About Canada by Jim Silver

Author:Jim Silver
Language: eng
Format: epub
Publisher: Fernwood Publishing
Published: 2014-03-15T00:00:00+00:00

5

THE COSTS

OF POVERTY

It is not possible to determine the financial costs of poverty in Canada with precision. It is possible, however, to identify the many ways in which poverty drives up costs to society and to governments and in some cases to estimate the magnitude of those costs.

Considering what poverty costs Canada in dollar terms may seem like a cold and calculating approach to what many would more properly see as a matter of social justice, of fairness. It is not fair, it is not morally right, that so many people in a wealthy country like Canada are poor, especially when a small minority has reaped a large proportion of the benefits of economic growth in recent decades, and especially when we have the capacity, if we were to choose to do so, to reduce poverty in Canada to a fraction of its current level. Nevertheless, it is the case that poverty imposes a large financial burden on the country as a whole, and for those not inclined to be moved by appeals to fairness and social justice, perhaps the knowledge that allowing poverty to persist is as expensive as it is — and almost certainly more expensive in the long run than the cost of dramatically reducing poverty — will lead them to support anti-poverty measures.

Calculating the costs of poverty is a task that is in its relative infancy and is fraught with methodological difficulties. Not a great many studies attempting to estimate the costs of poverty have yet been done; those that have been done must of necessity rely upon a variety of assumptions, and these assumptions can be contested. The result is studies that produce estimates rather than precise costs. Different methods, with different assumptions, produce different estimates. Despite these limitations — fully acknowledged by the economists, and others, doing such calculations — the methods and assumptions and calculations are transparent and can be understood by non-economists. This means that it is possible for any interested and reasonably intelligent person to examine these studies and reach their own conclusions in regards to their plausibility and accuracy. And it means that we are beginning to get an informed sense of the real dollar costs of poverty to Canada. What we find is that poverty imposes very large economic costs, not just on those who are poor — although obviously they bear the brunt of the burden, financial and otherwise, of poverty — but also on society at large and on governments.

Governments and policy makers are not designing budgets with these costs in mind. Part of the challenge is that investments in anti-poverty strategies would have to be large and they would have to be made first, while the benefits in terms of cost reductions and increased economic activity and tax revenues — described below — would come later. The time lag is an issue for governments facing various fiscal constraints and seeking to be re-elected. This is especially the case when so many citizens blame the poor for

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