A Deeper Look - Issue #11 | Mar 21 2021
Early Democracies, Canada's Economic History, and The Beginning and the End
Hello Everyone:
For those who may be unfamiliar, this weekend marks the occasion of Nawroz, the beginning of the new year and spring. It is a time of warmer weather, and of more sun, but for many communities it also symbolises spirit of renewal, gratitude hope and optimism. as well as a time for family, and community. This year Nawroz takes an even greater significance as we emerge from what has been a very dark, long and cold winter.
To you and your families, no matter your background or heritage, a very happy Nawroz, or Nawroz Mubarak. May the year ahead be one of peace, happiness, safety and prosperity in all areas of life.
This week we look at two reports, the first presents an interesting history of Canada’s economic history and the challenges Canada faces in a post COVID world. The second is an essay on lessons from the world’s earliest democracies. Given the state of democracy today what can the past teach us?
[Report] From Keynesian Consensus to Neo-Liberalism to the Green New Deal
[Essay] Lessons from All Democracies
[Read of the Week] Naguib Mahfouz The Beginning and the End
[Economics] From Keynesian Consensus to Neo-Liberalism to the Green New Deal
The report by the Canadian Centre for Policy Alternatives (CCPA), authored by Lars Osberg, McCulloch Professor of Economics, Dalhousie University explores: 1) economic inequality in Canada, 2) the impact of COVID-19 and 3) what this means for the future of Canadian society.
The report categorises Canada’s economic history into three distinct periods:
Keynesian Consensus: (1950s-1970s) This was a period of economic stability, characterised by post-war growth. Incomes remained unequal but lower and higher incomes grew at the same rate. It was a time in which “stability was an implicit social contract in which capitalists got growing markets, increasing dividends and continued political dominance while workers got jobs, rising wages and a taste of economic security through an expanding welfare state.”
Neo-Liberalism: (1980s) This was a time of unequal growth and one in which those with higher incomes saw their incomes grow at a faster rate. On an intellectual level “the 1980–2008 period of triumphant neo-liberalism had been marked by remarkable hubris….Macro-economists routinely congratulated themselves on the presumed end of the business cycle and a “great moderation” of economic fluctuations. However, this complacency was shattered by the unforeseen financial crisis of 2007–08, the suddenness and the depth of the ensuing Great Recession, the slow speed of recovery and the consistent failure of macro-economic models to predict both the 2008 crisis”
Zombie Neo-Liberalism (2009-2019): In this period the policies that characterised neo-liberal economics carried on, even in the lack of an alternate model or policy paradigm. “While some policies morphed, incoherently, into new forms, others staggered on.”
Having charted Canada’s economic context prior to COVID-19 the report examines the impact of the pandemic and makes several noteworthy observations:
Impact of the COVID-19 Pandemic on Inequality: “Salaried professionals who can work from home have been inconvenienced, but their paycheques still arrive. Many hourly paid and gig workers in the hotel, restaurant, cultural and retail trade sectors have lost their income. (See figure 7) Since these workers are disproportionately female, young and racialized, with low hourly wage rates, the pandemic’s economic impact has been “K shaped”: recovery at the top, but worsening misery at the bottom. As well as spotlighting the failings of Canada’s public health system, the pandemic shock revealed the inadequacy of Canada’s social safety net and the importance of both public health and the social safety net to the well-being of Canadians.”
Job Loss February-April 2020 By Industry The Future of the Political-Economy: “It is unlikely that the political economy of the post-COVID-19 world can be shaped by the same faith in low taxes and market-based individualism that fuelled Neo-Liberalism. The COVID-19 pandemic is the formative experience of a whole generation and will shape its lifetime political perspectives. In a pandemic, each individual’s chances of remaining healthy depend on the health and behaviour of their fellow citizens. As a concrete experience of a community’s shared fate, a pandemic is much more immediate than the gradual experience of climate change, but the essential role of government in dealing with a common problem is the main lesson of both crises. Having so many incomes evaporate overnight, in a way that so obviously is not due to personal failings, is also an experience that produces greater appreciation for the insurance value of social safety nets.”
COVID-19 and The Cost of Contraction: “The Keynesian consensus and Neo-Liberalism differed profoundly in their answers, but both framed the key policy question of income distribution as one of determining how the benefits of growth are to be shared. In the post-COVID-19 world, the problem becomes how to allocate the costs of contraction”
The Green New Deal: “The benefits of reducing greenhouse gas emissions now will last long into the future, and the long term decline in global interest rates, even before COVID-19, has shifted the calculations of climate change policy, towards making the necessary investments now, rather than later.36 But the language From Keynesian Consensus to Neo-Liberalism to the Green New Deal used and the fact that it was felt necessary to make these statements is also partly an indicator of which way these institutions [IMF and the World Bank] think the political wind is blowing”
[Social Sciences] Lessons from All Democracies - David Stasavage
David Stasavage is Dean of Social Sciences at New York University and the Julius Silver Professor of Politics from NYU’s Department of Politics. In his essay in Aeon Magazine he seeks inspiration from early democracies to solve the current problem of democratic decay. In early societies:
"There were several defining features that tended to reinforce early democracy: small scale, a need for rulers to depend on the people for knowledge, and finally the ability of members of society to exit to other locales if they were unhappy with a ruler. These three features were not always present in the same measure, but collectively they helped to underpin early democracy.”
Each of these elements, Stasavage explains, provide important lessons for the preservation and reinvigoration of democratic systems today.
Early forms of democracy were small in scale: Stasavage explains that early forms of democracy were much smaller in scale, and governance often took place at the level of the community which often resulted in a much more direct, and substantive experience. This has changed in modern democracies and a citizen’s experience is now much more distanced, limited to voting every few years. This distance provides room for the growth of distrust, suspicion and skepticism.
As Stasavage explains: “The potential risk of this arrangement… is that citizens might grow distrustful of the people who are actually running government on a daily basis and of the special influences to which they might be subject.” In modern times the antidote to this has been the development of effective and trustworthy information and news sources. Yet even this too is under threat, disinformation, fake news and the consolidation of media conglomerates have locked out local and often trusted media sources.
Stasavage comments that, “this suggests that we need to think of new investments that might better connect citizens with government by giving them information sources that are in touch with reality.”
Early forms of democracy had methods to deal with political polarisation: Stasavage points to the example of Cleisthenes, the Athenian statesman who revolutionised political representation in Athens at the time. Previously Athenians had developed a collective system of governance termed the Council of Four Hundred which was composed of 100 members from a particular kin or occupation based tribe. This method of governance lent itself to increasing polarisation.
Cleisthenes then rearranged these groups into 10 smaller groups of individuals from different geographies ensuring a mixture of individuals. Stasavage also points to the example of the Huron and Iroquois tribes who created clans that “cross-cut” tribal divisions. The task for us today is “to examine how different political and social institutions can aid in creating links for people living in different places, from different backgrounds and holding very different beliefs.”
Read of the Week:
This week’s read of the week is Naguib Mahfouz’s The Beginning and the End, it is a novel I read while in university but recently picked up again. It is not a happy or pleasant read, but the the vividness of Mahfouz’s writing, the emotion he imparts and the details of everyday life which echo universal truths make it a favourite.
“A lute lay against the edge of the sofa, the quill in place between the strings. Surprised and disturbed, their eyes focused on the lute. Their father’s fingers had often played on those very strings; often delighted friends gathered around him, begging him to repeat the same tune - as he always did. How thin is the line between joy and sorrow, even thinner than the strings of the lute!”
Thank you for reading, until next week…
FK
Enjoyed the read as usual, especially the old techniques of mitigating against polarization. It is interesting to what extent polarization is largely geographical - rural vs urban, north vs south, etc. Though I worry that as time goes by, we become increasingly linked to these geographical spaces, i.e., with each subsequent generation that passes, "my" borders become more and more mine, such that mixing might only entail more hostility. Thanks for the insight.