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Economic Growth Fails to Eliminate Child Poverty - Are you surprised?

Are You Surprised? November 28/07

Once again, the report card is in, and our Great God, Moloch, aka Economic Growth, has failed to deliver on its promise of eliminating poverty. Child poverty that is. Despite a pledge made two decades ago to see that it would come to an end, Statistics Canada recently revealed that 17% of Canadian children live in impoverished conditions, along with just under 10% of adults.

Child poverty rates are at double-digits in all provinces except for Alberta, Prince Edward Island and Quebec. After twenty years of failed promises, what is the cure?

That old panacea, of course, economic growth. Alberta’s oil economy has boomed and the child poverty rate is low. But then British Columbia’s economy has also boomed and it has the highest rate for the whole country at 21%. Why the discrepancy?

It is instructive to look at Quebec, which has suffered a weaker economic performance and lower living standards than the rest of the country. For example, Quebec had an unemployment rate of 8.5% in March of 2006 compared to the Canadian average of 6.3% and 6.8% lived on social assistance compared to 5.2% for the rest of the country. Their per capita GDP was 13% less than Canada’s as a whole and $23,000 less than Alberta’s.

Given these numbers, conventional economic thinking would assume that Quebec’s poor would be in rough shape. Not so. It is not so important what cards the economy deals governments, but how governments play them. As Welshman Nye Bevan once said, “Priorities are the language of socialism”. Quebec, you see, has a poverty-reduction strategy. They believe in using the state to help those who need help.

According to the Canadian Council on Social Development, using Statistics Canada data, Quebec was able to reduce family poverty rates from 29.5% to 15.0%. This is a much more dramatic fall than Nordic countries were able to effect (2.5%>4.2%) with similar income support payments. British Columbia provides some social assistance to poor families, which, if removed, would see the child poverty rate jump by nearly 25% in that province. Manifestly state intervention is key to reducing child poverty.

The champions of economic growth who run our death machine of course see anti-poverty initiatives as a trivial pursuit against the great background of job creation. The greatest welfare benefit is a job, or so we have been told ad nauseum. Economic growth is the tide which will raise all boats, both rich and poor. Social democrats and trade unionists and all other environmental vandals, preach this line too. Armine Yahizyan, an economist with the left-wing the Canadian Centre for Policy Alternatives, home of Naomi Klein’s brother Seth, also follow this gospel. It is as Kenneth Boulding said, anyone who believes that growth can continue indefinitely on a finite planet is either a madman or an economist.

Another is Manitoba NDP Premier Gary Doer, the social democrat, who chirped that “All the West is doing well and that’s good. Our growth has been steady over the last five years and we don’t worry about one year over another, we worry about steady growth.” He certainly doesn’t worry about the environment because after all, according to his website, all of his government’s growth is “sustainable growth”. Doer brags that Manitoba’s GDP is projected to be the second-best in the land next year and he looks forward to more population growth in the province.

Nonetheless it is an indisputable fact that in the wake of this latest wave of economic growth, and population growth of 1.08% per year over the past five years, that there are one-third fewer Canadians living below the controversial “low-income cut-off” than there were in 1996. The statistics indicate that both the number and the percentage of people considered “poor” by this definition are fewer than a decade ago. But there are competing interpretations for these statistics.

Professor John Richards of Simon Fraser University has an explanation that both angers anti-poverty activists and takes the credit from the cheerleaders of the Tory economic miracle. In a just-published study for the C.D. Howe Institute, he argues that the “tough love” policies adopted by the Conservative governments of Ralph Klein in Alberta and Mike Harris in Ontario in the mid 90s, and to a lesser degree by BC NDP Premier Glen Clark, chased employable people off the welfare rolls and on to jobs which improved their lot. “Tough-love” effected an 80% drop in the welfare case loads of both Alberta and Ontario, while “soft-love” had the reverse effect in Ontario a decade previously. In Canada generally, softer approaches resulted in a welfare rate of one in nine, while the institution of a harsher attitude cut that ratio in half. Richards contends that neither strong economic growth, nor a recession, seems to have much bearing on the poverty rate. It is mostly a reflection of the government’s posture toward recipients.

Without grappling with his assessment of social welfare policy, both Richards, who favours a hard-nosed attitude to social assistance recipients, and those who promote growth as a bromide for poverty, an agent of employment opportunities, need to be challenged for making one critical assumption. That is, the one that all the people who are off welfare are now gainfully employed. Some in fact are living with relatives, or in the underground economy working for pitiful wages or hours. The fact that they are no longer registered as a burden on a “caseload” does not indicate that they are free from the poverty trap and substantial revenue contributors.

Secondly, the booming economy I’ve seen has not been generating high-end jobs, but low-income service sector jobs and positions in retail sales. Having such a job is no answer to escaping poverty. In 2005, 41% of all low income children lived in families where at least one parent had a full-time job. In BC the figure was 50% for a full-time job, and 85% for a job of some kind. The “prosperity” that this tide of economic growth has swept in indeed produced more jobs for low-income parents but they’re not finding jobs with sufficient pay, hours and benefits to lift their families out of poverty. And a huge number of them are not showing up on the Statistics Canada radar screen as “poor”.

Any reader of Orwell’s 1984 would come to realize that ruling elites use statistics to distort, or simply lie about reality. The virtual reality that Corporate Canada and its executive arm in parliament likes to project is that thanks to their agenda, the poor have never been so few in number and if we continue to support them the poor will vanish altogether.

But a visit to Canada’s major urban centres reveals the truth. If there are a third less people on the dole now than there were in 1996, there is a ten-fold increase in the number of homeless people. Only the top 20% of income earners saw their salaries rise, and it is with callous indifference that they look upon the people who sleep in the doorways of their flashy condos, which the police obligingly clear for them in the morning. In 1980 the disparity between the top-income category and the lowest was $83,000. By 2005, it was $105,400. This, as record numbers of tenants are being evicted from their homes and more and more souls must turn to food banks to feed their families. Vancouver rivals Ancient Rome in the growing opulence of those who view abject despair with cold detachment. I pray one day God may smite the city.

In British Columbia a public opinion poll showed in late November of 2007 that the heartless majority is still determined to re-elect the incumbent pro-business party and maintain this immoral system of economic apartheid. The system that historically has displayed no ability to solve poverty, but has no bloody intention of doing so either. The system that is killing the biodiversity that ultimately underpins our existence while thwarting our ability to reduce GHG, yet for all of that, fails to deliver dignity and sustenance to a significant segment of the population.

To this God of Economic Growth we have sacrificed social solidarity, time for ourselves and families, and the very environment which supports all life, and for what? Access to a Big Box Store, a Hummer, three bathrooms and an annual Mexican vacation?. A Faustian bargain indeed.

Tim Murray
Quadra Island, BC