The Circle of Government Borrowing from the Rich to Payouts to the RichThe imperialist oligarchy regards lending to governments and then profiting from government projects and payouts as a way to skin the ox many times. The government borrows money from private interests to finance its deficits. As it borrows from the rich oligarchs, the government simultaneously announces pay-the-rich schemes through public/private/partnerships to build infrastructure and other projects. Much of the activity in the service sector is arranged through government contracts to global cartels, including food and laundry services in hospitals and prisons, military supply contracts and extremely lucrative contracts for pharmaceuticals. The imperialists' "virtuous circle" was summed up in a recent item in TML Weekly: 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 simply saving their own troubled investments and using some of the money to buy 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.
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. (From TML Weekly, Public Infrastructure Spending Programs to Pay the Rich and Sustain Class Privilege and Control, June 27, 2020.)
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This virtuous
circle of the imperialists 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, an
imperialist think tank, 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.