Many First Nations citizens see their tax-exempt status as a function of the treaties and other legal arrangements with the Crown, or as partial compensation for the resources taken from the lands. They believe that imposing an income tax would be not only unfair, but unconstitutional.

Canada’s courts have upheld tax exemptions as a means to preserve the collective rights of First Nations, ensuring that the Crown does not attempt to erode the reserve land base through taxation.

The federal government has made little effort to explain the policy to Canadians, allowing an unhealthy resentment to grow. There has been little counterpoint to the pressure from the right on this issue. Given the public confusion, it seems a worthwhile exercise to actually do the math and see what light it sheds on the matter.

First, it helps to be specific about whom we are talking. Income is only exempt from tax when earned by status Indians working on reserves. The 2006 census identified fewer than 700,000 people who have a North American Indian identity. This number includes about 133,000 who are non-status Indians and slightly more than 565,000 status Indians who might be exempted from paying income tax, if they earned income on-reserve. Bearing in mind that half of Aboriginal people are under 20, more than 40 per cent of status Indians live off-reserve, and Aboriginal people have an unemployment rate more than twice the national average, it is not surprising that the number of people exempted from paying taxes is actually quite small. In fact, the most recent figures tell us that the number of First Nations citizens living on reserves who had employment or self-employment income was only 103,885.

Unfortunately, Statistics Canada has not made average income numbers for on-reserve employment freely available—which would have allowed for a more precise calculation—but we do know that the median income is $13,637. This allows us to estimate the total employment and self-employment income earned on-reserve as somewhere in the neighbourhood of $1.4 billion.

So what is the total of tax revenues lost to Canada as a result of the exemption?

The federal income tax rate for those earning less than $41,544 is 15 percent. Provincial tax rates vary, but adding them into the calculation puts the tax rate somewhere between 20 and 25 percent across the country. The basic personal deduction is $10,382, which would leave just over $4,000 in taxable income from the median, even with no other deductions. On that amount, one would owe between $800 and $1,000. Multiplying that back out against the 103,885 earners, the exemption amounts to between $84 million and $104 million in foregone revenues.

If all of those earning income on-reserve actually qualify for the exemption, the Receiver General is collecting approximately $100 million less in taxes as a result.

It is possible to quibble with the figures here. I have used the most recent census figures from 2006 with the 2010 tax rates and using the median income level rather than the average leads to a lower total. Nonetheless, even the highest mark-ups on all of this data wouldn’t put the lost revenue higher than $120 million.

That number is nothing to sneeze at, of course. But in the context of a 2010 budget of more than $261 billion, it’s also not going to make or break the federal government. Nor does it seem disproportional or unfair, when looked at in context. By way of comparison, there are $1.4 billion in annual subsidies for oil and gas companies, equivalent to the total income earned on-reserve, and $120 million in subsidies for ethanol production, equivalent to the highest estimation of revenues lost to the Canadian government through the income tax exemption.

More to the point, the tax exemption in no way compensates for shortfalls in funding to First Nations. The provinces spend more than 20 percent more on children than the federal government does on First Nations children, whether those kids are in school or under child welfare services care. The disadvantage to First Nations children from these two policies alone amounts to far more than the foregone tax revenues, and there are dozens of other examples.

Taxes pay for public services like roads and water, and First Nations communities are notoriously under-serviced. A 2005 study by the Assembly of First Nations found that, per capita federal funding for First Nations citizens is $7,200. That’s far lower than the amount that the government spends on the population in general. In Ottawa, for instance, the combined per capita spending by all three levels of government totalled $14,900, more than double the amount being spent on-reserve.

Given the amount of energy certain groups have spent decrying this tax exemption, one might have expected them to conduct an analysis of this nature. The fact that they haven’t might suggest that there is another agenda at work in their complaints.

The balance of advantage is clear when the tax exemption is compared to the lack of services on-reserve. To whom is the system unfair when the numbers are so grossly tilted the other way? And why focus on this issue when there is so much else that needs to be done?

Recalling the views of the Supreme Court, if First Nations land can be eroded through tax policy, it is an efficient way to end communal land ownership in Canada. Once that is accomplished, First Nations can be fully assimilated into the mainstream and any resources on or near their lands can be exploited without the inconvenience of consultation or compensation. Complaining about tax policy is only one of many ways in which the right wing in Canada is seeking to achieve that goal.

Canada began a coordinated public relations program this week, with Finance Minister Jim Flaherty speaking in New Delhi and Mumbai, Trade Minister Peter Van Loan in Washington, Treasury Board President Stockwell Day in Shanghai and Industry Minister and Foreign Affairs Minister Lawrence Cannon addressing the home crowd in Ottawa.  This is all part of Prime Minister Harper’s ramped up campaign against a global levy that would see a tiny tax—averaging 0.05 percent—applied to all financial market transactions, including those by banks, hedge funds and other financial institutions.  The tax, which would not apply to ordinary customer transactions, could simultaneously raise money from one of the wealthiest sectors of society—some analysts estimate the revenue could be $650 billion annually—while reducing the risk of another economic collapse.

Flaherty has been characterizing the levy as an unfair punishment of the banking industries in countries that were not responsible for the financial crisis: governments in Asia, like ours here in Canada, did not have to bail out their banks, and this public relations campaign is engaging those nations in search of allies against the tax leading up to the G8/G20 summit in Toronto in June.

The goal of the Robin Hood tax is to ensure that taxpayers are not responsible for the price tag of future bailouts.  Endorsed by the IMF, the U.K., France, Germany and other European nations with lukewarm support from the United States, the Robin Hood tax would essentially amass a fund to hedge future economic crisis.  Canada has offered a counter-proposal: forcing banks to raise “embeded contingent capital,” shifting the burden of future bailouts from the taxpayers to the shareholders. Canada’s proposal, in the words of a Globe and Mail op-ed piece supporting Flaherty’s initiative, depends upon “a reform that builds in market discipline”—because we all know how disciplined the banking sector has shown itself to be.

“I’m Canadian.”

This became my opening for every interview at the tax day Tea Party rally at the Freedom Plaza in Washington, DC.

It seemed like the best way to distance myself from the camera crews and journalists who were swarming the interesting or outrageous among the two-to-three thousand ralliers.

“I’m Canadian and I just want to know what’s happening today,” I would explain. And It was true. I went to the rally because I really don’t understand what’s happening in the United States today. I read blogs, watch the news, and catch Daily Show highlights like anyone else, but it doesn’t capture the sometimes hopeful, sometimes intimidating, always ethereal sense of change happening in America.

I went to the Tea Party not to judge anyone or enforce misconceptions, but to try to figure out what is mobilizing people from across the country to take part in an undeniably influential grassroots movement.

What I learned first was that most of these people were skeptical of the media. They eyed me, recorder and camera in hand, with suspicion. Those who were talkative often used the interview as a platform to expose whatever bias they thought I had.

Those who were interested in talking talked a lot. Tom, for example, approached me and the people I was with seemingly out of the blue, and took a great interest in whether or not we were Jewish.

Once Rick and Sharon started talking, they had a lot to say. They commandeered the interview to interrogate me about the quality of Canadian health care.

Carolyn and Ryan, two of the few students at the rally, seemed reasonable, even if our politics don’t match up. And like the few young people I spoke with, stressed that there were a lot of young people present

Another important lesson I learned was that the “Fair Tax” movement is not the same as “Tea Party” movement. Fair Tax might organize Tea Party events, but, as Jabari explained, the two aren’t synonymous.

I tried to be as non-judgmental as possible and to allow the interviewees to speak for themselves. The question I most wanted an answer to was, “why are you here?” Here are some of their answers:

Caroline

Caroline from Arlington, Virginia

What brings you out here today?

I’m a conservative. I once was a Democrat, but the Democratic party was once conservative, too. It was once pro-life. And then I was a Reagan Democrat for years, and worked for Pat Buchanan–he’s a great conservative. I believe in following the constitution; small government; and right to life, liberty, and the pursuit of happiness–life number one. That is our most troubling issue. Three thousand, one hundred children will be killed today by abortion. Today. More than died on 9/11, died of abortion in the United States. That is such a huge problem. And the Democratic party is supporting it. It’s disgraceful. So that’s my number-one issue.

And I also believe in subsidiarity, distributes, small government. If it can be done in the family, it should be done in the family. If it can be done in the county level or the city level, do it there. If it needs to go to the state–and some things do–there. And the federal government is supposed to have a military to defend us, and not a whole heck-of-a-lot more. And we’ve just gone farther, and farther, and farther, and of course we have this terrific debt. And I’m upset that George Bush was involved in spending more money than he should have, although he has so much in the plus column. So supportive of the pro-life community. So you see how I got where I am.

And you look around here and you see authentic people. You see hand-made signs that tear your heart out. And you look at the protestors [that protest the Tea Party supporters] going by, I see them–I pray at Planned Parenthood five days a week–I see them at Capital Hill demonstrating. But they have signs that somebody handed them, and then they all leave at the same time because they’re all told to go. Their bosses told them to go, “You must go to the demonstration.”

Did anybody tell these people to go? No. This is not an engineered crowd. And a lot of us are saying, “Where do we meet? Is it 11? Is it six?” We’re trying to find out where to go, when.

Where do you get that kind of information?

Well, I got some in the Washington Times yesterday. And then on Fox news this morning they talked about [it].

It’s so authentic. It’s so real. It’s so American. These people here. [A man walks by, one of the many vendors selling flags an buttons, Caroline points at him] Now, he’s selling flags. He’s in business. He’s a small business man, God love him. So he’s here trying to earn money today, and that’s good. That’s good. That’s good. We love that!

We’re authentic. We’re for real.

Do you agree with everything the tea party believes in?

We don’t have a list of things we believe in. There is no membership card, there are no dues. It’s just people getting together. If I came down here and I saw something and I heard something I don’t like, I’d just leave. You look around and people are saying, “God bless you, I love you. What’s your first name? Where are you from?”

This is authentic. These are real people. They’re precious! And you’re precious. And I love you, and God loves you […] look around. Look around. This didn’t happen by a big bang or by accident. There was a cause, that always was, and always will be. And most of us call that cause God, call it whatever you like. But it’s… It’s… God. God love you, sweetheart.

Jabari and Marilyn

Jabari Zakiya, Washington, DC
Marilyn Rickert, Oak Forest, IL

A lot of people are talking about “authentic Americans” here today. Do you think the people here are “authentic Americans”?

Marilyn: Yeah, we’re all volunteers, we all pay our own way, nobody gets a salary, we have basically a nation-wide grassroots organization and there is maybe a handful of people that actually collect any kind of a salary at all.

Jabari: Well, you have to define. If authentic means “real”, then yeah, they’re real, but there is all levels of real. I mean, I don’t consider myself a tea party person, but there are elements of their concerns I agree with. I don’t agree with 100% of the political stuff. But one of the things that makes America America is that we can have all kinds of diversity in thought, but we can come together around a lot of common interests. I mean, the most right-wing person and I can cheer for the same sports teams, you know? And in the same way, that’s what our movement is about. We have a lot of different people from a lot of different movements with a lot of different ideologies, but we all agree on the fair tax. Even the tea party people that don’t agree 100% that the fair tax is the way, we’re trying to convince them that the reform is the fair tax.

Carolyn and Ryan

Carolyn Bolls from Washington, DC and Ryan Gilroy

Why are you here today?

Carolyn: Well, basically we’re sick of our government spending our money. We’re spending more to save more, that doesn’t make sense to us. We’re protesting this big government control of our country. We don’t want to end up with the government controlling every sector of our lives. It’s not just about taxes, it’s about government control of our personal lives.

Ryan: We’re tired of watching government spend, spend, spend. Honestly, both parties are spending so much money, they don’t realize that they’re stealing jobs away, they’re stealing our generation’s wealth. They’re robbing Peter, who isn’t even born yet, to pay Paul now.

Do you think anything like that was happening with the last generation?

Carolyn: I think it’s cyclical. I mean, we have elections, that’s why we have a democratic republic, we will be able to voice our opinions on November 2nd. That’s when we get to change, and I hope that’s the change that our country needs.

Ryan: It seems like we need it more than ever. The Republicans had control from 2000-2006 with a Republican congress, a Republican senate, and a Republican President. You figure taxes would go down. But no, it got ratcheted up even higher. That’s the problem: people want to be in power, so they try to get votes. They pass projects and say, “Hey look! If you help me get my vote, I’ll get your vote.”

Carolyn: Even with the last administration, with the George Bush administration, he spent–you know, No Child Left Behind, you had all these federal programs, the bailouts towards the end of his term as President. I don’t support that either. You know, I call myself a Republican, but I’m a Conservative first, and Conservative also insures fiscal responsibility.

Ryan: And also, you realize Medicare Part D is the tip of the iceberg. Then you got Obama and healthcare, which is putting another thing on top of another thing, and realizing […] it’s bi-partisan. Most people would hate to say, “oh, it’s the Democrats”. No, it’s both parties [that] like to spend a lot.

Are you proud to be representing young people with your politics? Do you think there should be more young people here today?

Ryan: I think there’s a lot of young people here. Look around you. there’s plenty of young people behind you. I think it’s a good mixture of everything, young, old, everything in between.

Carolyn: I agree, but I think those that care the most are the ones who are paying taxes, and so that will generally attract an older population. I’m definitely proud to be here. My generation has to stand up and speak for ourselves otherwise we’ll be in debt for the rest of our lives, and for the lives our children, and children after that.

Tom

Tom Wallin from Springfield, Illinois.

What religion are you?

I was baptized Anglican.

I’m just curious. I thought you might have been Jewish, and if you were I was wondering: do you support Obama or the people here?

Well, I can’t vote here—

I mean, but who would you support?

I don’t know, I don’t have all the information. I don’t live here.

Do you have a point of view on this event today?

I’m here because I’m asking people about their points of view.

Well I want to know who you are first, because you might distort what I have to say. I rode here 800 miles on my motorcycle to be part of it.

What kind of motorcycle?

A Yamaha FJR 1300. Yup.

Very nice.

It is. I hit a construction barrel coming in the other day, and it went off my bike like a ping pong, or a bowling pin.

Holy cow. So why are you here today?

I’m here because I think the government is out of control. I think it’s taking our tax money. And I think a lot of the stuff it’s doing is unconstitutional. I think they are ruining our medical system by changing something that was probably the best. [In the] the country there’s just a small number of people that needed to be insured. And they didn’t do things that would really cut costs.

I think president Bush–I love president Bush for many things that he did–but he was trying to befriend liberals, and he spent way too much money, and I think that made his government a toss up on whether he should go on Mount Rushmore or not. I think what he did to fight enemies of ours country, I think he should be respected like a Mr. Rushmore president. I mean, for eight years he fought against people trying to make him look bad. From the very, very beginning, the people that were trying to take over tried to make him look bad. And he didn’t have the courage to say “no” to the big spenders. But I think he’s a good, honest man, and I loved him for what he was, and I think the people who say he was dumb were just absolutely wrong. He was a very smart man. He’s countrified a little bit like I am, but that doesn’t mean he was dumb, that means that he didn’t appear to people like we used to establish-mentize.

What would you say to someone who wants to understand what’s happening in America right now?

It’s kind of like if you want to ask a motorcycle rider why he likes to ride a motorcycle. If you have to ask, you won’t figure it out.

I mean, this is the greatest country on Earth, and what they’re doing is just going to take it away. You know, you how to ruin a great country? You spend it to death. You know, people like Saul Alinsky, people that Obama likes to quote, all of his crowd, I mean–look at his friends. I don’t know who these young men were that were with you, but they were nice respectful guys. I don’t know what they do in their personal lives, but if they were anything like Obama’s friends, you would run for the hills, buddy. You would run for the hills, because his friends are evil. Reverend Knight, I mean, there’s the catholic priest…

What did you think of us when you saw us? You seemed really eager to talk to us.

I wanted to talk to you because, I wanted to ask—and I love Jews, Jewish country, Israel, I just totally respect [Benjamin] Netanyahu and everything he stands for—I wanted to ask you a question: how could you support Obama if you were Jewish? Because, 95% of American jews support Obama, and that’s one of the greatest things I don’t understand about this country.

Richard and Sharon

Richard and Sharon from Michigan

Richard: Do you like your healthcare up there? Have you ever used it?

Yeah.

Richard: Have you ever used it?

Yeah, of course. I mean, I’ve never had trouble with it. I’ve never been seriously ill, so I’m very thankful for that.

Richard: Well that’s a good thing.

We were in England in October. I came down with a kidney infection. And I got into their health system. And if Canadian health system is anything like English, you don’t want it.

I went into the emergency room, and the guy says, “oh I got some drugs that will do away with this.” Because we wrote on the little slip that I was passing blood in my urine. [He] never checked me one bit. Just read that little note that I wrote, or she wrote, on my admit.

Sharon: Didn’t check his vitals.

Richard: And he went to get the drugs and he came back and said, “It’s going to be a couple of minutes.” I said, “Well what about my fever?” And he says, “I’ll go see about the drugs.” Then he came back, to check my [temperature].

As soon as he checked that, he said, “Oh everything changed.” And they put me in the hospital. But he was going to let me go home, with a 100, 102 temperature without giving me anything for it.

Sharon: And he was supposed to be drinking water. They told him he was supposed to drink a whole lot of water while he was there. And the nurses would say they’d bring it when he’d ask them, and they never brought it. I’d have to go get it for him. That’s our only experience with government health care. That’s why we’re not happy.

Is that the reason you guys are here today?

Sharon: Well, we don’t like the spending.

Richard: We’re from Michigan. We don’t like the spending. We’re both—I’m retired, she never worked—

Sharon: [laughs] Well, thank you!

Richard: —well, outside, you know.

We have two kids. No grandkids. And we sit here, thankful, that we don’t have grandkids. Because of the debt that we’re putting onto our grandkids.

Do you think previous generations have left that kind of legacy?

Sharon: I think each generation has done better for a while now.

Richard: I think that after the war, we had such a baby boom that we could take care of our folks. But there’s too many of us now to put that debt onto our kids, you know? This year there’s less money coming in for social security than going out.

Do you think this will change things? The people here today?

Richard: Let’s hope.

Sharon: Well I think you gotta speak up and try. That’s why we’re here.

Richard: You got to try to stop it. I mean, look how much the government spent this year already, and last year.

Sharon: We’ve written to our congressman and the like. You know, doing what you can. There’s only so much you can do.

Has any other issue brought you to rally like this?

Sharon: a lot of the people here, it’s the same thing. They haven’t done this kind of thing before.

Richard: Back years ago we was too busy making a living. You know, going to work five, six days a week. Didn’t have time to do this kind of stuff.

Sharon: This is the fifth one we’ve been to. We went to two in Jackson, two in Lansing, and this one.

Where do you get information about the rallies?

Sharon: They have some information online. A lot of it is from there. TV.

What kind of TV do you watch? Which networks?

Richard: We watch Fox, because the other ones are so biased. I mean, we watch the other ones, I mean, I have CNN, and MSNBC. I look at all them, but they don’t bring up–like Brian Williams, you know, on NBC. He don’t bring up the tea parties. He just shows you what they want you to see.

Fox, you get mad at Fox because they don’t–they might spend too much time saying how great something is, but you don’t think it’s worth a damn. But they’re the best of the networks.

What would you say to someone who doesn’t understand this and just wants to know more?

Richard: I guess they could sit at the Ambassador bridge and watch the ambulance coming from over there to bring people to the hospital over here. They say there’s 40 to 60 ambulances bringing people from Canada over to here, because the health care is better here than there, you know.

Pronoblem

Pronoblem, from another dimension.

Why are you here?

That’s a pretty deep question, man.

Yeah, it is pretty deep. What do you think?

I don’t know. I try to do good, raise good kids. Be fair and honest.

What do you represent?

When people asked me that before, you know what I told them?

No, what did you say?

That I was Canadian.

Why did you come out here today?

I heard there was some good Ethiopian food in town.

What does your button say?

I bought that here.

Do you believe in the message?

Oh, no. not really. What does it say?

It says “Welcome to Obamunism”.

Okay, so that means Obama has a philosophy.

I guess that’s not too hard to believe. Is this an average day for you?

Actually, yeah.

With files from Ryan Briggs

Toronto's Rogers Centre (formerly Skydome), built with public funds and later sold off to private business for a pittance. A major league sports team is often assumed to be more economically stimulating than actual results attest. Creative Commons photo by Mike Babcock.

The National Hockey League playoffs open this week and the abundance of emotion-laden storylines are sure to captivate a significant portion of the the Canadian sporting public’s hearts. But while three Canadian squads—the Vancouver Canucks, the Montreal Canadiens and the Ottawa Senators—vie for Lord Stanley’s coveted Cup, there’s another, less exciting, story unfolding that probably should captivate our minds, even those of the non sports-adoring variety.

Tomorrow, the city council of Glendale, Arizona will vote to approve the arena-lease agreements for the two bids put forward to purchase the suburban community’s NHL hockey club, the Phoenix Coyotes. But, as the Globe and Mail reported this weekend, even if the leading bid, submitted by Chicago White Sox owner Jerry Reisdorf, is approved the lease agreement may not survive. In an interesting twist of fate, a lawyer for the Goldwater Institute recently announced that the conservative watchdog group won’t hesitate to take the city of Glendale to court if it appears the agreements are in violation of Arizona laws against public subsidies for private corporations.

The concern for Goldwater is a piece of the Reisdorf “memorandum of understanding” that calls for local taxpayers and businesses to foot up to $165-million of the purchase price and annual operating losses. While this sort of stipulation isn’t unusual in the standard agreements between sports franchises and host cities, it is unusual that a powerful watchdog is calling both parties out.

For too long, the public has dogmatically accepted the connection politicians and team owners like to tout between sports franchises and local economic development. Massive public subsidies are regularly given to billion-dollar sports operations under the guise that they will bring an influx of new economic activity to the local community. This year alone, Winnipeg, Quebec City and Hamilton have all, at one point or another, flirted with the idea of bringing a professional hockey team home. And each has made claims about the economic benefit a pro franchise would bring. However, the problem is that justification is demonstrably false. There is, in fact, no economic rationale for publicly funded sports teams and stadiums.

According to Andrew Zimbalist, a prominent sports economist at Smith College in Northampton, Massachusetts, all independent scholarly research on the economic impact of sports teams and stadiums has come to the same conclusion: there isn’t any. As he told Stephen J. Dubner on the New York Times Freakonomics blog, contrary to the rhetoric often aired by local politicians and sports teams owners, “one should not anticipate that a team or a facility by itself will either increase employment or raise per capita income in a metropolitan area.”

The economics behind this are complicated, but, generally, three principles hold. First, sports stadiums rarely create new capital: consumer spending on sport is almost always a redistribution of existing dollars in the local economy. People don’t spend money they wouldn’t have otherwise; they simply spend some their entertainment budget on local teams instead of something else. Second, much of the income generated by the team ends up leaking out of the local economy. Millionaire owners and players have their savings tied-up in world money markets and often live and spend their money outside of the host city. Third, and perhaps most importantly, host governments typically contributes close to two-thirds of the financing for the facility’s construction, usually takes on obligations for additional expenditures and routinely guarantee a significant amount of revenue. In other words, it’s the taxpayers that bear most of the risk—not the multimillion-dollar franchises that make a city home.

That’s not to say there aren’t perfectly good reasons for cities to host big-time sports teams or build world-class sports stadiums. It’s just that the supposed “positive economic impact” of a sports franchise shouldn’t factor into local governments’ decisions. Cities spend millions of dollars on cultural activities that they don’t anticipate to yield additional revenue. Sports teams can have a powerful cultural impact on a community and are integral part of most cities’ social fabric. If local residents value sport they are obviously welcome to allocate public dollars toward it. In fact, I, for one, hope they do. But sports teams and stadiums should be sold as a source of civic pride—not as a source of economic development.

Although Flaherty claims to have introduced a budget that is “Canada’s response to the challenge of our time,” many groups, including the Centre for Policy Alternatives, are saying Flaherty’s plan is “too little too late.”

This had us wondering if anyone, or anything, will benefit from the almost $40 billion stimulus package being pumped into our economy over the next two years. Here’s what we found.

Tax Cuts

Personal income tax reductions will give Canadians of all economic stripes between $21 to $53 a month extra to play with. But this $2 billion per year in tax cuts is essentially just a shallow crowd-pleaser that’s widely seen as an ineffective way to jump-start the economy. Instead, the government should have pumped that money into health care, for example, where it could have created more than three times as many jobs as broad-based tax cuts.

Mid- and upper-class homeowners

The 15 percent home renovation tax credits, for renos between $1,000 and $10,000 and available only until February 2010, will benefit only those who happen to have extra money to spend on redecorating.

Infrastructure

The government plans to throw $12 billion over the next two years into infrastructure, mostly through construction projects. But while this is a major job-producing move, it benefits sectors that are still largely dominated by men, leaving women out in the cold in terms of job creation. And while the government likes to boast that its stimulus package equals 1.9 percent of the GDP, CPA economist David MacDonald points out that that figure includes the matching funds that provinces and municipalities are expected to put up for infrastructure, meaning the feds are effectively counting “what other people are spending.”

Unemployed Canadians

Though only 40 percent of unemployed Canadians can access EI, no really significant EI reforms were made in the budget, with the stimulus package granting a mere five extra weeks of available benefits for the unemployed. And of the 1.5 billion set aside for retraining, only one third is available to unemployed Canadians not accessing EI.

Parents needing childcare

Under the stimulus package, low-income parents are able to earn a little more under the Canada Child Tax Benefit, but those earning less than $20,000 will see none of the increases they might have hoped for.

First Nations groups

Although the $1.4 billion allotted to First Nations communities for skills training and on-reserve housing might seem impressive, off-reserve First Nations people won’t benefit from much of this cash.

Affordable housing

Although the government is putting $1 billion over two years into social housing renovation projects, accessing these funds requires a 50-50 commitment from the provinces, a demand that may be difficult for poorer provinces to meet and may mean they miss out on housing they need the most. This money also can only be spent on already in-place affordable housing units—no new units are part of the stimulus plan.

* December 2008 StatsCan figures. These have likely risen since then.

While at first glance it might look like the federal government is playing favourites, with benefits starting earlier and lasting longer in Newfoundland and Labrador, these regional inequalities actually make a lot of sense.

Explains Julie Hahn from Human Resources and Skills Development Canada: “When a region’s unemployment rate increases, the entrance requirement is relaxed and the benefit duration is extended to allow more time for a successful job match.”

This is why Newfoundland and Labrador, with unemployment rates nearly five times Edmonton’s, sees their residents eligible for EI at the minimum number of 420 hours, while Edmontonians need to work the maximum 700 hours.

So while the schemes aren’t equal, they are designed to be fair. If only last year’s EI surplus, which topped more than $50 billion, was handled with such care. That money, which could have been used to support laid-off manufacturing workers, was instead funnelled into the government’s general revenues, where it helped pay off the national debt — and cover corporate tax cuts.

Martha Stewart was searching for the perfect word.

She was trying to describe her disastrous year to Jeffrey Toobin from the New Yorker. It began last summer, when Stewart was accused of insider trading, and her good friend, ImClone CEO Samuel Waksal, was hauled off to jail. While the government investigated Stewart herself, the media piled on—mercilessly mocking her, questioning her ethics, and making the obligatory “Martha Stewart Living in Jail” jokes. Investors dumped her stock, shaving $400 million off her net worth. As she told Toobin her story, she wandered through her sprawling mansion, showed off her collection of china, had her personal cook serve a five-course meal, described the in-flight caviar she’d served some friends on her personal jet, and fretted over why everyone seemed to have it in for her. “My business is about homemaking. And that I have been turned into or vilified openly as something other than what I really am has been really confusing,” she said. “I mean, we’ve produced a lot of good stuff for a lot of good people.”

Is it schadenfreude? Toobin asked. “That’s the word,” she replied. “I hear that, like, every day.”

Stewart isn’t alone. In the past year, the wealthy—and their political friends—have been enduring regular blasts of ill-will from an increasingly testy public. It’s not hard to see why. While the recession has blindsided most of the working world, the rich have continued to joyfully grind their good fortune in everyone’s faces. When Enron collapsed, senior executives cashed out big; one top earner, Lou Pai, pocketed a stratospheric $994 million. Even as Dennis Kozlowski was approving Tyco’s voodoo accounting, his handlers were buying him $10,000 shower curtains and a $2,500 trash bin. And in December, just as the U.S. labour board announced grimly that over 50,000 jobs had vanished from the economy that month alone, George W. Bush was heatedly defending a tax cut that would hand $80 billion over to the richest one percent of the population.

Rarely has the P.R. for the rich been so bleak. And the heat isn’t coming just from bitter proles. Even federal bank honcho—and former Ayn Rand acolyte—Alan Greenspan delivered a speech bemoaning the “infectious greed” of America’s rich. Meanwhile, writers at Fortune magazine, hardly the sort you’d expect to find storming the Bastille, devoted an entire issue last fall to keelhauling the titans of industry. “The public,” they fulminated, “has been treated to an ever-lengthening parade of corporate villains, each seemingly more rapacious than the last.” Ouch. Where’s the love?

Yet the most curious part of this trend is the reaction of the wealthy. Faced with this blizzard of venom, they have begun to mount a curious counterattack: for the rich and their supporters, “envious” is now the insult of choice. Want to defend that bloated tax handout? Or your interstellar pay package? Or maybe that humungous inheritance from dear old dad? Tell your critics that they’re envious wannabes—jealous of your brilliant, well-merited success.

“Today a religion of hate, of envy and of anti-greed, using an unjust set of antitrust and insider-trading laws, punishes innocents. The innocents are successful American entrepreneurs” raged Mark Da Cunha, editor of Capitalism magazine, in an editorial in the National Post. George W. Bush has wholeheartedly joined the backlash, claiming those fighting his tax cuts are fuelled by “organized envy.” Meanwhile, Jack Kemp mutters darkly in the Washington Post about “liberal class warriors who practice the politics of envy.” Ralph Klein in Alberta castigates the “envious” folks who crave his oil. And as for Martha Stewart—The Wall Street Journal published an entire editorial devoted to “Martha Envy,” explicitly pegging Stewart’s woes on the green-eyed monster. Even the enemies of North America are blasted as vessels of unimaginably huge envy; global conflict is not ideological, but emotional. When the terrorists hit the World Trade Center, it was because they envy our freedom; when Europe refuses to unleash daisy-cutters on Iraq, it’s because—as conservative pundit Josef Joffe sniffed in a recent Foreign Policy article entitled “The Axis of Envy”—they’re jealous of the U.S.’s massive economic might.

Consider this our newest cultural battle—The War On Envy. We have, it seems, become a nation of nasty little playa hatas, and the playas are none too pleased about it.

All of which suggests a rather intriguing political question. What, precisely, are the elites so afraid of? When a continent’s power brokers are so unified in their panic, maybe it’s time we looked more closely at this unsettling emotion. Is it possible that envy is a lot more politically important—and useful—than we think?

In July of 1998, the British economists Daniel John Zizzo and Andrew Oswald conducted an unsual experiment. They took a group of subjects and gave each one 100 units of an imaginary currency. The subjects then played a computer gambling game, in an attempt to increase their virtual wealth. On screen, players were able to see not only their own wealth level, but the wealth of every other player. But soon things changed: after the first round was over, the economists picked a few players at random—and gave them 500 extra pieces of currency. When the gambling resumed, the other players were astonished to observe the sudden, new riches of their opponents.

And here’s where things got interesting. The economists gave the players the option of “burning” each other’s wealth. They could pay their own money to destroy another player’s wealth.

The result? The poorer players all ganged up on the few who’d become suddenly wealthy—and began furiously burning their riches. By the time the dust settled, almost two-thirds of the players had burned someone else’s money, and one-fifth of the overall money pool was destroyed.

“Our subjects gave up large amounts of cash to hurt others in the laboratory,” noted the mildly stunned economists. “The extent of burning was a surprise to us.” One could scarcely imagine a result more likely to horrify the rich. Not only will the envious poor pillage the rich—but hey, scientists can prove it! Marxism may have died in the Soviet Union, but you can bring it back to life in a petri dish.

The experiment is a spectacular illustration of the main reason envy is traditionally so distressing: it is a singularly destructive emotion. It’s not merely about craving someone else’s good fortune; it’s about wrecking it, and bringing others down to your level. Some of the most famous acts of retribution in history have been envy-driven. It’s particularly bad among artists, who are renowned for cherishing minute grievances. In the Renaissance, for example, the Italian painter Baccio concluded that Michaelango was so superior in his skill and fame that he broke into a temple and shredded one of Michaelango’s murals. Another artist, Domenico Veneziano, actually murdered a successful rival by beating him with “leaden weights.” In medieval Germany, wealthy urban residents would tweak the envy of neighbours by constructing enormous buildings that they didn’t even need; it got so bad that they had to pass a regulation about it.

When Adam Smith was writing Wealth of Nations, he was painfully aware that great wealth would inspire great conflict. “The affluence of the few supposes the indigence of the many, who are often both driven by want, and prompted by envy, to invade his possessions,” he wrote. “It is only under the shelter of the civil magistrate that the owner of that valuable property, which is acquired by the labour of many years, or perhaps of many successive generations, can sleep a single night in security.”

Given that the wealth gap in North America is now as howlingly wide as it was during the original Gilded Age, no wonder the affluent are scared witless about envy. They must feel like pinatas. Cooped up in their paramilitary Hummers and hunkered behind the poured-concrete barriers that surrounded the recent Davos World Economic Forum, today’s super-rich behave as if they are constantly holding a global lynch mob at bay.

The powerful have always painted those who covet their wealth as crazed, irrational freaks. But this isn’t quite fair. Envy may be corrosive, but it does have a logic. Consider that British study again: when the economists analyzed the data, they found that the burning was more complex than meets the eye. It concentrated on those who had gotten their riches randomly—those who hadn’t done anything to deserve it. Other players who’d increased their wealth in a “justified” way—by winning at the gambling game—were not as frequently targets of the money-burners. Which is to say, the attackers were concerned not merely with destroying wealth, but with imposing integrity on the game. The burning, the researchers surmised, “appears to be strong evidence for the existence of some kind of envy or concern for fairness…Many people are not burning rich people more because they are rich, but rather because, and to the extent that, they got the money undeservedly.”

When you look at it this way, the burning seems weirdly wholesome. What could be more classically progressive than levelling the playing field—and correcting unearned privilege? Envy may not be a terribly upbeat emotion; you would hardly want to drive all your actions by its bitter fuel. But as philosophers like John Rawls have long noted, there’s a link between envy and a concern for justice. In A Theory of Justice, he argued that envy can function as a sort of canary in a mine-shaft, alerting us to the presence of genuine unfairness—and making us scrutinize the world more carefully. If the richest in society are alarmed about mass envy, it’s possible they’re nervous about the lessons from Enron, Global Crossing, and Tyco; perhaps their fortunes could not stand the scrutiny either.

During the holidays, I was having drinks with a friend who was flipping through the business pages. He hit upon a story about Jack Welch—the outgoing CEO of General Electric. Welch was in the middle of a nasty divorce, and as a result, his entire financial life was being made public. As it turns out, his GE retirement package includes a stunning $10 million annually—and includes the free use of corporate jets, helicopters, and a palatial Manhattan apartment with an infinite supply of wine. My friend snorted. “What in hell did this guy do to earn that?”

This is, of course, the $64,000 question: what precisely constitutes “deserved” wealth? That’s really What We Talk About When We Talk About Envy. Have the super-rich really earned their super-riches? Ask Martha Stewart, and she’ll tell you she worked hard for her corporate success. Ask George W. Bush; he’s argued that he became a millionaire—and president—solely on his own merits. The fact that Bush Sr. held the same office, and got dozens of former cia spook cronies to hurl public funds at his son’s half-cocked business plans and presidential campaign? No impact. All joking aside, though, “merit” is easily the most complex yet unresolved question in Western economics, so forgive me when I tell you I’m not going to resolve it here. Reasonable people can reasonably debate whether a $4-million-a-year CEO has actually earned his way, or gotten it on the backs of others.

Yet this is what’s so striking about the new backlash against envy: there is no such debate. The hue and cry about “the politics of envy” has become a judo move, letting our elites neatly sidestep any questions about the moral dimensions of capitalism. This is particularly odd when you consider how many CEOs lately have been carted away in handcuffs. But it’s true: if you’re rich, the consensus is that you must have done something to deserve it—and if anyone says different, it’s because, dude, they suck.

Last year, Jennifer Lopez’s handlers became worried that her ballooning wealth—and her increasingly disconnected-from-reality diva behaviour, including her demand that every single item in her backstage rooms be white—were alienating her working-class fan base. So they rushed out “Jenny From the Block,” in which Lopez meticulously catalogues her fame, proclaims her down-to-earth soul…and then lashes out at her critics for being envious. “Everybody mad at the rocks that I wear,” she protests. “Nothin phony, don’t hate on me.” This cynical pose is, of course, by now practically a lizard-brain reflex in bling-bling hip hop. But what’s kind of hilarious is how similar the protestations of the mainstream right-wing sound. Don’t like my rocks? Or my wildly over-the-top pay? Or my million-dollar anti-labour lobbying budget? Hata. “Typical class warfare rhetoric,” Bush sneered when opponents began criticizing his tax handout for the rich. Who’s writing this guy’s speeches? P. Diddy?

But you know what? That name-calling works quite well. Labelling someone an “envious” loser is a uniquely efficient way of shutting them up. Because even if you feel perfectly justified in your resentment, nobody wants to be known as envious. It is one of our most massive social no-nos. People will excuse many ugly emotions: greed, spite and, given the right circumstances, even murderous rage. But envy is the sin no one will defend. When’s the last time you openly admitted you were envious of someone? “Did ever anybody seriously confess to envy?” Herman Melville once wondered. “Something there is in it universally felt to be more shameful than even felonious crime.”

Back in the sixties, George M. Foster, a professor of anthropology at the University of Berkeley, began polling his students about their levels of envy. One half declared themselves to be “virtually without envy,” and another 40% said they were envious only very occasionally. Barely 10% would admit to being “very envious.” “Moreover,” Foster noted, “the 90% who deny major envy tend to be vociferous and argumentative; it is a personal affront to them to suggest that they are much more envious than they care to believe.”

In the late 1980s, the Boston University professor Richard Smith shed even more light on the matter, with a different “burning” experiment. He presented a group of students with a hypothetical unfair situation, in which they got the short end of the stick. They were offered the opportunity to even the odds by hacking away at the winner’s earnings. In one test, they were allowed to retaliate anonymously; in another, they had to do it publicly. When they were allowed to do so anonymously, 30% burned the winner. But when they were required to be public about their envious actions—and have the winner know who was attacking them—only 6.7% did so. Social censure, Smith concluded, is so powerful that it can stop people from acting on their envy, no matter how justified they might fee
l. “Despite a degree of ill will often directed at the person who is envied, social prohibitions prevent the expression of this ill will,” he noted.

There are some very good reasons for this social censure. After all, philosophers have long noted that our economic envy is frequently directed not at powerful, nasty overlords, but at our close friends and family. When we compare ourselves to those most similar to us, even niggling differences in rank and privilege can become nasty grievances. (As Gore Vidal famously wrote, “Whenever a friend succeeds, a little something in me dies.”) Since wishing ill on our intimates seems awfully creepy, we understandably worry whether envy is not, in all cases, a sort of subhuman emotion. If it can drive us to dislike even our friends, what good could there possibly be in it? In Of Envy, Sir Francis Bacon concluded that envious people were “deformed persons, and eunuchs, and old men, and bastards.” Count me in!

Back in 1891, when Americans were awash in the Gilded Age, and the fabulous clothes and houses of the elites were paraded in endless, fawning articles, Edward Bok, editor of the conservative Ladies’ Home Journal, decided that his readership had become too envious. In an editorial, he proclaimed that it was unhealthy to care so much about what others had. “If you do not possess all the things you would like to have, it is very poor policy to idly wish for them,” he wrote. “A woman is happy just in proportion as she is content…Contentment is a wonderful thing to cultivate.”

Obviously, this sentiment seems pretty naive and Victorian (to say nothing of wildly condescending to women). But throughout the ages, it has been the traditional response to envy: chill out. Practice some zen, man. Don’t worry about what others have; be happy with what you’ve got! This message comes from all political quarters, from conservative churches to crunchy-granola co-ops. Your mother probably told you the same thing over the dinner table. And sure, disavowing envy is probably good for your soul, to say nothing of your blood pressure. But what if it’s bad for you in other ways?

Consider one final envy experiment. Recently, economists at Harvard and the University of Miami asked 257 test subjects for their thoughts on income. They gave subjects two different scenarios, and asked them which they’d prefer. In Scenario A, they would make $50,000 a year, in a society where everyone else makes $25,000. In Scenario B, they would make much more—$100,000 a year—but everyone else in society would make $200,000. When the economists tallied the results, they found 56% of people opted for Scenario A. In other words, a majority of people would prefer to have considerably less money, so long as they were ahead of the pack. It didn’t matter that everyone, on balance, would be poorer. As the authors dryly noted: “Many seemed to see life as an ongoing competition, in which not being ahead means falling behind.”

The really weird thing is, this completely violates traditional economic theory. According to classical economics, we are all supposed to be rational actors—who care only about maximizing our own personal wealth. What our neighbours do is supposedly of no concern to us. By this logic, the vast majority of people ought to pick Scenario B, where they enjoy twice as much cash.

But most people didn’t pick B, and for a very good reason: when we are relatively poorer than others in society, we tend to get screwed. As the economist Robert Frank argued in his 1999 book Luxury Fever, we cannot ignore the existence of higher earners even if we try, because their spending affects us. For example, if you live in a city where everyone else becomes suddenly richer, housing prices go up—and drive you out of the city, consigning you to a one-hour commute from a cheaper suburb. Likewise, if other parents hire expensive private tutors to increase their kid’s chances of getting into a preferred university, they might take your kid’s slot. And if everyone shows up to the job interview wearing expensive clothes, so must you—even if you can’t afford it as easily. Their spending will drive you into debt.

“To the extent that wearing the right watch, driving the right car, wearing the right suit, or living in the right neighbourhood may help someone land the right job or a big contract, these expenditures are more like investments than like true consumption,” Frank argues. “And this suggests yet another reason that people often feel uneasy when in the presence of others who have conspicuously more.” It is a lovely irony of the marketplace: while actual wealth may not trickle down, the pressure to spend like the wealthy does.

Frank is on the cutting edge of what’s called “positional” economics. In the last few decades, he and his colleagues have accomplished something quite remarkable: they have created economic theory that, for the first time, reflects the powerful role of envy in our lives. As positional economists are now finding, envy is sometimes an extremely rational impulse upon which to act. It can indeed be rational to be resentful of, say, the cosmic pay scales of CEOs, or the passing on of massive inherited wealth—even if these don’t appear at first blush to be any of your business. Even The Economist, when it editorialized on the famous British “burning” study, was forced to conclude that while the results didn’t conform to neoclassical economics, they made a hell of a lot of sense.

Let me be clear about one thing: i am not trying to “reclaim” economic envy. I don’t entirely trust envy as a motivation. I certainly don’t like it when I feel it (which is pretty often; writers are among the most bitter, envious people you’ll ever meet).

And of course, personalized envy doesn’t always work in the service of justice. For example, envy has arguably helped wreck several progressive groups—when the leader becomes famous, manages to gain access to power brokers, and is promptly ripped to shreds by footsoldiers who accuse him or her of “hogging the spotlight.” Envy delights in tearing down the prominent, even if the prominent are doing good work. Back when Gloria Steinem was helping to kickstart second-wave feminism, she was pilloried by other feminists who felt her blonde good looks gave her too much power in the media.

Recently, the anti-globalization movement has been hit with this type of rancour—including sniping about the egotism of activists like Jaggi Singh. Back in January, Singh was arrested by Israeli police after refusing to abide by their order to stay out of the occupied territories. Within days, a series of posts appeared on the activist rabble.ca discussion boards, mocking Singh as a narcissist. “A legend in his own mind,” sniped one; “Another pointless performance in the ongoing Jaggi Singh Show,” another chimed in. “Mr. Media Star Singh,” sighed a third. All this because the guy accepted an invitation to visit a social-justice group in the occupied terrorities?

There’s got to be some difference between getting angry at an unfair world, and simply giving vent to the spleen of personal envy. What freaks the elites out, ultimately, is the sense that envy might break out of personal animus and turn into an organized force. Who knows when the great unwashed are going to stop whining and start lighting political fires? Still, as I logged off the rabble boards, I began to sympathize with poor Martha Stewart.

Well, almost. At one point during his visit, the New Yorker’s Toobin commented on the silver chopsticks she’d laid out for their lunch. “You know, in China t
hey say, ‘The thinner the chopsticks, the higher the social status.’ Of course, I got the thinnest I could find,” Stewart said. “That’s why people hate me.”

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