It's Time to Hang the Priests of Neoliberalism.

Failing to fairly tax the rich reminds me of nothing so much as the stadium extortion game that major league teams now routinely play with municipal and state governments. Give me a new stadium and all the concession revenues or I'm taking my team and walking.

Why does that sort of shakedown work? Because there's another municipality somewhere willing to pay for the privilege of becoming the next shakedown victim. They're honing the knife they're going to hold to their own throat. Only it's not their own throat, it's some future mayor's throat. It's whomever is in power when the "stadium shakedown cycle" rolls over again.

We do the same thing when it comes to taxation. With the big and the powerful, we roll over.  The Globe's Eric Reguly says a new study on globalization and the free mobility of capital, means middle class Canadians are getting doubly screwed.

Western governments have been forcing the middle classes to shoulder more of the overall tax burden. Why? Because the middle classes are the easiest targets. Tax wealthy mobile professionals and they hit the road, moving to low-tax areas like Monaco. Ditto corporations; the recent tax-inversion craze has seen dozens of big companies use takeovers to shift their legal headquarters to tax havens such as Ireland.

In this sense, the Western middle-income classes are losing twice. Jobs are disappearing and their relative tax loads are rising.

By the mid-1990s, NAFTA was already in place. A few years later, most of the European countries opened their borders under the Schengen agreement and China joined the World Trade Organization. Dozens of countries signed bilateral free-trade agreements.

During that era, OECD governments came under enormous pressure to fund greater social welfare spending, partly to insure their workers against the economic shocks triggered by free trade. At the same time, the tax bases in some of these countries eroded, the result of the mobility of wealthy professionals and corporations. The governments’ response? “Between 1994 and 2007, the average OECD economy responded to higher [trade] openness by placing a higher tax burden on the relatively immobile middle-income classes,” the trio of authors said.

How will governments reduce the wealth divide if they have convinced themselves that open markets mean it’s difficult or impossible to boost the taxes on the mobile rich?

Endless surveys, including ones from Harvard Business School and the Pew Research Center, point to rising wealth inequality and middle-class stagnation as a top social and economic concern.

Shifting the tax burden to the middle class as globalization continues apace – new trans-atlantic and transpacific trade negotiations are under way – will only make the wealth divide worse.

Now, none of this should come as a surprise. The studies Reguly cites are new but this wealth gap/inequality problem has been chronicled, in relentless and unassailable detail, by the best minds such as Nobel laureate economist Joe Stiglitz. Read his books, especially, Freefall; The Price of Inequality; and The
Great Divide: Unequal Societies and What We Can Do About Them.

The critical point to understand - and never forget - is that if you're on the wrong side of the wealth gap and the inequality problem, the party to blame is your government.

Stiglitz demonstrates that modern inequality is neither merit nor market driven. It is legislated. It is the hallmark of neoliberalism, the political and economic disease that has infected our legislators, our leaders. 

Canadian politicians don't come right out and say it but they subscribe to this "wealth creator/job creator" mantra that's embedded in the free market capitalism/globalization faith. Did I say "faith"? Why yes I did. That's because it's faith-based economics. It's an ideology, nothing more. It survives despite empirical evidence, facts, showing that it's failed us. Our political caste, the current management included, clings to it for one simple reason - they know nothing else. They don't have a fu#king clue of what else to do or how to change even if that's what they wanted. They're indentured to it and because of that, so are we.

Here are some helpful thoughts from John Ralston Saul on our economic disease: neoliberalism/free market fundamentalism/globalism. He writes that we are currently wallowing in, "a vacuum of economic thought, which adds an element of even greater uncertainty becAuse economics is a romantic, tempestuous business, rather theatrical, often dependent on the willing suspension of disbelief by the rest of us."

"Civilizations, religions, languages, cultures, nations, even nation-states tend to last centuries. For economic theories a quarter century is a good run. A half-century is unusual. More than that is something to boast about."

He goes on to point out that free trade flourished in earlier times and was at its zenith at the outbreak of the First World War:

"Keynes went on to demonstrate the extent of economic interdependence inside Europe in 1914. Germany had been the leading customer of Russia, Norway, Belgium, Switzerland, Italy and Austria-Hungary; the second best of Britain, Sweden and Denmark; the third best of France; and the primary supplier to Russia, Norway, Sweden, Denmark, Holland, Switzerland, Italy, Austria-Hungary, Romania and Bulgaria, as well as the second largest to Britain, Belgium and France. Neither these investments nor this trade stopped these countries from slaughtering each other in an unprecedented way for five years."

"Instead the closest, most integrated of economic and trading partners went to war with each other in a particularly vicious manner. And immediately after that they variously embraced communism and fascism and the worst of racism and, almost incidentally, high tariff barriers. And then they went to war again.

The author has one chilling insight on how globalism was hijacked. He notes that "commerce" today has become the fiefdom of capital markets, not trade in goods and services as was intended at the outset.

"It isn't simply a matter of failures and unforeseen contradictory forces. The most revealing measurement is the system's own successes. Why? Because it increasingly feels as if even the promises fulfilled are not having the expected effect. A few questions will suggest the pattern."

"Most of the foreign exchange movements are about speculation, not investment or wealth creation. The amounts involved are forty to sixty times that of real trade. Serious supporters of Globalization like Jagdish Ghabwati and partial critics like the economist Joseph Stiglitz and a growing number of others are horrified by what they see as a hijacking of free trade movement to support open capital markets."

He argues that free trade and wealth, in the sense of national well being have become decoupled. His book is now ten years old but that's also a measure of how long we have wallowed in this interregnum, waiting for some new models of economics and governance. One point his book proves, convincingly, is that there's no foundational truth to globalism/market fundamentalism/neoliberalism that is rooted in inevitability as so many of us have been led to accept. It is an ideology, nothing more, akin to a religion and it is entirely faith-based.

Our previous prime minister, Shifty, was a true believer. Our current prime minister, Slick, goes to the same church. He's very much a neoliberal adherent of globalized free trade, the very ideology that preys so miserably on middle class Canadians. When the media were conducting their post mortem on the Trudeau government at six months, Justin held himself up foremost as an agent for international trade.

Trudeau has promised to increase taxes on the wealthiest Canadians and lower taxes for the middle classes but he confuses symptoms with the disease. Taxes, sure, but that's no lasting solution. It's power that Canadians need restored, power that successive governments have yielded through corporatism, globalization and its companion political apparatus, neoliberalism. Tax hikes here, tax breaks there -  that's a sop, gestural and nothing more. That changes budget to budget, election to election, government to government.

There is no sense, none, that Trudeau grasps the scourge that neoliberalism visits on ordinary Canadians.

It was just this week that the High Temple of neoliberalism, the International Monetary Fund, shattered forty years of orthodoxy to admit that neoliberalism is fueling inequality and stunting economic growth. Will Trudeau heed the message, accept the obvious? Don't count on it. He, or more accurately his advisors, have invested their careers in this ideology. It's all they know. Even if they did want to chart another course, find a better economic model, they wouldn't know how to begin.