This is John Stapleton's response to What are you skating towards in 2012?
I want to conduct ‘thought experiments’ concerning where Canada is heading as a nation as we race to create greater inequality through increased public scarcity and private wealth.
What does this look like? The area I know best is our income security programs so I start there.
This is the first ‘skate’. Our public narrative is the arena. A first experiment If Canadian governments were to cancel all income security payments to individuals overnight, the immediate savings to governments would be in the $150 billion range . This includes all Old Age Security, child benefits, EI, and disability payments. It also includes provincial payments such as workers ‘compensation and welfare. In addition to placing hundreds of thousands of Canadians into immediate destitution, grocery stores and other shops would take a huge hit to their sales and landlords would be forced to evict hundreds of thousands of tenants. Some would go out of business.
Although one can’t be clear if a $150 billion haircut would result in a contraction in activity of $150 billion overnight, the nominal short term Canadian balance sheet would get a sudden boost with this immediate change. In nominal terms, we could eliminate the $60 billion federal deficit and, over time, we would have many billions left over for all governments to make serious inroads in paying down their deficits and accumulated debt. Our fiscal house would finally be in order.
But something else very curious would happen. Since government and all other income security expenditures are components of GDP, the $150 billion in cancelled payments could reduce our GDP by over 10% literally overnight, placing Canada into a deep and long economic depression that would easily rival the Great Depression of the 1930’s. At the same time, millions of Canadians could become homeless. In essence, our economy would contract and tax revenues would deteriorate quickly and deeply. This pathology might sound familiar. It is the same prescription that our economies swallowed in the 1930’s. This prescription is now being recommended in part for countries like Greece, Spain, Ireland, Italy and Portugal in the modern day European Union.
If this pathology continues, it will spread to all of us. Why? Because you can’t shrink yourself bigger. Public scarcity is a choice and not an inevitability. This is the arena and I’ll be skating.
John Stapleton worked for the Ontario Government in the Ministry of Community and Social Services and its predecessors for 28 years in the areas of social assistance policy and operations. He is a Commissioner with the Ontario Soldiers’ Aid Commission and is a volunteer with St. Christopher House and Woodgreen Community Services of Toronto. He is undertaking an Innovations Fellowship with the Metcalf Foundation. He teaches public policy and is a member of 25 in 5. John has published over 50 articles, studies, and op-eds. John serves on the Board of Directors of the Daily Bread Food Bank. His website is Open Policy Ontario.
Twitter – @rampagehall
Note: I am releasing individual essays from the collection, What are you skating towards in 2012? on a regular basis. Upcoming contributions are by Cheryl Rose, Jacques Dufresne, Linda Perry, John Mighton, Sam Sullivan, Linda Couture, Sherri Torjman and many others. You can access the accumulated essays here.