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Below the Radar Transcript

Episode 225: Extreme Inequality in Canada — with Alex Hemingway

Speakers: Steve Tornes, Am Johal, Alex Hemingway

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Steve Tornes  0:05 
Hello listeners! I’m Steve Tornes with Below the Radar, a knowledge democracy podcast. Below the Radar is recorded on the territories of the Musqueam, Squamish, and Tsleil-Waututh peoples.

On this episode of Below the Radar, our host Am Johal is joined by , Senior Economist and Public Finance Policy Analyst at the . Together they discuss the Canadian housing crisis, the precarious labour of the gig economy, as well as Alex’s latest report promoting a wealth tax. We hope you enjoy the episode!

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Am Johal  0:51 
Hello, welcome to Below the Radar. Delighted that you could join us again this week. We have a special guest, Alex Hemingway is joining us in person at 312 Main. Welcome, Alex.

Alex Hemingway  1:02
Hey, thanks for having me, Am.

Am Johal  1:03 
Alex, I'm wondering if we can begin with you introducing yourself a little bit?

Alex Hemingway  1:08 
Sure. Yeah. I'm a senior economist at the Canadian Center for Policy Alternatives' BC Office, which is an independent research institute that investigates public policy issues in a whole range of areas. My focus lately has been on issues relating to housing, inequality, wealth taxes, and also just like the state of public finances in BC, and the way that we fund public services and the importance of those public services.

Am Johal  1:36 
Why don't we begin with some of the work that you've done related to the wealth tax. There was a that came out quite recently. Wondering if you can talk a little bit about what that research showed?

Alex Hemingway  1:47 
Yeah, so part of where we're coming from in investigating the wealth tax as a policy option is just looking at what's happening around us in terms of the rise of extreme inequality in Canada. You know, we could see this by just about every measure that the share of Canada's wealth held by the 1%, top 1%, top 10th of 1%, has grown substantially in the past few decades. We saw during the pandemic as well, the rise of billionaire wealth, even as you know, many, many Canadians were struggling.

So, you know, that has a lot of consequences, that extreme inequality. It has social consequences. I think, you know, most Canadians, when you look at the polling are very concerned about this. It also has economic consequences, though, you know, you look at research, even from relatively conservative institutions like the IMF and the OECD, they point to the, the drag on economic growth that's caused by inequality.

So, that's a bit of preamble, but what we did in the report in particular was, look at what it would mean to bring in a wealth tax focused on, very narrowly, on the super rich in the country. So we modeled a wealth tax on net wealth of Canadians with $10 million or more of wealth, applying 1% wealth tax to that, 2% above $50 million, and 3% above $100 million. And we wanted to take a look at what kind of revenue that could raise, and it turns out is very, very substantial.

A wealth tax of that kind, we estimate, would bring in $32 billion in its first year alone and, rising from there, about $400 billion over 10 years. And again, I would just emphasize, this is actually very narrowly targeted tax. So, if you're in the top 1%, you're not actually necessarily rich enough to be affected. You have to be in the top half of 1% of wealth in the country to be affected by a tax like this.

Am Johal  3:41 
I'm wondering if you could give examples in other countries where they've had, not necessarily this particularly designed tax—or a more progressive form of taxation that we could learn from in the Canadian context?

Alex Hemingway  3:54 
Yeah, so on the wealth tax question in particular, there's been actually an explosion of research on an annual wealth tax in a number of countries in the past few years. This was a prominent issue in the US. A couple of years ago, in the presidential election, Elizabeth Warren was running on, on a wealth tax over $50 million. Bernie Sanders as well. In the UK, there's a wealth tax commission that brought together dozens of academics to look into all the particularities of implementing a wealth tax on the super rich.

So these recent proposals—and there are EU wide proposals for wealth tax as well. This sort of new generation of wealth tax proposals is actually a bit distinct from some older wealth taxes that did exist, and some still do exist in Europe. One of the big differences is the new generation of wealth taxes is narrowly targeted. It's focused at the very top where some of the older European wealth taxes, you know, they did work in their own way, but they had some difficulties. One is—first, one distinction is that they were taxes on—they included the upper middle class, the very affluent, but not necessarily the super, super rich in the way that the new proposals are targeted.

One related problem that arose in these older European wealth taxes is that there were all sorts of holes poked into them. So, a feature of the modern proposals backed by economic research is that they are comprehensive wealth taxes. They don't—they apply equally to all different asset classes. So, it's not that, you know, one type of asset, like real estate or small businesses are excluded, whereas in the older generation of taxes, these types of exemptions were brought in and that immediately creates an incentive for tax evasion and causes difficulty with the enforcement of these taxes.

Now, despite that, they did, they did work. There was a behavioral response that we, as we call it, as economists, of tax avoidance and evasion that could be measured and it differed in different countries. But these taxes still worked. But the new generation of wealth taxes, we want to be more careful about the design, if we're going to bring these types of things forward and ensure that they can be enforced more effectively as a result.

Am Johal  6:07
Now, there's oftentimes critiques of wealth taxes or progressive taxation on the right, or conservative commentators, that go something like this, that, you know, capital is mobile, it will move to where the regulations the least or the taxations the least that will have the phenomenon of capital flight, if we tax in this way. I'm wondering how you would respond to that critique?

Alex Hemingway  6:33 
Yeah, and that's one of the big questions, of course, and you're right to flag it that, that the recent economic research has focused on, how can we enforce these types of taxes effectively in an environment of, of mobile capitol? First thing to say, in our report, you know, when I gave you our estimate of $32 billion of revenue in the first year, that's already actually accounting for and assuming some loss of revenue to avoidance and evasion.

But when you look at some of the leading international experts on tax havens, on tax evasion, economists like and at University of California, Berkeley, they are also some of the same folks who have done recent research on, on wealth taxes. And so they're very attuned to this. And what they tell us and what their research tells us is that the type of tax avoidance and evasion that we see is not a law of nature, it's actually a policy choice that we're, we're making. And that, in part, reflects the power of, of the super rich to influence our, our, our politics and our tax policies.

But if you do a few simple things, you can minimize that avoidance and evasion response in a wealth tax. One we already talked about, is make the, make the tax comprehensive, applied equally to all different types of assets. So, you avoid poking holes in it that way.

Another is you use what we already do in other elements of our tax system, which is require third party reporting from financial institutions of the assets of the super rich. So this is actually—this already happens, you know, banks report to Canada Revenue Agency about the incomes of, of Canadians, and that's, for example, how we track capital gains tax in Canada. Those capital gains income is reported by financial institutions. So it would be an—we would need an expansion of that approach to include that broader swath of financial assets and reporting not only the gains, but the current value of those assets.

And finally, you know, one of the elements of, for example, the, the US proposals for a wealth tax is to include an exit tax in the policy. So, you know, if, I think, there are many super rich folks out there who want to live in Canada for all sorts of reasons, and would be happy to chip in a few more dollars to have a better functioning society, worth keeping in mind here that at the rates we're talking about, their fortunes are going to continue to grow. So, we're not taxing them—we're not proposing to tax them at a high enough rate, that their fortunes would even be eroded. We would simply be slowing the growth of those fortunes. So that's worth keeping in mind.

But the principle of the exit tax is, if despite all that someone decides to get up and renounce their Canadian citizenship, and move abroad to avoid the wealth tax, you can apply an exit tax. So, in Elizabeth Warren's plan, that's a 40% tax on the total wealth of those individuals. And there are variations on this approach that the UK Wealth Tax Commission proposed for example. So, you could continue to apply the annual wealth tax after expatriation of a super rich household for a set number of years. Again, all of this in recognition of, of the major contribution of the broader society in, in making those fortunes possible. The working people who made it possible, all the social and physical infrastructure that makes an economy run that we all contribute to through our public institutions.

Am Johal  9:59 
You mentioned, you know, powerful interests have an outsized influence on government policies, forms of regulatory or policy capture, that can happen if you were to critique the broader Canadian taxation system as it exists today—obviously, this research comes with it with the critique, but wondering if you could articulate a little bit about where the gaps are in broader economic/tax policy in the Canadian context.

Alex Hemingway  10:25 
I think one of the most striking inequities in our tax system today is the way that capital gains income is taxed. And so that's, that’s income from existing assets that you might generate from investments of different kinds. And under our current tax system, those—that type of income is taxed at half the rate of regular income or labour income. That's a multibillion dollar tax break every year as result of that. I don't have the numbers in front of me, but it's on the order of about $15 billion a year, that special treatment of capital gains income. So reforming that alone would be a major step in the right direction.

In fact, you know, in the—we had partial reform in that direction in, in the 1990s. In Canada currently, you know, when I say it's taxed at half the rate, that's a 50% inclusion rate in, in the 1990s. In Canada, we had a 75% inclusion rate for capital gains income. So, you know, those are proposals we have seen on the table, for example, from the Federal NDP in the last federal election and that's a simple change that could be made.

The other big one I'll flag is, is, in many ways, the most obvious one, which is that our top income tax rates are, are much lower than they used to be. And they're also much lower than what economists tell us would be the revenue maximizing top tax rates. So, you know, right now, the top tax rate, top marginal rate on the highest incomes in Canada is a little bit over 50%, depending on which province you're in. When you look at the economic research, it tells us that the revenue maximizing rate would be between 60 and 70%. So we actually have a lot of room to maneuver in our income tax policy in this country, if the political will were there to make those types of changes.

Am Johal  12:10 
I'm gonna move to housing now. I'm wondering if you can sort of speak to a little bit of the research that you've done at the CCPA related to housing and affordability.

Alex Hemingway  12:20 
As housing prices and rents have really skyrocketed in this province and in the country and other jurisdictions as well, in recent years, that's become a bigger and bigger research focus for us. And, you know, one of the reasons for that is, you know, even when we make gains in other areas, so, for example, we're seeing the rollout of a major new social program right now in universal childcare, if we're able to find ways to raise people's incomes and so on. The danger is, as long as rents keep rising, as long as we have a housing shortage that gives landlords an incredible amount of leverage relative to renters, those gains can quickly get eaten up by rising rents. So that's one of the reasons we're focusing on this so much.

And, you know, it's a multifaceted problem. One of our primary focuses on—in terms of housing policy, all along has been emphasizing the need to significantly increase public investment in dedicated, affordable, and non-market housing. And, you know, part of the problem, part of the cause of the problem we're in today is that that type of public investment essentially dropped off a cliff at both the federal and provincial levels over the past few decades. Federally in the 1990s and, and here in BC, provincially in the early 2000s. So we have a huge backlog of need for investment in public and nonprofit housing, non-market housing. So, that's essential.

Another element of the housing crisis, though, and we've been publishing on this as well, is the municipal level roadblocks to to creating housing, and in particular, the problem of exclusionary zoning, where, you know, we have a situation in all of our major cities where the vast majority of the residential land is zoned exclusively for the most expensive types of low density housing. In effect, we have a ban on apartments in most of the residential land in our cities. And so that creates a series of problems. It, you know, contributes to the housing shortage. It also raises the price of the scarce land parcels where you can actually build multifamily housing or apartments. And this causes problems for nonprofit developers and private developers alike, in terms of getting projects off the ground. So, you know, there are many aspects to this. So there's a whole demand side question on housing. But the two biggest pillars, in my view, are the shortage of dedicated non-market housing and the overall shortage of housing driven in part by these municipal roadblocks.

Am Johal  14:51 
We've had visits by former UN Special Rapporteur on Housing, Miloon Kothari, who came officially on a trip back in, I think it was around 2007. Again, after he was in that role in 2017. He speaks very much, you know, around the human right to housing, having a continuum of housing policies that go all the way from non-market to increased supply around a range of, of needs, and the 30% income towards rent as a kind of best practice. It seems that even when some forms of lower-end market are brought into and laid down as facts on the ground, oftentimes we [are] still seeing a disconnection between people's income and what they're paying for housing via rent, or if they're able to eke into the market, oftentimes paying mortgages that are greater than, than the rent. And so in the, in the short term, it really feels like a city where people are sort of grasping to just get by.

Or the number of people living paycheck-to-paycheck and what that does to the rest of the economy, in terms of people going to restaurants or spending their money in other ways, the kind of opportunity cost of the incredibly expensive costs of housing in relation to income.

I'm wondering if you can speak a little bit about that phenomenon of the disconnection between income and housing costs and how and why it may have persisted for so long. And in Vancouver, in particular, but, but broadly in the Canadian housing sector in relation to other places?

Alex Hemingway  16:25 
Yeah, it's, it's, it's a big, big problem, as you say, and it has these knock on economic effects, you know, that having a shortage of affordable housing is a cost to the businesses in the city too, in terms of the difficulty in recruiting workers. It's certainly hurting households, we know that. And there's a massive disconnect between, as you say, the levels of income in a city like Vancouver and the cost of rent and the cost of housing.

There are a couple of ways that we can begin to bring this under control. You know, when we talk about a big build out of public housing, one of the approaches we've put forward is that—and in part, we're just trying to remind folks that when you create public housing, when you talk about a massive build out, to some that might sound very expensive. That might sound nice, but, but too expensive to pull off. But you have to remember that every time you create a public housing project, you're also creating a stream of rental income that's going to be coming in over the life of that project and that can help pay the upfront costs of the investment. In fact, you can structure housing investments so that the entire cost of the project is paid by the, by the rental income coming in. You know, in a way, that's, that's what private developers do, but they also layer in profit on top of that, which goes towards higher breakeven rents.

Part of our proposal is, the government should also, in addition to building deeply affordable housing, should get in the business of building a middle income, non-market housing. Doing that in that way that I just described, where the rental income is covering the costs, that actually has some implications on a budgetary level.

Provincially, that type of investment can be booked in our provincial accounting system as self-supported debt. And that actually makes it much more possible for the, for the government to expand the amount of borrowing it's doing to build that type of housing. Now, you get a couple of advantages there. You don't have to build in profit to that type of housing, so you can charge lower rents. The public sector also has lower borrowing costs than the private sector, and it can pass on those savings in lower rents as well.

However, that can only get you so far. That's going to get you moderately below market rental housing. But given the disconnect between incomes and rents, we also need more deeply subsidized housing. So, if you structure your investment that way, you can also layer in things like block grants at the front end of a project that can lower the rents that are charged. You can cross subsidize by having a mix of market and non-market units within a building. So, you can charge lower rents in some of those buildings. And you can finance some of that deeper subsidy, for example, through taxes on the wealthiest landowners in the province. So, you know, there are tools at our disposal here to, to deal with that disconnect between income and rents. But we really do have to look at, and I think you're getting at this in your question, the full spectrum of housing, and full spectrum of subsidies that might be needed across the housing spectrum, to meet the needs that are out there today.

Am Johal  19:27 
There's enough institutional memory at CMHC, or the other kind of housing bodies that there were in previous eras, like the 70s taxation and incentives for investors, particularly, you know, long game investors. So, let's think of like pension, union pension funds and others, who could invest in the construction of rental housing, have some protections from government or taxation incentives, get a rate of return that was quite solid and over the long term, but when we have something like the condominium form and others coming in, that were, you know, generating 20, 30% profit rates that wipes out anything rental income would do.

I'm wondering if you can speak a little bit to one of the challenges of densification, and you see the provincial government going into urban areas and otherwise, pushing and setting targets and also asking municipalities to upzone. And so you see some really—a lot of movement on that front from a, from a policy perspective. On the other hand, what we've seen through densification in Vancouver, particularly in the condominium market driven form, is that we've gotten density without affordability. And so how do we get the right mix so that we can ensure that, and some of your work ties into that, but I think that's the challenge that you get into the politics of it or you start to scratch the surface and oftentimes that density doesn't come with affordability.

Alex Hemingway  20:52 
Yeah, there's there's, there's a lot of threads to pull there. One I'll just pull quickly is, if you're a developer and you're thinking about whether to build condo or rental, there's a huge tilt in the playing field in this country against rental, for some of the reasons you mentioned, you know, tax policies changed in the 70s, the condo form stratification, Strata Act came in place made it more profitable to build strata rather than rental. And another element is the way that the tax system deeply subsidizes homeownership. That adds to the incentive to create condos rather than, than rental. So, you know, we talked earlier about the scarcity of land parcels where you're actually allowed to build apartment buildings, multifamily housing, when those parcels are, are out there on the market, and different developers are competing for them, it's generally going to be a developer pursuing the condo avenue, who's going to be willing to pay a higher price for that parcel of land, because it's more valuable to them as a result of these various tax policies and the, and the subsidies towards homeownership.

So, that's part of the issue that's in the background there. Now in terms of the density that we have built in a city like Vancouver, and in a province like BC, folks who have lived here for the past couple of decades have seen, you know, lots of new housing go up, you, you look around, you see cranes everywhere. But when you actually look at the numbers, we're—we haven't actually been building very much housing by historical scales until quite recently. So there was a big gap in overall provision of new housing for decades—it started to come up recently. When you look at it, the increase on a per capita basis, we're building, finally again, about the same amount that we were way back in the 70s and then had had a big, big gap. So, there is still an overall supply shortage there.

And I think one of the places where we can learn some lessons about this is actually New Zealand. That's been a bit of a petri dish for housing policy in recent years and one of the places that—one of the rare places actually around the world that did a substantial city wide upzoning to reduce barriers to new housing is Auckland. And they did this back in 2016, they changed their local planning and zoning rules to basically increase the capacity for new housing, zone capacity by about 50%. And the results were very dramatic. They sharply increased housing supply. And most importantly, they, you know, rents didn't fall in nominal terms, but in inflation adjusted terms, rents have actually fallen in that city, while in other cities in the same country, they continue to rise and rise. So that's one avenue that can have a real effect. And it is encouraging to see in BC some consideration of, of that approach that's been playing out this year. And, you know, we're going to see the results in the months and years to come. But that's, that's one of the avenues that can make a difference alongside the question of direct public investment in affordable housing.

Am Johal  23:59 
I'm wondering if, you know, if we're looking at zoning of single family homes or duplexes, let's say, being zoned up to four or six units a lot—when previously, the government was talking about moving to duplexes, for example, scale of volume or the pace at which it is going to go forward wasn't necessarily ensuring affordable—you look at duplexes and Vancouver property going for one and a half million now, single family houses two and a half. Even if we were to go up to five or six units, it still requires, you know, time to go through the development process, still requires the capital to do that work in a time of rising construction costs. You know, what's to say that each of those units wouldn't be worth, you know, a million dollars each. And so how do we meet that sort of policy, and even if we do the blanket rezoning—and I suppose the blanket rezoning creates a pace of development or a volume that will bring down costs over time.

Alex Hemingway  24:58 
That's exactly the issue. That's the distinction that so important to make here is, is the difference at the margin of, you know, taking [a] single lot or a block of the city and upzoning it for duplex or multiplex versus the overall effect on supply. So, you know, if you change one lot or, or one block or even one area of the city, but you're not moving the needle on the overall housing supply, it's absolutely true. Those new units are going to be priced at the same market price as everything else out there. You know, it's usually—the, the best rule of thumb is to look at the price per square foot of a piece of housing. So, you know, if you take 6,000 square feet and split it up into two duplexes at 3,000 square feet, you know, look at the price per square foot. That's going to stay the same at the margin, but, but it's a question of easing that overall shortage where you have too many people competing for, for too few parcels.

The other thing—and just related to that, you know, we've seen in BC some so called missing middle policies relating to, you know, allowing five, six units per lot come forward in cities like Victoria and Vancouver recently, one of the big shortcomings there is, they're essentially just allowing you to divide up the same space into more units and not increasing the actual allowed square footage per lot adequately. You know, in, in Vancouver's proposed policy, it's about 16%, we'll see where that actually lands in the end.

So, we need to do both, we need to allow subdivision, we need to—but also, we need to allow additional square footage on each lot if we're actually going to see any results from these types of policies. And that's a big difference between, say, the Victoria policy that's in place today and the New Zealand policy that I mentioned earlier. There was about a doubling of the square footage allowance on some of the smaller lowest density lots in New Zealand. And so you need to move in that substantial way to, to make a difference. But to your point, you know, the gains are going to take time to, to accrue from that approach. And that's why, you know, we always come back again and again, to the need to invest in dedicated affordable housing, non-market housing, right, that's the type of housing that's going to make the biggest difference, the quickest. It can help in both ways, by bringing new units online and easing the shortage, but also ensuring those units themselves are immediately more affordable. And by the way, that can also help in making sure there's workforce housing available for, for example, new construction workers who might want to move to Vancouver and help us increase our output of new housing in a given year as well.

Am Johal  27:44
Yeah, and I guess with the cost of land so high, and provincial, federal, and civic governments being the bigger holders of land in terms of maintaining it in public hands, or within Indigenous organization in the case of Sen̓áḵw and some of the MST developments, that it can actually bring down the cost of housing, retain public ownership, and do it on a leasing model provided financing pieces are put into place to allow the construction to to happen.

I'm wondering just in terms of—also oftentimes this gets turned into a bit of a political football, but around immigration in Canada, where, you know, we have roughly half a million people a year coming in. We know from historical data, it's about 12% move into Metro Vancouver. So, based on, you know, those numbers, we'll probably have about 180,000 people coming here through immigration, let alone other—the kind of model that you're talking about really needs to be in place over 5, 10, 15 years to keep up with the growth, let alone the crisis we're currently in.

Alex Hemingway  28:46  
Yeah, no, and, you know, there's no question that demand for a place to live is, is—contributes to the housing crisis and I think, fundamentally, we want to keep our doors open in this country and welcome newcomers. And so the answer is to address the issue from, from the other side, which is to get more housing built, get more dedicated, affordable housing built and, and plan for that in a serious way. You know, this interacts with other issues of public infrastructure. We have this bizarre situation in a city like Vancouver where some schools are under enrolled because we're not building enough housing around them, in the highest demand part of the province and country. It's, It's insanity. And you know, there are other areas where schools are badly overstretched. So, we really need to align things here in terms of planning to build that new school infrastructure, planning to build new childcare spaces, you know, that's got to be a big element of any of these new housing projects that we need to be getting off the ground, is to build in space for childcare, where we have a huge shortage as well.

So—and the only other point I would make about, you know, the infrastructure question, with new housing is that, you know, this is also sometimes used as a political football and you've seen some of the municipalities say, you know, we don't want the province pushing us to build so much new housing, but because the infrastructure can't keep up. One thing to keep in mind in the background there, when we're failing to build enough housing in our city centers, where the demand is highest, where the rent is highest, people still have to live somewhere. In general, that means they're being pushed out further and further into suburban sprawl and into greenfield development. And one thing that's often missed in this discussion is that the, the per person infrastructure costs of that suburban sprawl style development is much higher than denser urban housing. So, you know, we can't escape the need to build infrastructure with a growing population. And if we want to do it efficiently, and if we want to allow people to live, you know, where they say they want to live, based on where rents are being chased up the most, we need to build in our, in our city centers.

Am Johal  30:58 
Bring up the question of inflation. We're recording this in June, this episode will come out October. I don't think we will solve the inflation issue by then, just guessing. When I talked to my parents, they were paying 17, 18% back in the early 80s on their, on their mortgage. We're also seeing, you know, the coming out of the pandemic, fingers crossed, that we've also had a kind of cultural change where people are working remotely, further away from downtown. So as subsidies are pulled for businesses, you're seeing some of them go under or not being able to renew their leases, even at Woodward's where we have a campus—the JJ Bean, which is a franchise and, you know, does well as a, as a coffee shop—just because of the lack of people coming downtown and then the leases are still being increased as they come up—that this phenomenon is resulting in businesses closing down that otherwise are well run, or seemingly would be profitable in a different context. And so I'm wondering if you could speak a little bit to what you see as the kind of the longer term implications of inflation and coming out of this pandemic period, of what are the things people should be paying attention to?

Alex Hemingway  32:11 
Yeah, I mean, to me, the reason we care about inflation is about the costs that households, families, individuals in the province are facing, that's stretching them relative to their incomes. And so, you know, a lot of the inflation discussion tends to gravitate towards things like Bank of Canada interest rate policy, which is a very, you know, raising interest rates to rein in inflation is a very blunt instrument. And, you know, if you actually ask central bankers to spell out the reasoning of how this is going to work, the mechanism is meant to be that you raise interest rates, you suppress investment, you raise unemployment, and lower workers wages as, as a result of that. That's the mechanism that the folks behind these policies actually have in mind. And they're, they're not often explicit about it, but sometimes they are. And so, of course, that's a little bit paradoxical. If we're—we care about people's wages not being able to keep up with costs, then having an answer that is to suppress wages is a bit circular. So that's all to say, all sorts of complexities and nuances here.

But you know, what I would say is we need to pay more attention to what are those increased cost drivers that people are facing, whether it's housing, whether it's childcare, whether it's food, and what can we do to directly bring down the costs of those types of goods and services. Obviously, we've had a lot of discussion about how to do that in relation to housing. You know, we have, I think this speaks to the importance of the rollout of a program like $10 a day childcare. So, you know, focusing on that supply side of inflation, I think is—should be part of the progressive agenda, when it comes to addressing inflation, and addressing all those issues has, you know, knock on benefits for the broader productivity of our economy, you know. We know that we invest in making child care more affordable, that allows more folks to participate in the labour force, that allows businesses to recruit workers, that increases our GDP over time. Same can be said about housing, same can be said about investing in our transportation infrastructure, particularly public transit, which is going to meet the needs of folks on lower incomes disproportionately. And that's another way of concretely bringing down the, the daily cost of, of life for British Columbians.

Am Johal  34:36 
We've also had, you know, over the last five, six years—it certainly began before the pandemic, but the expansion of gig workers, contractors, various forms of precarious labour, where people are set up on independent contracts, the employment relationship is quite suspect, comes without benefits or other social supports around long-term disability capacity to collect employment insurance, often, we have the phenomenon of AI and how that will disrupt the workforce in ways that will likely undermine labour rights, bring down wages in various kinds of contexts. So, I'm wondering how some of your previous research looked into this and kind of what, what came up from that?

Alex Hemingway  35:17 
Well, and I think, you know, there's a couple of things to say here. When it comes to precarious work and misclassified workers, that you're getting your question, you know, you have the workers for companies like Uber or various delivery services, are being misclassified in our, in our labour system as independent contractors. And so one of the most straightforward things we can do is make it very clear under the law that workers who are employees—employees are employees and they should be classified as such and they should be entitled to the same rights as all other workers, whether that's the minimum wage or contributing to various elements of the social safety net, and the various employment protections that come under our labour law. And that's one of the biggest steps forward and my colleague, , has undertaken a project called . That is, researching all aspects of these issues. So, but the classification issue is a central one.

You know, another approach is, you know—one thing I wrote about when we were seeing companies like Uber and Lyft come into our market here in BC is that there were issues with the existing taxi system at that time, as well, and lots of exploitation in that, in that existing system. And, you know, there was an opportunity at that time, and some of us were pushing this idea forward is, you know, instead of simply letting these giant multinationals, like Uber and Lyft, come into the province, push in, in the same way they had all around North America, we could have actually regulated this new industry in a way that encouraged the emergence of, for example, driver owned cooperatives, where you know, instead of Uber, or instead of a taxi oligopoly, controlling the dispatching system and controlling, you know, being able to extract income from drivers, have the drivers in control of that industry. So, you know, I think we can find solutions in, you know, more straightforward ways, addressing basic rights under labour law and we can also look at innovative ways to ensure that precarious workers have a more dignified existence, higher wages, and more control over their day-to-day work.

Am Johal  37:23 
Alex, I'm wondering if you could talk a little bit about how you got into economics in the, in the first place?

Alex Hemingway  37:29
Yeah, so I took a bit of a winding path here and, you know, I started actually in university as a computer science major, always interested in, in, in crunching numbers in various forms. But long story short, I did my PhD focused on the question of the relationship between the economic class backgrounds of politicians and the types of economic and redistributive policies they advocate in parliaments and examine that relationship with some quantitative research. And so, you know, I've always had an interest in economic inequality, but also political inequality. And that's, you know, that's what I was getting at, in that research in terms of, you know, that's one lens in which to see the ways that, you know, the more affluent in our society, and in particular the super rich, exert disproportionate influence over our politics, and, you know, we see the results in our public policy. And, you know, there can be a bit of a spiraling effect there, you know, when you have disproportionate political influence by the rich, the rich get richer, and their ability to influence things gets richer, gets stronger. So, you know, it's a, it's a tough situation, and it's one in which we need to find ways to short circuit that phenomenon that is skewing our politics in Canada today.

Am Johal  38:51 
Alex, is there anything you'd like to add?

Alex Hemingway  38:53 
One thing I would just say, you know, in the background here, you know, we talked about issues like wealth inequality and wealth taxes, is simply the disconnect between current public opinion on some of these big issues. So, when you look at—and the actual public policy results that we're getting. When you look at the polling on wealth tax, it shows that actually close to 90% of Canadians back what appears on the surface to be a relatively radical policy, and yet, it's essentially nowhere to be seen on the federal government policy agenda today. So, you know, bridging that disconnect and reinvigorating our democracy, I think, is one of the essential questions that sits in the background of all these more granular policy debates. And I think one of the most important ways that we can make progress on that front is, is—as it always has been through the history of expanding social rights, is organizing.

And so, I guess if I had to leave your listeners with one book today, I would point them to the work of the labour organizer, , whose book, , has some very inspiring stories of contemporary labour struggles and how, with the right organizing techniques, they can quickly win gains for workers in their workplaces, but also build that broader social power that can begin to move the needle on some of the, the big policy questions that we've been talking about today.

Am Johal  40:23 
Alex, thank you so much for joining us on Below the Radar.

Alex Hemingway  40:27 
Thank you. Thanks for having me.

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Steve Tornes  40:32 
Below the Radar is a knowledge democracy podcast created by ¶¡ÏãÔ°AV’s Vancity Office of Community Engagement. This has been our conversation with Alex Hemingway. Head to the show notes to read up on some of the resources mentioned in this episode. Don’t forget to subscribe to Below the Radar on your podcast listening app of choice. Thanks for listening, and we’ll catch you next time on Below the Radar.

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