Poor Poverty Statistics

Poverty is an awful social condition and many studies show that it produces a wide-array of negative externalities, including crime and substance abuse. Although eradicating poverty is a noble cause, elected officials frequently politicize the issue and use “poverty reduction” as a means of saving face and many interest groups stretch the definition of it to absurd lengths, which distracts us from discussing real, abject poverty in Canada and abroad.

The Cape Breton Post and the Chronicle Herald have given significant coverage to the issue following a report released by the Canadian Centre for Policy Alternatives (CCPA). The most shocking statistic in the report is that 33 per cent of children in Cape Breton are living in poverty. In 2014, one out of every three children in Canada live in poverty, which, from the outset, appears to be a terrible social blight that the government needs to rectify. Those calling for action would certainly be justified in doing so if the situation were as bad as they describe.

Statistics Canada does not have an official measure of poverty and the statistical agency said it would not institute one without Parliamentary consensus. It does, however, measure low-income individuals and families using multiple methods: the Low-income Cut Off (LICO), the Low-income Measure (LIM), and the Market Basket Measure (MBM). LICO and LIM measurements are relative measures of poverty. In other words, these measures determine poverty relative to another statistic, such as the median income. If income gains in the top 50 per cent of the income distribution were faster than in the bottom 50 per cent, for instance, these measures would make it seem as though more individuals have entered poverty. In the case of children, for instance, Statistics Canada noted that there was a statistically insignificant decrease in LICO rates between 1979 and 2009, whereas the LIM and MBM rates increased between 2008 and 2009.

The CCPA study relies on the After-tax Low Income Measure (AT-LIM) to gauge poverty rates in Nova Scotia, which defines poverty as 50 per cent of median income adjusted for family size. This measure and the CCPA study are problematic because relative measurements of poverty are not indicators of absolute wellbeing and the AT-LIM does not reflect income growth of low-income individuals: an increase of income for all groups would indicate that poverty has not improved. The nature of this measurement also allows for groups and politicians to define poverty according to their own ideological beliefs and gives them justification for implementing large social programs in the interest of eliminating poverty.

dd

Measuring absolute poverty is a more accurate method to assess how many people are living in actual poverty. Chris Sarlo, a Senior Fellow with the Fraser Institute and economist at Nipissing University, used the “basic needs” approach to measure poverty. This method attempts to define the basic needs of individuals to sustain long-term physical wellbeing. Essentially, there is a basket of goods and the poverty line represents the amount of income necessary to obtain those goods. According to Sarlo’s calculations, this measure fell from 12 per cent of the population in 1973 to 5 per cent in 2004. Statistics Canada uses the MBM, which is a much broader basket than the Fraser Institute, and ideology, too, can shape the “basket of goods.” For instance, some baskets include university education, but one could reasonably argue that a lack of university education does not constitute abject poverty.

In its truest form, abject poverty is extremely problematic and requires a solution, however, its prevalence in Nova Scotia and Canada is largely exaggerated. Relative poverty, on the other hand, is typically rooted in a lack of economic opportunity in a given area and the best response is pro-growth policy–something the region has been sorely lacking for quite some time.

Corey Schruder is an AIMS on Campus Student Fellow who is pursuing an undergraduate degree in history at Cape Breton University. The views expressed are the opinion of the author and not necessarily that of the Atlantic Institute for Market Studies

An Economic Exploration of Bilingualism, Part One

As an Anglo resident of Montreal, I have gotten to know the city in my three years here as a student. Known as the “cultural capital” of Canada, Montreal is one of the most diverse metropolises in the world. The city has a rather complex demographic history, largely with Anglophone and Francophone residents sharing the island-city through most of its existence. Power and influence has shifted between the English and French since the colonial era, with the Anglophones occupying the business and social elite until a massive cultural shift–the Révolution Tranquille–resulted in the Francophonization of Quebec in the 1960s and 1970s. Today, roughly 60 per cent of Montrealers are native Francophone; Anglophone Montrealers constitute a mere 13 per cent.

Despite these shifts, Montreal is a shining example of bilingualism: Anglophone residents are 80 per cent bilingual and their Francophone counterparts are 51 per cent bilingual. Overall, Montreal is 52 per cent bilingual–the highest rate in Canada.

Economics is the primary driver of the phenomenon: actors make decisions based on perceived value.

tgtgtg

In 1993, Jeffrey Church and Ian King constructed a simple model of the economics of bilingualism, which led them to conclude that network externalities and the cost of learning a new language made it more efficient for a linguistic minority to become bilingual. This model suggests that it is more efficient for Anglophone Montrealers to learn French than it is for their Francophone counterparts to learn English. Unsurprisingly, the number of bilingual Anglophone Montrealers exceeds that of bilingual Francophone residents by a sizable margin. Many Montrealers are bilingual, however, despite one’s origin and considering over half of Francophones identify as bilingual–especially younger Francophone individuals–there must be an omitted variable.

A study published by the London School of Economics and Political Science in 2012 notes that Anglophones in French-majority cities assimilate less than Francophone individuals in English-majority cities, which may provide some insight into language diversity in Montreal. English is the lingua franca of the world, for example, and although Francophone residents can sustain themselves in Montreal using solely the French language, the economic incentive to learn English is substantial, especially for those with career prospects abroad. Bilingualism, however, is becoming a standard requirement for obtaining employment in Montreal’s service sector. Moreover, both English and French speaking Montrealers have a variety of incentives to adopt bilingualism and Quebec’s education system makes learning either language quite easy.

In essence, Church and King’s model explains why it is more efficient for Anglophone Montrealers to learn French, whereas the interconnectedness of Montreal with the English-speaking world creates an incentive for Francophone Montrealers to learn English. Alternatively, Montreal’s role as an economic hub that connects to the English-speaking world is a primary driver of the city’s unique bilingual nature: economic incentives outweigh cultural sentimentality.

Montreal has developed a cosmopolitan culture unlike the rest of Quebec, which enhances its standing as a multicultural hub and economic nexus. It certainly should stay that way.

Leo Plumer is an AIMS on Campus Student Fellow who is pursuing an undergraduate degree in economics and political science at McGill University. The views expressed are the opinion of the author and not necessarily that of the Atlantic Institute for Market Studies

Singing a Different Tune and Embracing the Unknown

Cape Breton Island has a rich culture and fascinating history, matched only by its scenic routes and picturesque landscapes. The Island is highly sought after by vacationers searching for a new spot and golfers looking to play a few rounds at the famous Highland Links Resort. In addition, it is renowned for delicious seafood, hearty people, and, perhaps most importantly, the infamous “East Coast Kitchen Party,” which is an organization that promotes Atlantic Canada’s art scene.

Tourism Nova Scotia and the Government of Canada touts this embellished description of Cape Breton Island, however, it conflicts with a harsher reality: 16 per cent unemployment rate, reliance on government transfers, and a median income well-below the national average–in 2012, $26,160, compared with $31,320 nationally. Furthermore, several rural towns have disappeared, poverty is on the rise, and thousands of Nova Scotians have left the province for a better future.

Fixing these issues requires a momentous shift in the mindset of Nova Scotians and their elected officials. A different approach to natural resource development, for instance, may be the most helpful.

Cape Breton Island, and, in general, Nova Scotia, have a tremendous supply of natural resources, from oil in George’s Bank to natural gas in the Lake Ainslie area, not to mention coal deposits spread throughout the province. There are multiple local groups, however, that have convinced the public that natural resource development is not worth the risk, culminating in the decision to extend the moratorium on hydraulic fracturing indefinitely. Prohibiting all things that carry risk is a dangerous mindset, though. On one hand, residents of Nova Scotia demand jobs, and on the other, shun opportunities that would produce them.

Cape Bretoners must begin to sing a different tune. Industry experts suggest that hydraulic fracturing–colloquially known as “fracking,” could generate nearly $1 billion annually in the province. Former “ghost towns” in Pennsylvania, for instance, have begun booming due to natural gas development in recent years: the unemployment rate in the state is 5.6 per cent, compared with 6.1 per cent nationally, and as a whole, the industry supports roughly 1.7 million jobs in the country. Moreover, natural gas is a much more sustainable and environmentally-friendly alternative to coal and oil. Lastly, the correlation between fracking and earthquakes is weak and instances of pollution occurred due to breaches of government regulation.

Although there are risks associated with fracking, as is the case with any venture, those who are concerned about them exaggerate their scale and probability. Instead of banning the practice, the sensible approach would have been to mitigate the chance of disaster through sound regulation. Furthermore, natural resource development can provide support for local communities. In the United Kingdom, for example, the chemical firm Ineos offered local communities 2 per cent of profits from wells in the area to support hospitals and parks, and 4 per cent of profits to residents who own land near drilling sites. Greenpeace described this practice as a “bribe,” however, it is a common one in the United States that has delivered massive benefits to local communities. A similar approach in Cape Breton Island, and in Nova Scotia, could benefit communities tremendously, and a sound regulatory regime would reduce the risk of environmental damage.

In addition to the picturesque landscapes in the Tourism Nova Scotia commercials, the province should hoist an “Open for Business” sign. At least we could then start to improve the lives of Nova Scotians. In the meantime, however, shunning all, and every, opportunity to create jobs and generate economic growth will reinforce the status quo.

Corey Schruder is an AIMS on Campus Student Fellow who is pursuing an undergraduate degree in history at Cape Breton University. The views expressed are the opinion of the author and not necessarily that of the Atlantic Institute for Market Studies