Workers' Voice mailing list
December 4, 2016
RE: The market fundamentalist version of public works
The right-wing bigot Trump has promised a major infrastructure rebuilding program; so did Hillary Clinton; and the Democrats have already shown some on-again-off-again interest in Trump's plan. A big public works program sounds good. But it depends on how this program is carried out. Already the liberal Prime Minister of Canada, Justin Trudeau, has been pushing privatization under the banner of investing in infrastructure. This threatens a dramatic expansion of privatization in Canada, and a similar plan of privatized "public works" is something which the liberal and conservative wings of the bourgeoisie in the US might also agree on.
Below are three items about this. The first is an article by a Canadian activist, Marv Gandall, that he posted on several email lists last month. The second consists of excerpts from the article by Michael Rozworski that Gandall cited. And the third has my comments on an IMF paper that Rozworski says was characterized by the press as saying that "neoliberalism is on its way out".
Marv Gandall, Nov. 11, 2016, on PEN-L
Be careful what you wish for…
Liberal and even conservative economists have been urgently pressing governments to invest in infrastructure to boost employment and growth. The new Trudeau government in Canada was seen as a poster child for this effort when it took office last year.
Donald Trump has made infrastructure spending the centrepiece of his extravagant promise to create "millions and millions" of jobs - derided by many as an empty boast unlikely to win the support of congressional Republicans.
But, as the recently unveiled Canada Infrastructure Bank demonstrates, what the Canadian program calls "asset recycling" is a euphemism for a massive new push to privatize airports, highways, ports, utilities, treatment plants, and other public assets in the guise of public-private partnerships.
Currently, most Canadian infrastructure is publicly owned and operated, and could be repaired and expanded at record low interest rates. Instead, private investors will be offered a huge majority stakes in these facilities and guaranteed high returns in the form of user fees, tolls, subsidies, dividends, and other payouts.
Canadian economist and blogger Michael Rozworski explains.
With today’s fiscal update, the Trudeau government has really shown itself to be at the forefront of global left neoliberalism. Taking nearly all his cues from his business-dominated Advisory Council on Economic Growth, the Finance Minister announced a new Canada Infrastructure Bank as the centerpiece of the fiscal update and the Liberals’ economic strategy. Don’t believe the fanfare that is bound to come from the Canadian and international press, this isn't anything progressive. It’s a new elite consensus that might become one of our main exports, pumped via virtual pipelines across the globe. ....
Note that while the fiscal update makes all the right noises about First Nations, the fight against climate change or public transit, the motivation for infrastructure investment is squarely to provide global investors with better returns in the new, low-growth, low-interest-rate reality. ...
The private sector won’t be "leveraging" for free. What used to be simply called privatization is now the "flywheel of institutional capital participation" or some other gratuitous b.s. CUPE [Canadian Union of Public Employees] economist Toby Sanger has calculated that majority private financing of this kind can double the cost of a project over 30 years. While the federal government can borrow at under 2%, private capital needs stable returns in the 7 to 9% range. The end result will be some combination of higher user fees, subsidies or cuts elsewhere to make up for these guaranteed profits to private investors. (Though we won’t see this for a while; like recent funding for First Nations education, most of the federal infrastructure money is backloaded until after the next election.)...
The reason is that while austerity may have fallen slightly out of favour among a section of the elite brokers of the global economy, privatization remains an important component of the new consensus being forged. Even the IMF paper that argued neoliberalism is on its way out, and made so many headlines in the process, praised privatization as an important component of economic strategy. The private sector may not be investing enough on its own but we shouldn't deprive it of profits! Canada has historically been open to policy experimentation from a "well-intentioned" technocratic elite. This is the 2016 model. <>
The IMF paper referred to by Rozworski is "Neoliberalism: Oversold?" (June 2016) by Jonathan D. Ostry, Prakash Loungani, and Davide Furceri. (https://www.imf.org/external/pubs/ft/fandd/2016/06/pdf/ostry.pdf) Its subtitle is "Instead of delivering growth, some neoliberal policies have increased inequality, in turn jeopardizing durable expansion". It criticizes the policies of "removing restrictions on the movement of capital across a country's borders....; and fiscal consolidation, sometimes called 'austerity'..." But it manages to overlook the deep crises ravaging economies around the world, and instead repeats the usual bourgeois nonsense about the great wonders brought by neoliberalism as a whole. Even the two policies it criticizes are characterized as merely being ones that have "not delivered as expected". The paper seeks to preserve the main neoliberal policies in the face of the growing economic and political crises.
So the IMF paper illustrates that the bourgeoisie isn't going to give up on neoliberalism simply because hundreds of millions of people are suffering from it, and the world economy is tottering. Not at all. Instead it will seek to preserve and even extend neoliberalism, albeit with some modifications. The paper holds tight to such key market fundamentalist policies as deregulation and privatization. It is silent on the environmental crisis, which doesn't fit into its economic model. And it is silent on the mass suffering around the world, regarding even surging inequality as a mere technical issue of some "economic damage".
The paper does not represent a dissident wing of the IMF. On the contrary, it expounds IMF policy, and says that the IMF is at the forefront of efforts to preserve neoliberalism but with "a more nuanced view of what the neoliberal agenda is likely to be able to achieve. The IMF, which oversees the international monetary system, has been at the forefront of this reconsideration."
This shows the need to be vigilant about how the bourgeoisie, both its liberal and conservative wings, will be pushing market fundamentalism even when using old slogans from former days. Privatization can be pushed in a large way under the guise of public works. The IMF and World Bank are also in the forefront of pushing for market measures as the way to deal with global warming: they back the failed "cap and trade" program and the carbon tax. Some activists think that if such measures are supplemented with public investment and subsidies, we will have "social change", not climate change. The new neo-liberal version of public works should be a warning about this.
By JosephGreen <>
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Posted on December 24, 2016