Posts Tagged ‘Canada’

a Red Tory in Canada

Monday, October 3rd, 2011

I wrote last Saturday that there were no ‘Red Tories’ in Canada’s new Conservative party. I was wrong. There is at least one Red Tory, not at the national level, but in the provincial politics of Alberta – the base of the Conservative party. And, she is about to become premier. (Conservatives label themselves “Progressive Conservatives” at the provincial level, but it is supposedly the same party.)

Early Sunday morning, 46-year-old human rights lawyer Alison Redford stunned the establishment of the long-ruling Progressive Conservative party by scoring a narrow upset victory to become its leader. She’s about to be the first woman to hold the post of Alberta premier and one of four female premiers in office in Canada. ….

With Ms. Redford, the PCs will be a firmly centrist party. She’s a … red Tory who holds a thinly veiled distaste for much of [prime minister] Stephen Harper’s federal Conservative party, particularly on social issues. Nonetheless, Ms. Redford played down any rift and pledged to work with her federal counterparts; Mr. Harper, in turn, congratulated her Sunday afternoon. ….

Many conservatives in the province dismiss Ms. Redford as a closet liberal, and predict her win will be a boon to [the libertarian] Wildrose [party].

Josh Wingrove, “Alberta’s premier-elect signals a province in transition“, Globe and Mail, Toronto, 2 October 2011.

attitudes toward poverty in colonial Canada

Wednesday, July 13th, 2011

The apathy toward the condition of the poor in British North America may be related to the view, commonly held, that poverty was the result of some personal failing or character flaw. Certain elements of Protestant theology provided support for this view by interpreting success as evidence of godly living and of God’s grace. The corollary was, of course, that poverty was an indication of a sinful life and of divine retribution. Therefore, such help as was extended to the poor was often accompanied by unsolicited … advice on how the poor might regain God’s grace through the exercise of those human qualities that he apparently admired and rewarded. The poor were urged to appreciate the values of thrift, hard work, self-help, and self-discipline. …. A particular danger for the poverty-stricken, according to conventional wisdom, was addiction to strong drink, which in a government report of 1849 was blamed for one-half of the crime, two-thirds of the insanity, and three-fourths of the paupers in the Province of Canada.

Dennis Guest, The emergence of social security in Canada (third edition, UBC Press, 1997), pp. 17-18.

Dennis Guest (born 1923) for many years was a professor of social work in the University of British Columbia. He had retired from teaching when this much revised edition of his 1980 text was published.

Mr Guest adds, in an endnote: “The problem of alcoholism was very real, nonetheless, owing to the availability of cheap spirits. Canadians at this time had an unenviable reputation for heavy drinking.”

old age pensions in Canada

Wednesday, July 6th, 2011

Federal-provincial confrontation over administration of pensions, in the year 1936. (The province won!)

From the beginning of the program [the Old Age Pension], the British Columbia board had distributed the 31 December pension cheques so that they were in pensioners’ hands in time for Christmas. In 1936 the federal officials challenged this practice as unwise, arguing that some of the recipients might die before the end of the month and the funds could often not be recovered. Provincial officials defended the practice on the grounds that it allowed pensioners to enjoy Christmas celebrations and that actual losses were low. Provincial authorities did agree to cease the practice if the federal officials insisted, but warned that British Columbia pensioners would be informed that the change had been the result of an Ottawa ruling. Federal officials backed down at this point.

James G. Snell, The Citizen’s Wage: The State and The Elderly in Canada, 1900-1951 (University of Toronto Press, 1996), p. 208.

Canada’s means-tested Old Age Pension, established in 1927 for those aged 70 and older, was superceded by universal Old Age Security pensions in 1951.

in defence of Canada’s Medicare

Tuesday, June 7th, 2011

Aaron Carroll, associate professor of Pediatrics at Indiana University School of Medicine, has a seven-point defence of Canada’s Medicare system:

1) Doctors in Canada are not flocking to the US to practice

2) Canadians are not flocking here [to the US] to get care

3) Doctors are not less satisfied practicing in Canada than the US

4) Claiming that hip replacements and cataract surgeries happen faster in the US does not prove that a single payer system doesn’t work

5) Canada’s wait times aren’t due to its being a singe-payer system

6) Since Canada adopted their single payer system, infant mortality has dropped below that of the US

7) In Canada, they may “ration” by making some people wait for some things, but here in the US we also “ration” – by cost

Medicare in Canada is similar to Medicare in the United States. But there are important differences. A major one is that everyone in Canada is covered, not just the elderly. Another difference is that there are no co-pays in Canada, whereas there are large co-pays in the US. Also, Medicare is a provincial responsibility, though partially funded with federal tax dollars. Some of the Canadian provinces provide more generous benefits than others (especially for dental work and prescription drugs). What is the same in both countries is that medical providers, by and large, work on a fee-for-service basis. Medical insurance in Canada is socialized, but not the provision of medical care. Canadians can, and do, purchase supplemental private insurance to cover what is not covered by government insurance, such as private or semi-private hospital rooms, and some dental and prescription drug bills.

Each of Dr Carroll’s seven points are important. I encourage you to read them. As a sample, here is point #3:

How satisfied are physicians with their practice?  It’s not a perfect measure, but it’s an important one:


Given the rhetoric of how much physicians hate reform, you would think doctors were very happy before reform passed.  You’d be wrong.  With the exception of Austria [sic-Australia] and Germany, fewer doctors were satisfied with practicing medicine [in the US] than any other surveyed country.

Aaron Carroll, “In defense of Canada“, The Incidental Economist, 5 June 2011.

Even more surprising, to me, is the satisfaction of doctors practicing in the UK, compared to Canada and, even more markedly, to the US. British doctors, for the most part, work for salary whereas most doctors in the US and Canada work on a ‘fee for service’ basis. In both counties, it is widely believed that doctors would not appreciate any move away from private billing. It is very possible, apparently, that this belief is without foundation. Interestingly, the Tories in Britain are moving to the US/Canadian practice of ‘fee for service’.

I have one small complaint about an otherwise excellent post. ‘AUS’ is the code for Australia. The code for Austria is ‘AUT’. I live in Austria, so am sensitive to confusion of Austria with Australia. (I have nothing against Australia, but I prefer that mail intended for my address in Austria not be sent to Australia.)

HT Paul Krugman.

immigration in Canada

Saturday, May 21st, 2011

As a matter of national policy, Canada actively solicits immigrants and has done so for years. The public supports this and the default political assumption is in support of continued immigration. According to a recent poll, only a third of Canadians believe immigration is more of a problem than an opportunity, far fewer than any other country included in the survey. …. Being an immigrant is also no barrier to being a proper Canadian; in parliamentary elections earlier this month, 11% of the people elected were not native. This warm embrace isn’t just a liberal abstraction; 20% of Canadians are foreign-born.

…. Why is Canadian public opinion so different from views in United States?

At a conference yesterday, Jeffrey Reitz, a sociologist at the University of Toronto, cited two big explanations for the difference. The first was that Canadians are convinced of the positive economic benefits of immigration …. Even unemployed Canadians will stoutly insist that immigrants do not take work away from the native born. This makes sense, as most immigrants to Canada are authorised under a “points” system tied to their credentials and employment potential. About half of Canadian immigrants have bachelor’s degrees.

Mr Reitz’s second explanation was that Canadians see multiculturalism as an important component of national identity. In one public opinion poll, Mr Reitz said, multiculturalism was deemed less important than national health care but more important than the flag, the Mounties, and hockey.

E.G., “Immigration: The United States v Canada“, The Economist, Democracy in America blog, 20 May 2011.

The second explanation is important. Both Canada and the US are nations built primarily by immigrants, but they treat newcomers differently. Canadians expect immigrants to enrich its cultural “mosaic” whereas Americans want them to blend into its “melting pot”.

HT Mark Thoma.

universal pensions in Canada

Friday, May 20th, 2011

From 1927, Canada had a system of means-tested pensions in effect for British subjects 70 and older who met residence requirements. Not until 1952 was this superseded by a universal pension. Beginning in 1965 the age of eligibility for a universal pension was gradually lowered, reaching 65 years in 1970.

Surprisingly (to me) only a minority of voters initially supported elimination of means-tests. As can be seen in the table below, as late as November 1946 only about a third of the public favoured universal pensions, when fewer than half of all Canadians 70 years of age and older were receiving an old age pension. Public opinion changed when Members of Parliament (MPs), a majority of whom wanted to eliminate means tests, began to draft legislation known as the Old Age Security Act. Canada’s move to universal pensions, in short, appears to have been a top-down rather than a bottom-up process.

[A] majority of the public was seen to support universal pensions in the autumn of 1950, following the Report of the Joint Committee [of the Senate and the House of Commons] on Old Age Security, but overwhelming public support was not forthcoming until after the Old Age Security bill had been introduced into Parliament on 25 October 1951. …

[I]t should be noted that old age security benefits are not really universally available at a uniform amount. Given that payments made to pensioners are taxable income, a modest portion is recovered by the federal treasury through income taxes. A 1984 National Council of Welfare report on pensions has estimated that only about 6% of the old age security program’s costs are recovered in this way, since many elderly persons have limited incomes and pay little or no income tax.




Source: Canadian Institute of Public Opinion.

June Dewetering, “The Old Age Security Fund“, Parliamentary Research Branch, MR-58E, 14 March 1990.

Means-tests were re-introduced in 1989 by the Progressive Conservative government of Brian Mulroney. The move to end universal pensions was ‘top-down’ – lead by politicians in Ottawa – just as the move to introduce them had been.

The Mulroney Conservative government came to power in the mid 1980s espousing neo-conservatism (or neo-liberalism) in the same ‘wave’ which elected Thatcher in the UK and Reagan in the U.S. Regarding social programs, the message was that spending had to be restrained, and “benefits targeted to those in need”. ….

The universality of the Old Age Security ended in 1989, with that year’s federal budget ‘clawback’. The budget declared that seniors had to repay 15¢ of their pension for every dollar of net income earned over a certain threshold. The threshold was $53,215. ….

But the threshold level where the clawback kicked in was only partially indexed against inflation – indexing continued only at inflation rates above 3% …. This meant that over time, the threshold level declined in real terms. ….

The Tories’ (partially indexed) clawback ended the universality of the OAS because it was now allocated on the basis of income. Their strategy for selling it to the public was to emphasize that it only affected the wealthiest 4.3% of the seniors’ population: why should they get a government benefit? But because of the partial de-indexing, a growing number of seniors could expect to be affected (depending on the inflation rate). Thus, the clawback was another example of the ‘politics by stealth’ strategy, coupled with seductive rhetoric about the reasonableness of ‘targeting’ programs.

National Union of Public and General Employees, “A Brief History of Pensions in Canada“, Pensions Backgrounder #2 (March 2007), pp. 7-8.

universal vs means-tested age pensions

Wednesday, April 20th, 2011

University of Calgary economists J.C. Herbert Emery and Jesse Matheson, using historical Canadian data, calculate the value of universal and means-tested age pensions. They find that universal pensions reduced mortality rates of the relevant age groups by around 4 percent. Means-tested benefits of the same size, in contrast, had no significant effect on mortality rates of recipient age groups. Mortality rates are intended to be a measure of well-being.

Canadian public pension plans offer a “quasi-experimental” situation for identifying the effects of income transfers on elderly well-being, and the relative effectiveness of targeted versus universal eligibility for alleviating poverty. The Old Age Pension (OAP), introduced in 1927 for Canadians over age 70, and Old Age Assistance (OAA), implemented in 1952 for Canadians aged 65–69, were means tested programs while Old Age Security (OAS), introduced in 1952 for Canadians over age 70, was a universal plan. The OAP, OAA and OAS were non-contributory programs ….

How the pension programs were implemented allows for the identification of pension effects on elderly well-being. For the OAP, the timing of the program’s introduction varied across provinces after 1927 but all provinces participated with relatively uniform eligibility requirements and nominal benefit values. With the introduction of the universal OAS in 1952 nominal benefit levels were unchanged from the means tested OAP so we can identify the impact of extending pension benefit coverage without a coincident increase in benefit sizes. ….

We find that the means tested pensions did not reduce recipient age group mortality rates, but the universal OAS pension benefits reduced recipient age group mortality rates by around 4 percent. This estimate suggests that the universal pension resulted in roughly 2,100 fewer deaths of Canadians aged 70 and over per year. We estimate that the value of a statistical life (VSL) implied by the OAS induced mortality risk reduction was around $0.5 million (2005 dollars) which is one-tenth of the VSL associated with contemporary government policy interventions. This means that Canadians did not need to place a high value on the life of a senior to justify the higher costs of the universal OAS program.

J.C. Herbert Emery and Jesse Matheson, “Should Income Transfers be Targeted or Universal? Insights from Public Pension Influences on Elderly Mortality in Canada, 1921-1966“, University of Calgary, Department of Economics, Working Paper 2011-02, 24 June 2010.

Canada’s experiment with universal OAS pensions ended in 1989 with the introduction of a ‘clawback’ of benefits – at the rate of 15% – from those with substantial income from other sources.

Canada’s 2011 federal budget

Thursday, March 24th, 2011

Canada’s minority Conservative government tabled its 2011 budget. None of the other major parties are pleased with it, so a general election is imminent. Researchers at Ottawa’s Caledon Institute, an independent think tank, were not impressed either.

The Budget’s most significant social policy news took the form of an increase to the [poverty-targeted, tightly means-tested] Guaranteed Income Supplement (GIS) [for old-age pensioners]. But the monthly amount of $50 is way too low to make a dent in poverty. The benefit increases should have been higher and been targeted toward single seniors only — i.e., those most in need. Caledon recommends an increase of $1,000 for single GIS recipients, funded by ending pension income splitting [which reduces taxes of wealthy couples].

Budget 2011 failed to deal substantially with the significant weaknesses in Canada’s retirement income system. The federal and provincial/territorial Finance Ministers have agreed to a new voluntary retirement savings plan called Pooled Registered Pension Plans (PRPPs).

The problem is that Canada already has in place a voluntary supplementary system of pensions. They are called Registered Retirement Savings Plans (RRSPs). These vehicles are used mainly by taxpayers in upper-income levels who have the money at hand and enjoy a hefty tax break in return for their contribution. The challenges facing modest- and middle-income Canadians will remain unresolved. In our forthcoming paper Pension Tension, Caledon proposes that the retirement income system be secured through enhancements to the Canada Pension Plan in both its replacement rate and Year’s Maximum Pensionable Earnings. ….

Budget 2011 introduces several new measures in support of caregivers. The most significant is the Family Caregiver Tax Credit that will provide an annual tax reduction of $300 (15 percent of $2,000) for caregivers of all types of infirm dependent relatives including –for the first time– spouses, common-law partners and minor children.

The new Family Caregiver Tax Credit enhances current tax assistance for those now eligible for various measures. Herein lies the problem. The new credit builds on a system that is already inequitable. The announcement in Budget 2011 will end up providing more to those who already receive (albeit modest) assistance. The rich get more tax savings while low- and modest-income households get more of the same: nothing.

From a 23 March Announcement that summarizes the following publication:

Ken Battle, Sherri Torjman and Michael Mendelson, “Policy Agenda in Search of a Budget”, Caledon Institute of Social Policy, March 2011.

HT Warren McGillivray.

universal health care and the health of the poor

Wednesday, March 2nd, 2011

Universal access to health care does not ensure universal good health. This is the unremarkable conclusion of four Toronto researchers. Their published paper has nonetheless attracted the attention of bloggers opposed to universal health care, who cite the study with titles such as “Socialized Medicine Doesn’t Improve Health of the Poor” and “Health Insurance Doesn’t Necessarily Mean Better Health“.

These bloggers conclude that access to health care has zero effect on the health of the poor, even though the poor use comparatively more health care services. But this does not follow from the study they cite.

The four Toronto researchers conclude that universal health care can reduce – but not eliminate – “historical disparities in outcomes suffered by disadvantaged groups”. This is to be expected, since the health of a disadvantaged person is affected by numerous factors, such as poor nutrition, limited education, and addiction to tobacco, which do not change because of provision of medical care.

Here is the abstract of the Canadian study (emphasis added). I was unable to find an ungated link to the full text.

Lower socioeconomic status is commonly related to worse health. If poor access to health care were the only explanation, universal access to care should eliminate the association. We studied 14,800 patients with access to Canada’s universal health care system who were initially free of cardiac disease, tracking them for at least ten years and seven months. We found that socially disadvantaged patients used health care services more than did their counterparts with higher incomes and education. We also found that service use by people with lower incomes and less education had little impact on their poorer health outcomes, particularly mortality. Countries contemplating national health insurance cannot rely on universal health care to eliminate historical disparities in outcomes suffered by disadvantaged groups. Universal access can only reduce these disparities. Our findings suggest the need to introduce large-scale preventive strategies early in patients’ lives to help change unhealthy behavior.

David A. Alter, Therese Stukel, Alice Chong and David Henry, “Lesson From Canada’s Universal Care: Socially Disadvantaged Patients Use More Health Services, Still Have Poorer Health“, Health Affairs 30:2 (February 2011), pp. 274-283.

Update: One more point, which may not be obvious to everyone. Disadvantaged people consume more health care services because their health is poor. Consumption of health services does not cause poor health (not in our time, at least).

Daylight Savings Time and currency unions

Sunday, November 7th, 2010

The US changed the date at which Daylight Savings Time would end. After some discussion, because the new US date didn’t work so well for us up North, Canada decided it was more important to stay in synch with the US than to stay in synch with our own dawn and dusk. Canada and the US may not be an optimal currency area, but it’s been decided that we are an optimal time area. No currency union, but we do have a time union. It’s the equivalent of fixed exchange rates. When the US devalues its time, we devalue our time too.

Why does money have real effects? It’s just bits of paper. It’s not real. ….

Metrification was a nominal change that had negiligible real effects, as far as I know. Daylight Savings Time is a nominal change that has real effects. Some monetary changes, like currency reforms where we knock a couple of zeroes off the old currency and call it the new currency, are like metrification, where nothing real changes. And maybe all monetary changes are like metrification in the long run. But some monetary changes are like Daylight savings Time, and have real effects, at least in the short run.

If we understood Daylight Savings Time better, and how it works, we might understand monetary policy better.

Nick Rowe, “Daylight Savings Time and the non-neutrality of money”, Worthwhile Canadian Initiative, 6 November 2010.

Who knows, we might even learn something about the functioning of currency unions (such as the eurozone)! Like all of Nick’s posts, this one is long, at times a bit technical, but very original and very rewarding.

HT: Marginal Revolution