Now for some disaster relief on the homefront

I’ve been very pleasantly surprised at the public response to the tragic earthquake in Haiti. I’ve seen donations being collected through school bake sales, at the liquor store, and on Hockey Night in Canada, among the usual channels for such stuff. It’s nice to know that, collectively, we care, in spite of the neglect of Haiti by our elected governments for some time.

But having said that, my home province of BC and Canada as a whole have become a lot meaner in recent years. Sure, the good life is still attainable if you have a good job and bought real estate before prices took off, whether due to that good job or through an early inheritance from the folks (itself a growing source in inequality as the boomers hit retirement). But as the song (and a CCPA report) goes, it’s a bad time to be poor.

As we show our Olympic pride at having a crew of multi-million-dollar-a-year hockey players come to Vancouver to play for the home team, let it be known that BC has the lowest minimum wage in Canada at $8, and that has not changed since 2001. In case you were wondering, for a minimum wage earner to pull in what Sidney Crosby earns in just one year, they would have to work 40 hours a week for 541 years (and I’m not even counting Crosby’s signing bonus and endorsement contracts).

You know the rest of the story: social assistance rates that are preposterously low and a system that is punitive; a lack of supports for child care; the end of new social housing construction; an over-crowded public transit system; cutbacks at schools and libraries; and so on.

In my work on climate action, it seems inevitable that the price of food, transportation and energy are going up if we are to be successful at reducing emissions. How we go about designing climate actions matters a lot, and this is the focus of my recent work. But most of the affluent people who go to policy meetings are not thinking about how higher prices affect low income people. Across all of these areas, the problem low income people face is, well, their low income, even though they have done the least to contribute to the climate crisis.

So in the absence of “first-best” solutions like raising the earning power of low income workers and setting a floor (basic or guaranteed) income for all, we are left with “second-best” solutions that try to fix regressive impacts on an issue by issue basis. A credit here, a subsidy there and an ugly patchwork everywhere. Which is already a huge problem: after about $20-25,000 per year low-income credits and subsidies phase out for the low-but-not-lowest-income workers, meaning they face marginal tax rates of 60-70% on new income earned. With the carbon tax and now the HST, the same dynamic has been exacerbated with low-income credits that phase out early and quickly.

Still, I think that a more coherent credit system could be the basis for a guaranteed income, but it would have to be designed more like the credits we give to the middle-class, like Old Age Security and the Canada Child Tax Benefit, which have a long tail phase out so that a very high proportion of families get something. A lot of economists agree on this type of redistribution. But they generally think only about redistributing after the fact. I also want to see the labour market do more of the heavy lifting, as it gives workers and taxpayers the sense that they have earned that income, and this makes for better social inclusion and better political sustainability. Doing that means expanding the scope and quality of public services, raising minimum wages and, perhaps more importantly, vastly expanding the unionization of the low-wage service sector.

So Canada, let’s take that generous spirit we discovered when Haiti got trampled by an earthquake and put it to work at home. A campaign of charitable giving is of course helpful and there are lots of great organizations doing the work that governments ought to be doing. But let’s also focus on electing governments that are going to make eradicating poverty a top priority, something no political party (including the NDP) has endorsed.

7 comments

  • rentier fungicide

    Why not bring back the Canada Assistance Plan, have the CMHC build and offer social housing, affordable housing, and supportive housing, bring in $5 per day daycare in all provinces (while supplementing QC to bring daily payments back down to $5 from $7). Have the NDP voice a clear and unequivocal support for national social program spending without the right of any province to opt out.

  • That would be awesome. But we need to do some serious culture-changing before that can happen.

    It seems to me that people are ready to step up to the plate and help others when they see them as innocent victims of a larger force (rather than victims of their own poor choices or mistakes). So earthquake, other natural disasters, maybe even civil war – it could (arguably) happen to anyone. Poverty, on the other hand, or addiction, or even family violence – many people are convinced (rightly or wrongly) that these things cannot happen to them and there’s a lot of blame attached to those who are affected. That’s why we see a lot less willingness to help.

    I think that the change we need to make is to get people to look deeper than individual responsibility and see the systemic barriers facing certain groups in our society that to a large extent shape the choices they face and the decisions they make. Once we break down the deserving/undeserving poor barrier, that’s when we’re going to see more collective action on social justice.

  • I also want to see the labour market do more of the heavy lifting, as it gives workers and taxpayers the sense that they have earned that income, and this makes for better social inclusion and better political sustainability. Doing that means expanding the scope and quality of public services, raising minimum wages and, perhaps more importantly, vastly expanding the unionization of the low-wage service sector.

    This looks like an unhealthy preoccupation with trying to win points for style in a game where winning is the only consideration. If these considerations don’t conflict with the primary goal, fine. But if the primary goal is to implement “solutions like raising the earning power of low income workers and setting a floor (basic or guaranteed) income for all”, then for pity’s sake let’s not make making achieving the primary goal conditional on winning points for style.

  • I dunno Marc, leaving the labour market to do the heavy lifting of egalitarianism is a rather problematic proposition. One of the things unions did was to privatize and thereby micro corporatize some significant aspects of the welfare state. Given that almost all schools of economic thought from new-classical, new Keynesian, post Keynesian and Marxian agree that the labour market is rarely characterized by anything close to full employment (once the NAIRU is properly understood) asking the labour market to do the heavy lifting is somewhat like putting the cart before the horse.

    The nut of the issue is twofold to my mind. First put basic needs such as health, housing and nutrition beyond the naked coercion of labour markets which means taking them out of competition (hence why unions can’t do it). And second after having put those basic necessities out of control of the market by making them universally accessible we can allow labour market to delegate super rewards.

    Let the private and public sectors really face a work force that has only the choice between leisure and disposable income. In this sense we can re-interpret the NC model of labour markets as the ideal.

  • The electoral marketplace isn’t free. Focussing on capitalist (pro free market, pro neoliberal) choices, still puts into political power a servant of power and special interests.

    Perhaps the focus should be – or at least ‘always’ include – creating a real electoral marketplace in which ‘the people’, if they care to, can put forth a man or woman who will actually democratically represent them, and hopefully be rational enough to work toward creating a system that works for everyone and not just a minority.

  • I’d like to take a moment to note that Travis and Stephen both agree on a guaranteed income, and both disagree with my emphasis on labour markets. Travis supports stronger public service delivery as part of the package, but I suspect Stephen would prefer just transferring the cash. On this part I would side with Travis, as there are market failures and spillovers that justify public expenditure in certain areas; it is not just the straight-up lack of income.

    As for the labour market, there is a balancing act in this. I agree with Travis that a major part of the rationale for a guaranteed income is to rectify the bargaining power of labour vis-a-vis capital so that a decent guaranteed income leads to higher wages to induce people to work in undesirable jobs. This could well make my requirement for a much higher minimum wage redundant.

    Beyond this, it gets more complicated. I would refer people to a recent CCPA discussion paper on a guaranteed income, with the history of the idea, and the pro and con arguments:
    http://www.policyalternatives.ca/publications/reports/possibilities-and-prospects

  • Hi Marc, thanks for the focus. I would like however to indicate that I have something much more ambitious than a guaranteed income scheme delivered through the aegis of the traditional welfare state.

    Put in extremely thin and underdeveloped terms. I think the welfare state needs to be abolished and its place a participatory welfare state where those who use its services must be accountable and responsible for the production and delivery of those services.

    The taxing of some and the consumption of others via direct transfers or public services strikes me as politically fragile and *existentially* speaking alienating.

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