Panhandling, Misguided Moralizing and the Bank of Canada

January 2, 2004
in Category: Articles, BC Politics, Civil Rights, Economics
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On a downtown streetcorner, a piercing voice disrupted my chat with friends. Across the road, a thin, unkempt woman berated a cabbie for refusing her a free ride, and demanded money from people. We quietly condemned the woman’s rude aggressiveness. But as the taxi departed, we stared aghast as the woman collapsed to the concrete, sobbing violently. In the same instant, one of my friends realized he knew her, and dashed over. It turned out the woman was homeless and had minutes earlier been raped. She was shattered and in shock, and had hoped the passing taxi could take her to the hospital.

My friend called an ambulance. I pondered how, habitually, in the absence of facts and understanding about others, we moralize.

I recalled this when reading a recent editorial in a local newspaper defending BC’s new Safe Streets Act outlawing “aggressive” panhandling. As the writer assailed the unemployed with phrases about “government largesse”, “honest day’s work”, “sucking at the public trough”, and “preying on people’s compassion”, it became obvious our culture’s moralistic reactions against panhandling have become so habitual they’re now hackneyed clichés. Meanwhile, these automatic judgments reflect a complete lack of understanding of basic economic facts.

The diatribes typically go like this: Hey, I was poor once. And I’ve worked hard–damn hard–to get where I am. I’m proud of what I’ve achieved, and I resent people who’re trying to get a free ride. Sure, some deserve compassion–like that elderly, learning-disabled schizophrenic with multiple sclerosis. But many don’t deserve sympathy. The drinkers, addicts, and fakers. And I have proof many are lazy no-goods exploiting passers-by and our overly-generous welfare system.

Then, following several under-investigated examples of panhandlers declining a menial two-hour job, or apparently discussing spending their lucrative earnings on high-end consumer products, the lectures inevitably conclude, “Panhandler, get a job!”

This entire hyper-moralistic argument, however, ignores a simple fact. Governments and central banks in most major economies today work hard to maintain high unemployment rates. Many able, willing people cannot get jobs.

For example, recently the Bank of Canada, our economy’s pilot ship, raised interest rates to slow the economy by making it harder to borrow. Canadian Press explained, “A jump in job-creation last month pushed unemployment down… and built the case for the Bank of Canada to increase interest rates.”

That’s right–a mere 0.1% drop in unemployment prompted immediate action to slow the economy. The logic: When there are plenty of unemployed people struggling to get by, that keeps unions weak and wage demands throughout society low. This, in turn, helps keep prices down, and inflation minimized. This benefits those with substantial monetary assets, like banks, investors, and well-to-do people, by protecting the value of savings from being eroded by inflation. It’s less evidently beneficial to the unemployed and working poor.

This isn’t a wacky, communist interpretation of the policy. It’s the policy. An economy’s “Natural Rate of Unemployment”, explains BMO Financial Group in their website economics glossary, is “the rate of joblessness that is consistent with stable inflation.” The Bank of Canada’s mandate is to maintain “low and stable inflation” of 1-3% annually; reducing unemployment isn’t mentioned. To the contrary, as an executive from the similarly-mandated U.S. Federal Reserve once explained frankly to a group of businesspeople, “pushing unemployment below [the Natural Rate of Unemployment] would cause inflation to rise and thereby run afoul of… stable prices, which is our only objective[.]”

Essentially, whenever panhandlers get jobs, our central bank’s mission is to quickly create new panhandlers to replace them. Even if everyone was impeccably-qualified and eager to work, 7-10% of us would still be unemployed, and another 10-20% underemployed, because this “Natural Rate of Unemployment” is what’s currently considered optimal for Canada’s economy. Maintaining uncomfortable, widespread poverty is a vital anti-inflationary measure.

Far from being “natural”, though, the accepted unemployment rate is a creature of political expediency. Economists vehemently disagree about which inflation or unemployment rates are truly necessary or preponderantly beneficial. So the question becomes, how much pressure is the government under to reduce unemployment or, conversely, lower inflation? And what political sympathies steer the arms-length central bank?

It’s time we focused public attention on these economic facts, instead of on imagined moral failings of the poor. Perhaps we need a guaranteed livable income, slightly higher inflation, reduced work hours, more job-sharing. With mechanization, maybe the work ethic is passé; some “laziness” may even be a noble trait and social asset. After all, is the workaholic chewing through resources to produce throwaway products and pollution truly more worthy of respect than the person who just hangs out at the beach? Which is less destructive? Indeed, it’s ironic any professional politician or writer imagines his embittered, uninformed attacks on panhandlers benefit society more than the panhandlers who actually hold our whole economic system together.

Fortunately, few lawyers believe our latest moralistic assault, the Safe Streets Act, will stand in court. One reason is, the Act has basically made it illegal to plead for assistance in an emergency. Now, if you’re freezing or starving–or have just been raped and need money to get to a hospital–you’ll be breaking the law if you plead for help near an ATM or bus stop, or are persistent. Is that the kind of community we’re working to create?

I, for one, am hitting the beach to reflect on that question.

 

Rob Wipond is always trying to scrounge up other work because he thinks panhandling looks like a very tough job. Originally published in Focus, January 2004.

 

 

Rob Wipond

Thank you for reading.

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