Canada need not be at the mercy of the marketplace

Posted on March 11, 2015 in Debates – opinion/commentary – A guaranteed annual income isn’t the only way to heal a hurting, polarized nation.
Mar 10 2015.   By: Carol Goar, Star Columnist

The rules of the game used to be clear. You got a good education, found a job with a future, rented an apartment, started a family, bought a home, equipped your kids with the tools to succeed and saved for your retirement. It worked for five generations of Canadians. It is not working for the sixth.

Today’s young people are living in a world of precarious work, globalization, outsourcing, retrenchment at all levels of government and rising household debt. Even if they get a good education, they might not get a job. Even if they find work, it is likely to be short-term contract employment. Even if they make a decent living, they’ll be priced out of the housing market. Even if they want to save for their retirement, there’s no money left when the bills are paid.

For baby boomers, this is a strange new world. They don’t know how to prepare their children for it.

An increasing number are revisiting the idea of a basic income guarantee for all Canadians. They never thought they’d endorse universal income redistribution by the state. But they don’t see any other option.

In fact there are alternatives. They haven’t been talked about since 2006 when Stephen Harper became prime minister, vowing to cut taxes, downsize government, impose market discipline on the public sector and allow the private sector to bring in thousands of pliant temporary foreign workers, but they still exist. With an election approaching, it’s time to widen the conversation, look at the policies that he jettisoned and the tools being tested in other countries.

This list of possibilities is by no means exhaustive. It is meant to get people thinking and dispel the sense of powerlessness they feel.

Progressive taxation was used for almost a century to prevent the richest segment of the population from amassing a disproportionate share of the nation’s wealth. Since the mid 1980s, policy-makers have reduced the number of tax brackets under the guise of simplification and created hundreds of loopholes allowing wealthy individuals to pay little or no tax. As executive compensation hit stratospheric levels, the government did nothing.

By adding a couple of new high-income tax brackets and cleaning up the loopholes that are draining billions of dollars from the public treasury, Canada’s next government could mitigate the growth of inequality and use the new revenue to restore the safety nets that have been shredded.

After the Great Depression, Canada created unemployment insurance to tide workers over between jobs. It worked well for the baby boom generation (1946-1965). But their children (born 1972 to 1992) entered a very different labour market. Employers preferred contractors to employees, part-time and casual work became more common, temporary agencies burgeoned. Rather than adjust the system, Ottawa restricted access to benefits. Today, the majority of Canadian workers are excluded from the program.

By modernizing the employment insurance system, a new government could keep people afloat between jobs, stabilize their lives and moderate the swings of the business cycle.

Until 1996, Canada had a federal minimum wage. It applied only to industries regulated by Ottawa, but it set a national benchmark. Today, each province establishes its own wage floors. All 10 of them are below the poverty line.

Ottawa can’t dictate provincial labour standards. But it can set an example. By reinstating the federal minimum wage at or above the poverty line — which would mean at least $12.75 per hour — it could exert upward pressure.

In other countries, the state is the lead investor in far-sighted projects that spawn new industries, create good jobs and spur lasting economic growth. That used to happen in Canada too: Ottawa took a risk on Bell Northern Research (later Nortel) an early pioneer of digital communication; spearheaded the development of the Canadarm, inspiring generations of scientists and engineers; and created Atomic Energy of Canada (AECL) to explore the vast potential of nuclear energy in everything from medicine to power generation.

Under Harper, government labs closed, scientists fled, the very idea of government-led innovation fell out of favour. But a new government could revive it, using any national challenge — building modern infrastructure, moving to a low-carbon economy, adapting to an aging population — as the springboard.

The point is that Canada’s next generation is not doomed to a future of insecure low-wage work in an increasingly polarized nation. It is a choice.

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