OPINION: If economic disparity is a growing problem, then let’s discuss solutions

by Guest Contributor | Jul 25, 2011 | Opinion

By Kelly Ernst

Open a newspaper and you are likely to read that the Canadian economy is ramping up. Oil is up, the dollar is up, and employment is up. Yet on the streets we hear that things have not changed substantially for many people and for a very long time.

Statistics Canada data confirm that the highest-income people are earning more, while lower-income Canadians are not faring better. So where is the debate on new policy initiatives that could reverse such disparity across the income spectrum?

Growing disparity

It is easy to find reports of economic well-being but the fact remains that economic disparity is growing at a worrisome rate.

The Organisation for Economic Co-operation and Development (OECD) has pointed toward Canada as an example where “the rich have been getting richer leaving both middle and poorer income classes behind … Canada spends less on cash benefits such as unemployment benefits and family benefits … as a result, taxes and transfers do not reduce inequality by as much as in many other countries.”

Consequently, up to 14 percent of Canadians now live in poverty. Even in wealthy Calgary the working poor now number as many as 140,000 people.

The reports about how well our society is doing economically ignore the reality of the many people who are falling farther and farther away from those with wealth.

What’s wrong with income disparity?

To say that economic disparity is bad for all of us, not just the poor, is not particularly revolutionary. Richard Wilkinson and Kate Pickett, in their book The Spirit Level, bring together a wide variety of evidence showing that countries with greater disparity have lower life expectancy, higher teenage pregnancies, higher infant mortality rates, higher rates of crime and homicides, greater imprisonment rates, and lower social mobility.  The conclusion seems unavoidable: we ought to be tackling growing disparity to eliminate the harm it causes to all of us.

Back to basics

One policy worth considering is a guaranteed basic income level for all citizens. Although there are many approaches, a guaranteed annual income (GAI), has been described as a promising method.

A GAI provides enough income to ensure families can pay for their basic needs, such as housing, food, clothing, and transportation, without needing expensive government supports to monitor it. Senator Hugh Segal has argued that a negative income tax program could be used to deliver the GAI. For those who file taxes and earn below a particular threshold a grant would be delivered to them. This would phase out as they begin earning self-sustaining incomes. If unconditionally applied to all citizens, it might eliminate much of the poverty in Canada as well as the discrimination in adjudicating the “deserving” and the “undeserving” poor.

Segal suggests that GAI would reduce many costly provincial and municipal support programs (such as     welfare, employment insurance, food banks, homeless shelters, and many health services) that are currently used to address poverty. Because it would be universally applied through tax returns, the GAI eliminates the need for monitoring elaborate qualifying rules. It attacks core poverty without needing swarms of additional bureaucrats and may well result in a diminished bureaucracy.

Canadian evidence

Recent studies by Evelyn Forget based on evidence accumulated from a basic income trial in Manitoba in the 1980s suggest that a minimum income program leads to greater levels of post-secondary education plus fewer health and other costs associated with poverty.  Rather than acting as a disincentive for people to find work – a criticism often leveled against a guaranteed income – the Manitoba trial showed that the program provided opportunity for people to upgrade their education and opened new employment opportunities to them.

Canada currently offers a minimum Guaranteed Income Supplement (GIS) to seniors with low incomes. The GIS is often cited as a policy success because it keeps many seniors out of poverty who would otherwise experience extreme hardship. Similar programs have been suggested for people with disabilities, students, or single women with children pursuing educational upgrades.

Contrary to critics of a basic income policy who suggest it would be prohibitively expensive, its implementation may be quite affordable – especially in comparison to funds expended on recent   economic stimulus. For example, Canada spent $47 billion in 2009-10 on stimulus infrastructure   spending. This is five times more than the $8.3 billion spent in 2010 on GIS for 1.6 million seniors. We spent substantially less on direct supports for people entering the work force: $1.3 billion for   approximately half a million people accessing student loans and grants.

The billions spent on infrastructure rather than expanding Canada’s existing GIS was a conscious policy decision in response to the economic downturn. The main impediment to helping the poorest Canadians climb out of poverty is not that a basic income policy would be unaffordable but that we lack the political will to consider such a solution.

Policymakers should consider basic income benefits

Consider a GAI applied to students in postsecondary education. If we supported low-income students through school, they could complete their education debt-free similar to how many higher-income Canadians now complete their education. A GAI would allow access to education for diverse groups of people who are least able to afford it, simultaneously help to reduce economic disparity by improving their employment prospects, and reduce governmental costs associated with student granting programs.

A GAI could give the opportunity to students to invest savings immediately upon entering the workforce and foster compounded wealth accumulation both individually and on a macro scale. Such early investment by young people could significantly reduce the need to pay seniors’ pensions later in life.

This is only one example of how a basic income policy might help encourage people to sustain themselves, reduce the cost of poverty to taxpayers, and simultaneously reverse the societal impacts of deepening disparity.

Without serious discussion of economic disparity, its consequences, and possible solutions, we will never      determine how to mitigate poverty’s deleterious effects to all of us. If we think economic disparity ought to be addressed, then we have an ethical obligation to ask our policymakers how they plan to do it.

Kelly Ernst is Senior Program Director at the Calgary-based Sheldon Chumir Foundation for Ethics in Leadership.

OPINION: Thinking About Ethical Leadership: An ethical response to poverty in Canada

by Guest Contributor | Jul 18, 2011 | Opinion

By Janet Keeping

I often wonder why concern about poverty in Canada is not more intense and widespread. 

Are Canadians really as indifferent as we seem?  Or is some of the failure to react a function of ignorance? Certainly many people seem not to appreciate that there is acute poverty in Canada.

For example, in Calgary – one of the wealthiest cities in Canada – over 100,000 people, or about 10 percent of the population use food banks annually.  This fact is not widely known, even in Calgary, although it is publicized from time to time in the media.

As an aside, I note that ignorance itself has ethical dimensions. As good citizens we should keep ourselves apprised of what is going on in our community, especially what is going on with our society’s most vulnerable members. Ignorance may be bliss, as the old saying goes, but it isn’t ethically defensible.

In any event, ignorance can’t entirely explain the failure of Canadians to react to the poverty in our midst.  There is more to our apparent apathy about poverty; namely a profound failure of imagination. Knowing something – such as that many Canadians are poor – is one thing. Understanding the significance of being poor is quite another.  If you can’t picture the suffering, you aren’t going to appreciate the imperative to help.

When told the people were starving for want of bread, Marie Antoinette – the last Queen of France – famously replied “Well, then, let them eat cake.”  The phrase “let them eat cake” has become synonymous with a callous disregard for the lot of the (much) less fortunate.

But the anecdote also connotes an inability to picture how life goes for people in very different circumstances from yours. If Marie Antoinette’s bread supply had ever been low, there would have been many other foodstuffs to keep hunger at bay, primary amongst them cake.  This wasn’t true for the masses.

In contemporary Canada the demeaning grind of poverty looks very different than it did in 18^th century France, but poverty remains dispiriting and painful.

It looks like the parent who has always to say “no” to a child’s desire for what others all around have. It looks like the degradation of having to tell your child’s principal that you can’t afford the school trip and ask if a subsidy is available, and like the guilt of feeding your family what you can afford rather than the more nutritious foods you know they need to thrive.  And if your poverty is caused by being out of work, then it looks like the agony of knowing you are providing a poor role-model and as a   result the cycle of poverty may well be repeated in your child’s adult years.

Canadians have to have the relevant information – that there is significant poverty in our country – and they have to have some way into understanding what it means.  Only with that kind of understanding will we insist that collectively – through public policy reform – we address the issue in a robust way.

The precise policy solution to poverty is not our concern here. It is instead:  how do we get to the point that the suffering around us caused by poverty becomes intolerable and we insist upon action?

Our failure to reach that level of motivation is even more disconcerting now that the gap between rich and poor is growing in Canada (as it is in many countries).  There is ever stronger evidence of the connection between that gap and the incidence of serious social ills, such as teenage pregnancy, lower life expectancy and crime.

A growing body of evidence suggests that the bigger the income gap in any society, the worse the conditions for everyone in that society, not just the relatively poor. So even if you are not moved by the injustice of poverty and the stressful unhappiness it causes, you should be stirred to action by your own self-interest. Yet many people remain indifferent.  So, what is going on here? I think it is this: we do not see our interconnectedness.

The notion that our individual well-being is strongly connected to the well-being of the broader society flies in the face of one of the strongest myths of our place and time: that you make it or don’t almost exclusively on the strength of your own  effort.

We persist in believing we are personally responsible for our poverty or wealth, as though what is going on around us has no relevance. Increasingly it looks like this is far from the whole story and in important ways simply not true.

Greater knowledge, imagination and understanding of our interconnectedness seem needed to spur an ethical response to poverty alleviation.

Janet Keeping is President of the Calgary-based Sheldon Chumir Foundation for Ethics in Leadership.