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I have recently launched a Kickstarter campaign to try to raise money to support my efforts to finish the first book of what will likely be a series on ‘Power Politics and the Empire of Economics’.
What I am asking of my readers is not only to consider donating to the project, but more importantly, to share and promote it through social media, by sending it to others who you think may be interested, and to help get the word out in any way you can!
Every bit helps, and a great deal of help is needed if this is to be successful!
I have collected below links to the campaign, as well as a video I made to promote it, and links to the sample introduction chapter that I published online so that potential patrons could read the kind of material that they would be supporting.
About the Project:
This book will tell the stories of the rich and powerful oligarchs and family dynasties who collectively rule our world: the global Mafiocracy, operating behind-the-scenes playing their games of power politics, globalization’s Game of Thrones where rich and influential families play their games, balancing collusion and cooperation with fierce competition to rule the world Empire of Economics.
In 1975, Henry Kissinger told President Ford: “The trick in the world now is to use economics to build a world political structure.”
This book is that story.
A small network of banks and other financial institutions dominate the global economy, its wealth and resources. This small network of corporate power functions as a global financial Mafia, complete with excessive criminal behaviour in laundering drug money, funding terrorists, rigging interest rates and manipulating markets.
Name a nation, and there are rich dynasties that rule behind the scenes. The Rockefellers in the United States, the Rothschilds in France and Britain, the Agnelli family in Italy, the Wallenbergs in Sweden, the Tata family of India and Oppenheimers of South Africa, the Koc and Sabanci families of Turkey, the Gulf Arab monarchs and the rich industrial families of Germany with dark Nazi pasts.
Germany once again rules Europe, with the European Union’s institutions of unelected technocrats undertaking a process of internal colonization as they impose their economic empire upon Greece, Spain, Italy, Ireland, Portugal and Cyprus. Finance ministers and central bankers are the agents of empire, cooperating closely with bankers, oligarchs and dynasties to create a world which best serves their interests. The global financial Mafia mingles with political leaders at forums and secret meetings like the Bilderberg group, the Trilateral Commission and the World Economic Forum.
From the streets of Athens, to Egypt, Turkey, Brazil, Spain, China, South Africa, Chile, Canada, and in the streets of Ferguson and Baltimore, people are rising up against exploitation, repression and domination.
This book is not simply a collection of stories of the ruling Mafiocracy; it is designed to encourage strategy among popular and revolutionary movements capable of creating something altogether new. It is time to do away with a world ruled by oligarchs, and save the species from itself. But first, we must know our world better.
Help me to complete the first book in a series on ‘Power Politics and the Empire of Economics’. For four years I have been doing my own research, scouring the archives of the New York Times, Wall Street Journal, Financial Times, government documents, official reports and corporate strategies, studying the world of power and empire, translating the political language of ‘economics’ into plain and simple English.
I have been published in multiple news sources, online and in print, interviewed by radio and television networks, and now I am asking for your help to raise $10,000 so that I can finish the first book in this series, to expose the Empire for all to see, its strengths as well as the weaknesses left exposed for us to exploit. Let us bring true democracy and an end to Mafiocracy. Help me to write this book, and together, let’s help each other to end the Empire.
Donate today. Thank you.
Andrew Gavin Marshall
Italy in Crisis: The Decline of the Roman Democracy and Rise of the ‘Super Mario’ Technocracy
Part 1 of “Italy in Crisis”, a series of excerpts from a chapter in an upcoming book.
By: Andrew Gavin Marshall
The European debt crisis continues into its third year, with four government bailouts – of Greece, Ireland, Portugal, and Spain – and having imposed harsh austerity measures upon the people of Europe, forcing them to pay – through reduced standards of living and increased poverty – for the excesses of their political and financial rulers. Italy, as Europe’s third largest economy, with one of the largest debt-to-GDP ratios, plays a central role in the unfolding debt crisis across Europe. Part 1 of this excerpt from a chapter on the economic crisis in my upcoming book covers the “suspension” of democracy in Italy and the imposition of a ‘Technocracy’ – an unelected government led by academics and bankers – with a mandate to punish the people, facilitate the financial elite, and serve the interests of the supranational, unelected, technocratic European Union. Power centralized, power globalizes, power plunders and profits on the punishment and impoverishment of people everywhere. This is the story of Italy’s debt crisis.
This is an unedited, rough draft excerpt from my upcoming book – the Preface to the People’s Book Project – which is due to be finished by the end of the summer, and covers the following subjects: the origins, evolution, and consequences of the global economic crisis; the expansion and effects of global imperialism and war; the elite-driven social engineering project of establishing an institutional structure of ‘global governance’; and the rising resistance of people around the world to this system, as well as the attempts of the imperial powers to co-opt, control, or destroy these socio-political movements – the embodiment of the ‘Global Political Awakening’ – from the Arab Spring, to the anti-austerity movements across Europe, the Indignados in Spain, the Occupy Movement, the Chilean Winter and the Maple Spring in Quebec, among others. This project needs your support: I am attempting to raise $2,500 in donations to support the efforts to finish this book by the end of the summer, with $530 raised so far, and $1,970 left to go. Please donate today!
Bilderberg, Berlusconi, and Italian Austerity
The Italian Finance Minister, Giulio Tremonti had attended the Bilderberg meeting in early June of 2011, alongside other notable Italian participants, including Franco Bernabe, CEO of Telecom Italia (and Vice Chairman of Rothschild Europe); John Elkann, the Chairman of Fiat; Mario Monti, the president of Bocconi university and a former EU Commissioner; and Paolo Scaroni, the CEO of Eni, an oil and gas company and Italy’s largest industrial corporation. The Bilderberg meeting for 2011 took place from June 9-12 in Switzerland, and of course was attended by a host of other major European elites, including: Josef Ackermann, Chairman and CEO of Deutsche Bank; Marcus Agius, Chairman of Barclays Bank; the Swedish Ministers for Foreign Affairs and Trade; Luc Coene, the Governor of the National Bank of Belgium; Frans van Daele, Chief of Staff to the President of the European Council; Werner Faymann, the Federal Chancellor of Austria; Douglas J. Flint, Group Chairman of HSBC Holdings; Neelie Kroes, Vice President of the European Commission; Bernardino Leon Gross, Secretary General of the Spanish Presidency; George Papaconstantinou, the Greek Minister of Finance; Herman Van Rompuy, President of the European Council; and Jean-Claude Trichet, President of the European Central Bank, among many others.
In July of 2011, Silvio Berlusconi’s government announced a package of austerity measures hoping to calm markets, seeking to reduce the deficit by 40 billion euros. The package, largely designed by finance minister Giulio Tremonti, only attempted to address Italy’s debt, but markets were also concerned about the country’s “ultra-low-growth,” which has been consistent since Berlusconi returned to office in 2001. Once the austerity measures would be signed into law, several opposition politicians were suggesting the formation of a cross-party “technical government” without Berlusconi in office. The Finance Minister Tremonti announced a wave of privatizations. Apparently, the privatizations and various liberalizations were urged into the austerity package by the main opposition party, the Democratic Party (PD), not Berlusconi’s Freedom People Party. The central bank governor of Italy, Mario Draghi, who was poised to become the next President of the European Central Bank (ECB) following the end of the term of Jean-Claude Trichet, warned the Italian government that “it would have to raise taxes or make further spending cuts” if it wanted to calm markets. By July 14, the Italian Senate approved an increased austerity package worth 70 billion euros (or $99 billion), “aimed at convincing investors that the eurozone’s third-largest economy won’t be swept into the debt crisis.” Italy’s bonds (government debt) saw its borrowing rates (interest) hit record highs as investors were not calmed by the proposed austerity measures.
Even as the austerity measures were being passed, market confidence was still lacking, which was largely credited to the fact that a rift emerged between Berlusconi and his Finance Minister Tremonti, who as a Bilderberg attendee, no doubt has the confidence of markets. Berlusconi reportedly viewed Tremonti as a “rival” and has “repeatedly attacked [Tremonti] as a traitor in newspapers owned by the Berlusconi family.” After Tremonti, who was facing his own corruption charges, was caught on camera calling a colleague a “cretin,” Berlusconi told an Italian newspaper, “You know, he thinks he’s a genius and that everyone else is stupid… I put up with him because I’ve known him for a long time and one has to accept the way he is. But he’s the only one who is not a team player.” It was opined, then, that markets reacted to this rift between the Prime Minister and the Finance Minister, as articulated by an official at F&C Investments, who stated that markets view Tremonti as the “steady counterweight to the unpredictable and capricious” Berlusconi.
In July of 2011, Nichi Vendola, a popular leftist opposition political figure in Italy, wrote an article for the Guardian, in which he critiqued the austerity measures imposed by the Berlusconi government. Vendola wrote that, “Italy will not survive this crisis by listening to the very people who got us into it, especially not when they demand that the middle class and poor foot the bill for their failures.” Vendola also put blame on the European managing of the crisis, as “governments now have an obsessive fixation on employing tighter control of budget deficits to satisfy the European stability pact.” Vendola referred to Tremonti’s austerity package as a “social catastrophe,” and that instead, he suggested, what Italy must do “is turn this policy on its head,” noting that, “Italy’s problem is as much about growth as it is debt.” To do this, Vendola wrote, it “will require a new government,” and that, “Italy needs elections, because only a completely new governing class can achieve the political consensus to design and implement a plan to tackle the crisis.” He suggested that the European stability pact would need to be re-negotiated, and concluded: “It does us little good to please the out-of-touch elite of our capitals while the people have to tighten their belts and our youth are robbed of their future.”
Mario Monti, President of Bocconi University and a former European Commissioner, also agreed that Italy needed a new government, though for different reasons (and a different type of government). He wrote an article in a major Italian paper in August of 2011 in which he advocated – as a solution to Italy’s problems – the formation of a “supranational technical government” which would make all the major decisions in order to “remove the structural constraints to growth,” and opined that “an Italy respected and authoritative… would be of great help to Europe.” Vendola wanted a new government to help the people, and Monti wanted a new government to help “Europe” (read: banks and elites). Guess who became the next leader of Italy!?
Berlusconi Bows Down to the Bankers and Punishes the People
In August, Silvio Berlusconi had to approve a new austerity package, the second in less than a month. In a letter which was leaked to the Italian press, it was revealed that Jean-Claude Trichet, the President of the European Central Bank, and Mario Draghi, the President of the Italian Central bank (from 2006 to 2011, who was set to secede Trichet at the ECB in October of 2011), put pressure on Berlusconi to “implement significant austerity measures.” The letter, written by the two central bankers, demanded “pressing action… to restore the confidence of investors.” Dated August 5, 2011, it was issued just days before the ECB announced its new programme to buy Italian bonds (debt), designed to reduce the country’s borrowing costs (interest on future debt). One of the measures mentioned in the letter instructed Berlusconi to take “immediate and bold measures to ensuring the sustainability of public finances,” to achieve a balanced budget in 2013. This was adopted in the subsequent austerity package put forward by Berlusconi in August. The letter also stated that, “it is possible to intervene further in the pension system, making more stringent the eligibility criteria for seniority pensions and rapidly aligning the retirement age of women in the private sector to that established for public employees.” Further, the “borrowing, including commercial debt and expenditures of regional and local governments should be placed under tight control, in line with the principles of the ongoing reform of intergovernmental fiscal relations.”
In economic-speak, the letter asked for privatizations of public services: “Key challenges are to increase competition, particularly in services to improve the quality of public services and to design regulatory and fiscal systems better suited to support firms’ competitiveness and efficiency of the labour market.” This would require three key actions, the first of which was that, “a comprehensive, far-reaching and credible reform strategy, including the full liberalization of local public services and of professional services is needed,” and that, “this should apply particularly to the provision of local services through large-scale privatizations.” The second major step was “a need to further reform the collective wage bargaining system [meaning: undermine unions] allowing firm-level agreements to tailor wages and working conditions to firms’ specific needs and increasing their relevance with respect to other layers of negotiations.” In other words, destroy the unions so that companies can exploit labour to whatever degree they choose. And thirdly, according to Trichet and Draghi, what was needed was a “thorough review of the rules regulating the hiring and dismissal of employees [which] should be adopted in conjunction with the establishment of an unemployment insurance system and a set of active labour market policies capable of easing the reallocation of resources towards the more competitive firms and sectors.”
In other words, labour rights and laws and the rights of workers need to be dismantled so that companies can do as they please. It’s not simply the unions that need to be destroyed, but the laws for worker security in general. Of course, no advice from central bankers would be complete if it didn’t advocate that the government “immediately take measures to ensure a major overhaul of the public administration in order to improve administrative efficiency and business friendliness.” Trichet and Draghi wrote that it was “crucial” that the government take these actions “as soon as possible with decree-laws, followed by parliamentary ratification,” or, in other words: skip the democratic process because it takes too long, rule by decree, something Italy has a “proud” history of. All of this was demanded to be done before the end of September 2011. In an interview with an Italian paper, Trichet admitted that this was not the first time the ECB had sent such letters to governments (such as Greece), saying, “We have sent messages and we do that on a permanent basis, through various means, addressed to individual governments. We do not make them public.”
Indeed, the European Central Bank had demanded austerity measures be implemented by the governments of Greece, Ireland, Portugal, and Italy, and when Berlusconi submitted to the mandate from the central bankers, he complained that it made his administration look like “an occupied government.” A leading liberal MP in Italy, Antonio Di Pietro, said that, “Italy is under the tutelage of the EU, and a country under tutelage is not a free and democratic one.” An Irish MEP (Member of the European Parliament), Paul Murphy, stated that there had been a “massive shift away from democratic accountability since the start of the crisis,” and that: “There needs to be a check on the enormous power of the ECB, which is unelected, and has basically held a government to ransom.” Europe’s largest trade union federation, the European Public Sector Union, “accused the ECB of directing Italian fiscal and labour policy in secret,” which is, of course, true. The Deputy General Secretary of the federation, Jan Willem Goudriaan, said, “Europe cannot be governed through secret letters of bankers, officials or an unaccountable body.” EU officials, from Angela Merkel, Nicolas Sarkozy, to Herman Van Rompuy and Jean-Claude Trichet, have been increasing their calls for an “economic government” of Europe, tightening and deepening fiscal integration and proposing the creation of new council’s and organizations to impose sanctions on countries and “police the austerity measures of governments,” and even the creation of a European finance ministry. Paul Murphy stated that, “All these proposals, discussions about economic government, are about undermining democracy in order to impose a European shock doctrine… EU elites need to remove points of pressure that can be mounted on governments. If the mass of people are opposed to austerity, they can mount pressure on governments to hold that in check. So the only way it can then be imposed s undemocratically.” The head of a Belgian pro-transparency group stated that, “European powers [are] distancing themselves from voters while at the same time [there is] a growing tendency towards building closer relationships with corporate and specifically financial lobbies… These two trends are explosive and can only lead to a loss of legitimacy for the EU institutions.”
Shortly after, on August 12, the Berlusconi government was meeting to approve the new austerity package to meet the ultimatum from the ECB, amounting to a package of “fiscal adjustments” (i.e., spending cuts) of 20 billion euros in 2012 and 25 billion euros in 2013, with the spending cuts and tax increases to be “enacted immediately by decree, but subject to approval by parliament later,” just as Draghi and Trichet instructed. The rapid tax increases did much to damage even long-time supporters of Berlusconi who had promised that he would “never put their hands in the pockets of the Italian people.” Fiscal federalism was the policy of giving the various regions in Italy more control over their finances. With the new austerity package, the governor of Lombardy, Roberto Formigoni, stated, “It seems clear [fiscal] federalism has vanished.”
In mid-September, Berlusconi won final parliamentary approval for the 54 billion euro ($74 billion) austerity package, while police outside the parliament in Rome had to disperse protesters with tear gas. The German Economy Minister Phillip Roesler told a news briefing in Rome that, “The approval of the austerity package sends a signal of stability… I have respect for what Italy has done with its budget adjustment as this will benefit the whole euro area.” The legislation simply made legal the measures that Berlusconi’s government enacted through un-democratic decree the month before, and were formalized in exchange for the European Central Bank bond purchases which helped to reduce Italy’s borrowing costs. Silvio Peruzzo, an economist at the Royal Bank of Scotland, stated that the plan’s passage is a “very welcome step,” but that the slowing global economy still cast doubts on whether Italy could “meet its fiscal targets and will also render additional corrective measures [austerity packages] very likely.” Even with the endorsement and backing of the ECB, said Peruzzo, Italy’s debt remained “under pressure, which is indicative of a well-rooted lack of confidence in Italy and in the European policies to tackle the crisis.” One the plan was approved, said Italian Finance Minister Tremonti on September 10, “If there are things to change in our growth measures we will, and if there are things to add, we will.”
The Economist reported on the new austerity package, noting that while Berlusconi had approved the austerity package in Italy, designed to cut roughly 45.5 billion euros from the deficit by the end of 2013, he almost immediately back-peddled on 7 billion euros worth of spending cuts and tax increases, “notably a tax on high earners that would have hurt his natural supporters,” meaning, rich people. Thus, even as the package went to the Senate in early September, Berlusconi was fine-tuning the details. Thus, noted the Economist, “the markets [were] again registering alarm,” and at the same time, Italy’s largest and most militant trade union federation, the CGIL, called for a one-day strike in opposition to the austerity package, “protesting over a clause making it easier to dismiss workers and, more generally, over a budget that the CGIL’s leader, Susanna Camusso,” referred to as “unjust because it attacks the weakest.” This further worried “the market” and “investors.” The Economist wrote that: “Mr. Berlusconi had consistently failed to react unless bullied. His first emergency budget in July followed a telephone call from the German chancellor, Angela Merkel,” while the second was of course at the prompting of the ECB.
By October of 2011, the austerity measures in Italy had been wreaking havoc, as non-profit organizations lose their funding and had major bureaucratic obstacles put in their way for community projects, such as the Associazione Obiettivo Napoli, which ran two programs working with children in difficulty in Naples since 1998, helping them clean up local communities and provide counseling. As central government funding to town halls had been cut, organizations like Obiettivo Napoli, “which sit uneasily somewhere between education, welfare and rehabilitation budgets, have been the first to suffer.” Pietro Varriale, who works with the organization, commented on further obstacles put in their way: “They’re saying we need a second degree in education science to be able to do this work… It’s crazy. I have 15 years experience in this field, most of the team likewise, and we all have first degrees. A second degree is going to cost people a fortune, really a lot of money, and there’s no help or grant for that kind of thing. We’ve been given till 2013 to conform.” To add to that, the city of Naples simply stopped paying the bills for the organization, which had to then borrow money from a bank, forcing the employees such as Pietro to have to take on jobs working at bars, waiting tables, picking tomatoes and other piecemeal projects while they continue to work with the association being unpaid: “You keep going because of the kids, the relationships you build up.”
Giancarlo Di Maio, a 23-year old university graduate in Naples working at a secondhand bookshop told the Guardian that, “University here is like a car park. You stay there as long as you can, because there’ll be nothing to do when you come out,” referring to the lack of jobs for youth. As he was employed, he explained: “Every morning, I wake up with a smile… How fortunate am I? Because otherwise, the only other work around here is black. The black economy is a huge, monumental issue for Italy.” His friends might make 30 euros for 10 hours working in a bar, or 20 euros for a night waiting tables in a restaurant. Di Maio, who works at a bookshop owned by his father, said that, “I know plenty of people in their 30s, even some in their 40s, still living with their parents… That’s not normal. For me, that’s one of the biggest problem [sic] in Italy – opportunities, any kind of prospects for young people.” When asked about Italian politics, he replied, “We have the worst political class in Europe, no question… Twenty years of Berlusconi, and not a single reform, nothing for the unemployed, nothing to address the economic crisis. Instead we talk about his sex life… we have a political class who do nothing. They don’t have solutions, and even if they did they wouldn’t try to do anything. They just speak air, it’s all they can do. Posturing.” Expressing some hope at the Occupy movement, though lamenting how it turned to violence in Italy, he explained that people were “finally starting to get angry. They are beginning to see that really, we can’t carry on like this. Italy really is sick. We can’t pretend to be the doctor any more; we need curing ourselves.”
The Technocratic Coup
By early October 2011, it was clear that the “markets” were not satisfied with Berlusconi’s efforts at implementing a program of social genocide (fiscal austerity) which was to their liking. Thus, on October 5, the international ratings agency Moody’s cut Italy’s credit rating for the first time in two decades, adding to the downgrading from Standard & Poor’s two weeks prior. The Italian government responded that the actions of the ratings agencies were “politically motivated.” Even Moody’s acknowledged that the political situation within Italy played a part in its decision, including Berlusconi’s sex scandals, and the growing protests against the austerity measures.
The effect of the downgrades is to make Italian bonds (government debt) less attractive to buy (as it is a riskier investment), and thus, Italy would have to pay higher interest rates. As a result of that, as we have seen with Greece, this makes the country’s overall debt larger (as it amounts to borrowing money to pay back borrowed money), except with the higher yields (interest rates), the future payments will be even more costly, likely to create potential for a bailout (again, just taking more debt to pay interest on older debts). All the while, the overall debt to GDP ratio increases, and austerity measures become the “conditions” for receiving bailouts, and the country is essentially taken over by the IMF, the ECB, and the EC (named the “Troika”), as occurred in Greece. This creates a permanent spiral of expanded debt, economic crisis, and social genocide. This is what is often called “market discipline.”
In mid-October, opposition to Berlusconi’s harsh austerity measures from within Italy was increasing, just as “market pressure” and EU-opposition from outside Italy was building against Berlusconi for his austerity measures being perceived as ‘too little, too late.’ Nine members of Berlusconi’s own coalition said the austerity package “unfairly targets the middle class and fails to tackle Italy’s massive tax evasion problem.” Susanna Camusso, the head of Italy’s largest and most militant labour federation, CGIL, said that a strike is the only way to “change the inequity of this package.” During a global “day of rage” partly inspired by the Occupy Wall Street movement in the United States and the Indignados movement in Spain, October 15 saw various Occupy and other protests erupt around the world, in 950 cities in 80 different countries. In Italy, Rome saw roughly 200,000 protesters come out into the streets, protesting against the austerity measures, the government, the EU, the ECB and the IMF. The protests erupted into violence as hundreds of those assembled began fighting with riot police, who were using tear gas and water cannons against the protesters, and several hundred erupted in urban rebellion (what is often called “riots”) in which banks were destroyed, they set cars and garbage bins on fire, hurled rocks, bottles, and fireworks at the police who continually charged the crowd. Roughly two dozen demonstrators were injured, with one reported to be put in critical condition, and at least 30 riot police were injured.
As Berlusconi’s own government began to fracture in the face of the austerity package, disagreeing on what and how and if to cut, one of Berlusconi’s main coalition partners, the center-right Northern League, hinted that new elections were a possibility. Considering the popularity of the anti-austerity leftist leader Nichi Vendola, this was perhaps too much to bear. European leaders Angela Merkel and Nicolas Sarkozy lost their patience, and in late October, demanded that Berlusconi move forward with the austerity package. In a series of EU summits in late October on handling the economic crisis, discussing specifically the plan to boost the funds of the European Financial Stability Facility (EFSF), there was concern, reported Der Spiegel, “that the current size of the (recently expanded) fund isn’t sufficient should additional countries, particularly Spain and Italy, be infected with debt contagion.”
Following these meetings, it was made “abundantly clear” to the Italians that their “leadership is no longer taken seriously.” Italian papers and TV shows were overwhelmed with covering the “condescending smile” of Angela Merkel to Berlusconi, and comments made by Sarkozy. Merkel and Sarkozy and other EU leaders told Berlusconi in the talks that he had to present a plan within three days “for reducing Italian debt more quickly than current plans call for.” European Council President Herman Van Rompuy said that Berlusconi had “promised to do so.” The following evening, Berlusconi stated, “No one is in a position to be giving lessons to their partners.” European leaders were frustrated that even the austerity package passed earlier in the summer had not been fully implemented, and the government’s stability was continually threatened over debating each new measure. The European Commissioner for Economic and Monetary Affairs, Olli Rhen, said that all the details of the new plan were “unclear.” With the EU summits proposing increasing the EFSF bailout fund from 440 billion euros to 1 trillion, a central feature to the demands of the EU leaders was that countries like Italy impose more stringent austerity measures. As Der Spiegel reported, “A clear Italian commitment to austerity is a key component of that plan.” There was then a good deal of conjecture over the possible departure of Berlusconi. The Italian paper Corriere della Serra reported that Angela Merkel called the Italian President Giorgio Napolitano the previous week “to discuss concerns about Italy’s political leadership.”
In fact, Angela Merkel did make such a phone call to Italy’s president Napolitano in October, violating “an unwritten rule” for Europe’s leaders “not to intervene in one another’s domestic politics.” But this is a new, changing EU, one in which democracy – even the withering façade Western governments maintain – simply no longer matters. Merkel was “gently prodding Italy to change its prime minister, if the incumbent – Silvio Berlusconi – couldn’t change Italy.” The Wall Street Journal reported on the events that led to this incident, explaining that at the annual meeting of the IMF in September, China, Brazil, and the U.S. “berated” Europe for its small bailout fund, and told Europe to borrow “hundreds of billions of euros from the ECB,” something Merkel had long been against, and which was refused by Jens Weidmann of the German central bank, explaining that the bailout fund “was an arm of the governments… and lending to governments was against the ECB’s charter.” On October 19, Sarkozy left his wife who was in labor at a clinic in Paris to fly to Frankfurt to confront Jean-Claude Trichet at a party being held for the President of the ECB to honour him as he prepared to leave the ECB at the end of the month (to be replaced by the president of the Central Bank of Italy, Mario Draghi). Sarkozy argued that the ECB needed to intervene in the bond markets (buying government debt), stating that, “Everything else is too small.” Trichet said that it wasn’t “the ECB’s job to finance governments.”
The ECB had engaged already in certain bond purchases, which “had caused a political backlash in Germany,” and as Trichet said, “I did a bit, and I was massively criticized in Germany.” Merkel, who was present during the shouting match between Trichet and Sarkozy, was frustrated at Sarkozy’s pressure on Trichet, as she had always opposed the ECB printing money to handle the crisis, telling Trichet, “You’re a friend of Germany.” It was the following day, on October 20, that Merkel made her “confidential” phone call to the Italian President in Rome, “the man with authority to name a new prime minister if the incumbent were to lose parliament’s support.” President Napolitano informed Merkel that it was “not reassuring” that Berlusconi had only “recently survived a parliamentary vote of confidence by just one vote.” Merkel then thanked Napolitano for doing what was “within your powers” in promoting reform. Within days, Napolitano began “sounding out Italy’s political parties to test the support for a new government if Mr. Berlusconi couldn’t satisfy Europe and the markets.” It no doubt did not help Berlusconi when he wrote in an Italian paper in late October that the word austerity “isn’t in my vocabulary.”
In early November, at a G20 meeting in Cannes, President Obama and other leaders were “effectively ordering Silvio Berlusconi to accept surveillance of Italy’s austerity measures by the International Monetary Fund,” reported the Guardian. Berlusconi was advised by Merkel, Sarkozy, Herman Van Rompuy and other EU leaders the previous week to come to the G20 with “a specific austerity package,” but due to divisions within his cabinet, Berlusconi “arrived empty-handed.” It was reported that Berlusconi would likely not survive a vote of confidence in the Italian parliament set for the following week. The ECB had been purchasing Italian bonds since August in order to push the yields lower, which dropped to below 5%, but by early November they had been driven up to 6.5%, “levels that make it difficult to pay back debt.” Italian President Napolitano had been holding meetings with party leaders to discuss the possibility of “constructing an interim government if Berlusconi’s collapses.” The G20, which was discussing the possibility of adding $300 billion to the IMF’s bailout fund of $950 billion, and G20 leaders pressured Italy “to sign up to a more specific austerity package or else the US and other countries would not put extra funds into the IMF.”
Just prior to heading to the G20 meeting, Berlusconi had attempted to issue a decree which would pass various austerity measures, “thus bypassing the parliament,” but, reported the EUobserver, he “was held back by [President] Giorgio Napolitano,” as well as the Finance Minister Giulio Tremonti. Instead, Berlusconi was pressured to attempt an amendment to a “law for stability” to be approved the following week, at which time he would likely face a vote of confidence. Enrico Letta, the deputy general secretary of the center-left Democratic Party (PD), the main opposition party, said that, “We think that next week will be a week in parliament where we try to force the situation if Berlusconi does not resign before.”
As Jean-Claude Trichet retired from the ECB at the end of October, and Mario Draghi left the Bank of Italy to take up his new job as President of the ECB, the newly-appointed governor of the Bank of Italy, Ignazio Vasco, said that Italy “needed to take urgent action to boost confidence in the economy and initiate structural reforms,” insisting that the commitments already given to the EU in a “letter of intent” in late October (following Berlusconi being castigated by Merkel and Sarkozy), “must be honoured quickly and consistently.” At the G20 conference, Berlusconi agreed under pressure to have the IMF oversee Italy’s implementation of austerity measures, following late-night talks with G20 leaders. Jose Manuel Barroso, President of the European Commission (EC), said that, “Italy had decided on its own initiative to ask the IMF to monitor. I see this as evidence of how important Italy’s commitment to reform is.” The EC would also monitor Italy’s progress, and was set to visit Italy the following week to undertake a more detailed study. One EU source told the Telegraph that, “We need to make sure there is credibility with Italy’s targets – that it is going to meet them. We decided to have the IMF involved on the monitoring, using their own methodology, and the Italians say they can live with that.” The chief financial officer of Commerzbank, Eric Strutz, said that, “The whole stability of Europe depends on whether Italy gets its act together.”
On November 8, Berlusconi suffered a party revolt in parliament which failed to deliver him a majority, and would likely lead to a vote of non-confidence a few days later. Upon this defeat, Berlusconi announced that he would resign as Prime Minister “as soon as parliament passed urgent budget reforms demanded by European leaders.” President Napolitano announced that he would begin consultations on the formation of a new government, and stated that he would prefer a “technocrat or national unity government.” At the same time, the “markets” had pushed Italy’s bond yields (debt interest) to nearly 7%, figures that saw Greece, Ireland, and Portugal getting bailouts. The leader of the main opposition Democratic Party (PD), Pier Luigi Bersani, said, “I ask you, Mr. Prime Minister, with all my strength, to finally take account of the situation… and resign.” Berlusconi and some of his close allies, however, warned that appointing a technocratic government, the option which was said to be favoured by “markets,” would amount to an “undemocratic coup.” Naturally, that’s just what happened.
Writing for the Guardian, John Hooper suggested that one of four scenarios would take place upon the event of Berlusconi’s resignation: one envisions Berlusconi leaving but the right gaining a broader majority, specifically under Umberto Bossi’s Northern League, who was in Berlusconi’s coalition but had advised him to resign, and was pushing for him to be replaced with the next in command in Berlusconi’s party, Angelino Alfano; another scenario envisioned a “grand coalition,” or a “government of national emergency or salvation,” bringing together all the parties; a third scenario had Italy calling an election, urged by both Berlusconi and Bossi; or the fourth option, “a cabinet of technocrats,” which Hooper wrote was “favoured by the markets and the Italian centre left,” which would consist of “a government filled with specialists who could pass the unpalatable legislation needed to revive Italy’s flagging economy without having to worry about re-election.” This happened before in Italy, when Berlusconi’s government fell in 1994, at which time he was replaced by Lamberto Dini, a central banker, who headed a government of “professors, generals and judges.” In this scenario, suggested Hooper, the likely prime minister would be Mario Monti.
Upon Berlusconi’s failure to achieve a minority during the budget vote on November 8, many officials from the financial community began making their observations, such as Jan Randolph, the head of sovereign risk analysis at HIS Global Insight, who said that, “Berlusconi has effectively lost political capital to carry the country through a period of austerity and structural reform,” and that, “Berlusconi will have to resign.” He went on to suggest that it was possible “that a broad National Unity government headed by a respected technocrat like ex-EU commissioner Mario Monti could be formed.”
As Berlusconi officially resigned on the night of November 12, 2011, he left the president’s palace through a side door as a crowd of over 1,000 people outside yelled, “buffoon,” “Mafioso,” and for him to “face trial.” A poll from early November reported that 71% of Italians favoured his resignation, and upon hearing of his official resignation, the crowd erupted in roars of “Halleluja.”
On November 16 of 2011, Mario Monti was appointed as Prime Minister of Italy. Monti accepted the mandate to form a new government, and was expected to appoint technical experts as opposed to politicians to his cabinet. President Napolitano told Italian politicians that, “it is a responsibility we perceive from the entire international community to protect the stability of the single currency as well as the European frame work.” Berlusconi’s political party, the People of Liberty, said it would accept a Monti government for a short while before elections would have to be scheduled, and Berlusconi referred to his resignation as “an act of generosity.”
Mario Monti is an economist and academic who served as European Commissioner for the Internal Market, Services, Customs and Taxation from 1995 to 1999, and European Commissioner for Competition from 1999 to 2004. Monti is founder and Honorary President of Bruegel, a European think tank he launched in 2005, based in Belgium, and which represents the interests of key European elites. Monti has also been a member of the advisory board of the Coca-Cola Company, and was an international advisor to Goldman Sachs, was a former member of the Steering Committee of the Bilderberg Group, having previously attended the meeting in Switzerland in June of 2011, and was European Chairman of the Trilateral Commission until he resigned when he became Prime Minister of Italy.
Monti’s think tank, Bruegel, represents key elite European interests. The Chairman of the Board of Bruegel is Jean-Claude Trichet, the former President of the European Central Bank (ECB) from 2003 to 2011, who is also a member of the board of directors of the Bank for International Settlements (BIS), and has joined the boards of a number of major corporations, including EADS. Other board members of Bruegel include: Jose Manuel Campa Fernandez, who was the Spanish Secretary of State for Economic Affairs at the Ministry of Economy and Finance from 2009 to 2011, and has been a consultant for the European Commission, the Bank of Spain, the Bank for International Settlements (BIS), the Federal Reserve Bank of New York, the Inter-American Development Bank, the International Monetary Fund and the World Bank; Anna Ekström, the president of the Swedish Confederation of Professional Associations, Saco, and formerly the Swedish State Secretary for the Ministry of Industry, Employment and Communication; Jan Fisher, Vice President of the European Bank for Reconstruction and Development (EBRD), former Prime Minister of the Czech Republic; Vittorio Grilli, the Deputy Minister of the Ministry of Economy and Finance of Italy (whom Monti appointed to his technocratic government in November of 2011), and a former Managing Director at Credit Suisse First Boston; Wolfgang Kopf, Vice President at Deutsche Telekom AG; Rainer Münz, head of Research and Development at Erste Group and Senior Fellow at the Hamburg Institute of International Economics (HWWI), former consultant to the European Commission, the OECD, and the World Bank; Jim O’Neill, Chairman of Goldman Sachs Asset Management; Lars-Hendrik Röller, the Director General of the Economic and Financial Policy Division of the German Federal Chancellery, and is President of the German Economic Association; Dariusz Rosati, former consultant economist at Citibank, former Minister of Foreign Affairs for Poland, former adviser to the President of the European Commission, and was a member of the European Parliament from 2004 to 2009; and Helen Wallace, a British academic expert on European integration.
In October of 2009, Mario Monti was asked by the President of the European Commission Manuel Barroso to draw up a report on how the EU should re-launch its single market. Barroso advised that the report, “should address the growing tide of economic nationalism and outline measures to complete the EU’s currently patchy single market.” Mario Monti was President of the Bocconi University at the time he was asked to write the report. In May of 2010, Monti produced the report and officially handed it in to European Commission President Barroso. The report recommended ways to fight the potential of economic nationalism and to preserve and protect the regional bloc and to advance the process of integration, with Monti arguing that, “There is now a window of opportunity to bring back the political focus of the single market.” The report eventually became the EU’s Single Market Act of 2011.
After becoming the technocratic and unelected Prime Minister of Italy, Monti quickly appointed his new cabinet, of which more than a third of the 17-member cabinet consisted of professors and other technocrats. The cabinet position of Minister of Economic Development, Infrastructure and Transport was given to Corrado Passera, the chief executive of Italy’s largest bank, Intesa Sanpaolo. Passera told the Financial Times upon his appointment as “superminister” that, “If you want to build the wide consensus that is needed, we have to share sacrifices and benefits among all the segments of society with a balanced set of actions and with the right mix of austerity and development programmes.” British hedge fund manager Davide Serra stated, “Monti and Passera are the right guys for the job. They are the dream team.” Upon appointing his new technocratic government, Monti declared: “We feel sure of what we have done and we have received many signals of encouragement from our European partners and the international world. All this will, I trust, translate into a calming of that part of the market difficulty which concerns our country.” On the lack of party representatives in his cabinet, Monti commented, “The absence of political personalities in the government will help rather than hinder a solid base of support for the government in parliament and in the political parties because it will remove one ground for disagreement.”
A former ambassador who worked with Monti when he was an EU Commissioner recalled Mario’s style of governance, stating, “He didn’t have a very Italian way of going about things… His nickname in those days was ‘The Italian Prussian’.” An article in Reuters described Monti as “a convinced free marketeer with close connections to the European and global policy making elite, Monti has always backed a more closely integrated euro zone,” and went on to mention his leadership positions within the Bilderberg Group of “business leaders” and “leading citizens” and the Trilateral Commission, which “brings together the power elites of the United States, Europe and Japan.” Monti’s government would be given roughly 18 months to push through “reforms” and austerity measures, as another election would not be due until 2013. However, as one outgoing minister commented in November of 2011, “The decisions which Monti will take must pass in parliament and I think that with such a heterogeneous majority he will have many problems. I believe this solution will lead to many problems.”
Monti of course received abundant praise from Europe’s leaders on becoming the new unelected technocratic Prime Minister of Italy. An article by Tony Barber in the Financial Times explained that Italian party politics was simply too problematic, as: “Even a centre-left government with a mandate from the voters would find it hard to maintain the unity and resolution required to implement the unpopular austerity measures and structural economic reforms demanded by Germany, France, the European Commission, the European Central Bank and the International Monetary Fund.” And with the prospect of labour resistance from workers and pensioners, “it is easy to see why Europe’s leaders were eager for Mr Monti to inherit the premiership.” Thus, wrote Barber, “technocracy has an irresistible appeal.” Mario Monti himself had acknowledged that “irresistible appeal” in August of 2011, when he wrote an article in a major Italian paper advocating the formation of a “supranational technical government” which would make all the major decisions in order to “remove the structural constraints to growth,” and opined that “an Italy respected and authoritative… would be of great help to Europe.” And as it turned out, a great help to Monti.
In early December of 2011, after forming his cabinet and being approved by Italy’s lower chamber of Parliament with a rare majority, Mario Monti received the endorsement of Angela Merkel and Nicolas Sarkozy, declaring their “absolute trust” in Monti and in “his structural changes” to his governing of Italy. Monti, upon assuming power, warned Italians in a speech that, “It is not going to be easy, sacrifice will be required.” As Monti’s “technocratic government” is full of appointments from the ruling class, including bankers and other executives, many in Italy were raising concerns that this suggested an inherent conflict of interest in his government, as those who helped create the crisis are brought in to solve it, a highly political government, despite all the claims of an apolitical ‘technocracy’ (technocracies are always political entities, but instead of pushing party ideologies, they push ultra-elite ideologies in the management and maintenance of society). Monti replied that, “There is no conflict of interests… The fact that many of us have played a role in the institutions before doesn’t mean that we will not be totally transparent.” And with that note, Monti appointed Carlo Malinconic as undersecretary for publishing affairs, after having previously served as president of the Italian Federation of Publishing and Newspapers.
Writing in the journal of the Council on Foreign Relations, Foreign Affairs, Jonathan Hopkin, a professor of comparative politics at the London School of Economics, commented that the replacement of Berlusconi with Monti “marks a new stage in the European financial crisis,” in which “the crisis now seems to be wiping out democratically elected governments.” Largely under pressure from bond markets, “Italian politicians have opted to hand power to technocrats, expecting that they will somehow enjoy greater legitimacy as they impose painful measures on an angry population.” Hopkin stated: “This will not work.”
In early November, as democratically-elected governments in Greece and Italy were replaced with unelected and unaccountable technocratic governments, essentially run by and for the European Union and global banks, Tony Barber, writing in the Financial Times, suggested that this is but one of several responses to the economic crisis. Specifically, this response “involves the surgical removal of elected leaders in Greece and Italy and their replacement with technocratic experts, trusted within the EU to pass economic reforms deemed appropriate by policymakers in Berlin, the bloc’s top paymaster, and at EU headquarters in Brussels.” Barber referred to the “sidelining of elected politicians in the continent that exported democracy to the world” as a “momentous development.” In short, “eurozone policymakers have decided to suspend politics as normal in two countries because they judge it to be a mortal threat to Europe’s monetary union.” Thus, these policymakers “have ruled that European unity, a project more than 50 years in the making, is of such overriding importance that politicians accountable to the people must give way to unelected experts who can keep the show on the road.” In Greece, the government was put under the technocratic leadership of Lucas Papademos, a former vice president of the European Central Bank, and upon accepting his appointment, stated: “I am confident that the country’s participation in the eurozone is a guarantee of monetary stability.” In Italy, Mario Monti came to power, a technocrat who “is revered in Brussels as one of the most effective commissioners for competition and the internal market that the EU has known.” One prominent Italian banker commented: “We need a strong national unity government for one to one and a half years to do what the politicians haven’t had the courage to do.”
Running the ECB can be such a ‘Draghi’
In late October of 2011, at a gala event to mark the end of Jean-Claude Trichet’s eight years as president of the European Central Bank, Mario Draghi, the governor of the Bank of Italy, who was selected to take over for Trichet at the start of November, was “working the room” of high-powered European elites, including Angeal Merkel, and IMF Managing Director Christine Lagarde. Between 1984 and 1990, Draghi was the Italian Executive Director at the World Bank, and in 1991, he became the director general of the Italian Treasury until 2001. Between 2002 and 2005, Draghi was the Vice Chairman and Managing Director of Goldman Sachs International, thereafter becoming the governor of the Bank of Italy from 2006 until 2011, also putting him on the Governing Board of the European Central Bank and the Bank for International Settlements (BIS). Draghi is not simply one of the individuals who has been most responsible for handling and managing the economic crisis, but he also played an important role in causing it. As Vice Chairman of Goldman Sachs, and in Italy at the Treasury and the central bank, “Draghi was a proponent of nations and other institutions like pension funds using derivatives to more efficiently manage their liabilities.” This means that Draghi advised that governments should essentially hide their debts in the derivatives market, where they would not be viewed as liabilities, but rather, transactions. These “transactions” were very popular in Greece and Italy, and had a great deal to do with accumulating and hiding the massive debts of these countries.
When Draghi led the Italian Treasury in the 1990s, he “oversaw one of the largest European privatization efforts ever and paved the way for Italy’s entry into the euro,” earning him the nickname, “Super Mario.” Italy liberalized its financial markets, allowing for massive speculation, derivatives, and other banking excesses, and he privatized roughly 15% of Italy’s economy. While Italian governments came and went during this period, Draghi always remained. While both Draghi and Goldman Sachs said that “Super Mario” did not have anything to do with the especially controversial Greece-Goldman Sachs transactions, one Goldman Sachs executive in Europe, “who was not authorized to speak publicly,” told the New York Times that, “Mr. Draghi had discussed similar initiatives with other European governments.” When asked about his involvement at Goldman Sachs, Draghi once replied, “I was not in charge of selling stuff to the governments… In fact, I worked in the private sector even though Goldman Sachs expected me to work in the public sector when I was hired.” However, in a paper which Draghi wrote in 2002 just a couple months after being hired by Goldman Sachs, at which his job description was “to win investment banking business from European governments,” Draghi argued in favour of governments using derivatives “to stabilize tax revenue and avoid the sudden accumulation of debt,” which the New York Times politely described as “faithful to the spirit” of the Goldman-Greece deal.
In an interview with the Financial Times in December of 2011, European Central Bank president Mario Draghi reflected upon the financial crisis and the actions taken to manage it. He explained that the ECB’s long-term refinancing operation (a half-trillion euro bank bailout) was not designed to give banks an incentive to buy government bonds from the “periphery” nations, but rather, that, “the objective is to ease the funding pressures that banks are experiencing,” and that the banks “will then decide what the best use of these funds is.” Draghi stated that, “we don’t know exactly” what banks were doing with the money, but that, “the important thing was to relax the funding pressures.” Draghi reiterated that the banks “will decide in total independence what they want to do.”
It’s interesting to note that when governments get bailouts, they are told what and how to spend the money, and are forced to impose austerity measures that destroy the social fabric and punish the populations of their countries, and then, of course, have to pay back the money at exorbitant interest rates; but when banks get a half-trillion euro bailout, the banks will “decide what the best use” of the money is, and where it goes is not important, it’s only important to “relax” the pressure on the banks, who will repay the debt over a long-term period (3 years) with extremely low interest (averaging 1%). So people get pressure, and banks get pressure “relaxed.”
Draghi told the Financial Times that what is needed most is to “restore confidence,” and for this, there are four answers. The first one “lies with national economic policies, because this crisis and this loss of confidence started from budgets that had got completely out of control.” The second answer, explained Draghi, “is that we have to restore fiscal discipline to the euro area,” which means to impose austerity, “and this is in a sense what last week’s EU summit started [in mid-December 2011], with the redesign of the fiscal compact.” The third answer “is to have a firewall in place which is fully equipped and operational,” meaning a massive bailout fund, which “was meant to be provided by the EFSF.” The fourth answer, according to Draghi, is for countries “to undergo significant structural reforms that would revamp growth,” implying things like liberalization, privatization, and further deregulaiton. When Draghi was asked about the critics of the fiscal compact who suggest that it amounts to a “stagnation and austerity union,” Draghi replied that, “they are right and wrong at the same time.” Draghi repeated the mantra of pro-austerity voices, who always suggest with no historical evidence to support, that there is “no trade-off between fiscal austerity, and growth and competitiveness.” However, Draghi contended, “I would not dispute that fiscal consolidation [austerity] leads to a contraction in the short run.” The correspondent with the Financial Times asked: “But these austerity programmes are very harsh. Don’t [you] think that some countries are really in effect in a debtor’s prison?” Draghi replied: “Do you see any alternative?”
In an interview with the Wall Street Journal in February, Mario Draghi warned European countries “that there is no escape from tough austerity measures and that the continent’s traditional social contract is obsolete.” Draghi said that Europe’s social model was “already gone,” and that the only way to return to “long-term prosperity” was “continuing economic shocks [that] would force countries into structural changes in labor markets and other aspects of the economy.” As European people were suffering through the increased austerity measures, Draghi warned that, “Backtracking on fiscal targets would elicit an immediate reaction by the market.” This of course implies that the market has the ‘right’ to determine the fate of Europe’s people. For Draghi, “austerity, coupled with structural change, is the only option for economic renewal.” The European Commission, headed by Jose Manuel Barroso, agreed with Draghi, stating that despite forecasting a deepened recession brought on by austerity measures, governments “should be ready to meet budgetary targets.” Simon Johnson, the former chief economist of the IMF, said that Draghi was “just sugarcoating the message.” Johnson explained: “A lot of this structural reform talk is illusory at best in the short run… but it’s a better story than saying you’re going to have a terrible 10 years.”
In the interview, Draghi commented on the “positive changes” which had been taking place in the previous few months: “There is greater stability in financial markets. Many government shave taken decisions on both fiscal consolidation and structural reforms. We have a fiscal compact where the European governments are starting to release national sovereignty for the common intent of being together.” When Draghi was asked what his view was “of these austerity policies in the larger strategy right now, forcing austerity at all costs,” Draghi replied: “There was no alternative to fiscal consolidation, and we should not deny that this is contractionary in the short term.” Then, he added, it was necessary to promote growth, “and that’s why structural reforms are so important.” The interviewer asked Draghi what the “most important structural reforms” were for Europe at that time. Draghi replied:
In Europe first is the product and services market reform. And the second is the labour market reform which takes different shapes in different countries. In some of them one has to make labour markets more flexible and also fairer than they are today [in other words: more easily exploited]. In these countries there is a dual labour market: highly flexible for the young part of the population where labour contracts are three-month, six-month contracts that may be renewed for years. The same market is highly inflexible for the protected part of the popuation where salaries follows seniority rather than productivity. In a sense labour markets at the present time are unfair in such a setting because they put all the weight of flexibility on the young part of the population.
When central bankers and politicians and others talk about “labour flexibility,” what they really mean is “worker insecurity.” This was bluntly stated by Alan Greenspan back when he was Governor of the Board of the Federal Reserve System, when in testimony before the US Senate in 1997, he discussed how America’s “favorable” economy was constructed. Greenspan discussed how wage increases for workers did not keep pace with inflation, which was, he explained, “mainly the consequence of greater worker insecurity.” He elaborated: “the willingness of workers in recent years to trade off smaller increases in wages for greater job security seems to be reasonably well documented.” Greenspan credited the creation of “worker insecurity” with technological changes, corporate restructuring and downsizing, as well as “domestic deregulation.” The New York Times reported on this, stating that Greenspan described “job insecurity” as “a powerful recent force in the American economy,” and that Greenspan, “clearly elevated this insecurity to major status in central bank policy.” How does worker insecurity influence central bank policy? The article explained: “Workers have been too worried about keeping their jobs to push for higher wages… and this has been sufficient to hold down inflation without the added restraint of higher interest rates.” However, Greenspan warned that even though job insecurity continues to rise, once “workers become accustomed to their new level of uncertainty, their confidence may revive and the upward pressure on wages resume.”
In his interview with the Wall Street Journal, Mario Draghi was asked if “Europe will become less of the social model that has defined it,” to which Draghi replied: “The European social model has already gone.” Draghi, repeating the mantra of so many in power, stated that, “there is no feasible trade-off between” austerity and growth: “Fiscal consolidation is unavoidable in the present set up, and it buys time needed for the structural reforms. Backtracking on fiscal targets would elicit an immediate reaction by the market.” In terms of “progress” – as Draghi defines it – throughout the crisis, he praised the fiscal compact treaty as “a major political achievement because it’s the first step towards a fiscal union. It’s a treaty whereby countries release national sovereignty in order to accept common fiscal rules that are especially binding, and accept monitoring and accept to have these rules in their primary legislation so they are not easy to change. So that’s a beginning.”
In further testimony in 2000, Alan Greenspan again addressed the issue of “worker insecurity,” which he stipulated was the “consequence of rapid economic and technological change,” which in turn created a “fear of potential job skill obsolescence.” Greenspan stated that, “more workers currently report they are fearful of losing their jobs than similar surveys found in 1991 at the bottom of the last recession,” and that, “greater workers insecurities are creating political pressures to reduce fierce global competition that has emerged in the wake of our 1990s technology boom.” While Greenspan admitted that “protectionist policies” would “temporarily reduce some worker anxieties,” he felt this was a bad idea, as “over the longer run such actions would slow innovation and impede the rise in living standards.” Greenspan elaborated:
Protectionism might enable a worker in a declining industry to hold onto his job longer. But would it not be better for that worker to seek a new career in a more viable industry at age 35 than hang on until age 50, when job opportunities would be far scarcer and when the lifetime benefits of additional education and training would be necessarily smaller?.. These years of extraordinary innovation are enhancing the standard of living for a large majority of Americans. We should be thankful for that and persevere in policies that enlarge the scope for competition and innovation and thereby foster greater opportunities for everyone.
This is called “labour market flexibility.” Of course, as Greenspan was full of praise for the fact that “job insecurity” is a necessary factor in “enhancing the standard of living for a large majority of Americans,” which “fosters greater opportunities for everyone,” what he really meant was that it benefits a tiny minority and creates better opportunities for exploitation. Ironically, this wonderful “boom” in the economy turned out to be a bubble, and it popped within a year of his giving this speech, and then of course, he resorted to building up the housing bubble thereafter… and we know how that went: more worker insecurity, more labour market flexibility, and thus, more benefits to a tiny minority and more opportunities for exploitation and profits. Isn’t the “free market” wonderful?
In April of 2012, Mario Draghi advised the eurozone to adopt a “growth compact” in order to boost economic prospects as he “scaled back his hopes for an early economic rebound,” stating that the eurozone bloc was “probably in the most difficult phases” in which the austerity measures were “starting to reverberate its contractionary effects,” he told the European Parliament. Austerity had, according to Draghi, “taken a larger than expected toll.” A “growth pact” was promoted by the front-runner in the French presidential elections, Francois Hollande, who would go on to win the May 6 elections against Sarkozy. Hollande had called for a “new Europe” stressing “solidarity, progress and protection,” warning against a North-South split in the EU countries. Angela Merkel also approved of Draghi’s call for a “growth pact,” agreeing that austerity was not “the whole answer” to the crisis, but insisted that growth would be “in the form of structural reforms,” which implies liberalization and privatization. She added: “We need growth in the form of sustainable initiatives, not simply economic stimulus programmes that just increase government debt.” While acknowledging the “economic weakness” created by the austerity packages across Europe, Draghi continued to say that, “Europe’s leaders should stay the course on fiscal consolidation.”
European leaders were quick to endorse the calls from Draghi for a “growth pact” for Europe, including Angela Merkel in Germany, and France’s new Socialist president, Fancois Hollande, as well as EC President José Manuel Barroso. Following Draghi’s suggestion, Barroso stated that, “Growth is the key, growth is the answer.” Francois Hollande commented in references to Draghi’s proposal, “He doesn’t necessarily have the same measures in mind as me to foster growth,” as Draghi’s position was closer to that of Angela Merkel, who viewed the pact as consisting of “structural reforms,” not a stimulus which would “again increase national debt.” An analyst at the Cutch bank ING said: “For the ECB, a growth compact does not mean more fiscal stimulus,” which is, of course, only reserved for banks, not people. Instead, stated the analyst, Carsten Brzeski, it entails “structural reforms with a vision.”
In May, this vision was publicly endorsed by Jorg Asmussen, the governor of the Bundesbank (the German central bank), and a member of the Executive Board of the European Central Bank, and was just previously the deputy finance minister of Germany. In a speech on May 21, Asmussen stated that, “we need both” austerity and growth, but that: “Talking about more growth does not mean moving away from the fiscal policy strategy pursued so far. It is not a matter of boosting growth over the next one to two quarters with credit-financed spending programmes, but of increasing potential growth. No one is against growth. The crucial and rather difficult question to answer is how, in ageing societies, to increase potential growth.” As to the question of ‘how’, Asmussen suggested three main components: product market reforms, labour market reforms, and financing of reforms. Product market reforms could include, according to Asmussen, “the completion of the internal market for services… [as] 70% of the EU’s GDP comes from services, but only 20% of services are provided on a cross-border basis.” As for labour market reforms, Asmussen suggested they should be “inspired by the Agenda 2010 programme in Germany,” and that, ultimately: “labour mobility needs to be increased in the euro area (the theory says, we remember, that an optimal currency area requires full mobility of labour). Mobility could be increased through broader recognition of qualifications within Europe, greater portability of pension rights, language courses and a European network of job centres.” The Agenda 2010 programme was, explained Der Spiegel, “a series of labor market and social welfare reforms introduced by former Chancellor Gerhard Schröder that completely restructured Germany’s welfare state,” which included, “easing job dismissal protections, lowering bureaucratic hurdles for starting businesses, setting a higher retirement age and lowering non-wage labor costs,” all of which are “typical examples of structural reforms.”
The Crisis Continues…
And so the European debt crisis continues, and so the austerity measures continue to punish the populations of Europe, and so Italy remains at the forefront of a growing global power grab: a ‘Technocratic Revolution’ in which even the trappings of formal democracy are pushed aside in favour of a government subservient to unelected councils of supranational institutions and global financial interests. In Par 2 of this excerpt on the Italian debt crisis, we examine the austerity programs and structural adjustments undertaken by the technocratic government of Mario Monti.
Andrew Gavin Marshall is an independent researcher and writer based in Montreal, Canada, writing on a number of social, political, economic, and historical issues. He is also Project Manager of The People’s Book Project. He also hosts a weekly podcast show, “Empire, Power, and People,” on BoilingFrogsPost.com.
Please donate to The People’s Book Project to help this book be finished by the end of summer:
 Bilderberg Meetings, Participants, 2011:
 John Hooper, “Italy’s politicians rally round to prevent market’s slide,” The Guardian, 12 July 2011:
 Phillip Inman and John Hooper, “Italy hopes privatisations will calm markets,” The Guardian, 13 July 2011:
 AP, “Italian Senate passes key austerity package,” The Independent, 14 July 2011:
 Rachel Donadio, “Italy to Adopt Austerity Plan to Fend Off a Debt Crisis,” The New York Times, 14 July 2011:
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Del Invierno Chileno a la Primavera Canadiense: ¡Solidaridad!
En la noche del 16 de mayo, miles de estudiantes y simpatizantes de Montreal salieron a las calles para pasar la 23va noche consecutiva de protestas, esta vez impulsada por el anuncio del gobierno de Quebec de legislar para terminar con la huelga estudiantil de 14 semanas que se ha apoderado de Quebec en los últimos tres meses. El proyecto de ley propuesto por el gobierno “impondría condiciones estrictas a los estudiantes que deseen manifestarse en contra de los aumentos previstos en las tarifas de matrícula”, que podrían “incluir multas severas contra cualquiera que intente bloquear las entradas a los colegios y universidades.” El primer ministro de Quebec, Jean Charest, anunció que el actual semestre no ha sido cancelado por el gobierno, “Estamos suspendiendo el semestre. No lo estamos cancelando… Esto nos permitirá terminar el semestre en agosto y septiembre.” Los estudiantes advirtieron que impugnarán la ley ante los tribunales “si la legislación limita su derecho a manifestarse y bloquear las clases si la mayoría de los miembros de una escuela o de las asociaciones estudiantiles vota realizarlo.”
Gabriel Nadeau-Dubois, el portavoz de 21 años de la asociación de estudiantes más grande, CLASSE, que representa a más de la mitad de los 160.000 estudiantes en huelga, declaró que: “El proyecto de ley que el gobierno propone a la mesa es una ley antisindical, es autoritario, represivo y vulnera el derecho de los estudiantes a la huelga… Este es un gobierno que prefiere golpear a sus jóvenes, ridiculizar a sus jóvenes, en lugar de escucharlos.” Cuando miles de personas salieron a las calles de Montreal para oponerse al plan del gobierno, se toparon nuevamente con la policía antidisturbios, y se desató la violencia después de que la que fuera una protesta pacífica fuese declarada “ilegal” por la policía, con 122 manifestantes arrestados. Sólo unos pocos de los 122 manifestantes arrestados están acusados de agredir a algunos agentes, mientras que el resto está siendo acusado de haber participado en una “protesta ilegal”. La policía antidisturbios cargó contra la multitud y se dispersó la protesta en unidades más pequeñas, que la policía luego arrinconó, y acto seguido, con roció con gas pimienta y les arrojó granadas aturdidoras, además de golpear con lumas a los estudiantes.
Más temprano el mismo día 16 de mayo, a unos 9.000 km de Montreal, cerca de 100.000 estudiantes y simpatizantes salieron a las calles en Santiago, Chile, en la segunda manifestación más importante este año, llevando al resurgimiento del movimiento estudiantil que se inició un año antes, en mayo de 2011; los estudiantes fueron movilizados por la Confederación de Estudiantes de Chile (CONFECH), una confederación de todos los sindicatos estudiantiles de universidades públicas, (así como de algunas privadas), y el sindicato más antiguo, la Federación de Estudiantes de la Universidad de Chile (FECH). Estos sindicatos marcharon contra el sistema educativo más caro de los países de la OCDE, un sistema de educación privatizado instalado en mayor medida en Chile por el ex dictador militar, Augusto Pinochet, quien llegó al poder en 1973 con apoyo de la CIA. Gabriel Boric, el líder estudiantil de la FECH y vocero de la CONFECH de 26 años declaró: “Somos más de 100.000 personas. Estamos dando una vez más una clara señal al gobierno de que el movimiento estudiantil, después de un año, se levanta sobre sus pies y no va a descansar. Todavía estamos en la lucha.” Boric agregó: “Seguiremos siendo rebeldes, ya que el movimiento estudiantil no va a conformarse con corregir algunos excesos. Queremos arreglarlo todo.” El gobierno de Chile ha presentado tres propuestas diferentes a los estudiantes en el último año, todas las cuales no cumplían con el movimiento estudiantil, ya que eran meras concesiones que no tratan el problema principal de un sistema social, política y económicamente injusto, exigiendo un sistema de educación pública gratuita y de calidad para todos los chilenos. Boric declaró: “Este gobierno ha sido incapaz de responder a las peticiones básicas de los estudiantes.”
Las protestas de 16 de mayo 2012 se tornaron violentas con enfrentamientos entre estudiantes y policías antidisturbios, que llevaron al arresto de 70 estudiantes en Santiago. Esta fue la segunda manifestación estudiantil más importante de este año, después de cerca de 40 manifestaciones en todo el país durante 2011. La policía antidisturbios respondió a la protesta de los estudiantes con gas lacrimógeno y carros lanza agua. El 15 de marzo, Santiago fue sede de la primera manifestación estudiantil importante del año en la que varios miles de estudiantes salieron a las calles, y se produjeron enfrentamientos con la policía antidisturbios que llevaron a 50 arrestos. Por cierto, el 15 de marzo en Montreal, estudiantes y otras personas participaron en una protesta contra la brutalidad policial que terminó en violencia y en la detención de más de 200 manifestantes.
El gobierno chileno ha tratado constantemente de tanto reprimir – a través de la violencia estatal – y socavar – a través de pequeñas concesiones legislativas – al movimiento estudiantil que se ha identificado con la necesidad de un cambio en el sistema social, político y económico. A pesar de un año de protestas, la ex líder estudiantil de la FECH, de 24 años, Camila Vallejo, quien dirigió el movimiento estudiantil hasta que fue reemplazada por Boric en las elecciones estudiantiles de noviembre de 2011, comentó respecto al movimiento estudiantil: “En términos concretos, se podría decir que hemos logrado poco o nada… Pero a grandes rasgos, el movimiento estudiantil ha hecho una ruptura en la sociedad chilena. Hay un antes y un después de 2011, y por primera vez estamos hablando de temas que eran tabú en Chile.”
El 14 de mayo, la ministra de educación de Quebec, Line Beauchamp, renunció declarando: “Estoy renunciando porque ya no creo ser parte de la solución.” Ello siguió a las revelaciones de que Line Beauchamp asistió a un evento de recaudación de fondos para el Partido Liberal donde aceptó donaciones de un conocido mafioso de Montreal. Quebec se ha visto envuelta desde hace años en una controversia por la corrupta industria de la construcción, que está fuertemente controlada por la mafia y recibe contratos públicos tremendamente sobrevalorados por parte de los gobiernos municipales y provinciales. Beauchamp no ha sido la primera casualidad en el gabinete del primer ministro, Jean Charest. Ya en septiembre de 2011, la primer ministro subrogante de Jean Charest, Nathalie Normandeau, que también fue ministra de recursos naturales de Quebec, renunció en medio de controversias. Ella también estuvo implicada en escándalos de corrupción relacionados con la mafia.
Cerca de un mes después de que las protestas estudiantiles comenzaran en Chile, el ministro de educación, Joaquín Lavín, renunció en julio de 2011. Fue sustituido por Felipe Bulnes, quien a su vez renunció en diciembre de 2011, en medio del persistente movimiento estudiantil. Bulnes había tratado de calmar las protestas estudiantiles mediante la concesión de un mayor acceso al crédito y “una mejor supervisión de las universidades.” Bulnes fue reemplazado con Harald Beyer. Así como Bulnes renunció, tras las revelaciones de que tenía fuertes lazos con una universidad privada en Santiago (y por lo tanto, un interés personal en la defensa del sistema educativo privatizado), el ministro de Agricultura, José Antonio Galilea también renunció. A finales de marzo de 2012, el ministro de Energía de Chile, Rodrigo Álvarez renunció tras dos meses de protestas en la región austral de Aysén por el alza de los precios del combustible.
Como ministra de recursos naturales de Quebec (hasta su renuncia en septiembre de 2011), Nathalie Normandeau fue responsable de introducir el ‘Plan Nord’ (Plan del Norte), un programa de desarrollo económico de 80 mil millones para explotar los recursos del norte de Quebec a través de inversiones públicas y privadas. El Plan incluye inversiones en minería, silvicultura, transporte y gas, y está atrayendo el interés de corporaciones multinacionales de todo el mundo. El Plan Nord fue anunciado por Normandeau y el primer ministro Jean Charest en mayo de 2011, donde Charest declaró: “En el plano político, este es uno de los mejores momentos de mi vida.” Y añadió: “Esta es una de las razones por las que me involucré en la política.” El Plan prevé 11 nuevos proyectos mineros en los próximos años, con miles de millones gastados por el gobierno en el desarrollo de infraestructura y caminos para el transporte. La industria minera aplaudió Charest, pero incitó la preocupación de grupos ambientalistas y representantes de los pueblos originarios. En abril de 2012, un grupo de mujeres del pueblo inuit marchó desde el Norte a Montreal para protestar contra el Plan Nord, llegando a la ciudad para la reunión que promovería el Plan Nord entre el 20 y el 21 de abril. El 20 de abril, las mujeres de los pueblos originarios se reunieron para protestar contra la reunión, y se unieron a las protestas estudiantiles fuera del Palais des congrèsen en el centro de Montreal. Los manifestantes chocaron con la policía antidisturbios, granadas aturdidoras, gases lacrimógenos y lumas, y unos 90 manifestantes fueron arrestados.
En mayo de 2011, al igual que el gobierno de Quebec anunciando sus planes para el Plan Nord, el gobierno chileno anunció la aprobación del proyecto Hidroaysén, que será el generador de energía más grande de Chile, llevando a protestas de cientos de personas. El proyecto “consta de cinco represas y 1.900 kilómetros (1.180 millas) de línea de transmisión para alimentar a la red central que abastece a Santiago y a las ciudades circundantes, así como las minas de cobre de propiedad de Codelco y Anglo American Plc.” El proyecto provocó un aumento de la ira de los residentes de la región, así como de ambientalistas y otros activistas. Los opositores al proyecto presentaron recursos de amparo y una corte de apelaciones suspendió el proyecto Hidroaysén en junio de 2011. Fue en este momento que el movimiento estudiantil en Chile comenzó a emerger rápidamente. En octubre, un tribunal de apelaciones local rechazó las siete demandas contra el proyecto y dio luz verde para reanudar las obras. En diciembre, un recurso legal en contra del proyecto fue llevado a Corte Suprema de Chile. En abril de 2012, la Corte Suprema rechazó los siete recursos contra el proyecto. Esto provocó grandes protestas por la decisión de la corte, que chocaron con la represión la policía antidisturbios. La creciente demanda de energía proviene de la industria minera en rápido crecimiento de Chile, de la cual las empresas mineras canadienses son la mayor inversión de origen extranjero.
Protestas estallaron la región sureña chilena de Aysén en febrero de 2012, donde el costo de vida es significativamente mayor que en el norte (debido a la lejanía de la región patagónica) y por lo tanto, los costos de combustible, alimentos, cuidado de la salud y la educación son mayores que en otras partes. Los manifestantes se enfrentaron casi todas las noches con la policía antidisturbios, incluso levantando barricadas y lanzando piedras contra la policía, que utilizó carros lanza agua y gases lacrimógenos contra los manifestantes. Uno de los manifestantes incluso perdió un ojo durante los enfrentamientos, según informes, al ser baleado por la policía. Partidarios salieron a las calles de Santiago en solidaridad con los que luchaban en Aysén . En marzo, los manifestantes relajaron los bloqueos para mantener negociaciones entre el gobierno y las más de treinta organizaciones sociales que participaban en las protestas. Fue después de las negociaciones que renunció el ministro de energía Álvarez, diciendo que fue excluido de las conversaciones. A fines de marzo, el gobierno anunció planes para crear mejores condiciones en la región de Aysén.
En abril de 2012, Chile experimentó protestas contra una planta termoeléctrica y la minería, donde en mayor medida participaron chilenos de ascendencia indígena, y los estudiantes regresaron a las calles de Santiago, con decenas de miles de personas. A lo largo de Quebec, los estudiantes intensificaron las protestas durante todo el mes de abril, y se unieron indígenas, ecologistas y estudiantiles en protesta contra el Plan Nord. El 25 de abril, decenas de miles de estudiantes chilenos salieron a las calles de Santiago, en protesta contra la propuesta de “reforma” educacional del gobierno, que era completamente inadecuada. En el mismo día, 25 de abril, cerca de 5.000 estudiantes protestaban en Montreal contra de la cancelación del diálogo del gobierno con los líderes estudiantiles. A principios de ese mismo mes, el presidente chileno Piñera y el primer ministro canadiense Harper se reunieron en Chile para expandir el tratado de libre comercio entre los dos países. Los movimientos estudiantiles no fueron objeto de debate.
En Chile, al movimiento estudiantil y su desarrollo social más amplio junto a ambientalistas, sindicatos y otros grupos de activistas se le ha conocido como “Invierno Chileno“. En Quebec, el movimiento estudiantil, con su desarrollo social más amplio junto a sindicatos, ambientalistas, y otras organizaciones de activistas, se ha conocido como “Primavera Arce.” Ambos movimientos, manteniendo al mismo tiempo sus propias especificidades, en última instancia, se han movilizado en torno a una lucha contra el neoliberalismo, contra la austeridad, y contra un sistema social, político y económico que ha gobernado el mundo para unos pocos y en detrimento de las mayorías.
Para que ambos movimientos avancen, es importante no sólo promover actos informales y declaraciones de solidaridad entre los dos movimientos, sino comenzar a establecer vínculos directos e indirectos entre los movimientos: establecer conexiones entre las asociaciones estudiantiles, coordinar días de acciones de protesta importantes, protestar contra las empresas mineras que explotan a Quebec en el Norte y a Chile en el Sur, crear medios de comunicación organizados por estudiantes que compartan información entre ellos, realizar intercambios de activismo estudiantil entre los dos países, pero en primer lugar, es importante educar a los estudiantes en Quebec sobre lo que está ocurriendo en Chile, y a los estudiantes en Chile sobre lo que está ocurriendo en Quebec. Esa es la base para todas las otras formas de cooperación.
Así que desde el Invierno Chileno a la Primavera Arce
¡Solidarity, solidarité, solidaridad!
Andrew Gavin Marshall es un investigador independiente y escritor residente en Montreal, Canadá, que escribe sobre una serie de cuestiones sociales, políticas, económicas e históricas. También es Project Manager del The People’s Book Project y presenta un programa semanal de podcast, “Empire, Power and People”, en BoilingFrogsPost.com.
The Québec Student Strike: From ‘Maple Spring’ to Summer Rebellion?
Tuition Hikes, Student Strikes, Police Batons, and Teargas Bombs
By: Andrew Gavin Marshall
The following is Part 6 of the series, “Class War and the College Crisis.”
In Montréal, where I live, and across the Canadian province of Québec, there is a growing and expanding student movement which emerged as a strike in February against the provincial government’s plan to increase the cost of university tuition by $325 per year for the next five years, for a total of $1,625. The students have been seeking and demanding a halt to the tuition hike in order to keep higher education accessible, a concept that the province of Québec alone has held onto with greater strength than any other province in Canada. The government continues to dismiss and deride the students, meeting their protests with batons, teargas bombs, and mass arrests. The universities in Québec are complicit with the government in their repression of students and the struggle for basic democratic rights, bringing in private security firms to patrol and harass students in the schools. While the university administrations claim they are ‘neutral’ on the issue of tuition hikes, privately, the boards of governors are made up of bankers and business executives who lobby the government to increase tuition. After all, in April of 2007 – five years ago – Toronto-Dominion Bank (TD Bank Group), one of Canada’s ‘big five’ banks which dominate the economy, released a “plan for prosperity” for the province of Quebec, which recommended, among other things, raising the cost of tuition: “by raising tuition fees but focusing on increased financial assistance for those in need, post secondary education (PSE) institutions will be better-positioned to prosper and provide world-class education and research.”
The movement is becoming more radicalized, more activated, and is consistently met with more state repression. Almost daily, it seems, there are protests all over the city, drawing in other social organizers and activists in solidarity. The little red square patch – the symbol of the Québec student strike – is adorned across the province of Québec and the city of Montréal and on the jackets and bags of a large percentage of its residents. The city and the province, it seems, are at the forefront of a youth-driven social struggle, a growing and rumbling resistance movement. As the issues spread from tuition hikes to a more broad conception of social justice, the movement has the potential to grow both within and far beyond Québec. If the situation continues as it has until present, already the longest student strike in Québec’s history, with increased activism and accelerated state repression, it is not inconceivable to imagine a growing student-led social rebellion by the end of the summer. As the economic situation in Canada – and indeed, the world – continues to get worse for the people of the world (as opposed to the corporations and banks, who are doing very well!), the momentum behind the current student movement has the potential to spill across Québec’s borders into the rest of Canada, with some people referring to this as the beginnings of the ‘Québec Spring,’ or the ‘Maple Spring.’
Emotions are running high in Québec, and increasingly, the government and the Canadian media are presenting the protesters as violent and destructive, and framing the debate in a misleading context, presenting the students as whining about “entitlements.” The rest of Canada is especially fed a line of intellectual excrement, repeating the same invalid and misleading arguments ad nauseum. This article seeks to present the issues of the strike, and the actions of protesters and the government into a wider context, so that other young Canadians (and youth around the world) may understand what is truly taking place, what is truly being struggled for, what the government and media are doing to stop it, the absurdity of the arguments against the students, and the need for this movement to spread beyond this province, to let this truly be the dawn of the ‘Maple Spring.’
Entitlements and Social Justice: Putting the Protests in Context
The most commonly spewed argument against the student protests – and for the tuition increases – emanating from the ‘stenographers of power’ (the media) and others, is that the students are complaining about their supposed ‘right’ to entitlements for cheap education. Québec has the cheapest university tuition in Canada (for residents of the province), and even with the tuition increases, it will still remain among the cheapest nation-wide. Thus, claims the media, there is no rational basis for the complaints and strike. The argument is, however, based upon the fallacious argument that, “the rest of Canada does it, so why not Québec?” In Québec’s history, however, the claim that “the rest of Canada does it” has never been an argument that has won the sympathy of residents of Canada’s French-speaking province. This argument, however, goes beyond a cultural difference between Québec and English-speaking Canada. The most basic problem with this line of thinking is that what is taking place in the rest of Canada is something to aspire to, that because the rest of Canada has higher tuition costs, this is not something to struggle against. When placed in context, we are left with the conclusion that the rest of Canada should be following the example of the students in Québec, not the other way around. So let’s break down the numbers.
Currently, the average yearly cost of tuition for Québec residents is $2,519. With the projected increases of $325 over five years (for a total of $1,625), the annual cost would reach roughly $4,000. The province of Ontario has the highest tuition costs in the country, which has also increased over the past four years from $5,388 to $6,640, an increase of 23% between 2008 and 2012. Québec’s proposed 75% increase over the next five years would mean that Newfoundland would have the lowest tuition in Canada, at $2,649 per year. Québec, while currently the cheapest in Canada, has already undergone a number of tuition hikes in recent years. While maintaining a tuition freeze between 1994 and 2007, while the rest of Canada had consistent hikes, Québec premier Jean Charest introduced a five-year tuition hike of $100 per year between 2007 and 2012. So the reality is that Jean Charest has undertaken and is attempting to undertake a 10-year tuition hike for a total of $2,125 in additional costs, more than doubling what tuition cost in 2007, prior to the onset of the global economic crisis.
So, what does this have to do with the rest of Canada? Let’s pretend, for a moment, that the argument that “the rest of Canada does it” is a valid one. So let’s look at what the rest of Canada actually does, and therefore, if this is something which should be accepted and promoted, instead of struggled against. An article in the Kamloops Daily News pointed out that the average tuition cost in Canadian schools is $5,000, while Québec currently has roughly half that cost. Thus, stated the author, “despite all the whining and crying coming from post-secondary students in Quebec, it’s hard — really hard — to feel sorry for them.” Describing the students like children throwing a tantrum for lack of getting what they want – “kicking up a fuss” – the author contends that since we’re not in a “perfect world,” tuition has to be increased. This line of thinking is, of course, beyond ignorant. Its premise is that because we don’t live in a “perfect world,” there is no basis for trying to struggle for a “better world.” I suppose that black Americans in a liberation struggle in the 1950s, 60s and 70s should have just listened to those who claimed that, “hey, it’s not a perfect world, accept your place in it!” Or perhaps gays and lesbians should just accept that it’s “not a perfect world,” so, why bother attempting to attain rights? Or, for that matter, just tell women to get back in the kitchen. After all, it’s not a “perfect world,” so there’s really no point in trying to make it better, in trying to achieve even small victories along the way. With this absurd argument out of the way, it is true that Québec has roughly half the tuition costs as the rest of Canada. As well as this, Québec students have less student debt than the rest of Canada, at roughly $13,000, also nearly half as what the rest of Canada has. The author of the absurd article contends, therefore, that the real reason for the strike is that, “like a lot of things in Quebec, the sense of entitlement seems to have become a normal part of the culture.”
Now, think about this for a moment. Let’s put this in its proper context. The average tuition for students in Québec is $2,500, and the average debt for Québec students is $13,000. On the other hand, the average tuition costs for Canadian students is $5,000, with the average debt for Canadian students at $27,000. Is this really something to aspire to? Is this really the type of “equality” that we should want, that we should accept, or adhere to? Is it really a valid argument in stating that since the rest of Canadian students pay excessive tuition costs and graduate with absurd debts, that we should too? Especially important in this equation is the current condition for students and youth in Canada today, where upon graduating with an average of $27,000 (a national average, which, by the way, is kept lower due to Quebec’s lower fees), and “once they complete their degrees, there are fewer jobs around that pay the kind of money that allows grads to seriously whittle away at their debt.” This massive debt for students in Canada “is bankrupting a generation of students,” explained the Globe and Mail. It’s not simply the money which is being borrowed, but the interest rates being paid, varying from province to province at between 5 and 9 percent. Interest rates, more over, are expected to increase, and thus, the cost of the debt will increase, and with that, so too will youth poverty increase.
With tuition hikes to add to that, the debt burden will become greater. So not only will the average interest payments on student debt increase with more student debt required to pay for tuition, but the interest rates themselves will increase. What this translates into is class warfare. Thus, the argument that “the rest of Canada does it, so stop complaining,” is akin to saying, “Everyone else is screwed, doomed to be a ‘lost generation’, so stop complaining that we’re throwing you to the wolves too!” Since debt essentially amounts to a form of slavery, let’s use the example of slavery itself to look at this argument. Let’s build a premise of ten slave plantations, one of which is made of indentured slaves (meaning that they will be freed after a set amount of time), and the other nine consist of absolute slavery (from birth to death). Indentured slavery, while not desirable, is better than absolute slavery from birth to death. So, if the plantation owners begin to change the system of slavery of the unique plantation from indentured to life-time slavery, and the indentured slaves revolt, the plantation owners would then argue, “All nine other plantations operate under that system, stop complaining.” Is this a legitimate argument? So when Québec’s student-slave plantation owners tell us that, “the rest of Canada does it,” what they’re really saying is that they want to enslave us in debt and plunge us into a poverty of future opportunities to the same degree that exists in the rest of Canada. And when we fight against this, they say we are “whining and crying” about “entitlements.”
Québec students, themselves, are not living the easy life, as the picture is often painted. A study from November of 2010 put to shame these notions, based upon surveys of students in 2009, and thus, before the $500 tuition increase that ended in 2012, meaning that the numbers are likely much worse today. Half of all full-time students in Québec live on less than $12,200 per year, significantly below the national poverty line. To add to that, 25% of full-time students live on less than $7,400 per year. This data includes the amounts that students get in government loans, leading the president of the Fédération étudiante universitaire du Québec (University Student Federation of Quebec), Louis-Philippe Savoie, to comment, “Imagine the disastrous effect that raising tuition fees by the Charest government” would then have on the students. The largest source of finances for students does not come from government loans, but from working: part-time students work more, and have less debt, with their work accounting for 83% of their financing; full-time students have more debt, but still 55% of their financing comes from working, and over 80% of full-time students work an average of 18.8 hours per week. Thus, Savoie noted, “The portrait of the lazy student is totally false.” The second largest source of financial support for students is from parents, accounting for 22%, with 60% of full-time students getting support from their parents and families, while 23% of part-time students get financial support from their parents, accounting for a total of 7% of their total financing. Roughly 60% of full-time students in Québec will go into debt, averaging at around $14,000, with student loans making up the majority of that debt, as 44.5% of full-time students have government loans, 23.4% take out bank loans or credit lines, and 22.1% take on credit card debt. The study further showed that 46.6% of part-time students will even end up in debt, averaging at $11,500. The report concluded that the government should freeze tuition and increase financial assistance. Over one year later, the government announced a 75% increase in tuition costs.
To Strike and Strike Down!
By April 26, 2012, the student strike – the longest in Québec’s history – had lasted 72 days and had a running total of 160 different protests, hundreds of people arrested, multiple injuries, and still the government stands stubborn in its refusal to even enter a negotiation with the students in good faith. As a result of the government’s intransigence to democratic appeals, some have taken to acts of violence and destruction. Bricks have been tossed off a downtown overpass, and onto the tracks of the Montréal metro system, leading to road and metro closures. Cars and businesses in downtown are left with broken windows and shattered debris, the remnants of protests in which police invariably turn to oppression and brutality. As the government and police become more repressive, the issue becomes less and less about tuition, and develops a wider social position. Thus, the nomenclature has begun to change from “student strike” to “Québec Spring” – or “Maple Spring” emblematic of “a broader, international Occupy-style fight for a new economic order.” In French, ‘Maple Spring’ is translated as “Printemps Érable,” with érable being very close to the French word for ‘Arab,’ thus drawing an even closer dialectical connection with the ‘Arab Spring.’ One student commented, “A lot of people have stopped calling it a student movement; now it’s a social movement, and I think that it affects people in a much deeper way than just tuition fees.” Another student added, “the whole protest is against the neoconservative and neoliberal point of view of doing politics… People in Quebec are using this movement as a means of venting against the current government.”
In March of 2011, Québec’s Finance Minister under the Liberal Jean Charest government announced the tuition hikes of $325 per year, over five years. In August of 2011, students began campaigning against the tuition hikes, with a large peaceful rally held in Montréal in November, establishing a “common front” of student groups attempting to apply democratic pressure against the government. On February 13, 2012, the strike officially began, with several student groups voting in favour of a walk out. The decisions in the student group are, after all, made democratically, unlike the decisions of the government.
On February 23, students occupied a downtown bridge, and were subsequently pepper-sprayed by police. During a protest on March 7, one student, Francis Grenier, almost lost an eye due to a police stun grenade. On March 21, student tactics changed – as the government refused to even consider negotiations – and were now seeking to disrupt the economy in order to be heard. One group of students occupied the busy city Champlain Bridge in Montréal during rush hour, leading to each student involved being fined $494. On March 22, a massive rally of students from around the province took place in Montréal, drawing hundreds of thousands of students and supporters. The government again refused to negotiate or even consider changing its position. Line Beauchamp, the Quebec [Mis]Education Minister, had the outside of her Montréal office painted red – the symbolic colour of the protests – as she continued to deride the protests and refuse to negotiate with the students. On April 16, the city’s subway (metro) system was shut down in a number of places as some individuals (who remain unidentified) tossed bags of rocks onto the metro tracks at a number of different stations. On April 18 and 19, over 300 people were arrested in the city of Gatineau, Québec, in a confrontation with police at a local university campus. On April 20 and 21, as Jean Charest was attending a job fair, speaking to an audience of business leaders in promoting his ‘Plan Nord’ (Plan North) which seeks to provide government funds to subsidize multi-million and multi-billion dollar mining corporations to exploit the mineral resources of northern Québec, had his speech interrupted by protests. Outside the convention centre, protesters clashed with police, leading to the arrests of over 100 people.
In what was described by the Globe and Mail as Jean Charest’s “Marie Antoinette moment,” as tear gas filled the streets with students fleeing the riot police protecting the comfortable lap-dog-to-the-rich premier inside the convention centre, Charest, speaking at a business lunch with his real constituency (the wealthy elite), joked, “we could offer them a job … in the North, as far as possible.”
Jean Charest, when he paused from making jokes about giving jobs to students “as far as possible” in the North, commented that, “[t]his is 2012, this is Quebec. We have had ministers find tanks of gas on their verandas… Molotov cocktails in front of their offices. There are ministers who have had death threats.” He added, “I find it unacceptable that one student association refuses to condemn violence,” referring to C.L.A.S.S.E (the largest and most militant of the student groups). Meanwhile, as Charest joked and complained, students were being brutalized by police just outside his conference meeting, with tear gas and concussion grenades being tossed at Québec’s youth by riot police. Charest declared social disruption to be “unacceptable,” but apparently state repression and violence is therefore, totally acceptable.
With Jean Charest’s ‘Marie Antoinette moment’ during his conference of congratulating Quebec’s business elite on their new government subsidization from his administration (the latest Québec budget allocated massive funds for mining companies), protests continued outside, with students setting up barricades “made from construction site materials and restaurant patio furniture to impede the circulation of police,” and so of course, the police “responded with stun grenades, pepper spray and batons.” As the violence erupted, Charest was inside making more jokes to his real constituents, stating, “[t]he (event) that we’re holding today is very popular. People are running all over the place to get in.” The crowd of businessmen erupted in laughter and applause. Charest added, “It’s an opportunity for job hunters.” The spokesperson for the student group, CLASSE, replied to the premier’s contemptuous comments, stating, “all my calls for calm won’t do anything… He’s laughing at us. I don’t know if he realizes were in a crisis right now.”
The Schools Side Against the Students
The schools themselves have been participating in the repression of student strikes. Injunctions were issued to protesters, demanding that they permit other students to attend their classes and exams. The legal injunctions declared that those who were not attending classes were not considered to be participating in a legitimate strike. After the injunctions were issued, and two days after the school’s director demanded classes resume, student protesters blocked the entrance to College de Valleyfield, with hundreds blocking the main doors to the school. The school director threatened students that if they did not return to class they would fail the semester. The director, however, canceled the classes in order to avoid a physical confrontation with protesters. Education minister Line Beauchamp then reminded schools that, “they are legally obliged to provide courses.” Premier Charest, who was in Brazil at the time, again serving corporate interests on a trade mission, suggested the possibility of “forcing the schools to open.” He added, “We leave to each institution the task of taking the decisions they must make based on several criteria that include safety as well as the management of their establishments.”
At Concordia University, protesters also blocked the entrance doors, preventing other students and teachers from entering the building during exams. The school responded by calling in the riot police to ‘remove’ the protesters, with fights breaking out between various students, and police then began “intervening” with pepper spray. The University of Montreal won a court injunction which banned protests from assembling on the school campus. The school informed students that, “all individuals must refrain from blocking access to campus buildings, individual classrooms, and even parking lots. Protesters are also banned from taking any action that interferes with classes, campus services or meetings.”
Striking students at McGill University delivered a letter to University President Heather Munroe-Blum, signed by many students, professors, staff and student groups, asking the school to accommodate striking students with finding alternatives to exams or issuing ‘Incompletes’ for classes. Munroe-Blum was not present to accept the letter, with her chief of staff accepting the letter on her behalf, stating that Munroe-Blum had “University business off campus.” Perhaps she was running errands for the Royal Bank of Canada, whose board of directors she also sits on. Concordia University has also shown significant opposition to the strike. The chancellor of Concordia, incidentally, is also on the board of directors of the Bank of Montreal. Concordia, facing demands from striking students to accommodate the strike, replied: “The university’s position has been the same from the beginning, and it’s not going to change.” Students who are involved in the strike, stated a Concordia spokesperson, are “accepting the risks.” She added, “[t]hose who choose not to attend exams when exams are being held, they know the consequences… There’s just nothing more we can add.” A CLASSE representative referred to the situation of the striking students at Concordia, numbering in the thousands, “Unfortunately, since the start of the conflict [they] have faced an intransigent and undemocratic attitude in their talks with their administration.” Some of the French-speaking schools had been making accommodations for striking students, but none were to be found at the English-speaking schools, where there are fewer strikers and more elitist administrators. The CLASSE representative, Gabriel Nadeau-Dubois, commented that, “[o]ur coalition and our militants will be there on the campus to help the students, to help the strikers, in order to make their democratic-mandated strike respected.”
Concordia University has also responded to the strike by hiring a private security firm to patrol the school. On March 26, there was a clash between striking students and security guards as the school took a harsh stance against picketing students. Some students were taking part in a sit-in on the 7th floor of the school, while others were being harassed by seven security guards on the 4th floor. Geography students were blocking the entrance to their classroom when security guards showed up, purportedly to ensure “there would be no incident,” while intimidating the students and filming them. One student who was present commented, “What happened at the classrooms so far was very calm and very peaceful. The presence of security guards is creating a really uncomfortable environment on campus. It’s really unnecessary and it feels like students are being prosecuted.” The previous week, the school had sent emails out to all of its students, “warning about consequences for students who choose to continue blocking access to classes, which could include formal charges.” The geography teacher who was supposed to teach the class then cancelled it, telling the security guards that there weren’t enough students to continue the class. The professor commented, “I just think that I’m in a really difficult position because I respect what the students have democratically chosen to do… But the picket wouldn’t permit me to pass through anyway and there weren’t enough students that were in the classroom to hold the class.” Earlier that same day, a student who was filming an argument between security guards and students “was struck in the face by one of the security guards, throwing the camera out of her hands and onto the ground.” The incident was filmed, and after the camera was thrown to the ground, the student asked the security guard for his name “for hitting a student,” after which he walked away.
As it turned out, the security official that hit the student in the face “was discovered not to be in possession of a valid security permit, according to a letter sent by the Concordia security department.” The student who had been assaulted had filed a request for information from the director of Concordia University Security, to which she received a letter response informing her that the assaulting guard – hired by the school from the private firm of Maximum Security Inc. – did not possess a security license, adding, “Given the fact that he is not a licensed security agent […] we are not legally permitted to release his name.” Concordia Student Union (CSU) VP Chad Walcott commented, “It would be very concerning if we are being blocked access to any information about the assault of a student… Having unlicensed security staff on campus is completely unacceptable.” The student who was hit told the school newspaper that, “[t]hese kind of accidents are likely to happen again… That’s what happens when you start hiring a large number of security guards for political purposes on campus when they’re not trained to do it.”
CSU VP Chad Walcott later commented: “The university told us on [March 30] that this person was under review… Then we found out that he wasn’t even licensed at all, which leads me to believe that the university lied to us, or they themselves were lied to… Every security agent that is on the university premises is supposed to be a licensed individual. These individuals are also all supposed to be providing students with licenses when requested, and to fail to do so is a violation of the Private Security Act.” As section four of Quebec’s Private Security Act stipulates, “Any person operating an enterprise that carries on a private security activity must hold an agency license of the appropriate class.”
Meanwhile, in late April, the Canadian Parliament – with the Conservative Party in power – are attempting to pass a bill entitled, “Bill C-26: The Citizen’s Arrest and Self Defence Act,” which “clarifies” laws around citizen’s arrests, and according to the Canadian Bar Association, “will grant greater powers to private security agencies” which “will give poorly trained ‘rent-a-cops’ greater latitude to arrest Canadians.” An official at the Canadian Bar Association warned that, “Such personnel often lack the necessary range of equipment or adequate training to safely and lawfully make arrests in a manner proportionate to the circumstances.” The only MP in Parliament to oppose the bill was Elizabeth May of the Green Party, who stated that it would be a “very big gift to the private security companies… The constitution of this country is governed by the concept of peace, order and good government… This stuff goes off in a wacky new direction, and it worries me.”
The Concordia University email sent to students declared that it was “no longer possible to tolerate further disruption of university activities by a minority of protesters who refuse to respect the rights of others,” though apparently it is okay to tolerate harassment by private security guards. The university informed students that those who choose to picket will be asked for their IDs by the private security goons, “and will be reported to a panel to face the appropriate charges,” while those who refuse to provide ID “will have their pictures taken in order to be identified.” The school declared that, “[t]he charges will depend on the severity of the case but it could go from a written reprimand to expulsion.” A Concordia spokesperson stated, “[t]he university will only target students who are physically blocking access to classrooms and offices. We received complaints and we need to make sure our community has the liberty of movement. Blocking the Guy Metro building [the previous week] for example was unacceptable.” The Concordia Student Union and Graduate Student’s Association replied to the school’s email, stating, “Students will not be intimidated.” Both organizations referred to the school’s email as “dangerous” and “irresponsible,” presenting picketers as aggressive, when “in reality [their actions] have been consistently characterized by a lighthearted, peaceful, and creative nature, with very few incidents.” A student union official stated, “[t]heir message is calling for a profiling of students and a general discrimination against protesters and picketers. We think that it is highly unacceptable.” The same official added that, “We actually sat with the university administration to tell them that this email would only create conflictual relations between students and the university… We were basically told that the university did not care if things went out of hand.”
Negotiations in Good Faith…? Not With Beauchamp!
In late April, the [Mis]Education Minister, Line Beauchamp, suggested that the government would agree to discussions with the students. She ensured, however, that the talks would be cancelled before they began, by demanding that the more radical, and most active student organization – C.L.A.S.S.E. – be refused the opportunity to engage in the discussions. Why? CLASSE was branded as “radical” (assuming ‘radical’ is a bad term to begin with) because it refused to come outright in denouncing violence at the protests, though there has never been any condemnation of police brutality and repression from the government, so it’s apparently a contradictory position. Moreover, Beauchamp, accustomed to operating in an authoritarian manner, empty of any notion of democratic governance, demanded that CLASSE do as she said before they could be invited to discussions with a government that had, until late April, refused to discuss the issue with hundreds of thousands of students demanding it. Beauchamp delivered an undemocratic ultimatum, stating that she would only speak with two of the three student associations involved, which together represent 53% of striking students. The student organization, CLASSE, which represents 47% of the 175,000 striking students, held a press conference in response, saying “Beauchamp’s decision was unacceptable and that there can’t be a solution to the dispute without CLASSE’s involvement.” A spokesperson for CLASSE commented, “She can’t marginalize half of the people on strike,” and accused Beauchamp of attempting to “divide and conquer” the student movement. CLASSE was not even involved in the violence that took place, and as the organization acts and makes decisions in a democratic manner, it cannot respond to authoritarian ultimatums from a woman who has no consideration for democratic methods.
Despite Beauchamp’s authoritarian ultimatum, the other student groups remained in solidarity with CLASSE and refused to meet with the [Dis]Honourable Beauchamp unless CLASSE was present. CLASSE announced that they could only denounce the violence if the members voted on it, since the leaders of the organization (unlike those of the government) must make decisions based upon the democratic wishes of their constituents, not their personal pandering to the financial elite. Of course, the refusal by CLASSE to follow the immediate demands of Beauchamp incurred the continued denunciation of the organization by the government and its media lap-dogs like the Montreal Gazette, responsible for possibly the most deriding, rag-like, yellow-journalism-inspired newspaper coverage of the protests to date. However, on April 22, CLASSE addressed its constituents (unlike the government) and they took a vote in which they unanimously condemned the violence, stating: “The position we took to last night was to clearly denounce and condemn any act of deliberate physical violence towards individuals… As a progressive and democratic organization, we cannot subscribe to those actions.” The spokesperson for CLASSE added, however, that civil disobedience will continue: “We think that the principle of civil disobedience has made Quebec civil society a little bit more just and little bit more free than other societies.” Beauchamp replied to the announcement, clearly confused about the difference between civil disobedience (the likes of which was praised and practiced by peaceful non-violent leaders like Gandhi and Martin Luther King) and acts of violence. Beauchamp addressed her own lack of education in stating, “We all need to act in good faith. If social and economic disruptions continue, the students who endorse them will be excluding themselves from talks.” So where previously it was the refusal to denounce violence that would result in exclusion of talks, and since that requirement was met, the demand changed to refusal to denounce “social and economic disruptions,” which is the entire basis of civil disobedience, strikes, and protests. So, essentially, Beauchamp is demanding that the student organizations denounce their cause before they meet… to discuss their cause.
The last strikes that took place in Quebec in 2005 were successfully divided using the same strategy as Beauchamp attempted. However, as her tactical failure was evident, the divide and conquer effort clearly was not working on Québec students anymore, who remained in solidarity with one another. The government then agreed to sit down to negotiations with the student groups in late April. The talks came to a quick end on April 25, as Line Beauchamp admonished CLASSE for sponsoring a protest the previous night which ended in violence, vandalism, and injuries. Beauchamp commented that, “We cannot pretend today that they have dissociated themselves. I consider, therefore, that the CLASSE has excluded itself from the negotiation table.” A CLASSE spokesperson replied, “Madame Beauchamp does not want to talk about the tuition hike… This decision by Madame Beauchamp is obviously another strategy to sabotage the discussions… Madame Beauchamp will not resolve the crisis without the CLASSE.”
On the night Beauchamp threw her hissy-fit and again ended the chances of negotiations, Montréal had a large protest, drawing thousands of students into the streets. When the students reached a police barricade at a major downtown intersection, tempers flared: garbage cans were overturned, windows of banks were smashed, and some rocks were hurled at police cars. It is notable that violence tends to erupt in protests when confronted with a heavy police presence. A protest earlier on that same afternoon was entirely peaceful, as the police did not have a major presence, instead tailing behind the protesters in vans. It is when the protest is cordoned off, and the right to march – the right to freedom of speech, association, and movement – is being curtailed by riot police, blocking off entire intersections like some reinforced line of Storm Troopers, with police tactics aimed at attempting to separate the protesters into smaller groups, that the police presence creates an antagonizing factor. So, as the protest on the 25th of April was confronted by the line of riot police storm troopers, the protest was declared to be “illegal” by the police: as a few acts of vandalism took place, the police waited, and then began firing tear gas into the crowd of students. The crowd began to disperse and students ran, as the police threw concussion grenades and used their batons.
The following day, all the blame was placed upon the students. In fact, this remains consistent. All the blame for all the events that have taken place is placed squarely upon the students and protesters. When, earlier in April, three out of four of Montréal’s metro lines were shut down due to bags of bricks being thrown on the tracks and emergency stop levers being pulled on the trains, the blame was also put on students, “but the police have not connected this incident to students.” One individual even released a smoke bomb in a metro station on April 18. While the sources of these incidents remain unknown, the sources of the vast majority of violence at protests is quite evident: the police. It should also be noted that Québec has a bad track record of dealing with protesters and inciting violence, often through agent provocateurs. Back in 2007, at the Montebello protests against North American integration, the Québec provincial police had to later admit that they planted three undercover cops among the protesters, dressed in all black, with their faces covered and brandishing large rocks in their hands as they neared a lineup of riot police. The three men were called out by protesters as being undercover cops attempting to start a riot and justify police repression, and once their cover was blown, they made their way past the police line where they were then “arrested.” Photos of the men show that they were wearing the same police-issued shoes as the riot cops, and the government had to later admit that they were indeed police. Though, the government claimed at the time, their men were undercover “to keep order and security.” No doubt with large rocks.
Emergence of the ‘Maple Spring’
Following the large protests in late April, the Liberal Quebec government – bypassing negotiations – came up with its own brand new “solution” to the protests: increase the tuition even more! Jean Charest and Line Beauchamp gave a press conference on April 27 announcing a six-point plan to end the protests, with absolutely no input from the protesters themselves. Charest began the press conference, speaking to the stenographers of power (the media), stating, “There is an increase in the tuition fees… Let’s not pretend it isn’t there.” The proposal suggested that the government would spread the increases over seven years instead of five, though Charest announced that the government would begin “indexing” the tuition costs in the sixth and seventh years to the rate of inflation, which would mean an annual increase of $254 over seven years (instead of $325 over five), resulting in a total of $1,778, as opposed to the $1,625 over five years. Beauchamp added that, “after factoring in the income-tax credit on tuition fees, the increase is $177 a year, or 50 cents a day.” Beauchamp told reporters, “I invite the students to go to their courses because the solution proposed by the government is a just and equitable solution which ensures better financing of our universities, which ensures a fair share from students, which also ensures access to university and ensures better management of our universities.” Further, Charest and Beauchamp announced that the government would add $39 million in bursaries, the premise of which suggests that it’s fine if the government takes a lot more money from students, so much as they give a small fraction of it back, without raising the obvious question of: why don’t we just keep it in the first place? A student organizer commented that Beauchamp’s “50 cents a day” argument was “very clever,” yet, “It does not touch the nub of the question.” The president of the student organization, the Federation etudiante universitaire du Quebec (FEUQ), Martine Desjardins, commented that, “Quebec families are already heavily indebted,” and the new plan would only increase the debt burden.
An overlooked report from late March by the Institut de recherche et d’informations socio-economique explained that, “increased student debt from higher tuitions could have severe repercussions on public funds.” The researchers noted that, “the provincial government is creating a precarious situation when it encourages students to incur higher debt, much in the same way banks in the United States created a risky situation when they made it easy to obtain mortgages – a situation that ultimately threw the U.S. economy into a recession when homeowners began to default on their payments.” When interest rates go up, as they are set to do so, “today’s students may well find themselves in the same situation of not being able to pay off their student loans.” One of the researchers commented, “Since governments underwrite those loans, if students default it could be catastrophic for public finances… We are already seeing signs of a higher education bubble like that in the U.S… If the bubble explodes, it could be just like the mortgage crisis… The fact is, there is no need for additional funding for Quebec universities.”
The student movement has now begun the campaign for other social movements, labour groups, and activist organizations to join the protests in a wider ‘social strike’ against the Québec government. The more radical student organization, which represents 47% of the 175,000 striking students in Quebec, C.L.A.S.S.E., issued a press release in late April calling for a “social strike” from the “population as a whole!”
Following a massive demonstration of over 200,000 people on April 22 in Montréal demanding the protection of the environment and natural resources, the message was clear: more than tuition is at stake. A manifesto for a “Maple Spring” appeared and spread through social media networks in late April. The manifesto declared that:
2011 was the year of indignation and revolt. The Arab spring unnerved autocrats, swept out dictators, destabilized regimes and drove many to grant reforms. The images of these Arab peoples deposing their oligarchies went around the world and set an example.
Inspired by the spontaneous occupations of public places in the Arab world, the first Indignados appeared in Spain, when deep-going austerity measures were imposed on the country. The Spanish highlighted the real limits of democracy in that country, strongly affected by the economic crisis, subject to the dictates of the financial markets, with 46 per cent of its young people unemployed. The initiative produced its emulators and the movement spread in Europe and beyond.
The movement extended to North America, and from New York around the Occupy Wall Street initiative. That movement was aimed at the richest 1 per cent, the major banks and multinational corporations, which dictate the laws of an unjust global economy that is mortgaging the future of all of us. The movement then spread to more than 100 U.S. cities, but also to Canada (Vancouver, Toronto, Ottawa, Montréal).
The rebellious Arabs, the European Indignant, or the American occupiers, all have gathered behind the same message of hope: Another world is possible!
This storm of global protest against economic and political elites out of touch with the legitimate concerns of insecure peoples who are always being asked to pay more, to work harder, and above all not to demand anything in return, is now blowing over Quebec. The students’ courageous fight for the right to education now constitutes the spearhead of a profound movement of indignation and popular mobilization that has been stirring in Quebec for several years. The monster demonstration of March 22 launched the printemps érable! [Maple Spring!]
Let us join in this global current of revolt and follow the example of the Icelanders who, in January 2009, forced the resignation of the neoliberal government of Geir Haarde, which had participated in the genesis of the economic and social crisis in which that country plunged in 2008.
It’s Quebec’s turn to bring down its corrupt clique!
Charest, that’s enough! Let us demand the government’s resignation!
Among the ‘demands’ that the manifesto made were:
– The right to education for everyone, without discrimination linked to money;
– The right to a healthy environment and the conservation of our natural resources, to protect our water, our rivers, our forests, our regions, and not to yield to the voracious appetite of the mining and oil and gas companies;
– The rights of the indigenous peoples to their aboriginal lands;
– The right to enjoy a responsible and democratic government, serving its people and not some financial interests;
– The right to pacifism and international solidarity, clearly displaying Quebec’s opposition to the militaristic and commercial policies of the federal Conservative government;
– The right to a local, sustainable, mutually supportive social economy that puts humans at the centre of its concerns.
Solidarity for the Québec students has been shown from students and unions and other groups across Canada and indeed, around the world. Students from the University of Ottawa have participated in strikes and protests in Montréal, and the Student Federation of the University of Ottawa (SFUO) sent a bus of students to participate in the mass rally of hundreds of thousands of students on March 22. SFUO president Amalia Savva stated, “When it comes to tuition fees in general—when we see a 75 per cent increase in tuition fees over the next five years in Quebec—that’s extremely dangerous for students not only in Quebec, but across the country, to set a precedent like that… Tuition fees are one of the common struggles students have, not only between Quebec and Ontario, but across the country and across the world as well.”
A number of unions from Ontario expressed solidarity with the student strike, stating that, “We stand in solidarity with the student strikers and the professors, campus workers and community members who have supported this movement. Students in Quebec are fighting against the commercialization of education and user pay through tuition increases that create massive barriers to access and student debt that profits the banks while haunting students for years after graduation.”
On April 26, roughly 50 peaceful protesters assembled in downtown Toronto, with riot police assembled nearby, demonstrating in support of the Québec student strike. A progressive think tank, the Centre for Social Justice, had called for the Toronto protest, issuing a press release stating: “Join us for a rally in front of Québec’s Office in Toronto in solidarity with the ongoing student strike. On this occasion, we will be delivering a petition to be sent to the Premier’s office in Québec. With this action, we also want to contribute to bringing this great movement’s democratic and combative spirit to Ontario.” Students, while fighting against tuition hikes around the world, continue to express solidarity with Québec’s strike, including signs of solidarity appearing at a protest against tuition hikes in Taipei, Taiwan, as well as small protests in Paris and Brussels specifically assembled to show solidarity with Québec students.
Québec is not the only place where there is a massive student movement developing into a wider social movement. In fact, Chile saw the start of its massive nation-wide student protest movement in May of 2011, roughly one year ago. The movement began as a student protest and evolved into a wider social movement with demonstrations drawing hundreds of thousands of Chileans, often met with the state apparatus of repression, remnants from Chile’s military dictatorship put in power by the CIA in 1973. The student movement has continued into the new year, and on April 25, the same day that large protests erupted in Montréal, Santagio had a protests which drew tens of thousands of students into the streets (between 25-50,000), rejecting the government’s proposed reforms as “too little.” Student leader Gabriel Boric declared, “We will carry on making history… We students will not give up the fight to make education a public right.” Roughly ten days prior to the protests, Canadian Prime Minister Stephen Harper visited Chile seeking to extend “free-trade” agreements for the benefit of multinational corporations. Canada already has the largest investment in Chile’s mining industry. Reportedly, the massive student movement in Chile was not under discussion between Harper and Chilean President Pinera.
So in Québec, the premier is dismissing the students and subsidizing the mining corporations. In Chile, the Canadian Prime Minister is ignoring student movements in both Canada and Chile while seeking to better secure Canadian mining interests. Thus, in the provincial, national, and international arena, Canadian politicians continually seek to protect, support, and expand the interests of multinational corporations while simultaneously undermining, ignoring, dismissing, and repressing massive student movements demanding social, political, and economic justice. This is not merely a Canadian issue, but a global one, making what is happening in Québec all the more relevant in attempting to bring about a ‘Maple Spring.’ Informal acts of solidarity and formal associations and relationships should be established between the two student movements in Québec and Chile so as to further empower and support those around the world who are partaking in a similar struggle.
What the Students are Saying
I had the chance to interview students and youth taking part in the strike and protests here in Québec. While the mainstream media inundates readers with quotes and concerns of the minority of students who do not support the strike, thus giving a very slanted perspective of the events taking place, I felt it was important to provide statements and perspectives from students who do support and have been taking part in the strike. I asked the students to tell me about their experiences, perspectives, and hopes for the strike and student movement, and what their message to the rest of Canada would be, in light of the poor information being given through the media.
Karine G. from Québec City said that her message to the rest of Canada was that, “Québec is not Canada. Our education system, like other specificities in our society, reflects our difference and our values. We are not complaining, simply trying to defend who we are and how we think it should be reflected through our institutions. Democracy supposes that citizens are free to invest in what they value the most; we think education should be a priority.” She added, “No matter what people try to justify with numbers, raising tuition fees is an ideological decision. Even though the Liberals are trying to make us believe – ‘There is no other alternative’ – we are not fools.” She expressed a great deal of frustration in getting others to understand what democracy and strikes actually represent and consist of, and finds a great deal of “ignorance and individualism” as well as apathy among others who criticize or oppose the strike.
Mathieu Lapointe Deraiche from Montréal stated that while the strike began in opposition to the tuition hikes, “I think after 11 weeks of strike, in the middle of one of the greatest student movements in the history” of the province, in both numbers and duration, “the hike of fees is now only a detail.” He added, “It is now a social crisis that [has] revealed an important generational gap (not to say ‘war’) between Quebec’s youth and the children of the ‘Trentes Glorieuses,” referring to the “30 Glorious Years” of growth following World War II, ending in the 1970s. He explained that the “social crisis” has “called into question the role of the police and the media,” such as TVA, the Journal de Montréal, and the Gazette. Referring to it as a “socio-political war between the youth and the government,” Mathieu explained that it has now reached the point where he “couldn’t be satisfied with a cancellation of the fees,” as his “actual disgust towards [the] government… transcends a financial issue.”
Freezing the ‘Spring’: State Repression of the Strike
Andrée Bourbeau, a member of the legal committee for C.L.A.S.S.E., is responsible for organizing funds to pay for the legal defense of those who are arrested at the protests (whether or not they are students), by disputing the tickets and fines which are dispersed to protesters by the police for taking part in the demonstrations. The mass arrests are done through the use of such tickets, using two Québec laws in particular to repress the student protests, which C.L.A.S.S.E. maintains – and rightly so – as being unconstitutional. For example, article 500.1 of du Code de sécurité routière (Québec law) is “unconstitutional,” explained Bourbeau, “because it prohibits any demonstration.” The article states that, “No person may, during a concerted action intended to obstruct in any way vehicular traffic on a public highway, occupy the roadway, shoulder or any other part of the right of way of or approaches to the highway or place a vehicle or obstacle thereon so as to obstruct vehicular traffic on the highway or access to such a highway.” In short, the very notion of a street protest is declared “unlawful” by Québec, which is a very violation of the right to assemble, the right to free speech and movement. Thus, it is unconstitutional. This article has led to the repression of every demonstration in Québec City, where more than 300 people have received $500 fines under this law. If any of those individuals take part in another protest, and receive another fine, the amount increases to between $3,500 and $10,500. Bourbeau told me, “this is outrageous because this is purely political repression of the student movement in Quebec City.” From the beginning of April, demonstrations have been declared illegal by the police, who threaten students that they will be fined if they take part, even if the demonstrations are peaceful, and of course the vast majority of them are.
It’s a stark reminder of the reality of how the student movement is presented in the media that with over 160 protests – with an average of 2-3 per day across the province – the rest of Canada only hears about the few protests that turned violent. Yet, for the nearly 200 protests that have taken place thus far, they are consistently met with a large police presence, fines, police brutality, and other forms of state coercion and repression. But it is the incidents of bank windows being smashed which the rest of Canada hears about. In Montréal, protests are repressed by the police through a bylaw which forbids assemblies that “breach the peace.” Bourbeau explained, “this is so broad it covers every kind of demonstration.” Thus, at each demonstration, the police arrest students and other protesters simply for being present. When some protesters react with violence or vandalism, this is referred to in the media and by the government as a “riot.”
For example, an article in the National Post written by David Frum was entitled, “David Frum on the Quebec student riots.” The first line in the article wrote, “The rioting students of Quebec got scant sympathy even before they started smashing windows and detonating smoke bombs.” He later referred to the student protesters as “a radical fringe,” who do not “deserve any sympathy.” He added: “And besides, they are part of the problem: a richer-than-average tranche of their own cohort demanding support from the taxes of less affluent people.” David Frum, it should be noted, is a Canadian-American “journalist” who was previously a speechwriter for U.S. President George W. Bush, an ardent neoconservative, and was one of the loudest voices calling for the war on Iraq. Frum was also responsible for coining the phrase “axis of evil,” which George Bush first used in a speech from 2002. Hard to imagine that Québec would get fair coverage from the likes of Frum.
The use of bylaws and other unconstitutional ‘articles’ are – explained Bourbeau – aimed at “trying to demobilize the students, to make us fear going out to demonstrations and organize.” Of particular concern for protesters and organizers, she said, was the recently created police “GAMMA squad” in Montréal. In January of 2011, the GAMMA (Guet des activités et des mouvements marginaux et anarchists) squad was created as a special unit of the Montréal police, specifically designed to monitor anarchists and other “marginal political groups.” In short, it is a political policing unit, designed to engage in repression of ideological opposition to the state. These types of “squads” are typical in fascist and authoritarian countries around the world, but it’s new to Montréal. While protest organizers are very concerned about this squad, they have remained virtually out of the national media (though there is some discussion of them in the French media), so very few are even aware of their existence.
In July of 2011, C.L.A.S.S.E. filed human rights complaints against the GAMMA squad after an “unprecedented” wave of arrests, when four members of the student group, three of whom were executives, were arrested as they were preparing to organize a campaign against the tuition hikes. The stated reason for the arrests was for the organizers participating in having organized protests the previous March which resulted in a small injury of a staff member of Québec Finance Minister Bouchard’s office. A CLASSE spokesperson stated that the aim of the arrests was to “break the back” of the student movement before it even began to mobilize. CLASSE is neither an “anarchist” nor a “marginal” organization (due to it being the largest representation of the student movement), which is not to say that monitoring anarchist and other “marginal” groups (however the State defines that) is acceptable, because it is not. The “evidence” against the student organizers was largely provided by an informant for the GAMMA squad. CLASSE spokesperson Gabriel Nadeau-Dubois stated, “There is no doubt about the political nature of these arrests… This is clearly an attempt by the [Montreal police] to decapitate the Quebec student movement on the eve of one of its historical struggles.”
Alexandre Popovic, a spokesperson for the Coalition against repression and police brutality, explained that the GAMMA squad represents “police use of social stereotyping to hinder the legal expression of opposition to social and legal policies.” He stated, “It’s ridiculous… They have a stereotypical cartoon image of anarchists,” adding that while anarchists believe in opposing authority (which is a good thing!), they also have families, host book fairs, and engage in intellectual discussions. Referring to the complaints filed against GAMMA to the Québec Human Rights Commission, Popovic stated: “The commission needs to remind the police that we are not in a police state. We have the right to disagree and even have thoughts they might not like.” CLASSE spokesperson Nadeau-Dubois explained, “This squad is really a new kind of political police to fight against social movements.” The GAMMA unit is a branch of the Montréal Police Force’s Organized Crime Unit, which “uses tactics developed to monitor mafia and street gangs in order to keep tabs on political activists.”
Though apparently they don’t do a very good job of handling the Montréal mafia, since the city government they work for has been handing out public contracts to the mafia, who have connections to political parties and the construction industry as well. Back in 2009, a former city government opposition leader, Benoit Labonte, facing corruption charges, stated that the Montréal mafia controls roughly 80% of City Hall, telling Radio-Canada, “Is there a Mafia system that controls city hall? The response is yes.” Mafia-connected construction executives have been involved in election campaigns in municipalities all across the city of Montréal and elsewhere, and have thereafter been awarded with lucrative public contracts. Arrests were made on anti-corruption charges in Montréal in late April, and among the 14 suspects arrested, two of them were Liberal Party organizers, putting Jean Charest’s government further on the offensive. One of those Liberal Party organizers was personally given an award by Jean Charest at a Liberal Party meeting in 2010. Back in September of 2010, Jean Charest’s Québec government was declared by Maclean’s Magazine to be “the most corrupt province” in Canada. Marc Bellemare, the province’s former Justice Minister in the Charest government, spoke out about the rife corruption, favouritism, collusion and graft, with Charest granting Liberal Party fundraisers a say in the appointments of judges, not to mention his government’s deep connections to the overtly-corrupt construction industry. Interestingly, “it costs Quebec taxpayers roughly 30 per cent more to build a stretch of road than anywhere else in the country.” So if Québec really is concerned with “balancing the budget,” perhaps the government – and the police, for that matter – should start with ending corruption in the governments itself (as if that were even possible!). It seems that the government is more interested in supporting organized crime than organized students.
I do not mean to paint Charest as a pawn of the mafia, since he always has been and always will be far more beholden to elite financial and economic interests, specifically that of the powerful Desmarais family (Canada’s equivalent of the Rockefeller family), with its patriarch Paul Desmarais Sr, who treats Charest like a little poodle, and who has established close connections with every Canadian Prime Minister since the 1970s, and all but two of Québec’s premiers in the same amount of time. As one reporter with the Globe and Mail explained, “Desmarais has been personally consulted by prime ministers on every major federal economic and constitutional initiative since the 1970s. Most of the time, they’ve taken his advice.” It was also reported that, “[o]ver the last several years, [Paul Desmarais Sr.] has spun his web to such an extent that it now enables him to call the shots,” especially in promoting his right-wing economic vision, with “a disproportionate influence on politics and the economy in Quebec and Canada.” In particular, Desmarais “has a lot of influence on Premier Jean Charest.” Quebec writer Robin Philpot wrote that when Paul Desmarais received the French Légion d’honneur (Legion of Honour) from French President Nicolas Sarkozy, Jean Charest was in attendance, of which Philpot stated, “He took him along like a poodle.” Philpot added, “It’s a very unhealthy situation for a government to be indebted to a businessman that has his own interest at heart. They get their hands tied.”
And now Charest is attempting to ensure that future generations of students are themselves beholden to the same interests he is: the bankers and corporations, the political-economic and financial elite who dominate the province and the country.
The Students ‘Spring’ Forward
Following Charest’s announcement of a new “seven-year” program for the tuition hikes (with even more tuition costs added on!), students took to the streets in another night of major protests in Montreal. Student leaders rejected the absurd proposal, declaring, “It’s not an offer, it’s an insult.” When some students in the protest occupied an intersection and sat down in the street, the police responded with tear gas. Then, after two hours of peaceful protest (apart from police aggression and a few projectiles thrown at police in response), the police declared the demonstration to be “illegal” and began arresting people.
In late April, in the eleventh week of the strike, international media have finally taken notice, as the student movement is making its way into the headlines of CNN, the BBC, and Al-Jazeera. Martine Desjardins, president of the Fédération étudiante universitaire du Québec (FEUQ), one of the main student groups, commented that, “I think we’ve seen that no matter how far reaching the movement is, Charest just isn’t listening… After months of taking to the streets, it’s encouraging and surprising to see the struggle catching on like this. It’s been tiring for students to have to keep marching and striking but this gives us new hope moving forward.” However, despite the general perception of the protests, both student leaders and the police themselves admit that the vast majority of those assembled do so peacefully. Constable Yannick Ouimet of the Montreal Police said, “We know that 99 per cent of the people who show up to protest want to do so peacefully… What we’re seeing now is that the peaceful protesters and their leaders are helping police identify criminals so that they can be removed from the crowd.” Desjardins reflected on the latest “proposal” from Charest, calling it “a smokescreen.” He explained: “the offer was never mentioned when we set down to negotiate with the government. Instead, it was sent above students’ heads as an attempt to win over the general public.” While the media continues to repeat the falling support for the students among the general public – figures which are attributed to the violence – Desjardins felt it noteworthy to point out, “We’re seeing small openings and we’re seeing our support base broadening. It’s not just students out there, it’s parents, teachers, trade unions and different social groups. We don’t want to have gone through all of this and to go back to school empty handed.”
Québec students are increasingly frustrated with the government response to the strike. At a protest in late April, a number of students gave their complaints to the media. “I don’t think there is any class of society that would like to be ignored for three months,” one student explained. She added, “Now, all of a sudden, people realize something is going on because some windows were broken.” Another student, and mother of two, Aurélie Pedron, raised the issue of agent provocateurs being used to demonize the students: “When there are vandals on bicycles, with rocks so huge that you could not find them on Ste. Catherine Street [where the protest was taking place], when it’s a bookstore whose window is smashed, do you really think it is students who do that?.. Don’t take us for idiots.” Another student explained that, “the government approach is to present us as a bunch of vandals.” One political science student explained, “this has become more than a student fight, it is a fight against the government and the state.” Another student at the protest agreed: “The issue is bigger than tuition fees. It is a question of re-establishing democracy. There is no democracy. We are closer to totalitarianism. Decisions are made without listening to the people.” Gabriel Nadeau-Dubois, the spokesperson for CLASSE, elaborated on the increased scope and vision of the struggle of students: “Those people are a single elite, a greedy elite, a corrupt elite, a vulgar elite, an elite that only sees education as an investment in human capital, that only sees a tree as a piece of paper and only sees a child as a future employee.” Thus, he explained, the student strike would be “a springboard to a much wider, much deeper, much more radical challenge of the direction Quebec has been heading in recent years.”
Andrée Bourbeau of CLASSE told me that, “if Quebec is the province that has the lowest tuition fees and the best system of bursaries, it’s because we fought since the 1960s through organized actions and strikes,” with the current 2012 strike being the ninth one, and the largest of its kind, with the longest duration. She added, in regards to the methods of the student organizations, that, “we have practiced direct democracy through our student general assemblies for several decades now,” and that it is through this ‘direct democracy’ approach that decisions of the students are made before approaching the government. When the government ignores and dismisses the demands of the students, it is through the direct democracy approach of syndicalisme de combat that the students decide to target – through civil disobedience and peaceful assembly – the economy itself. “Transparency is very important,” explained Bourbeau, “Acting with syndicalisme de combat means that we mobilize people, we organize demonstrations and actions. The movement is its members, not an enlightened elite.” I asked her what her message to the rest of Canada was, to which she replied:
I wait for Canadian students to start struggling for their rights, for free tuition and self-governed universities. I don’t think Quebec has to be different than the other provinces in regards to social programs and public services. [I speak] in solidarity with the people of Canada!
The “political police” and its corrupt and elite-beholden government sponsor continues to repress dissent, demonize an emerging social movement, prevent the expression of basic – constitutionally guaranteed – rights and liberties of hundreds of thousands of youth and activists across the province. The government of Québec is attempting to turn a potential ‘Maple Spring’ into a ‘Hopeless Winter.’ But as we here in Montréal can see and feel, winter is on its way out, the temperature is getting warmer, the sun is starting to shine more and more, and spring is sprouting!
Message from Canada’s Youth: We Refuse to be a Lost Generation!
The argument that Québec students are “whining and crying” about “entitlements” is not only wrong, but deeply immoral. What Québec students are doing is finally standing up and saying, ‘No More!’ What Québec students are doing is not a misguided attempt to preserve “entitlements,” but to try to ensure for ourselves a future, a future which is being – year-by-year – stolen from us. My generation of Canadians – and for that matter youth all over the world – are shackled with more debts than any before us, with less job opportunities, with more poverty, and with the burden of beginning our lives under a system which has consistently favoured the rich few at the expense of the rest. We are told to go to school and get a good job. So we go to school, get deep into debt, and graduate into a market with few jobs. With professional degrees, we go work at Starbucks, so that we may pay the interest on our student debts, or the interest on our credit card debts, struggling to pay our monthly rent, or living at home for much longer than any generation before us because we simply can’t afford to move out. Rents are going up, and housing prices are sky-high in an absurd bubble waiting to burst. So then we are told that if we want “a future,” we have to buy property. None of us can afford a $500,000 condominium in Vancouver or Toronto, so we are told: get a mortgage, it’s the “smart” thing to do. So we get a mortgage, because our parents, our banks, and our government said: “It’s the smart thing to do.” And when this absurd housing bubble pops, our interest payments on our mortgages will skyrocket, and our student debts will skyrocket, and our credit card interest payments will skyrocket, and we won’t even be able to keep up with the increasing costs of food.
We are doomed to poverty before we even have a chance at possibility. We were raised with expectations of a life we could have. For those of us who grew up middle class, like myself, we grew up in a world built on a mirage of debt. The average Canadian household today spends 150% of its income, so that for every $1 they make, they owe $1.50. The average Canadian household is $103,000 in debt, largely due to mortgages, but also as a result of credit card debt, student debt, and other loans. Canada’s big five banks help provide the mortgages, the student debt, tell us to get credit cards, and through the Bank of Canada (our central bank), keep the interest rates low so as to encourage people to get more loans and go deeper into debt. Everyone is told to get an RRSP because “it’s the smart thing to do.” So we save what money we can, and put it into an RRSP account. Yet, if we want to spend that money, we have to do so on property. If we take out the money for anything other than a house or condo (which would still require us to get a mortgage to cover the full expense), then we lose a huge percentage of the money within the account. I took a class in high school where the teacher explained to all the compliant young students that investing your money in an RRSP is “the smart thing to do.”
So now our parents are struggling to pay their rent, meet their interest payments, or even pay for food. They work several jobs, and still we struggle, day-to-day and week-to-week. Our parents see us – their children – also struggling, falling behind and not meeting the social expectations that were set for us: when to move out, when to get an apartment, when to go to school and graduate, when to get a job, when to get a house, when to get married, when to have kids, etc. So our parents, naturally, want the best for us, want us to have what they tried for but are now struggling to even maintain as an illusion. So they tell us: get a student loan to go to school and get a good job, get a credit card, get a mortgage to buy a house. They encourage us to follow their path, when where they currently stand is already dangerously close to the cliff’s edge. Our path, then, is much rougher, much more dangerous, and all the more illusory than theirs. They see only their own children, and want the best. But we, their children, see each other: we see our friends, co-workers, fellow students and compatriots; we see our entire generation and how we all struggle. Our parents see the individual struggles of their own kids. We see and feel the collective struggle of a generation. We did what we were told, and now we are left with massive debt and no jobs, higher rents and fewer hopes. We did what we were told, year after year, because, as they say, “It’s the smart thing to do.” We did everything we were told to “get ahead,” and now we are being left behind.
So what the students in Québec are doing is simply trying to catch up, is simply speaking up and saying that we don’t want to be a “lost generation,” doomed to debt bondage. And now that we – finally! – are awakening to our situation and taking action, we are derided and dismissed, insulted and ‘dissed’, spat on and chastised, beaten with batons, bombed with tear gas. We are told, now, that we are “crying and whining,” that we are spoiled children, demanding “entitlements” and subsidies. We aren’t asking for a free ride through life, all we are wanting… is the chance to have a life.
The future is the world that we are inheriting, and before we can even enter the future, it’s being stolen from us. We are disciplined under heavy debts and higher costs before we have the chance to even reach a true sense of autonomy and independence. We are indebted before we even move out of our homes, before we get our first job. And then we are told we are spoiled and entitled!
It’s time for older generations to move aside, to stop telling us what it is we should want, how we should get it, and then deride us for not doing what they say. If we feel we are ‘entitled,’ it is because we were raised to feel that way. This is partly the fault of our parents’ generation, who have lived a life in debt, and who now instruct us to follow them into the abyss, and dismiss us when we say we want to chart our own course. Well now it’s time for them to move aside. They tried, in the 1960s and early 70s, to civilize society and make a better world – something we are now told is not worth aspiring to – and indeed, achievements were made, but it was stopped short. The elites of our society saw the emergence of social democratization and struggles for liberation and put a finish to it. The system they constructed to strangle the struggle for liberation is what we call “neoliberalism” and debt-domination.
Now, all around the world, from North Africa, to Latin America, East Asia, Europe and right here in Québec, the youth are finally standing up against this ruthless global system of exploitation, militarism, racism, and domination. What the students in Québec are doing is joining the global struggle as it emerges around the world, and setting an example for the rest of Canada and North America, who have so far been lagging far behind. We are not preserving entitlement; we are seeking empowerment. If our parents failed to do it, it is left to us. So, for those in previous generations who only want “the best” for their children, it is time to stop telling us to follow their examples, and time to start following ours. It is time to stand with and behind the youth, instead of out in front and above us. It is time to support us where we need it most. What the youth of the world are now saying is that we will welcome your support and encouragement, but if you get in our way, we will push you aside and leave you behind. So if you – like all people of this world should – desire a better world for your children, want to enter a more hopeful future, and create a more equal and fair society, it’s time to step up to the plate and stand behind the vanguard of the revolution: the youth!
Andrew Gavin Marshall is an independent researcher and writer based in Montreal, Canada, writing on a number of social, political, economic, and historical issues. He is also Project Manager of The People’s Book Project. He also hosts a weekly podcast show, “Empire, Power, and People,” on BoilingFrogsPost.com.
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 Vincent Larouche, “Des étudiants se disent persécutés par la police,” La Presse, 18 July 2011:
 Jacob Serebrin, “Student union’s human rights complaint against Montreal police,” Maclean’s On Campus, 20 July 2011:
 Max Harrold, “Montreal police unit to monitor anarchists,” The Gazette, 14 July 2011:
 Christian Macdonald, “Political policing in Montreal,” The Dominion, 9 November 2011:
 CBC, “RCMP challenges Quebec request for Mafia evidence,” CBC News, 18 April 2012:
 CTV, “Mafia ties run deep at city hall: Labonte,” CTV Montreal, 22 October 2009:
 Linda Gyulai, “Quebec collusion squad casts a very wide net,” Postmedia News, 18 April 2012:
 Brian Daly, “Two Que. Liberal organizers among corruption suspects,” The Toronto Sun, 19 April 2012:
 Martin Patriquin, “Quebec: The most corrupt province,” Maclean’s, 24 September 2010:
 Konrad Yakabuski, Like Father, like sons?, The Globe and Mail, 26 March 2006:
 Marianne White, “Author delivers high-voltage critique of Paul Desmarais Sr. — the man behind Power Corp,” Ottawa Citizen, 21 October 2008:
 Christopher Curtis, Roberto Rocha and Max Harrold, “Jean Charest’s new education offer results in huge night of protests,” The National Post, 28 April 2012:
 Christopher Curtis, “Quebec student strike makes international news, but “Charest just isn’t listening”,” The Montreal Gazette, 28 April 2012:
 Graeme Hamilton, “Quebec student protests not just about tuition but battle against ‘greedy elites’,” National Post, 28 April 2012:
Canada’s Economic Collapse and Social Crisis: Class War and the College Crisis, Part 5
By: Andrew Gavin Marshall
What are the Spending Priorities of the Government?
In the debate raging over increased costs of tuition in Quebec, increased debt loads of the federal and provincial governments, the need to reduce costs – impose “fiscal austerity” – and find “solutions” to these problems, very little context is given. As students fight back against increased fees, the counter argument simply states that people must pay for their education, that governments must reduce their deficits, and therefore, cuts in spending and increases in tuition are necessary, though undesirable. But how necessary are they? Where is the government putting its money?
The question really comes down to one of priorities and approach. What are the spending priorities of the government, for people in need or for the benefit of the rich? What is the government’s approach to spending in terms of addressing a major social and economic crisis, to treat symptoms or address the cause? A great deal is revealed about the moral, ethical and humanitarian considerations of a state in terms of how and where it spends its money. Canada is no exception.
First, let’s start with Canada’s debt. In October of 2011, it was reported that Canada’s combined federal and provincial debt equaled roughly $1.1 trillion. This raised calls from the business community in Canada stating that, “It’s time for governments across Canada to get more serious about controlling and reducing debt.” In other words: time for fiscal austerity! (i.e., cutting social spending and increasing costs and taxes) This debt load amounts to roughly 58% of government GDP (that is, 58% of yearly tax revenues), as opposed to Greece, with a debt-to-GDP ratio of 160%.
An interesting issue to note is that the Bank of Canada (Canada’s central bank) was created in 1934 as a private bank, and it was transformed into a government-owned bank in 1938, and was then able to lend to the government without interest, and thus, “the Bank is ultimately owned by the people of Canada.” The job of the Bank is to manage monetary policy, by issuing the currency and setting interest rates. Canada had a unique central bank, as most other central banks were founded and maintained as private banks (responsible to private shareholders), such as the Bank of England (1694), the Bank of France (1801), and the Federal Reserve Bank of the United States (1913). It was responsible for financing Canada’s war machine during World War II, railways, the St. Lawrence seaway, the TransCanada Highway, schools, hospitals, healthcare, pensions, and social security, all with no interest attached. Between 1940 and 1974, Canada had a national debt below $18 billion. In 1974, all of this changed as Canada sunk into its neoliberal abyss, when private banks (the “big five” in Canada) essentially took over the function of lending to the government, and at high interest rates, with Canada paying over $61 billion per year on interest to private banks alone. Between 1981 and 1995, the Canadian government collected $619 billion in income tax, but because the debt was owed to private banks, instead of being interest-free with the Bank of Canada, during that same period of time, the Canadian government paid the private banks $428 billion in interest payments.
Interest payments on Canada’s debt account for roughly 15% of Canada’s revenues. Statistics Canada provides information up until 2009 on the Canadian government’s expenditures and revenues. In 2009, the federal government’s expenditures amounted to $243 billion, with $26 billion spent on health care, $88 billion on social services, $5.8 billion on education, and $18.6 billion on debt charges.
So, while cuts are being made to social programs and education (fiscal austerity), they are increasing dramatically to the military, defense, and police. In 2000, Canada spent $10 billion on defense, and that rose to $21.8 billion in 2011. In 2008, Canada’s Conservative government set out a plan to increase defense spending over the following 20 years, setting the goal at $490 billion in total defense spending over that period. Included in the plans are the purchase of 65 F-35 fighter jets from Lockheed Martin, the American war profiteering corporation, to a possible dollar amount of $30 billion or more. So there is money for the war machine, to support an increasingly imperialistic foreign policy, and as the ever-present appendage lap-dog to the American Empire to the south.
And since Canada has its lowest crime rate since the 1970s, naturally the ever-pragmatic Conservative government is seeking to rapidly accelerate the construction of prisons and expansion of police forces. The government’s proposed changes to the criminal system seek to “create a flood of Canadians into the prison system.” The government identified prisons, police, and the purposely-Orwellian classification of “public safety” as the biggest winners in increased budget allocations for 2011, seeking to build more prisons and hire hundreds more police officers. At the same time, the government is slashing benefits to seniors and old-age pensioners. According to the Parliamentary Budget Office, prison costs are expected to rise from $4.4 billion in 2011 to $9.5 billion in 2015-16. When the Conservatives came to power in 2006, prison costs amounted to $1.6 billion per year. So while the government spends billions on corporate tax cuts, fighter jets, police and prisons, it is simultaneously planning on cutting spending for old age pensioners and social security programs.
As the government cuts between 11-22,000 federal public sector jobs, the Canadian Forces (military), RCMP (police), and the overall ‘national security’ establishment will not suffer such cuts, and in fact, will gain employees. Ultimately, under the plans of the Conservative government, between 60,000 and 70,000 jobs could vanish across the country to implement $8 billion in spending cuts.
While spending on health care exceeded $200 billion in 2011, it amounted to $5,800 per person in Canada. While this system – of what is often called ‘socialized healthcare’ – is portrayed by Americans as costly and wasteful, it is far cheaper than the American corporatized – or privatized – health “care” system. The average spending on health care for OECD countries – as a percentage of GDP – is 9.5%: Canada spent 11.4% of its GDP on healthcare in 2009, compared to the United States, which spent 17.4% of its GDP on healthcare; with the Netherlands spending at 12% of GDP, France at 11.8% and Germany at 11.6%. In terms of spending per capita (that is, the cost of healthcare spread out evenly to each individual within the country), Canada spends $4,363 (U.S. dollars) per person on healthcare, with the OECD average at $3,223, and compared to the United States at $7,960 per capita. The irony here, of course, is that a for-profit health system is far more costly than a ‘socialized’ healthcare system, despite the common claims to the contrary.
So naturally, the Federal Government, in the midst of – and on the precipice of a far greater – economic crisis, decides that the best courses of action are to increase unemployment by firing tens of thousands of people, reduce social spending so that they are left with less support in their newfound poverty, and continue to privatize everything. Of course, this inevitably leads to social unrest, protests, even rebellion. Quebec is a great example, as it seems that the anti-tuition strikes and protests are getting more dramatic with each passing week. As the reality of our situation settles in over the course of the next year and years, the protests and resistance will exacerbate and grow nation-wide (along with the development of similar movements around the world). Thus, we may properly understand the impetus of the government to increase spending on police, the military, “public safety” (national security/police state) and prisons: as typical state responses to social crises, throw money at the systems, structures and institutions of oppression so that when the people begin to rise up, the state may have the force available to push them down, oppress them, and imprison them.
The Government of Quebec, which is doubling tuition costs over the next five years, has a current debt of $184 billion or 55.5% of GDP. Quebec’s current budget, released in March of 2012, projects spending of $70.9 billion, with 42.5% of the budget allocated to healthcare and social services, 22.5% on education and culture, 11.6% on debt servicing, 3.5% on families and seniors, and 19.9% on “other.” Total expenditures on education, leisure, and sports amount to less than $16 billion, with $1.3 billion being allocated to Quebec’s corporations, $5 billion going to manufacturing, while $8.2 billion of the budget is going to pay the interest on the debt. Meanwhile, the government was announcing major investments in mining, aiming to produce a surplus, with $1 billion in investments in mining and hydrocarbon industries, as part of Quebec’s ‘Plan Nord,’ The Plan includes the creation of Resources Québec, a new Crown corporation that will oversee a $1.2-billion equity portfolio, designed to “help develop the north and exploit the province’s abundant mineral resources.” The government, in turn, is expecting $4 billion in mining royalties over the next decade. The forestry, tourism, and agribusiness industries are also getting support from the government, creating partnerships between big business, government, and unions. Quebec provides a great deal of corporate welfare. In 2007, Quebec ranked first among Canadian provinces in how much corporate welfare was doled out, at $6 billion, followed by Ontario at $2.1 billion, Alberta at $1.2 billion, and British Columbia at over $1 billion. So, there’s no more money for education, but there’s plenty of money to throw at multi-billion dollar corporations.
For all the screaming and wailing governments engage in over the costs of social programs and benefits for the public, there’s very little discussion over the expenditures of governments which go to corporations, not to mention, tax cuts. Beginning in 2000, under Prime Minister Jean Chrétien, the Canadian federal government began implementing massive corporate tax cuts, which “allowed Canadian companies to amass some $477 billion in cash reserves,” with corporate taxes going from 28% in 2000, to 21% when the Conservatives came to power in 2006, to 15% at the beginning of 2012. While the tax cuts were supposedly to encourage job creation, in reality, the cuts “allowed companies to hoard cash, pay out larger dividends to shareholders and beef up executive salaries.” For each percentage point in a decrease of corporate taxes, the federal government loses $2 billion in potential revenue. Thus, the total loss from the new tax cuts amounts to $26 billion. A report from the Canadian Labour Congress explained, “The government has been borrowing money to pay for its corporate tax giveaways. Now, to pay for tax breaks, the government is planning to make massive cuts to public services, such as meat inspection, that are essential to Canadians.”
So while students, seniors, and the poor suffer, Canadian corporations are doing marvelously well. Reports from Statistics Canada show that Canadian corporations are “sitting on more than $583 billion in Canadian currency and deposits, and more than $276 billion in foreign currency.” The cash reserves of these companies have climbed 27.3% since 2007, back when Canada’s economy was “booming,” and 9% of the increase in reserves was since last year. Not including financial corporations and banks, Canadian companies saw their cash reserves increase by $33 billion in the last quarter of 2011. While Canadian household debt has doubled since 1990, corporate taxes have been cut almost in half in the same amount of time. Canadian provinces have been lowering corporate taxes as well. Back in 2000, Canada’s combined federal and provincial corporate tax rate was the highest of the OECD countries, at 43%. Today, it’s around the world average of 26%. So while Canadian corporations sit on hundreds of billions of unused dollars, the Canadian government is continuing to give them more money to put in their bank accounts, which then reduces the government budget by billions each year, and the Canadian people are then expected to pay for this corporate welfare through reduced social services, loss of public sector jobs, increased tuition costs and increased debt.
Corporate welfare is dolled out by provincial governments as well. In 2011, the Province of Quebec and Quebec City each provided $200 million to build a new hockey arena for a for-profit hockey team. Ontario is also a corporate welfare haven, as between 2003 and 2005, the province gave $422 million to GM, Ford, Toyota and Chrysler, and in 2009, the province participated in a Canada-Ontario $15.3 billion bailout of GM and Chrysler. The last year that government statistics are available, in 2008, Ontario spent $2.7 billion on corporate welfare, while Quebec spent $6 billion. Between 1991 and 2009, the government of Ontario gave $27.7 billion in tax dollars to corporations. Meanwhile, the Government of Quebec increased taxes in 2010, and the provincial sales tax increased by 2% since then, along with an increased gas tax, and of course, tuition increases.
This system is, by definition, corporatist. A corporatist system (alternatively referred to as “corporate socialism” or “economic fascism”) is one in which profit is privatized and risk is socialized. In other words, the state ensures that corporations profit and become more powerful and dominant, while the people have to foot the bill and suffer for it. As Benito Mussolini reportedly stated, “Fascism should more appropriately be called corporatism, for it is the merger of state and corporate power.” It is no surprise then, that as the state becomes more supportive to the suckling-pig-like-corporate cancers of our society, they also become more oppressive and totalitarian. The very circumstances demand it.
The Big Five Banks Declare War on the People
In early March of 2012, it was reported that Canada’s big five banks (Royal Bank, CIBC, TD, Scotiabank, Bank of Montreal) have recorded “sky-high profits” of $7 billion in the first quarter alone (from November 2011 to January 2012), an average increase of 5.8% since last year. Much of the profits, especially for CIBC, “were mostly due to higher volumes of personal and commercial loans,” or, in other words: debt for people and corporations. Canadian banks are, on the whole, doing better than ever. They are consistently rated as the “world’s soundest” banks by the World Economic Forum, and are even adding some jobs, while U.S. banks cut theirs.
A recent report released by CIBC stated that corporate Canada is as “fit as a fiddle,” as “a health check on Canada’s corporate sector shows businesses across the country passing with flying colours.” In fact, according to economists from CIBC, Canada’s corporate sector has never been better. The major indices of corporate ‘health’ are: “debt-to-equity ratios, cash to credit ratios, profit margins, returns on equity, returns on capital.” The economists concluded that, “even with public sector retrenchment under way, and indications that consumers may not have the same appetite to spend as earlier in the recovery, corporate Canada could be positioned to pick up the mantle and drive economic growth in the years ahead.” So naturally while Canada’s corporations are as “fit as a fiddle” and the public at large is dominated by debt, the government – both federal and provincial – seek to extend more benefits to corporations (tax cuts and state subsidies), while extending hardships to the majority of Canadians (increased taxes, reduced social spending, increased costs). Again, it’s about priorities.
The banking sector in Canada itself is becoming two-tiered, where the big five banks are vacating the inner cities, and so-called “fringe banks” are becoming the choice banks for poor and low-income Canadians. Professor Jerry Buckland wrote that, “There is something ethically troublesome about a situation where low-income people are paying high fees for low-quality services and middle-income people are paying low fees for high-quality services.” Unexpected fees, bad banking hours, lack of ID, and other constraints have pushed lower income groups away from the big five and toward the ‘fringe banks’ which also charge big fees but are more accessible. However, the combination of the big five leaving the inner cities and the fringe banks charging high fees and interest rates, “exacerbate poverty and create a two-tiered banking system.”
Canada’s big five banks are rolling in money. CIBC reported $835 million in profits for the first quarter, up 9.4% from last year; Royal Bank reported first quarter profits of $1.86 billion; TD Bank had profits of $1.48 billion; Scotiabank had first quarter profits of $1.44 billion, a 15.2% increase from last year; and the Bank of Montreal recorded profits of $1.11 billion, up 34.5% from last year.
So why are Canada’s banks doing so well? It’s simple: because people are in debt, and getting deeper into debt. As the Globe and Mail reported, “Mortgages and credit card spending have fuelled bank profits for years.” So now what? Well, Royal Bank of Canada and TD both announced in March of 2012 that they will begin to increase their interest rates on mortgages, which means that they are seeking to further sap the wealth and deflate the future potential of the average Canadian household. But the increase in interest rates will increase bank profits, so it’s a good thing for Royal Bank and TD, never mind that it’s bad for everyone else. The other major Canadian banks will likely follow suit in raising their interest rates. The chief economist at TD Bank estimated that, “more than one million Canadian households, or about 10 per cent of those that currently have debt, will have to devote 40 per cent or more of their income to making their monthly debt payments if rates rise by two-to-three points to more normal levels.”
A Bubble Waiting to Burst?
So what is the Canadian mortgage and housing market doing? Well, it’s replicating the disaster seen in the United States just prior to the 2008 crash. Canada’s banking regulator, the Office of the Superintendent of Financial Institutions warned that Canadian banks were offering mortgages very similar to the U.S. subprime loans and that these pose an “emerging risk” to Canadian banks. Now the regulator didn’t just come out and say this, because that might be helpful. Instead, this information was released to Bloomberg news via a Freedom of Information law request, which revealed that Canadian mortgages “have some similarities to non-prime loans in the U.S. retail lending market.” In 2009, Canada’s housing market began to soar with record-low interest rates on mortgages. This is one of the primary reasons why Bank of Canada governor (and former Goldman Sachs executive) Mark Carney warned that household debt is the greatest threat to Canada’s economic stability.
The state of the Canadian population is abysmal. The average debt for a Canadian household is over $100,000, and the average Canadian household spends 150% of their income. This means that for every $1,000 earned, $1,500 is owed. These debt figures are primarily made up of mortgages, but also student debt, credit card debt, and other lines of credit. A 2011 report indicated that, “17,400 households were behind in their mortgage payments by three or more months in 2010, up by 50 per cent since the recession began. Credit card delinquencies and bankruptcy rates also remain higher than before the recession.”
In March of 2012, the Bank of Canada warned that household debt “remains the biggest domestic risk” to Canada’s economy. While part of the Bank’s role is to set interest rates, it has kept interest rates very low (at 1%) in order to encourage lending (and indeed, families have become more indebted as a result). Yet, the Bank says, interest rates will have to rise eventually. Economists at Canada’s major banks (CIBC, RBC, BMO, TD, and ScotiaBank) naturally support such an inevitability, as one BMO economist stated, “while rates are unlikely to increase in the near term, the next move is more likely to be up rather than down, and could well emerge sooner than we currently anticipate.” The chief economist at CIBC stated that, “markets will pick up on the slightly improved change in tone on the economy, and might move forward the implied date for the first rate hike.” This translates into: the economy is doing well for the big banks, therefore they will demand higher interest rates on debts, and plunge the Canadian population into poverty; the “invisible hand of the free market” in action.
The Canadian housing market is in a major bubble, “with a run-up in prices, high ownership rates and overbuilding.” A majority of Canadian mortgages are financed through the Canada Mortgage and Housing Corporation (CMHC), the equivalent of Fannie Mae and Freddie Mac in the United States (which both went bust in the 2008 crash). The CMHC has an outstanding balance of $132 billion in mortgage-backed securities, $202 billion in Canada Mortgage Bonds, and last year issued a debt of $41.3 billion (compared to $6.5 billion in 2001). The big five banks generally provide the remaining mortgages (again, just like in the U.S.). A spokeswoman for the Canadian Bankers Association, however, reassured those who somehow still trust bankers that Canadian banks “carefully manage risk in their mortgage portfolios.” Home sales are increasing – another indication of the growing bubble – by 9.5% last year alone, while home prices increased by 7.2%. CIBC reported that Canadian homes are overvalued (that is, their prices are artificially inflated) by 10%, and the heads of the Bank of Montreal and Royal Bank both warned in late 2011 that, “condominium markets in Toronto and Vancouver are at risk of correction,” which is to say, a crash.
The problem is especially large in Vancouver, which was recently rated as the most expensive city to live in across North America, followed Los Angeles and New York. Vancouver is now the 37th most expensive city in the world, whereas just last year it was ranked as 72nd. The average price for a detached bungalow in Vancouver increased by 17% from the previous year to $1.02 million. The average cost of a condominium in Vancouver rose 5.1% to $513,500 and the “average priced home in Vancouver is now 11.2 times the average family income, a figure many economists call unsustainable.” In certain areas of Vancouver, such as Richmond, West Vancouver and the West End, housing prices have soared nearly 80% in the past five years, and 27% just in the past year alone. This has been raising fears of a housing bubble in Vancouver, and indeed it should be.
In January of 2012, Bank of Canada governor warned – in very subtle and vague terms – that Canada’s property market is “probably overvalued,” meaning that it is heavily overvalued. Canadian Finance Minister Jim Flaherty also hinted that something is rotten in the state of Denmark, stating, “We watch the housing market carefully and we are prepared to intervene if necessary.” So is it a bubble? Yes! In fact, the Bank of Nova Scotia recently reported that, “At 13 years and counting, Canada’s current housing boom is one of the longest-lasting in the world.” The price of Canadian homes has increased by over 85% since 1998, with a slight stagnant period in 2008, and then continued to rise in 2009, growing by a further 20%. It is no coincidence that household debt has increased as well, with the debt burden of Canadian families at 153% of their income, which is “almost as much debt as American households had at the peak of their bubble.” In fact, the Economist magazine estimated that the Canadian housing market is overvalued by more than 70% (which is to say, it’s probably much higher than that). One of the major American banks, Merrill Lynch, issued a report indicating that the Canadian housing market is rife with “overvaluation, speculation and over supply.” According to an international survey of housing affordability, Vancouver is the second-least affordable city in the world.
It seems that 2012 will be the year the housing market bubble begins to pop, with the economy slowing down, unemployment rising, and job creation has virtually stalled, according to CIBC, which explained that, “the job market is currently weaker than any non- recessionary period.” Canada is not alone, of course, as the United States and Ireland were just the beginning. It is expected that the U.K., Australia, Belgium, France, New Zealand, Spain, and Sweden are all set to follow suit. Within Canada, however, British Columbia and Ontario will be the most affected. But don’t worry, the Canadian banking sector will survive the pop, because it is actually the Canadian government which owns 75% of the mortgages, meaning that this will then pass to Canadian taxpayers, not the poor disadvantaged millionaire and billionaire bankers. Besides, the risk they have will probably be bailed out by our government. As our Finance Minister stated, “we are prepared to intervene if necessary,” which means that they will take all the bad debts of the banks, and then hand them to YOU.
An economist at the Bank of Montreal said not to worry, however, because Canada’s housing market isn’t a bubble, “it’s a balloon,” and therefore, she predicted, “Canada’s housing market is expected to deflate slowly rather than pop.” The argument, however, is one based upon faith: faith that the banks won’t increase interest rates by too much, faith that Canadian household debt won’t inflict as much harm as American household debt, and faith that one can compete in verbal and mental gymnastics in such a way as to convincingly refer to a bubble as a “balloon.” It should be noted that up until the burst of the American housing bubble, all the major players were denying that a bubble even existed.
Patti Croft, a recently retired chief economist from the Royal Bank of Canada warned the Canadian Parliament in January of 2012 that, “the risk of a housing bubble was among Canada’s biggest issues.” The Bank of Canada’s extremely low interest rate (of 1%) has stimulated this growth, just as the Federal Reserve in the United States helped stimulate the housing bubble there through historically low interest rates. The result of such low rates is an excess of speculative actions in the housing market, driving prices up. Croft warned that, “the greater concern is the looming housing bubble that we see, particularly in cities like Toronto and Vancouver, because I think that is where the speculative excesses lie.”
In March, TD Bank warned that Canada’s housing bubble posed a “clear and present danger” to Canada’s economy, and singled out Vancouver as “the market with the greatest risk of a housing price correction.” The effects of the bubble are already evident, as British Columbia is increasingly losing people who are moving to other provinces due to the high cost of living.
It should be noted that, even though this housing bubble in Canada has been inflated since the late 1990s, it is only being talked about, admitted as even existing (though some make absurd claims about magical “balloons”), and acknowledged NOW. This is dangerous. The fact that it is now being acknowledged by top banks, the finance minister, the Bank of Canada and other major international organizations and banks, implies that they are now preparing for it to burst, and are thus positioning themselves to profit from the coming collapse. Remember, this is not a strange idea: during the housing bubble collapse in the United States, all the big banks which helped create it then bet against the market and profited off of its collapse, not to mention, they were then rewarded by the federal government with trillions of dollars in bailouts for their outstanding accomplishments in causing the crisis in the first place. Criminals are rewarded, and victims are punished. That is for a simple reason: government is organized crime.
Canada’s youth are in a major crisis. The youth unemployment rate in Canada is at 14.7%, compared to an overall unemployment rate of 7.4%, with 27,000 less jobs for young Canadians than last year. As one economist explained, “In addition to the fact that youths are facing competition from their own age cohorts, they are now facing competition from people who just lost their jobs during the recession and have 20 years of experience in the workforce.” Further, the economist added, “the whole process of trying to get to where you wanted to be when you got out of university takes years longer than it used to. Taking a lower wage than you were initially expecting has significant repercussions for your long-term career.” A one percent increase in unemployment rates leads to a six-to-seven percent decrease in salary, and thus, “It can take anywhere from 10 upwards to 15 years to close that gap of reduced wages. So your lifetime earnings are substantially lower, for the simple fact that you graduated at the wrong time.” The real rates of unemployed are actually much higher than the stated 14% “because a lot of young people aren’t collecting Unemployment Insurance or welfare.” Thus, it is 14% of Canadian youths who are on Unemployment Insurance or welfare, and the statistics don’t include the rest of the unemployed youth population of Canada.
As for the net unemployment rate of Canadians at 7.4%, this too is misleading, because the statistics don’t include the number of Canadians who have simply given up on the job search, amounting to 38,000 Canadians in the past year. The province of Manitoba created 600 new jobs in 2011, while cutting 10,000 jobs in the same amount of time. The Canadian economy has cut 37,000 jobs just since October of 2011, and it’s only going to get worse. While there are 27,000 less jobs for Canadian youth than there were last year, this number grows to 300,000 less jobs for youth than there were in 2008.
The Canadian federal budget, released in late March, set out the government’s priorities for the coming year. Students and youth, who are among the most in need of help, were basically left out of the budget, naturally, since they are not multinational corporations, bankers, or billionaires. What money is going to schools is marked for industry-related research (i.e., a corporate subsidy), and as Finance Minister Jim Flaherty explained, “The plan’s measures focus on the drivers of growth: innovation, business investment, people’s education and skills that will fuel the new wave of job creation.” Again, it’s important to note that when politicians use the terms “jobs” or “job creation,” what they actually mean is “profit” and “profit creation,” invariably for corporations and banks. In regards to education:
The Conservatives placed a clear emphasis on partnerships between businesses and universities when it came to research funding: among their plans, they intend to dedicate $14 million over two years to double the Industrial Research and Development Internship Program, which currently supports 1,000 graduate students in conducting research at private-sector firms.
While the Canadian government announced funding of “$500 million over five years to support modernization of research infrastructure on campuses through the Canada Foundation for Innovation,” as well as through other research granting councils, the funding will actually be reallocated from other areas of education financing, what are deemed “lower-priority programs,” which means that they do not directly support corporate or industrial profit-making potential. The government will also cut 19,200 jobs from the public sector.
The federal government’s budget estimates a $5.2 billion cut in spending, as well as increasing the limit on Old Age Security from 65 to 67, meaning that older people will have to work longer before getting any benefits. That will give the government just enough time to steal everyone’s pension and hand them to corporations before the people actually need them. So while the government cuts social spending, ignores the needs of Canada’s youth, and fires tens of thousands of workers – this is what economists call “fiscal austerity” – it simultaneously is increasing its spending and support to Canada’s corporations (who are already as “fit as a fiddle”), with “direct spending and incentives to help firms expand, invest and export, as well as measures designed to shed some of the shackles on their growth.” The chief economist at TD Bank stated, “They are trying to create a favourable environment in which businesses can grow.” So while the government provides a meager $50 million to help students find jobs, it hands out billions to corporations. The increased funding for research at universities is also specifically designed to produce products to go onto the market; so again, education funding is being further railroaded into merging business and higher education.
These moves are obviously not taken on the initiative of government alone, but are lobbied for by the corporate and financial elite, whether directly through interest groups, or indirectly through think tanks. The Canadian Council of Chief Executives (CCCE) – formerly the Business Council on National Issues (BCNI) – is an interest group made up of the top 150 CEOs in Canada, and which directly lobbies the government to serve their interests. They played a major role in the efforts to create NAFTA and to pursue the agenda of North American integration, as well as a plethora of other free trade deals. However, their “interests” extend beyond trade, and they seek to lobby the government to serve their interests across the whole society.
The current President and CEO of the CCCE is John P. Manley, former Deputy Prime Minister of Canada, former Minister of Finance, Industry, and Foreign Affairs. He was the co-chair of a Council on Foreign Relations Task Force on the Future of North America (which set the agenda for the Security and Prosperity Partnership and North American integration). He is also on the board of directors of CIBC and a number of other corporations and non-profits. The Vice Chairman of the board of directors of the CCCE is of course, Paul Desmarais Jr. (of the powerful Desmarais family, who essentially OWN Canada’s politicians and Prime Ministers), and other board members include: William A. Downe, CEO of BMO Financial Group; Gordon Nixon, CEO of Royal Bank of Canada; and a number of other leading corporate executives.
The CEOs of the following companies and business organizations are all represented in the CCCE: Air Canada, Astral Media, Barrick Gold Corporation, BCE Inc and Bell Canada, BMO Financial group, BNP Paribas (Canada), Bombardier, the Canadian Chamber of Commerce, Canadian Manufacturers and Exporters, Canadian Oil Sands Limited, Canadian Pacific Railway, Canfor Corporation, Cargill Limited, Chevron Canada, CIBC, CN, Deloitte & Touche LLP, Desjardins Group, Dow Chemical Canada, E.I. du Pont Canada Company, Encana Corporation, Ford Motor Company of Canada, GE Canada, GlaxoSmithKline, the Great-West Life Assurance Company, HSBC Bank Canada, Hudson’s Bay Company, IBM Canada, Imperial Oil Limited, Manulife Financial Corporation, McCain Foods Limited, Microsoft Canada, National Bank of Canada, Pfizer Canada, Power Corporation of Canada, Power Financial Corporation, Royal Bank of Canada, Scotiabank, SNC-Lavalin Group, Standard Life Assurance Company, Sun Life Financial, Suncor Energy, TD Bank Group, TELUS, TransCanada Corporation, The Woodbridge Company Limited, among many others.
Back in October of 2010, John Manley spoke to the Association of Universities and Colleges of Canada on the issue of making Canada “a leader in the knowledge economy.” Manley stated that Canada needed to ensure that “more of our academic discoveries successfully ‘cross the chasm’ to commercial success,” referring to the need to market what is done in university laboratories. Manley stated that, “there is a need for closer collaboration between post-secondary education institutions and the business community,” as, he explained: “Business-university collaboration is key to Canada’s ability to compete more effectively, to enhance our quality of life and to provide better opportunities for tomorrow’s graduates.” Manley elaborated:
All of us have an interest in achieving stronger partnerships between post-secondary institutions and the private sector, and in overcoming the barriers to commercialization of university research – barriers ranging from “hard” issues of funding and intellectual property ownership, to less tangible considerations such as differences in expectations, culture and behaviour between academia and the private sector.
With the release of the Canadian federal budget for 2012, the CCCE of course praised the budget as “taking steps to promote job creation and business investment.” John Manley stated, “By restraining the growth in public spending, reducing regulatory overlap, improving Canada’s immigration system and enhancing support for business-driven research, the government is helping to build a stronger and more competitive Canadian economy.”
Economists from Canada’s major banks had a good deal to say about the budget. Economists from TD Bank explained that, “When combined, the various measures included in today’s budget are aimed at improving productivity and boosting private sector growth, at a time when public spending is being constrained,” and that, of course, this is a good thing. An economist at CIBC praised “the path towards fiscal balance,” as “the 2012 budget was as much about Canada’s longer term prospects as it was about squeezing spending.” Economists at the National Bank of Canada praised the budget’s decision to raise the old age security pension eligibility from 65 to 67 years, “While it is a step in the right direction, it could have been implemented earlier.” Economists at Royal Bank of Canada stated that the Canadian government “has delivered on its promise of guiding the Canadian economy towards improved fiscal performance in what are generally difficult economic times globally.” Meanwhile, the National Pensioner and Senior Citizens Federation declared that, “Today’s budget tabled by Finance Minister Flaherty confirmed the worst for our children and grandchildren… This government has attacked the retirement security of future generations as it looks years ahead for dollars to finance other priorities… There was nothing for seniors, not even a discarded penny for the poorest living in poverty.”
But then, that’s the point, isn’t it? Why would you seek to help the elderly and the poor and needy when you can help the multinational corporations and global banks, and thus, when you leave government, get a secure position on their boards (as John Manley did), and live the rest of your days as a jet-setting, globe-trotting, high-rolling elite? As a politician, you get no personal benefit or profit from supporting or serving the poor or the majority, you must only serve a tiny elite, and then your place is ensured among them.
Make no mistake: Canada’s Big Five Banks, the corporations they control, and the federal and provincial governments, which they collectively OWN, have declared class war on the people of Canada. The agenda is simple: get the population of Canada indebted, which is to say, enslaved; then, increase interest rates, cut social spending, increase unemployment, increase tuition, increase consumer costs, increase taxes, and at the same time, give more support and money to corporations and banks, and decrease their taxes. Then, build prisons, fund the military and the police and the police state apparatus of surveillance and control, so that when the people wake up to the fact that their future is being stolen from them, you can put them in their place: under the boot.
So the question for Canadian is this: will you acknowledge the class war taking place against you, your friends, and your families and fellow brothers and sisters, and then seek to fight back; or, will you continue to go into credit card debt, further into student debt, get mortgages and passively accept subservience to a system which treats you like a slave, sub-human degenerates, and superfluous, that is, useless and expendable. It is a question of passive acceptance of an evil system, or active resistance to forge ahead and creatively construct a humane society. The question is for all; the answer is yours alone.
Andrew Gavin Marshall is an independent researcher and writer based in Montreal, Canada, writing on a number of social, political, economic, and historical issues. He is also Project Manager of The People’s Book Project. He also hosts a weekly podcast show, “Empire, Power, and People,” on BoilingFrogsPost.com.
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Student Strikes, Debt Domination, and Class War in Canada: Class War and the College Crisis, Part 4
By: Andrew Gavin Marshall
There is a process under way in Canada, led by the corporate and financial elite, and directed against the general population, the poor, and the young, intending to provide for the rich and powerful, to punish the poor and steal from the rest, to plunge into poverty, to repress, control, and dominate: this process is called ‘Class War’ and it’s waged by the super-rich against the supposedly superfluous rest. It’s objective is simple: to preserve, protect, and expand the control and domination of the wealthy over the majority.
In Quebec, where the class warfare has taken on a specific assault on the students and youth, there are finally growing signs and actions that the youth are starting to fight back. The provincial government of Quebec – the French-speaking province of Canada – has decided to double the costs of tuition over the next few years. These moves have prompted hundreds of thousands of students across Quebec to go on strike in protest of the increased fees. Since Quebec currently has the lowest tuition costs in Canada for residents, a great deal of the media and commentary on the issue is related to lambasting Quebecers for their concept of “entitlements” and for “complaining” that they have to pay what others pay. The debate is focused around the ‘need’ for the government of Quebec to reduce its debt – balance its budget – framing increased tuition costs as a necessity to be accepted, and when resisted, to dismiss the protesters as unrealistic and petty.
So is it true that Quebec has the lowest tuition fees in Canada? Yes. However, Quebec residents also pay the highest income taxes in all of Canada. One of the major claims by the Quebec government as to why tuition must be increased is the claim that Quebec’s universities are among the most “under-funded” in Canada, and therefore they need to increase their funding so as to increase their “competitiveness.” However, according to the Quebec government itself, total government spending on education (in 2008-2009) amounted to 1.94% of GDP, compared to 1.76% for Ontario, and 1.65% for Canada as a whole. At the same time, total university spending per student in Quebec was at $29,242, compared to $26,383 in Ontario, and $28,846 for Canada as a whole. Thus, Québec’s universities are funded to a greater degree than the rest of Canada, so that argument does not hold weight.
Quebec’s universities are funded more than other Canadian universities, while Quebec residents pay more in taxes than the rest of Canada, so why the increase in tuition? As tuition fees for universities increase, government spending on education decreases. As the Canadian Federation of Students notes:
In the past fifteen years, tuition fees in Canada have grown to become the single largest expense for most university and college students. The dramatic tuition fee increases during this period were the direct result of cuts to public funding for post-secondary education by the federal government and, to a somewhat lesser extent, provincial governments. Public funding currently accounts for an average of approximately 57% of university and college operating funding, down from 84% just two decades ago. During the same period tuition fees have grown from 14% of operating funding to over 34%.
This marks a move “away from a publicly funded model and towards a privatised user fee system,” which has caused “post-secondary education to become unaffordable for many low- and middle-income Canadians.” In the mid-1960s, nearly all of Canada’s university funding was provided by the federal and provincial governments, and tuition fees were either incredibly minimal or non-existent. This process began to change in the early 1980s, with the rise of neoliberalism in the global political economy, which saw moves toward cutting social spending by governments. As government funding decreased, tuition costs rose, and as a result, between the early 1980s and the early 1990s, tuition fees in Canada nearly doubled. In 1995, the Liberal federal government of Canada cut $7 billion in spending for the provinces, leading to “the largest tuition fee increases in Canadian history.” Quebec had, however, resisted the push toward making students pay more, which was taking place in all the other Canadian provinces. In the early 1990s, average undergraduate tuition fees in Canada were $1,464; today the average has more than tripled to $5,138.
So why is this process taking place? Why must government spending on education (and other social programs) be reduced, while personal costs for all of these services be increased? The answer is not in “efficiency” or “balancing budgets,” but rather, in class warfare.
In April of 2007, TD Bank (one of Canada’s ‘big five’ banks which dominate the economy) released a “plan for prosperity” for the province of Quebec, which recommended, among other things, raising the cost of tuition: “by raising tuition fees but focusing on increased financial assistance for those in need, post secondary education (PSE) institutions will be better-positioned to prosper and provide world-class education and research.” In one Canadian province, Nova Scotia, the government hired a former chief economist from the Bank of Montreal, Tim O’Neill, to assess higher education finances, and unsurprisingly, advocated higher tuition fees. Banks, of course, have a major interest in promoting increased tuition costs, because they provide student loans and profit off of the interest on student debt, like some malevolent ever-growing succubus draining the life force and potential of future generations which are doomed to debt slavery. So naturally, our governments take the advice of the banks, because they know whom their real masters are.
It should be noted, as well, that this is not merely a problem in Quebec or Canada. Tens of thousands of students in the United Kingdom are planning a walk out in protest of increasing tuition fees, which “are pricing students out of education.” The Occupy Movement in the United States is moving into universities, as campuses in California experienced demonstrations and protests against “state budget cuts to education and the resulting hikes in tuition.” In Spain, more than 30,000 students took to the streets of Barcelona protesting the ‘austerity cuts’ to education, and were then of course met with state repression. Perhaps most impressive is a mass student movement that has developed in Chile over the past year.
The College Crisis
What is the ‘college crisis’? It’s quite simple: our society is producing more educated, professionalized youths than ever before, who are then graduating into a jobless market, and what’s more, they are graduating with extensive debt. The professional education students receive, in combination with the heavy overbearing debt load and the immense dissatisfaction with the lack of opportunities for them, creates a large, mobile, educated, activated, and very pissed off group of people. This is what is referred to as a ‘poverty of expectations,’ whereby the inculcated expectations of a group or sector of society cannot be met by the society in which they live. In any society, in any period of history, this is a recipe for social unrest, resistance, rebellion, and, potentially, Revolution.
Naturally, the elites of any society fear such a scenario, so they always come up with various methods of managing these increasingly problematic conditions. The solutions, invariably, are always aimed at finding methods and means for undermining the ability and effectiveness of the target group to mobilize and organize for their cause; in this case, students. Cutting education budgets and increasing tuition fees is a very effective means to create more ‘desirable’ conditions for elites. How so? Any form of ‘austerity’ is essentially an act of class war, waged by the upper class against the rest. Austerity means that budgets will be cut and costs will be increased, whether through taxation, direct prices for services and necessities, or more often, both. The stated purpose of ‘austerity measures’ is to reduce debt (spending) and increase profitability (or revenue), with the purported aim of eliminating the debt over time. This is, however, not the true purpose of austerity, and appropriately so, it is never the result. The result is actually to increase debt, and impose a regimen of what amounts to ‘social genocide’: increasing the burden, costs, taxes, and hardships upon the wider population. For the poor, it means despair; for the middle class, it means poverty; and for the rich, it means prosperity and power.
The current crisis stems from developments that took place in the 1960s which saw an increase in activism and engagement among the general population, and especially the youth. Universities were breeding grounds for activism and movements which sought to create social uplift. The elite response to this scenario, in the United States specifically but also across the Western world as a whole, was to declare a “Crisis of Democracy” in which too many people were making too many demands upon the system, in which all forms of authority were under attack, and the legitimacy of those authorities were called into question. Elites of both the left and right saw this acceleration of democratic participation and activism as an assault upon their conception of what “democracy” should be – namely, a state that serves their interests alone. From the right, the U.S. Chamber of Commerce – and from the liberal internationalists, the Trilateral Commission – launched a major national and global attack upon the surge of democratic activism in what the Trilateral Commission referred to as an “excess of democracy.” The result of this attack: neoliberalism and debt. The two documents that were most influential in this attack on democracy were the “Powell Memo” of 1971 sent to the U.S. Chamber of Commerce which outlined a detailed program for how big business could reorganize society for its own interests, and the Trilateral Commission’s 1975 report, “The Crisis of Democracy,” which outlined an elite ideology which saw the problem of society being in an “excess of democracy” and that what is required is to correct the balance in favour of elites and increase apathy and passivity among the population. The Chamber of Commerce represents all the major business interests in the United States, while the Trilateral Commission (founded in 1973 by banker David Rockefeller), represents roughly 350 elites in the areas of academia, finance, business, government, foreign policy, media and foundations from North America, Western Europe, and Japan.
The result of this was to decrease government funding for education, increase tuition and other costs, increase debt for students and the general population as a whole (through credit cards, mortgages, loans, etc.), and to merge higher education and big business: the corporatization and privatization of universities.
As part of this process, knowledge was transformed into ‘capital’ – into ‘knowledge capitalism’ or a ‘knowledge economy.’ Reports from the World Bank and the Organization for Economic Cooperation and Development (OECD) in the 1990s transformed these ideas into a “policy template.” This was to establish “a new coalition between education and industry,” in which “education if reconfigured as a massively undervalued form of knowledge capital that will determine the future of work, the organization of knowledge institutions and the shape of society in the years to come.”
Knowledge was thus defined as an “economic resource” which would give growth to the economy. As such, in the neoliberal era, where all aspects of economic productivity and growth are privatized (purportedly to increase their efficiency and productive capacity as only the “free market” can do), education – or the “knowledge economy” – itself, was destined to be privatized.
Solving the ‘College Crisis’
In February of 2011, it was reported that the average debt for a Canadian family had reached over $100,000, spending 150% of their earnings. Thus, for every $1,000 in after-tax income, the average Canadian family then owes $1,500. The debt figures include mortgages, student loans, credit card debts, and lines of credit. In 1990, the average Canadian family was able to put roughly $8,000 into savings, in 2012, that number was at $2,500. So while the public is constantly told that the ‘recession’ is over, this is simply not true for the general population, though it may appear to be true in the quarterly reports of Canada’s multinational corporations and banks. A 2011 report indicated that, “17,400 households were behind in their mortgage payments by three or more months in 2010, up by 50 per cent since the recession began. Credit card delinquencies and bankruptcy rates also remain higher than before the recession.”
By February of 2012, this rate of income-to-debt had not only failed to improve, but even got slightly worse, hitting a new record. The state for Canadian families is indeed getting worse. More than half of the jobs created since the “end” of the “recession” went to those aged 55 and older, leaving the youth struggling to find jobs, while older workers have to either stay working longer, return from retirement because they can’t survive off of their pensions, and thus, young people are living at home longer and staying in school longer. The slight increases in hourly earnings has not kept up with inflation, and thus amounts to a loss of earnings, and income inequality continues to grow between the super-rich and everyone else.
Mark Carney, Governor of the Bank of Canada (Canada’s central bank), is also Chairman of the Financial Stability Board, run out of the Bank for International Settlements (BIS) in Basel, Switzerland – the central bank to the world’s central banks – and which operates under the auspices of the G20. Carney had previously served as Deputy Governor of the Bank of Canada, the Canadian Department of Finance, and spent thirteen years with Goldman Sachs prior to that.
The Bank of Canada, like all central banks, serves the dominant elite interests of the nation, but also of the international financial elite more broadly. The board of directors of the Bank of Canada includes William Black, former CEO of Maritime Life, who sits on the boards of Dalhousie University, the Shaw Group, Standard Life of Canada, and Nova Scotia Business, Inc.; Philip Deck, CEO of Extuple, Inc. (a technology finance corporation), former managing partner with merchant banking company HSD Partners, and is on the board of a major Canadian think tank, the C.D. Howe Institute; Bonnie DuPont, former Vice President at Enbridge Inc., former director of the Canadian Wheat Board, a current director of agribusiness firm Viterra Inc, UTS, on the board of governors of the University of Calgary, member of the Institute of Corporate Directors, and is past president of the Calgary Petroleum Club; Jock Finlayson, Vice President of the Business Council of British Columbia, former Vice President of the Canadian Council of Chief Executives (an interest group made up of Canada’s top 150 CEOs), and a member of the Canada West Foundation; Daniel Johnson, a director of Bombardier, IGM Financial, Mackenzie Financial Corporation, Investors Group, and former Minister of Industry and Commerce in the Province of Quebec; David Laidley, Chairman Emeritus of Deloitte & Touche LLP, on the boards of Nautilus Indemnity Limited, ProSep Inc., EMCOR Group, Aviva Canada Inc., the Cole Foundation, and on several boards at McGill University. The rest of the directors of the Bank of Canada are almost exclusively businessmen or former government officials (two women in total), and all of them are white; so, naturally, they truly represent the struggling Canadian family.
In March of 2012, the Bank of Canada warned that household debt “remains the biggest domestic risk” to Canada’s economy. While part of the Bank’s role is to set interest rates, it has kept interest rates very low (at 1%) in order to encourage lending (and indeed, families have become more indebted as a result). Yet, the Bank says, interest rates will have to rise eventually. Economists at Canada’s major banks (CIBC, RBC, BMO, TD, and ScotiaBank) naturally support such an inevitability, as one BMO economist stated, “while rates are unlikely to increase in the near term, the next move is more likely to be up rather than down, and could well emerge sooner than we currently anticipate.” The chief economist at CIBC stated that, “markets will pick up on the slightly improved change in tone on the economy, and might move forward the implied date for the first rate hike.” This translates into: the economy is doing well for the big banks, therefore they will demand higher interest rates on debts, and plunge the Canadian population into poverty; the “invisible hand of the free market” in action. Increased interest rates mean increased payments on debts, which means increased suffering for the indebted, who make up the general population.
As the Bank of Canada warns that interest rates will increase, perhaps as soon as this year, the Canadian people – heavily indebted – will suffer immensely and will likely fail to meet their interest payments. Since such a large majority of the debt and interest is in mortgages, this would potentially cause a major housing crisis, which is already at bubble proportions (especially in Vancouver, now the most expensive city to live in within North America), and will drag the middle class and the rest of the Canadian economy down with it. Even TD Bank has said the housing market is over-valued (i.e., artificially inflated), and warned of a coming “correction” (i.e., economic crisis).
As the gap widens between the rich and everyone else in nearly every OECD (Organisation for Economic Cooperation and Development) country, Canada is no exception. The top 10% of Canadian earners make ten times as much as the bottom 10%. The top 1% in Canada saw their share of total income increase from 8.1% in 1980 to 13.3% in 2007, while the top 0.1% saw their share increase from 2% to 5.3%. Tax policies in Canada strengthen the wealth gap. In 1981, the tax rate for the top margin of earners was 43%, and in 2010, it was 29%. As the Secretary General of the OECD stated in December of 2011, “The social contract is starting to unravel in many countries… This study dispels the assumptions that the benefits of economic growth will automatically trickle down to the disadvantaged and that greater inequality fosters greater social mobility.” Thus, “inequality will continue to rise.”
In a 2008 OECD study, Canada was singled out as one of the countries with the worst rates of widening inequality, stating that, “In the last 10 years, the rich have been getting richer, leaving both middle and poorer income classes behind.” The top 3.8% of Canadian households controlled 66.6% of all financial wealth by 2009, with rates set to increase. As the Conservative government in Canada continues to implement corporate tax cuts, this disparity will increase, with the Harper government providing $60 billion in corporate tax breaks, while maintaining a $30 billion budget deficit (public debt). Despite all the tax cuts for corporations, the money that is not spent on taxes tends to go to shareholders and very little goes toward investments or job creation, meaning that the benefits do not “trickle down,” but rather, as to be expected, trickle up. For Prime Minister Harper’s tax policies and programs, “The higher the income, the bigger the tax break.” The senior economist at the International Trade Union Confederation stated that, “The growing gap between the rich and the rest of us has many causes, including higher remuneration for top earners, much higher profits as a share of the economy, less bargaining power for workers, and less progressive taxes… Conservative tax policies will clearly aggravate the problem.”
The Conference Board of Canada released a study in the fall of 2011 which stated that, “income inequality has been rising more rapidly in Canada than in the U.S. since the mid-1990s,” and on a global scale, “Canada has had the fourth-largest increase in income inequality among its peers.” The President of the Conference Board explained, “Even though the U.S. currently has the largest rich-poor income gap among these countries, the gap in Canada has been rising at a faster rate.”
Among the OECD countries, the one with the highest rates of inequality was none other than the Petri-dish experiment of neoliberalism, Chile, followed by Israel, Italy, Portugal, the U.K., and the United States. While the top 10% of Canadian earners had an average income of $103,500, the bottom 10% had an average annual income of $10,260.
While Canada is often hailed as the most promising nation to come out of the economic-financial crisis of 2008, since its banks were largely left out of the housing derivative market (and thus, were protected), the facts on the ground represent a different reality. As the Economist reported in 2010, of the 31 OECD nations, Canada ranked as the 22nd worst country in terms of child poverty, with one in ten Canadians (roughly 3 million) being poor, 610,000 of them being children. In November of 2010, it was reported that roughly 900,000 Canadians were dependent upon food handouts, a 9% increase from the previous year, with roughly 300,000 homeless people. The majority of the poor are single mothers, immigrants, aboriginal and disabled Canadians. Through the 1980s and 1990s (with the implementation of neolibral policies), welfare payments to these groups were slashed, with British Columbia as the most enthusiastic supporter of exacerbating child poverty, which stood at 10.4% by 2010.
The cost of poverty is quite extensive:
* By 2011, poverty was said to cost the government between $72-86 billion per year;
* In the city of Hamilton, Ontario, there is a 21 year-difference in life expectancy between those who live in high and low-income neighborhoods;
* In March of 2010, nearly 900,000 Canadians had to go to food banks for food, 38% of them being children, an increase of 28% since March of 2008, the “highest level of food bank use ever”;
* In 2010, there were between 150-300,000 “visible” homeless in Canada, with another 900,000 “hidden” homeless, and 1.5 million families in “core housing need” and 3.1 million families in unaffordable housing;
* In 2010, 59% of Canadians (over 20 million Canadians) lived from paycheck to paycheck, “saying they would be in financial difficulty if their paycheque was delayed by a week”;
* In 2009, the average annual income of Canada’s best paid CEOs was $6.6 million, “155 times higher than the average worker’s income ($42,988);
* A third of all income growth in Canada over the past two decades has gone to the richest one percent of Canadians.”
Canada’s Youth: A “Bankrupted Generation”
By January of 2009, Canadian students had a debt to the federal government of over $13 billion, with student loan debt increasing by $1.2 million every day. The Canadian Federation of Students said the obvious answer to this growing crisis was to make education “affordable.” Studies show the effects of student debt, reducing “the ability of new graduates to start families, work in public service careers, invest in other assets, volunteer, or even just take a lower paying job in their own field to get a foot in the door.” On top of the $13 billion owed to the Federal Government, Canadian students owed an additional $5 billion to provincial governments, and the figures do not include debt owed to banks, credit card companies or parents. In short, Canada’s student youth are a “lost generation.”
In September of 2010, the Canadian Council on Learning published a report which indicated that, “students who graduate from college and university with high debt loads are putting off buying a house, having children or investing for the future.” The average debt load of a Canadian university graduate in 2009 was $26,680, and the average debt for college graduates was $13,600. These figures, it should be noted, do not take into account mortgages, credit card debt, lines of credit, or car loans. This represented a doubling in the amount of student debt from 1990, and in 2005, the number of Canadian students needing loans to pay for their education had increased to 57%.
In October of 2011, it was reported that Canadian student debt (to the Federal Government) will surpass $15 billion by 2013, which is the current ceiling set by the government in student loans. Thus, if it reaches the ceiling, the government will no longer (in theory) be able to provide student loans. The solution, according to the Canadian Federation of Students, does not mean eliminating the debt ceiling, which will only make the problem worse, but rather, in reducing the costs of education itself. As the national chairperson of the CFS stated, “The reality is that the job market is grim and students are facing their first interviews with a mortgage-sized debt.” Thus, once they begin work, they do not contribute to the economic growth of the country, but rather merely have to focus on paying interest and repaying debts. The cost of university education in Canada is estimated to be at $60,000, and some studies suggest that this will rise to $140,000 for those born in 2011. The average yearly undergraduate tuition fees were a 4.3% increase from the previous year, reaching $5,366.
In 2011, almost two million Canadians had a student debt totaling $20 billion, and as the chairman of the Canadian Federation of Students stated, “We have an entire generation of people who now more than ever have to complete some form of post-secondary education just to get a job interview, with more than 70% of all new jobs requiring some degree or diploma. We are on the verge of bankrupting a generation before they even enter the workplace.” As job losses continue, and especially as the youth job market continues to decline, the number of full-time students tends to increase, and the availability of part-time work for students continues to decline. A post-secondary education no longer increases a “return on investment” through a lifetime, as it was once assumed. The overall student debt is not the most pressing immediate problem, but rather the “crippling interest rate attached to these government loans” which plunge youth into a deep crisis. So while interest rates are very low (in other lending, as set by the Bank of Canada at 1%), the government is charging 8% interest on student loans. Margaret Johnson, president of Solutions Credit Counselling Service Inc. in Vancouver stated that, “When the loan goes into default, the interest starts to compound. And then you have an absolute nightmare. The average debt I’m seeing is anywhere between $30,000 and $60,000. The payments are so high on some of these loans that the young person cannot live and make a payment. Instead of lowering the interest rate — or eliminating it, which I think is the best solution — the government extended the repayment term to 14 years. The fact that so many loans are in arrears proves this isn’t the answer.”
Some things are worth repeating: the average debt for every Canadian household is over $100,000 and the average debt for a university graduate in Canada is over $26,000; nearly one million Canadians depend upon food banks for their food, poverty and inequality are increasing, homelessness is increasing; the rich are getting richer and everyone else is getting poor or poorer, and there is a horrible job market with few jobs available, let alone available to youth. So the “solution” – we are told – to the supposed “problem” of “competitiveness” in our universities… is to increase the burden, the cost, and the debt of students, families, and the general population; to increase tuition and student debt, to increase interest rates on all debts, and to plunge the population into abject poverty. It seems then, that Canadians, and the Western world in general (as these policies are being pushed throughout the G8 nations on the whole) are about to get a hard lesson in what our countries of the industrialized and supposedly “democratic” north have been doing to the rest of the world (Africa, Asia, Latin America) for decades and, indeed, centuries. What has been done abroad is now coming home to roost.
The conditions, restrictions, programs and policies that our nations have imposed upon Africa, Asia, and Latin America for the past four decades have plunged those countries into poverty, allowed for the unhindered control and extraction of their resources for our corporations, put their nations into the debt of our banks, exploited their populations for cheap labour, and propped up ruthless dictators to repress the people if they ever get wise and want to change their society. While our nations of course continue in their raping and pillaging of the world, now they have also turned their attention – and absolute disregard for humanity – to their domestic populations. The same banks, international institutions, nations, organizations and even individuals who promoted the policies which led to the impoverishment and punishment of much of the world’s population are now telling us that these same policies are the “solutions” to our current crises, just as they told the populations of Africa, Asia, and Latin America. If we listen to these same people, submit to the same policies, and accept the same ideologies which have caused so much destruction and devastation around the world, and expect different results at home, we deserve what we get. Naturally, then, we must stop accepting and consenting to the hegemony and power of our elites and their institutions and ideologies. This means that we have to actively create alternatives, not simply protest against their programs, or demand reforms, rearranging deck chairs on the Titanic. The boat is sinking, it doesn’t matter how it looks on the way down. It’s time for a new system altogether. One cannot demand from others to create a new system, but must actively create it themselves.
In the next part of this series, “Class War and the College Crisis,” I will be discussing the coming economic crisis for Canada, which has thus far been hailed as the “safest” nation emerging from the 2008 “recession,” a myth that will soon be broken. As Canada, and much of the rest of the world, begin their rapid descent into an economic depression, the above-mentioned statistics regarding debt, poverty, and inequality will get worse. As the social and economic crisis deepens, our governments will continue to show in whose interests they truly rule: with batons, tear gas, beatings, mass arrests, detention camps, and the growth and development of a police state surveillance society, our governments will reveal that they rule for bankers, corporations, and oligarchs. The democratic façade will wash away. It is within these circumstances that Canadians, and the wider world in general, must seek to create a true democratic system. First, however, we must recognize and understand the system in which we live for what it is: a State-Capitalist society ruled by a power-mad oligarchy. The next part of this series will be taking a look at what this power-mad oligarchy is doing and will be doing to Canada’s economy and society in the coming years. Here’s a hint: it doesn’t benefit YOU!
 CRA, What are the income tax rates in Canada for 2012? Canada Revenue Agency:
 Finances Québec, “A Fair and Balanced University Funding Plan: To Give Québec the Means to Fulfill its Ambitions,” The Government of Québec, 2011-2012 Budget, page 7.
 CFS, Tuition Fees, The Canadian Federation of Students:
 Press Release, “TD Economics outlines plan for prosperity in Quebec report,” Newswire, 10 April 2007:
 CNW, “Déjà Vu: O’Neill Report Recycles Dated, Discredited Tuition Fee Myths,” Newswire, 17 September 2010:
 Alison Kershaw, “Thousands of students to stage walkout protest,” The Independent, 12 March 2012:
 Carla Rivera and Larry Gordon, “Occupy protests bring small yet intense crowds to state campuses,” Los Angeles Times, 1 March 2012:
 Giles Tremlett, “Fighting breaks out in Barcelona as students protest over education cuts,” The Guardian, 29 February 2012:
 Mark Olssen and Michael A. Peters, “Neoliberalism, Higher Education and the Knowledge Economy: From the Free Market to Knowledge Capitalism,” Journal of Education Policy (Vol. 20, No. 3, May 2005), page 331.
 Ibid, pages 338-339.
 CTV News Staff, “Average Canadian family debt hits $100,000,” CTV News, 17 February 2011:
 Why are Canadian families falling further into debt?, The Globe and Mail, 14 February 2012:
 Tavia Grant, “Financial security ‘elusive’ for many Canadian families,” The Globe and Mail, 22 March 2012: http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/financial-security-elusive-for-many-canadian-families/article2377592/
 Gordon Isfeld, “Bank of Canada says household debt ‘biggest risk’ to economy,” The Leader Post, 9 March 2012:
 John Morrissy, “Household debt a mounting concern as rates appear set to rise,” The Montreal Gazette, 23 March 2012:
 CBC, Wealth gap widens to 30-year high, CBC News, 5 December 2011:
 Les Whittington, “Tax policies may aggravate gap between rich and poor,” Toronto Star, 27 May 2011:
 Tavia Grant, “Income inequality rising quickly in Canada,” The Globe and Mail, 13 September 2011:
 CTV News Staff, “OECD report finds income inequality rising in Canada,” CTV News:
 Poverty in Canada: Mean Streets, The Economist, 25 November 2010:
 CTV News Staff, “Canada Student Loan debt tops $13B, figures show,” CTV News, 21 January 2009:
 CTV News Staff, “Canada Student Loan debt tops $13B, figures show,” CTV News, 21 January 2009:
 CBC, “Student debt limits post-grad options,” CBC News, 22 September 2010:
 QMI Agency, “Student debt doubled over 20 years: Study,” Toronto Sun, 22 September 2010:
 Sharon Singleton, “Action needed on student debt: CFS,” Toronto Sun, 17 October 2011:
 Mary Teresa Bitti, Student debt bankrupting a generation, The Financial Post, 4 June 2011: