No better time for an economics debate

Posted on September 26, 2013 in Social Security Policy Context – Full Comment
26/09/13.   Father Raymond J. de Souza

When I come to Toronto, I don’t pay any attention to which electoral constituency I am in. Scarborough Rouge River or Scarborough Agincourt? Who cares?

But this time it seemed important that I was in Toronto Centre, the federal riding recently vacated by Bob Rae, and therefore due for a byelection in the near future. It has a history of rather distinguished representatives — before Rae, there was the previous interim Liberal leader, Bill Graham, and before him David Crombie, a man many think was twice the mayor Rob Ford is, even though literally half the size.

There is unusual excitement about the upcoming Toronto Centre byelection — unusual because there is excitement. The Tory candidate is a solid citizen, Geoff Pollock, but few expect the Conservatives to pick up the seat. So the attention is on the two star candidates, the Liberals’ Chrystia Freeland and the NDP’s Linda McQuaig. Authors of economic books, the race is being billed a rare contest between articulate advocates of serious policy reform.

With Freeland, that remains to be seen. A resident of New York City, Freeland’s book Plutocrats more points to a phenomenon — the rise of the super-rich — rather than proposes plausible policy responses. There is no such mystery with McQuaig, whose economic ideas and prescriptions are crystal clear. For decades she has railed against the “neo-liberal” economic consensus shared by the Conservatives and the Liberals. It is slightly awkward that Tom Mulcair is trying to fudge any NDP dissent from that consensus, but at least with McQuaig there is the potential of a good argument.

Both Freeland and McQuaig speak to the growing economic anxiety among classes that, in previous generations, prospered in good economic times — professionals, college graduates, skilled service workers, skilled and unskilled labour, civil servants. Recent decades have seen stagnant real wages among those groups, with the exception of public-sector workers, whose income and benefits have kept them rather insulated. High government indebtedness, especially at the provincial level, is now threatening those workers too.

What is to be done about this is the great economic challenge of the next several generations. Everything that has produced a revolution in services, technology and retail for consumers also lays waste to the high-paid labour upon which so many middle-class families depended for historically high standards of living. When other factors are taken into account — the increasing need for and cost of post-secondary education, decreasing private- and public-sector pension provision, diminishing returns to savings due to low interest rates, the increasing health-care (drugs, non-covered services, nursing homes) costs for small families with elderly parents — the middle-class squeeze is all too real.

Linda McQuaig says the whole rotten international system needs to be torn down

The new economy does provide significant returns to the highly-skilled and highly-educated in certain sectors, but it seems unlikely that an entire workforce can become so skilled and so educated. Linda McQuaig says the whole rotten international system needs to be torn down, and Chrystia Freeland says the system may be rotten, and something should be done about it. Whatever the merits of the two positions, that such a critical economic issue would dominate a prominent federal byelection is welcome news.

I was in Toronto Centre last night for a dinner honouring Senator Hugh Segal, a Kingston friend who has ennobled Canadian public life for nearly 40 years, including his service in the Senate, which has been in recent need of ennobling.

Dave Chan / Postmedia News

Dave Chan / Postmedia NewsHugh Segal

Senator Segal has been, from the unlikely position of the Senate, one of the most creative voices on economic policy. There is much debate about poverty, and Andrew Coyne in these pages has shown that there is much good news on that front over the past 20 years. Segal knows that there are pockets of Canadian society in which poverty is stubbornly persistent. He tends to think that poverty causes consequent social dislocation, and I think the causality is likely reversed, but we do agree that the massive poverty alleviation bureaucracy of the Canadian welfare state is itself a burden — to the taxpayer and to those it is trying to help. It’s a spider web rather than a safety net, in Segal’s apt phrase.

Segal advocates for a guaranteed annual income, a policy that has friends on both the left and the right, but evidently very few in the centre of the economic policy consensus. But he has advanced good arguments about the afflicted among us for a long time, and that is worth saluting. A good argument about economics is too rare in Canada. A byelection here is a good time to have one.

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