COVID, CERB, UBI

In some places there is a lot of concern about the CERB money paid out, and how it will be paid back. Too much, they said. Too many people got it, they said. Too few checks against eligibility requirements, they said. Too big of an addition to the federal debt, they said.

I'm taking another run at this with a bit of a different spin, but you might want to check out this blog, or this one.

Let's just say there was a lot of urgent need. Far too many Canadians have far too much debt, with some stats saying that half of us would have trouble meeting monthly payments if they missed a paycheque or two. The average debt to income ratio is $1.78 to $1. It should be a maximum of about $.35 to $1. That isn't much slack in the financial rope. In fact, that rope is more like a noose already in place.

Then COVID came along. At first it looked like a repeat of the Spanish Flu, and the government wanted to shut down as many vectors of transmission as possible. At first masks were to be reserved for medical staff, since they feared a wave of hospitalizations. That never happened because the social distancing thing worked. Now masks are required indoors in most places, and the people squawking about it are idiots, but that isn't the topic today.

It worked on reducing the virus transmission, but it also dramatically reduced the transmission of money to employees. If the CERB money hadn't flowed so promptly there would already have been a wave of bankruptcies, both personal and business. Once a rip starts in a net, it's hard to stop. That's one way of crashing the economy. It might still happen, there's a lot of debt around.

The CERB money buys everybody some time. Some think that's to get back to normal, but they are deluding themselves. It's a cruel trick of our economic system that a few people get extraordinarily wealthy, and most have essentially nothing, in net economic terms. They might look wealthy, with a house, and car, and vacations, and all the toys, but it comes from debt. They borrowed the money. The bank will eventually want it back, with interest. Lots and lots of interest. It's to the bank's advantage advantage to keep people working and making just enough to service the debt but not actually get ahead. The system also drives a small number of people into being homeless, but the banks don't care. (Small in terms of overall population, huge in terms of trying to deal with a complicated problem on an individual basis.)

For example, our credit card bill came a few days ago. A bit bigger than usual, but I had some routine dental work done and the benefits payback hasn't hit my account yet. Rather than pay it all off, which we will, we could pay $10 as a minimum payment. That's in big bold print. Only $10! In smaller print a bit further down, it says they estimate it would take us 32 years and 7 months to pay the new balance in full. Assuming no new purchases. Lets see, 32 x12, then add 7, and multiply by 10. Except next month interest kicks in at 19.99% per year, adding several hundred dollars a year to the debt. I'm guessing the minimum payment goes up, but you are now not just behind the eight ball, you are sliding down a slippery slope into a deep ditch. And remember, that's BEFORE any more purchases kick in.

Mortgage interest works much the same way. The bank lends you an enormous pile of money to buy a house they essentially own, that you have to take care of, and if you pay it back at the rate they want over the longer timeframes people choose, you could easily be paying back twice or three times the amount borrowed. The banks LOVE it when you take out a mortgage. They even make you pay for the insurance that benefits them.

The gamble is the house value will go up and you'll gradually build equity, and eventually sell it for much more than what you paid. A great risky dream, as long as you don't lose your job along the way and start missing payments. Thats another way of sliding into the ditch very quickly. Even the deferrals the banks have offered are not a forgiveness of the interest, it's just a holiday, and that interest will itself have further interest added to the amount. The slope into the ditch just got steeper. Plus it puts a note on your credit record, making it more difficult and possibly more expensive to get credit next time you might need it.

Which is why I've been saying debt is an emergency situation, especially credit card debt. You should be moving heaven and earth to pay them off in full every month.

So here we are, Canada borrowing money to hand out to nearly every breathing Canadian. (Not us!) How do they turn off the taps again? I wonder how many people have been using that money to hunker down and meet their obligations, or how many have been treating it like free money?

Businesses are complaining they can't get workers because, CERB. Why would anyone work, and risk getting infected, when you can stay at home and collect money? And of course, this gets applied to the proposals of UBI, that people won't work. My thinking is that many of the jobs they're trying to hire people for are not particularly desirable jobs or particularly desirable employers.

Businesses don't like it when people have choices about where to work. It means they have to pay more money to compete, which is why overall wages are so high in Alberta. During boom times if you can breath and chew gum without choking on it, you can get a good paying job, as long as you're willing to get dirty and work in the boonies, or mostly so. Then in bust times those people get laid off, but other wages typically don't contract, at least not right away, but there are lots of people looking. Wages go down eventually. New employees might get paid lots less to start, and will be doing the less desirable jobs.

This is the state businesses like. Lots of people looking for work, and they get to look like heroes for "creating jobs". They've got right wing government types believing that if business taxes are cut, they'll create jobs. Except that tax cut money goes to the business owners. Why would they hire more people just because they pay less tax? It's a form of the economically discredited trickle down theory.

I mean, look at a for profit business. They spend little money as possible on their inputs, things like salary or wages, rent, various taxes, utilities, and raw materials. They get paid money for the goods or services they produce, whatever that might be. Over the course of a year, the work balances out to the number of workers available. Sure, they might hire some people because some people leave for whatever reasons. The money balances out so there is a profit to go to the business owners. Or maybe there isn't a profit and they lose out, but that doesn't happen often, and they do whatever they need to ensure it doesn't. Mostly by beating up on the most vulnerable of their costs, wages and salaries.

Now give that company a tax cut. What happens? The owners pocket it and might say thank you. Will they hire more workers? No, why should they? There isn't more work. Cutting their taxes doesn't generate more people buying the product. All it does is cut the cost of doing business. The only time companies hire ordinary people is when they have more work. They sometimes hire 'consultants' as part of a dodge to pay back favours, or as a quid pro quo for those tax cuts.

One of the phrases I hate most is "disincentive to working." That's what some economists and business leaders call things like CERB. In more private moments, it's what they call anything related to the government spending money on people. Things like welfare, food stamps, employment insurance, pensions, sick leave days, all that social safety net stuff. Because that stuff gives the corporations less leverage over people.

Without those things, people would have to work or starve, and that's what business wants. When workers have no alternative, they have to take what's offered, and what they are in is called a race to the bottom. That's why corporations have moved productions off shore. They are looking for the place that lets them get away with paying the least possible amount to the people working for them. Also the least other costs possible, but we aren't going there today.

Now imagine a system where every person gets a UBI, and other compensation programs like EI and old age security go away. The wages businesses pay would be considered a top up on what people already get, and some of the payroll taxes would go away, or be consolidated into paying some of the UBI. There have been other Canadian studies on such a thing, and corporations and right wing politicians do their best to shut down the discussion.

There is a lot of detail going into discussion about a Universal Basic Income, and what exactly it replaces. I'll be the first to admit the devil is in those details, especially at income levels near whatever the UBI turns out to be. There needs to be a graceful transition between someone earning only UBI, and someone earning, say, 3 times that. At some point the UBI would be taxed back.

But as an example, right now for EI we have a patchwork quilt of rules about who can get how much money if they lose their job. It might depend on how long they've had their job, how much they made, where they live, economic conditions, special government programs, and who knows what else. Someone has to administer those rules, and something almost everyone agrees is that there are too many government employees. I've no idea how many it takes to administer a program like EI and how much it costs. Now multiply that by all the other government programs that give money to people. Imagine all that money going to actual program recipients. Or if the math works out, not being taxed in the first place.

It's much simpler if everyone gets something. Not corporations, people. Citizens. Everyone that has a bank account and is registered with the government to get the money, with the appropriate checks for fraud. Maybe the banks would have to be "encouraged" to provide low fee bank accounts. Or maybe do it like in Europe, and do it through the post office.

But, the businesses say, we won't get anyone to work for us. Well, boo-hoo. Work itself, as thought of today, is a relatively recent invention. Sure, people worked, mostly at farming, and mostly for themselves, until quite recently, historically speaking. Maybe, just maybe, if corporations want people to work for them, they should put a little incentive on the line. Pay better. Offer better working conditions.

Like, gasp, working from home. It wasn't so long ago that was a total non-starter. Now, it's practically a condition of employment. It certainly was for me. I flat out wasn't going to commute downtown, stand in an elevator full of people that could have been in contact with anyone at all, and sit in a cubicle breathing air that has gone through filters laden with who knows what filth.

Businesses always talk about the burdens involved in running a business, and red tape, and how hard it is, and how long they work, and how little they make, and how unappreciated they are, and on and on. Except I am a business, a tiny one, and it isn't that bad. Great big businesses have people to deal with all that stuff, and they all have to deal with the same stuff, so how hard can it be? There are other businesses who offer services to deal with that stuff. The businesses in the middle, I grant you, might be big enough to feel the pinch of the requirements, but not big enough to make it worth having full time people to deal with it. But if the same rules, like a minimum wage apply to all businesses, how is that affecting the competitive advantage between similar businesses?

Back to the big picture. Granted, Canada has borrowed a lot of money to pay out for CERB. The technical term is a shit-load of it. Where did it go? To Canadians. What did they do with it? Many bought food, paid rent, all that good stuff. Some saw the opportunity to buy some toys, knowing they were perfectly able to pay their bills when they came due. Some bought booze or other drugs, and probably munchies to go with it. Think about it, where did that money go? To other Canadians, mostly, but it kept the economy ticking over.

Eventually that money will get paid back to the government in the form of taxes. No, it won't happen next week, or next year. Any money that governments borrow is done over a generational time frame, no matter what they build or spend it on. The Canadian government is the best entity to borrow money. They get the best rates, and have the best credit rating, and the longest terms. Money is so cheap to borrow right now, they're practically giving it away. When actual serious economists aren't fussed about it, you shouldn't be either. Ignore what the Fraser Institute and it's lackeys say.

That's not to say it can continue forever like this. They do have to put in controls. Some people double dipped, getting CERB when they shouldn't have. There was almost certainly some outright fraud. Most of those people will be caught. Maybe there will be a repayment program, such that anybody who took CERB, doesn't get a tax refund till that amount is paid back. Some flexibility in thinking is a good thing, if in short supply in government.

Much of this has been looking at it in purely economic terms. Maybe one of the conditions of getting a UBI is that you become a potential government worker, being put to work doing something relevant to your skills. Or maybe you become an informed voter, having to submit a comparison of the  policies of the various political parties. Or maybe you have to demonstrate that you are doing something worthwhile to better yourself, and that benefits Canada in some way. Volunteering for some organization would qualify. Hell, I'd take enrolling in a substance abuse program as qualifying.

But in moral terms, Canada is a rich country. A few people get an outsized share of the benefits of being Canadian because they've rigged the system. Some people get a nice slice of the the pie. Many people get just enough to get by, and some don't get anything at all. Some inequality is good, it gives people an incentive to move up in the world, take some risks. Too much inequality is bad.

Why shouldn't all citizens get some of that benefit of being Canadian; a dividend from the economy. Maybe we could trust people to add to Canada, in the way they see best suits them. It might not best suit the corporations that are currently running things, but there's a phrase for that. It's "boo-hoo." Canada should be run for the people here, not the corporations.

So, speaking of a change in focus. These two shots. They are shot within a few seconds of one another, from exactly the same spot, plus or minus me swaying back and forth on my feet a bit. The difference is that the first is the lens on autofocus. The second is manual focus on the raindrop, which is what I wanted.

Economists and corporations and government hire experts to change the focus of what you see, to see it in a way that actually benefits them, while appearing that it might benefit you. The other place that happens is when a street hustler lures you into a 'game' of  Three Card Monte.

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