This is not the 1930s. We are not reliving the world depression. There is a crisis, because financial capitalism has reached a dead end. As a result, economic life is likely to get worse in Canada, and elsewhere.
Right now there is a lot of talk about what it would take for things to get better. The hidden question is what does better mean?
For the U.S., restoring the banks and auto companies to health is the top policy priority. The Obama administration has even announced more spending on highways, which should remind us that the military-industrial model of American economic development was based on building the interstate highway system. Cars, suburbs, separation of work and living space, the decline of cities, the waste economy, all followed from this misguided intervention at the behest of the military which wanted the ability to move troops around the continent by motorized transport.
Restarting the American economic machine hardly seems like the smartest option for a world being done in by climate change, and aghast at the amounts failing U.S. companies pay their executives. The WHO explains carefully how U.S. style inequality breeds ill-health, giving us an excellent reason to take social determinants of health as a starting point for starting afresh: better means healthier.
By and large the U.S. establishment is in denial. The economic crisis started in Asia, not the U.S., said U.S. central bank chief, Ben Bernanke. The Americans did not overspend on the military, and sustain wasteful, environmentally destructive consumption; the Chinese and others saved too much, and lent the money to the U.S. where, Bernanke admits, consumers took on too much debt. Princeton liberal economist and New York Times columnist Paul Krugman, who largely agrees with this thrust of blaming others, points out rightly that because of the crisis, the entire world is now trying to save, slowing down American economic growth.
In the U.S., economic recovery (the phrase favoured by the Obama administration) means dealing with the crisis in what Emma Rothschild has called the auto-industrial society. Looked on from outside the U.S., recapturing the glory days of booming auto sales does not seem entirely sane. Within the U.S., there is a realization that restructuring the Detroit Three does mean seriously downsizing American auto production.
Despite protestations to the contrary, seen from the U.S., the Canadian portions of Chrysler, Ford and GM are expendable.
Canada can try and buy its way into continuing a subordinate role in auto, by lending $6 to 8 billion to the Detroit Three, but there are better options. Putting in place a Canadian transportation company that would transform auto assembly plants into sites for production of subway cars, tramways, rail and light rail cars is preferable to giving public money to foreign -- owned corporations that have shown they cannot manage their businesses.
A national transportation entity should include an auto component. A new auto company, producing in Canada, cars designed in Canada, would be less costly than carrying along the failing Detroit companies. The market capitalization of GM has fallen from $56 billion in 2000 to less than $1 billion. Why lend GM two or three times what it would fetch on the open market?
The American-led auto bailout aims at reopening labour contracts. Building a publicly owned Canadian transportation company would only make sense if the CAW were at the heart of that company.
Anybody looking to green the economy has to be questioning reliance on the private automobile for every aspect of daily living. Building a better economy means replacing financial capitalism with public utility banking, and moving beyond the auto-industrial society.
Duncan Cameron writes from Vancouver.
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