Income Inequality, Poverty, and Affordability

This election is a lot about affordability with NDP and Tories trying to argue they will make things more affordable while Liberals also taking steps to improve on what they’ve already done.  Below is a summary of my views on each and how best to deal with them.  There are strong emotional arguments on these, but policies should be made based on best evidence not what sounds best in 10 second bytes.

Poverty

No matter where one stands on the political spectrum, I think we can all agree we want less poverty.  The problem here is how do you define poverty and what is the best way to reduce it.  For starters I think you need to define it and I believe the best method is to do it relative to the cost of living as opposed to where one stands relative to the median income.  Former looks at affordability latter more at equality.  All of us benefit from less poverty and even for Conservatives who want less taxes and lower government, less poverty saves money long term in terms of less crime, so lower justice and policing costs while also lower health care costs and increased productivity.  The problem is the issues on Downtown Eastside of Vancouver are much different than say in some Northern Indian reserve in Manitoba.  As such I believe this is an issue where governments need to work together with the federal government setting goals and targets, but giving provinces and municipalities as much leeway as possible.  After all the solution that works in one area won’t necessarily in the other.  More importantly since there is no silver bullet, we should encourage experimentation and learn from best practices.  A couple ideas that we should consider is some place should try a GAI.  If done right, it can save money as you could then scrap most social assistance programs thus reducing bureaucracy while still helping low income individuals.  The main thing is to ensure it is not clawed back dollar to dollar so work always pays more than not working.  Also taking a low paying job can help move one beyond the welfare wall as with experience, one has an easier time getting employed in better paying jobs.  I believe we need strong reform in criminal sentencing with harsh sentences being limited to severe crimes while for minor crimes and especially drug use, focus on rehabilitation.  A criminal record can be a life sentence to being stuck in low paying jobs and most good jobs won’t hire people with one.  Likewise also more adult education programs so those who dropped out of school can go back as those who dropped out of high school have a very high poverty rate and a dumb decision as a teenager should be one, that a person can correct.  Finally we need to find a way to work with First Nations to allow more economic development.  As one of the fastest growing demographics, this is a group that is vastly under utilized so improved standards of living amongst First Nations could be a real boost for our economy.  This is why I am strong supporter of the pipeline and allowing First Nations’ whose lands it cross to have partial ownership.

Income Inequality

While not quite as big an issue as in 2015, ever since Occupy Wall street movement, this issue has been thrusted from a left wing pet cause to a major issue across the spectrum.  I believe this is one we need to be careful as our income distribution isn’t even remotely similar to the United States, so trying to copy problems US is using may cause more harm than good here.  I believe in the idea of equality of opportunity, not equality of outcomes.  I support reducing income inequality if it means raising the standards of living of those at the bottom, but I do not support reducing it by reducing standards of living at the top if there is no corresponding increase at the bottom.  As I have blogged elsewhere, I don’t believe creating a more progressive tax system is the solution, in fact, correlation between progressivity of tax system and income equality is very weak.  Nordic Countries have a fairly flat tax system while US is quite progressive yet Nordic Countries much less on inequality.  Its rather programs and transfers that play a bigger role.  Likewise Canada on income mobility ranks near top of OECD while US and UK are near bottom and I think the conversation needs to turn more to income mobility not income inequality as former looks at equality of opportunity latter at equality of outcomes.  While some may say I am being selfish by ignoring this issue, I believe poverty and affordability are the real issues as I discuss on this one and that is where the focus ought to be.  We should celebrate success and entrepreneurship and having envy of those more successful is hardly the idea of a successful society.  Instead a lot of the corrosive effects that come from income inequality can be solved by working on poverty and affordability.  Some have suggested higher minimum wage, but I believe that is a double edge sword.  Put minimum wage too low, too much poverty, put it too high too much unemployment so finding the sweet spot is always a challenge, but based to have an independent commission look at it and make raises steady and predictable instead of being used as a political football.  Some have been concerned about CEO compensation and no doubt high levels do have risks, but I think regulation here can have unintended consequences.  Nonetheless to avoid Canada someday electing a Jeremy Corbyn or Bernie Sanders, I believe CEOs should stop giving themselves large pay raises and also pay their taxes as if people feel the system is rigged, eventually they will entertain more radical options.

Affordability

In recent elections affordability has been a big issue and there is no question in some parts of Canada, particularly Vancouver and Toronto, cost of living is rising too fast and people aren’t able to keep up.  I think on the real estate front, we need to work with municipalities to increase supply while avoid making home loans easier which will just drive up prices further.  In most large cities elsewhere, people tend to live in multi unit complexes, not detached homes, so I think we need to re-zone more for this as this will increase supply allowing prices to fall.  Likewise with immigration much like Australia, we need to offer bonus points to immigrants who go to smaller communities.  This will lower population growth in large cities while increase it in communities struggling.  Places like Prince George, Winnipeg, Windsor, and Moncton are all far more affordable, but due to lack of jobs people aren’t moving to them.  With more people moving there and creating more jobs, that will hopefully create more opportunities for people to live in communities that are more affordable.  Also to reduce commuting costs both in price and time, we should work with municipalities to change zoning laws to have business districts more spread out so not everyone has to commute over an hour to the downtown core.  This would save on gas prices as well as lost time for commuting.  Likewise we should also work with businesses, to offer childcare.  For working mothers, having a business have a daycare centre right next door and included in business plan would be a huge boon and very cost effective.  These are just some suggestions and much like with poverty, federal government can take the lead in initiatives, but provinces and municipalities should try different approaches and we should learn from best practices.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s