Economic Crisis and the Poor: Probable Impacts, Prospects for Resistance

Author: John Clarke

Now that the crisis of the financial markets has become a crisis of
the 'real' economy, it is obvious that those who already face poverty
(or live on the edge of it) will be hit extraordinarily hard in the
days ahead. Over the last three decades, social programs that served
to partially redistribute wealth or limit the disciplinary power of
unemployment on the working class were massively reduced. With this
'social safety net' seriously compromised, we can expect a rapid and
deep process of impoverishment to take effect as the downturn unfolds.
The scale and severity of this will pose major challenges but open up
huge possibilities in terms of mobilizing poor communities.

In the last weeks since the crisis came to head on Wall Street and
scandalous bailouts for the rich ensued, a question has been lurking
in the background: who will pay for this crisis of capitalism? That
the capitalists and bankers do not intend to pay is more than obvious.
That workers and the poor face massive austerity is also very clear.
However, in order for this to happen, those in power are going to have
to impose their harsh 'solutions' and that will produce suffering and
an anger that forms the basis for fighting back. I would like to look
at how poor communities may be attacked and at some of the forms that
resistance could take. I speak from the standpoint of someone who is
active in anti poverty struggles in Toronto. In some smaller and more
heavily industrialized cities, the situation is already further
advanced but we may expect a deepening downturn to affect Toronto very
seriously. In many smaller centres, systems of social provision are
even more inadequate than in Toronto and many people facing conditions
of poverty and destitution will be forced to head for the major centre
out of necessity.

The Shredded 'Safety Net'

In assessing the likely impacts of the downturn, the first important
question to consider is the fact that 'employment insurance' (EI) has
been so drastically undermined. If all that people have to turn to is
the welfare system, they will face a devastating shock. EI, while it
has highly restrictive rules, considers eligibility from the
standpoint of unemployed status. Welfare, in contrast, is a system of
last resort that can only be accessed by those on the very edge of
destitution. Those with any other sources of income are ineligible by
reason of the welfare means test. In conditions of rapid economic
downturn, that will translate into a whole mass of people who are
without work but who cannot even apply for income support until they
have exhausted their savings. Once they have reached the required
level of poverty, those who were previously working for living wages
will be expected to make do with the degrading pittance that welfare
provides. I spoke recently to a man who had just lost his job and
wanted to know about accessing welfare if he could not collect EI. He
was truly devastated to learn that his very modest bank account would
have to be almost emptied before he could go to Social Services. As
this kind of thing happens on a major scale, it will send a shock wave
of indignation through whole communities.

However, even the miserably low income provided by welfare is not
something we can assume will be available. The social assistance
system is massively arbitrary in its actual implementation and
municipalities have to foot the bill for part of it. Ontario Premier
Dalton McGuinty has already made clear that local governments will
face cost cutting measures in the months ahead and, in such a
situation, it is to be expected that local welfare offices will engage
in an intensified drive to deny entitlements by way of a covert
process of improper denial. If the crisis becomes deep enough and
caseloads reach a high enough level, the very viability of welfare
provision will be called into question.

In fact, Toronto's City Council has already set the stage for a
disastrous situation to develop in the near future. Under Mayor David
Miller and his progressive allies on Council, the City's welfare
reserve fund has been depleted to pay for day-to-day operating
expenses. From a high point of $94.4 million in 2003, it has been
taken down to a mere $8.3 million. This means that we are going into a
major international economic downturn with the income support system
of the largest city in the country ready to collapse at the first
test. Aside from generalized demands for increases in welfare rates,
we will have to be ready to fight for the very right of people to
obtain even a minimum level of income support.

Nor can we forget that, for hundreds of thousands of low-income
people, the undermining of social programs has meant that they must
frequently access private charity in order to survive. If food banks
and other such services face a big increase in demand, while finding
it harder to bring in donations, the costs in terms of hunger and
illness will be very great indeed. Food banks have become a de facto
second layer of welfare provision that until now has partly concealed
the gross inadequacy of social assistance payments and limited the
spread of hunger. If they are overwhelmed, the resulting situation
will be tragic.

We can expect other impacts in the area of municipal services. 180,000
public housing tenants in Toronto are living in buildings and units
that are in a state of massive disrepair. Infusions of cash from
Queen's Park have been well short of the hundreds of millions needed
to bring this huge quantity of public housing stock up to a standard
that even meets legal requirements. In conditions of funding cutbacks,
this process can only intensify. Already, despite a waiting list for
social housing of some 70,000, City owned buildings are left vacant
for want of resources to restore them to a level where they can be
occupied. There are not a few buildings that have been neglected to
the point where action must be taken soon if they are to continue to
house people. The loss of public housing in conditions where growing
numbers of people lack the means to pay rent in the private market
would be a disastrous addition to the overall crisis.

Even before this downturn really takes hold, hundreds of thousands of
low-income tenants in Toronto barely keep themselves housed and pay
the rent only by going short on decent food. There are already more
evictions taking place under McGuinty than during the Harris years. If
jobless rates shoot up and income support systems are further
restricted, an epidemic of economic evictions will ensue. Then, as the
loss of housing drives people to seek emergency shelter, we see
another situation where the course charted before the downturn has
horrible implications. Toronto has taken up a relentless drive to
remove shelters and services for the homeless from the central part of
the city. At present, finding a bed for the night in the overcrowded
shelters is a challenge for the homeless. An upsurge in destitution
will mean more people trying to access a system that is already
inadequate. There will be a great political reluctance to respond to
this need. Not only will Toronto City Council want to minimize
expenditures but it will also be loath to open facilities in areas it
has recently worked to clear of the homeless in the interests of
upscale redevelopment. Some of the fights we face ahead will be for
the very right to find shelter and stay alive.

Marginalized Communities and the Crisis

It would be hard to overestimate the degree to which this crisis will
intensify the abuses faced by precarious workers in the most
exploitative and low paying sectors of the job market. The level of
enforcement of the most basic legal rights for such workers has
already sunk to the level of tokenism. A worker who actually receives
the protections of the Employment Standards Act enjoys little enough
but these protections are a dead letter in many workplaces. The
payment of wages below the level of the minimum wage, failure to
provide overtime pay, the disregarding of statutory holidays, blatant
safety violations – all these things are widespread now. In conditions
of rising unemployment, we may expect employers to intensify the
abuses very considerably.

There is one 'service' that has been exempt from austerity and,
indeed, has had money thrown at it to the point where its budget has
swollen to unheard of proportions. That exception to the rule is, of
course, policing. This institution and its repressive role will be
preserved and pampered no matter how dire the fiscal situation in the
period ahead. The role of the police in poor communities will be
stepped up in conditions of worsening poverty and destitution. If we
look at the history of the Great Depression, we can see how local
authorities responded in that period to the explosion of homelessness
that took place. The police were used to ensure that those without
work and housing received a very clear message that they were
unwelcome and should move on.

Over the last few years, the drive to clear the central part of the
city of poor and homeless people in order to make way for the process
of gentrification, has given the Toronto cops extensive experience in
harassing and terrorizing people the merchants, developers and
politicians would rather not have around. Toronto's drive to remove
panhandlers has been stepped up greatly in the last couple of years
and it has provided the police with a huge training exercise in
criminalizing a population and disregarding its most basic legal
rights. As pressure on services and the level of visible homelessness
increases, we can count on intensified police repression to be a key
element of the attack that poor communities will have to respond to.

In every aspect of the unfolding crisis that I have pointed to, it is,
very sadly, a given that immigrant communities will face a massively
disproportionate level of attack. A few days ago, the Ontario
Coalition Against Poverty (OCAP) office took a call from a Central
American family who had applied to their local welfare office for a
health related benefit. An official informed them that she did not
believe they needed the benefit and threatened to make sure they were
deported for making false claims. A Somali woman applying for the same
benefit was told by another office that she should not expect such
assistance because she was already better off in Canada than she had
been in Africa. The impending drive to restrict social provision will
have a racist, anti immigrant element that will shape and define it.
With immigrant communities already disadvantaged and vulnerable, any
movement of resistance to poverty will need to confront racism whether
it is sanctioned officially and hides its face or it begins to come
out in the open as expressions of political backwardness.

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