What is the employer-friendly CEWS, the Canada Emergency Wage Subsidy, and how is it funneling public funds to big businesses? Doug Nesbitt joins Team Advantage to discuss the generosity of the Canadian state with regards to employers, and how this differs substantially from the approach taken towards workers. Why did the NDP and major labour leaders support a program that is essentially trickle-down economics on steroids? Who benefits from this program? And how will the costs it creates be used against working people in the future?
Follow Doug Nesbitt on Twitter @StandingTheGaff, and read his work at rankandfile.ca.
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Kate: Hello, and welcome to The Alberta Advantage. I am your host, Kate Jacobson, and joining Team Advantage today are Tyler —
Tyler: Hey there.
Kate: Patrick —
Patrick: Hello!
Kate: And special guest and founding editor of Rank and File, Doug Nesbitt. Doug, thank you for joining us again on the podcast.
Doug: Thanks for having me once more.
Kate: So, we are about a year into the COVID-19 pandemic with its horrible mixture of anxiety-fueled boredom interspersed with moments of complete chaos and terror, and it has many people longing for the wide rollout of the vaccine and a return to some semblance of normality. And, while many people have experienced 2020 like life — or, at least, parts of lives — were put into some kind of limbo or pause, the wealthiest people in Canada and their representatives in the Canadian state have very much been on the move. Capitalists really don’t tend to waste a crisis, and the COVID crisis has left open a lot of opportunities for them to pad profits and get rich off of everybody else in our society.
Patrick: When the stock market went into free fall in the spring, Canada’s wealthiest briefly saw a decline in their fortunes. But, as one of the worst six months in Canadian economic history wreaked havoc in the lives of most Canadians, Canada’s richest not only recovered but have made enormous gains. Since September, reports have been rolling out tracking the ballooning wealth of Canada’s richest families and its biggest businesses, and the sharp inflection of inequality that has attended those gains. So, for example, in September, Alex Hemingway and Michael Rozworski released a policy note article that showed $37,000,000,000 in gains for Canada’s 20 richest billionaires, averaging about $2,000,000,000 an increase with the biggest increase going to the Thomson family, to Toby Lutke of Shopify and that fucking Lululemon shithead Chip Wilson. And a wider view of Canada’s top 44 billionaires in November showed that their wealth had increased 28%, by some $54,000,000,000, between April and October of 2020.
Tyler: Canada’s richest are feathering their dynastic nests and, of course, that’s come at the expense of the lowest-income workers in this country. You know who we’re talking about — the heroic essential workers that saved all of our asses by going to work in the grocery stores and the gas stations and the restaurants during the pandemic as it raged on. While governments and media were offering up kind words to these workers, their material conditions deteriorated. Low-wage workers in grocery stores have seen their $2/hr pandemic pay clawed back, and, while employment numbers have improved from April, when 5,500,000 jobs were impacted by the pandemic, the recovery of work hours and job growth continues at a slower pace than the recovery in July and August. Women, immigrants, and non-white workers have been disproportionately affected by these economic disruptions. The disparities here reflect an ongoing and accelerating entrenchment of vast wealth inequalities in Canada. Over the last decade, everyone but the 1% of Canadians — which is defined as those with $6,000,000 or greater in net worth — has seen their share of Canada’s wealth decline.
Kate: And I think it’s really important, here, that we think about COVID, in many ways, as a crisis of capitalism. And, when COVID initially hit, or became part of our daily lives here in Canada, it very much was a crisis that initially fundamentally disrupted capitalism, right? It fundamentally disrupted patterns of employment, it disrupted the circulation of commodities, financial flows, and there was this time in early March where unemployment was spiking, the stock market was tanking. There was a sense that the way we organized our society was very much in question. And that was because not only were there these shocks to the system that I mentioned, but the rhythms of our everyday life — and this is how capitalism reproduces itself on a day-to-day basis — were also interrupted due to the lockdowns. And I think it’s really important to keep this in mind because, when we’re going to be going through this episode, we’re going to be seeing how the state, the Canadian state, responded to this kind of crisis, and what we’re going to see is, basically, them working out and workshopping in real time how to keep capitalism chugging along in these new pandemic conditions. And what’s really interesting about it, I think, is that, as you go through it, it very much has this “in real time” feel to it, where they’re just throwing things out and seeing what sticks in terms of, “how can we keep capitalism going, not make any major changes to our society that will raise people’s expectations or drastically alter the way in which our society is organized?”
Tyler: One interesting thing about the shock caused by this pandemic is that the reason that the economic shock happened is because the specifics of the virus meant that we had to isolate, we had to stop going into big offices, we had to stop going to work if we were able. And all of these things were good in the terms of stopping the virus, but, of course, if you think about that from the lens of capitalism — for example, if you’re a Starbucks owner or managing a Starbucks store downtown — all of a sudden, people stop coming to the office buildings and your profits have dropped by 90%, and you multiply that out across the entire economy, and that ripples through everything. So, it’s a weird economic shock which is caused — the pandemic itself, obviously, which we don’t have time to get into today, was caused by capitalism and is obviously an externality of that, but the actual specifics of this shock are quite unique to this virus, and what we have to actually try to do to control it.
Doug: Part of the explanation for the growth of this wealth comes from regular sales and stock market profits. The Canadian Emergency Wage Subsidy program, the CEWS, is, really, one of the most infuriating parts of this whole story, and now we’re starting to actually see, in the news, we’re starting to see these stories come out, trickle down, about what sort of companies are taking these wage subsidies and what sort of companies are paying out dividends while they’re collecting them. What is CEWS, the Canadian Emergency Wage Subsidy? So, in mid-March is when the government began to really look at what sort of supports and subsidies it was going to put towards employers as well as ordinary people, and, on the 27th of March, we saw this really incredible letter come out, and it came out earlier in the day because something important also happens later that day. It was a letter signed by Jagmeet Singh (of the NDP, of course), Gord Johns (who is a BC NDP MP), Dan Kelly (the president of the Canadian Federation of Independent Business), and three union leaders of large private-sector unions: Ken Neumann of the steel workers, Jerry Dias of Unifor, and Paul Meinema of UFCW. And this letter called on Trudeau to implement a 75% wage subsidy.
Patrick: Boo!
Doug: Boo indeed.
Kate: A real unholy alliance there.
Doug: Yeah. This letter really blew my mind, because CFIB — if anybody follows who our class enemies are in all these battles, the CFIB is always in there. It’s always in the press, it’s always making statements. Dan Kelly is their mouthpiece. He calls for freezes on EI premiums, he’s opposed any kind of minimum wage increase anywhere. The CFIB is anti-union; they are really a nasty employers’ organization, so to see unions and the NDP openly collaborating with them, that was my first instance of asking, “Wait a minute — what is this wage subsidy?”
Kate: I think, to me, it really shows the inability for social democrats or the labour movement to really take advantage of a crisis, and I say that because it stands in such sharp contrast, to me, with the way that groups like the CFIB and other employer-driven right wing organizations really took advantage of COVID-19 to push, push, push for austerity, for wage subsidies, for all of the things that they wanted to remake society in their own image. And there was this complete inability for social democrats to take advantage of a crisis in any way, and I think it’s because there is not really a coherent social democratic project at the moment, nor is there really a coherent project of the mainstream labour movement, so, when a crisis happened, they had nothing to push, because all that’s really keeping them going is this inertia of being institutions.
Doug: Yeah. One of the institutional imperatives, of course, from the unions is maintaining their dues base. So, as far as I can tell, the reason why these three giant private-sector unions are in favour is maintaining that flow of big money union dues to their bank accounts to keep the unions, to keep their staff on, to keep doing what they’re doing. The CFIB, I think that’s pretty obvious why. And then as you said, Kate, the NDP has really lost the plot on who exactly they ought to be cooperating with as a social democratic party. But one of the aspects of the letter that was strange to me was: who is Gord Johns? Because I’m not from BC, and Gord Johns is an MP from Vancouver Island. And he is a small business owner, and he is a Chamber of Commerce hotshot; he’s a superstar for the Chamber of Commerce there. So that, again, another aspect of the letter that really raised eyebrows. And then, later that day, on the 27th of March, Trudeau said, “Yeah, let’s do 75% wage subsidy for small and medium-sized businesses.” So, the first time a strongly-worded letter achieved something, I guess.
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Kate: Call me old-fashioned, but I simply believe if you are a social democrat or a trade unionist, you should not hang around with people from the Chamber of Commerce or the Canadian Federation of Independent Businesses.
Doug: [laughs]
Kate: Just a little thing I believe.
Patrick: I think one of the lenses that we’re trying to look at this through is the work of Ralph Miliband, who’s a British Marxist theorist who wrote, in the 1960s, this really influential book called The State in Capitalist Society. And, in a lot of ways, Miliband’s take on the state and its role in shoring up capital remains really vital to understanding our contemporary society. Just in thinking about the interaction with the NDP and the CFIB and the unions here, we can quote from Miliband when he says, and I quote, “Political office holders themselves do not at all see their commitment to capitalist enterprise as involving any element of class partiality. On the contrary, they are the most ardent and eloquent exponents of the view of the state and themselves as classless, as concerned above all to serve the whole nation, the national interest as being charged with the particular case of subduing special interests and class-oriented demands for the good of all.” Then, continuing, “Because of that commitment, and because of their belief that the national interest in inextricably bound up with the health and strength of capitalist enterprise, governments naturally seek to help business and businessmen,” to end quote.
Tyler: When the legislation was presented in April, the CEWS was an offer of a 75% wage subsidy for any business. It was meant to run for 12 weeks, from March 15th to June 6th, and it covered a minimum of 15% of revenue declines based on the period from February to March 2020 and provided 75% of wages, up to $847 per week. Here’s how one business guide at Davies — which is a corporate law firm — to the program described it (and this is quoting now) — “…the government sought to leverage existing income tax refund mechanisms to distribute the subsidy to employers in a timely manner and to utilize the broad investigative powers and penalty provisions of the Act to verify and encourage compliance with the terms of the program,” end quote. Crucially — and this is maybe the most despicable part of this entire Act, in my mind — is that no conditions were placed on companies regarding existing cash reserves or profits made during the wage subsidy period. Obviously, there was no even hint or talk of any kind of state ownership or stock payout directly to a sovereign wealth fund or something of that that was included with this legislation.
Patrick: In April, Doug, you wrote that the CEWS was, to quote, “trickle-down economics on steroids,” which I think is a really good way of putting it, and you noted that the lack of qualifying conditions and the business-first consensus was that was an abandonment of EI reform and that the enormous budget cost of the CEWS would serve as a rationale for a future series of union-busting rollbacks from employers and more austerity public budgets. Do you want to go into that a little bit?
Doug: Sure. The EI question is really my whole life, which isn’t the longest life, but I’ve been political for 20-plus years, and every time we hit one of these crises, EI reform is a big thing that labour pushes, it’s a thing that the NDP has also pushed, and other organizations who favour the program in society. And, this time around, I just thought it was immediately striking how employment insurance was a non-issue, and it was no longer being pushed, and, in its place, we got the wage subsidy program. So, I’m asking myself, “What the hell is going on here?” And then, when you dig into the details, and as details trickled out through April and into May and you saw that there was no real qualifying conditions on what sort of cash reserves corporations were sitting on, there was no qualifications around profits — there isn’t even actually a job guarantee. A lot of people think that this is about saving jobs, but there is no actual job guarantee tied to the wage subsidy program. The government is not telling people to keep workers at their jobs; they can still fire them, but they can also collect wage subsidies for the people they keep on. So, really, it was just asking: why is this being pushed and EI reform, which is not exactly rocket science, basically, if we got it back to something like what had in the 70s or before that, it would be vastly superior to what we would have. Those are the kind of questions that got me thinking and then churning out this article saying, “Hey, if there’s no qualifying conditions for how to get this other than declines in revenue, then what the hell type of program is this, anyway?” And, “Why is the CFIB backing it?” [laughs] That was always in the back of my mind, too. And I suppose the other thing is that, as we moved into May and we had re-opening attempts that failed and we had these huge corporate industrial workplace outbreaks and were starting to see agricultural workplace outbreaks, we had an extension of the program for another 12 weeks, and then, through the summer, we started to see more and more pressure against CERB recipients and this silence on the wage subsidy program that was happening. So, my earlier suspicions, I thought, were being confirmed, that there’s some sort of scam being run here.
Tyler: Yeah. I think part of that, too, is the way it was framed and the way it was reported on, too. And I think, even the fact that we refer to it as a wage subsidy — obviously, that is what the program is called, so it’s not entirely incorrect for us to do that — but, like Doug said, there’s really nothing in the language of this money that is securing anyone’s jobs. And you’ve seen, maybe, stories here and there about companies that have accepted the wage subsidy money and have then fired a whole bunch of people. So, it really is quite disgusting, in my mind, the way this was sold, and then the way it’s been reported on by mainstream media has really served to solidify this idea that all that we’re doing here is using employers as a go-between, and what we’re doing is we’re just making sure that people who have jobs are able to keep their jobs so that, when the pandemic is over, we don’t have to go through this phase of everyone being re-hired to the same jobs they had before — which, when you lay it out like that, I think, to a lot of people, that kind of makes sense, but that’s certainly not what the program — if that’s what you wanted to happen, the way the program was build certainly doesn’t guarantee that.
Patrick: Yeah, and we saw a number of further extensions and modifications made through the summer. So, in July, the CEWS was extended to November 21st, and then changes were backdated for companies to July 5th. And so there was moving around of some of the categories and how to qualify. So, 50% or more decline in revenues from July 5th to August 29th, the government would give a 60% base wage subsidy rate. From 0 to 49% decline in revenue from July 5th to August, there would be a 1.2-times revenue drop as a measure for qualification. The government was fiddling around with the qualifications and the arrangement of the subsidy, and the original plan was to bring the subsidy down to 20% by about mid-December, but then it was topped up, based on the previous three months’ revenue losses, up to 75%. And then, on December 2nd, the government extended the CEWS to June 2021, and it put in revised calculations involving a base wage subsidy plus top-ups. And of course, while all this is going on — so, all these fiddling around to ensure this income for Canadian businesses — while the government has been busy extending its largess to Canadian businesses, it’s been looking to crack down on regular Canadians who sought support through CERB and EI. On December 14th, 441,000 people got letters from the CRA that were threatening CERB recipients. And these were so-called “education letters” informing recipients that they may have to repay CERB benefits. And one specific reason people received these notices was because the CRA could not, to quote, “confirm employment and/or other self-employment income of at least $5000 in 2019 or in the 12 months prior to the date of application,” which was one of the key qualifications for CERB.
Kate: So, what is going on here is that the Canadian government is placing no restrictions — absolutely zero — on a company like, say, Air Canada, who had $7,380,000,000 in cash reserves from 2019, using a wage subsidy, and the state has repeatedly and generously extended this wage subsidy. At the same time, Canadians who cannot prove, for whatever reason, that they earned $5000 in 2019 are facing paying back this $2000 a month in CERB payments that helped a hell of a lot of people stay afloat throughout this year during an unprecedented global pandemic. On one hand, this is an absolutely godawful society — and, in fact, calling it a society is quite generous. But, on the other hand, this is the role of the Canadian state, and this is the role of the state in a capitalist society, which is to say: the point of the state is to keep the economy going, but not just any economy and not just the production of goods and services or the production of everyday life — it is about keeping a distinctly capitalist economy going and about reproducing the specific conditions that allow for capitalist economy. So, what that means is that billionaire employers got an enormous subsidy and used it to pay themselves and their shareholders dividends while you and your coworkers got potentially exposed to the virus, your $2, quote, “hero pay” got clawed back, and the CRA threatens to stick you with the bill for the measly subsidy that you applied for. That is what the state is doing.
Doug: Absolutely, and they’ve started, in mid-March, with a 10% wage subsidy for small businesses — so, of businesses under 50 workers — and then it was 75% for small and medium businesses and, by the time the legislation came in in mid-April, it was any business. And, by July, they had dropped the qualifications on revenue decline; so it wasn’t 15% or 30%, it was any decline in revenues and now you can qualify for wage subsidies. So, it was just opened up to any company that could claim those sorts of revenue declines or cook their books that way.
Kate: Right. For employers, the system just kept getting more and more and more generous, whereas, for workers, the system got more and more restrictive and more and more punitive. And, if that doesn’t sum up the state and capitalist society better than anything else, I don’t know what will.
Doug: I am announcing that I am incorporating myself, and there is billboard space on my forehead.
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Kate: Hey, folks. We’re interrupting you mid-episode to promote another podcast. Now, we wouldn’t do this for just any other podcast — but, if you like The Alberta Advantage, you should check out the new season of COMMONS, a documentary podcast from Canadaland. Host Arshy Mann takes you right into this country’s dark underbelly, uncovering stories of crime, corruption, and all manner of misdeeds. This season, COMMONS brings you stories about the police. They’ll examine the power that Canadian cops wield and investigate the lengths they’re willing to go to to hold onto it. Subscribe now on your favourite podcast app. And, honestly, I do have to say their past seasons have been fantastic as well. They examine Canada’s fossil fuel industry in their season called CRUDE and then examine some of Canada’s wealthiest and most powerful families in their season DYNASTIES. And we now return to our regularly-scheduled programming.
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Tyler: It gets better. So, we’re going to talk about some of the profiteers here that really benefited from this subsidy. So, remember how we noted that Trudeau, with the backing of the baby Liberals and the NDP, didn’t place any restrictions on dividend payments on companies receiving CERB? Well, at least 68 Canadian companies who received federal funds have paid out billions in profit dividends to their investors. The Financial Post reported, on December 7th, that those companies had collectively received some $1,030,000,000 in Canadian Employment Wage Subsidy over the second and third quarters of 2020 while still paying out $5,000,000,000 in dividends. And it’s also worth noting, actually, that there are some places in the world who — this is not a panacea, obviously, but — in the US, the UK, and Mexico, they all force their financial institutions — so, no other companies, but at least financial institutions — to cut or suspend their dividends. It may be just a gesture, but I think it’s still a very reasonable thing to have asked companies — not just financial companies, but all companies — to have done during this period, but we were actually alone out of that group of peers in the fact that we were not asking any of our banks to do this, and we just allowed them to proceed as normal — a point of pride that the big 5 banks in Canada take, that they have never stopped paying dividends since 1940, which is a little bit scary to think about. A kind of follow-up from that is that the UK and the EU have just announced that, after about nine months, these restrictions are going to be removed with, quote unquote, “strict limits” set on the level of dividends. So, like I said, not a panacea, but it would have been nice to at least see something that recognized that companies who are potentially receiving some of this subsidy, or any kind of government subsidy at all right now, should certainly not be passing on any amount of that subsidy to their stockholders in the form of dividends. So, we can get a sense of the scale of the profiteering by actually looking at a few of these companies, so I’ve got a few examples here. Imperial Oil: $120,000,000 received from the wage subsidy, and paid out $324,000,000 in dividends. Air Canada: $492,000,000 in wage subsidies, $7,380,000,000 in cash reserves at the end of 2019 and $9,000,000,000 in cash reserves at the end of June. Extendicare: $82,200,000 in wage subsidies, $21,400,000 in dividends (that was Q2 and Q3 dividends).
Kate: I’d like to point out that Extendicare is a long-term care company. So, they are literally profiting off of, in this situation, a wage subsidy to their business where they failed to take care of the elderly. Extendicare has had some of the worst pandemic management out of all of the privatized long-term care facilities in this country, they are terrible to their staff, and they are paying out millions of dollars in dividends, and the Canadian government is subsidizing it.
Tyler: Yeah, pretty amazing. If you were to pick any single industry that has absolutely failed in their duties to provide whatever service they were supposed to provide in this time, it would be private long-term care homes. So, just complete villains. And this list goes on and on: we’ve got many, many examples here, and you can imagine many, many companies of similar size that took in some large amount of wage subsidy and paid out as much, or many more, in dividends. One note I wanted to add in this part, actually, is that it’s good to single those companies out so everyone is aware of who these companies are, but it’s also worth noting that this is not an individual company problem, necessarily — this is the demands placed upon companies operating a capitalist system, right? It’s the course of laws of competition come to life in a really, really evil way. If you are, for example, Air Canada and you decide that you’re no longer going to be paying dividends out during this time, but your competitor — WestJet, or competitor airlines anywhere in the world, as capital is able to flow wherever it wants to in this modern world — you are going to lose capital inflows to your company. You are going to have a bunch of people who either sell your stock because it’s no longer paying the dividends that they bought it for, in some part, and that’s going to hurt your business. And, for some businesses, that may the difference between them surviving or failing. And not only, obviously, is that hurting the company as a whole, but, if you think about the board of directors, C-suite level employees as well, that is obviously going to impact the potential stock options that they have. It’s very worthwhile to point out who these companies are, and everyone should have this understanding, but I want to impress upon everyone the fact that this is not an Air Canada problem or an Imperial Oil problem — this is a capitalism problem.
Kate: Yeah, there’s no way to be an ethical private long-term care facility. It just doesn’t exist. The issue is the system in which they are forced to operate. One example — that said, though, on this list of profiteering companies from the pandemic that is particularly egregious is K-BRO Linen, who took in $7,700,000 in wage subsidies and paid out $6,200,000 in dividends. And the reason I say it’s particularly egregious is that this is the company who stands to benefit from the privatization of laundry in Alberta, which is currently the first in-house service that the Alberta government is planning to privatize as part of its massive privatization project in healthcare. For me, this really shows the links between all of these levers and actors in capitalism. So, you have a company like K-BRO Linen who is benefiting from the federal government’s extremely generous wage subsidy which is allowing it to pay out millions of dollars in dividends at the same time it has, say, a COVID outbreak in its facilities in Regina, but it’s also benefiting massively from the provincial government’s privatization scheme, which they will be poised to benefit from if the government succeeds in carrying out its plan to lay off hundreds of workers and replace it with a privatized laundry delivery service. So, that’s very interesting to me because, theoretically, in a liberal democracy, you would expect our provincial government and our federal government, who are run by different political parties, to be different in some way and to be different in some substantial way, but when you look at a company that is operating within capitalism, they’re really getting the same benefits from the state regardless of who is in power. And, with that wage subsidy, worth pointing out that that was pushed for by the NDP, by major trade unions in this country. So, it’s very much all of these political actors, and actors in the political class, coalescing in this moment of crisis to reproduce capitalism.
Tyler: Yeah. It’s pretty funny, specifically, for the example of K-BRO Linen, just to reiterate those numbers. So, they got $7,700,000 in wage subsidies and $6,200,000 in dividends. Those numbers are almost exactly the same and much closer together than almost any other of the examples we have here. And I don’t know — call me a cynic, but I don’t think that the similarity in those numbers is entirely coincidental.
Doug: I think that the greatest achievement of the wage subsidy program was the success of the Royal Ottawa Golf Club, which received $1,019,000 in wage subsidies and ended the year with a surplus of $1,038,000, and their increased operating fund surplus jumped from $44,000 to $825,000 over a year. And there was a whole CBC news exclusive about this out of Ottawa, and the company — well, I don’t know if it’s a for-profit or non-profit, but the Royal Ottawa Golf Club just said, “Yeah, we’re just going to pocket that money.” I don’t know how a golf club works, but they just got a million dollars for nothing. [laughs]
Kate: The real heroes of our society — people who own golf clubs.
[laughter]
Doug: And, on top of Extendicare, there’s a whole sector and a whole army of for-profit long-term care and nursing home and retirement home companies that are getting wage subsidies and paying out dividends. So, Sienna Senior Living — that’s a big one. $75,000,000 in wage subsidies, $44,000,000 in dividends. Chartwell — where Mike Harris, former premier of Ontario, is chair of the board of directors — $3,000,000 in wage subsidies, $33,000,000 in dividends. And the question that keeps going through my head — and I don’t really have an answer to it — is: in the facilities of these companies, so many people are dying. Is that actually causing a drop in revenue that helps them qualify for the wage subsidies? It’s kind of a grim question and answer to think about.
Patrick: That might be the most depressing thing that could happen if that is the case, if that is actually happening, where, basically, every person that dies means that one of these long-term care facilities gets and extra $10,000 from the government in wage subsidy. That would be — ugh. I shudder to think, but I would not be surprised.
Kate: And even if that isn’t the case, the situation in long-term care with the wage subsidy is so disgusting because staff in long-term care are paid poverty wages for the work they do, particularly during a global pandemic that is particularly risky for the elderly. So, I know that frontline workers in long-term care are not seeing a fucking penny of these wage subsidies — and, in fact, long-term care companies in Alberta have gone out of their way to not provide hazard pay for their employees during the pandemic while, at the same time, they’re getting this generous wage subsidy from the government and using it to pay out to their shareholders. Their shareholders, by the way, who have these long-term care companies in their portfolios or their trusts as real estate.
Patrick: Fuck! Sorry. It’s not often that we’re going through these things and then my brain breaks and all I can do is swear. That is fucking infuriating. Goddamn. So, the perennial question — what is to be done, right? What to do about it? And I think the NDP is making moves, and it’s being backed by organizations like Canadians for Tax Fairness to try and address these developments with a wealth tax. The Canadians for Tax Fairness have released a report that supports the NDP’s call for a 1% tax on fortunes over $20,000,000 and other proposals concerned with closing tax loopholes, ending the preferential tax rate for capital gains and investments, an inheritance tax — which Canada’s alone in the G7 in not having — a tax on assets that rich people funnel into foundations and charities, and a tax on excessive profits. And other policies call for things like changing the policy inclination towards race-to-the-bottom corporate tax rates and closing tax havens and the like. But, as important as some of this stuff is, this all seems a little bit like rearranging deck chairs on the Titanic, right? As we’ve touched on over and over again, the whole mechanism of state action here is arranged around protecting and ensuring the stability and recreation of capital, and so even these reformist moves here are really only efforts to stabilize and legitimize these corporate and capitalist endeavours by putting a gloss of democratic control or of regulation on top of them.
Tyler: And, again, it might be worth revisiting Miliband’s The State in Capitalist Society here, so I’m going to quote — “Capitalist enterprise… depends to an ever greater extent on the bounties and direct support of the state, and can only preserve its ‘private’ character on the basis of such public help. State intervention in economic life in fact largely means intervention for the purpose of helping capitalist enterprise… Because of the imperative requirements of modern life, the state must, within the limits imposed upon it by the prevailing economic system, engage in bastard forms of socialization and assume responsibility for many functions and services which are beyond the scope and capabilities of capitalist interests. As it does so, however, what Jean Meynaud calls ‘the bias of the system’ ensures that these interests will automatically benefit from state intervention. Quoting Meynaud here, “…the concept of the ‘bias of the system’ makes it also possible to understand that the measures taken to remedy the derelictions, shortcomings and abuses of capitalism result ultimately, where successful, in the consolidation of the regime.” Back to Miliband: “Governments may be solely concerned with the better running of ‘the economy’. But the description of the system as ‘the economy’ is part of the idiom of ideology, and obscures the real process. For what is being improved is a capitalist economy; and this ensures that whoever may or may not gain, capitalist interests are least likely to lose.”
Kate: I think the point being made here that “the economy” always means “capitalism” is something really, really important because oftentimes, when you may think about the economy in the abstract, you may be thinking about your ability to be employed, you may be thinking about the movement of goods and services and commodities that you need around the country and around the world, but that’s not what the economy is ideologically. The economy is people working in order to reproduce life and in order to generate capital for people who own things: the capitalist class, the people who own the companies that we’ve gone over in this episode, people who own businesses. And, when that system breaks down, it’s not actually about whether or not our society can reproduce itself or whether we are able to get the goods and the commodities we need to do that reproduction — things like food and basic essential services and goods — it’s about whether people who own things are still able to accumulate capital. Pulling back the mask on what politicians say and what they mean when they say “the economy” is extremely important for understanding the way in which the state has orchestrated Canada’s response to COVID-19.
Patrick: So, big picture — the wage subsidy has cost, or is projected through June to have cost, $97,600,000,000. To date, 368,420 unique approved applications paid out $54,200,000,000, and that’s an average of about $146,697 per business. CERB, as of October 20th, cost about $81,640,000,000 to 8,900,000 unique applications — so, 23% of the population. That’s an average of $9173 per application. The pandemic has lasted ten months so far. A little over $900 a month if you average it out over time. Remember that, in January 2020, pre-pandemic, about 46% of Canadians were less than $200 away from insolvency.
Doug: Instead of these programs, we could’ve stopped and frozen mortgages and rents, we could’ve set up programs that guarantee the necessities of life — so, food, utilities, housing, education — and these programs have to be fundamentally understood as subsidizing the largest players in our economy. And this includes CERB. So, CERB goes to your landlord, which goes to a bank or an investment fund or to the grocery store (which has a good chance of ending up in the pockets of the Weston family) or Amazon (where it ends up in Bezos’ pockets). It would then apply for the wage subsidy program as well. And it doesn’t help you build power relative to your employer or landlord; it just prevents a problem from cascading all the way to Canada’s biggest banks, and now your employer or landlord are in a better position relative to you.
Kate: It’s also worth pointing out here that a lot of the problems we’ve just outlined with CERB are also problems with UBI. UBI, or Universal Basic Income — the idea that everyone in a society, regardless of what they are doing, should receive this generic, basic amount in order to cover basic necessities — is one that is somewhat popular and is even a little bit popular on the left these days but, I think, is really dangerous and, I think, is really politically bad for the same reasons that I have a problem with CERB, and it’s because it leaves the market mechanism of our society, and the way in which our society is organized around markets, completely intact and, instead, it just gives everyone some money which they can spend in the market. Now, of course, the market is going to react to that Universal Basic Income, and I don’t think it’s necessarily going to be as emancipatory as people might think, but it also re-enshrines the market mechanism, the idea that you should have to pay to have childcare, that you should have to pay for food, that you should have to pay to be housed, whereas I think a more productive direction for any kind of left-wing political project is taking the market mechanism out of society or engaging in a struggle to take the market mechanism out of society, engaging in struggle around ideas such as everyone deserves to be housed through things like tenants’ unions, or engaging in struggle around the idea that everyone deserves to have childcare — childcare is a basic public good that should exist in our society, and it should be available to everyone. And I think UBI completely sidesteps that question of who has power, where does our power as working people and as non-capitalists come from, and how do we build and wield that power? And those questions are, really, at the core of any kind of successful political project.
Patrick: As we discussed with Doug in our episode about the deficit-slaying Liberals in the 1990s, right-wing forces in this country love to manufacture a “debt crisis” as an excuse for eviscerating the existing welfare state and the existing social supports that we have in this country. I think it’s pretty fair to predict that we’re going to be told pretty quickly that Canada is now in a horrible financial position — indeed, we’ve already seen figures on the right talking about the deficit and a budget crisis. We’re going to be told we’re in a horrible financial position, especially relative to our competitor countries, and this is where they’re going to come to turn the austerity screw when the pandemic begins to recede and the next face of the so-called “recovery” begins.
Kate: I guess what it really comes down to, for me, is that almost everyone’s life is worse than it was a year ago, that you have gone through the last ten months of anxiety and awfulness mostly so that the rich could get richer. And, in the future, what you have to look forward to is them using the deficit as an excuse to go after the few things that you still managed to hold onto in our society as an excuse to pay down the deficit. As always, the only alternative to this is to organize and fight. So, in conclusion, our society is morally bankrupt and, in fact, even calling it a society is quite generous. Doug, thank you so much for joining us here for this episode of The Alberta Advantage. If people want to learn more about your work, where can they go to do so?
Doug: Thanks so much. If you want to read more of my stuff, go to rankandfile.ca. I have some articles on there. Also, just follow me on twitter — @standingthegaff — I have my rants and raves there, too. Thank you.
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Kate: If you liked today’s episode, you should check out the Harbinger Media Network, featuring shows like 49th Parahell, where ideological influencer and Twitter titan Rob Rousseau explores the hellish nightmare world of modern reality together. Find out more about the Harbinger Media Network and the entire cross-country line of podcasts at harbingermedianetwork.com.
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