Alan Redway has just published his third book, “A Big Idea: Eliminating Poverty in Canada.”
Although very few, if any, Leasiders have experienced personal poverty, you may have seen it through your work or your volunteer activities or just on your TV screen. As Mayor of East York, I saw it locally only occasionally. As federal Housing Minister, however, I saw people in every part of our country who could never afford to own a home or pay market rent. Later, as chair of the board of directors of Daily Bread Food Bank, I saw many who, after they paid their monthly rent, had nothing left to feed their children or themselves. But extreme poverty really hit home for me when I volunteered for the Out of the Cold programs at Eastminster United Church and St. Brigit’s Catholic Church Annex on the Danforth. There I came face to face week after week with extreme poverty in the form of men and women, young and old without jobs, without homes and without hope for better times to come.
In my days at university, my economics professor told us that “the poor will always be with us.” Many years later it seemed to me that my economics professor was right.
However, as a Member of Parliament in Ottawa I shared accommodation with another Toronto MP, Reg Stackhouse. After leaving Ottawa we met monthly for lunches. Every time we got together Reg would talk about the Guaranteed Annual Income (GAI) or, as it’s also known, the Universal Basic Income (UBI) as proposed by Milton Friedman and Hugh Segal, and how it could be used to eliminate poverty. Reg was convinced it could be done. I was skeptical. After all, how could we afford it without raising taxes and accumulating an enormous government deficit and debt for our grandchildren to pay back? But then I read a book by US President Joe Biden adviser, economics professor Stephanie Kelton, The Deficit Myth. That book convinced me that poverty can be eliminated in Canada.
The Bank of Canada Act authorizes The Bank to print our money, while the Finance Act allows the federal government to print our money too as they presently do and have done for years. The value of the Canadian dollar is no longer tied to the Gold Standard or the currency of another country as it used to be. Today our currency floats freely on the world market. This means that subject to inflation we can print as much money as the federal government needs to pay for its programs without raising taxes. Fortunately, the inflation rate in Canada has been 2% or less for many years, despite the fact that before the COVID-19 shutdowns we had close to full employment with only a 5% unemployment rate. By using Quantitative Easing (QE), the federal government issues bonds to pay for its spending programs and the Bank of Canada buys those bonds with the money it prints, thereby financing the government and keeping interest rates low at the same time. Both the US and Canada have been using QE for some time. At any time, our federal government can decide to redeem those bonds with the money it is authorized to print by the Finance Act.
Without admitting it, this is the method our federal government has been using to finance the many patchwork programs it has introduced to mitigate the impact of shutting down the economy because of COVID-19. Doesn’t it make more sense to have one universal program like the Old Age Security program to deal with the present problem and eliminate poverty in Canada at the same time?
