In Canada, trusting the safety net
Monday afternoon on the streets of Toronto, I spent a couple of hours talking to workers — people, in other words — about their lives in a troubled economy.
Three take-aways struck me:
First, at street level in Canada, a lot of folks feel very fortunate indeed. They’re not romantics. They don’t think their country is perfect. You find Occupy camps in places like Kingston and Toronto, just as you do in Burlington and New York City.
But even people who’ve spent time on unemployment think that their country is a relative oasis in a world where economies still seem at risk of unraveling.
The second thing that seemed striking was that these people — obviously this was about as unscientific a sampling as you could find — trust their society’s social safety net.
They simply don’t believe that their country will ever just cut them loose if they’re jobless. That’s not to say that Canada’s unemployment benefits are lavish — they’re not.
But you just get the sense here that Canadians trust their government — and believe in government’s moral role when it comes to serving as a backstop to the job market.
Finally, I heard a lot of real misgivings about America’s way of thinking and talking about jobless people.
The idea that people must be lazy, or slackers, or leeches, in order to be unemployed, or unsuccessful — that just didn’t wash with the people I spoke to.
Here’s the conversation I had with two women, Nicole and Nina, as they were walking home from work:
Nina: I think [American workers are] treated worse than we are, personally. I don’t agree that they don’t get healthcare. And I don’t agree that once they’re out of a job, they’re out of everything. I think they need some of the types of benefits that we have here. Yeah, we pay a lot of tax, but it adds up and I think it ends up being beneficial to us.
Nicole: I do think that Americans are treated poorly in terms of your economic living. Like, where is the money going? The rich seems to be getting richer and the poor seems to be getting poorer over there.
Brian: Do you think that’s in Canada too, or more in the United States.
Nicole: It’s more the United States.
One thing that I will say is that there is no evidence — at least that I can find — that Canada’s more robust safety net results in more malingering, or more abuse of the welfare system.
On the contrary: There’s a fair amount of evidence that these programs help to stabilize Canada’s economy, maintaining a more educated, healthy, productive work force.
So what do you think? Is this a case where our neighbors to the north have a better model? Or do you prefer our more laissez-faire system? Comments welcome below.
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I choose laissez faire.
“They wanted security, so they traded their freedom for chains, and they were secure”
Paul Harvey
JDM –
The people I talked to didn’t seem to be chained in any way.
–Brian, NCPR
A significant percentage of Americans (like JDM) tend to believe in a Darwinian kind of individuality, a frontier mentality. “I prosper or fail entirely on my own”. Canadians and the people I’ve encountered from other societies tend to see themselves as part of a society which they see themselves as part of an interdependent group which prospers or fails depending on how well they interact and cooperate.
IMO Many of the problems we have in the US come from the individualists acting according to their beliefs within the context of a social situation. This is exactly what Elizabeth Warren was talking about when she said “Nobody in this country got rich on their own…”. Failure to recognize the difference between hacking out a homestead in the wild and conducting an enterprise that involves many other people is a prescription for exactly the kind of problems our economy is suffering from.
Imagine how the music would sound if the lead violinist in the orchestra decided to play at a different tempo than the erst of the orchestra. It isn’t sacrificing freedom for security to cooperate for a mutual goal. If you want that kind of freedom from considering your fellow man, go off and live a subsistence life in the wilderness.
Americans have been tricked into believing democracy requires unfettered capitalism. Democracy is about voting. Democracy does not require capitalism. It can exist with socialism, capitalism or a mix of the two.
Even in the days of the Frontier, someone had to make the rifles and pistols, and a whole host of other necessities for the frontier man and woman to survive in the wilderness.
As John Donne wrote, “No man is an island.”
The idea of interdependence was also expressed in “The Three Musketeers,” “One for all and all for one.”
We really need to get beyond our illusions. When people in other countries start feeling sorry for us, isn’t it about time we find and fix what is wrong? If we don’t, we may soon find ourselves having an emigration problem rather than an illegal immigration problem.
The chains with an overtaxed society are the creation of a permanent underclass.
With a punitive, progressive income tax, and a high VAT, there is a huge disincentive not to succeed. In other words, if I work really, really hard, and increase my income from $100,000 to an incredible $200,000 per year, and the government gets most of the increase, then the incentive is to not try really, really hard to break into the upper level income.
It creates the “rich get richer and poor get poorer” by design.
As long as the average citizen on the street is happy with an unemployment cheque, and the opportunity for <$100,000 per year for life when they do work, then they are fine.
I don't want that limitation on my opportunity. I want the possibility of making any amount my talent and ambition will take me. I want to pay a flat percentage of my salary now, and then, because I do want to give to the greater cause.
JDM,
If the only reason you work is to get more money to buy more junk, no amount of money will ever make you happy.
Now if you do what you like to do and make enough money to take care of yourself and your family, you will be happy no matter how much money you make. And if you happen to make gobs of money, good for you but please don’t complain about the taxes you pay, otherwise you are just making yourself miserable and again you will never be happy.
Jim Bullard has his thumb on a key difference in the cultures. The chains are the acceptance of subservience. Government will take care of me or at least it should…
The question is: Shall a more socialist structure be created to better compete against central planning? Do we give up more freedoms for survival?
Pete Klein: “If the only reason you work is to get more money to buy more junk” That’s not my motivation. Is it yours?
Pete Klein: “Democracy does not require capitalism.” We had two years of Obama, Pelosi, and Reid (with almost filibuster-proof majority). A triple-play of socialism with no opposition.
I guess this nation is not ready for such enlightenment. It was soundly defeated in 2010, and may be again in 2012.
Here’s the interesting part of this in Canada:
The discussion isn’t ideological. It’s practical. People who go on unemployment don’t play to be shackled to government permanently.
They pay taxes so that the government is standing by to help people in crisis.
Then, when the crisis passes, people go back into the free market.
People here acknowledge that some people will game the system.
But the idea that a robust social safety net creates dependency, or a welfare mindset, or the like – it just doesn’t have the same traction.
And the interesting thing is that Canada actually provides a test of JDM’s theories.
If a strong social safety net were “addictive” or “enslaving,” you would expect Canadians to be, well, addicted…or enslaved.
But they’re not. They have incredibly thriving free markets, lower unemployment than in the US…
So what gives?
–Brian, NCPR
Social Darwinism involves a significant misconception. The survivors are not necessarily the fastest to outrun the predators. Plenty of the slow ones survive as well and many of the faster ones get eaten. The faster ones have a slightly higher probability of survival.
That means a few of the ultra wealthy became so because they earned it but most were just lucky. Similarly, many hardworking people with great ideas failed due to bad luck – they were a month too soon or too late with their great idea.
We need a social safety net to protect us from bad luck more than we need to worry about the moral hazard potential laziness from not having to worry about dying if we fail.
Brian – the other side of your story is that there have been times when Canada appeared to be doing worse than us. The laissez faire system that JDM likes so much has booms and busts. The boom years feel pretty good.
Brian Mann: “They have incredibly thriving free markets, lower unemployment than in the US…
So what gives?”
Fossil fuel.
If we went with “drill, baby drill” we would see an immediate decline in unemployment.
Cananda’s October unemployment report:
The bulk of the decline in October occurred in manufacturing, followed by construction. Natural resources was the only industry to post notable gains for the month.
http://www.tradingeconomics.com/canada/unemployment-rate
Keep in mind:
– we are a frontier society still. It’s just north south not east west and in the past. We know where hard times and bad decisions can lead us because we are still on that edge culturally.
– our unemployment system is user pay. We get direct deductions for Employment Insurance (EI) and it goes into a separate pool of funds. That pool is in surplus to our needs at the moment and has been for years. We have saved enough of our own money for that purpose collectively. That is not socialism, it’s folks taking care of themselves.
– Alberta oil and Newfoundland gas is a huge part of it but so is Quebec Hydro that electrifies NYC. We are resource rich and diversely so. Not just oil oil oil.
– we have more highly regulated banks and, because of that, some of the richest banks in the world.
– even with all that, we were Italy in the early 1990s but took drastic steps that affected everybody to get the house in order. A new federal sales tax of 7% (no 5%) was part of it.
So I see us as lucky, lucky to have you as neighbours for many reasons including being customers but also careful as we know how easily it can fall apart.
If we went with “drill, baby drill” we would see an immediate decline in unemployment.
i believe this is completely wrong. it would take years for any new extractive jobs to have a measurable impact on employment.
Peter said “…a few of the ultra wealthy became so because they earned it but most were just lucky.” I would add “or more conniving”.
The real difference is in the individual attitude toward society and government, a difference of “me” vs “we”. It was the me attitude that made the housing bubble, lenders looking for bonuses, borrowers willing to believe the notion that they could buy a McMansion for no money down and it would work. The idea behind making home ownership easier was a laudable attempt by “we” thinkers but got turned into a disaster by “me” thinkers. The “me” attitude passes by on the other side of the road from the person(s) in need. The “we” attitude goes to their aid.
As Jim says, in the U.S. we seem to be divided by “me” and “we” thinking or individual vs. community. Some of us recognize that the value of a community is greater than the sum of the individuals in it. That the community provides both tangible and intangible assets that allow individuals to achieve much greater success than in isolation. And it provides a safety net for those less fortunate and in tough times.
However, the philosophy that has captured the Republican Party is a selfish, me-first attitude. I’m going to get mine and you are on your own attitude. Tea Partiers want lower taxes and less government, as long as the services cut affect “those other people”. Anyone without a job is lazy, and temporary unemployment benefits just encourages the slackers. Anyone poor is their own fault, etc, etc. It is also baffling that many so-called Christians belong to this group.
Canada has benefitted by not having one major political party promoting the idea that government is worthless and always the problem for the past 30 years, like Republicans in the U.S. – And then when in power doing their best to prove it.
Jim Bullard:
Me’s are we’s. What do I mean? Americans outgive every other nation.
http://www.american.com/archive/2008/march-april-magazine-contents/a-nation-of-givers
Q. Are Americans more or less charitable than citizens of other countries?
A. No developed country approaches American giving. For example, in 1995 (the most recent year for which data are available), Americans gave, per capita, three and a half times as much to causes and charities as the French, seven times as much as the Germans, and 14 times as much as the Italians. Similarly, in 1998, Americans were 15 percent more likely to volunteer their time than the Dutch, 21 percent more likely than the Swiss, and 32 percent more likely than the Germans. These differences are not attributable to demographic characteristics such as education, income, age, sex, or marital status. On the contrary, if we look at two people who are identical in all these ways except that one is European and the other American, the probability is still far lower that the European will volunteer than the American.
Well, JDM, before you get too carried away by the generosity of Americans, you might want to read this: http://www.nytimes.com/2011/11/27/business/estee-lauder-heirs-tax-strategies-typify-advantages-for-wealthy.html?_r=1&scp=2&sq=estee%20lauder&st=cse
Walker: (from link) Mr. Lauder has for decades aggressively taken advantage of tax breaks that are useful only for the most affluent.
At least he is qualified to be Secretary of the Treasury. No wait. His tax breaks were legal, and for the affluent.
If he were from Chicago, that would make him eligible for the Oval Office.
Canada has some very good things going for it. They have smaller homes than in the US and smaller cars. My Canadian friends don’t find it odd to have a family with only one car. Americans have been slightly corrupted by a false belief in material things, even though we don’t have those things.
But the other thing to remember about Canada, they are riding an energy boom and they are not overly concerned about the environment in moving their commodity markets forward.
But yes I think their health care is something we need to look at, our budget problems are essentially health care problems; we have to move to a Canadian model in that arena in my opinion to be competitive economically.
While Brian’s focus was border towns of Canada my mind went to Smith Falls Ontario where Hershey closed its Chocolate Factory in 2008 which I toured shortly after the announcement to see a real candy factory in action. At about the same time another large business in the area closed. The town is about halfway between Cornwall and Ottawa along the canal.
I came across an interesting publication from the fall of 2009- Just Labor: a Canadian Journal of Work and Society, focused on Smith Falls and I recommend to all. It discusses the circumstances the town was- perhaps still is dealing with. It ties in Globalization quoting “Given Canada’s position of high relative wages and benefits in the knowledge economy, the advice for Canadian business leaders is to outsource the supply chain of unskilled to medium-skilled labour to low-wage countries.
This advice comes from the Canadian government’s Business Development Bank
itself (Nycz, 2007)”
It discusses how the social safety net (terms used in this blog) has contracted substantially due to Canadian federal changes in the past 20 years and how efforts to get people back into employment were not given as much provincial or federal support as in times past. There are some comparisons to American unemployment services and that Canada, in the eyes of the authors has moved substantially backwards in its support of the unemployed. Payments don’t cover rent and annual changes are no longer indexed for cost of living etc.
http://www.justlabour.yorku.ca/volume14/pdfs/06_jinha_press.pdf
What I considered to be their conclusion was:
“Chief challenges today are: a) reversing
the decline of state services, and federal/provincial government action in
addressing the impact of globalization on Rural Canada III; b) the ability of the
three rural Canada’s in Smiths Falls to fight back against de-moralization, and
support self-organization as a cohesive community; and c) the ongoing work of
economic development, through development of a learning culture,
development of networks and new enterprise – with the support of Canadians at
large and their governments”
A large part of “me” vs “we” is the attitude that government is bad, other, the enemy. For example, the “me” attitude wants to privatize Social Security as a way to build personal wealth for retirement. That is a basic misunderstanding of the “we” attitude that founded SS, not as a personal wealth plan but as an insurance plan to prevent seniors from falling into poverty. If you want to build personal wealth there are plenty of ways to do that through IRAs or just private investing but those shouldn’t replace insurance for most people.
You can save your money and, when you have enough, put up bonds against accidents instead of buying auto insurance. If you have enough you can insure yourself against all sorts of things. Most people don’t have that kind of liquid assets so various insurance plans are available. SS is that kind of plan, “we” protect each other because each “me” can’t do it on his or her own. In the case of SS government is the mechanism through which “we” insure ourselves. Government in a democracy isn’t the enemy, it is “we” acting collectively for the common good. The very first word in the preamble of the US Constitution is “We…”.