Public Infrastructure Spending Programs to Pay the Rich and Sustain Class Privilege and Control

Business pundits of the C.D. Howe Institute have been advising the federal government on how to defend the private interests of the rich during the pandemic. They formed a Crisis Working Group on Business Continuity and Trade and have now issued eight communiqués. The latest is called, Accelerate Infrastructure Projects and Adapt Restructuring Processes.

Their concern is based on their social class being as members within the ruling imperialist oligarchy. No one could doubt their sincerity in serving their cause to preserve and defend the immense social wealth and class privilege of their peers and their control of the country's economic and political affairs. The President of the C.D. Howe Institute William B.P. Robson writes, "Among the highlights of the C.D. Howe Institute's work over the years are liberalization of trade and investment in North America."

Liberalization signifies imperialist globalization, the anti-social offensive against the well-being and rights of the people, and the greater integration of Canada's economic, political and military affairs into the U.S.-led imperialist system of states. A significant aspect has been the proliferation of pay-the-rich schemes giving public funds to the largest and most powerful private companies and cartels of the global oligarchy.

The C.D. Howe Institute says its "impact" is such that its writings are "a pre-eminent source of trusted policy intelligence" and "required reading amongst senior decision-makers from coast to coast." The C.D. Howe Institute boasts that its "policy intelligence has laid the intellectual ground for such achievements as the development of continental free trade and ending the unsustainable deficits of the 1970s and 1980s."

The C.D. Howe Institute is a loud and prominent voice amongst the ruling elite for the anti-social offensive of the last three decades in favour of the imperialist oligarchy and against the broad interests of working people. The C.D. Howe Institute provides arguments to dissuade intellectuals in particular from participating consciously in uniting with working people in acts of finding a new direction for the economy that serves the well-being of the people and leads to solving the contradiction between the socialized nature of the modern economy and its continued control by powerful competing private interests and the resulting recurring economic crises. The existence of the C.D. Howe Institute and its influence underscore the necessity for the working class to have its own institutions that encourage working people including intellectuals to participate consciously in acts to find a way forward for the people and society and develop their own thinking, theory and ideology by engaging in acts to build the New.

Infrastructure to Pay the Rich

Communiqué #8 of the C.D. Howe Crisis Working Group demands federal funds be forthcoming to "provide much-needed stimulus and help Canada's economy recover from the COVID-19 crisis." A persistent emphasis is on public funding of large infrastructure projects to pay the rich.

Infrastructure is an indispensable social means of production used by all sectors and enterprises in the collective economy. The value from infrastructure is distributed widely throughout the socialized economy and should likewise be fully and objectively realized.

Fixed infrastructure such as roads and bridges is similar to machines and buildings; it transfers its value over time to users. The fixed transferred-value arising from the use of infrastructure can be scientifically identified and related to those enterprises and means of production that need, use and consume the value.

Circulating infrastructure such as water and electricity transfers its value in identifiable amounts, which are used and fully consumed. The circulating transferred-value can be identified and related to those enterprises and means of production that need, use and consume the value. The circulating transferred-value market value should be close to the price of production for the quantity consumed.

Communiqué #8 recommends amongst other things: "Stimulus through accelerated infrastructure spending -- specifically: the possible role of infrastructure spending to boost depressed aggregate demand...."

In addition, "broadband connectivity is a critical 'backbone' for long-term national prosperity. [...] To guide future national infrastructure priorities, Canada needs a national strategic assessment to identify those infrastructure investments that would boost long-run economic growth...."

"In order to employ idle industrial capacity and trades, governments should consider accelerating spending on those public infrastructure projects that boost long-run Canadian productivity."

The C.D. Howe Institute recognizes infrastructure's role in boosting productivity and seeks to use that necessity as a means to enrich private interests writing: "Facing a protracted recovery in private-sector non-residential investment, Canada should seize this near-term opportunity to address its maintenance backlog for aging public infrastructure assets -- for example, repairing the large shares of bridges, roads and linear water infrastructure that are in poor condition (i.e., at or past projected life)."

This is all well and good but the C.D. Howe Institute fails to identify who will profit from this "near-term opportunity." These projects will all become public/private/partnerships under the control of some of the biggest private enterprises and cartels. This includes not only the private expropriation of added-value directly by the big private construction companies but the private financing of these infrastructure projects by the global imperialist oligarchy through their purchase of government securities. The Institute's policies seek to defend the control and ownership of the main sectors and enterprises of the Canadian economy by the imperialist oligarchy.

The C.D. Howe Institute does not concretely analyze the central role of critical infrastructure in the modern economy and the necessity of a new pro-social direction. Infrastructure serving the economy generates enormous value and is crucial to all sectors and enterprises. The building and maintenance of infrastructure must be through public enterprise under the management and control of working people accountable to the public. All public and private enterprises must realize (pay for) the value they use from infrastructure in a transparent way. For this to happen, infrastructure must be in the hands of the working people and under their control as public enterprise with the value they create and subsequently realize invested back in the infrastructure and in other ways to develop the local and national economy.

The imperialist oligarchy eyes infrastructure as a means to skin the ox many times. First the infrastructure is necessary for the economy and all its enterprises and institutions. Second, although ostensibly said to be public, the money is borrowed from the financial oligarchy and becomes part of the public debt to the imperialists. Third, the big construction cartels, many of them headquartered outside Canada profit directly from the construction of the projects. Those private enterprises are guaranteed payment and profit and do not have to wait to have the value in the infrastructure they build realized through sale or its protracted use. Fourth, the big private enterprises throughout the economy benefit from the cheap price they pay for the use of the infrastructure under the hoax of "industrial" pricing to attract investors.

The Infrastructure Pay-the-Rich Virtuous Circle

The federal government's infrastructure program to pay the rich, which the C.D. Howe Institute demands be expanded immediately during the current crisis, has four main components that can be summed up as follows.

1. The Bank of Canada begins the process with the purchase of securities held by the global financial oligarchy. Some of the corporate bonds contain mortgages and other loans owned by the private financial institutions and biggest corporations. Many of the mortgages and loans contained within the bonds are now coming under stress from the economic crisis and may collapse. The Bank of Canada has said the amount it may purchase could reach $150 billion and will include the purchase of bonds held by provincial and other levels of government. In addition, the public Canada Mortgage and Housing Corporation (CMHC) has announced the purchase of $50 billion worth of mortgages held currently by the big banks. The rationale behind all this public money pouring into the coffers of global oligarchs is that the private moneylenders will now invest in the troubled economy but in fact those same global financial institutions are buying guaranteed government securities.

2. The financial oligarchy takes the public money from the Bank of Canada and CMHC from the purchase of its securities and buys the now even more plentiful government bonds, as the federal and other government deficits have soared. These purchases become a safe haven for the social wealth of the oligarchs during the crisis where other investment opportunities have dried up or have become too risky. The guaranteed government bonds even pay interest.

3. The government takes the private money it borrows from the financial oligarchy through the sale of its securities and puts a portion of the money towards financing infrastructure projects. This becomes the seed money to begin construction.

4. The government enlists the private global construction cartels to build the infrastructure projects. Those companies do not have to raise the financing themselves or worry about selling the finished project. The government gives them the construction money as the projects proceed, which includes a healthy profit. This activity is all guaranteed by the government, including exorbitant prices the private construction cartels charge to complete the projects.

5. Once built, the main users of the public means of production (the roads, bridges, electricity etc), which are the big private enterprises in the economy, do not have to pay the full market price for the value of the portion of the infrastructure they consume, as they are given preferential concocted "industrial" rates.

This virtuous circle explains how the federal government's infrastructure plan called "Investing in Canada" pays the rich and contributes to the ever greater concentration of wealth and power in fewer hands. The federal government in 2019 committed $187 billion in infrastructure funding over 12 years. The C.D. Howe Institute insists the recent crisis should prompt the government to spend even more and more quickly not only on new projects but on maintaining and upgrading existing infrastructure.

Canadians are directed and browbeaten not to object to this direction for the economy, as it "provides jobs and the infrastructure" so sorely needed. But a new direction is exactly what is needed to bring the economy under the control of the people who do the work and prevent recurring crises and solve other social and natural problems. A new direction for the economy would prohibit government borrowing from private institutions. A new direction would construct, maintain and manage public infrastructure using permanent public construction enterprises. It would ensure that the value from the infrastructure is fully realized by the public and private enterprises that use and consume the value and that this value would be poured back into the economy and not be taken out by the rich to some tax haven or other place.

The C.D. Howe Institute Attempts to Justify Public Money
Flowing to Private Interests

The communiqué says, "Public spending is economically justified where the net benefits to society exceed the costs of the outlays. The private sector is well equipped to deliver projects that will yield profits across the life of the asset. In contrast, governments justifiably deliver or contribute to capital investments when a project provides benefits for society that exceed the net present value that would accrue to a private owner."

This gobbledygook is totally self-serving. The "net benefits to society" are in fact pay-the-rich infrastructure schemes that benefit the financial oligarchy and guarantee their continued privilege and existence. A modern economy needs extensive infrastructure to exist. The C.D. Howe Institute wants public funds to be used when "the net benefits to society exceed the costs of the outlay" while the private sector delivers "projects that yield profits across the life of the asset." The C.D. Howe Institute posits "net benefits to society" in contrast to private profits. If the private profits were public profits would that not be a net benefit to society?

The public could justly argue that the expropriation of private profits benefitting a few oligarchs is a detriment to society and a drag on the economy especially within the current necessity to build a self-reliant all-sided local economy that is free of recurring economic crises, which could be characterized as a modern nation-building project. Those private profits are needed as "net benefits to society" for a vigorous all-sided economy that has the necessary means for increased investments in social programs, extended reproduction of the economy as a whole and to humanize the social and natural environment.

The C.D. Howe Institute attempts to justify the continuation of private profit in a situation where big projects and development cannot occur without public funds and pay-the-rich schemes. This outmoded direction for the economy ensures that no project of any size can proceed without a pay-the-rich component from the pooled funds of the state, which mostly come from taxes on working people and small and medium-sized enterprises. The C.D. Howe Institute does not want to move on to the New where public enterprise is the deciding and driving force in all the major sectors of the economy and the working people themselves are in control.

This article was published in

Volume 50 Number 23 - June 27, 2020

Article Link:
Public Infrastructure Spending Programs to Pay the Rich and Sustain Class Privilege and Control - K.C. Adams


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