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July-August 2008

Don’t save the economy. Make a better one

Ellen Russell

The golden age of the welfare state wasn’t that golden. The real solution is economics that actually promotes equality

Remember the good old days when Canadians used to think the government was supposed to help everyone share in economic prosperity and prevent anyone from shouldering the brunt of economic adversity? We thought we’d learned the bitter lessons about the perils of the free market from the Great Depression. A welfare state was needed to moderate the harsh forces of the market, with government programs that entitle all citizens to certain social and economic rights.

Today, the welfare-state programs of the 1960s and 1970s seem like a distant memory. Free marketeers have attacked everything from employment insurance to welfare to education funding.

One response of progressives to the shredding of the social safety net is the impulse to go back to where we were before the bad stuff happened. Remember the good old days, when most unemployed people could actually qualify for unemployment insurance? When the discussion was about how to fix or improve public services, not what price the government could get for auctioning them off? After losing so many fights over the decades to protect social programs, you can appreciate this nostalgia for the way things used to be. Wouldn’t it be great to have adequate income support programs again instead of having to rely on the not-so-tender mercies of seedy payday loan joints?

But nostalgia for the past overstates the virtues of the welfare state. Carleton University sociologist Janet Siltanen’s research shows that—even on its best days—the welfare state paradigm was far from paradise. Even in the “golden age” of the Canadian welfare state, politicians were long on rhetoric and short on substance. Income security programs were modest, and social programs were often not extended to everyone. Plus, a weak commitment to full employment meant that the Canadian government fell far short of placing the rights of citizens above market forces.

Some might argue that—despite its flaws—the Canadian welfare state of a generation ago is still preferable to today’s neo-liberal nightmare. But Siltanen argues that viewing the welfare state with rose-coloured glasses is not a great starting point for a new vision for Canada.

The welfare state paradigm was predicated on an agenda of redistribution: the idea that the government should take from the affluent to help out those who are struggling.

Under such a redistribution scheme, socially marginalized groups must fight over whose agendas will be supported from a limited pot of tax revenues. Groups that battle racism, sexism, homophobia or other forms of discrimination are badly disadvantaged when it comes to determining who are the deserving beneficiaries. For them, the welfare state is not a paradise lost.

Not that redistribution is a bad thing—far from it. And maybe we could sort out our oppressive prejudices enough to ensure that welfare state programs are not designed around the heterosexual male breadwinner household, and to ensure that many more groups (women and First Nations come to mind) receive the benefit of this redistributive vision.

But there are other problems with welfare-state-style income redistribution as a political agenda. Taking from the haves and giving to the have-nots occludes a bigger question: Why is it that the economy produces haves and have-nots?

This is a question about more than just income redistribution. Rather than relying solely on government to try to improve on an economic system that reinforces inequality, wouldn’t it be better if we had a more egalitarian economic system? If the economy weren’t creating such gulfs between rich and poor, there would be less damage for the government to fix.

This line of reasoning leads in a number of interesting directions—directions we don’t pursue if we are stuck in the past with the same redistribution mindset we had a generation ago. Siltanen poses her own provocative question: Who said markets are sacred? The market economy, with all of its imperfections, is not some force of nature; it is socially created. So for Siltanen and others, we should not just set our sights on a return to some imaginary, glorious past, but on creating a future where the economic system itself is up for debate.

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