Affordability gap between rich and poor

Press Release September 23, 2009

OTTAWA ­ There is a major affordability gap between Canada's richest and poorest households, says a new Canadian Centre for Policy Alternatives study released today. The Affordability Gap: Spending Differences Between Canada's Rich and Poor reveals how Canada's poorest households often forego buying things most Canadians consider essential, from eyeglasses and dental care to computers and newspapers. (...) The study looks at new data from Statistics Canada on how households spent their money in 2007 ­ one of the best years for gains in personal income in recent history. It finds Canada's poorest households are much less likely to buy sporting equipment for themselves or their children. They often don't spend money on eyeglasses, dental care and home furnishings.

They often don't have cell phones, personal computers and high-speed Internet access. Even going to a movie or buying a newspaper can be a rare treat.

The Affordability Gap: Spending differences between Canada's rich and poor (PDF - 396K, 17 pages) http://www.policyalternatives.ca/%7EASSETS/DOCUMENT/National_Office_Pubs/2009/Spending_Patterns,_Low_Incomes.pdf

September 2009 By Steve Kerstetter

"(...)Much of the recent research on poverty talks about social exclusion or social inclusion as the best way of defining poverty. Poverty, according to this view, isn't strictly a matter of very low income. It is also based on whether people are able to participate in a meaningful way in the society around them. In other words, can poor people purchase the goods and services that most people would consider reasonable for normal living in 21st century Canada? The latest spending data suggest the answer to that question is no.

Taking the Measure of Poverty, Proposed indicators of poverty, inequality and social exclusion to measure progress in Québec: Advice to the Minister (PDF - 311K, 80 pages) http://www.cepe.gouv.qc.ca/publications/pdf/Avis_CEPE_en.pdf Centre d'étude sur la pauvreté et l'exclusion (Centre for the study of poverty and exclusion) 2009 One of the mandates of the Centre d'étude sur la pauvreté et l'exclusion is to propose, to the minister of Emploi et Solidarité sociale, measures and indicators of poverty, inequality and social exclusion to measure progress in Québec in the implementation of the Act to combat poverty and social exclusion. This advice is a first proposition in that direction.

Well, it is Sunday and I have pretty much recovered from my expedition to Ottawa. It is always colder there than in Toronto and they had their first frost while I was there. It held off raining until I got back to Toronto.

I found a nice bed and breakfast to stay at, run by Chantal and her son, who make a nice omelette. They are down the block from the national art gallery, and a lot of their business is from people who are in Ottawa to visit that. At first they could not figure out what I was doing there, until I brought some literature back from the conference.

I did not have time to do anything touristy. I had small interest in going and looking at the parliament in operation. Been there, done that. But I improved my knowledge of central Ottawa considerably.

I enjoyed a couple of early morning walks in the mist. The first time, I went through the "Byward" market, something like Kensington in Toronto, and crossed the Rideau canal further down. The second day I went through this park with some veterans memorials in it, over the Rideau right past that office block next to the main parliament building, and so down to Cooper street.

It was fairly exhausting and I could not get to know all these people the way I would have liked to. I do not travel so well these days. But I am now much more enthusiastic about the prospects for a movement to a guaranteed income.

Jurgen de Wispaleare, the Belgian who does a lot of writing on the subject, had migrated to Canada the day before the conference started. He has been working in Ireland for a few years. We did not hear details about it, but he has some sort of job in Montreal that involves creating a Canadian Income studies journal.

It was not clear that this would have an English language version. Many people present expressed frustration about the unwillingness of the Basic Income group in French Canada to work with English Canada. They wanted De Wispaleare to convey that back to Montreal.

De Wispaleare's theme for the day was on administration of a guaranteed income. People who support it because they think it is going to eliminate the need for bureaucracy will be disappointed. While it will require less administration than the present welfare system, there will still be substantial administrative tasks to be carried out.

Someone will have to make sure that everyone who is qualified for the program is aware of it and that there is someplace to send the money to. If a Guaranteed Income will be done by direct deposit, everyone must have a bank account. If people are mentally incompetent, who is their guardian?

Also, what if people's circumstances change? You do not want a payment going to somebody who died five years ago, and having it pocketed by somebody else. Someone must check that people are reporting their situations truthfully.

De Wispaleare calls this process cadasterization. It cannot all be done remotely by computer. He made the observation that computers are only as smart as the people using them.

Libertarians will hate to hear this. It is another reason why there will be no "grand coalition" of the left and right in support of a guaranteed income. This is how the Guaranteed Income failed in the United States in the 1970's; when it got down to implementation, the coalition in support disintegrated due to incompatible ideologies.

So, the thing De Wispaleare thinks needs to be done is some standardized research, especially regarding senior citizens, about what people's needs are. He also thinks that a gradual strategy of implementation will have a better chance of succeeding. The issue is between a sectoral or incremental approach; giving it a little bit at a time to everybody, or giving it to one sector of the public first, and this is why he is so interested in seniors, and then extend it.

I suggested that gradual implementations do not have a good record in Canada. Most of the social programs we have in Canada happened in 1965, they were intended to be transitions to something more comprehensive, but they have never been moved any further ahead and some have been abruptly cancelled, especially the Canada Assistance Plan. De Wispaleare and a couple of other people considered this to be a "Marxist" position. He said something like, those who want it all at once can do it their way, and if we are ahead in twenty years he will eat his paper. Yeah, okay.

the Harmonized Sales Tax (HST)

We talked about the new harmonized sales tax, which De Wispaleare and some others say will be very bad for low income people. Yes, you can exempt things that poor families with kids need, but how do you think of everything they might need; not just books, but children's clothing, car seats, etc.

So far so good, but he also cited the C.D. Howe institute that the HST would cause price reductions. People asked how credible the C.D. Howe institute is. He also made the assumption that people's wages would automatically go up faster than spending; at least that is what I understood him to be saying.

Nonetheless, he knew that back when the GST came in, the GST credit was to be indexed to inflation. But it was never fully indexed and is eroding. So the effect of the HST is positive for people under $20 000 a year in income, on year one. What will it be on year ten?

Someone else had been doing some research. He showed us a bunch of graphs about the effects of HST, taken from provincial government figures. He did these graphs on the greyhound coming up from Toronto. But he would not let us keep them, because his research was still "ongoing".

I wish I could have looked at them longer, because as he said, there was something really fishy about the numbers. Certain groups gain much more than others from the sales tax, for no apparent reason. I think it was single mothers who started out not gaining much, then as their income went up they had a big bump, and then fell off sharply.

Somebody in the catacombs of governmental bureaucracy does not like very poor single moms, but is very partial to ones with a bit more money. Maybe it is assumed that the poorest ones are staying home, and so do not have daycare and other expenses.

We wound up this session with some chat about how the economy was going. Sales taxes are not much good if nobody buys anything except those necessities which are mostly not taxed. Our rulers are trying like hell to get us buying again.

The idea that you are going to fund a guaranteed income with a sales tax is seen as ludicrous. John quoted the economist Keynes as stating that the time must come to get rid of a society based on usury. Amen.

First, people reported on progress being made, or not.

Canada Without Poverty is in a lot of trouble. Three years ago when it was NAPO it was under the control of some bad people I know about from elsewhere, who seem to show up to either take organizations over or shut them down or sabotage them. They were gotten rid of, but they lost NAPO its charity tax number by just failing to renew it.

John had been working for CWP in Ottawa, but his contract is now over because there is no money to continue it. The unions were supporting NAPO/CWP but that seems to be ending. Unless BIENCA comes up with a funding source soon, It looks like Citizens for Social Justice will be the national banner carrier for the G.A.I. concept for awhile. They largely organized this conference.

BIENCA is getting to the realization that it must move forward or wither away. A web site will happen soon. Moves are being made to apply for some money, although it is scarce right now.

The monthly phone conference discussions have ended, but with luck BIENCA's new web site will include a discussion list or blog. I hope they take the "progressive economics forum" as a model, and not Rabble.

Some philosophical points were debated. Some people thought that with a GAI there would be no need to track what people made. But there would still be a need for taxation, so people will still have to file tax returns.

Do non citizens qualify for a GAI? This question requires some clarification. Is the person legally in the country? And what should the immigration policy be when we have a GAI? How to answer the criticism that people will come here just to live off GAI?

What about people who are incarcerated? Well, they have been bad people so they do not get their allowance. But what if they have dependents? If GAI should go to individuals instead of family units, there are no such people as dependents any more.

What about EI. Should employment insurance be rolled into GAI? If you lose an $80k a year job, GAI will not replace it. And EI is supposed to be revenue neutral and supported by payroll taxes. It is supposed to be insurance against unemployment, and not used for all these things it is now, including as a revenue source to government. It is probably a good idea to keep EI around even with a GAI.

The right wing wants to get rid of all sorts of social programs. The Milton Friedman idea of a GAI is that by giving everybody a small amount, we eliminate the obligation of government to provide any other social program.

Who pays for GAI? There are jurisdictional problems. Obviously, the federal government has the money, but some cooperation is required from the provinces on some "elements". I am not exactly sure what those elements would be, but I think provincial governments in Canada are mostly in the way and we would be better off rid of them.

Finally, there was some discussion of the arguments that could be used to promote GAI. Chandra from Citizens for Public Justice thought that the environmental argument was the weakest. You want people to consume less to stop depleting the environment, but you want to give them money to consume more.

Actually, you give them money so they do not need to consume more. And I have always held that a guaranteed minimum income would be useless without a maximum income as well. It is the people who are making $50k or $100k a year who are straining the environment, not someone with $15k. As well, it is not about raising people's incomes so much as reducing their expenses.

getting philosophical

Wispaleare talked some more about 'governance'. He admits that since he is a philosopher by training, he only deals with problems, not solutions. But he says that governance must have "effectiveness" and "democratic legitimacy".

Ineffective policy negates the reason for the policy. But public support for a policy depends on democratic legitimacy and vice versa. Conditions of effectiveness and legitimacy must be satisfied simultaneously.

The public is seen as not supporting a GAI. It will be hard to turn the public around. So, he thinks some conditionality should be introduced into a GAI to help it gain legitimacy. People should be required to 'participate' in some community service; the participation income idea again.

But participation is very hard and expensive to implement. The left will see new intrusions into people's lives. The right will see new forms of bureaucracy.

People do not support GAI because of myths. But to just keep talking, an education strategy, is difficult. The second strategy, implementation by stealth, is a 'con trick'. Also, I would say, he does not understand that to implement something by stealth you have to be in power.

So Wispaleare comes up with a third strategy; a combination of the first two; an incremental approach. You already know what I think about incremental strategies. But Wispie thinks the piecemeal approach is the most promising, if accompanied by education.

But I have already been called a 'Marxist' for basically saying that there already is public support for GAI, even if the public does not know it yet. Support will grow stronger over time as it becomes obvious that the only way out of the growing crisis is measures like a GAI.

So I let a few others grumble that they do not agree with incremental approaches. Someone asked the room how many present remembered the Canada Assistance Plan(CAP). Only half did.

People preferred what Jackson the labor economist had to say. He told us that an expert was "somebody from out of town with slides" and he fit the description.

He put up slides showing that countries with the most 'transfer' in the system, meaning income transfers from wealthy to poorer through taxers and programs, are also the ones with the highest wages. Canada now has more low wage people, and less 'transfer', than any industrial country except the U.S.

He thought that an earned income supplement would be a start, but not a replacement for a GAI. So he is a partial incrementalist.

But he said that a good example of a successful implementation of a social program was medicare. It was pushed through all at once over intense opposition and is still with us.

He said Martin Luther King did not say " I have a complaint."

A big problem is that the people who are one pay cheque away from being on the welfare system, are the most critical of it. Of course, that is because they know more about what the system is really about. They are not being asked about a guaranteed income.

Questions? John Stapleton chimed in with the 'slow change' thing.

Sheila Regehr thought that the poverty reduction strategies were at least a start; they broke inertia and created the base for getting a Guaranteed Income.

But she is frustrated by the attitudes in the media, that poverty is not news, it cannot be solved, it depresses people, so go away, we will not cover it.

Jackson continued. Many of the problems the MacDonald commission was stymied by in an earlier time, in trying to design a guarenteed income, are now solved. An example is the mother's allowance, which shows how a computerized delivery system can effectively "cadasterize" its recipient base.

Canada has been prone to "administrative excess" in its social programs. Every level of government has to get involved, and so three different bureaucracies are involved in running each program.

Jackson sees two ways of promoting a GAI, a rights model and an opportunity model.

Further questions and comments. Establishing a right.

As for the opportunity model, someone pointed out that far from being a work disincentive, a higher guaranteed income created a bigger incentive to work. People could negotiate a better deal with employers. They could actually get out of poverty, instead of be working in poverty.

Another member of Citizen's Income Toronto who was there made the point that no corporate job is a good job. They put people in unjust and anti-democratic situations, usually producing a lot of ecologically damaging crap. A guaranteed income would be better used at creating a small business.

Income security is a human right, but there is a problem with defining the human rights issue. Nowhere in international law is a right to an income stated. However, the right to life is stated.

In Canada, courts are strong on political rights, but not on social and economic rights. However, they hint that they could change if pressed hard.

Here is an important concept; do we frame Guaranteed Income as a program or as a right? Personally, I say it must be framed as a right. The drift of the room was toward a set of programs backed by a declaration of a right to an income. So it is about establishing a right.

Senator Segal

Senator High Segal spoke to the assembly that evening. Segal is Canada's big "Red Tory" these days. He is a member of the Conservative party but was appointed by Paul Martin. He spoke briefly about the long history of progressive conservatives in Canadian and British politics; William Pitt, Disraeli, Lord Elgin, Macdonald, Diefenbaker.

He described present social programs as helping people survive better in poverty, but as of no help in getting them out of poverty.

There should be a place at the table for all, Segal proclaimed. This gave me a warm fuzzy.

He went on; freedom from fear means freedom from want, without which all other freedoms are meaningless. The way to secure freedom is with a Guaranteed Annual Income bill. Nothing else will work. Yay!

The Segal strategy;

1) First, how about a floor for disability income?
2) Old people already have an income structure. This can be extended.
3) Extend the non judgmental principle to those who cannot make enough.
4) Do not go too broad too fast.

Some conservatives are Friedmanite GAI advocates; they accept that the poor know better than a bureaucrat what to do with their own money. From there you can get them to accept that poverty is a cause, not a result.

Segal got a bit off the topic and started talking about world peace. He thinks that there will only be world peace when people cannot get anything by using violence.

Evelyn Forget from the University of Manitoba told us what she had found out from re examining the Manitoba Mincome study of 1974 78. Enthusiasts of Guaranteed Income schemes will recognize this as a study by the federal government in which a community was selected, in this case Dauphin, Manitoba, and then much of the population given a Negative Income Tax benefit.

The flaws in the study were; there was limited funding for it. It was run by labor economists who were only interested in labor market effects and considered social impacts to be 'peripheral'.

They would not let Forget look up the original participants in the study. She had trouble finding the data. It turned out to be sitting in 1800 boxes in a warehouse in Winnipeg. It had never been digitalized. She was not about to do that herself; she would probably die of old age before she was done and she is not old.

So she tried a different approach. She looked at census and other information for Dauphin at the same time as the mincome program. She found many interesting things.

Kids stayed in school longer in Dauphin in 1974-78 than before or after. Hospital admissions dropped for Dauphin against her control group and regressed after 1978.

Data about fertility and divorce were less clear. Dauphin was a very conservative, religious, and Ukrainian community. During the study, the divorce rate did not change at all and the pregnancy rate declined. The Mincome was paid to families, not individuals.

This is in contrast to the U.S. studies at the same time, in which the birth rate and the divorce rate were reported to rise. This is one of the things which turned conservative Americans against a Guaranteed Income in the 1970s. However, closer study of the data there showed that this was not true.

Forget found a broader effect on society than merely those receiving the money. When she started tracking the next generation descendants of those who had lived in Dauphin at the time of the study, they did better than the controls. She thinks those getting the income could keep their kids in school longer, and this convinced other kids to stay longer, and that education was a 'transmitter' of prosperity to the next generation.

One interesting thing about the Dauphin experiment was that many people refused to participate in the study because it did not pay enough.

She is still working on her study of the study, so do not Forget her.

Several female activists from across the country spoke, making the following interesting points;

Tony Martin

Tony thinks the stars are starting to align. There is a need for a poverty elimination act.

He used to be a provincial MMP before he became a federal NDP MP and he thinks provincial governments have pretty much run out of policy solutions for poverty. You cannot just have a "labor market strategy."

He wants Quebec on side, because it has the most progressive social policies.

We need to eliminate poverty 100% right now. This brought a round of applause. "Social condition" must be added to the forms of discrimination forbidden in law.

The national council of welfare must be strengthened. There must be a poverty elimination fund to facilitate planning a poverty elimination strategy. There must be a national housing strategy. He said that all federal legislation must be "poverty proof" but I was not clear on what he meant by this.

He cited Martin Luther King; "don't ask which way the wind is blowing, change the wind." How do we change the wind?

The barrier is the dominant ideology that if people "just worked harder" they would be alright. There is what he calls "this 'others' thing"; the 'others' are bad, lazy, etc.

Once upon a time, if you walked into a room and started with this 'blame the victim' kind of talk, you would be tossed right out. Somehow during the 1980s, it became respectable.

People are now afraid to call poverty what it is. Poverty means the conditions in which people are denied the means of economic self sufficiency and to be a full participant in society.

A strategy for ending poverty must be inclusive; about income security, affordable housing, and about social inclusion. There was some discussion about including the word 'poverty' in the name. Some thought that without that, people would forget what the program is about.

"Keep the main thing the main thing"; a Guaranteed income is the tool for eliminating poverty. Period. It should not become a vehicle for anything else.

There was also concern about the phrase "affordable housing". There is lots of affordable housing around, most of it very bad. It should be "appropriate housing."

Martin said he would have a bill on the table within a few weeks. After that, who knows where it will go? It would be a lot easier if there were a coalition government.

I did not meet as many people as I would have liked to. But I got into a good discussion with Gilles Seguin about web site design. He keeps this huge repository of social research, and the government just changed all its web site to correspond to some sort of common standard or look. So all the links he spent years compiling are now dead.

I have been looking at government web pages, and other than they are now harder to find, I do not see what has changed on them.fortunately, most of what was in his GAI section was not on federal government servers.

He gave me some hints about looking up old pages which had moved. But what I advised him was that a rule with the internet is that all links eventually go dead. I do not want pages of dead links on my own sites, so I usually to not put in links, except on the links pages.

I prefer to simply capture what I want and put it on my own site. Sometimes I make a pdf of it, but I am getting better at swiping the HMTL. That can be a tedious task, because people tend to use these nonsense, bloated software packages to make documents. All the HTML code commands you will ever need can be put on one page. It does not have to be that complicated.

I met Sally Lerner briefly. I had thought she was tired of the idea of Guaranteed Income and wanted someone else to carry the torch, but she came from Guelph. She said I was one of the oldest proponents of GAI around. I had been at it ten years. No, actually I have been talking about this for thirty years.

She says she is working on an updated version of her book. So I guess I better get these ones sold. I sold all the books I brought up there, including the Bruce O'Hara ones. I am working on my own book, a "Citizen's Income Handbook. She seemed to think that would be a useful development.

However, I am going to be self publishing it and I am going to not worry too much about copyrights.

Vilma Dawson has been at it for twenty years in Calgary. Funny I never ran into her when I was there. She runs a support center for immigrants so we must not have moved in the same circles.

I spoke briefly with her too, about my experiences there. We had a sort of an anti-poverty group going, and then after the Chretien cretins abruptly cancelled CAP, the stuffing went out of it. They all left Alberta, and then I left for Toronto.

Since I have been gone, a quite strong anti-poverty movement has grown up in Calgary. In Toronto it is the shits; the social agencies try to control everything and are only interested in keeping their funding coming.

I did not catch the last bit of this conference. I wanted to catch the 4:30 bus back to Toronto so I did not arrive there after midnight.

It was a tiring, but inspiring, two days. People have the right ideas. The 'incremental' people were sidelined in this. People have it figured out that 'incremental' is a way of saying "not really serious about it".

This looks like a group which will not be easily coopted or taken down. Most of them have seen that crap and know what it is about. The makings are here for an effective national organization we have not seen in Canada since NAPO was effective.

When I get done with this, I should set down some thoughts on how to organize the new BIENCA, as they occurred to me coming back on the bus. The brainstorm in the rainstorm.

I think Wispie is going to eat some paper if he is still in the country twenty years from now. With the permanent and drastic changes which are coming as a result of the global economic crunch, there will be no way out except to separate survival from employment. I think we are going to have a GAI within ten years.

By the way, people at the conference agreed to call 'it' GAI because that is what people are most familiar with. This will probably stand until it is christened at another great meetup, when organization is further along.

It is now Tuesday evening and I am finished writing this up, in between doing other things. Now to get it into the CIT newsletter and get that done. I am late getting that out. But I finally have a swift publisher 2 and I want to start using that for the newsletter. And, to start setting up the Citizen's income handbook. Lots to do.

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