Commentary
The Deepening Economic Crisis
September 11th is frequently described as a watershed event in terms of the economic downturn the world is experiencing. However, it must be remembered that prior to the terrorist attacks in the United States the world economy was already in the grips of a severe and protracted crisis. For 17 months prior to September 11th the world's major financial markets were in trouble and by late summer of this year all the forecasts were that the world capitalist economy was headed towards recession.
Whatever its precise role, the political shock delivered on September 11th contributed to the general economic instability. It is estimated that the already fragile U.S. economy took a $100 billion hit as the result of direct and indirect disruption to the economy. Other countries were also pulled into the worsening economic turmoil.
The Canadian economy which has been developed as little more than a branch plant economy for foreign, mainly U.S. monopolies, is no exception. After months of predicting that the Canadian economy could withstand a downturn in the U.S. economy, Paul Martin is now being proven terribly wrong. This should come as no surprise. Intricately linked with the U.S. economy through the Free Trade Agreement and the North American Free Trade Agreement, and dominated by U.S. monopolies and multinationals, the Canadian economy is at the mercy of what happens in the United States.
Not even low labour and other production costs (because of the low value of the Canadian dollar and subsidized labour costs through state-funded programs like medicare) are an incentive to the monopolies to keep their branch plants open. In October, Freightliner, a truck manufacturer and subsidiary of Daimler Chrysler, announced it was moving 1,000 jobs out of Canada to the United States. Production at its Kelowna plant, along with 719 jobs, was shut down and moved to Portland, Oregon, while production at its Woodstock Ontario plant and another 321 jobs were moved to High Point, North Carolina. In announcing the closing, executives of Freightliner specifically mentioned that lower production costs in Canada were not an incentive to keep production here and even rejected an offer of assistance from the British Columbia government when it came to making the decision to leave.
Freightliner is but one example. The extent of the problem in the economy can be seen in the magnitude of the job losses being experienced in major sectors of the economy. The automobile industry is suffering massive layoffs. Besides the closure of Freightliner, Daimler Chrysler is slashing 4,300 jobs at its facilities in southern Ontario. General Motors next year will close its plant at Ste. Thérèse, Quebec with the loss of 1,700 jobs. It is estimated that the softwood lumber dispute has resulted in 30,000 workers being laid off in the forestry industry. The collapse of Canada 3000 resulted in 4,800 jobs being eliminated overnight and Air Canada has announced plans to cut 9,000 jobs. The B.C. government announced it would be eliminating between 8,000 and 11,500 jobs over the next three years (only 2,500 through attrition).
In Winnipeg, several major manufacturers are laying off workers. New Flyer Industries recently announced that 500 workers will be laid off in March, while another 500 are being laid off at Boeing. Motor Coach Industries and Bristol Aerospace have also announced layoffs recently.
Corresponding to the deepening crisis there have been renewed calls for the provision of government subsidies and handouts to the monopolies and multinationals to prop up their tumbling profits. Gone are the demands that government should stay out of business and allow the "hidden hand of the market" to solve all of society's problems. Air Canada (and Canada 3000 before it collapsed) demanded and got government help to keep it afloat. No doubt there will be others as the largest and most powerful corporations attempt to shift their profit crisis onto the general public. Interestingly, those who just a few years ago were denouncing government handouts to "corporate welfare bums", are now leading the chorus for government handouts to those same corporations.