Anti-scab Legislation

The Federal government introduced "anti-scab" legislation in Parliament last week. The legislation would make it illegal for federally regulated businesses to hire replacement workers in case of strike action by their regular workers.

I have noted in this space before that one of the reasons why workers have not benefited from the steady rise in productivity over the last 30+ years is the erosion of workers rights and the steady drop in union membership. The simple fact is businesses will not raise the wages of their workers unless forced to by minimum wage laws and collective bargaining creating upward pressure on wages in the labour market.

So it is heartening to see the federal government introduce legislation that will tip the balance a little bit back towards workers during collective bargaining. Of course, it does not go far enough. What really needs to be done is laws need to be passed that will make it easier for workers to organize. However, the level of government with that responsibility is the Provincial level and most of them are Conservative governments.

Indeed, the backlash against the legislation by conservative commentators and the business community has been predictable. It is also overblown. Even with this legislation businesses will still have the most power and the greater advantage during labour disputes. This just reduces that by a small amount. Of course, that will not prevent them from claiming all sorts of negative outcomes if the legislation is passed. They are completely unwilling to give up even a small part of their power and advantage.

The fact that workers have not seen any benefit from the increase in productivity was never sustainable and negative outcomes for the economy and businesses were inevitable. They seemed sustainable in the last decade or so because credit was practically free. Who needed wage increases when you could get money from the bank at negative real interest rates? That situation was always going to be reversed it was just a matter of when. The economic impact of the COVID pandemic just caused that reversal to be much more sudden and steep than if it would have followed a more typical business trend.  

With credit no longer being free the house of cards that was built on it is crashing down. The first victims of that destruction are the young people, which is not new as young workers are always the first victims of economic shocks. However, if you are a more mature worker you will not be spared the impacts. Higher interest rates will have an impact on you in due time. The banks will eventually reduce interest rates again. They have no choice because the economy is no longer structured to absorb high interest rates for long anymore. However, the days of negative real interest rates are probably behind us. So, if we want our purchasing power to keep up with inflation we are going to have to see our wages go up.

That is only going to happen if the balance of power between business and their workers becomes more even. The "anti-scab" law is a step in the right direction but more needs to be done.

Now the Polls are Just Becoming Ridiculous

Glancing through my political sights today I noticed a screen shot of a seat projection that had the Conservatives above 200 seats and the Liberals under 70.

After I stopped laughing I could not help but think that the pollsters and the pundits that report on these ridiculous polls are setting up some really big expectations for the CPC.

In the last few change elections, both Federally and here in Ontario, the party that won the election and replaced the sitting government started out trailing the incumbent or were tied with them. They did not have commanding leads going into an election campaign, they built one as the campaign unfolded.

With the Conservatives currently polling in the low 40 there is only one way the Conservative estimates can go. 

Down.

When it will happen remains to be seen and if my suspicions about polling companies are correct they will not go down any time soon. However, when the writ is dropped, and the polling companies will have to compare their estimates with actual election results, things could get rather sticky for them and the Conservatives.

If, as I suspect, the polls are not currently reflecting the true picture of the political situation in this country then the pollsters will have to begin showing that before an election if they want to be considered credible after that election. If their estimates are way off on election day they will never be trusted again and they know it. Plus, they will threaten their paying business of doing surveys since survey companies use political polling as marketing tools.

The implications for the Conservatives is their polling estimates will go down while the Liberals will go up and then the story will be the Liberals have the momentum, which could be a death blow to the Conservatives' election chances, particularly if it happens close to or during an election campaign.

There has been a full court press by the Canadian media to have Justin Trudeau resign as PM, although none of them have engaged in election speculation, despite massive polling leads for the Conservatives. That should be a clue by the way. I suspect the pollsters are on board with assisting the media in their efforts since they have no worries about their estimates being tested by an actual election. 

I also believe that the very sophisticated data management teams of the political parties have data indicating the true political situation in the country, which is why Justin Trudeau has not shown any indication of leaving and his caucus is solidly behind him. It also explains, that except for a few drive by suggestions by the Conservatives to the NDP, no pressure has been placed on the NDP and the Bloc to join the Conservatives in forcing an election. 

Mr. Trudeau probably has data telling him he can outwait the polling companies. Mr. Poilievre probably has data indicating that an election would not be the slam dunk the public pollsters are saying it would be. Either way both seem to be content to let things go on as they have been going on for the foreseeable future.

In an effort to push PM Trudeau out of his job our media could be overplaying its hand and in the end they could make things very difficult for Pierre Poilievre as we get closer to an election.

Book Review: The Expendables: How the Middle Class got Screwed by Globalization

I just finished reading this book by Jeff Rubin. I found it a bit of a slog because in several places he got basic facts wrong. For example, he states that those migrants who crossed at Roxhan Road in Quebec and then asked for asylum entered the country illegally. That is simply false. The vast majority of those who crossed were in the US legally but doubts about a change in their status during the Trump presidency convinced them to move north. They came to a designated border crossing, crossed the border, presented themselves to Canada Customs officials and then asked for asylum. None of that is illegal either domestically or internationally

It is hard to take a book seriously if it cannot get simple facts like that correct.

However, the central argument of the book is valid. The era of globalization, with its love affair with free trade agreements has certainly kicked the stuffing out of the middle class in the West. This book looks at the situation the United States, Canada and the European Union but its primary focus is the US experience. The author goes into great detail just how much of a negative impact that globalization has had on the middle class. There is no denying that central argument.

The problem lies in his proposed solution which is to introduce more protectionism into the international trading system. Anybody who has read this blog before knows that I am no fan of free trade agreements. They have never lived up to their promises. However, the historian in me also knows that when countries or trading blocks establish high trade barriers they protect their domestic industries but at the price of making their economies more brittle and less able to handle economic shocks. This was true almost a century ago and it is doubly true in the integrated world economy we have now. When I say integrated I mean the fact that everything is now done by computers. When you can transfer ridiculous amounts of money with just a few key strokes and you no longer have to worry about transferring the currency or precious metal to cover that transfer the level of economic integration is way too high to create economic islands.

That does not stop Mr. Rubin from trying to argue just that. He does so by arguing that President Trump's tariffs on China, the EU, Canada and Mexico brought back jobs to the US. There is some truth to that but the jobs brought back are a mere fraction of the ones lost. As well, when those jobs returned they usually did not return to the old locations, they returned to US states that have "Right-to-work" laws on the books so most of those returning jobs are not as high paying as the ones that left.

Mr. Rubin touches on one of the big problems caused by globlalization. Namely, the level of unionization in the West falling off a cliff in the last 50 years. That is exactly right. That situation created the condition where workers could not stop business from siphoning off the financial benefits of increased productivity over the last five decades from workers to themselves and their stockholders. However, Mr. Rubin fails to make that connection.

The promise of free traders has always been that there would be more winners than losers and programs to assist the losers would be created to make certain they were not left behind. That promise was broken from the start but that hardly matters because it was the wrong promise. Most of the jobs that have been lost in the West as a result of globalization have been manufacturing jobs. What has been left behind are mostly service jobs. They are the jobs that were supposed to replace the manufacturing jobs but they did so at much lower wages and benefits. So the promise should have been that Western governments would make it easier for service workers to organize to allow those jobs to really compensate for the lost manufacturing jobs. The level of unionization does not need to be high. As Mr. Rubin points out at the height of unionization in the US less than one-third of jobs were unionized but that was enough to create upward pressure on wages economy wide. If we reach those same levels we would probably see a similar result.

The simple fact is Westerners cannot compete on wages for the manufacturing jobs that have been offshored and while higher tariffs might change that it will not do so to the extent of bringing all of those jobs back and certainly not at the wages and benefits that workers in those industries used to enjoy. The solution lies in making the jobs that replaced those manufacturing jobs better paying and with more benefits. The true failure of globalization and free trade proponents was not doing that. Until they and Western governments are willing to facilitate that process the outlook of the ever shrinking middle class in the West will grow increasingly bleak.

That is the connection Mr. Rubin failed to make which is unfortunate because otherwise he made a good case for what is ailing the middle class and the fact that something needs to be done about it.