||Menaced by Monetarism
by Brian Fawcett
GIVEN THE RECENT FEDERAL budget, Linda McQuaig's Shooting the Hippo couldn't have come at a better time. And given that two years from now we are likely to be up to our ears in budget-austerity victims, this might be a good time for Canadians to take a break from worrying about why no one seems able to pull the human side of the economy - the one where ordinary people have jobs, eat cheeseburgers and drive ageing Chevy out of Cavaliers the doldrums and find out why even our government is putting the screws to us.
Linda McQuaig has been the only serious Canadian journalist with the courage to take a critical look at the Way money has been moving around in this country over the last decade. In this, her third and best book on the subject, she offers a view radically different from the one we're presented with by debt-crazed news media and the government/corporate propaganda machine that feeds this obsession with balanced budgets.
According to McQuaig, from the 1930s through the mid-1980s Canadian government (and, since 1935, the Bank of Canada) manipulated the money system to achieve a relative balance between employment growth and the need to maintain investor confidence by controlling inflation. But in the wake of a frightening surge of inflation that sent interest rates above 20 per cent in 1981, a fundamental shift in both the tactics (and perhaps even the loyalties) of the government and central bank has taken place. The G-7, with Canada taking the point position, began to pursue policies that have turned governments and their central banking systems into instruments of the financial sector and the bond market, both of which characteristically seek price stability and low inflation to protect the value of bondholder and other lender investments.
In Canada, McQuaig reveals, this de facto political revolution has gotten out of hand. Mulroney's Bank of Canada governor John Crowe (who, interestingly, attended the same British public school as the current financial-celebrity- fuckup Nick Leeson) set out, in the late 1980s, to drive Canada's inflation rate not merely downward but to ground zero -- regardless of prevailing interest rates. This ostensibly admirable goal made the recession of the early 1990s much worse in Canada than elsewhere, and quite deliberately created a situation where the gap between interest rates and inflation (known as the "real" interest rate) sits at between six and seven per cent in Canada. Such a rate is about double what it is in other G-7 countries, and considerably more than double what it has been historically in this country.
Does that sound horribly technical? It isn't, and it is crucial that more of us understand its implications. This immense -- and contrived -- gap between interest rates and inflation makes borrowing infinitely more expensive, whether you want to finance the national debt or buy a new car. It explains why we've all been feeling poorer lately, and it's the reason why our governments are seemingly prepared to abandon their mandate to govern us. Artificially high "real" interest rates are both the product and clandestine goal of the new econopolitics, which trades high unemployment, excess productivity, and wasted lives for excessive bond market and bank profits, and something called "investor confidence." Boil it down a little, strain out the red herring, and you've got government by the rich, for the rich. In short, all those "inevitable" cutbacks we've been seeing may not be quite the .,mandatory response to economic globalization" they're touted to be. McQuaig believes they're an induced effect of Canada's experimental monetary policy, one that has turned this country and its citizens into the lab rats for the international financial community.
Shooting the Hippo
goes further toward debunking the monetarist project than any book I've encountered, and McQuaig, who is writing about a subject no one else seems to have the courage to tackle, puts faces on systems that go out of their way to appear anonymous while they're uprooting both the Canadian security net and the civilities that lie behind it.
The logic behind the monetarist project isn't based purely on financial greed. There is an irritated wealthy class in this country, and they aren't merely out to make themselves wealthier. They're weary of people without declarable assets loudly declaring their human rights, they're annoyed at our multicultural shenanigans and our preferential pride, and they're royally pissed at the arrogant self-estimation of lumpen middle-class professionals who have no economic bite and no interest in acquiring any. The money guys want to load their pockets with gold like they always have, but now they want more. They want to kick some butt, and if they're not stopped, they're going to kick Canada all the way back to the late 19th century.
Shooting the Hippo
lets you glimpse how they plan to do this, and just how close to redefining our social, political, and cultural institutions they've gotten. Believe me -- or McQuaig -- they're damned close.