"We are living in an era in which the ascendancy of free-market economic policies has grossly increased the disparities between rich and poor, and created massive social disorganization that has undermined the traditional supports of children's lives The lives of children bear the strongest imprint of the tremendous social and economic upheaval that has rocked the region over the past 15 years." (1)
Over the last decade the promotion of Free-trade has dominated throughout the Western Hemisphere. Free-trade, promotes market mechanisms in exchange for state intervention, cuts government spending, and deregulates and privatizes industries. It has been shaped to benefit the corporate world, "while locking the poor into a system over which they have no control." (2) These actions, entrenched through laissez-fair regimes of governance, have come to be called the neoliberal economic development model. Neoliberalism, understood as a wider aspect of free market policies, does indeed (as Scheper-Hughes and Hoffman argue) profoundly affect the lives of children. Scheper-Hughes and Hoffman thus raise a crucial question of vital importance to any considerations of NAFTA's future; and it is this question, concerning the future of this next generation, that the following pages will address.
When neoliberal reforms are put in place the reduction of public spending becomes a priority. Cuts in public health care, public education, housing subsidies, and direct assistance programs are all implemented in the name of maintaining a "balanced budget." This in turn eliminates, or greatly reduces, a nation's "safety net," which so many children are dependant on for survival. In addition to these spending adjustments comes the change to the existing labor market that takes place. Industries are moved or restructured creating many "newly unemployed" persons. These actions taken in pursuit of the neoliberal economic development model directly and/or indirectly affect the lives of the children, pushing more of them into poverty and making it even more difficult for them to elude their destitute circumstances.
The NAFTA, with its neo-liberal principles, is simply enhancing these government actions, making the lives of the children in Mexico, the United States and Canada even more vulnerable to a life of poverty and the struggles it entails. This chapter makes a case for considering the important needs of the children in the context of Free-trade policies, within the frame-work of neoliberalism, and considers how these policy reforms directly and/or indirectly affect the children of the three signature nations of NAFTA. In the first section it will address the importance of taking the affects Free-trade policies have on children into account. Following this section the chapter will show some of the links Free-trade ideology has to the reforms made in these three countries that have directly and/or indirectly made children more vulnerable to poverty. Thirdly this chapter will look at recent adjustments made, under Free-trade principles, to specific programs which were originally designed to improve the lives of children and the chapter will conclude with some suggestions regarding some tentative solutions for alleviating these destructive actions taken by NAFTA and other Free-trade treaties.
In the words of Prime Minister Jean Chretien governments must remember that, "[p]overty is the enemy of a good start." (3) In a recent study done by UNICEF, in regards to the nations of the industrial world, it was determined, "[i]n dollar terms, children living in the richest American [United States'] families easily top the international league. Only Canada and Switzerland come close. But when it comes to the poorest, the U.S. drops to 16th." (4) The study's results additionally said that the U.S. has a higher level of real income than most of the countries studied; yet it is the high-income children who reap the benefits of these higher levels. "The average low-income child in the other 17 countries is at least a third better off than the average low income American child." (5)
Since the 1980's, The great majority of American's [people of the U.S.] have not been getting bigger slices from the growing pie. As many people have noted, median family income has failed to grow the top 20 percent of wealth holders have received 99 percent of the total gained marketable wealth, while the bottom 80 percent of the population got only 1 percent. America produced a lot of new wealth in the 80's -indeed, the stock market boomed-but almost none of it filtered down In fact, international data now indicates that wealth is more unequally distributed in the U.S. than in other developed countries, including the old symbol of class privilege, Great Britain. (6)
Other studies of industrialized countries also rank the United States first in overall household and child poverty. "Its [the United States'] child poverty rate was nearly twice as high as the overall average." (7) The poor children in the United States were poorer than the poorest children in most of Europe. Sheila Collins states it more forthrightly, "this gives the U.S. the highest child poverty rate of any modern industrial country!" (8)
It is in the context of neo-liberal reforms, since 1979 to the present, that the numbers of children under the age of six who were living in poverty grew from 3.5 million to 6.1 million in the U.S.; during this same time period the rate of poverty for children under six also grew drastically from 18% to 25%. (9)
The United States is not alone, as Canada is close behind them in second place with regards to numbers of children in poverty. Canada has, "the second highest rate of child poverty in the developed world - one in five or roughly 1.5 million kids - outstripped only by the United States." (10)
In a 1997 report card put out by Canada's Campaign 2000 it graded Canada on, "[w]hat has happened [to the children of Canada] since 1989." The following results were reported: 1) the number of poor children has increased by 58%. 2) The percentage of children in families experiencing long-term unemployment has increased by 47%. 3) The percentage of children in working families has increased by 43%. 4) The percentage of children in families needing social assistance has increased by 68%. 5) The percentage of children living in unaffordable rental housing has increased by 48%. 6) The percentage of poor children in 2-parent families has increased by 57% and 7) the percentage of children living in families with incomes less than $20,000 has increased by 45%. In addition to these published statistics, ones were done on a provincial level - in Ontario, since 1989, the increase in the number of poor children was 99%! (11)
Like the United States, as a nation, Canada has been doing very well. Which is why the richest children in Canada are the third richest in the world - only the children of Switzerland and the United States are richer. (12) Yet "[o]ur [Canada's] vast national wealth does not benefit the poor children," as Canada's gap between the rich and poor child is well above the average industrialized country. The average gap is $33,514 and Canada's is $42,510 (the United States, has the highest gap, at $54,620). (13)
In addition to these negative statistics Canada has to deal with the hypocrisy of being "ranked number one in the world on the U.N.'s human development index." With the recent statistics put out regarding how poorly Canada has done in regards to the wellbeing of its children this ranking appears inaccurate. How is this ranking explained? According to David Ross, the Executive Director of the Canadian Council on Social Development, it is explained like this,
From the 1940's until very recently [possibly 1989?], Canadians understood that children were societal as well as a family responsibility. And as a result of this thinking we rank repeatedly near the top as a 'good place to live' in various international surveys. Perhaps, because our generation has in large measure inherited this high ranking, we take it for granted. We've forgotten how we got here in the first place. (14)
Mexico, although different then the U.S. and Canada in regards to wealth, also has extremely high numbers of children in poverty. Currently one third of children are poor in Mexico, while "[a] study by Mexico's National Autonomous University earlier this year reported that 50.7 percent of all Mexicans were considered 'extremely poor,' up from 31 percent in 1993" that puts over 66 million Mexicans in poverty. (15)(16) The percentage of households with no income or below minimum wage in each state was also measured resulting in the following:
|
Chiapas |
40.3% |
|
Guerrero |
11.4% |
|
Oaxaca |
42.6% |
|
Baja California |
8.3% |
|
Chihuahua |
18.3% |
|
Mexico City |
43.2% (17) |
Although the levels of wealth are substantially lower in Mexico than in its NAFTA partners its concentration of wealth is on the same level. "While Mexico, like many other Latin American countries has succeeded in attracting foreign investment, prosperity has not trickled down The money still benefits only the country's elite." (18) With the above numbers and statistics, Mexico's level of children in poverty is comparable, if not equal, to its more developed NAFTA partners.
Upon hearing these statistics Paul Martin, Canada's Minister of Finance replied, "I think we're now reaching the point of absurdity in terms of inequality I believe child poverty is the greatest social policy challenge of this generation." (19) The United States, Canada and Mexico, although varied in their levels of wealth, have some of the highest child poverty rates in the world. Levels that put millions of children at risk of poor living conditions, lack of education, malnutrition, starvation, homelessness and more. These rates have not always been at these levels, the numbers in all three of these countries have only been on the rise since neoliberal reforms have been put into place.
With this in mind the countries of NAFTA need to consider the long-term affects current neoliberal policies will have on their future generations. It is the children of today that will be the consumers and employees 10-20 years from now. With more and more children being pushed into poverty, as adults they will be unable to participate in the activities of the market. 1) They will be unable to purchase the products being made, due to their limited incomes. 2) They will be unable to participate in the labor force as they will have had minimal, if any, access to a formal education. 3) Their health will be in a poorer state, making for higher risks of disease and death, which will also directly effect their future employers. All of these reasons and more will be devastating to the current design of NAFTA let alone the population as a whole.
Neoliberalism, "rejects state intervention to influence the results of market behavior and views the state only as the enforcer of market rules." (20) It has replaced the social democratic way of thinking and has become entrenched in the international institutions over the last 40 years. The principle ideals consist of increasing competition, through cuts in government spending; deregulation, privatization and restructuring of the economy. "These ideals are a radical departure from the general historical rule in which economic processes were embedded in social relations, the economy being but one manifestation of the social order. The consequence of this disembedding of the economy was to disarticulate society to make people more vulnerable to forces over which they collectively had no control." (21)
This argument, which Cox presents about neoliberalism, is doubly pertinent to the North America of NAFTA, in so far as the agreement has made it very hard for governments with less laissez-fair oriented platforms to put social welfare policies in place (in the previous chapter by Stacy Stack she discussed this more thoroughly in her section on Women in the U.S. and Canada). By locking in these principle ideals of neoliberalism, "[c]ompetitiveness becomes a justification for dismantling the welfare states built up in the post-World War II period ." (22) In addition, cuts in public spending can also be justified as they are assumed to additionally increase competition. The fiscal deficit takes priority and measures are taken to reduce it, which will in turn make them more internationally competitive. "Fiscal deficits are cut by sharply reducing public spending. Subsidies and public employment are also cut back." (23) Welfare recipients and non-established workers are hit as their "safety net" (or guaranteed assistance when in dire need) is taken away and replaced with "tough love" programs - or programs which help only those who are willing to give back to the system in return for the assistance given.
This action is seen throughout North America. In the United States a plan to reduce the debt to zero by 2002 and to maintain balanced budgets for every year thereafter was put in front of Congress in 1994. This would require over $1 trillion in spending cuts over the next seven years. (24) In Canada the federal transfer payments, under the CHST of 1996 (discussed in more detail later on in this chapter), will be reduced substantially. A cumulative loss of seven billion dollars in the first two years, from the amount paid under the old CAP/EPF system, will take place. (25) In addition to the adjustments made to the federal transfer payments other adjustments have been made, which particularly hit Canadian families. Since CUFTA, these additional adjustments have been estimated at $10 million dollars in spending cuts. (26) In Mexico similar cuts were reported when neo-liberal reforms were put in place and the reduction of the fiscal deficit was put as a priority.
The government reduced spending through drastic cuts in subsidies and non-interest expenditures in all sectors. As total expenditures declined from 45.4 percent to 40.6 percent of GDP, primary expenditures fell from 30.7 to 22.2 percent of GDP. The reduction in primary expenditures were the result of a huge reduction in public investment, a drastic cut in government wages as well as a 6.2 percent decrease in expenditures for social development. (27)
When spending cuts are made a priority it is usually children, families and the poor which are hit the hardest. As Carol Hartt mentioned in her chapter earlier, "[w]ithout a strong corporate voice, often those in poverty can not be heard." These reforms made to the spending done on federal programs take away the "safety net" which so many children are dependent on since they have no resources of their own to pull from.
Public education, public health care, housing subsidies, direct government assistance and more are all usually on the list for budget cuts. Cuts in public education are actually encouraged by World Bank, "[t]he Bank recommends drastically reducing public investment in education through privatizing and breaking up school systems, and nullifying teachers' contracts The Bank's education policy is part and parcel of a larger neoliberal economic program whose overarching goal is to reduce state spending so that governments are able to continue making payments on their foreign debt." (28)
Therefore it goes without question, that spending cuts on public education can be found throughout the countries of NAFTA. In British Columbia, children were promised 9 new schools by the Education Minister Paul Ramsey, yet the schools now, "will not be built if school districts fail to meet a number of 'cost containment' criteria imposed by the government." (29) Elsewhere in Canada schools have eliminated field trips and other "outside of the classroom expenditures," in order to keep spending low. (30)
In the United States the reduction of spending on education can be seen in the quality of U.S. schools. As Carol Hartt said in her previous chapter, "U.S. schools have been deteriorating to the point that they are now considered to be one of the lowest quality in the industrial nations." In New York City it has been noted that many good schools are increasingly jammed or over crowded and that often you find, "less than a fourth of students reading at grade level." (31)
In Mexico as of 1988 spending on education fell 29.6 percent. (32) Recently more spending on education has been implemented but only as a result of IMF pressure; the present levels of spending on education are still greatly reduced from the levels they were at prior to neoliberal reforms. (33) Even with this new increase in spending Mexico still only spends roughly $110 a year per student on education, which is over 92 percent less than Canada and the United States; and the country invests a mere .3 percent of its GDP on science and technology. (34)
When cuts in public education take place it is the poor and middle class children who are at a disadvantage as wealthy kids have the option of attending private schools where class sizes are kept small, and technology, teaching practices and textbooks can be updated regularly. By limiting access to all available resources, the future labor force will have a smaller number of well educated workers to choose from. As Carol Hartt noted earlier, studies have shown, "that by increasing the labor forces' average education by one year raises GDP by 9%." Other studies done on Latin America showed that when a growing number of children began falling behind in their studies or dropped out of school all together it was caused by the dilapidated state of the educational system and low teacher morale. (35) Therefore it goes to show that by spending money on education it is the economy that will benefit in the long run as well as the children.
As for health care, "[s]tronger children grow into more productive adults And history shows that societies that meet women's and children's nutritional needs also lift their capacities for greater social and economic progress Approximately half of the economic growth achieved by the United Kingdom and a number of Western European countries between 1790 and 1980, for example, has been attributed to better nutrition and improved health and sanitation conditions, social investments made as much as a century earlier." (36) By cutting spending on public health care children no longer have adequate access to basic medical care as costs become out of reach. These children will then be unable to participate in the full realm of market activities as malnutrition and other health concerns will limit them.
Even with this knowledge public health care spending is continually being ignored. In 1996 there were 10 million children in the United States who were uninsured (either without private insurance or Medicaid), which is the highest number the U.S. has seen in the last 8 years. (37) Yet when President Clinton proposed a guaranteed health insurance for all Americans in 1994, Congress rejected it. Instead they agreed that efforts for a reduction in these numbers "would be carried out in the context of a balanced budget," in other words no further funding would be allotted. (38)
In Ontario, Canada the government has instated a $1.3 billion budget cut for its hospitals and over all, in 1995, Canada saw a reduction in government health care spending as a percent of GDP fall for the first time in 25 years. (39)
Mexico is not doing much better, since 1983 the provision of public health care has declined in overall spending and quality. "Health service indicators show a cut in the availability of doctors and physical infrastructures per beneficiary The quality of health care services thus probably worsened during adjustment." (40) According to UNICEF's Selected World Development Indicators, as of 1995, Mexico still had a high number of infant moralities, 33 out of 1,000 births, only 45% of births were attended by health staff in 1990 and there was only one hospital bed per 1,704 people as of 1993. All of these numbers signify that health care has not been an area of high priority for Mexico in the recent years - since the advocacy of neoliberalism.
Reduction in housing subsidies is also prevalent. As of 1996, the government of the United States has decided to reduce the numbers of persons to receive rent subsidies to zero (this will be addressed further in the next section). (41) In Canada, social housing development has halted in most of the country. Only two provinces maintain contribution to new affordable housing, leaving 569,000 (up from 339,000 in 1990) Canadians unable to afford housing. (42) Through Mexico's, "welfare" program, PRONASOL (will also be looked at further in the next section) Mexico reduced its federal spending on "Housing and Land Rights" from 120 billion pesos in 1991 to 57 billion pesos in 1992 - halving its expenditure from the year previous. (43)
Reduction in housing subsidies has obvious negative affects on children as more of them will be pushed into homelessness or worse living conditions--conditions so many children of these nations already face. "They confront frightening dilapidation: leaks that eat at their ceilings and rot their floors, rusted fire escapes and roller-coaster stairways, sometimes with steps so corroded that tenants adopt idiosyncratic safety measures And they endure vile infestation - rats gobble their garbage and nibble their slippers, and, in one horrifying case in Bushwick, cockroaches have laid eggs inside the noses of Wando Carrero's children." (44) There was estimated over 60,000 people living in habitations that endanger their lives in New York City and over 700,000 homeless each night in New York state alone. (45) Without an adequate living environment children suffer from an increase in disease and illness as well as a reduction in self esteem - all of which inhibit their ability to grow into healthy productive adults.
These reductions in public spending along with the elimination of many direct government assistance programs, like the ones that will be addressed in the following section, all are done in the name of "increasing competitiveness in international trade" and all hurt the wellbeing of the country's future generation. Further more the deregulation, privatization and restructuring of industry, additional promotions under Free-trade economics, have similar affects on children as they are dependent on their parents' or guardians' incomes which has been newly altered.
Deregulation and Privatization, "refer to the removal of the state from a substantive role in the national economy, except as a guaranteer of free movement for capital and profits. Restructuring refers to the reorganization of global production from Fordist economies of scale to post-Fordist economies of flexibility." (46) Which, in general, means fewer reasonably secure and high-income core workers will be replaced for a larger proportion of precariously employed lower-income, part time, peripheral workers. (47) In addition, fewer state sector employment opportunities will become available as the state reduces its role as an employer. These actions, in return, result in state sector employees, "becoming front line targets for budgetary restraints," and established industrial workers becoming unemployed or receiving a reduction in their real wage, as a consequence of being thrown into competition with other countries' labor forces which will work for lower wages. (48) Yet none of these workers will receive compensation for the reduction, or elimination, of their incomes and are asked to support their families as before.
With NAFTA this process, of reform to result, was seen in all three signature nations. According to the well respected trade theorist Edward Leamer of the University of California, "[f]reer trade will ultimately reduce the wages of less-skilled U.S. workers by about a thousand dollars a year, partly as a result of NAFTA." (49) With this reduction in income and the estimated elimination of 500,000 jobs many more U.S. children will be faced with the struggles associated with poverty. (50)
Canada has also seen these results, with over 121,000 public sector jobs cut between 1992 and 1996 and unemployment rising to 15.2 percent in 1995 from 7.2 percent in 1976. (51) (52) In 1993 the percentages of families affected by unemployment throughout Canada was recorded as follows:
|
Newfoundland |
63% |
|
Prince Edward Island |
50% |
|
Nova Scotia |
46% |
|
New Brunswick |
48% |
|
Quebec |
40% |
|
Ontario |
32% |
|
Manitoba |
28% |
|
Saskatchewan |
27% |
|
Alberta |
30% |
|
British Columbia |
31% (53) |
The estimated 1.6 million maze growers and the small 'artisan' produces of Mexico, which were put out of business by massive U.S. farms and the mass produced U.S. imports of NAFTA, will also be forced to adjust to a more limited income. (54) The National Minimum Wage Commission also reported that, "[t]he real minimum wage [in Mexico] peaked in 1978 and has since declined to levels lower than those of the populist 1930's. It now takes 4.8 minimum wages for an urban family of four to rise above the poverty line, but the average wage is between two and three minimum wages," further increasing the chance of children falling into levels of extreme poverty. (55)
What does all of this mean for children? It means more families having to stretch their newly reduced incomes, finding that more often than not, they come up short. Many children will then be asked, or forced, to contribute to the family income at the expense of losing valuable education and/or part of their childhood. In Mexico, more than 800 children work the streets in the border town of Matamoros. "They work as fruit or flower vendors. Some beg to eat or help their families, and some may even commit petty crimes to survive " (56) Outside of the city they work in the fields with their families or perform the household duties that their parents no longer can see too, since both parents are now needing to work. (57)
The children of Mexico are not isolated from this occurrence, as children in the U.S. and Canada have also taken up employment at an early age in order to supplement their family's income. You will find them working on large farms, selling newspapers, stocking goods, taking up the household chores, as well as participating more frequently as pan-handlers on the streets. These young workers have in return made it difficult for businesses unassociated with child labor practices to compete with the low wages given to these youth. (58) Therefore, when children enter employment too early it not only hurts the children themselves but also the businesses associated.
Cuts in social services have left in their wake a less-educated population and have placed even greater burdens on women, who now have to juggle the increased demands of the workplace and home, when the already inadequate level of state support has been further cut and a process of disintegration is threatening their families and communities. Already, family breakdown, deteriorating schools, spreading poverty and the rise in child labour are jeopardizing the well-being and productive potential of the next generation. (59)
By cutting government spending, taking away the "safety net," and restructuring the labor market, the traditional supports of children are being taken away and they are being forced to grow up faster, less healthy and less educated. Children do not have the resources needed to counteract the results of free market reform and therefore turn to the government for help. Yet the government has turned its back on them in favor of short-term economic growth. They have furthered the struggle of children by adjusting or eliminating previous "welfare" programs in the name of "balancing the budget" and have therefore "jeopardized the well being and the productive potential of the next generation." (60)
As of 1996 the United States was said to have the weakest safety net for children of all other industrialized countries. All other industrialized nations do more to lift their children out of poverty then the United States. (61) The United States not only provides the least support to its citizens but historically has been the last to offer such support.
Unfortunately the U.S. continues to uphold this title as in the past 4-5 years assistance programs for the poor have been reduced even more. In 1994 Republicans gained both houses of Congress and soon following began dismantling the already weak welfare state of the U.S.
Populist rhetoric was deftly put to work in the pursuit of transferring funds from the poor to the rich. A bill to slash aid to poor mothers and their children was called the 'Personal Responsibility Act.' A bill to redistribute wealth form the lower and middle classes to the top ten percent was called the 'Job Creation and Wage Enhancement Act.' A bill that would make it almost impossible to punish corporations for products that would prove to be harmful to health and safety was called the 'Common Sense Legal Reform Act.' (62)
In addition to these "reforms" were the changes made to the Supplemental Social Insurance, mother and child nutrition programs, home energy assistance, unemployment insurance, Medicaid, and the housing appropriations bill. (63) All of which directly affect the well being of the country's children - especially the less fortunate ones.
Of all the "reforms" the worst risks "to children come from replacing Aid to Families with Dependent Children with a block grant." (64) Before the bill was signed, studies by the Department of Health and Human Services predicted that it would push more than a million additional children into poverty. (65) The elimination of the AFDC entitlement status means:
Putting it more bluntly almost the entire safety net for children will be taken out from under them.
That is not all, there are other reforms almost as harmful to the wellbeing of the children of the United States. The housing appropriation bill of 1996 comes in a close second to the elimination of AFDC. With this bill the federal government has given up the fight for making housing affordable. On page 29 of the bill, "Congress specifies the number of 'incremental certificates and vouchers' - in English, the number of additional families that can expect rent subsidies from the government this year." The number has been set at zero. (67)
This zero number means more people will be out of reach from the American dream-having safe, decent and affordable housing. Yet the United States is still considered the nation which "shelters more people in better-quality homes than any country in the world." (68) How can this be, if the U.S. is telling so many people that good-quality housing is only available to those who can afford it? The U.S. can keep this status, "by offering the middle and upper classes exactly what it tells the poor it can no longer afford: generous government subsidies. The $66 billion a year the Federal Government now spends on mortgage-interest and property tax deductions is about four times as much as it spends on low-income housing. More than two thirds of it goes to families with incomes above $75,000." (69) This reform, simply means, more children will be left homeless or forced to live in inhumane circumstances.
The other reforms mentioned, including AFDC, have now been turned into block grants at reduced amounts for states to do as they like. Under this plan states decide their own eligibility criteria, work requirements and even benefit levels for their welfare programs. (70) With only these restrictions the states have been granted enormous flexibility, which with this new power many have already opted to cut assistance in exchange for "more politically palatable programs." (71)
As state budgets were debated, fourteen states had already either cut or restricted their general assistance programs with disastrous results The Connecticut legislature voted to shut off welfare benefits to families after twenty-one months, roll back benefits to levels of the late 1980's, and require all welfare recipients to be fingerprinted. The state's highest court upheld a 1992 law that allowed cities and towns to cut off welfare benefits to able bodied individuals after nine months, stating that Connecticut had no constitutional responsibility to care for its poorest citizens. Facing the most drastic budget cuts in half a century, New York's future was compared to the 'shock treatment' that devastated postcommunist Eastern European economies. (72)
Overall it does not look good for children in poverty since the trend for budget cuts is not veering away from the elimination or reduction of assistance programs which are directly beneficial to children.
Canada is following suit, with its many recent adjustments to their welfare programs. They have decided to let the market fix the problems of the poor which by the previous statistics appears to not be working. Taking the words of David Ross,
[i]n recent memory, there have been a rash of policy changes adversely affecting children and families; let's list them:
Considered together these changes signal a dangerous undercurrent. The war on the deficit has become a war on families. Families have taken a big hit --by our estimate at least $10 million dollars worth. (73)
Coincidentally the CHST he mentions in the beginning is very similar to the block grants of the U.S. The CHST reduces federal transfers, or in other words, gives less money to provinces. "The federal transfer payments under the CHST will be reduced substantially from the amount paid under the old CAP/EPF system. The cumulative loss during the first two years will be seven billion dollars." (74) The CHST also gives provinces more freedom to spend the money as they see fit. Provinces will now receive their federal transfer in one block fund and be able to spend it how they want--they can reduce assistance programs without penalty from the federal government. (75)
With this "reform," like that of the U.S., there will no longer be protection for social assistance or the key social services that aid children and their families. Many provinces have already slashed welfare benefits and cut programming, and are planning to introduce user fees for a variety of family services. "All of these moves hurt poor children, in particular those on welfare, and those whose parents are working at the margins of the economy." (76)
Mexico, although it does not have such a distinguished welfare system, has also been experiencing some adjustments to its social policy, done in the name of neoliberalism. PRONASOL, which is the primary social program of Mexico, is an umbrella organization in
charge of coordinating health, education, infrastructure and productive projects. It is designed to improve the living conditions of the poor, and is "seen as emanating from the presidency and from the (now defunct) Ministry of Budget and Planning (Matt Sisk will also be addressing this program further in the following chapter). (77) This program which was implemented under Salinas in 1988, changed the spending pattern of the government of Mexico, but has been heavily criticized for its use as a political tool for increasing presidential legitimacy. With PRONASOL, unlike the United States and Canada, Mexico has seen an increase in spending for many of its social programs over the last 3-4 years, yet these increases actually only took place after immense pressure from the IMF was placed on the government, "[i]ts genesis was not national, but was required by the IMF to accompany the restructuring process." (78)
In addition to pressure from the IMF, other outside influences have played a large factor in the creation of this program. Within the definition of the program it states, "it cannot interfere substantially with the logic of the market. 'Fondos de Solidaridad para la producciòn' is one of the most important but also one of the most problematic components of the program." (79)
One more note regarding the "welfare" system of Mexico is that in real terms the Mexican government is actually paying less overall for the specific social programs of PRONASOL than previously with its numerous government subsidies. "In replacing the state intervention of yesteryear with the Solidarity [PRONASOL] program of today, the state has effectively reduced its commitment to economic and social intervention." (80)
With each of these factors taken into account, its constraints by free trade principles, its pressure to be implemented by outside international forces, the government's actual reduction in public spending with its use, and that "PRONASOL has not led to any perceptible changes in inequality and poverty in Mexico," it is safe to assume that Mexico has remained within the guidelines of neoliberalism. (81) As they too have done little, if anything, to help the children offset the negative affects Free-trade has had on them.
As one can see the Free-trade practices of the 80's and 90's have been devastating to the lives of millions of children, and with NAFTA millions more are being affected. NAFTA, as Stacey Stack noted earlier in the previous chapter, with its clause which requires permission from its trading partners before implementing any new public programs, and with its requirement for providing compensation for any losses that the private sector might incur, has made it extremely difficult for any of the NAFTA countries to alter these harmful affects it is having on children. (82) For this reason NAFTA needs to be revised or new policies need to be addressed on a tri-national level in order to discontinue the course these three countries have embarked on.
With the previous social and welfare programs offered by these countries, often the biggest complaint is that too many people have become dependant on the assistance they receive. The government views recipients as simply "wanting a handout" instead of actually working to make a living. For this reason, among others, alternatives to the present system have been looked at. Basic tax reforms, taken in the form of shifting the tax burden toward the wealthy or direct taxation of wealth, have been looked at. In the educational realm, public preschools and additional scholarships have been considered. Vouchers or other types of social transfers, including child support assurance, raising the minimum wage, extending the earned income tax credit or implementing a child allowance, are additional alternatives along with a basic reform in the current regulations. (83)
Of these many alternatives, the child allowance, like that of many European countries and Israel, appears to be the alternative most appealing (outside of raising the minimum wage) as it has been proposed numerous times. When looking at it, if applied on a tri-national level, as part of NAFTA, it could be a very tempting alternative as it has obvious benefits which directly go to children and their families.
The children's allowance - known in other countries as family allowance - is paid directly by the National Insurance Institute to all families in Israel in accordance with family size, and is intended to supplement their income. The allowance is a universal one, and its rate has no connection with the level of the family income or the number of the family income sources. (84)
As is shown throughout this document the NAFTA has created some winners and some losers, which all three participating countries have experienced. One of the primary winners is the MNC's, while one of the primary losers is the children presently in poverty or the ones who are being pushed into poverty as a result of the increased neoliberal policies. By creating a tri-national children's allowance these extremes between the winners and losers could be reduced.
By calling it a "tri-national" children's allowance, all three countries of NAFTA would be required to adopt a children's allowance using the same guidelines. Enforcement would more than likely need to take place through a tri-national agency. The allowance would be designed, like Israel's, to supplement a family's income and by no means would be able to fully support any family with children. (85)
The source of funds would primarily come from employers (corporations and businesses). They would pay an approximate 1-2% tax on each of their employees' salaries. That is to say, for every employee, whether they have children or not, the employer would pay 1-2% on whatever the employee earned. This would then be deposited in a "children's allowance" fund which on an annual basis the tri-national agency would distribute 80% of these collected funds equally to the children of every employee within the countries of NAFTA. This 80% would be limited to strictly those children who are legal dependents of employees, giving the parents and guardians and incentive to enter the work force on at least a part time basis. (There is the possibility of reducing the allowance progressively with the number of children per family, which would reduce the possibility of people having children simply to collect the allowance.) The allotment of funds would not change with increases in salary or hours worked. The other 20% collected can be placed in an emergency fund (or "lender of last resort" fund), where national institutions/agencies, which have programs specifically designed to benefit children, can petition for assistance with their programs (for example: orphanages, children's shelter, food banks, etc.). This would give those children who are not supported by their parents or guardians some help outside of that which they receive form the private sector, which has a tendency to fluctuate with its contributions. The corporations to be taxed would include all those within the NAFTA realm as well as corporations who have their base/home office in the NAFTA realm. Meaning if a MNC whose head office/base is in the United States, yet has offices in Taiwan, they would still be required to pay the tax. (This would reduce the amount of corporations who would place branches in other countries outside of NAFTA simply to avoid the tax.)
Why would this option be beneficial? 1) The most obvious is that it helps reduce the social inequality gap that has widened further since NAFTA and effects the children of these nations so tremendously. 2) It is not dependent on government spending since it places the burden on corporations who as of now have been the biggest beneficiaries of NAFTA. 3) By placing the tax on all NAFTA corporations, one nation will not benefit, from not having to pay a children's allowance, by moving their firms to another NAFTA nation. 4) It would encourage people to work. One of the biggest arguments regarding welfare is that many government officials claim that it discourages people from working. As of now, for every hour one works that amount is deducted form their welfare check. The allowance would pay for the losses they incur in welfare, since they would then be given a supplement in addition to their work earnings. By eliminating the fear of losing too much welfare, as a result of going to work part time or for minimum wage, people will be encouraged to join the work force despite their low wages. The allowance will pay for their loss in welfare and allow them to slowly gain work experience that can lead to better job opportunities in the future. Which in turn will get them off welfare completely. 5) By keeping more children out of poverty they will have a greater chance of later being able to enter the work force, which is obviously a valuable asset to any corporation.
All three member nations of NAFTA, as of 1998, have high numbers of children in poverty and yet all three countries continue to take actions which further increase these numbers. Throughout their histories, all three countries, have seen times of reduction to this currently high number. In the United States between 1960 and 1972, when controversial welfare programs were put in place by the Kennedy and Johnson administrations, the poverty rate was cut in half. Millions of children gained access to Medicaid and the number of children never examined by a doctor dropped a remarkable 33 percent to 8 percent. Infant mortality, between 1965 and 1972 dropped 33 percent and food stamps and public housing also made some headway. (86)
Before 1989 "poverty was not considered a major problem," in Canada. (87) In the case of Ontario, between 1980-1989 social assistance rates increased an average of 190 percent. Welfare benefits were increasing more than twice as fast as consumer prices, making the real income to welfare recipients double during the 1980's. There were only two recorded times during the 1970's and 1980's that real welfare income declined. Once in Ontario during high inflation in the late 1970's and the second was in British Columbia during severe recession in the mid-1980's. (88) Then came CUFTA, in 1989, and all of this "euphoria" changed as neoliberal policies, like those of the United States, were implemented.
Even Mexico had a time where improvements were seen, in 1984 extreme poverty was estimated at a mere 2.5 percent and only rose to 7.3 percent by 1989. (89)
It has been shown time and time again that the "trickle down" theory, which Free-trade economics assumes, does not work. Free-trade advocates continue to use this argument as a way in which countries should address poverty. Yet in actuality, countries which support Free-trade ideology do not appear to be addressing poverty and the children involved at all, instead these issues "are considered a government expense, not an investment," even though the children of these nations are the nations' economic futures. (90)
As stated in the beginning Free-trade policies have grossly increased the gap between the rich and the poor, and have created massive social disorganization that has undermined the traditional supports of children's lives. Without government intervention, whether it be done by re-implementing programs similar to those which were working in the past or by creating new ones like some of the suggestions given in this chapter, the governments of NAFTA have sentenced millions of children to lives of poverty, which they themselves are incapable of escaping. Lives of poverty which will take them into poverty as adults and thus limit their participation in the Free-market which NAFTA has created.