Saturday, March 11, 2017

How Canadian political elite extracts money from the private sector

By first throttling the private sector with manufactured regulations, red tape and taxes to trigger recession, then by offsetting the deflationary trend by lowering the interest rates, generating money and credit - benefiting through their own controlled banking  and public sector system!

 A normally inflationary effect of the government stimulus, is balanced by the apparently intentionally engineered contraction in the private sector , such that the net effect is the overall stable currency.   However the net effect on the economy is anything but balanced - since the people working in the private sector, end up somehow earning less and less while people employed (I intentionally didn't put "work") in the public sector get paid more and more.  Especially in the high echelons of government departments and in the management of state or semi-state corporations.  The lavish pay is not only limited to the higher management but to the mid-ranking staff.  As anybody living in Canada, sooner or later notices the six-figure salaries of the employed firefighters, police officers, and doctors.

This is basically the applied Keynesian economics at it worst.

Originally   Keynes postulated, among other things, that during a recession, the government ought to stimulate the economy by investing counter-cyclically, using state reserves or debt, during the time when private sector is contracting.  Conversely, during economic expansion, the government ought to accumulate budgetary surplus by collecting higher taxes which also works to slow down the growth but will then serve as the resource to re-stimulate the economy during the next down cycle.

Our present Canadian oligarchs have improved the Keynesian system.  First they must have noticed that the flow of stimulus money and credit during recessionary time, flows mostly through their own government controlled institutions, enriching their personnel and management first, subsequently it may trickles down to the rest of the economy, if there is anything left, including the private sector (if lucky).

The must have noticed that the biggest post-WWII expansion of the government+banking sector in Canada and in the USA occurred during 1970-ties - at a time of severe oil crisis and recession - for the reason stated above!

The corrupt elites probably realized that they do not necessary have to wait each cycle for a next recessionary downturn to enjoy an opportunity associated with the "stimulus",  but they could simply manufacture such occurrences bu manipulating interest rates and spewing the red tape!

How did it happen in the 1980-ties and 1990-ties that the investment capital begun flowing out of the North American economies into China and elsewhere, creating local unemployment and rendering the large portion of Canadian and American working class destitute?

     When private business cannot make a profit by investing in certain countries, they of course don't invest there, their capital simply moves elsewhere!    But the interesting question is not "why" but "who"!

 Who set up the dis-incentives in the private sector to slow all productive investments?  Who set up the red tape, tax structure, labor and environmental laws to make it difficult to conduct business here?

  Who really benefits from government-imposed carbon tax and government engineered energy disaster in Ontario (and Alberta) resulting in the highest electricity prices in North America!

I submit the thesis that the government elites did engineer the crises in the recent times, and they are the main beneficiaries of their policies, while everybody else has to pay higher taxes and earns less!

Stan Bleszynski
11-March-2017