·  by Ken Neumann   ·  Ken Neumann Remarks

Neo-Liberals Are Not the Answer to Growing Populism

Remarks by USW National Director Ken Neumann at the Broadbent Institute Progress Summit, March 28, 2019.

Thank you.

My name is Ken Neumann. I’m the National Director of the United Steelworkers.

The Abacus Data polling results concretely show that the affordability gap in Canada is increasing.

It clearly shows that Canadians are increasingly anxious about their economic wellbeing. This should not be a surprise to anyone here.

Housing is becoming less affordable. Transportation and auto insurance, prescription medications, tuition for colleges and universities – all are getting more expensive.

People understand that they are falling further and further behind.

And they recognize that their children will be in even more trouble.

This data shows in graphic detail what we all know: Canadians are getting increasingly worried about their financial situation.

In fact, 74% of these Canadians tell us their income is not enough to even cover their “day-to-day” expenses.

This anxiety is real.

This lack of affordability is real.

The decline in living standards is real.

The deep concern people have for their children’s future is real.

The impacts are real, they are profound, and they are heartbreaking.

What we have documented is the subjective, personal impact of the changing economic reality in this country. The real, lived experience of everyday Canadians.

However, we should not be framing this as an “affordability crisis.”

By doing so, we solely focus on the symptom – the economic bind on individuals – rather than the conditions that create this bind.

Focusing on the symptom fails to identify the culprit. It fails to identify why Canadian workers and families are struggling economically, even when the economy is actually growing.

By focusing on an “affordability crisis,” we suggest the solutions are to be found in the situation facing the family under pressure. This often obscures any search for a real cause.

This approach would lead us to fine-tune the specific situation of individual families, rather than understand that the situation is created by economic forces that are not natural, but human-made and based on government decisions.

The real frame, of course, is growing inequality.

If we are interested in more than the ‘psychology of economic decline,’ we should NOT be talking about affordability.

We should rather be talking about inequality and wage stagnation.

We all know that inequality in Canada has been increasing for decades.

The average Canadian CEO today makes 197 times the wage of the average worker. 

Yet for years, real wages in Canada have completely stagnated.

Growing inequality is structural and severe: Canada’s 87 richest families own more than the lowest-earning 12 million Canadians – combined!

But the problem is not just the wealthiest one percent. Inequality is a much broader problem than that.

While real wages have stayed flat, the return on capital has been increasing rapidly.

So, real estate prices, spurred on by greater wealth and more and more speculation, continue to spiral upwards in Canada’s largest cities, while more and more workers simply cannot afford to buy their first house, or pay the rent.

Wages for Canadian workers no longer provide the security they once did.

Traditionally, wages are in virtual lock-step with productivity.

That makes sense. As labour produces more value, workers get a comparable share of the value.

However, this is no longer true today. 

Throughout most of modern times, Canadian productivity has increased at a relatively stable pace. This is true right up to today.

However, in recent decades real wages have stagnated and have not even come close to following productivity increases.

The inevitable structural result is what we see now: affordability problems at the individual level.

And the real problem with framing the issue as an “affordability” gap is that it doesn’t suggest the solution – a way forward.

It provides no real solutions for those analyzing the problem.

And no constructive way forward for those living the reality of this problem.

As the Abacus data shows, many Canadians believe the solution to their affordability problem is lower taxes.

Lowering taxes is NOT a solution. Rather, it intensifies many of the affordability problems across society.

If we look through a glass darkly at the data, we can see that Canadians already sense the problem is not simply “affordability,” but involves profound inequality.

An overwhelming 80% of Canadians believe “the people at the top are making more and more, and everyone else is just struggling to get by.

And, 71% say that inequality – the gap between them and the 1% – is getting ‘worse’ or ‘much worse.’

They are pointing to a concept of ‘equity’ not just ‘affordability.’

This points to the need for solutions beyond a band-aid to the family that is being ‘squeezed.’

Recognizing the structural component, radical changes are needed to our tax system, to reverse the growing inequality in our society. And consider new ideas appropriate to today.

We need to look seriously at increasing the top marginal tax rate – reversing the drop in that rate that started under Brian Mulroney.

We have to consider estate taxes in this country. We need to talk about taxing wealth in Canada, and get serious on tax avoidance.

Ideas such as a Financial Transaction Tax need to be developed.

This is where we as ‘civil society’ come in.

While politicians and parties can champion real change towards more equal taxes, the groundwork for radical changes – like dramatic marginal rates, a transaction tax or a wealth tax – needs to become more accepted in the general public. This requires commitment by civil society and progressives, including debate, education and choosing parties that are committed to transforming inequality.

What we don’t need is what we now have: a neo-liberal federal government that says it “feels the pain” of the affordability crisis.

A government that loves the slogan, “the middle-class – and those wanting to join it,” while at the same time reinforcing the pillars of structural inequality.

From half-measures on stock options, to one regressive trade deal after another.

More galling than anything is the Liberal government’s touchstone of progressive validation. Their so-called “middle-class tax cut.”

Well, this middle-class tax cut gives you $680-a-year if your income is $200,000.

But if, you’re at the median income of $50,000, you get a lousy $71.

And if you earn only $45,000?

Well, you get zero from this so-called ‘middle-class tax cut.’

As we come to the end of Trudeau’s majority government, we find that inequality is unchanged from four years ago.

And we’re still waiting for a national childcare program.

And I don’t know about you – but I don’t see a truly universal public pharmacare program in the Liberal plans any time soon.

More importantly – it has become as clear as it could possibly be, that first and foremost, the Liberals pay greatest attention to the loudest voices in corporate Canada when they make policy decisions.

So workers and their families become cynical. That’s what happens when neo-liberal governments cloak themselves in socially progressive values.

People hear a Liberal government say it wants to “stand up for the middle class.”

Then they see a Prime Minister beholden to corporate Canada.

Workers’ real-life experiences are proving to them that their lives are NOT getting better. 

Viewing our neighbours to the south these days, we can see how these things can get dangerous.

Disaffected, cynical, frustrated workers are vulnerable to right-wing populists who tell them what they want to hear… who can channel their anger and frustration.

If we want to avoid this in Canada, we need to get serious about reforming our tax system.

We need to address wage stagnation.

We must strengthen the universal public services that Canadians need in order to make ends meet.

As Ed Broadbent wrote just a few days ago, the antidote to such populism is not the complacency of the neo-liberal centre.

The solution, Ed reminded us, lies in “a passionately democratic and pro-pluralist left – championing the interests of ordinary people and acting as their voice against prejudice, inequality and the domination of extreme wealth.”

Thank you.

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