Be prepared to walk away from NAFTA

Canada is a trading nation. As such, we need well-crafted trade agreements. NAFTA is not one of those.

Photo courtesy Council of Canadians

Photo courtesy Council of Canadians

Both candidates for president of the United States have indicated that they would renegotiate or tear up the North American Free Trade Agreement with Canada and Mexico. Both are reflecting the discontent of the American people from the rust belt. They have seen well-paying jobs evaporate, only to materialize in low-wage countries.

There have been few winners of NAFTA, says Gordon Laxer, founding director and former head of the Parkland Institute at the University of Alberta.

“The big winners since 1988 (the year the FTA was signed) have been the global 1 per cent. The big losers have been the lower-income and middle classes in the rich countries. That underlies the populist revolts of Brexit and the presidential candidacies of Donald Trump and Bernie Sanders (Globe and Mail, August 31, 2016).”

Canadians aren’t happy with NAFTA either. An Angus Reid poll revealed that one-third want it renegotiated, one-third are unsure or want it done away, and only one-third want it left as is or expanded.

Canadians have reason to be unhappy. As taxpayers, we have paid $190 million to foreign corporations to settle lawsuits. Under NAFTA, Canada has been sued 39 times mainly over our environmental protection laws. The U.S. has never lost a case.

Disputes are settled, not by judges but by secret tribunals run by exorbitantly paid corporate lawyers who decide what Canadian laws have hurt U.S. corporate interests here.

Then there is the “Mexican exemption.” Mexico wisely refused to agree to the NAFTA clause that required countries to supply the U.S. with the same proportion of energy as in the previous three years –even if it hurts the exporting country.

Unlike Mexico, Canada is not exempt from this so-called proportionality rule. In the event of a sudden loss in our energy production, Canada would have to supply the U.S. even if it meant that we did without. What makes this clause worse is that the U.S. keeps 700 million barrels in the Strategic Petroleum Reserve in case of an emergency, while Canada has none.

What Canada supposed to get in exchange was unlimited access to U.S. markets. In other words, we would have free access in times of plenty in exchange for compulsory supply in times of dearth.

Except we don’t even have that now. The agreement to unlimited access was broken when President Obama stopped TransCanada’s Keystone XL pipeline.

It never crossed the minds of the Canadian negotiators of NAFTA that easy oil would run out and that the difficult tar-sands oil would be priced out of global markets. It never occurred to them that Canada would be burdened with CO2 emissions that would be produced from exported oil.

Canada is a trading nation and the world wants what we produce. We don’t have to settle for a second-class trade agreement. Laxer concludes:

“NAFTA is flawed and outdated. Two of its rules hurt Canada. We must be ready to negotiate hard and to walk away if necessary, using the six-month exit clause.”

Annual income by stealth

If a guaranteed annual income is such a good idea, why hasn’t it happened yet? It’s supported by both the right and left ends of the political spectrum. The right-wing likes it because it reduces government bureaucracy by combining a number of programs into one. The left-wing supports it because, unlike the trickle-down theory, it really does lift all boats.

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My own opinions have ranged from elation to despair. In my column for the Kamloops Daily News in 2000, I wrote glowingly of it. This year, I titled my column “Why an annual income won’t work” and some readers thought I was being too negative.

Sixteen years after the first column, I now think it’s a good idea poorly marketed. If Canadians can’t buy the idea because it suggests money for nothing, then it should be sold as an income-tax-implemented annual income, ITIAN (my acronym).

Andrew Jackson, professor at Carlton University and advisor to the Broadbent Institute, also likes ITIAN but acknowledges past failures:

“This could be an important step forward, but incremental reform toward an income-tested guarantee for working-age Canadians delivered through the tax system will be the best path as opposed to more visionary ‘big bang’ solutions.”

Instead of a big bang annual income, apply it incrementally by stealth –through the income tax system.

Remind Canadians that seniors already have an annual income in the form of the Guaranteed Income Supplement to Old Age Security. It comes close to pushing seniors above the poverty line. Ease Canadians into it with child benefits.

“And pending improvements to income-tested child benefits promised by the Trudeau government will deliver a maximum transfer which comes close to the cost of raising children and will significantly reduce child poverty,” says Professor Jackson in the Globe and Mail.

Another area in which ITIAN can be applied is the plight of the working poor. Some Canadians are working hard, often at more than one job, and still they live below the poverty line. Additionally, some working-age persons have no or limited employment income. Before they collect social assistance, they have to exhaust almost all assets. Even then, they can only earn so much before pay is clawed back.

Old attitudes linger. At the heart of such meanness is the idea that the poor are deservedly so: they wouldn’t be poor if their poverty wasn’t warranted (insert usual labels here – good-for-nothing, lazy, drunken, native, bad parents, worthless).

Another problem that ITIAN must address is the shrinking eligibility for Employment Insurance benefits. While the Trudeau government has increased benefits in the wake of the collapse of fossil fuel markets, the increases have been unevenly applied and depend on where you live, not a basic living wage.

A solution already exists called the Working Income Tax Benefit. In its 2013 report, the House of Commons human resources committee recommended an increase to WITB to supplement the incomes of low earners who are not eligible for social assistance and who do not usually qualify for much if any for Employment Insurance benefits due to current rules and low and unstable earnings.

Hope springs eternal. ITIAN may be just the trick to make this decades-old dream happen.

B.C.’s poor a convenient target in the politics of class rivalry 

Premier Campbell has a New Year’s resolution for B.C.’s poorest – – get off welfare and get a job.  It’s more than a suggestion.  In four months, thousands will be cut off welfare.  The B.C. Liberals refuse to say exactly how many.

The resolution won’t apply to Campbell, however.  Oh no, he prefers welfare, defined as “well-being, happiness, health and prosperity” by the Canadian Oxford dictionary.

The semantic difference between being on welfare and possessing welfare may be slight but they are worlds apart.

While the welfare of the rich is improving, welfare for the poor is under attack.  That wasn’t always so.  Welfare was once a good idea supported by nearly all governments.  Especially in the past when 80 per cent were poor compared to today’s 20 percent.

Modern welfare began over one hundred years ago as a response to disease and child poverty.  Welfare first depended on the philanthropic inclinations the wealthy and was generally treated as a local and private concern.  The government run welfare state soon became the sign of a civilized society.

Welfare was expanded after the First World War when soldiers returned to jobs held by women.  Many of those women lost their jobs to men, and lost husbands on the battlefield. The “mother’s allowance” was established to help those single mothers.

The failure of capitalism during the great depression of the 1930s left all but the wealthy doubting about the supposed restorative power of the marketplace.  It became abundantly clear that philanthropic inclinations and a mother’s allowance was not going to be enough to pull most Canadians out of poverty.

The post-war economic boom of the 1950s and 1960s was a contrast to the dirty thirties.  Wages improved and the number of middle-class Canadians increased.  But they never forgot the depression and poverty was a persistent memory passed down through generations.

That memory of poverty gave political impetus to our modern welfare state with its three cornerstones – – Medicare, the Canada Pension Plan, and the Canada Assistance Plan.

The post-war economic upsurge was followed by a downturn in the 1970s. North American economies have never really recovered since. This period is characterized by an aging population, stagnant wages, growing unemployment, failure of large corporations, cuts of transfer payments to the provinces, and growing welfare ranks.

The growth of food banks are reminiscent of soup lines that my parents saw in the 1930s.  Poverty has thrown Canadians out on the streets.  The number of street people has also grown by the closing of institutions like Kamloops’ Tranquille Sanatorium in which many mentally ill patients were left to fend for themselves.  The generational memory of the depression is fading.

“The modern conservative conception of the welfare state is guided by principles of 19th century liberalism, i.e., less government equals more liberty (Canadian Encyclopedia).”

In this view, the reduction of inequality by the welfare state is seen as the antithesis of pursuit of freedom and material progress.

This is what the welfare state has come to.  Canada’s poor have been targeted, not only as a drain on taxes but as lacking the work ethic of the deserving rich class.  The failure of capitalism to provide a living for all is seldom mentioned.

The poor make a convenient political target because they don’t have the resources to fight back.  Politicians remind the middle class that their taxes going to support able-bodied people on welfare.  B.C.’s working poor don’t need to be reminded that their standard of living has been slipping.

In 1970, low-income Canadians had to work 50 hours a week just to keep above the poverty line.  “In the 1980s, this rose to 87 hours, in the 1990s, to 100 hours,” says University of Regina professor John Conway in his article for the Canadian Centre for Policy Alternatives.

The politics of class rivalry have worked well for the B.C. Liberals.  By attacking the poor who are on welfare, Premier Campbell can avoid questions about the excessive welfare of the rich.

B.C.’s rich are doing just fine.  Our province has the wealthiest citizens in Canada.  In 1999 the net wealth of the richest 10 per cent was $1,278,534.

Premier Campbell will promote welfare for the rich but not for the poor.   Until the poor have a voice in government, they will continue to be a convenient target.

Share country’s prosperity with guaranteed annual income

Prime Minister Chretien has assembled a top-level committee to investigate the idea of a basic income, also called a guaranteed annual income.  He says its not necessarily on his government’s agenda, but it should be.  The idea has been supported by other Liberals,  Prime Minister Lester B. Pearson for one, and by economist Milton Friedman.

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Basic income would be universal — paid to every Canadian man, woman and child.  It would replace welfare, child benefits, employment insurance, Old Age Security.  In fact, Old Age Security is already a kind of basic income — paid to every retired person regardless of means.  A basic income would be a more efficient and equitable means of distributing Canada’s wealth.

A basic income should be part of an overhaul of Canada’s social compact.  Our current system of welfare and employment insurance is sadly out of date.  It worked fifty years ago, after World War II when employment patterns were relatively stable. Our old social compact was designed for a time when unemployed were few and those on welfare were low.

Back then, homeless people were unheard of.  Now, poverty is increasing at an alarming rate — especially for single mothers, for which the poverty rate is 50 per cent.  We step over the homeless in our streets as if they have always been there. The squeeze is on everyone.  Natural gas is going up, and wages are going down.

The government of Canada now ensures that millions of Canadians are unemployed as a matter of policy.  The policy is called the Non-Accelerating Inflation Rate of Unemployment.    It works like this.  As soon as unemployment drops too low, the government takes this as sign that inflation is increasing.  The Bank of Canada increases interest rates to tighten the money supply, which then increases unemployment to what they consider “normal”.

A basic income would ensure that unemployed Canadians receive an income regardless of whether they meet the high qualifications of employment insurance or not.  A basic income could actually stimulate the economy through increased spending by millions of low income Canadians on basic goods and services.

Redistribution of wealth is not un-Canadian.   As it is, the rich provinces of B.C., Alberta and Ontario give to poorer provinces.  A basic income would be similar except that it would transfer money directly to individuals.

A basic income would not be taken away because a person worked, which would encourage the poor and unemployed to better themselves. Welfare and employment insurance discourages employment.

With a basic income, parents who stay at home with children (mostly mothers) would receive compensation for their work.  So would those who care for aging parents (mostly women).  With an aging population, a basic income could be a lifesaver.

A basic income would be federally administered, which is both its strength and weakness.  The problem with welfare is that its administered by the provinces.  When the feds find it expedient, they cut transfer payments to the provinces for welfare and let them take the flack.

With a federally administered basic income, the federal government would immediately come under attack if they tried to mess with the plan.   Much in the way that they were attacked when they tried to cut other federal programs such as Old Age Security, the Canada Pension Plan, and employment insurance in the Maritimes.  They quickly backed off.

The problem with federal administration of a new program is political.  The provinces want to have control over spending.  Also, after the last federal election, the country is divided into distinct political regions: West, Ontario, Quebec, Maritimes.   No political region wants to grant any power to the federal government, regardless of how beneficial a program  might be.

Another problem is one of perception, many Canadians consider a basic income as undeserved, since it is not earned by the sweat of their brow.  But investors in stocks who receive dividends are not bothered.  Nor is a landowner who possesses natural resources on his or her property.  They happily sell the resources and enjoy the profit.

Well, all Canadians own the resources of Canada.  A basic income is a dividend owed to everyone.   Prime Minister Chretien recently said “The fact is that our prosperity is not shared by all”.  He should listen to his  heart and not the bean-counters tugging at his sleeve.

Ottawa’s surplus paid for by Canada’s poor, unemployed

I’ll vote for any political party who will reduce the  deficit.  I don’t mean the financial deficit, I mean the  deficit in food to feed Canada’s starving children.

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No, I’m not exaggerating when I say starving.  Television  images of stick-like children from Africa lead us to believe  that starvation happens elsewhere, not in Canada.  A new  study published in the Canadian Medical Association Journal  paints a picture of hunger so profound it affects children’s   health. The study concludes that children in 57,000 Canadian  families go hungry on a regular basis.

Those children are four times as likely to suffer health  problems than poor children who don’t go hungry.  And  they’re nearly twice as likely to suffer from asthma.   “Hungry children lack of school readiness and proper growth  and development,” says Dr. Lynn McIntyre, author of the  study and professor at Dalhousie University.

Mothers are fearful that their starving children will be  taken away if they publically admit to the problem.  “There  is times that I try to keep enough money out of my cheques  to buy groceries and have food in the house for the  children.  I’ve seen myself go two or three days without to  give my kids something to eat,” said one such mother to CBC  TV’s The National.

The Liberals and the Alliance party  don’t offer solutions  to this food deficit.   I fact, they don’t even admit that  the problem exists.  They are too busy trying to outdo each  other in tax cuts — despite polls that show that tax  cutting is a low priority.  A poll by Decima Research shows  that Canadians are willing to have their taxes go to  national child care.

Starving children could be given one nutritional meal a day  through a Canada-wide, universal child care program.  Such a  program would help families as well as children.  It would  help parents find and keep jobs.  It would also reduce other  social costs such as welfare.

It can be done.  In Europe, fifteen member states of the  European Union provide preschool children, aged three to six  years, with educational childcare programs regardless of  whether or not their parents are employed or not.

Canada’s budget surplus was created by taking money from  programs that help the poor.  In fact, when you think about  it, there is no budget surplus at all.  A budget surplus is  something you have after all expenses are paid.  If I save  money by not maintaining my car, for example, it creates an  instant surplus, but it also creates a looming future  liability.  If I bragged that I had a budget surplus but  didn’t maintain my car, any reasonable person would shake  their head.  The Liberals have created apparent good times  at the cost of future health, welfare and education.

This bogus surplus hurts the poor. “When Canada had a  deficit, the programs that helped the poor were extremely  visible and they were cut, and they were cut very much. Now  that Canada has a surplus, the poor have vanished,” says  Julia Bass from the Canadian Association of Food Banks.    The current “surplus” was paid for by Canada’s poor and  unemployed through cuts to social programs and employment  insurance.  And now the Liberals and the Alliance want to  give those “savings” to the rich?  It’s the Robin Hood  principle in reverse — take from the poor and give to the  rich.

Canada’s surplus was created by the rich, for the rich. The  poor have been forgotten in the glow of what Chretien brags  as the best country in the world.  The best for whom?  It’s  the worst of all worlds to a starving child.  Help for the  poor is a long term investment.  A true budget surplus would  be one created through growing economy and by putting  Canadians to work.

Chretien and Day are school-yard boys intent on thowing  throw dirt in each other’s face and as a result, they can’t  see.   We need politicians with a vision of Canada beyond  the horizon of the next election — one that realizes the  full potential of all Canadians.   We must give all children  a chance.   The deficit of food and hope is the one we  should be working on.