Published on: 12/4/2013 11:50:30 AM Print | Font Sizes:  Normal Text Large Text

Ghoulish thoughts


By: David Robinson

David Robinson, Economist, Laurentian University, drobinson@laurentian.ca.
David Robinson, Economist, Laurentian University, drobinson@laurentian.ca.

The famous reading room of the British Library has a very high ceiling. Many deep thinkers worked there, including Wilde, Hayek, Stoker, Gandhi, Kipling, Orwell, George Shaw, Mark Twain, Lenin, Woolf, Rimbaud, H. G. Wells and Karl Marx.

Researchers discovered recently that rooms with a high ceiling encourages people to do “relational processing.”

That is a fancy term for abstract thinking. Abstract thinking is really the search for the “big picture” and the “deep truths.” When I read this I went right out to a highceilinged food court (I couldn’t afford a trip to the British Museum) and settled down with my computer to think deep thoughts about the future of the North. They didn’t turn out to be nice thoughts.

Marx came up with one of the big ideas for Northern Ontario in that reading room. He pointed out that the capitalist economy is so productive (a nice thought) it inevitably outruns its markets and falls into crisis (not a nice thought).

He claimed businesses would lay people off and mass unemployment would open the door for a revolution.

It is darned annoying to think that growing productivity can cause crisis and suffering, but it turned out Marx was right. We’ve had a whole series of overproduction crisis since his day. Marx’s revolution didn’t happen though. Somehow the system danced around each new productivity crisis.

The list of tricks was quite impressive. Globalization helped a lot. For more than a century, capturing colonial markets let the more developed nations expand their markets. Development in the colonies and free trade eventually turned that strategy upside down.

Unfortunately, globalization eventually brought so many more workers into play, that it increased competition for the domestic market in the developed countries. In the West, unionization and rising wages kept the system going by giving more people more money to spend. Ironically, the anti-union campaigns of the last 40 years actually threaten the economy.

Conservative politicians work hard to slow the growth of buying power just when business needs bigger markets. Military spending worked well for the U.S. The most expensive military industrial complex in the world helped keep the U.S. economy strong. Wars were useful too.

They not only created demand, they destroyed stuff that needed to be replaced. Even the U.S. Space program sucked up excess production.

Alas, all this lovely, wasteful Keynesian spending produced new technology that increased productivity, making the problem worse.

Expanding public spending for civilian purposes also kept keep demand growing. We spent on roads, sewers, schools and health.

Social security supported demand from the old and the poor. Schools and and universities kept people out of the workforce, slightly reducing the excess supply. Unfortunately, rabid anti-tax and anti-debt movements seem to have cut off public sector demand, producing a chronic slump in the U.S.

Here in the North, we still have a growing market. China and other developing nations will buy our raw materials.

The question is whether the rest of North America can get out of the overproduction crisis. How can they possibly justify the massive spending that it will take when debt levels are so high? Watching comedy shows in Ottawa, Washington and Toronto suggests that it is going to take a very, very scary crisis to get the attention of our current crop of politicians.

The good news is that we have enough bad news. We have a scary crisis big enough to force massive new spending. It is called global warming. If you happen to have been awake over the last few years, you know that we either spend hundreds of billions on reducing carbon emissions, and on adaptation, or we spend more hundreds of billions on cleaning up after super storms like the killer that hit the Philippines last month, as well as the floods, mudslides, droughts, hailstorms and forest fires that get more frequent each year.

Either way, the construction and re-construction will be good for the economy of Northern Ontario.

It seems a bit ghoulish to say that an endless series of disasters caused by global warming is good for the Northern Ontario, but sitting here with time to think and a nice high ceiling that’s what it looks like. Should we feel guilty?

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