an insurrection or civil war, or war, or somebody doing it for profit, or
drug running. We have laws to cover that, but that is not terrorism.
The only problem with a definition of that sort is that you have to apply it
equally, and that’s where we get into problems, because certain states want
to be able to support terrorism when it suits their needs. My only point is
that this bill has very little to do with terrorism in the sense that the
first speaker was speaking about.
1. What this bill does is really codify militarization and a police state,
and further globalization interests. You see it right in the bill. The Bill
is overly broad. Even though they took out the “lawful”, the Bill still
catches dissent. It still catches protest. Protests that interrupt public
facilities are acts of terrorism under this bill. No question about it,
whether they are “lawful” or not, if they endanger life. Any protest that is
going to cut off a part of the city from essential services like ambulances
by definition endangers life. That is the price we pay in democracy. That is
a terrorist act under this Bill.
2.The other thing the Bill does is that it can convict you of facilitating
terrorism without any knowledge or intent. The government pretended that
they changed the definition, but they didn’t. They changed it in one section
and they took ir away in another. Even if you don’t know you are
facilitating, you are going to get caught. So the guy who sells the
envelopes and the stamps at the corner store in my view is facilitating
terrorism when the purchaser puts anthrax in them and mails them off,
whether he knows it or not.
3. Then there is the 72 hour arrest on suspicion. The only test here is you
can be held here for 72 hours without being charged on suspicion. That is
not a test. That is not even a smell test. What is the suspicion going to be
based on? It will be based on another portion of the Bill which allows the
Court and police “in determining whether an accused participates in or
contributes to any activity of a terrorist group the court may consider
among other factors whether the accused uses a name, word, symbol, or other
representation that identifies or is associated with the terrorist group”.
Now if I look around this room, I can probably pick out five or six women
here who I find suspicious because the legislation allows it. So if you use
the same religious or codeful symbols that some terrorist group has
misappropriated for their own purpose, even though they are valid religious
or cultural symbols of Islam or being Arab or being Tamil or being Sikh,
then the legislation grants the police and the Courts the right to use that
as the basis of suspicion. In my language that is just racist profiling.
Racism, that is all it is.
So the 72 hour detentions are also problematic because there is no stop to
the revolving door. One police officer on suspicion will arrest you for the
72 hours. You are released. That is not to say they can’t come back in 12
hours or 12 minutes and re-arrest you on another suspicion. So you can go
around the revolving door this way. And they can put conditions on you
similar to bail conditions even though you are not charged or arrested with
anything, for a year at least without charging.
4. Investigative hearings are nothing short of Roman Catholic Inquisitions.
That is all they are, maybe without the torture, maybe not. But who knows
what people get tortured. Every group in this country has suffered torture
at police hands. That’s documented.
So you are hauled in, and you have to answer questions. If you don’t answer
questions, you are subject to criminal charge. They say they can’t use the
answers against you in a court. Well, that’s not true because (1) they can
use the answers to go engage in further investigation outside the answers,
and that evidence can be used in court. (2) If you ever take the stand to
defend yourself, the case law is clear they can use your answers to say that
you are lying. So it is not true that they can haul you in and anything you
say will never be used against you in court.
5. Really nasty provisions that no one seems to be talking about, quite
frankly because they are so foreign to our law and our experience, are the
secret trial provisions. Right now in Canada, there is only one instance
where you get secret trials - that is on CSIS terrorist cases under the
Immigration Act. That is where someone is accused of being a terrorist or
associated with terrorism. What happens when they allege that you are a
terrorist is that you never get to see the evidence. Your lawyer never gets
to see the evidence. All you get is a summary of the allegations against
you. And then the lawyer for the government sits with the judge and they
review the evidence. And then you go into open court, and the judge says,
“What do you have to say in response to the fact that we say you are a
terrorist?”
And so the game goes something like this: “I was born in a little village”
somewhere, wherever. “I knew all these people”, and you literally have to
ransack through a person’s life and hope that in doing so that you are
addressing whatever evidence, distorted rumor or hearsay evidence that is
before the judge.
So these secret trials are really foreign. They’ve been around since 1990 in
Canada (under Immigration cases, not the Criminal Law) . There has only been
one case where it was fought and won. That was a case I fought and won two
years ago. It was called Jibala. A case from Egypt. But lo and behold they
re-arrested him again even though the federal court said there is nothing to
the allegation. They re-arrested him this August and we are back on the
merry go round.
So now under, C36 at various stages, if the police or the CSIS or RCMP say,
“I can’t answer that question, I can’t divulge that evidence because it’s
“national security” (they usually lower their voice to say that) then you
don’t get to see it. That’s very dangerous because our whole system is based
on testing the evidence against you.
6. That also goes for the confiscation of property. These secret trials
allow for the confiscation of property as well. So your daughter has a
friend who is Muslim who has a brother who may be associated with a group
that is on the list. Let’s say there is any money that transfers. Let’s say
your daughter is helping you with the mortgage, but she gets some help from
her brother to pay the mortgage. They can and will confiscate your house.
You will never know why.
Because that money is coming indirectly from a terrorist source, even though
you don’t know that your daughter is getting money from her brother, and he’
s associated with somebody, that property can and will be confiscated, and
you will never know why. You will never see the evidence, and nobody will
know why your property is getting confiscated, except for a bald allegation
that is tied to terrorism.
7. Lastly, I want to say I personally find all this legislation C36, C35,
C22, C 42 offensive:
C35 which broadens state immunity to state terrorists or dignitaries from
abroad from international organization. If they are terrorists its OK. They
are immune from our law;
C22 that makes lawyers spies for the government. They have to report
suspicious activity and not tell their client;
and C42 that’s just been introduced which allows ministers to delegate
authority to their officers to declare military security zones on the spot,
issue orders on the spot, and nobody can discuss the orders, even the
subject of the order, because if you discuss it or publicize it, that’s a
separate criminal offence;
If you take all these bills together, it doesn’t take a rocket scientist to
see that what we have here is a road map for, essentially, I am not
exaggerating, a military junta, really in the hands of four cabinet
ministers who can delegate right down to the ground. That what’s happening.
If you look at, and there’s no argument against this if you look at the
legislation, it is so offensive.
8. The last point I want to make about this globalization and the
militarization of that agenda is that if you look at the definition of
terrorism, what they have done is very reptilian, very slivery, so nasty.
They have included in the definition of terrorism “threats to and including
its economic security”. So if you do anything that threatens the economic
security of Canada, you are engaging in a terrorist act. Now, in addition to
all the problems of protest, there is something even more insidious than
this than just what is found in the definition of terrorism. Another part of
this omnibus bill (Bill C 36) is that they’ve re-defined the Official
Secrets Act and renamed it the State Security Act. Under that legislation,
S3 of that act (Official Secrets Act) which is S.27 of this Bill C36, it
says “for the purpose of this act a purpose is prejudicial to the safety or
interest of the state if a person...” Then there are various thing that a
person can do to endanger the security of the state:
(a) “interferes with the service facility or system or computer program”
(b) “damages property”
(c) (really offensive) “adversely affects the stability of the Canadian
economy, a financial system, or any financial market in Canada without
reasonable economic or financial justification”
So boycotts of the markets or the banks on ethical or environmental grounds
are now an act of terrorism. When you grasp that that’s “the economic
security of the country” via the Official Secrets Act, now the State
Security Act, you can’t even have financial dissent.
And then, here are the ones that are really nice.
(d) “impairs or threatens the capability of the government or the Bank of
Canada to protect against or respond to economic or financial threats or
instability
(e) “impairs or threatens the capability of the government of Canada to
conduct diplomatic or consular relations or conduct and manage international
negotiation.
So, no more Quebec city protests. They are all an act of terrorism. No
protesting any stock market any financial market, or ethical or environment
laws. So that’s how broad this bill is, and that’s how broad the net has
been cast.
Answers to questions:
1.Q; Charter Rights:
A: There is not one single right in the Charter that has been developed from
the Magna Carta to the English Bill of Rights, to the French Declaration of
the Rights of Man, to the U.S. Bill of Rights, to the U.N. Charter, to the
Canadian Bill of Rights, and to our Charter that has not been urinated upon
and buried. There is not one right that it does not completely undo. You
name me the right and I will tell you how it does it.
2. Q; CSIS secret trials:
A: CSIS secret trials in our Immigration law resulted from pressure from the
USA against the Muslim and Arab communities. The Mulroney government put in
the secret trial provisions back in the 80's.
3. Q: Can these Bills be overruled?
A: Once you get handcuffed, and you get a lawyer, and you spend so much time
in pre-hearing custody in the Metro West Detention Center where they put you
in a hole for 18 out of 24 , you get 5 minutes in the yard if you are lucky.
You do not get to phone your family or your lawyer. That is what is
happening now with an immigration hold. Then you go in front of judge and
you can make a Charter challenge. Then the court may or may not strike it.
But you know, charter challenges and judicial court review are no
substitutes for proper political debate and social economic balance in a
society.
We were in front of the Senate the other day, and they sighed in relief that
of course we were going to challenge it in the Courts and we said, “That is
not a proper substitute. Do not be going to sleep hoping that we challenge
it. It is your job to put in a proper bill.” This is where it is offensive.
4. A: I was an ex Crown Attorney. I read this bill as if I were prosecuting.
5. A: C42 is even worse than C36 .
6. Q: What motivated our government to put in these Bills?
A: I am not shy in saying this given my work on the MAI case and the Quebec
city case. Anyone in tune with globalization protests and the agenda of the
government (whether or not globalization is a good or bad thing, I am not
going to reveal my true beliefs cause I don’t want to get fired by my
clients but ) it became clear to the government of Canada that they were
losing the handle on the globalization issue and I think they stomped on us.
In fact, I know from friends of friends from the Justice Department in
Ottawa that they were just foaming at the mouth when they got this
opportunity, (hundreds of justice lawyers working on this). This thing has
to do with giving globalization a military and police state so that nobody
can protest. They can bash our heads now legally. They’ve been doing it
anyway. So that’s what motivated the government.
If you read the Bill, this Bill (C36) should be 10 pages thick. You go to
the Criminal Code. You enact terrorism, and you’re done.
--
When Democracy is not enough, let Freedom endure.
Overgrow the State!
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