Heading south: a student’s opinion on Canada’s direction

Features November 2, 2011

In the last 15 years Canada has seen a widening gap between incomes of the rich and poor, a situation that will most likely become more extreme under the current government.

Income inequality is a global epidemic, and is a key reason behind the Occupy protests. At a time when most of the world is struggling with income inequality and general fiscal malcontent, Canada has proven to have a strong economy even in the face of a global recession.

In spite of this, the Harper government is determined to make decisions that benefit the needs of the rich, leading Canada down a well-worn path already proven unsuccessful by our neighbours to the south.

Graphic by Jessica Tai.

In a move towards fiscal prudence, the Harper government is dissolving the per-vote subsidy. This subsidy sees that every vote a party gets in a federal election translates into $2 of federal funding via tax money for that party, regardless of whether they win any seats. This amounts to about $30 million a year in funding for political parties, and has allowed small parties to participate in the election process.

Although there are other subsidies available, the per-vote subsidy provides a relatively level playing field, at least in terms of representative financial support. The rescinding of the per-vote subsidy goes along with the neo-liberal ideologies that say the state has no role in terms of equal allocation of resources.

Of course, what happens in this situation is the one percent of the population, who has a lot of money, recognizes the party that represents its interests, which in our case is the Conservative Party, and that party ends up with the most funding.

The inverse of this is the party with the poorest supporters ends up with the least funding. In the US, the situation is so extreme that one needs millions of dollars to even consider running for office.

As income inequality becomes more extreme, fewer voting options will be available to a greater majority of (poorer) people. If viewed from the angle of the one percent, though, this situation can be seen as beneficial. Only in this way can a person understand the determination of the Conservative government to move in the direction of a crumbling democracy, in which a small percentage of the population profits directly from the financial oppression of the majority of the population.

Economists have relentlessly analyzed the American economy since the beginning of the global recession a few years ago. A couple of key reasons explain why the US has been hit harder than Canada by the recession.

First, military expenditures in the US are trillions of dollars every year. Pound for pound they spend 15 times more on the military than Canada every year, although their involvement is not 15 times greater.

Second, as Europe and Japan recovered after the Second World War they were able to rebuild many factories and manufacturing plants and take business back from the US. At this point in time, America was practising a very pure form of capitalism, which worked because their economy was so strong. Labour unions were practically nonexistent, and weren’t in demand because there was excess wealth.

Canada continued to practise a combination of capitalism and socialism, with the support of unions, and relied mostly on the export of resources to sustain the economy. As the American economy declined due to competition overseas, its citizens were left without protection against the growing gap between rich and poor.

Much like Ronald Reagan in the 1980s, who essentially fired an entire body of air traffic controllers for striking, thereby dissolving their union and employment, some of Stephen Harper’s first moves were to intervene in what constitutes the basic framework for industrial relations in Canada.

In June, the Conservatives legislated the postal workers back to work, citing damage to the economy. More recently with Air Canada, a private company, the federal government said they would force the airline workers back to work if they voted to strike.

It’s important to note that this is an unprecedented move by the federal government, and it essentially stripped the union’s bargaining power. Again, potential damage to the economy was their reasoning for back-to-work legislation.

This action by the Canadian government is disturbingly similar to what Reagan did in the ‘80s. If unions, and the labour force in general, have their bargaining power stripped, then there’s no longer a system of checks and balances in place to protect employees.

Given this history, and given the current protests in the US and Canada, one has to wonder why the Conservative government is following much in the same footsteps as previous American governments.

The Conservative government argues and, in fact, ran on a platform that insisted that the role of the business sector is key in promoting economic growth and prosperity. In general terms, this may be correct, but this neo-liberal style fails to address the divide between rich and poor and in no way moves towards an egalitarian society.

To someone in the 99 percent, this system is entirely detrimental. Neo-liberals will site the trickle-down effect as being the most effective form of economic policy, and yet if that were true we wouldn’t be seeing situations of extreme income inequality in the US.

In theory, the trickle-down effect works by giving tax breaks to the higher earners, with the idea that they will be more likely to spend money, invigorate the economy, and create jobs. Like many things, it works great in theory, but fails in reality.

And if tax breaks really do stimulate the economy, then why not just give an equivalent break directly to the lowest earners instead of waiting for it to trickle all the way down from the top?

The most disturbing thing about this situation is that none of the actions by the government come as a surprise. The Conservatives fully stand behind their ideals and policies, and believe emphatically that the economy is the most important thing on the political agenda. Once a government has a majority in Canada, it can basically do whatever it wants within the confines of the constitution, including changing laws.

Seeing the support for the Occupy movement is encouraging, but Canadians have to remember that at this point it’s still in their greatest interest to demonstrate their opinions at the polls. Young, low-earners have a traditionally poor showing in elections, but they are often the ones most affected by government policy.

Only the Conservatives ran on a platform that supported less funding for small political parties, or placing the economy above all else.

There’s no reason Canadians should have historically low voter turnout in the future, given our demonstrations in support of democracy and equality.

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Expert examinations

Nexus asked professors from UVic and Camosun to discuss the Occupy movement and what it means in Canada. The experts commented on income inequality, corporate influence on government, and Canadian politics.

Bill Carroll
Professor of Sociology, program director in Social Justice Studies
University of Victoria

My sense is that the divide between rich and poor will continue to grow in Canada and globally in the next few years. In Canada we have a very conservative federal government, also a pretty conservative provincial government, just looking at BC in particular, and the policies that are likely to issue from these kinds of governments are not going to address issues of poverty or income inequality. They’ll be primarily oriented towards trying to attract investment capital. In particular, at the federal level I would say the Harper government has signalled a very strong anti-labour posture since it won its majority last May. Of course, one of the major social forces that help reduce inequalities is the labour movement, so I think you might say there are two different scenarios. One is that the federal government will continue along the policy agenda that it seems to be putting forward, and that would definitely increase inequalities. Or, if there’s a sufficiently strong opposition from below, its agenda might be checked. In which case, perhaps, inequalities would not increase.

Warren Magnussen
Professor of Political Science
University of Victoria

The divide between rich and poor has been growing for quite some time in this country, as elsewhere. It’s hasn’t grown quite as dramatically as in the US, but that’s been the direction of change. In terms of corporate influence there’s not a huge amount of difference, although there are some differences in the two political systems in that the American system has been more prone to lobbying by particular interest groups. But the overall influence of business on government is similar in the two countries, and always has been. So, would I expect inequality to increase of the next number of years? It depends a great deal on the kind of resistance amongst people to that growth in inequality, and their capacity to put pressure on governments and business to make adjustments to reduce inequality. It’s anybody’s guess whether that kind of political pressure will be forthcoming or sufficient.

James Lawson
Assistant professor, Canadian Politics
University of Victoria

I think the fact that the Occupy Wall Street movement has targeted income inequality is big. That’s not been on the political agenda for decades. Does the government of Canada respond by being open to it, or cracking down on it? So far some government officials have been surprisingly open to listening to the discussions that the Occupy movement are holding. Here, the protesters have gone out of their way to be very diligent to not diversify their tactics. That’s a change from earlier protests, which have sometimes accommodated those who are willing to damage property while protesting. It will be interesting to see whether the Occupy movement comes up with more concrete demands and how the government will respond then. The wider picture is that the stakes are very high. It is possible to come out of a crisis with a more egalitarian society or a less egalitarian one; the Great Depression ended with a set of policy changes that greatly reduced the gap between rich and poor.

Mona Brash
Political Science instructor
Camosun College

The trend is continuing along the growing gap between rich and poor. I don’t see what’s going to stop it unless there’s a big change in participation of voting, for example. Many stats are showing that young people are falling further behind, economically, but youth voter turnout is low. I think some young people, those 18 to 30, may not see what role government is going to play in their lives, they don’t realize how much of a role there will be, but they’ll find out soon and hopefully they’ll start voting. I haven’t seen anything that indicates the current federal government is willing to work to close the divide between rich and poor.