No doubt the rich and powerful have been cracking up with laughter for decades over their ability to peddle "trickle-down economics" to a trusting public.
But a surprisingly strong report just released by the prestigious Organization for Economic Co-operation and Development (OECD) may cause the public to regard these wealthy snakeoil salesmen more skeptically in the future.
Essentially, the OECD report reveals the immensity of the trickle-down scam, which the report shows has not only failed to foster economic growth as promised, but has proved to be an overall killer of economic growth.
And the report puts actual numbers on how much growth has been reduced as a result of trickle-down. In the case of Canada, the reduced economic growth amounts to about $62 billion a year -- which economist Toby Sanger notes is almost three times more than the estimated annual loss to the Canadian economy of lower oil prices.
But while dropping oil prices are grabbing headlines, the serious negative economic consequences of Canada's pro-rich economic policies are largely ignored. Certainly the Harper government promises to entrench these policies more deeply if re-elected.
First, a little background. As the dominant economic theory for the past 30 years, trickle-down economics -- also known as Thatcherism, Reaganomics, neoliberalism or even just the "austerity agenda" -- has led to a set of economic policies that have concentrated income and wealth at the top.
From the outset, critics charged that, despite its intellectual pretensions, neoliberalism was simply a confidence game aimed at redistributing resources to the rich.
Not so, responded most mainstream economists (particularly those employed by right-wing think-tanks). Rather, they insisted, neoliberal policies would -- by providing generous incentives for top performers and cutting back expensive social programs -- foster overall economic growth, with benefits ultimately "trickling down" to all.
This unproven claim became the justification for imposing this largely Anglo-American economic theory on the developing world as well. For years, powerful bodies like the International Monetary Fund (IMF) forced poor countries to adopt radical neoliberal reforms in order to qualify for desperately needed loans.
Meanwhile, there was mounting evidence -- advanced by Joseph Stiglitz, Paul Krugman and other high-profile liberal economists -- that neoliberal policies did little more than the obvious: making the rich richer, with no benefits for anyone else.
In the wake of the 2008 financial collapse, even the mainstream international economic organizations -- including the IMF and the World Bank -- began releasing studies with findings that seemed to contradict their organizations' longstanding support for neoliberal orthodoxies.
With its report this week, the Paris-based OECD has gone farther still, stating unequivocally that its research shows that policies favouring the rich haven't just failed to create overall economic growth, they have actually "curbed economic growth significantly."
Indeed, according to the OECD, the dramatic increase in income inequality -- now at its highest level in 30 years -- is the "single biggest impact" preventing economic growth.
This drag on economic growth, the OECD explains, results largely from those lower down the income scale -- including the bottom 40 per cent of earners -- lacking the funds to invest in their own education.
The OECD's powerful message is clearly of little interest to the Harper government, which is planning to exacerbate Canada's rich-poor gap by introducing an income-splitting scheme that will benefit rich families almost exclusively. Harper's plan to provide an additional $60 a month per child to all families won't be nearly enough to allow the bottom 40 per cent of Canadians to invest meaningfully in their children's education.
The OECD stresses the need "not only for cash transfers, but also increasing access to public services, such as high-quality education, training and healthcare" -- areas where Harper's planned cutbacks to the provinces will hit hard.
What's striking about the entrenchment of policies favouring inequality is how out of sync they appear to be with popular will.
According to international research co-authored by the Harvard Business School's Michael Norton, there's an almost universal desire out there for a smaller gap between the pay of corporate CEOs and ordinary workers.
Norton surveyed the level of inequality favoured by people in 16 Western countries and found it wildly out of whack with the actual level of inequality in their countries.
For instance, if CEO compensation were to remain at its current heights, in order to achieve the level of inequality desired by most Americans, the pay of the average U.S. worker would have to be increased … to $1.8 million a year.
While the world's elite may still be slapping their knees and marvelling at what they've managed to pull off, the fact that the most prestigious international economic bodies have lined up against trickle-down orthodoxy may mean there are now prospects for real change.
At the least, it suggests that, in a showdown with the world's billionaires and multi-millionaires, the world's people may actually stand an outside chance.
Winner of a National Newspaper Award, Linda McQuaig has been a reporter for the Globe and Mail, a columnist for the National Post and the Toronto Star and author of seven bestsellers, including Shooting the Hippo: Death by Deficit and other Canadian Myths and It's the Crude, Dude: War, Big Oil and the Fight for the Planet. Her most recent book (co-written with Neil Brooks) is The Trouble with Billionaires: How the Super-Rich Hijacked the World, and How We Can Take It Back.
This article is reprinted with permission from iPolitics
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