Sometimes we experience a moment of revelation, an enlightenment, when an issue or problem becomes so clear, when the path to resolution is revealed in perfect clarity.
It appears that Manitoba Premier Pallister has experienced such a moment of enlightenment with respect to reducing poverty.
As quoted in The Brandon Sun (Dec. 30, 2016, “Minimum Wage Hikes Don’t Reduce Poverty, Pallister Says”), Premier Pallister defined a rise in minimum wages as a “mitigation tactic” which “really doesn’t reduce poverty.” An unfortunate truth when governments play around with minimum wage levels which hardly keep up with normal rises in the cost of living, never mind eliminating poverty.
The path to reducing poverty, proposed by Premier Pallister, is “economic growth and economic development,” which he views as the best ways to boost wages and create opportunities for the unemployed.
So far we have not found a way to economic growth and development without spending on goods and services to support and promote growth and development. The more we spend the more businesses will respond with increasing output, resulting, hopefully, in more jobs.
So, in essence, the premier’s message to the poor is “get out and spend” so businesses will be motivated to grow. In other words, the poor are poor because they are not spending enough. An interesting concept.
The premier accidentally offers a solution. If wage hikes don’t reduce poverty, then, by the same logic, is it reasonable to argue that neither do the high wages increase riches and wealth? If true, could we then assume that the rich and wealthy should be willing to give up their high wages and give it to the poor so they in turn could spend more? An ingenious solution since the uber-rich can’t spend all their money on goods and services anyways, but the poor would likely spend all the money transferred to them. That would be like hitting the economic mother lode. Businesses would thrive.
The only outstanding item then is how to put more money into the hands of, or, under the control of the poor.
Premier Pallister nixes the idea of legislating employers to provide a living wage. However, he has revealed an alternative. Playing around with the provincial tax system.
Pallister suggests that raising the basic personal exemption might be a way of reducing poverty. Unfortunately this does virtually nothing for the poor (or, for that matter, the rich). But, through his suggestion, Pallister appears to be open to making changes to the provincial tax system.
One change that would be quite impressive, in terms of reducing poverty, is to use the tax system for one of its intended purposes — the redistribution of income/wealth. By the stroke of a pen the premier could impose a significant tax on the rich (including rich businesses, while he is in the right frame of mind) and provide significant tax credits to the poor. That way the rich could be relieved of the burden of dealing with money that they don’t use and the poor would receive monies which would allow them to increase their spending on goods and services.
(So listen up employers and Finance Minister Friesen, imagine, you would have the freedom to not pay wages to employees knowing that the taxation system would look after the annoying problem of payrolls and wages biting into profits or increasing deficits.)
While Premier Pallister’s revelation as revealed in his statements may not be as extensive or comprehensive as the above discussion might suggest, his shared revelation does offer an opportunity to consider and pursue different means, policies, mechanisms to achieve the objective of reducing poverty.
For that, Premier Pallister is commended.