John Richards’s review of Paul Collier, Exodus: How Migration is Changing our World (New York: Oxford University Press, 2013) appeared in Inroads 35 (Summer/Fall 2014).

Paul Collier’s Exodus, which I reviewed in Inroads in 2014, is an economist’s assessment of the pros and cons of large-scale immigration. He began the book with a précis of his family history. Prior to World War I, his grandfather, Karl Hellenschmidt, migrated from an impoverished German village to Bradford, at the time a prosperous city in northern England. Come the war, a “gutter rag” newspaper labelled Hellenschmidt a traitor and a mob ransacked his shop. Paul’s grandfather was interned; his grandmother sank into terminal depression. His father, age 12, left school to run the shop. A quarter-century later, the threat of European war reemerged and Paul’s father decided to change his name and his identity and become English.

Given this family history, the reader might reasonably expect a vigorous denunciation of host-country nationalism and a defence of immigrants’ rights. That is not Collier’s conclusion. A strong national identity, he argues, is a necessary – although obviously not sufficient – condition for a society to have a successful set of social programs. Without a reasonably strong national identity, he argues, the rich will not agree to pay high taxes to fund programs that disproportionately benefit the poor. While the host country has an obligation to suppress violent anti-immigrant activities, immigrants have an obligation to integrate and accept core features of the host country’s national culture – such as expectations of group reciprocity on social programs. More on reciprocity below.

In 2014, I agreed with Collier’s conclusion. Immigration is a mixed blessing. As I wrote at the time,

Immigrants clearly benefit from immigration. The benefits to members of the host society are ambiguous and often unevenly distributed. Those left behind in the country of origin may benefit from emigration via several routes, starting with remittances … However, if the state of governance (in the home country) is very low, emigration of the most capable may well be at a level that serves to entrench dysfunction. Collier cites Haiti: most decently educated Haitians are living in New York and Montreal (I should have added Paris). Were they living in Port-au-Prince, they would be less prosperous but their political weight would improve prospects for decent governance.

In 2021, I essentially agree with what I wrote in 2014. Were I writing the review now, I would elaborate on the role of immigration to Canada in explaining the disruptive increase in housing prices over the last decade, particularly in Toronto and Vancouver. There are multiple causes for housing price increases, but among them is the high concentration of new immigrants, nearly half of whom opt for one of those two cities.

Collier reworked and expanded the arguments in Exodus in his 2018 book The Future of Capitalism.¹ This book is his attempt to summarize conclusions from a long career as a World Bank economist in Africa and as a senior professor at Oxford University. As in Exodus, he slips fragments of his family history into this book. The reader learns about his cousin: “Aged fourteen, my cousin and I were in tandem: born on the same day, the children of uneducated parents. (We) had won places in grammar schools (academically oriented government schools). Her life was derailed by the early death of her father; shorn of that authority figure, she became a teenage mother, with its attendant failings and humiliations.” A dramatic contrast with his own education and career.

Reciprocal obligations and the welfare state

Collier chose his title to honour Anthony Crosland, a prominent Labour Party MP and public intellectual in the quarter-century following World War II. In 1956, Crosland published The Future of Socialism, in which he made a sharp distinction between social democracy, a set of policies intended to equalize opportunity, and Marxist-inspired strategies that seek to contain corporate power via nationalization of major firms. Both Crosland and Collier conclude that the evidence of the last two centuries is unambiguous: strategies that accommodate private corporations and markets are the only institutional basis through which the majority in a country can escape poverty – whether it be the 19th-century U.K. or 21st-century China. While capitalism is the necessary basis for economic productivity, left to itself capitalism does not assure high-quality basic services for all – and on occasion, as occurred in 1929 and 2008, it derails.

Collier and Crosland emphasize that the realization of social democratic goals in the mid-20th century owes much to the distress arising from the Great Depression of the 1930s and the sacrifices of World War II. Ultimate victory over fascism and mass unemployment bequeathed to the U.K. and U.S. a strong national identity among their citizens. Collier’s summary:

Social democracy worked from 1945 until the 1970s because it lived off a huge, invisible and unquantifiable asset that had been accumulated during the Second World War: a shared identity forged through a supreme and successful national effort. As that asset eroded, the power wielded by the paternalistic state became increasingly resented.

An element of this asset was agreement (more or less) among the majority, including the rich, to pay much higher taxes to fund massively expanded postwar social programs – the most important being universal health insurance and good-quality kindergarten-to-college education. Collier makes passing reference to parallel developments in continental Europe, but he primarily discusses the New Deal in the United States and the postwar Labour government in the U.K. Funding social programs required that government capture about 40 per cent of GDP via taxes, at least twice the share captured in the 1920s. The Democrats created better education programs in the United States than did Labour in the U.K. (for example, the GI Bill catalyzed U.S. expansion of college education); Labour created better health care programs (the single-payer National Health Service providing universal medical, hospital and pharmaceutical insurance).

The Magna Carta of the U.K. welfare state is the Beveridge Report, tabled in Parliament in 1942. William Beveridge was an economist who devoted his career to social policy reform in the U.K. (Leonard Marsh participated in research under Beveridge. He subsequently emigrated to Canada and authored a Canadian equivalent, submitted to Ottawa’s Parliament in 1943.) Beveridge perceived the welfare state as a set of reciprocal obligations among citizens. His report contains many passages on the obligation of the rich to pay highly progressive income taxes and the obligation of the working classes not to abuse health insurance, unemployment insurance and other social insurance programs.²

As have others, Collier describes the post-1980 lowering of global trade barriers, rise of manufacturing capacity in East Asia and technological change favouring jobs that require education over those that require manual skills. With some justification, Margaret Thatcher and Ronald Reagan succeeded in portraying centre-left governments and unions of the 1970s as “special interest groups” hampering economic development. When they came to power in the 1980s, major U.K. and U.S. coastal cities thrived; however, many cities dependent on traditional sectors fell into prolonged decline (shipbuilding along the Clyde, car manufacturing in Detroit). Income inequality has risen throughout high-income countries, more prominently in the U.S. and U.K. than in most others. In statistical explanations of family income distribution, a variable that looms large is parents with a college degree relative to those without. Geographic distribution of college graduates correlates closely with prospering and declining regions. In terms of group identity, Collier follows David Goodhart’s characterization of well-educated “Anywheres,” who increasingly identify with cosmopolitan international communities and who are abandoning their earlier identification with domestic “Somewheres.” ³

Communalism

Cataloguing the factors that have worsened income distribution in high-income countries is hardly novel. The “big” idea that Collier pursues in this book is communalism: for better or worse, he insists, the human being is essentially a communal animal. Most of us identity with members of our extended family – albeit to varying degrees. Prior to settled agriculture 10,000 years ago, identity did not extend much beyond small villages. Among the changes brought on by industrialization, most of us now identify, at least to some extent, with our nation. Since the 19th century, we have extended our sense of identity from city to region to the country of which we are citizens. Collier makes references throughout to loyalties among working-class families in industrial cities (such as Bradford) in northern England.
Our portfolio of identities may extend beyond the nation-state but, as the travails of the European Union repeatedly reveal, most citizens of nation-states are loath to cede ultimate political authority to supranational bodies. Our identity with communities beyond our own country does exist – for example, in the form of foreign aid in times of natural or human-made crises – but this identity is weak relative to that accorded to citizens within our country. Depending what programs one counts, Canadian governments spend about 25 per cent of GDP on social programs for Canadians, and about 0.3 per cent on official foreign aid. Admittedly, new immigrants over the first and second generations usually maintain an identity with their country of origin far greater than most.

Collier relies heavily on Jonathan Haidt, champion of “moral foundations” theory.⁴ According to Haidt, human communities construct their moral conventions intuitively, with scant attention to complex implications and intellectual consistency. Dominant moral conventions are based on six fundamental values: loyalty to members of the community however defined; a sense of fairness among community members; extent of individual liberty; behavioural norms that define sanctity of community members; care or empathy for suffering among others; various concepts of equality. Different communities accord varying salience to each of these values. Haidt’s six intuitive human values are open to much debate. Here is how Collier interprets them.

Having staked out his belief that humans are fundamentally communal in both Exodus and The Future of Capitalism, Collier vigorously condemns academic economists for constructing elaborate models that envisage the economy as a series of market exchanges among individuals, each possessing a set of preferences and maximizing their utility (personal well-being) subject to their income and market prices. The idea is not wrong if the goal is maximizing national GDP. Deng Xiaoping understood the insights of The Wealth of Nations. Among his first accomplishments was to allow farmers, as opposed to government bureaucrats, to decide what crops to grow. Allowing farmers to choose crops yielding maximum expected income resulted in a doubling of wheat production from 1978 to 1985. By the end of the 1980s, Chinese production of grains and tubers was three times that of India.

Collier acknowledges that, post-1980, free trade “neoliberal” economic policies have increased world average per capita income and have modestly reduced worldwide income inequality – thanks to hundreds of millions of peasants in China and India moving to town and earning higher incomes in manufacturing jobs. But, he argues, this has been at the cost of increasingly polarized societies within high-income countries. Individual income maximization overemphasizes individual liberty and underemphasizes values of fairness.

Also, Collier has little good to say about Rawls. Rawls insists that we should make moral decisions as if each of us is behind a “veil of ignorance” as to our own future placement in the social hierarchy. Rawlsians will assent to a proposed policy that increases the sum of utility among those in a country if it offers benefits to those with the lowest utility. This reasoning, Collier argues, overemphasizes equality. It invites formation of minority identity groups defining new judicial rights. In reaction, populist demagogues (mostly conservative) and anticapitalist ideologues (mostly neo-Marxist) emerge in defence of the majority. Pragmatic policies of compromise may well become impossible.

Pragmatism, a nebulous philosophical trend that arose in late-19th-century America, rejects the search for philosophical and scientific certainty.⁵ It is associated with John Dewey and other liberal reformers of the first half of the 20th century, who argued for incremental progress and rejected ideological certainty. To give the flavour of Collier’s conclusions, I quote at some length a polemical passage:
In its origin (pragmatism) is communitarian, seeing the task of morality as doing our best to fit our actions to the values of our community and the specifics of the context … it rejects ideology, no one value is overarching, absolute and timeless. In real communities, the relative importance of values evolves; pragmatism asks “What, here and now, is more likely to work?”

In contrast, ideologies each lay claim to supremacy, derived from reason, over those who disagree with them. The custodians of the supreme ideology are a vanguard of the cognoscenti. Religious fundamentalists invoke a unique divine being as the ultimate authority; Marxists invoke the dictatorship of the “proletariat” guided by a hierarchy. Utilitarians invoke the sum of individual utilities and Rawlsians invoke “justice,” as defined by themselves. Just as pragmatism stands in contrast to ideology, it also stands in opposition to populism.
Collier acknowledges that “pragmatism has its dangers. The freedom to deduce moral actions situation-by-situation has to be bounded by our inherent limitations … Worse, we are tempted to fit reasons to our values. Worst, our judgements are no better than our knowledge.” At this point, an example helps us understand Collier’s over-the-top critique of utilitarian and Rawlsian moral theory.

Given Collier’s extensive work on African development, he not surprisingly has much to say about ethical responses among high-income countries to the increase over the last three decades in refugees from Africa and the Middle East – not to mention Afghanistan. The proximate cause of rising refugee numbers has been civil wars in, for example, Algeria, Ethiopia, Mali, Mozambique, Niger, Nigeria, Côte d’Ivoire, Chad, Iraq, Syria and Yemen. A second proximate explanation is religion: in all these cases, conflicting interpretations of Islam are implicated. In some cases, all participants are Muslim, one side moderate and the other committed to various Salafist perspectives. In Syria and Iraq, the conflict has pitted Sunni against Shi’a – exacerbated by unsuccessful U.S. and NATO interventions. In Algeria and West Africa, conflict has erupted between educated urban elites whose incomes have risen dramatically in the half-century since independence and a rural population whose incomes have not risen. In rural areas, Salafist imams define morality and jihadist extremists attack schools as institutions leading to apostasy.

Rawlsian moral policy, combined with economists’ emphasis on global utilitarianism and the responsibility of care for those faced with war and natural disasters, implies large-scale immigration of refugees as the appropriate response to civil wars. Not surprisingly, Collier disagrees: we have plenty of evidence, he argues, that large-scale immigration of refugees with values profoundly different from those of the potential high-income host country is a catalyst for populist anti-immigrant demagoguery (Donald Trump in the U.S., Nigel Farage in the U.K., Marine Le Pen and gilets jaunes in France, Viktor Orbán in Hungary, Matteo Salvini in Italy).

The clash between the “moral foundations” of immigrants from developing countries and citizens of high-income countries readily leads to a breakdown of pragmatic policy. As I write in mid-October, U.K. leaders are mourning the assassination by the son of a Muslim immigrant of a highly respected MP as he met with constituents. The recently elected Labour leader, Keir Starmer, spends most of his energy attempting to shift the public view of Labour from Jeremy Corbyn’s neo-Marxist tiers mondisme to some version of social democracy.

Among European countries, France has been the most dramatically afflicted by a Huntington-style clash of civilization between well-educated citoyens de souche and Muslim immigrants who have been in France for three generations at most. To some extent, the French have themselves to blame. Their social policies are overly generous and contain few reciprocal obligations (such as transfers conditional on employment) designed to accelerate integration.

In 2015, jihadists assassinated the editors of Charlie Hebdo, a high-profile satirical weekly. In 2020, a radicalized Chechen immigrant assassinated Samuel Paty, a secondary school teacher who, in conducting the required curriculum lecture about laïcité and free speech, displayed caricatures of Muhammad. Between these two high-profile events, Islamist jihadis killed some 250 people in targeted attacks throughout the country.

Emmanuel Macron is a pragmatist, but the chattering classes in Paris are not currently talking about pragmatic policy innovations to hasten integration. They are discussing the rising public profile of Éric Zemmour, an articulate Jewish journalist born in France to Algerian immigrant parents. Zemmour is convinced that the key policy innovation needed to preserve French secular values is a halt to Muslim immigration and deportation of those found guilty of serious crimes. Zemmour may, or may not, enter the 2022 presidential election. His latest poll result (mid-October) is 17 per cent, second only to Macron at 24 per cent for the first round of the election.

If not large-scale immigration, what? Collier does not discuss a Canadian point system designed to keep out those with low education levels and unable to speak English or French. His response turns around a responsibility of high-income host countries to finance employment opportunities in countries abutting the source of conflict. A good idea, but international support for such major interventions is, at present, marginal.

Anywheres versus Somewheres in developing countries

Collier’s thesis is that social democracy tamed capitalism and afforded a “good life” to the great majority of residents in high-income countries. It took two centuries after Adam Smith for countries in Europe and North America to abandon revolution and 19th-century Manchester liberalism. If the post-1980 lowering of global trade barriers, rise of manufacturing capacity in East Asia and technological change have polarized income and political identities in high-income countries, should we not expect a somewhat similar dynamic in developing countries? This is a question that Collier does not pose.

In the mid-20th century, a national identity on behalf of sovereignty accorded legitimacy to the first generation of postcolonial elites. It is an understatement to note that the governing elites of most newly sovereign countries emerging from European empires did not pursue social democratic goals consistent with Collier’s expectations. They did not prioritize good-quality health clinics and hospitals, good-quality primary and secondary education or adequate employment opportunities beyond the major cities. Many countries (e.g. India and Pakistan) copied the Soviet obsession with centralized investment in heavy industry; many collapsed into deeply corrupt dynastic regimes (e.g. Uganda under Museveni, Iraq under Saddam, Syria under the Assad family, Libya under Gaddafi, Algeria under geriatric FLN leaders, Zimbabwe under Mugabe, Pakistan – intermittently – under the Bhuttos).

With many national differences, the post-1980 factors that have fractured national identities in high-income countries have done the same in low-income countries. Over the decades, urban elites in the rapidly growing megacities of developing countries have identified with the lifestyles of high-income countries. Many young adults living in villages have migrated to urban slums in hope of gaining access to higher-income employment. Some succeed in gaining a formal-sector job, either in the public sector or in a labour-intensive sector such as construction or garment manufacturing; most remain in the informal sector earning not much more than they would have if they had stayed in their village.

Admittedly, per capita GDP has risen in the developing world post-1980, even in the poorest regions, sub-Saharan Africa and South Asia. But averages tell us nothing about income inequality, which is very high. Over half the South Asian population lives below the World Bank’s lower-middle-income threshold of US$3.20 per person per day.

These observations are not new. They have motivated international bodies such as the World Bank and various UN agencies to “nudge” the governments of developing countries into adoption of social democracy. The highest-profile initiatives have been the UN’s 2000–2015 Millennium Development Goals (MDG) campaign followed by the 2016–30 Sustainable Development Goals (SDG) campaign. These campaigns have realized some success, but public sector corruption and underfunding remain pervasive and most SDG goals are unlikely to be met.

In South Asia, the urban elites have long since abandoned public education and health services. Among the near-poor (those with some discretionary income), an increasing share have abandoned government schools and health clinics in favour of low-fee private schools and mediocre private health care.

European and North American countries took two centuries before they decided that “tamed capitalism” was the best of many imperfect options. I wish the SDG campaign well in attempting to make the transition in 15 years.

Continue reading “If Not Immigration, Then What?”

Image: Francis Mckee, CC BY 2.0, via Wikimedia Commons. Edited by Inroads.

On the one hand, liberal greens will tell you that the world is ending – but that we must not use nuclear power, an abundant source of clean energy, to stave it off. On the other hand, conservative greens will tell you that the world is ending, but that we can’t burden people with a carbon tax or a gasoline tax to slow global warming.

On a third hand, suburban greens will tell you that the world is ending, but that they don’t want any windmills, solar farms or high-speed rail lines in their backyards.

On a fourth hand, most of today’s leaders will tell you that the world is ending, so at Glasgow they’ve all decided to go out on a limb and commit their successors’ successor to deliver emissions-free electricity by 2030, 2040 or 2050 – any date that doesn’t require them to ask their citizens to do anything painful today.

This is not serious – not when you’re talking about reversing all the ways that we have destabilized Earth’s systems, from ice caps and ocean currents to coral reefs and tropical forests to the density of carbon dioxide in the atmosphere. This is pretend.

Serious was how we responded to Covid-19, when it really did feel like the world economy was ending: We fought back with the only tools we have that are as big and powerful as Mother Nature – Father Profit and New Tech.

— New York Times columnist Tom Friedman¹

Friedman succinctly makes an argument with which I strongly agree. With exceptions, the political leaders speaking at the Glasgow UN Conference of the Parties (COP26) were not “serious.” Perhaps the most ominous evidence of a lack of seriousness is paragraph 36 of the Glasgow Climate Pact:

36. (The Conference of the Parties) Calls upon Parties to accelerate the development, deployment and dissemination of technologies, and the adoption of policies, to transition towards low-emission energy systems, including by rapidly scaling up the deployment of clean power generation and energy efficiency measures, including accelerating efforts towards the phase-out phase-down of unabated coal power and inefficient fossil fuel subsidies, recognizing the need for support towards a just transition.²

Optimists note that this is the first mention in a COP statement of eliminating use of coal to generate electricity; realists note that, at the last minute, India and China amended the text by substituting “phase-down” for “phase-out.”

Whatever the interpretation, paragraph 36 is not “serious” in Friedman’s terms. His implicit definition of serious is that politicians invest their political capital in launching programs that (1) are undertaken now, as opposed to being scheduled to ramp up over time or come into effect in future decades, and (2) have the potential to make a major impact in lowering greenhouse gas (GHG) emissions. Where should we start?

The Intergovernmental Panel on Climate Change (IPCC) is a UN organization responsible for assembling climate change scientific studies. In a 2018 report targeting policymakers, it put forward four pathways that would probably hold the increase in average world temperature to 1.5 degrees Celsius relative to preindustrial estimates (see Box 1).

Box 1

IPCC pathways to limit future temperature rise to 1.5 degrees Celsiusa

Pathway 1

The first scenario requires that innovations can simultaneously reduce energy demand and increase living standards, especially in the global South. A downsized energy system enables rapid decarbonization of energy supply. Afforestation is the only carbon dioxide removal option considered. There is no need for either fossil fuels with carbon capture and storage or bioenergy.

Pathway 2

This scenario requires faith in international cooperation with a broad focus on sustainability including energy intensity, human development, economic convergence, shifts toward sustainable and healthy consumption patterns (e.g., substitution of plant-based protein for red meat), low-carbon technology innovation and well-managed land systems. It requires some limited societal acceptability for carbon capture and storage, and bioenergy.

Pathway 3

This scenario implies that social as well as technological development follows historical patterns. In other words, final energy demand continues to grow. Central to this pathway is that we support universal acceptance of nuclear power. The scenario projects a fivefold increase in use of nuclear, a ninefold increase in nonbiomass renewables and a sevenfold increase in carbon capture and storage plus bioenergy. (At present, adding carbon capture from fossil fuel power generation roughly doubles the cost per kilowatt-hour).

Pathway 4

A resource- and energy-intensive scenario in which economic growth and globalization lead to widespread adoption of greenhouse gas–intensive lifestyles, including high demand for transportation fuels and livestock products. Emissions reductions are mainly achieved through technological means. We need faith in new technology removing carbon dioxide from the atmosphere, faith in carbon capture and storage and faith in bioenergy fuels.

a Summary of pathways defined in Intergovernmental Panel on Climate Change, Summary for Policymakers of IPCC Special Report on Global Warming of 1.5℃ Approved by Governments (Geneva, Switzerland: Author, 2018), p. 14.

Each of these pathways requires policies that, at present, are highly unpopular in high-income countries or depends on technological innovation that may or may not materialize. Pathway 1 requires reduced world energy demand, a massive increase in forest cover and emphasis on increased living standards in the global South. Pathway 2 requires high levels of international cooperation, lower energy intensity and a major shift in diets from meat to plant-based protein. Pathway 3 assumes extrapolation of historical trends in energy use. Central to this pathway is a massive increase in the share of energy derived from nuclear power as well as an increase in nonbiomass renewables and in carbon capture and storage. The fourth requires optimistic trends in technology for CO2 removal from the atmosphere and faith in carbon capture and storage.

The value of the pathways is to illustrate what “serious” means. My choice is Pathway 3. The case for it is that the majority in all countries – developing or high-income – will never agree to “phase out” or even “phase down” fossil fuel energy without a reasonable substitute. Pathway 1 requires Brazil, Indonesia, countries in tropical Africa and Russia, among others, to halt illegal logging and find ways to expand forest cover. It also requires that the global North reduce energy demand and leave room for the global South to increase its energy demand and the contingent GHG emissions. All good ideas, but they require Scandinavian quality of governance. Pathway 2 requires that the world abandon meat, especially red meat. Good luck in persuading the majority across the world to become vegetarians, or perhaps eat chicken along with vegetables, fruit and pulses. (No fish! Substituting fish for meat accentuates the pressure on world fish stocks.) The IPCC is dubious about realization of the technological innovations required by Pathway 4.

As with the other pathways, Pathway 3 poses obstacles. Relative to 2010, it assumes a doubling of nuclear power capacity by 2030 and a fivefold increase by 2050. What about disposal of spent fuel? What about more Fukushimas? What about the history of cost overruns on ex ante construction cost estimates? An obscure white paper answers these questions adequately. The good news about this pathway is the consensus among engineers that (relatively) small modular reactors (SMRs) are much safer than large earlier designs. Furthermore, engineers expect that use of standardized modular components will enable lower construction costs per megawatt capacity than earlier designs for much larger reactors.

In 2018, a committee composed of a half dozen Canadian power companies as voting members and Natural Resources Canada as a nonvoting member published a white paper on the potential to construct multiple SMRs.³ While the white paper addresses the technical questions, it does not address the major problem: public opinion in most high-income countries, including Canada, is opposed to expansion of nuclear power. One recent Canadian survey found overwhelming support for substituting renewable and “clean” energy for fossil fuel–based energy, but only 21 per cent were prepared to endorse nuclear as a clean energy option.⁴

Despite public attitudes, nuclear is making a comeback among some of the world’s “deep thinkers.” The well-respected Union of Concerned Scientists (UCS) publishes carefully researched reports on numerous U.S. policy issues. In 2018, UCS published a monograph advocating expanded investment in U.S. nuclear power capacity.⁵ In its November 13 issue, The Economist published an editorial and two articles on the potential of nuclear power in reducing greenhouse gases associated with power generation. All three are positive. Bill Gates has decided to put serious money behind his pronuclear advocacy and is investing half the cost of a $4 billion modular nuclear reactor to replace a coal-fired plant in a Wyoming coal town. (The U.S. government is paying the other half.) Gates is partnering with Warren Buffett on other nuclear projects.⁶

And in Canada? The white paper mentioned above and a more recent “action plan” are not on the Natural Resources Canada website.⁷ Nominal action plan supporters include six provinces and territories (Alberta, Saskatchewan, Ontario, PEI, New Brunswick, Yukon – but not British Columbia or Quebec), major provincial power companies in supportive provinces, a few universities (not including my university, Simon Fraser), several Indigenous organizations and municipalities, civil society groups, industry associations, heavy industry (e.g., Suncor), engineering firms and would-be SMR vendors (e.g., CANDU). You are forgiven if you have not heard of this “action plan.” It is probably the least visible climate change policy initiative developed in Ottawa.

Neither Natural Resources Minister Jonathan Wilkinson nor Environment Minister Steven Guilbeault is likely to ask my opinion on how to activate the SMR “action plan” – and change public opinion. However, I would be delighted to forgo my consulting fees if one or both want advice. Here are a few strategic arguments:

  • Wind and solar power are valuable renewable nonfossil energy sources, but solar does not generate power at night and wind must blow. Hydro and nuclear are the two Canadian sources of significant “dispatchable” power available at all times. Unfortunately, there remain few unexploited sites for large-scale hydro dams.
  • While Canada gets most of its power from non–fossil fuel sources, it still gets nearly a fifth from coal, natural gas and petroleum. Over this decade, Canada could eliminate nearly all fossil fuel–generated electricity by building 100 SMRs.⁸ An investment by Ottawa of, say, $50 billion over the next decade might be considered “serious.” Construction jobs for SMRs could be a suitable substitute for many jobs linked to fossil fuel power generation (see table 1).
  • The estimated levelized cost per megawatt-hour of electricity generated by SMRs is probably similar to that for natural gas or hydro. There are many SMR designs on the drawing board, and no consensus on optimal design. Hence, there is considerable uncertainty about the range of unit costs of energy generated by SMRs. By making a commitment to build multiple SMRs in Canada, we can contribute to developing optimum designs (see figure 1).
  • Canada was a leader in the mid-20th century in nuclear power technology, and could become a leader again. Since Canada generates 15 per cent of its power from nuclear plants, it has considerable engineering capacity in nuclear power generation.
  • A commitment to invest in nuclear power would, in time, probably generate an export potential. If Canada was prepared to invest heavily in multiple SMRs – some based on Canadian designs, some on designs from elsewhere – and thereby eliminate domestic fossil fuel power generation, we would within a decade build a comparative advantage over other countries in constructing and managing SMRs. If SMRs become widespread, Canada would be in an ideal position to export its expertise.
  • Canada could designate aid to SMR construction in developing countries as a major priority for our foreign aid budget. Eliminating the 18 per cent of Canadian electricity currently based on fossil fuels should be an initial goal. Most developing countries rely on fossil fuel–based power, and lack of adequate power capacity is a major impediment to their economic development. (“Load shedding” refers to the frequent shutdown over many hours of regions of a country because system demand exceeds capacity. It is one of the most widely understood English words among the poor in the global South.)

Pursuing serious climate change policy inevitably exposes a country to potentially losing out in some future unpredictable collective coordination game. I have sketched the potential of Canada promoting the IPCC’s Pathway 3. I acknowledge the risk. Others may prefer to sketch out one of the other IPCC pathways – or invent an altogether new pathway. Whatever the option, if serious, it will entail significant financial and political investments now, with uncertain future benefits.

For more from our Inroads 50 feature on climate change, click to read A Carbon Tax that Pays the Cost of Climate Change, by Marvin Shaffer and John Richards.

Continue reading “Getting Serious About Climate Change”

Photo via United Nations Development Programme.

On occasion, my interest in South Asia comes to the fore and I prevail on my Inroads colleagues to publish relevant articles, some written by me, some by others. In Summer/Fall 2018 we published Why is South Asia Poor?, a précis of a chapter in a book that I and two Bangladeshi colleagues have written. The book surveys the lamentable state of primary education in most of South Asia – and the difficulty of reform (it will be published by University of Toronto Press this fall). In Summer/Fall 2020, we published Something is Rotten in the State of India: An Election in Delhi, a Ghost in Denmark and a School in Bangladesh. The motivation for that article was the concerted, but fortunately unsuccessful, campaign by Prime Minister Narendra Modi’s political party to dislodge the reform government in Delhi in a bitterly fought state election. We continue the tradition here with Sumbal Naveed’s article on the decline in reading habits among young Pakistanis. Her evidence comes from a USAID-supported survey.

Click to read Why Young Pakistanis Don’t Read by Sumbal Naveed, and our accompanying photo essay, In School, But Are They Learning?

It is hard to exaggerate the importance of literacy in understanding why some countries are rich and others poor. Figure 1 illustrates literacy trends over three decades, by gender, in South Asia’s three populous countries: India, Pakistan and Bangladesh. The data are estimates by the United Nations Educational, Scientific and Cultural Organization (UNESCO). Obviously, there was progress in the intervening decades. However, literacy is a complex concept; the UNESCO threshold defining literacy is low (e.g., ability to read short articles in a newspaper) and literacy is self-reported in many of the national surveys on which UNESCO relies. Also obvious is persistence of a gender gap in literacy – even among young adults in school in the 1990s and this century.

Naveed refers in her article to the Annual Status of Education Report (ASER), a large-scale early-grade assessment conducted in India and Pakistan. In India the sample size is about 500,000, in Pakistan about 80,000. ASER’s literacy threshold is the ability to read a short story (about 200 words) in the Grade 2 curriculum in the dominant regional language. In Pakistan, the three languages are Urdu, Sindhi and Pashto. In the most recent (2018) survey in India, 27 per cent of Grade 3 students could read the story, in Pakistan 17 per cent. By Grade 5, in both countries about half could read the Grade 2–level story.

Photo via United Nations Development Programme.

The following essay on Pakistani schoolchildren is an accompaniment to the article Why Young Pakistanis Don’t Read, by Sumbal Naveed.

These photographs illustrate school life in what was previously Pakistan’s Federally Administered Tribal Areas (FATA), now merged with Khyber Pakhtunkhwa (KP). The former FATA is bordered by Afghanistan to the north and west with the border marked by the Durand Line, KP to the east, and Balochistan to the south. The largest city nearby is Peshawar. All statistics cited in this photo portfolio are national statistics, derived from the 2018 ASER-Pakistan survey.

Photo via United Nations Development Programme.

In most countries, girls outperform boys in learning to read in early primary grades. However, in Pakistan boys outperform girls. One reading measure of the ASER protocol is the ability to read a short paragraph at the Grade 1 level. Among Grade 3 children in the 2018 survey, 47 per cent of boys could read a paragraph in Urdu; 43 per cent of girls could do so.

Photo via United Nations Development Programme.

The Millennium Development Goals were launched in 2000; the second goal was universal primary education. Over the next 15 years, enrolment dramatically increased across South Asia. By 2018, the enrolment rate for children ages 5–16 was 81 per cent. However, South Asia is facing a serious “learning problem.” Most children are in school, but not necessarily learning.

Photo via United Nations Development Programme.

Pakistan’s patriarchal culture results in important gender gaps in enrolment. The gaps are accentuated after accounting for family income as well as gender. Among the lowest quarter of families in terms of income, in 2018, only 46 per cent of girls ages 5–16 were enrolled, as compared with 67 per cent of boys. Only at the top income quarter were gender gaps more or less eliminated – 83 per cent for girls, 87 per cent for boys.

Photo via United Nations Development Programme.

Among young children ages 6–10, the share of children who had either never enrolled or dropped out was 13 per cent. This rose to 17 per cent among children ages 11–13, and 27 per cent among ages 14–16.

Photo via United Nations Development Programme.

There is a wide range of ages at which children enter Grade 1, and grade repetition is common. In the 2018 ASER sample, the grade distribution of children aged 9 years is 10 per cent in Grade 1, 19 per cent in Grade 2, 31 per cent in Grade 3, 27 per cent in Grade 4, 10 per cent in Grade 5 and 2 per cent in Grade 6.

Photo via United Nations Development Programme.

A good teaching tactic at all grades is to organize the class into small groups and encourage peer learning to take place.

Photo via United Nations Development Programme.

The UN’s Social Development Goals call for all countries to achieve universal primary and lower secondary education by 2030. On the basis of present trends, this goal will not be met in most developing countries, including Pakistan. Over the entire 6–16 age cohort surveyed by ASER-Pakistan in 2018, approximately 11 per cent never enrolled. The dropout rate was only 3 per cent in the primary age cohort (ages 6–10), but it rose to 8 per cent in the lower secondary cohort (ages 11–13) and 16 per cent in the upper secondary cohort (ages 14–16).

Photo via United Nations Development Programme.

The two “foundation skills” for all formal learning are reading and mathematics. In Grade 3, 28 per cent of children could perform two-digit subtraction and divide a two-digit by a one-digit number. By Grade 5, the share of children able to perform these operations rose to 53 per cent.

Photo via United Nations Development Programme.

A crucial feature of a “good” primary school is that children have fun.

Photo via United Nations Development Programme.

Like India, Pakistan faces the problem of multiple languages. Urdu is the national language, but in many regions the dominant language is not Urdu. Pashto is important in the Territories, as is Sindhi in Sindh; in Punjab, the most populous state, the dominant language is Punjabi. In addition, English is an important language for secondary and tertiary education.

While you’re here, why not read the rest of our section on Literacy: In South Asia, Literacy is Crucial by John Richards.

The following article is a response to Elaine Power and Jamie Swift Respond.

Power and Swift conclude that the B.C. Expert Panel report “gives no indication that the (panel members) themselves met with or spoke to anyone living on low incomes … Nor does it appear that Professor Richards spoke with any of the low-income people, often with complicated lives, who might benefit from basic income.” The expert panel did meet with many on low incomes, but maybe fewer than Power and Swift. The same applies to me. The basic income debate should not turn on counting the number of poor that we have met.

Power, Swift and I all agree that people living on low incomes “with complicated lives … might benefit from basic income.” I think more would benefit from the B.C. Expert Panel’s agenda of incremental reforms. Maybe I am wrong; maybe the B.C. panel is wrong. However, Power and Swift might have devoted a passage in their response to assessing the tradeoffs.

Central to my critique of basic income proposals is an argument, admittedly controversial, that communities in which transfer income becomes the major income source are prone in the long term to serious social dysfunction. In the early 1990s, the share of the Canadian population in receipt of social assistance exceeded 10 per cent, and long-term seasonal reliance on unemployment insurance (“lotto 10/42” – 10 weeks work, 42 weeks UI) was prevalent. These realities underlay work-oriented reforms to social assistance and unemployment insurance. In the United States, similar unintended consequences of intergenerational social assistance prompted President Clinton to accept work-oriented reforms to social assistance programming.

Power and Swift dismiss these issues as a “trope.” They make no mention of William Julius Wilson’s analysis of ghetto life in American cities, Case and Deaton’s “deaths of despair” analysis of opioid addiction, alcoholism and suicide among White working-class communities in the United States or exceptionally high suicide and homicide rates among Canadian First Nation communities in low employment regions.

Click to read the original article on the case for Basic Income, Work, Idleness and Basic Income, and the case against in Basic Income Provides Dubious Benefit at a High Cost. And while you’re here, check out the rest of the Basic Income Section in this issue of Inroads Journal!

Pictured: Doug Ford, whose government cancelled the Liberal government of Ontario’s basic income pilot in 2018. Photo by DickieBuckShot via Flickr.

The following article is part of a larger debate in our Basic Income section of this issue of Inroads Journal. To read the other side of the debate, check out Work, Idleness and Basic Income.

Employment is a key determinant of social outcomes

This century, the compounding of disruptive events has generated animated debates about reconfiguring the welfare state – among them, the pros and cons of a basic income.

The first major disruption to the social policy status quo was the financial collapse of 2008 and ensuing recession. Prior to 2008, an important social policy, pursued most aggressively in the United States and United Kingdom, was aid to low-income families wanting to buy a house. As long as house prices continued to rise, as they did from the early 1990s to 2007, the policy more or less worked as intended. When prices stopped rising, the fragile portfolios of many large banks and many working-class families led to cascading bankruptcies. The political fallout was collapse of confidence in centre-left and centre-right governments. While some of the ensuing populist upheaval occurred on the left (e.g. Jeremy Corbyn’s takeover of the UK Labour Party), most was on the right (e.g. “tea party” Republicans, Trump’s election, Brexit referendum).

The second disruption has been the massive shift of basic manufacturing from high- to middle-income countries, China in particular. With the post-1989 demise of traditional Communist conventions of five-year central planning as a viable development strategy, pragmatic elites in east and southeast Asia enabled private and state-owned firms to operate free of many previously entrenched corrupt practices – practices still prevalent in much of South Asia and sub-Saharan Africa. They also assured decent primary and secondary education for all. A reasonably well-educated population is a prerequisite for creating a large labour force able to “go to town” and become productive workers in export-oriented manufacturing. Consumers in Europe and North America have enjoyed the low prices at Walmart; the working class has not enjoyed the loss of well-paying manufacturing and resource-sector jobs, replaced by low-paying service jobs. In the West, income polarization has worsened.

The third disruption is the COVID pandemic, which has led governments in high-income countries to protect lives over jobs. Instead of a job, millions of laid-off workers have received income via ad hoc transfers.

Not surprisingly, many on the left and on the right now argue to cut the Gordian knot implicit in our complex set of conditional social programs and convert the new ad hoc transfers into an unconditional basic income for all adults. Conservative advocates of a basic income – Milton Friedman is the iconic example – envision a basic income that substitutes for many conditional social programs and leads to a net reduction in government transfers. Progressive advocates envision a basic income as a more solid foundation to reduce poverty.

Elaine Power and Jamie Swift present a well-argued version of the left-wing case. In brutal summary, they make three arguments:

  • The ethical component: Poverty is a miserable state of affairs, and a basic income could more or less eliminate it.
  • Minimal adverse consequences: Incorporation of a basic income in the social contract would not generate reduced employment or family dysfunction.
  • Manageable financial implications: Financing a basic income does not require major, politically unacceptable changes to Canadian taxation conventions.

I am not persuaded. Let’s take each argument in turn.

The ethical argument

Our communal identities begin with the family. Over millennia, the scope of human identities has extended to our village, our tribe and, in the last two centuries, our respective nation-states. Identification as citizens of a nation, with accompanying benefits and obligations, came to prominence in the 19th century. In most high-income democratic countries, national identity is sufficiently meaningful that citizens elect governments intending to impose taxes equivalent to 40 per cent or more of GDP, a third of which is redistributed via provision of core services (basic education and health care) and cash transfers.1 At present, cash transfers are provided to the old, the poor and the disabled. In Canada, since the 1990s, a new category of conditional transfers is large-scale transfers to low-income families with children. This was a quid pro quo for simultaneous tightening of access to social assistance.

At the current stage of human evolution, meaningful identity with the old, the poor and the disabled beyond the nation-state exists, but it is a marginal concern. Some high-income countries adhere to the UN admonition to spend 0.7 per cent of GDP on international development, but most countries, including Canada, spend less than half of 0.7 per cent on development.

The major disruptions that predated public support for the present welfare state were the Great Depression of the 1930s and the horror of World War II. For the UK and Canada, the “Magna Carta” of the welfare state is the Beveridge Report, tabled in the UK Parliament in 1942. Born in India, William Beveridge was an economist who devoted his career to social policy reform in the UK. Leonard Marsh, who participated in research under Beveridge, subsequently emigrated to Canada and authored a Canadian equivalent, submitted to Ottawa’s Parliament in 1943.2

Both reports called on governments, following World War II, to create a new social contract, with a dramatic expansion of expenditures on social insurance programs, education and pensions for the old. In 1945, the uncharismatic Labour leader Clement Attlee defeated Winston Churchill, the war hero. The postwar Labour government’s most important innovation was universal health insurance (the National Health Service). By the late 1960s, Canada achieved a similar set of expanded social programs.

Beveridge perceived the welfare state as a set of mutual obligations among citizens in a democratic society. His report is filled with passages on the “citizen’s obligation,”of which this one, on the obligations implicit in provision of unemployment insurance, is typical:

The correlative of the State’s undertaking to ensure adequate benefit for unavoidable interruption of earnings, however long, is enforcement of the citizen’s obligation to seek and accept all reasonable opportunities of work, to co-operate in measures designed to save him from habituation to idleness, and to take all proper measures to be well. The higher the benefits provided out of a common fund for unmerited misfortune, the higher must be the citizen’s sense of obligation not to draw upon that fund unnecessarily.3

Assar Lindbeck, one of the most important Scandinavian economists to have analyzed the welfare state, reached the same conclusion as Beveridge.4 For Lindbeck, the welfare state is a “triumph of western civilization … (However,) the day the ‘Lutheran ethic’ subsides in the population, and ‘Prussian discipline’ ceases to be exercised by the controlling administrators, the welfare state is in trouble.”5

A recent contribution to analysis of the postpandemic welfare state is the 500-page report issued by British Columbia’s Expert Panel on Basic Income in December 2020.6 The panel outlines many incremental reforms to improve and enlarge transfers to the poor; however, the authors reject a basic income on several grounds, the first being that it ignores Beveridge’s “citizen’s obligation” or Lindbeck’s “Lutheran ethic”:

The basic income philosophy is conceptually consistent with our stated goal of moving to a more just society … However, there are two major differences between the (principles espoused by basic income advocates) and our broader social justice–based framework … (We emphasize) two elements of public trust that are sometimes overlooked by basic income advocates: policy stability and reciprocity. Specifically, (policy stability) relates to the cost of a program, how it would be financed, how those costs would be distributed, and the overall economic effects. Reciprocity refers to mutual respect between those who are beneficiaries and those who are mainly paying to fund the supports … By emphasizing (individual freedom from poverty) and downplaying the collective interest, important considerations related to public trust – cost, economic implications, and reciprocity – are downplayed in the basic income principles.7

Opinion surveys are snapshots of opinion at a point in time. They are not the final word, but if we are concerned with mutual respect between those paying for social services and those receiving them, surveys should not be ignored. In mid-2020, the Angus Reid Institute released a national survey on support for a basic income (see table 1). The headline of the release (“Majorities Support Idea of Basic Income”) sins by omission. The majority (59 per cent) support the idea of a basic income, but only a third (36 per cent) are prepared to pay more in taxes to finance it. This statistic is similar to the willingness to pay (34 per cent) in a 2016 Angus Reid survey posing the same question. Admittedly, there are important differences in willingness to pay based on region, age, income, education and preferred political party.

Adverse consequences

Advocates of a basic income point to several large-scale pilot projects that indicate no dire employment consequences over the length of the pilot. The B.C. report agrees that, over the length of typical pilots (three years or under), changes in employment are minor.8 However, the authors of the B.C. panel report do not find this evidence convincing:

We do not believe that basic income pilots provide information that accurately reveals the effects that a permanent, ongoing, fully implemented basic income would have on people’s behaviour … people will not respond in the same way as they would to a permanent basic income available to all eligible persons, rather than a sample.9

The implication is that adverse long-term consequences emerge slowly and randomized control pilot studies (assessing “treatment” samples versus “control” samples) are not able to answer misgivings about long-term consequences. For basic income advocates to be convincing, they need to discuss some long-term “success stories” – examples of communities, formerly poor, faring better thanks to some unconditional intergenerational income transfer available to all members of the community at low or poverty-level incomes. To my knowledge, no such cases exist.

On the other hand, there are many potential counterexamples: low-income urban neighbourhoods in which intergenerational reliance on social assistance is the norm; rust-belt American cities that have suffered significant loss of stable manufacturing jobs and are reliant on social assistance; remote indigenous communities in high-income countries, from First Nations in Canada to the Sami in Scandinavia and Aborigines in rural Australia; native-born citizens of petromonarchies in the Gulf.10

In each of these counterexamples, basic income advocates can argue that factors other than reliance on transfer income are to blame for adverse social conditions. Admittedly, racism features in any analysis of urban poverty in U.S. ghettos; low education levels are associated with dysfunction in the American rust belt; disruption by European settlers of tribal societies is a lingering problem; dependence of industrial societies on Middle East oil extensively distorted political and economic incentives in the Gulf. All these qualifications matter, but nonetheless a common feature among these cases is serious social dysfunction arising from unemployed men.

Advocates of a “traditional” welfare state – I include here Beveridge, Marsh, Lindbeck and the B.C. Expert Panel – want high-quality universal social programs, in education and health in particular. They support generous in-work benefits to those with low earnings and generous transfers to the elderly, disabled and dependent children in lower-income households – categories that most citizens do not expect to be employed. However, they also want employment earnings to remain the major source of income for most households with adult members able to work. Not surprisingly, the B.C. Expert Panel’s report contains recommendations to supplement low earnings as well as to improve labour standards and pay for lower-skill jobs.

There is a long tradition in social policy that emphasizes the role of employment – young adult male employment in particular – as a key determinant of social outcomes in a community. There are several motivations behind this emphasis:

In general, two-parent families realize better outcomes for children and for themselves than do one-parent alternatives. In any community, women, when choosing marriage partners, use employment as a proxy for men’s suitability as fathers. In marginalized communities, where many young men experience a low employment rate, young women often seek second-best alternatives (such as grandmothers as prime caregivers) for raising children.11

Adverse employment conditions are particularly damaging for men with low education levels relative to the norm. Over the last quarter century in the United States and most other high-income countries, men with high school or less have disproportionately experienced employment and income declines and above-average prevalence of many pathologies.12

Adults typically form unions and begin families while in their 20s. Those in their 20s who are not in education, employment or training – NEET, as they are called – are less likely to form stable unions than the non-NEET. The NEET group is less likely to participate actively in raising children that arise from a union and is prone to depression and abuse of alcohol and drugs.13

As summarized in the above bullets, the emphasis on employment may appear excessive. There is, nonetheless, extensive evidence that unstable and poorly paid employment is central to any understanding of intergenerational poverty in high-income countries. William Julius Wilson, a prominent American sociologist, developed his ideas on the role of employment in family formation primarily in the context of American inner-city ghettos. Writing in 1996, he summarized:

The disappearance of work and the consequences of that disappearance for both social and cultural life are the central problems in the inner-city ghetto. To acknowledge that the ghetto still includes working people and that nearly all ghetto residents, whether employed or not, support the norms of the work ethic … should not lead one to overlook the fact that a majority of adults in many inner-city neighborhoods are jobless at any given point in time.14

In several studies, American economists David Autor, David Dorn and Gordon Hanson have analyzed the impact of the decline in stable manufacturing employment over the last quarter century. In a recent study, in 2018, they analyzed change in manufacturing employment and social outcomes using detailed U.S. census data at the local level between 1990 and 2014. They concluded,

On average, trade shocks differentially reduce employment and earnings of young adult males, compared to young women, and shocks to male relative earnings reduce marriage and fertility. Consistent with prominent sociological accounts, these shocks heighten male idleness and premature mortality, and raise the share of mothers who are unwed and the share of children living in below-poverty single-headed households.15

Over the last decade, Princeton economists Anne Case and Angus Deaton have analyzed cohorts of Americans born since 1940 in detail. They focused on the prevalence trends of numerous morbidities and sources of distress – suicide, chronic joint pain, difficulty in socializing, heavy drinking, mental distress, sciatic pain, drug/alcohol mortality – and paid special attention to those who were not married or had never married and those who were not in the labour force. Adjusted for age, these symptoms of community distress were more prevalent among those born more recently. Not only has prevalence risen among younger cohorts, but the increase in prevalence rates has also accelerated among cohorts born since 1980.

Case and Deaton make no claim to have the definitive explanation for these trends. However, they introduce evidence on the importance of declines in wages and in labour force participation among White working-class Americans with education levels below a college degree. Among younger cohorts of men with low education levels, the accelerating prevalence of these pathologies is more pronounced among White than among African and Hispanic Americans.

There have been no studies in Canada as rigorous as those studying social problems in low-employment U.S. communities, but there is abundant cross-section evidence – fragmentary and some of it dated – to the effect that First Nation communities with low employment rates experience high social dysfunction. Statistics Canada publishes descriptive studies on homicide statistics in Canada, disaggregated in terms of Indigenous/non-Indigenous identity, gender and province. Averaging results over three years, 2016 to 2018, the Indigenous homicide victim rate outside the Prairies was four times the national non-Indigenous rate. In the Prairie provinces, the Indigenous homicide victim rate was 12 times the national non-Indigenous rate. Three quarters of Indigenous victims of homicide are men. A disproportionately large share of Indigenous homicides (two thirds of both Indigenous victims and Indigenous perpetrators) take place in the Prairie provinces, where the Indigenous employment rate is lowest. A similar tragic story can be told about Indigenous suicide rates.16

Financing a basic income

In 2017, the Liberal government of Ontario launched a basic income pilot, which was cancelled by the incoming Conservative government the next year.17 The basic income was set at $17,000 for a single individual and $24,000 for a couple. These amounts were 75 per cent of the relevant Low Income Measure, one of the poverty thresholds calculated by Statistics Canada. The federal Parliamentary Budget Office (PBO) has estimated the annual gross cost of a national basic income, based on parameters of the Ontario pilot. Canada-wide, the lowest gross cost of the basic income was estimated at $92 billion and the highest at $196 billion,18 depending on variation in the rate at which the basic income is reduced as earned income rises (benefit recovery rate or BRR, illustrated in box 1). To give some perspective, total estimated federal tax revenue for the 2019–20 fiscal year (prepandemic) was $286 billion. Depending on the BRR, the basic income would cost between one third and two thirds of total federal tax revenue.

The PBO offset gross costs by eliminating numerous federal and provincial tax credits and other programs targeting low-income households. Including these offsets, the net annual cost ranges from $46 billion to $150 billion. Note that some of these offsets imply sizable tax increases for all Canadian taxpayers. The “basic pesonal amount” is a nonrefundable tax credit that implies no federal income tax is payable on the first $13,200 of taxable income in the 2020 tax year. The provinces offer a similar tax credit, which varies by province; in B.C., it implies no provincial income tax on the first $11,000 of taxable income. These tax credits are available to all taxpayers, but are of greatest relative benefit to those with low taxable incomes. Elimination of these credits would raise the annual income tax liability of each B.C. tax filer by $2,500.19

Simulating the impact of a basic income

The B.C. Expert Panel undertook many simulations of the impact on poverty to be expected from a basic income, varying two key parameters: the value of the basic income transfer to those with no earnings and the rate at which the basic income is reduced as earned income rises (benefit recovery rate or BRR). In one case, which is discussed in detail, the estimated decline in poverty rate is from 8.6 to 2.7 per cent (in terms of the Market Basket Measure, a poverty threshold calculated by Statistics Canada):

  • the basic income for an individual is $18,000 annually;
  • the BRR is set at 50 per cent;
  • the break-even earnings level beyond which no basic income transfer is disbursed is $36,000.*

We need to introduce one more concept, the marginal effective tax rate (METR). The METR is simply the sum of the relevant BRR and relevant tax rates (personal income tax, Employment Insurance and Canada/Quebec Pension Plan) based on earned income.

In figure 1, the blue line illustrates the METR at different earnings levels arising from the federal plus provincial personal income tax, with no benefits provided. At earnings below approximately $13,200, the METR is zero or negative. Why zero? The “basic personal amount” is a nonrefundable tax credit that implies no federal income tax is payable on the first $13,200 of taxable income; a similar B.C. credit implies no provincial income tax is payable on the first $11,000 of taxable income. Why negative? Canadian social policy also includes an earnings supplement for those with earnings above a lower threshold and below an upper threshold. Increases in earnings within this range increase the size of the supplement. Above the upper threshold, the supplement remains in place. At a somewhat higher earnings level, the supplement is subject to a BRR. The effect of the earnings supplement BRR, added to personal income tax rates, is a METR between $15,000 and $20,000 of close to 40 per cent. Once the break-even earnings level for the earnings supplement has been reached, the METR declines until earnings place the taxpayer into a range with a higher marginal tax rate.

The orange line applies to those receiving temporary assistance in British Columbia. It illustrates the “welfare wall,” a major disincentive for anyone “on welfare” to seek employment to get “off welfare.” Beyond a $400 per month exemption in B.C. (now raised to $500), the welfare BRR is 100 per cent. Once earnings exceed the break-even temporary assistance level, the METR falls to the blue line.

The purple line assumes a basic income of $18,000 for an individual, subject to the 50 per cent BRR associated with the basic income. Until the basic income break-even income, the purple line lies 50 percentage points above the blue line. Tax credits and the earnings supplement keep the METR below 50 per cent until approximately $11,000. Thereafter, the METR rises to 80 per cent until the $36,000 basic income break-even earnings level. The METR associated with this basic income model entails a “wall” lower than in the case of temporary assistance, but sufficiently high that the BRR over the $15,000–$36,000 earnings range is 80 per cent.

The choice of parameters for this illustration was based on minimizing the program cost while reducing the provincial poverty rate below 3 per cent. A lower BRR reduces the METR and hence the employment disincentive, but it increases program cost because the break-even earnings threshold at which recipients no longer receive any basic income rises. If, all else constant, the BRR was lowered to 30 per cent from 50 per cent, the METR “wall” would decline to 60 per cent over much of the range between $15,000 and the break-even earnings level of $60,000. The estimated cost of implementing this revised model in B.C. rises from $9 billion to $15 billion. To give perspective, the basic income cost with a 50 per cent BRR is nearly twice the province’s preK–12 education budget, and with a 30 per cent BRR nearly three times the preK–12 budget.

* British Columbia Expert Panel on Basic Income, Covering All the Basics: Reforms for a More Just Society, p. 363.

Instead of a basic income

If we ignore potential long-term unintended consequences, the basic income undeniably generates benefits to the poor in B.C. (the Expert Panel assessed a B.C. basic income, not a national program). For example, the panel estimated that the model discussed in the box will reduce the province’s poverty rate from over 8 per cent to below 3 per cent.

The Expert Panel’s final argument is that the opportunity cost of a basic income is too high. At an annual budgetary cost between $3 and $5 billion, the panel concluded that many poverty-related problems, more urgent than a basic income, could be addressed. Among many other changes, the report’s 65 recommendations included:

  • reforming disability assistance programming, including an increase in the monetary benefit for those on disability assistance to the Market Basket Measure poverty threshold (at a cost of approximately $900 million);
  • increasing temporary assistance benefits and reducing the associated BRR to 70 per cent (over $300 million);
  • increasing the earnings supplement for adults without children ($400 million);
  • extending targeted health benefits currently available only to social assistance beneficiaries, including dentistry, to low-income families not receiving social assistance (about $800 million);
  • increasing services and financial support for young adults transitioning out of care (under $200 million);
  • providing rent assistance (about $900 million).

My one major criticism of the Expert Panel is that it said little about the potential for high-quality preK–12 education to reduce intergenerational poverty. Admittedly, among the 65 recommendations are school bonds and funds for training social assistance recipients. One of the proximate goals for poverty reduction should be to reduce the incomplete secondary school rate among young adults aged 20 to 24. (Currently, this rate is about 9 per cent nationally.) Among those not achieving secondary certification by age 25, the most important group is the Indigenous population. On the basis of 2016 census data, among those on-reserve, fewer than half (48 per cent) have achieved secondary certification. The ability of those lacking such certification to find permanent employment at decent wages, whether living on- or off-reserve, is severely restricted. Among those who identify as First Nation but live off-reserve, secondary completion is higher (75 per cent). Among Métis, the share is 84 per cent, and among the non-Indigenous it is 92 per cent.20

Reducing incomplete secondary rates is feasible – but it is expensive. Among the most successful programs is Pathways to Education, a program of intense secondary-level mentoring and tutoring in low-income neighbourhoods. Its first pilot was in a public housing project in Toronto; Pathways has slowly expanded to inner-city neighbourhoods across Canada. The annual cost per student is about $5,000. The program has undergone several rigorous evaluations, which indicate its efficacy.21 Had I been on the Expert Panel, I would have argued for the array of services provided instead of a basic income to include several hundred million dollars spent on programs such as Pathways.

While you’re here, why not check out the other side of the debate in Work, Idleness and Basic Income, and the rest of our Basic Income section of this issue of Inroads Journal?

And for the rebuttal to the case against basic income, click to read Elaine Power and Jamie Swift Respond.

Continue reading “Basic Income Provides Dubious Benefits at a High Cost”

Pictured: Assar Lindbeck, laureate of the Global Economy Prize for 2017. Photo by Kielinstitute, licensed under CC BY-NC-SA 2.0

No Canadian public intellectual has exercised the influence that Assar Lindbeck enjoyed in Sweden, where he played a prominent role in academic and public affairs over four decades. The obituary published in the Financial Times of London on his death in 2020 spoke to his reputation in Europe.

Lindbeck combined advocacy for generous social programs with insistence on containing what he described as “hazardous dynamics.” The most prominent manifestation of his public role occurred in the early 1990s, when he chaired a commission that redesigned many core Swedish social and economic programs.

At the time, both Sweden and Canada were experiencing financial crises, brought on by the bursting of respective speculative housing bubbles and the general recession in Europe and North America. Those of us over 50 can recall Canadian initiatives in the 1990s equivalent to those Lindbeck championed in Sweden. Ottawa limited access to unemployment insurance, reduced conditional transfers to provinces and doubled Canada Pension Plan premiums. The provinces closed underused hospitals, rendered welfare assistance more difficult and severely constrained civil servants’ wages.

We invited Inroads contributor Richard Murray, a protégé of Lindbeck’s, to write a personal note on his career.

Click to read Assar Lindbeck 1930–2020: A Personal Reflection.

Social conditions in many of Canada’s First Nation communities are, by expectations of a modern society, intolerable. While, on average, social conditions among those who have “gone to town” are better, they remain intolerable for many urban First Nation families. What’s to be done?

At least since the 1996 report of the Royal Commission on Aboriginal Peoples, the dominant answer among First Nation and non-Indigenous political leaders, academics and newspaper editors has been affirmation of First Nation identities via an expansive interpretation of treaty rights and emphasis on autonomous Indigenous communities separate from mainstream society. A prominent image in the RCAP report is a “birch bark canoe, for the Indian people, their laws, their customs, and their ways a ship… for the white people, their laws, their customs, and their ways … Neither of us will try to steer the other’s vessel.” Here is a somewhat fuller exposition of the RCAP goal:

Assimilation policies have done great damage, leaving a legacy of brokenness affecting Aboriginal individuals, families and communities … Yet the damage is not beyond repair. The key is to reverse the assumptions of assimilation that still shape and constrain Aboriginal life chances … To bring about this fundamental change, Canadians need to understand that Aboriginal peoples are nations … To this day, Aboriginal people’s sense of confidence and well-being remains tied to the strength of their nations. Only as members of restored nations can they reach their potential in the twenty-first century.1

A quarter-century after the RCAP publication, it is time to ask: has the agenda succeeded? Arguably, the most important criterion of success is the ability of First Nation communities to create employment for their members. By this criterion, the answer is no. There are, obviously, relevant criteria other than employment. But however important these other criteria are, they are complements to, not substitutes for, employment.

Following each census, the federal Indigenous services ministry constructs the Community Well-Being Index (CWB), a heroic attempt to assess the social well-being of more than 600 First Nation and Inuit communities across Canada. The employment rate is one element in constructing the CWB. From the first CWB iteration, based on the 1981 census, to the most recent, based on the 2016 census, the employment rate in First Nation communities remained two thirds the rate in non-Indigenous communities. At a regional level, the rate has risen in some regions, stagnated in others and declined in one region.

In this article, I aim to illustrate the relevance of employment as a factor associated with three social pathologies that have received extensive attention in government reports and academic and policy studies: suicide, alcohol abuse, and homicide. Ideally, the analysis should be conducted at the level of individual First Nation communities, but in the absence of disaggregated data, regional-level data suffice to show the existence of dramatic differences in prevalence of these pathologies associated with differences in regional employment rates.

First Nation families voting with their feet is an indication that employment matters. In the 2001 census, 49 per cent of those who had the right to live on-reserve (“registered Indians” pursuant to the Indian Act) did so; in the 2016 Census, only 40 per cent did so. Another measure of mobility is the distribution of those who identify in the census as First Nation whether or not they are “registered.” In 2001, 45 per cent lived on-reserve; in 2016 only 34 per cent did. The majority of First Nation people now live in cities, and more than a third live in large cities (population over 100,000). Probably the best explanation for this migration comes from the large-scale survey of 2,600 urban Indigenous people (Métis and Inuit as well as First Nation) undertaken for the 2010 Urban Aboriginal Peoples Study:

When asked (unprompted, without response options offered) why they first moved to their city, equal proportions cite the opportunity to be closer to family (38%), and the pursuit of education (37%) and employment opportunities (37%). Smaller proportions say they moved to their city because it offered better amenities (18%), the chance to escape a bad family situation (10%) and the opportunity for career advancement (9%).2

None of the above implies that the urban Indigenous population enjoys overall social conditions on a par with their non-Indigenous neighbours or that urban natives have abandoned their Indigenous identity. Emphasis on the RCAP agenda has obscured the extent to which Indigenous communities display social pathologies – which also afflict many in non-Indigenous communities – that can only be addressed by the overall society. A key factor underlying these pathologies is absence of employment.

Suicide

A frequently cited article on suicide among the Indigenous population is Michael J. Chandler and Christopher Lalonde’s 1998 study of suicide in British Columbia.3 Chandler and Lalonde established the residence of each Aboriginal suicide in one of 29 tribal councils. Then, using an index of “cultural continuity” that each tribal council achieves (based on such measures as the percentage of children attending on-reserve schools and the extent of band control of health and other services), they found a connection between this index and suicide: the higher the tribal council’s cultural continuity, the lower the suicide rate. I do not deny that “cultural continuity” matters. The major problem with this study is the attempt to attribute suicide to a single factor.

In 2017, a parliamentary committee submitted its report on “The Suicide Crisis in Indigenous Communities,” which is worth quoting at some length:

Jack Hicks noted there is a connection between “job losses, unemployment, social despair, and suicide.” Sheila North Wilson, in describing the recent loss of her cousin to suicide, noted he had trouble finding work when he returned to his home community, “How is a young man, a young father, and a young husband supposed to feel when they don’t have any jobs to provide for their family?” …

For those living in remote communities, the Committee heard there is clear connection between unemployment and hopelessness. For example, when the Weeneebakyo Area Health Authority asked a young First Nation woman why there are many suicides in her reserve she replied, “It is simple, no jobs, no future and no hope.” Will Landon explained how “a lot of suicides can be linked to low economic opportunity. They don’t feel there’s a lot for them out there. Sitting on welfare is not a great option for them and it gets depressing.”

In addition to providing a source of income to provide for their families, work can also be an important aspect of developing self-worth and confidence. For instance, Joachim Bonnetrouge from the Deh Gah Got’ie First Nation noted that about half of his community is currently unemployed and that more opportunities would substantially benefit the community, “If you have a family and a father, and they could give him a job, holy man, you’d see that would make a big difference in anybody’s life.”

This passage from the parliamentary committee report emphasizes lack of employment as the key factor associated with suicide. But like the cultural continuity cited by Chandler and Lalonde, employment is not the sole cause of high community suicide rates. In a recent Statistics Canada study that attempted to identify the role of several socioeconomic factors, Mohan B. Kumar and Michael Tjepkema conclude with respect to First Nation adults:

After adjusting for age and sex, the risk of suicide … was twice as high as that among non-Indigenous adults. Adjusting for household income resulted in a decrease in risk by 35%. After further adjusting for labour force status, level of education and marital status, First Nations adults were still at a higher risk of suicide than non-Indigenous adults. Together, these factors accounted for 66% of the excess suicide risk. Further adjusting for living on and off reserve resulted in a HR of 1.2, which was not significantly different from 1.0. Together, all these factors accounted for 78% of the excess suicide risk among First Nations adults.4

Not only are multiple socioeconomic factors relevant, but the factors are also interdependent. For example, higher education improves the probability of employment, which improves family income. It’s important to consider which socioeconomic factors are most subject to policy intervention. Employment and education stand out as obvious candidates.

That employment yields social benefits beyond the direct value of income for the worker is hardly a new idea. Historically, employment as a strategy to address poverty and social pathologies is associated with harsh poor laws in Elizabethan England. In current social policy debates, many – on both left and right – argue that whatever the excesses of poor laws and workhouses, high unemployment is a fundamental factor in explaining high rates of social pathologies. Social policy that ignores employment will not succeed.

Among those who have insisted on increasing employment among marginalized groups, William Julius Wilson figures prominently. Wilson is an American sociologist much of whose early research analyzed the role of unemployment in the context of American inner-city ghettos. Writing in 1996, he summarized:

The disappearance of work and the consequences of that disappearance for both social and cultural life are the central problems in the inner-city ghetto. To acknowledge that the ghetto still includes working people and that nearly all ghetto residents, whether employed or not, support the norms of the work ethic … should not lead one to overlook the fact that a majority of adults in many inner-city neighborhoods are jobless at any given point in time.5

Wilson’s research has inspired recent studies on the decline in employment rate and working conditions among working-class Americans over the last quarter-century. Prominent in this literature is research undertaken by the husband-wife team of Angus Deaton (winner of the 2015 Nobel economics prize) and Anne Case. In several recent publications, they have analyzed increases in U.S. age-adjusted mortality rates due to suicide, alcohol abuse and drug abuse among populations defined by race, education level and geography. These three proximate causes of premature death they label “deaths of despair.”6 Following Deaton and Case, the second pathology to discuss is alcohol.

Alcohol

Large-scale surveys of alcohol abuse have found that excessive alcohol consumption is more prevalent among Indigenous than non-Indigenous Canadians.7 Rather than a summary of epidemiological studies, a better introduction to the consequence of alcohol is the memoir of Harold Johnson, a First Nation lawyer who, for two decades, acted as defence counsel and crown prosecutor in northern Saskatchewan. The RCAP commissioners concluded, “The widely held belief that most Aboriginal people consume excessive amounts of alcohol on a regular basis appears to be incorrect.”8 Johnson bluntly retorts, “The Royal Commission obviously got it wrong.”

He traces the link between alcohol and employment to the disappearance over the second half of the 20th century of traditional employment opportunities in the north: logging, trapping, freshwater fishing. The disappearance of such jobs exacerbated alcohol abuse. At the core of his memoir is a harrowing description of multiple cases in which alcohol figures prominently.

Johnson advances four interpretations of alcohol abuse in First Nation communities, each of which he finds wanting because each denies the obligation of First Nation leaders to assume responsibility and address the problem.

He first analyzes the victim model: present problems are the consequence of colonization. Obviously, White settlers were colonizers; they expropriated land and introduced alcohol. However, argues Johnson, “If we believe that the only reasons for our problems rest with colonization, we can never fix our problems, because we cannot go back and fix colonization.”9

The second interpretation is that the psychological trauma of colonization, and of residential schools in particular, induced destructive drinking habits. This, he concludes, is a variant of the first interpretation: “Many people who attended residential schools were severely traumatized. But traumatic events did not end when the residential schools were closed. Alcohol creates its own trauma. More often than not, the trauma our relatives experience occurs as a result of excessive drinking.”

He is equally dissatisfied with the medical model, which treats alcoholism as a disease similar to others, such as smallpox or tuberculosis. Once again, he concludes, the medical interpretation denies any responsibility within Indigenous communities to introduce social reforms.

The fourth interpretation is reliance on the law to resolve problems arising from abuse of alcohol:

On the northern court circuit, the judge and the prosecutor and the defence lawyer … fly into remote communities once or twice a month … We hold court all day and often late into the evening … After a day in court, after doing what the Law Enforcement Model requires, after hearing over and over again that, “when he’s sober, he’s a good guy; it was just the alcohol”, we are driven back out to the airplane by the RCMP.

Reliance on the law, concludes Johnson, is “insane.” Asking judges to weigh partial conflicting evidence presented by defence counsel and prosecutor requires that judges choose one side or the other and ignore complex reality:

Law can never solve our problem with alcohol in our communities and the devastation it causes, because law is not rational. It refuses to look at the whole of the problem, even though alcohol and its aftermath are the primary matters that the courts deal with every day, all day long. In its deliberate blindness, law is actually quite insane.

His tentative short-term solution turns around “sober houses”:

If you have a sober house, if you are one of the 35% of our people who never use alcohol, you put a Sober House sign on your door and people will know that you welcome sober people to come and join you … A safe place, a cup of tea, someone to talk to, some who understand: the experience of what a healthy life and a healthy home look like would be, for many of our relatives, something superior to any treatment centre.

Sober houses may be a weak reed on which to rely. Johnson has much to say about cultural revival of Indigenous values and employment as means to restore community health.

Homicide

The causes of homicide are similar in many ways to those of the three deaths of despair analyzed by Case and Deaton. The recent report on murdered and missing Indigenous women (MMIW) is the most prominent official acknowledgment in Canada of the high homicide rate among the Indigenous population. Like the RCAP analysis of alcohol, the MMIW analysis of homicide is woefully inadequate. The report notes that in recent years nearly one quarter of female homicide victims have been Indigenous, a share far higher than the Indigenous share of the Canadian female population. The explanation for this state of affairs, MMIW concludes, is straightforward: White settler colonialism and continued White racism:

*Rate: annual average per 100,000 in the relevant population. Source: data in Tables 1-3 are author’s calculations from Homicide in Canada (Statistics Canada). various issues. Note: Indigenous includes both those identifying as First Nation and as Métis.

The violence the National Inquiry heard amounts to a race-based genocide of Indigenous Peoples, including First Nations, Inuit and Métis, which especially targets women, girls, and 2SLGBTQQIA people. This genocide has been empowered by colonial structures evidenced notably by the Indian Act, the Sixties Scoop, residential schools and breaches of human and Indigenous rights, leading directly to the current increased rates of violence, death, and suicide in Indigenous populations.10

If past colonialism and allegedly persistent White racist attitudes are the only relevant factors to explain contemporary pathologies, perhaps the RCAP agenda of parallel societies is the only option to pursue. However, there is a great deal missing from the MMIW report – beginning with the absence of any discussion of homicide among Indigenous men, both as perpetrators and victims (see tables 1–3). Here is a summary of recent statistics11:

While a quarter of female homicide victims are Indigenous, male Indigenous homicide victims are also a quarter of all male homicide victims (table 1). Since the total male homicide victim rate is much higher than the female rate, three quarters of Indigenous homicide victims are male.

In terms of perpetrators of homicide, the overall rate is much higher among males than among females, and the rate is much higher among Indigenous males than among non-Indigenous males (table 2).

*Rate: annual average per 100,000 in the relevant population. Source: data in Tables 1-3 are author’s calculations from Homicide in Canada (Statistics Canada). various issues. Note: Indigenous includes both those identifying as First Nation and as Métis.

The distributions of relationships between perpetrators of homicide and their victims are similar among Indigenous and non-Indigenous victims (table 3). In both cases, the relationship is overwhelmingly one of spouses, family members, intimate nonfamily members and friends. In the case of Indigenous homicide victims, only 10 per cent of perpetrators are strangers to the victim.

Consistent with the data on relationships between Indigenous victims and homicide perpetrators, over a third of all homicide perpetrators are Indigenous (table 2), which implies that a large majority of homicides of Indigenous women are perpetrated by Indigenous men. Which brings us back to the discussion of pathologies associated with low employment.

Source: data in Tables 1-3 are author’s calculations from Homicide in Canada (Statistics Canada). various issues. Note: Indigenous includes both those identifying as First Nation and as Métis.
The link between “deaths of despair” and employment

What is the relevance of employment to this discussion of suicide, alcoholism and homicide?

In Canada, there has been no detailed linking of community-level First Nation employment conditions and “deaths of despair” comparable to the research undertaken in the United States by Case and Deaton and others. However, fragmentary evidence does exist. The Statistics Canada study discussed above reaches a firm conclusion that “labour force status” is a significant socioeconomic factor associated with high suicide rates among First Nations. I introduced the Community Well-Being Index (CWB), constructed from four subindices (per capita income, housing quality, education level, labour force status).12 The community employment rate is a second-order statistic that enters into calculation of the labour force status subindex.

Since the initial CWB based on 1981 census results, the employment rate in First Nation communities has remained at two thirds the rate in non-Indigenous communities. Regional employment rates, however, have diverged. In Atlantic Canada, Quebec and the Territories (one fifth of the total First Nation population), 2016 employment rates are higher than in 1981 by over 10 percentage points. In Ontario and B.C. (over one third the total), rates have risen at rates similar to those of the non-Indigenous population. In the Prairies (nearly half the total), employment rates in 2016 are either the same as in 1981 or slightly lower (see Figure 1).

Correlation is a crude measure to assess causality. But, in the absence of more detailed evidence, correlation conclusions should be addressed. The Statistics Canada study quoted above reports provincial-level statistics on suicides, in the form of ratios of First Nation to non-Indigenous suicide rates. Nationally, the ratio over the years 2011–16 is 3:1 (First Nation 24.3/100,000 vs. non-Indigenous 8.0/100,000). At the provincial level, the range of ratios is from 1.9 to 4.6. The three highest ratios are in Manitoba (ratio 4.6), Saskatchewan (4.5) and Alberta (3.5). There is a negative correlation between regional First Nation / non-Indigenous suicide ratios (highest in Prairies) and First Nation regional employment rates (lowest in Prairies).

There is also an obvious negative correlation between Indigenous homicide rates, for both victims and perpetrators (highest in Prairies) and First Nation regional employment rates (lowest in Prairies). Over the years 2016–18, two thirds of all Indigenous homicide victims and Indigenous homicide perpetrators were in the Prairie provinces. Indigenous homicide rates in the Prairies, for victims and perpetrators, are roughly three times comparable Indigenous homicide rates elsewhere in Canada (tables 1 and 2).

Strenthening employment and education

If past colonial relations and present White racism suffice to explain the incidence of suicide, alcoholism and homicide among the Indigenous, why are there such dramatic regional differences? If we exclude the Prairies, the Indigenous homicide rates (as victims and perpetrators) and suicide rate are approximately three times the respective non-Indigenous national rates. In the Prairie provinces, the Indigenous homicide and suicide rates are approximately three times the respective Indigenous rates elsewhere in Canada. This is strong evidence that addressing social pathologies requires addressing low employment among many Indigenous communities.

First Nation families that want to live in their First Nation communities should be able to do so with reasonable employment prospects. That is seldom the case at present. For it to be feasible, successful out-migration must become an option for those who want to “go to town.” At present, those living in a First Nation community with weak education outcomes face severely limited employment options – whether in their community or “in town.” Hence, many stay on-reserve and on welfare.

In the medium term, successful out-migration requires K–12 education outcomes that are similar to those among non-Indigenous children. Historically, on-reserve band-controlled schools have not performed well. The core obstacle is not inadequate government school financing. With honourable exceptions, First Nation leaders have not made sufficient commitment to strengthening student outcomes in their schools – which does not excuse provincial education ministries. Most First Nation secondary school students attend provincial schools and provincial governments vary widely in terms of the priority attached to successful First Nation student outcomes.13

For a small minority of First Nation communities, the RCAP agenda is succeeding in the creation of jobs. Thanks to the courts having strengthened treaty rights, communities with rights bearing on resource projects are now able to strike beneficial partnerships with resource companies, which generate income and employment for community members. We can get a picture of where these more successful communities stand by looking at the top decile, in terms of employment rate, among the more than 600 First Nation communities included in the CWB. It is well above the First Nation average, but still six percentage points below the average rate for non-Indigenous communities. In other words, fewer than 60 First Nation communities enjoy employment rates above or reasonably close to the non-Indigenous average.14

In the short term, affirmative action is justifiable. There should be no illusions: there is a long history of mixed results from past affirmative action initiatives. One avenue is decentralization of relevant federal administrative offices from major cities to small towns, which would increase the probability of Indigenous employment. Another avenue is to further strengthen treaty rights that engender sustainable employment, such as First Nation fishing and logging rights. An important, highly controversial precedent is the 1974 Boldt decision (named after the trial judge) in Washington state. It awarded American Indian tribes along the Columbia River the right to half the allowable salmon catch, a share far more generous than the equivalent allocation among First Nations in B.C. Over the decades, Washington state tribes have developed significant employment in processing salmon and managing an intertribal regulatory regime.15 Other controversial quota options exist: Ottawa could impose quotas regulating the minimum number of First Nation workers to be hired by firms wanting to hire temporary foreign workers.

None of this will happen as long as the dominant discourse is one of colonialism and White settler guilt.

Continue reading “First Nations, Employment, and Deaths of Despair”

Photo via Immigration Canada Services.

Among high-income OECD countries, Canada currently has one of the highest proportions of foreign-born individuals in its population. While Canadian immigration rates have risen substantially over the last three decades, Canada has long been a “country of immigrants.” Figure 1 shows the foreign-born share in Canada since Confederation. After hitting a low point of 13 per cent in 1901, the foreign-born share shot up to over 20 per cent through the next three decades. It then dropped and stabilized at 16 per cent until late in the 20th century, when it began to rise. In the 2010s, it once again surpassed 20 per cent.

Perhaps the most important distinction between the two periods of high immigration is geographic dispersion. In the early 20th century, immigration rates were highest in the western provinces, largely as a result of rural settlement in the Prairies, while rates were also high in British Columbia, Ontario and Quebec. In sharp contrast, over the last three decades, immigration has been concentrated in a handful of large cities. Over a third of 2019 immigrants settled in Toronto (35 per cent). Another third settled in four cities with population over a million – Vancouver (12 per cent), Montreal (10 per cent), Calgary (6 per cent), and Edmonton (5 per cent). The final third settled elsewhere.

To date, Canada has avoided the serious conflicts that have taken place in the United States over immigration levels and rural/urban political divisions. Whether we can extrapolate present-day immigration trends over the next two decades and avoid serious political divisions deserves discussion. In the latest poll on public attitudes, opinion was not enthusiastic about government projections of higher immigration levels: 17 per cent favour higher levels; 36 per cent favour lower levels; 40 per cent favour the status quo (340,000 immigrants in 2019).1

In this issue, we are publishing two articles on immigration. Mark Stobbe writes on the excessive resort to international visa students as a “back door” immigration route. Increasingly, colleges and universities are relying on visa students paying high fees (at least four times those charged to domestic students). From his experience as an instructor, he finds that most visa students are not much interested in his lectures, while university and college administrators are primarily interested in the fee revenue.

Click to read The Postsecondary Education Extortion Racket for International Students by Mark Stobbe.

Anne-Michèle Meggs dissects the complex channels whereby immigrants achieve “permanent residence” and citizenship. Over a third of the 340,000 immigrants accepted in 2019 did not come from abroad but were already in Canada, most under student or conditional work permits. She discusses the declining role of the “points system” in determining immigration, and expands on Stobbe’s concern over the unintended consequences for postsecondary institutions of the growing number of international students. In a second article on immigration in the Summer/Fall 2021 issue of Inroads, Meggs will examine temporary worker programs.

Click to read by How Immigration Really Works in Canada by Anne Michèle Meggs.

Continue reading “What Kind of Immigration Policy Does Canada Want?”

Harold R. Johnson, Firewater: How Alcohol is Killing My People (and Yours).
Regina, SK: University of Regina Press, 2016. 180 pages.

Harold Johnson is a member of the Montreal Lake Cree Nation in northern Saskatchewan, son of a Cree mother and a Swedish father (who assimilated into Cree culture). He has lived a very full life. Before pursuing his present “job” as both fiction and nonfiction writer, he undertook many careers. In his youth, he was a logger, miner, trapper and fisher. He joined the navy; later he decided to be a lawyer and got a law degree from the University of Saskatchewan, and subsequently a master’s degree in law from Harvard. For two decades he was  a senior crown prosecutor in northern Saskatchewan. He insists on describing himself as “Indian” as opposed to other labels, and enters into the debate over the origin of the word (Columbus’s confusion as to where he landed in 1492 vs. evolution of the Spanish in Dios – with God). Currently, he lives “off grid” with his wife, near his family home.

I was aware of this book, but did not read it until recently. It deserves a review in Inroads, even if four years late. Incidentally, Firewater was shortlisted in 2016 for a Governor General’s literary award.

Johnson’s thesis is straightforward: alcoholism is the key dysfunction in First Nation communities. To date, he concludes, the Canadian elite – both Native and non-Native – has avoided discussion of its seriousness. In discussing the 1996 report of the Royal Commission on Aboriginal Peoples (RCAP), he writes that alcoholism “was too blatant a subject to ignore … The commissioners argued back and forth about this study and that study and which might be correct … They said, ‘the widely held belief that most Aboriginal people consume excessive amounts of alcohol on a regular basis appears to be incorrect.’” Johnson’s response: “The Royal Commission obviously got it wrong.”
       From his experience as crown prosecutor he describes many harrowing cases involving alcohol. To give a sample:

I know a young man from a community near here who had a girl friend. The two of them were having a few relationship problems and had walked away from the community … They were standing on the bridge consuming alcohol. The girl decided to punish the young man by committing suicide – she jumped in front of a semi-truck that was passing by just then. The young man was devastated and confused … The experience haunted him, and he went to talk to an aunt for advice. She told him, “Go get good and drunk and let it go.” … He drank as much as he could for as long as he could. He woke up one morning in his car. The police were knocking on the window. They were investigating a hit and run. They found the victim’s DNA under the young man’s car. Sometime during the night he had run over his cousin and killed him … At that moment, he quit drinking. Trauma, grief and drinking seem to go together in our communities.

Is this case representative? There is no definitive evidence on the prevalence of abuse of alcohol in First Nation communities and the extent of negative consequences. Johnson thinks the case studies he raises are representative; I agree with him. There is also a great deal of anecdotal evidence. Johnson refers to conversations with police, probation officers, judges and a forensic anthropologist, and personal experience with Indigenous friends, primarily those who do not drink. He cites the indirect evidence arising from coroners’ reports of proximate causes of death in northern Saskatchewan, where roughly two thirds of the population is First Nation. In the north, the leading cause of death between 1998 and 2007 was “injury” (at 23 per cent). In the province overall, “injury” was far less prevalent (at 6 per cent), and would have been lower yet (at 4 per cent) were the north excluded.

“Injury” (which includes suicide) is one of a dozen standard causes of death listed in coroners’ reports. It is, admittedly, an ambiguous residual category. One of the few comprehensive studies to make use of “injury” statistics is a study nearly two decades old, undertaken by the First Nations and Inuit branch of Health Canada.1 This study analyzed the difference in distributions of proximate causes of death between on-reserve First Nation and non-Indigenous Canadians. The study used the concept of potential years of life lost, a measure that accords a higher weight to death at early ages. The overwhelming difference between causes of death in the two populations is the dramatically higher importance of “injury” among First Nation relative to non-Indigenous Canadians. To my knowledge, no subsequent comprehensive study has been undertaken.

As evidence that non-Indigenous elites are also unwilling to address alcoholism, here is the conclusion of a (highly negative) review of Firewater in Quill & Quire, a representative organ of respectable literary opinion in Canada: “Johnson’s basic argument – that alcohol is killing so many indigenous people – is flawed from the start … He offers no supporting research, no police reports, coroner reports, or medical records, to back up his claim.”2

Johnson has pursued many careers, but statistician is not one of them. He realizes, as does the author of the Quill & Quire review, the need for better statistical evidence. He describes in some detail an unsuccessful attempt to persuade a statistically competent colleague to research evidence on the role of alcohol among First Nation people in Saskatchewan:

I wanted to find out many things. How many deaths were the direct results of alcohol? What percentage of accidents? How many cancers? How many heart attacks? How many suicides? Could he determine how much shorter a child’s life would be because the parents were drinking and not providing proper nourishment during the child’s formative years? What is the cost to society for one child with Fetal Alcohol Spectrum Disorder (FASD) during that child’s life?

Johnson rejects various explanations that make deterministic arguments based on historical wrongs: “If we believe that the only reasons for our problems rest with colonization, we can never fix our problems, because we cannot go back and fix colonization. We cannot go back and change residential schools.” His tentative short-term solution turns around “sober houses”:

If you have a sober house, if you are one of the 35% of our people who never use alcohol, you put a Sober House sign on your door and people will know that you welcome sober people to come and join you … A safe place, a cup of tea, someone to talk to, some who understand: the experience of what a healthy life and a healthy home look like would be, for many of our relatives, something superior to any treatment centre.

“Sober houses” may be a weak reed on which to rely. Johnson has much more to say than advocacy for sober houses. He hopes that a cultural revival of Indigenous values will restore community health.

In thinking about potential policy to realize reconciliation, I have been influenced by the late Allan Blakeney, a politician much ahead of his time in his concern about the condition of the Indigenous population. Many would now dismiss as inadequate his attempt as Premier in the 1970s to create Native-run municipal governments throughout northern Saskatchewan. At the time, they were valuable innovations. Given Blakeney’s longstanding engagement, Brian Mulroney appointed him to RCAP as a commissioner. Prior to publication of the report, Blakeney resigned. Why, I asked him? I take the liberty of summarizing here his response in a personal conversation:

In my opinion, roughly a quarter of those who identify as Indian or First Nation truly want a communal lifestyle available on self-governing reserves, and that should be acknowledged and respected. Another quarter are reasonably well integrated in mainstream Canadian society. The half in the middle are migrating between reserve and town and facing many difficulties in both contexts. For two years, I travelled with other RCAP commissioners across Canada and could never generate a serious discussion about education and employment. My frustration was such that, finally, I thought it preferable to resign.

Blakeney placed more emphasis than Johnson does on formal education and employment, and the desirability of most – not all, but most – “Indians” opting to go to town. Maybe Johnson is right, and Blakeney wrong. Whatever the ultimate explanation of excess Native death by “injury,” Johnson makes a very convincing case that both Indigenous and non-Indigenous elites are ignoring a fundamental social scourge.

Continue reading “Is Alcoholism First Nations’ Key Dysfunction?”