Freeman

ARTICLE

To Help the Poor

DECEMBER 01, 1984 by KENNETH MCDONALD

Kenneth McDonald is a Toronto free-lance writer. This article first appeared in The Globe and Mail (Toronto) July 31, 1984.

Canada’s commitment to the redistribution of income is well established. In 1970, Prime Minister Pierre Trudeau said: “We believe the Government of Canada must have the power to redistribute income, between persons and between provinces, if it is to equalize opportunity across the country.”

Budget figures for 1984-85 confirm it: 40 per cent is allocated to social affairs. Most of the money goes to income support and the financing of health services and education.

Results of the process between 1951 and 1981 were published recently by Statistics Canada. The population was divided into five equal groups from lowest to highest income. Each income group represented one-fifth of all families and unattached individuals.

The results showed that “the share of income for each group is the same in 1981 as in 1951 when income (including social benefit payments) is considered. This means that although each group’s income has increased substantially, there’s been no movement toward greater equality between groups.”

Since the Fabian Socialists adopted it in the 1940s, the redistribution of income has been one of the tenets of democratic socialism. Yet the stubbornness with which inequalities of income persist has been known for almost a century.

In Natural Inheritance (1889), Francis Galton described the nature of variation: “Whenever a large sample of chaotic elements are taken in hand and marshalled in the order of their magnitudes, an unsuspected and most beautiful form of regularity proves to have been latent all along.”

It can be demonstrated mathematically that many human activities, including the distribution of wealth and income, fall into a predictable pattern of distribution represented by the bell-shaped curve and variations of it. The mass is in the bell. Few are at the rim.

What is not predictable is the degree of success or failure that attends the separate efforts of individuals as they make their way from one income group to another.

But the natural urge of politicians to keep office drives them to cater to the mass. The coercive power of the state is recruited to redistribute the effects of a natural phenomenon.

The state does not see the individuals, only the mass that they constitute. Trying to reduce the disparities between sections of the mass becomes a major occupation of government. The process causes government to grow. It is government’s share that changes.

In the industrialized West, big governments are out of fashion. The emphasis now is on creating wealth, rather than trying to redistribute it.

But creating wealth is a matter for the individual, the entrepreneur and risk-taker, for the citizens the state does not see as they make their way from one income group to another.

Their efforts are hampered by the actions of government. Progressive taxation, regulation, form-filling, all the machinery of government is a brake upon initiative and the creation of wealth.

The accumulation of debts and deficits, and the resulting rise in government’s obligations to pay interest on its borrowings, adds to the tax burden. Much of the accumulation stems from political reluctance to reform the universal programs that accompany the redistribution of income.

It appears that cutting the size of government is much more than a political slogan. If the poor are to be helped, their best hope is in a chance to join the wealth-creating process.

A job gives them a chance. In a dynamic economy, one job leads to another. New ventures are undertaken.

Canada’s economy is not dynamic. Unemployment is rising. Capital investment is sluggish. Individuals, who watch their spending carefully, see perhaps half their incomes transferred to governments that seem not to watch it at all.

It is in the lack of control over their own affairs that entrepreneurs and risk-takers suffer the most. Government intervention saps that control. Yet much of government’s intervention is inspired by endeavors to improve the lot of the poor. Government’s actions are contradictory.

Admitting the contradiction, and explaining its effects to the electorate, is a task for politicians. If they tackle that contradiction, they will be faced with another: that in courting voters they will risk antagonizing the majority that is found in the lower income groups.

What they do not know is the extent to which members of that majority would understand and respond to the truth.

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December 1984

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