When prices rise due to austerity and greed

Submitted by on

By: 

During the fall of 2005, the Ontario Liberals were deliberating on how to break one of the few promises they kept from the 2003 election. The tuition fee freeze that they introduced for the two academic years between 2004–2006, would come to an end. Bob Rae’s famous dog and pony show created the political cover to increase tuition fees, but in a way that Liberals could feel good about: through schemes and illusion.

I remember being in Saskatoon when Dalton McGuinty casually announced that tuition fees would rise. The way he announced it has stayed with me ever since: “tuition will eventually go up” he quipped. “The price of bread will go up. The price of milk will go up.”

McGuinty then launched into a string of other things that will become more expensive, but it was his first example is what made me revisit this announcement, now 12 years later.

Arguing that inflation is law, and therefore everything gets more expensive, is the easiest way to justify increasing user fees. Of course prices rise. Everyone knows this. But what we don’t always or immediately know is the relationship between the rise in prices for various things and the reason for why these prices rise.

Tuition fees in case in point. During the 1990s, tuition fees outpaced inflation by a lot: four times on average, and as much as ten times for programs like medicine and law.

McGuinty’s tuition fee freeze was politically popular. Students were one of the few groups that successfully pushed to have their promises kept. The stories of how that happened are great. I hope someone writes about them someday. It put the breaks on what many considered to one of the worst examples of Mike Harris’ legacy: that only the children of doctors and lawyers could expect to become doctors and lawyers.

Since 2005, tuition fees have skyrocketed, vastly outpacing inflation. The Liberals then created a complex bureaucracy to try and mitigate these increases but the fact remains: you need to anticipate shelling out +$10,000 per year if you want an undergraduate degree in Ontario. Even if that degree is the most common (business) and promises you nothing, and you need to continue to pay more for more credentials once you’re finished.

Students in Ontario are on the receiving end of these policies. A new semester will soon start; a new set of OSAP payments will roll out. More debt. More stress. Fewer options upon graduation etc. etc.

Student and professor organizations have consistently worked to debunk the myth that fee increases are as inevitable as inflation, and to an extent, have been successful. The bureaucracy built to obscure Ontario’s tuition fee increases is proof of this. But still, the system is complicated and journalists consistently get it wrong as they explain what drives higher fees. It’s a simple calculation: far from being inflationary, tuition increases when public money decreases. So, governments take money out of the system and it’s replaced by the cobwebs in student bank accounts. Operating expenses rise too, but the defunding of higher education is a more intense driver of the problem than inflation is.

For me, this is all ancient history, until this week when the price of bread came roaring back into the news.

During the 1990s, the price of bread stayed close to the Consumer Price Index. Unlike tuition fees. But, like tuition fees, forces outside of the laws of inflation pushed the price of bread to outpace the CPI by a rate that was double. Terra Ciolfe for Maclean’s took StatsCan data to show how bread, rolls and buns climbed much faster than CPI and other food items. This was during the period of time that Loblaw’s leadership admitted to price fixing.

The Competition Bureau was investigating claims of price fixing when Loblaw admitted to fixing prices. By proactively declaring that they broke the law, they shielded themselves from penalties. If average people could only be so privileged.

Then, they implicated other grocery stores like Metro and Sobey’s, claiming that the practices were industry-wide. They’re not too impressed with Loblaw.

Former grand chief of the Assembly of Manitoba Chiefs Derek Nepinak has filed a class-action lawsuit against Loblaw over the scheme. It’s worth $1 billion.

(The percentage change in price for 1L of homogenized milk from 1995 to 2015 is 85%. Just for fun, here’s a comparison between milk and bread. Remember that milk is publicly regulated).

 

StatsCan data showing bread rising much faster than milk over a 20 year period

So yes, tuition fees rose just like the price of bread rose in the 2000s: thanks to policies that are rooted in squeezing individuals by as much as you can get away with it. Dalton McGuinty didn’t know that his off-the-cuff remarks would turn out to be so true!

But from a rhetorical position, it’s important to not understand cost increases as inevitable. Fighting against the inevitable is something that only fools do, after all. Peeling back the reasons for why prices increase is critical. When it’s because of greed, or because of austerity, we must call it out for what it is, even if we only get our answers years later.

Tags: