Strong middle class vs. equitable society

Posted on October 16, 2015 in Equality Policy Context – Opinion/Commentary – Justin Trudeau’s plan for a strong middle class sidelines Canadians facing genuine hardship.
Oct 15 2015.   By: Carol Goar, Star Columnist

As an election mantra, “bolstering the middle class” hits all the right notes.

It taps into the pervasive sense of anxiety among once-secure families. They can’t get ahead, manage their debts, educate their kids, support their aging parents, save for their retirement and give back to the community.

It covers a broad swath of the population. It touches the economy, social mobility, intergenerational equity and Canadian values. And it targets the people who are most likely to vote.

As a solution to income equality, it is missing a few chords.

It is true the gap between the hyper-rich and the rest of the population is growing. But it’s not the whole truth. The hollowing-out of the middle class is one symptom of the economic polarization that is eroding the underpinnings of western democracies.

Focusing on stalled middle-class incomes diverts attention from 4.7 million Canadians facing genuine financial hardship. It legitimizes mainstream self-interest. It minimizes problems such as the spread of low-wage, precarious jobs, the outsourcing of work and the stratospheric rise in executive pay packages.

All three of Canada’s political leaders have championed the middle class in this campaign, but Justin Trudeau has been the most explicit. Since Day 1 of the race — indeed Day 1 of his tenure as Liberal leader — he has focused single-mindedly on strengthening the middle class. He calls it “the central problem of our time.” His platform is entitled “A New Plan for a Strong Middle Class.”

It is refreshingly progressive, in some ways courageous. But it leaves out too many people.

To his credit, Trudeau challenges three taboos that foster income inequality.
– No prime minister would dare raise personal taxes.
– No responsible government would dare run a deficit.
– No modern legislator would think of redistributing income.

Having freed up these levers, however, he proceeds to restrict the benefits.

He would cut Canada’s income tax in the middle bracket from 22 per cent to 20.5 per cent. But he would leave the rate in the bottom bracket — which covers people earning less than $44,700 a year — at 15 per cent.
Welcome as any move to make the tax system more progressive is, the Liberal plan offers little relief to those who need it most.

He would run a modest deficit ($10 billion annually for the next three years) to stimulate the economy and build badly needed infrastructure. Welcome as any departure from the prevailing balanced-budget orthodoxy is, public works programs tend to favour men in the skilled trades. Women, particularly single mothers, new immigrants and lone seniors who are most vulnerable, risk falling further behind.

He would transfer roughly $3 billion from individuals earning more than $200,000 to those earning between $45,000 and $90,000. Welcome as any attempt to redistribute income is, this one bypasses the people at the bottom of the economic pyramid.

In Trudeau’s defence, two of his campaign commitments are explicitly targeted at people living in poverty. The Liberals would revamp the Canada Child Benefit to direct more support to the lowest-income families, lifting an estimated 315,000 kids out of poverty. And they would enrich the guaranteed income supplement which goes only to low-income seniors, giving them an additional $1,000 a year.

Several of his other policies, while not aimed exclusively at those who live in poverty, would help them. A Liberal government would invest in affordable housing, public transit, post-secondary education and job training.
What is missing?

1. A national early learning plan. A child’s life chances are largely determined by the age of five.

2. A national income floor. Wages and welfare levels have fallen below the poverty line. This is not a self-correcting problem. Ottawa may have to introduce a guaranteed minimum income or negotiate with the provinces to set a level below which wages could not fall in Canada.

3. A toolbox to curb corporate excesses. Chief executives and boards of directors no longer exercise restraint over the chasm between massive paycheques at the top and miserly wages at the bottom. The state can’t tell business leaders how to run their companies, but it does have ways of influencing their behaviour, from publicly expressing disapproval to closing tax loopholes, cancelling subsidies, hiking government fees and letting lucrative contracts lapse.

4. A clear commitment to low-income Canadians that they will not be left behind.

Trudeau has pointed the compass in the right direction. He has drafted a politically palatable road map. He has defended it with tenacity and passion.
The final imperative is to ensure that the path to a fairer Canada is wide enough for everyone.

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