Call me crazy, but as our elected representatives return to Parliament next week, I’m actually feeling a little hopeful.
That’s because as we approach a critical election next year, the pressing issue of inequality might finally take centre stage. It’s more than a hunch. Inequality is clearly forming roots in the public imagination.
The soil was fertilized by the success of Thomas Piketty’s authoritative economic tome on inequality, Capital in the Twenty-First Century , and we’re now seeing the problem being raised by a diverse group of people and organizations — from Pope Francis to Bank of England Governor Mark Carney, from the World Bank to the United Nations’ International Labour Organization.
And if the success of The Hunger Games books and the wildly entertaining blockbuster movies about a post-apocalyptic America ruled by autocrats and defined by deep inequality are any indication, there is genuine pop-cultural fascination with the implications of the gap between the rich and the rest.
Closer to home, I was emboldened last year when the late Jim Flaherty, finance minister at the time, spoke publicly about his discomfort with the Conservatives’ ill-advised promise to introduce income-splitting for families.
“It benefits some parts of the Canadian population a lot. And other parts of the Canadian population virtually not at all,” Flaherty said, riling the Conservative caucus and Prime Minister Stephen Harper. Flaherty had already mused aloud that he wasn’t “sure that, overall, (income-splitting) benefits our society.”
And he was right.
As several studies have now made clear, the Conservative income-splitting plan benefits a very few affluent families with one breadwinner and a stay-at-home spouse at the expense ($3 billion, specifically) of everyone else.
Still, it is significant that a finance minister of our decidedly right-wing government showed the political courage to criticize a policy that will clearly make inequality worse. This test — whether a policy choice will exacerbate inequality — should be the test for any government in making political choices.
A new report released Thursday by the Broadbent Institute, which looks at the distribution and concentration of wealth based on new data released to us from Statistics Canada’s Survey of Financial Security, shows just how important this consideration must be.
While the growing income share of the richest 1 per cent often dominates the headlines, looking at the distribution of wealth as opposed to income provides a broader view of the economic resources available to an individual or family.
A family’s wealth can be thought of as the amount of money that would be left over if they sold all their assets and paid off all their debts. Assets might include such things as houses, vehicles, stocks, bonds and savings. Debts might include mortgages, student loans or consumer debt.
These new data paint a sobering picture of a deeply unequal Canada, with concentrations of wealth that are difficult to believe.
For example, the wealthiest 10 per cent of Canadians accounted for almost half (47.9 per cent) of all wealth in 2012, while the poorest 10 per cent held more debts than assets.
The share of wealth at the bottom is particularly disconcerting: 30 per cent of Canadians together owned less than 1 per cent of all wealth; and the bottom half of Canadians controlled less than 6 per cent of wealth combined.
It’s important to put the distribution into context. The median wealth of the richest 10 per cent — meaning half in this group own more, half own less — was more than $2 million in 2012. In contrast, the median wealth of the poorest 10 per cent was a debt of $5,100.
Moreover, when you exclude pensions, the richest 10 per cent of Canadians own an even larger share of financial assets, which include things such as stocks, bonds, mutual funds, investment funds, income trusts and tax-free savings accounts. The richest 10 per cent controlled almost $6 of every $10 (59.6 per cent) of such assets in 2012, more than the bottom 90 per cent combined.
Meanwhile, the bottom half of the population combined held less than 6 per cent of financial assets and the bottom 70 per cent of the population only 16 per cent — a clear shot across the bow of the various rosy reports trumpeting post-recession financial wealth recovery for Canadians.
These data, though disheartening, can help focus the minds of Canadians and our elected officials to understand the urgency of taking action to combat inequality.
Because in the end this situation is the result of political choices, not some inevitability. As Ed Broadbent, a long-time champion of combating economic inequality, has explained, “Democratic politics, at its best, is about choosing what kind of society we want to live in.”