With all the public attention during G20 on the 1000 arrests and such, something critical was overlooked. That’s the paradox the assembled heads of governments created for ending the global economic crisis.
The G20 leaders recognize that “demand” needs to grow. That means people must have the means to buy stuff. Do a search in the G20 Toronto Summit Declaration and fourteen times you’ll find a reference to boosting or increasing “demand”.
Yet they want to halve their deficits by 2013. How are they going to cut government spending and increase demand at the same time?
They acknowledge that some stimulus spending may still be necessary to stop the world from sinking deeper into recession. But by 2013 they want government deficits to plummet. How will they pull it off? It’s already in the works; cut social-safety-net programs with a focus on social security and public pensions.
So the G20 wants to increase “private demand” and cut the deficit. Ok, there must be ways to do this without simply adding more government stimulus money.
Now do a search in the Declaration for the word “wages”. You’ll find it once. The document says “Reforms could support the broadly-shared expansion of demand if wages grow in line with productivity.”
Wow! An admission that over the last four decades productivity has skyrocketed while wages have remained stagnant? A recognition that the greatest transfer of wealth from working people to the rich in modern history might have led to a lack of real demand and is a root cause of the crisis?
Are we about to see a G20 agreement on promoting anti-strike breaking laws, or eliminating legislation that makes it difficult to impossible to organize unions in many places around the world, including the US and Canada?
Sorry. That one sentence is all there is. Not one recommendation or agreement on how wages will rise in line with increases in productivity. One wonders why they bothered to put the sentence in the document.
Let’s backtrack. If productivity is up, why can’t we afford social programs now that we could in the past? Higher productivity means more wealth, not less, right? Let’s just say the top five percent of income earners in the world have never had it so good.
So if the economic pie is bigger, there must be ways to lower deficits without cutting social spending, right?
Now do a search in the G20 Declaration for the word taxes. You will find zero. Not a single reference to taxing the riches the very few accumulated over the last decades of growth.
That says it all. If you don’t like it, we always have a nice detention cell ready for you.
You might find these interviews on The Real News Network of interest:
“Productivity is up so why cut social programs” with Bob Pollin and “Deficit hawks and finance reform doves” with Rob Johnson or my piece Toronto G20 – The shape of things to come