Have you read the news lately?
The Bank of Canada, The RBC and TD Canada Trust have arrived at a consensus that Canada is now in a recession. or at least heading for one. Bank of Canada is considering slashing its bank rate again, following many prior reductions in order to spur more investment. Polls are suggesting that most Canadians believe we never left the Great Recession. That Poll, conducted by Pollara states that more than fifty percent of Canadians in mid-2014 believed the economy was shrinking. However, our Finance Minister Joe Oliver refuses to believe we are in a recession, as his government is slated to go to the polls this fall. This is despite both private and public sector economists warning that we are either already in a recession, or we are facing one very soon.
One would think that our lower dollar would help resurrect our ailing manufacturing sector, which prior to the 1990's was the main private sector producer of middle-class jobs. But it seems my spider sense, and those of many others, sees this is not happening. As extraction, refining and transportation in the oil and gas sector is facing major competition in the South, Alberta is for the first time in many years sliding into a recession as well. This is being felt by Canadian people across the country, both in their perception of their own economic opportunities, as well as economic growth in general. For the first time, in May 2015, Albertans went to the polls and elected their first NDP government, after years of iron-clad conservative rule. This party has also been leading in the polls federally as well. More than fifty percent of Canadians view the NDP as the best effective change from the current government. Mulcair's party continues to enjoy a steady lead over the other two main parties.
Recessions affect all of us. Traditionally, our governments have been cost conscious and tight fisted when it came to spending on programs to relieve the impacts of a recession. While many on the right would argue that governments cannot spend their way out of a recession,but conversely making cuts and tightening up program spending on vulnerable communities does not 'cure' a recession either. Over the past few years, more and more commentators and even wealthy business people have come forward to protest what we all knew already: the rich are getting richer and the poor are getting poorer, and more and more people are saying this is not a good thing. Nick Hanauer, a billionaire investor stated in his TED Talk video that when communities don't have consumers to spend their money, business at all levels suffers. Tax cuts for the rich and cuts to social programs supporting the lower income has not ever led to more and better jobs. In fact, the less money the public has to spend at small businesses in their communities, the less likely these business will hire additional staff.
This issue has been brought to the fore by the Occupy movement that claimed the 1% is taking from the further impoverished 99%. Hugh Segal, former Conservative Senator, has been raising the spectre once again of a guaranteed annual income for all Canadians. This would mean creating an income floor that nobody falls below to ensure that nobody lives in poverty and can meet their basic needs. He critiques the current welfare measures applied today, which do more to discourage work and crush incentive than they lift anybody out of poverty, while citing an unconditional guaranteed annual income for all Canadians will increase local spending, as well as eliminate disincentives for Canadians to accept paid work. While discussions about a guaranteed annual income (GAI) still need to be focused, issues around amounts required per person, per family or household, as well as what - if any - clawbacks would exist - as the recipients of the GAI begin to increase their paid work - need to be finalized to ensure we are not replacing one bad welfare system with another one.
At the same time, last Sunday a referendum was held in Greece, in which 61% of those who voted elected to say NO to further austerity measured imposed on them by the European Union, European Central Bank and the IMF, from which bridge funding has been provided over the past five years and has not yet been renewed. Greeks have lived the effects of austerity, enduring deep cuts in pensions, public sector wages and program spending, leaving many people without enough funds to pay for their basic needs. There have been public suicides, business closures and large public protests, which led to Greece electing a far left government that agreed with its people: austerity has to end. Greece is in a difficult spot, not necessarily a result of profligacy, but a result of many factors (e.g. poor enforcement of tax collections, insufficient value added tax or VAT, previous attempts at cuts, as well as pressures resulting from having an economy and currency controlled by others -- countries with more stabilized funding and a significant resource base). More austerity is not going to cure Greece, nor is kicking them out of the "euro: either. These next few weeks are going to prove interesting as Greece's new government attempts to work with its European partners and creditors to get a plan to get itself out of this mess.
In Canada, our right wing has constantly pushed for further austerity measures on its people; in particular, people who are most vulnerable. I don't understand how cutting the amounts people get in unemployment insurance, disability and welfare allowances is going to create jobs, or get these people into stable, middle class positions/ I have witnesses the effects of this philosophy over the past ten to fifteen years and have only seen a downward drift in wages, in business confidence and a noticeable spike in social problems (e.g. family breakdown, mental illness, hate crimes, etc.)/ People talk about not having enough to eat and to pay for their housing in the same month, so how would it be possible for them to spend any money at their local restaurant, movie house or bowling alley? The downward trend is being accompanied by the disappearance of manufacturing jobs and transition to other types of less labour intensive industries, such as the knowledge sector, personal services and to some extent, financial services. Many jobs are also being automated, leaving many more people out of work now or in the future ... . a future vision of self-driving cars, cell phone apps, e-mail and video communications, and so forth, eliminate many jobs as we speak. A recent article in The Atlantic entitled "A World Without Work" hypothesizes further social breakdown and economic crashes if our policy makers are not cognizant about leading interventions to make this transition smoother for all concerned and again, raises the spectre of a GAI.
As the owner of a small legal practice in Niagara, I know that if I were to remain successful and grow my business, as in hiring new people, I need more clients. That means, I need more people who have discretionary funds to pay my office to assist them in various legal matters. If government austerity policies continue to shrink the pocketbooks of the middle class, who remain our biggest customer, my business would not be able to function, nor would any other business - apart from discount grocery stores, second hand clothing shops and low cost rentals. As more people fall into this decline, the demand for these basics will only go up, while supply is limited. Many anti-poverty spokespersons, most of whom have never been poor themselves, are asked what is needed, their first response is "affordable housing". While I agree housing is an issue, it is a symptom not the cause of the sorry state of affairs we are in now. Most people do not want to live with the rules, restrictions and traps offered by 'rent geared to income' housing, while others would like to hang onto the homes they have. The notion of building more social housing as a salve for poverty's ills is very limited to those that want to and manage to get to the top of extensive wait lists, while others further down the list or those that do not wish to live in social housing are left out. Those in RGI housing tend to remain in RGI housing, as establishing oneself or re-entering the labour force from social benefits is penalized.
An attack on poverty has to start with income; that is, income that does not squeeze incentive from those in receipt of it, or stigmatize those that need it or who apply for it. Housing markets that cater to the general population can and will adjust their prices to match the "market" meaning that prices will eventually rise or fall with average income of those that demand the commodity. This relates to talks the mainstream media has about a "housing bubble", which is when the price of housing becomes too high for most people, the prices will naturally fall to a lower equilibrium. Some economists fear this, as many people have taken advantage of low interest rates and have over-mortgaged themselves, where if the rates ever go up or they re-enter the market, they may find themselves locked out. When prices go back to equilibrium it may not necessarily be a bad thing, especially as it will bring more renters into the ownership market, leaving more rental housing available to those that need them. The situation as it stands now is wage controls (esp. the "social wage") without price moderation, which is shutting out the poor not only from the economy, but from their communities as well. Shelter portions of OW and ODSP were last deemed to be adequate at some point in the 1970's, but certainly are insufficient in today's market. These things tend to segregate a large part of our community, which has been repeatedly found in any academic study I've read, to be polarizing and dysfunctional for the people involved (and with enough people in these situations, there can be a chronic recession - much like we feel today in Niagara region).
We have a federal election coming up. While I cannot tell you who to vote for, but please do study your candidates' positions on all issues of importance to you and choose the candidate you believe will best get Niagara out of this recession. Most important -- register to vote, and learn what you need in terms of ID, as some of this had changed. For agencies and others who work with low income communities, please try to ensure that people that need some type of identification can obtain this identification before they will need it to go out to vote. Promotion of citizenship at this very crucial time is vitally important if we are ever going to achieve stronger communities.
