“You can mine for gold, but you can sell pickaxes.”
-Anonymous

One of the biggest fortunes made in the Californian gold rush of the nineteenth century was that of Levi Strauss, who made his money selling everything from tents and buckets to the denim pants that still bear his name. He got paid whether his customers found gold or not. All retailers make money whether we find happiness in the products they sell us or not. Indeed, the longer people search for gold, or happiness, the more pants and other stuff Mr. Strauss and other retailers can sell them.

Affluenza has fuelled a massively inefficient search for happiness. Rather than dig through the earth in search of gold, or dig through Keynes’ rubbish dump looking for bottles of money, modern capitalism relies on billions of people searching for new products that will fill the hole in their lives that was briefly plugged by the last purchase. The banks, the manufacturers, the advertisers and the retailers all make their fortune by selling us the dream that ‘there’s happiness in them there hills’. Of course, the last thing retailers want is for us actually to find it.

As we have seen, poorly understood economic indicators such as GDP help to ensure the global debate about building strong economies focuses on the flawed idea that the amount of economic activity is in some way a proxy for the rate of economic or social progress. In fact, the empirical link between growth in the size of an economy and human happiness is very weak – some would say non-existent. This should come as no surprise. Consider the following:

• No shareholder would be impressed to learn that their company was spending lots of time and money having meetings with itself, even if the meetings required a lot of expensive travel that necessitated new teams of people dedicated to booking that travel.

• No parent would be impressed to find that their child had spent hours moving the mess from one side of their bedroom to the other.

• No government would be pleased to have riots and vandalism, even if they caused a boom in the local window repair, painting and construction industries.

So why are politicians and business leaders impressed when told that GDP has grown because of a spike in the consumption of imported appliances and bottled water (otherwise known as ‘strong retail sales figures’)?

The answer is both simple and cynical. Wasting natural resources to produce stuff that will soon be thrown away doesn’t generate true national wealth, but it does generate enormous wealth for some people in the supply chain. That’s all it does, and that wealth creation is naturally very, very important to those people. But to suggest that borrowing money from overseas to buy things that were made overseas – things that are quickly thrown out and buried in local landfill – plays an important role in making a national economy strong is simply absurd.

It is hard to believe that all the rowing machines that accumulate in the spare rooms of the nation might be seen as an indicator of wealth or progress. But, as enormous amounts of energy, natural resources and human labour are wasted on making products that are never used, or that are designed to fall apart, what have the economists and politicians had to say about this consumerism-induced waste? Almost nothing, except for implicit praise. Indeed, rather than highlight the economic and environmental harm of such waste, an enormous number of economists and politicians have spent decades trying to shift the rules of global trade, and the norms of ‘sensible economic policy’, to generate more such waste.

The term ‘Washington Consensus’ has often been used to summarise the fundamental tenets of the neoliberal agenda at the global level. According to its adherents, who have shrunk in visibility if not number since Donald Trump was elected and the UK supported Brexit, the way to increase the efficiency of an economy is:

• To cut tax rates for wealthy citizens, allowing them to spend more money on consumer goods;

• To cut taxes on businesses, allowing them to appropriate a larger share of national income, on the promise that they will invest some of the proceeds into the production of more stuff;

• To cut spending on the labour-intensive community services used most heavily by low-income earners (such as public schools, hospitals and public transport), on the basis that such activity is inefficient and crowds out more efficient private-sector activity;
• To cut the wages of low-income earners, who spend the smallest proportion of their income on the disposable consumer goods that have the highest profit margins;

• To reduce protections for workers, consumers and the environment, so as to increase producer profits; and

• To increase trade with developing countries whose environmental, labour and consumer protections are much lower to help reduce such standards in developed countries.

While there is no doubt that there are times when lowering trade barriers can lead to an increase in the quality of life of some people in some countries, there is also no doubt that far more effort has been expended by groups such as the World Bank and the International Monetary Fund on trying to reduce trade barriers than on trying to reduce water pollution and income inequality – which have also been shown to improve economic performance and human wellbeing.

Once we draw a distinction between whether an activity will create wealth for a producer and whether it will create wellbeing for a community, it becomes much easier to decode the flood of econobabble used to justify the obsession among advocates of the Washington Consensus for lower taxes and less regulation rather than for reduced tax evasion and more environmental regulation. While it is possible for the owners of multinational companies to profit from poor labour and environmental standards in low-income countries that export stuff to rich countries, it is far harder for rich people in rich countries to benefit from an improvement in the standard of living of workers in those developing countries.

Economists have always been aware of the difference between the amount of stuff a nation consumes and the wellbeing of its citizens. The question we must ask is not ‘Why don’t the economists get it?’ but ‘Why don’t the economists say much about it?’

A cynical answer to that question is that most economists operate on the assumption that the customer is always right. So when the IMF and the World Bank offer to pay economists to explain the benefits of using borrowed money to buy new stuff, most of them are happy to take the money. On the other hand, many economists have highlighted the problems with placing the pursuit of GDP ahead of the pursuit of community wellbeing, but such economists are far less likely to be asked to give keynote addresses at the most ‘prestigious’ events. Culture shapes not just economics, but the economists anointed to explain economics to the populace.

***

If millions of people voluntarily gave up buying bottled water tomorrow and instead donated the money they saved to medical research, there would be no reduction in GDP, but there would be a devastating impact on those who profit from the sale of bottled water. There would also be a surge of new jobs in medical research. Given how few people are employed to fill a bottle with water and how labour-intensive research is, there would likely even be an increase in overall employment.

Similarly, if a tax was imposed on the sugary drinks that cause so much ill health, and the tax revenue used to fund a labour-intensive program such as active playgroups for kids, supporters of small government would likely scream about the inefficiency of a program that improved health and created jobs at no net cost to the budget.

It’s not the size of government that is a key concern for many conservatives, but the size of the private sector’s profit margin. When we spend $100 on pie makers and table-top electric wine chillers, the majority of the money goes as profit to the owners of the various parts of the supply chain, but when we spend $100 on a publicly funded teacher, nurse or aged-care worker, there is little or no profit margin to be sliced off. That’s why the proponents of small government who rage against excessive spending on public health care usually don’t mind huge public expenditure on aircraft carriers and fighter jets. They know the military hardware will be built by the private sector and that the manufacturers, like Levi Strauss, will make their profits whether or not the ships, jets and weapons are ever used. The shape of our economy doesn’t just determine how much harm is done to the environment, it helps determine how much profit will be collected by the owners of the supply chain. One thing that manufacturers, retailers, advertisers and transport companies can agree on is that none of them make a buck out of higher taxes being used to fund better quality high schools.

While choosing which activities do most to improve community wellbeing will always be controversial, identifying the economic consequences of such choices is quite straightforward. For example, if consumers shifted away from buying lots of stuff towards buying lots of services, it would have a huge impact on the shape of the economy but almost no impact on its size. And if citizens switched their spending away from stuff they didn’t need and towards services that governments provide efficiently – health care, education, public transport, bigger parks and more museums – there would be no reduction in the size of GDP, but there would be a significant reduction in the amount of profit earned in the economy (the profit margin on $1000 worth of publicly provided childcare is a lot smaller than the profit margin on $1000 worth of branded merchandise . . . but there are more jobs created per dollar spent on childcare than for each dollar spent on handbags and sunglasses).

A shift away from privately provided stuff towards publicly provided services would also lead to much lower consumption of natural resources. Yet as long as people get the same or more satisfaction from high-quality public services as they do from foot spas they don’t use and food they throw away, this shift would have no adverse impact on the happiness of citizens. Indeed, people would likely be happier.

Excerpted from Curing Affluenza: How to Buy Less Stuff and Save the World by Richard Denniss. Published by Between the Lines ISBN #9781771133678. Purchase the book online today.

Trudeau and Finance Minister Bill Morneau pose on budget day in 2016. Photo courtesy of CBC.

Trudeau’s majority win in 2015 promised many things, among them a strong economy and a happy middle class. Early on he revealed the party’s plans to run a “modest short-term” deficit of no more than $10 billion a year to achieve this, and hit the ground running with campaign promises of better infrastructure, innovation spending, and greener communities. Citing the need to jump-start the economy with these investments, the Liberals vowed to balance the budget by 2019–20.

On March 22, Finance Minister Bill Morneau blew through that promise in the 2017 federal budget, announcing a planned deficit of approximately $28.5 billion in the coming year, set to decline “gradually” to $18.8 billion in 2021–22. Long-term fiscal projections are now anticipating deficits until 2050, leaving Canadians wondering how the government ever plans to get back on track.

While Trudeau’s plans were praised by International Monetary Fund managing director Christine Lagarde last year, a number this large is atypical. Governments may run large deficits to stimulate a struggling economy. But despite some quarters that have experienced slower growth, the Canadian economy is currently growing. That means if there’s a sudden downturn, the Trudeau administration would have to plunge even further into the red.

In keeping in line with his campaign promises, Trudeau also promised in the C-44 budget bill to spend $187 billion on infrastructure over 12 years, including a $35 billion Infrastructure Bank. The bank would include the private sector to provide low-cost financing for new projects—a possible way to boost the economy and get much-needed transit projects off the ground. There are high expectations for the results of such spending, and success will largely depend on execution and choosing the right projects.

Trudeau was forced to push himself out of the worst economic decade since the Second World War, and after a sluggish start, Canada’s economy has indeed picked up. It grew by more than two percent in the last quarter, while unemployment in July hit 6.3 percent—the lowest level since the October 2008 recession.

But few of these happy stats may be attributed to Trudeau’s planning.

Much growth in Canada is rooted in consumer spending, which has picked up the slack from declining growth from the resource sector. Low interest rates have allowed consumers to carry the economy for a while, but have also let them rack up a fair bit of debt—making Canadians increasingly vulnerable to sudden rate hikes. On the bright side, Trudeau has set aside $6.6 billion to support skills and innovation, and has been pushing for a European Union free trade deal (spearheaded by the Harper government) to help improve exports.

For some, the irony of the 2015 anti-Trudeau campaign smear that our PM thinks “the budget will balance itself” is sinking in. Meanwhile, other Canadians are basking in the current steady economic climate—whether Trudeau is to thank for that or not. Ottawa hasn’t been shy throughout their planning phase and over the next two years Canadians will watch as they juggle their multiple projects in the air, waiting for results and all the while hoping against hope that we aren’t forced to send the bland old economist back in.

Grade: B

Justin Trudeau has reached the midway point of his term as prime minister. But after two years in power, how much change has he truly made? In this special report, we grade Trudeau’s performance—and our PM has some serious work to do.

TRUDEAU’S MEDIA PRESENCE: C-

“When American news is dominated by a president with no filter, it’s hard to not be enraptured by our self-proclaimed feminist hunk prime minister…. It’s hard to see when we should be genuinely applauding him and when we’re just swooning over a Ken doll with half-decent politics—because our leader seems so much better than the alternative.”

Read more

TRUDEAU ON INDIGENOUS RIGHTS: F

“Trudeau can no longer scrape by with prime ministerial tweets and tokenistic gestures in the hopes that they might somehow solve the problems at hand. Indigenous people, and upcoming generations, want more than ‘a place to store their canoes and paddles so they can connect back out on the land.'”

Read more

TRUDEAU ON FOREIGN AFFAIRS: D

“This is the Liberals’ diplomacy under Trudeau in a nutshell: They are a bulwark of the worst impulses of liberalism and capitalism, and effect superficial dedication to social justice issues in an effort to mask their less-than-savoury endeavours.”

Read more

TRUDEAU ON SOCIAL ISSUES: B-

“We’re not used to a leader who will take off his shoes and walk into a mosque or a teepee, sit with us, and tell us, ‘You belong here.’ But, with only two years left to go, it’s time for more concrete policy that addresses the underlying issues and fears of these minority communities.”

Read more

TRUDEAU ON THE ECONOMY: B

“Trudeau was forced to push himself out of the worst economic decade since the Second World War, and after a sluggish start, Canada’s economy has indeed picked up.”

Read more

What we have, largely, is a budget based in politics, not policy—more a campaign advertisement than an economic document. Thanks to a consistent and persistent PR campaign over the past decade, the government needed an operating surplus to uphold its claim of competent fiscal management—a necessity it deliberately created. Harper works tirelessly to convince Canadians the economy is simple. That spending is bad, taxes are bad, a balanced budget is good, and that no party understands that but his. If there’s any indication of Harper’s widereaching political success, it’s that today every party agrees a balanced budget is necessary; they only disagree on when they’ll get there.

Unfortunately, when a budget becomes a political answer, rather than an economic one, many Canadians lose. Let’s look at the document itself. It was never really balanced. With slumping oil prices and slow growth, a surplus wouldn’t come without consequences. The feds delayed the release of the budget by weeks so they could sell off $2.1 billion of its General Motors shares—a move Stanford, known for his past work with the Canadian Auto Worker’s Union, says will hurt future investment from GM. Then, it dipped into the Employment Insurance operating surplus for a cool $3.4 billion. (Meanwhile nearly 60 percent of unemployed Canadians are ineligible for EI.) Finally, the feds took $2 billion from the emergency contingency fund. And yet, we get headlines that boldly declare “balanced.”

In reality, the budget “bakes in growing income inequality” warns Armine Yalnizyan, a leading economist with the Canadian Centre for Policy Alternatives. It’s low on meaningful investment. It barely nods to public transportation or infrastructure spending. There is nothing for Canada’s youth. What it does promise is a familiar pattern: tax breaks that disproportionately favour the wealthy, and new ways to reduce the abilities of government. And so we get a government that consistently seeks ways to reduce revenue streams, increasing dependence on a select few, such as Canada’s oil economy. “[The Conservatives] have no plan other than $100 a barrel oil,” says Yalnizyan. “That’s their economic action plan.”

In a way, it’s nothing new. Under Harper’s leadership, the Conservatives have been remarkably consistent in their messaging since the party’s victorious 2006 campaign. That platform declared “Canadians deserve to keep more of their own money,” which acted as a (often mis-) guiding principle for the government. Under Harper, the government slashed corporate tax rates, rolled back the (since renamed) goods and services tax, and introduced other boutique tax cuts. In doing so, the government deprived the treasury of over $300 billion, limiting the country’s resources during a tough economic recession.

An economy, however, needs an engine, argues Stanford—when the public isn’t spending money, it falls to the government to open its wallet. Instead, it cut off its source of revenue. When asked for the government’s guiding economic principle then and now, Yalnizyan answers quickly: “To write themselves out of a job description.”

Which brings us to today. In place of a truly thriving economy, we get policy made for politics. Canada’s economy is fragile. The oil slump is real, and the country’s dependence on the energy sector has been exposed. People aren’t spending money. Economists say the economy shrunk in the first quarter of 2015, and that will likely continue. We have a budget that isn’t made to govern and an economy that isn’t made for the majority of Canadians. For Stanford, an evaluation of this government is easy. “The economy,” he says, “has performed worse under the Harper Conservatives than any other government in Canada’s post-war history.” Well, in every way but politics, that is.

The Parliamentary Budget Officer, meanwhile, announced that the government’s operative budget will— based on overly-optimistic projections—actually sit in deficit at the end of this year. But that never really mattered to the Conservatives. It was the headlines they were after.

Site of the now-rejected Kanata gravel mine on land owned by the Elizabeth Metis Nation. Satellite imagery via Google.

A project that would have provided hundreds of Metis with jobs and affordable housing was quashed on Tuesday, with a 7-6 vote by the Edmonton City Council. And though it may not seem so at first glance, that decision was likely for the best. While the project’s benefits were appealing, there were some deeper problems with the proposal, especially its environmental toll. But whether you agree with the Edmonton councillors’ decision or not, the case raises a host of important questions: how to address the pressing social and economic needs of Canada’s aboriginal communities, for instance, and how to balance economic prosperity with environmental sustainability. These are thorny, complicated, politically charged issues, so it’s important to pay attention to decisions like this and how they’re getting made.

Here’s the background: Kanata Metis Cultural Enterprises Ltd., which is owned by the Elizabeth Metis community, proposed a gravel mining operation to be started up on land it bought in 2009.  According to  the  corporation’s proposal, the mine would have been operated for three to five years, created up to 300 jobs for members of the Metis nation, and yielded 1.7 million tonnes of gravel, the profits of which would have been used to fund Metis-focused social programs such as building affordable housing.

Opposition to the mine sprung up because the proposed site was right beside the North Saskatchewan River and, according to local conservationists, better left untouched. The North Saskatchewan River Valley Conservation Society posited that a gravel mine in the river valley could damage nearby wetlands and kick up large amounts of dust, harmful to area residents.

The argument against the mine was bolstered by the fact that the Edmonton Municipal Development Plan of 2010 specifically prohibits the harvesting of resources in the North Saskatchewan River Valley.

The task of the Edmonton City Council was to determine whether an exception could be made to the prohibition. Normally such a decision would be based on the potential value of the proposed project. But this particular case gave councillors much more to think about, as it raised questions about environmental protection, self-government, and aboriginal land rights (The Kanata Metis appeared to have taken on the role of standing in for Metis people across Canada, the term “our people” having been used frequently by proponents of the mine).

At a very basic level, the case could be made that Kanata Metis Cultural Enterprises should be allowed to mine the land because they own it. And although the city has prohibited activities such as mining in that area, the question of land ownership and use is complicated when it involves Aboriginal groups, self-governance being a stated priority of the Canadian government’s relationship with Aboriginal peoples. Although the mining proposal isn’t a cut and dried analogue, aboriginal communities’ autonomy is part of the mix of issues here.

Another major argument in favour of granting the Kanata Metis corporation exclusive mining rights to the area, was that the Metis nation, like many Aboriginals in Canada, are in need of assistance, and owed some form of compensation.

The 2006 census reported that the Metis employment rate amongst adults was 74.6 percent. Although this was a four percent improvement over 2001’s figures, it still placed Metis behind the non-Aboriginal population, whose employment rate was 81.6 percent. The 2006 census also reported that, as of the previous year, the median income for Metis was $5,000 lower than it was for non-Aboriginals. This inequity was even greater in Alberta, where the median Metis income was $6,600 lower than non-Aboriginals’.

Evidently a job-creation project with a focus on Albertan Metis deserves some thought, especially if it is also going to contribute funding to housing and training programs, as the Kanata Metis corporation said the mine would have.

But while the local Metis population would have benefited from the gravel mine, how should that be weighed against the environmental costs?

While campaigning in favour of the mine, Archie Collins, a councillor of the Elizabeth Metis settlement, described the Metis people as “stewards of the land,” a cliché about indigenous peoples often invoked by interested parties, aboriginal or otherwise, that portrays aboriginals as inherently protective and understanding of the earth and environment.

There are already conservation laws to which aboriginals are exempt because of their cultures’ unique relationships to nature. Hunting and fishing regulations, for example, do not apply to aboriginal Canadians, on the grounds that their cultural traditions, which include hunting and fishing, supersede Canadian laws.

Gravel mining, however, is not part of the Metis cultural tradition. It would have been undertaken only as a commercial opportunity, which makes it quite different from the hunting and fishing examples. Collins’s “stewards of the land” image, while romantic, does not exactly jibe with digging up a river’s watershed in search of gravel.

There is no doubt that the Kanata Metis Cultural Enterprises mine would have brought some needed material prosperity for Edmonton-area Metis. There is even less doubt that the Metis — like all Canadian aboriginal peoples — are owed some manner of reparations after a long history of oppression and marginalization. But there are better ways to help than the North Saskatchewan River gravel mine. There are definitely less environmentally damaging options. In the end Edmonton City Council made a tough choice, but it was the right one.

Consider this: the population growth of racialized or non-white groups continues to outpace that of white Canadians. This has created a shift in the demographic balance of the Canadian mosaic, with our population on its way to becoming a “minority majority.”

According to Statistics Canada, by 2031, over 70 percent of Canadians living in Toronto, Montreal, and Vancouver will be from a visible minority or racialized group. Already, almost half the population in the Greater Toronto Area is a visible minority. Yet we are not seeing an equivalent shift in the halls of power: in business and in government, visible minorities—particularly African-Canadians—still represent a small fraction of the decision-makers relative to their overall population.

In April, a report by the Law Society of Upper Canada looked at the legal profession relative to others and made the following observations: “In Ontario in 2006, members of a visible minority accounted for 30.7 percent of all physicians, 31.7 percent of engineers, 17.6 percent of academics and 11.8 percent of high-level managers, compared to 11.5 percent of lawyers.”

A recently released study, entitled “DiverseCity Counts: A Snapshot of Diverse Leadership in the Greater Toronto Area,” showed that while some sectors are doing better at reflecting the general makeup of the population, visible minorities are underrepresented in leadership positions. Today, visible minorities comprise 49.5 percent of the population, but only 14 percent of senior-level leaders.

The implications of this imbalance will only become more significant as the population continues to shift. Canada must demonstrate the potential of harnessing the best of all of our peoples. Diversity in the leadership of our institutions matters. Far from being a form of tokenism, a significant increase in the number and diversity of visible minorities at all levels of leadership is essential to Canada’s competitiveness.

In May, Governor General Michaëlle Jean addressed business, academic, and socialsector leaders in a speech to the Canadian Club. She told the audience that “saying yes to diversity is saying yes to modernity, to opportunity, and to the very future of our country.” There is an economic case for embracing diversity: to create a “brain gain” by recruiting, hiring, mentoring, developing, and retaining a qualified and diverse workforce. Imagine the dividends for Canada’s global competitiveness when all its citizens have an equal opportunity to lead, to innovate, and to contribute to our social, economic, cultural, and political landscape.

The DiverseCity study also found that visible minorities are underrepresented in the media, accounting for only 19 percent of appearances by broadcasters, reporters, print columnists, subject experts, and commentators. Diversity in media leadership and representation of visible minorities is improving incrementally, but larger gains are needed. Why do we not see or hear from more visible minorities in daily coverage? How long must we wait for media outlets to do the research and start assigning these stories?

One initiative to improve the coverage of racialized minorities is DiverseCity Voices, a new electronic database of experts who are also visible minorities. Journalists can turn to the website to find underrepresented leaders who are able to provide commentary and opinion on current affairs.

Since joining the website, I have appeared in a variety of local and national print and radio, television, broadcast, and social media outlets, providing my opinions on subjects ranging from the Olympic Games, the G20 summit, and Africentric Schools. I’ve received more calls from journalists looking for comment, and that’s important to me. Young people become what they see, and role models of all backgrounds need to be seen and heard.

Sociologist John Porter’s Vertical Mosaic, published in 1965, remains the touchstone for a deeper understanding of the structure of Canadian society. Porter’s findings portrayed Canada as a hierarchical racial pecking order, with attendant consequences for social mobility, access to power, and economic success. In the Canadian mosaic, whites were (and still are) the dominant culture at the top of the heap. Fifty years on, Porter’s study still rings depressingly true. But there is reason to be optimistic.

With a conscious effort to create and sustain diversity in all our institutions, it is possible that Canada’s vertical mosaic will be replaced by one that is inclusive, linear, and beneficial to us all—no matter where we come from or the colour of our skin.

Who knows if the global economy is recovering, stagnating, or double-dipping? To most around the world, however, the state of the economy can be reduced to two simple metrics. Do you have a job or not? Is it a good job? With that in mind we’re looking today at some of the world’s largest employers, both public and private.

1. The People’s Liberation Army (over 2.2 million employees)
You don’t get to be a global superpower these days without having an enormous military. In most countries, government spending on armies and armaments is a major part of the domestic economy. Sad, yes. True, also yes. It used to be that there were no ranks in Mao’s army but, along with the rest of China, the military has opted for a more hierarchical structure. So, for a few, the pay is good; for most, it isn’t.

2. Walmart (approximately 1.8 million employees)
Walmart’s workforce is more than triple the size of the world’s next largest corporate employer (Deutsche Post, the formerly public German mail corporation). But that’s not because it entices workers with competitive pay or generous benefits. No, Walmart has pretty much written the book on how to maintain a huge workforce while spending as little as possible. Allowing unions and respecting workers’ rights–that’s not how.

3. Indian Ministry of Railways (approximately 1.6 million employees)
India’s iconic railways are romanticized by both Indian nationalists and colonial apologists as the arteries which hold the world’s largest democracy together. This is not the longest railway network in the world (the US has 200,000+ miles of track to India’s 60,000+), but the Indian government does hold a national monopoly, making it the world’s largest railway company in the same way that Ontario’s LCBO is one of the largest liquor retailers in the world.

4. National Health Service (over 1.7 million employees across the UK)
Pensions and other vital programs are being threatened as Europe’s haves borrow and steal from Europe’s have-nots. One of the sectors likely to be hit hard is the UK’s public healthcare system, the largest in the world. In a noisy session of Parliament, Labour MP Alan Johnson accused some in the Conservative caucus of cheering “the deepest cuts to public spending in living memory,” suggesting this is what they got into politics to do.

Compiled by Kevin Philipupillai and Simon Wallace

Martha Stewart was searching for the perfect word.

She was trying to describe her disastrous year to Jeffrey Toobin from the New Yorker. It began last summer, when Stewart was accused of insider trading, and her good friend, ImClone CEO Samuel Waksal, was hauled off to jail. While the government investigated Stewart herself, the media piled on—mercilessly mocking her, questioning her ethics, and making the obligatory “Martha Stewart Living in Jail” jokes. Investors dumped her stock, shaving $400 million off her net worth. As she told Toobin her story, she wandered through her sprawling mansion, showed off her collection of china, had her personal cook serve a five-course meal, described the in-flight caviar she’d served some friends on her personal jet, and fretted over why everyone seemed to have it in for her. “My business is about homemaking. And that I have been turned into or vilified openly as something other than what I really am has been really confusing,” she said. “I mean, we’ve produced a lot of good stuff for a lot of good people.”

Is it schadenfreude? Toobin asked. “That’s the word,” she replied. “I hear that, like, every day.”

Stewart isn’t alone. In the past year, the wealthy—and their political friends—have been enduring regular blasts of ill-will from an increasingly testy public. It’s not hard to see why. While the recession has blindsided most of the working world, the rich have continued to joyfully grind their good fortune in everyone’s faces. When Enron collapsed, senior executives cashed out big; one top earner, Lou Pai, pocketed a stratospheric $994 million. Even as Dennis Kozlowski was approving Tyco’s voodoo accounting, his handlers were buying him $10,000 shower curtains and a $2,500 trash bin. And in December, just as the U.S. labour board announced grimly that over 50,000 jobs had vanished from the economy that month alone, George W. Bush was heatedly defending a tax cut that would hand $80 billion over to the richest one percent of the population.

Rarely has the P.R. for the rich been so bleak. And the heat isn’t coming just from bitter proles. Even federal bank honcho—and former Ayn Rand acolyte—Alan Greenspan delivered a speech bemoaning the “infectious greed” of America’s rich. Meanwhile, writers at Fortune magazine, hardly the sort you’d expect to find storming the Bastille, devoted an entire issue last fall to keelhauling the titans of industry. “The public,” they fulminated, “has been treated to an ever-lengthening parade of corporate villains, each seemingly more rapacious than the last.” Ouch. Where’s the love?

Yet the most curious part of this trend is the reaction of the wealthy. Faced with this blizzard of venom, they have begun to mount a curious counterattack: for the rich and their supporters, “envious” is now the insult of choice. Want to defend that bloated tax handout? Or your interstellar pay package? Or maybe that humungous inheritance from dear old dad? Tell your critics that they’re envious wannabes—jealous of your brilliant, well-merited success.

“Today a religion of hate, of envy and of anti-greed, using an unjust set of antitrust and insider-trading laws, punishes innocents. The innocents are successful American entrepreneurs” raged Mark Da Cunha, editor of Capitalism magazine, in an editorial in the National Post. George W. Bush has wholeheartedly joined the backlash, claiming those fighting his tax cuts are fuelled by “organized envy.” Meanwhile, Jack Kemp mutters darkly in the Washington Post about “liberal class warriors who practice the politics of envy.” Ralph Klein in Alberta castigates the “envious” folks who crave his oil. And as for Martha Stewart—The Wall Street Journal published an entire editorial devoted to “Martha Envy,” explicitly pegging Stewart’s woes on the green-eyed monster. Even the enemies of North America are blasted as vessels of unimaginably huge envy; global conflict is not ideological, but emotional. When the terrorists hit the World Trade Center, it was because they envy our freedom; when Europe refuses to unleash daisy-cutters on Iraq, it’s because—as conservative pundit Josef Joffe sniffed in a recent Foreign Policy article entitled “The Axis of Envy”—they’re jealous of the U.S.’s massive economic might.

Consider this our newest cultural battle—The War On Envy. We have, it seems, become a nation of nasty little playa hatas, and the playas are none too pleased about it.

All of which suggests a rather intriguing political question. What, precisely, are the elites so afraid of? When a continent’s power brokers are so unified in their panic, maybe it’s time we looked more closely at this unsettling emotion. Is it possible that envy is a lot more politically important—and useful—than we think?

In July of 1998, the British economists Daniel John Zizzo and Andrew Oswald conducted an unsual experiment. They took a group of subjects and gave each one 100 units of an imaginary currency. The subjects then played a computer gambling game, in an attempt to increase their virtual wealth. On screen, players were able to see not only their own wealth level, but the wealth of every other player. But soon things changed: after the first round was over, the economists picked a few players at random—and gave them 500 extra pieces of currency. When the gambling resumed, the other players were astonished to observe the sudden, new riches of their opponents.

And here’s where things got interesting. The economists gave the players the option of “burning” each other’s wealth. They could pay their own money to destroy another player’s wealth.

The result? The poorer players all ganged up on the few who’d become suddenly wealthy—and began furiously burning their riches. By the time the dust settled, almost two-thirds of the players had burned someone else’s money, and one-fifth of the overall money pool was destroyed.

“Our subjects gave up large amounts of cash to hurt others in the laboratory,” noted the mildly stunned economists. “The extent of burning was a surprise to us.” One could scarcely imagine a result more likely to horrify the rich. Not only will the envious poor pillage the rich—but hey, scientists can prove it! Marxism may have died in the Soviet Union, but you can bring it back to life in a petri dish.

The experiment is a spectacular illustration of the main reason envy is traditionally so distressing: it is a singularly destructive emotion. It’s not merely about craving someone else’s good fortune; it’s about wrecking it, and bringing others down to your level. Some of the most famous acts of retribution in history have been envy-driven. It’s particularly bad among artists, who are renowned for cherishing minute grievances. In the Renaissance, for example, the Italian painter Baccio concluded that Michaelango was so superior in his skill and fame that he broke into a temple and shredded one of Michaelango’s murals. Another artist, Domenico Veneziano, actually murdered a successful rival by beating him with “leaden weights.” In medieval Germany, wealthy urban residents would tweak the envy of neighbours by constructing enormous buildings that they didn’t even need; it got so bad that they had to pass a regulation about it.

When Adam Smith was writing Wealth of Nations, he was painfully aware that great wealth would inspire great conflict. “The affluence of the few supposes the indigence of the many, who are often both driven by want, and prompted by envy, to invade his possessions,” he wrote. “It is only under the shelter of the civil magistrate that the owner of that valuable property, which is acquired by the labour of many years, or perhaps of many successive generations, can sleep a single night in security.”

Given that the wealth gap in North America is now as howlingly wide as it was during the original Gilded Age, no wonder the affluent are scared witless about envy. They must feel like pinatas. Cooped up in their paramilitary Hummers and hunkered behind the poured-concrete barriers that surrounded the recent Davos World Economic Forum, today’s super-rich behave as if they are constantly holding a global lynch mob at bay.

The powerful have always painted those who covet their wealth as crazed, irrational freaks. But this isn’t quite fair. Envy may be corrosive, but it does have a logic. Consider that British study again: when the economists analyzed the data, they found that the burning was more complex than meets the eye. It concentrated on those who had gotten their riches randomly—those who hadn’t done anything to deserve it. Other players who’d increased their wealth in a “justified” way—by winning at the gambling game—were not as frequently targets of the money-burners. Which is to say, the attackers were concerned not merely with destroying wealth, but with imposing integrity on the game. The burning, the researchers surmised, “appears to be strong evidence for the existence of some kind of envy or concern for fairness…Many people are not burning rich people more because they are rich, but rather because, and to the extent that, they got the money undeservedly.”

When you look at it this way, the burning seems weirdly wholesome. What could be more classically progressive than levelling the playing field—and correcting unearned privilege? Envy may not be a terribly upbeat emotion; you would hardly want to drive all your actions by its bitter fuel. But as philosophers like John Rawls have long noted, there’s a link between envy and a concern for justice. In A Theory of Justice, he argued that envy can function as a sort of canary in a mine-shaft, alerting us to the presence of genuine unfairness—and making us scrutinize the world more carefully. If the richest in society are alarmed about mass envy, it’s possible they’re nervous about the lessons from Enron, Global Crossing, and Tyco; perhaps their fortunes could not stand the scrutiny either.

During the holidays, I was having drinks with a friend who was flipping through the business pages. He hit upon a story about Jack Welch—the outgoing CEO of General Electric. Welch was in the middle of a nasty divorce, and as a result, his entire financial life was being made public. As it turns out, his GE retirement package includes a stunning $10 million annually—and includes the free use of corporate jets, helicopters, and a palatial Manhattan apartment with an infinite supply of wine. My friend snorted. “What in hell did this guy do to earn that?”

This is, of course, the $64,000 question: what precisely constitutes “deserved” wealth? That’s really What We Talk About When We Talk About Envy. Have the super-rich really earned their super-riches? Ask Martha Stewart, and she’ll tell you she worked hard for her corporate success. Ask George W. Bush; he’s argued that he became a millionaire—and president—solely on his own merits. The fact that Bush Sr. held the same office, and got dozens of former cia spook cronies to hurl public funds at his son’s half-cocked business plans and presidential campaign? No impact. All joking aside, though, “merit” is easily the most complex yet unresolved question in Western economics, so forgive me when I tell you I’m not going to resolve it here. Reasonable people can reasonably debate whether a $4-million-a-year CEO has actually earned his way, or gotten it on the backs of others.

Yet this is what’s so striking about the new backlash against envy: there is no such debate. The hue and cry about “the politics of envy” has become a judo move, letting our elites neatly sidestep any questions about the moral dimensions of capitalism. This is particularly odd when you consider how many CEOs lately have been carted away in handcuffs. But it’s true: if you’re rich, the consensus is that you must have done something to deserve it—and if anyone says different, it’s because, dude, they suck.

Last year, Jennifer Lopez’s handlers became worried that her ballooning wealth—and her increasingly disconnected-from-reality diva behaviour, including her demand that every single item in her backstage rooms be white—were alienating her working-class fan base. So they rushed out “Jenny From the Block,” in which Lopez meticulously catalogues her fame, proclaims her down-to-earth soul…and then lashes out at her critics for being envious. “Everybody mad at the rocks that I wear,” she protests. “Nothin phony, don’t hate on me.” This cynical pose is, of course, by now practically a lizard-brain reflex in bling-bling hip hop. But what’s kind of hilarious is how similar the protestations of the mainstream right-wing sound. Don’t like my rocks? Or my wildly over-the-top pay? Or my million-dollar anti-labour lobbying budget? Hata. “Typical class warfare rhetoric,” Bush sneered when opponents began criticizing his tax handout for the rich. Who’s writing this guy’s speeches? P. Diddy?

But you know what? That name-calling works quite well. Labelling someone an “envious” loser is a uniquely efficient way of shutting them up. Because even if you feel perfectly justified in your resentment, nobody wants to be known as envious. It is one of our most massive social no-nos. People will excuse many ugly emotions: greed, spite and, given the right circumstances, even murderous rage. But envy is the sin no one will defend. When’s the last time you openly admitted you were envious of someone? “Did ever anybody seriously confess to envy?” Herman Melville once wondered. “Something there is in it universally felt to be more shameful than even felonious crime.”

Back in the sixties, George M. Foster, a professor of anthropology at the University of Berkeley, began polling his students about their levels of envy. One half declared themselves to be “virtually without envy,” and another 40% said they were envious only very occasionally. Barely 10% would admit to being “very envious.” “Moreover,” Foster noted, “the 90% who deny major envy tend to be vociferous and argumentative; it is a personal affront to them to suggest that they are much more envious than they care to believe.”

In the late 1980s, the Boston University professor Richard Smith shed even more light on the matter, with a different “burning” experiment. He presented a group of students with a hypothetical unfair situation, in which they got the short end of the stick. They were offered the opportunity to even the odds by hacking away at the winner’s earnings. In one test, they were allowed to retaliate anonymously; in another, they had to do it publicly. When they were allowed to do so anonymously, 30% burned the winner. But when they were required to be public about their envious actions—and have the winner know who was attacking them—only 6.7% did so. Social censure, Smith concluded, is so powerful that it can stop people from acting on their envy, no matter how justified they might fee
l. “Despite a degree of ill will often directed at the person who is envied, social prohibitions prevent the expression of this ill will,” he noted.

There are some very good reasons for this social censure. After all, philosophers have long noted that our economic envy is frequently directed not at powerful, nasty overlords, but at our close friends and family. When we compare ourselves to those most similar to us, even niggling differences in rank and privilege can become nasty grievances. (As Gore Vidal famously wrote, “Whenever a friend succeeds, a little something in me dies.”) Since wishing ill on our intimates seems awfully creepy, we understandably worry whether envy is not, in all cases, a sort of subhuman emotion. If it can drive us to dislike even our friends, what good could there possibly be in it? In Of Envy, Sir Francis Bacon concluded that envious people were “deformed persons, and eunuchs, and old men, and bastards.” Count me in!

Back in 1891, when Americans were awash in the Gilded Age, and the fabulous clothes and houses of the elites were paraded in endless, fawning articles, Edward Bok, editor of the conservative Ladies’ Home Journal, decided that his readership had become too envious. In an editorial, he proclaimed that it was unhealthy to care so much about what others had. “If you do not possess all the things you would like to have, it is very poor policy to idly wish for them,” he wrote. “A woman is happy just in proportion as she is content…Contentment is a wonderful thing to cultivate.”

Obviously, this sentiment seems pretty naive and Victorian (to say nothing of wildly condescending to women). But throughout the ages, it has been the traditional response to envy: chill out. Practice some zen, man. Don’t worry about what others have; be happy with what you’ve got! This message comes from all political quarters, from conservative churches to crunchy-granola co-ops. Your mother probably told you the same thing over the dinner table. And sure, disavowing envy is probably good for your soul, to say nothing of your blood pressure. But what if it’s bad for you in other ways?

Consider one final envy experiment. Recently, economists at Harvard and the University of Miami asked 257 test subjects for their thoughts on income. They gave subjects two different scenarios, and asked them which they’d prefer. In Scenario A, they would make $50,000 a year, in a society where everyone else makes $25,000. In Scenario B, they would make much more—$100,000 a year—but everyone else in society would make $200,000. When the economists tallied the results, they found 56% of people opted for Scenario A. In other words, a majority of people would prefer to have considerably less money, so long as they were ahead of the pack. It didn’t matter that everyone, on balance, would be poorer. As the authors dryly noted: “Many seemed to see life as an ongoing competition, in which not being ahead means falling behind.”

The really weird thing is, this completely violates traditional economic theory. According to classical economics, we are all supposed to be rational actors—who care only about maximizing our own personal wealth. What our neighbours do is supposedly of no concern to us. By this logic, the vast majority of people ought to pick Scenario B, where they enjoy twice as much cash.

But most people didn’t pick B, and for a very good reason: when we are relatively poorer than others in society, we tend to get screwed. As the economist Robert Frank argued in his 1999 book Luxury Fever, we cannot ignore the existence of higher earners even if we try, because their spending affects us. For example, if you live in a city where everyone else becomes suddenly richer, housing prices go up—and drive you out of the city, consigning you to a one-hour commute from a cheaper suburb. Likewise, if other parents hire expensive private tutors to increase their kid’s chances of getting into a preferred university, they might take your kid’s slot. And if everyone shows up to the job interview wearing expensive clothes, so must you—even if you can’t afford it as easily. Their spending will drive you into debt.

“To the extent that wearing the right watch, driving the right car, wearing the right suit, or living in the right neighbourhood may help someone land the right job or a big contract, these expenditures are more like investments than like true consumption,” Frank argues. “And this suggests yet another reason that people often feel uneasy when in the presence of others who have conspicuously more.” It is a lovely irony of the marketplace: while actual wealth may not trickle down, the pressure to spend like the wealthy does.

Frank is on the cutting edge of what’s called “positional” economics. In the last few decades, he and his colleagues have accomplished something quite remarkable: they have created economic theory that, for the first time, reflects the powerful role of envy in our lives. As positional economists are now finding, envy is sometimes an extremely rational impulse upon which to act. It can indeed be rational to be resentful of, say, the cosmic pay scales of CEOs, or the passing on of massive inherited wealth—even if these don’t appear at first blush to be any of your business. Even The Economist, when it editorialized on the famous British “burning” study, was forced to conclude that while the results didn’t conform to neoclassical economics, they made a hell of a lot of sense.

Let me be clear about one thing: i am not trying to “reclaim” economic envy. I don’t entirely trust envy as a motivation. I certainly don’t like it when I feel it (which is pretty often; writers are among the most bitter, envious people you’ll ever meet).

And of course, personalized envy doesn’t always work in the service of justice. For example, envy has arguably helped wreck several progressive groups—when the leader becomes famous, manages to gain access to power brokers, and is promptly ripped to shreds by footsoldiers who accuse him or her of “hogging the spotlight.” Envy delights in tearing down the prominent, even if the prominent are doing good work. Back when Gloria Steinem was helping to kickstart second-wave feminism, she was pilloried by other feminists who felt her blonde good looks gave her too much power in the media.

Recently, the anti-globalization movement has been hit with this type of rancour—including sniping about the egotism of activists like Jaggi Singh. Back in January, Singh was arrested by Israeli police after refusing to abide by their order to stay out of the occupied territories. Within days, a series of posts appeared on the activist rabble.ca discussion boards, mocking Singh as a narcissist. “A legend in his own mind,” sniped one; “Another pointless performance in the ongoing Jaggi Singh Show,” another chimed in. “Mr. Media Star Singh,” sighed a third. All this because the guy accepted an invitation to visit a social-justice group in the occupied terrorities?

There’s got to be some difference between getting angry at an unfair world, and simply giving vent to the spleen of personal envy. What freaks the elites out, ultimately, is the sense that envy might break out of personal animus and turn into an organized force. Who knows when the great unwashed are going to stop whining and start lighting political fires? Still, as I logged off the rabble boards, I began to sympathize with poor Martha Stewart.

Well, almost. At one point during his visit, the New Yorker’s Toobin commented on the silver chopsticks she’d laid out for their lunch. “You know, in China t
hey say, ‘The thinner the chopsticks, the higher the social status.’ Of course, I got the thinnest I could find,” Stewart said. “That’s why people hate me.”

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