This article originally appeared on iPolitics.
Income inequality is threatening Canada’s economic growth and is dragging the country’s standard of living down with it, says former NDP leader Ed Broadbent.
Appearing before the Commons finance committee Tuesday, eight experts — including some of the country’s top economists and policy specialists — took turns outlining why income disparity can no longer be ignored.
“There isn’t a sane adult in Canada who is against equal opportunity,” Broadbent told the committee.
“Income inequality is a subject of great concern for Canada, one that threatens to undermine democracy and the common good.”
The solution, he said, is greater tax fairness — higher income taxes and fewer tax exemptions for the country’s top earners, a policy pitch put forth in a 2012 report by The Broadbent Institute, a left-leaning think tank founded by Broadbent.
“Tax cuts have gone to upper income Canadians. We need to increase taxes on the top one per cent,” he told the committee, adding the government should consider restoring past tax levels.
When asked, Broadbent said he did not believe such tax increases would scare the wealthiest into leaving Canada.
“I don’t think they’re going anywhere. They’re not going to pack up and move,” he said.
But professor Stephen Richardson, an executive fellow at the University of Calgary’s School of Public Policy, argues the numbers tell a different story, one that suggests the idea of a growing income gap in Canada is a myth.
“If the rich are getting richer, which may be the case, something else must be at play because the numbers aren’t changing,” he told the committee.
There are two ways of measuring income discrepancy in Canada: through the Gini coefficient and by comparing the wealth of various income groups. The Gini method calculates inequality on a scale from one (total inequality) to zero (exact equality).
In both cases, the gap between Canada’s rich and poor appears to be stagnant. Since 1998, Canada’s Gini coefficient has remained unchanged at 0.43, Richardson said.
Income inequality in Canada, he told the committee, is “a relative concept” and entirely dependent on public perception.
“Canada could have a high level of income inequality and appear more well-off than a country that has lower inequality rates,” Richardson said.
While the numbers may not show direct income inequality, several committee members voiced concerns about unequal access to education, training and employment.
It’s this discrepancy that MPs say could be behind the decline in standards of living — particularly among aboriginal and young people — Canadians say is being felt across the country.
The challenge, said Conservative MP Mark Adler, is that most of the areas in question are provincial responsibilities. While they’re partly funded by transfer payments, he said, the federal government has no way of ensuring the money is spent properly.
Still, said Conservative MP Shelly Glover, the government is working toward improved access to these areas by creating programs like the Canada Jobs Grant, a proposed federal-provincial-industry partnership that would train Canadians in skills in short supply in today’s job market.
When questioned on this initiative, Broadbent admitted that he wasn’t familiar with the proposal but cautioned job training must also be supported by the creation of more unionized jobs.
There’s no doubt that low-income people, especially children and their parents, are better off because of social unionism’s strong tradition in Canada. At all levels, unions take the lead in pressing for public policies such as decent minimum wages, fair labour practices and progressive public services that support families when they are in the labour force and when they are not.Read more
The Fraser Institute claims that the average Canadian family’s tax bill has soared by 1,787% since 1961.
While that’s a clear exaggeration that ignores inflation, what is astounding is that their numbers don’t even remotely hold up.Read more
Broadbent Institute releases new report: “Union Communities, Healthy Communities”
OTTAWA--The right-wing’s regressive anti-union rhetoric and U.S. styled attacks on the labour movement threatens Canada’s prosperity, says a new report by the Broadbent Institute. The report, Union Communities, Healthy Communities debunks the conservative movement’s attacks on labour and makes the case that unions are vital to stable economic growth.
"The current right-wing attack on the labour movement is part of an attack on all progressives in Canada,” explained Executive Director Rick Smith. “Unions have been a major force for a more democratic, inclusive and sustainable Canada, and the progressive movement as a whole must strongly defend labour rights."
The report builds on the Broadbent Institute’s Equality Project in highlighting how unions have contributed an equalizing effect and helped to create broad-based prosperity. Unions successfully promoted fair wages, decent working conditions, social programs, and public services which benefit all citizens – not just unionized works.
"Economic research shows that unions are a major force for greater equality, and that a strong labour movement benefits all Canadians,” said Senior Policy Advisor Andrew Jackson. “Unions have been a force for progressive community change.”
In the coming days, the Broadbent Institute will release a series of responses to this paper written by a number of prominent Canadians from outside the trade union movement.
Admirers and detractors of Margaret Thatcher can agree that she will be remembered as one of the key political architects of our times. Along with her soulmate, U.S. President Ronald Reagan, she broke decisively with the post-war Keynesian welfare state and ushered in the still-enduring age of neo-liberalism.Read more
Comparing inequality between societies is useful, if only to remind us that inequality is not like gravity: there is no “law of inequality”. Political choices matter. True, worsening inequality trends across the OECD countries indicate important structural forces are at work in labour markets and in making it harder for governments to redistribute wealth. But significant variation persists between countries, meaning that we are not fated to become ever more deeply unequal.Read more
Most Canadians would agree that all citizens should be able to develop their individual talents and capacities and to meet at least their basic needs. We may differ on just how much economic inequality we are prepared to tolerate, but we generally agree on the importance of equalizing opportunities for all of us to live meaningful and healthy lives.
There is probably no single better indicator of how we are doing as a society than life expectancy. This varies a lot among countries at different levels of development – and differs to a surprising degree among the rich advanced industrial countries.Read more
Congratulations to Statistics Canada for providing an update on top incomes in Canada, and for launching two new CANSIM tables allowing researchers to dig into the details.
While the income share of the top 1 per cent has slipped slightly since the Great Recession – likely due in large part to the reduced value of exercised stock options – their share of all income (10.6 per cent in 2010) still stands well above the low of about 7 per cent that was reached in the early 1980s.Read more
Andrew Jackson: The Distribution of Wealth: Implications for the Neo Liberal Justification for Economic Inequality
Nobel Prize winning economist and political theorist Amartya Sen points out that “every normative theory of social arrangements that has at all stood the test of time seems to demand equality of something – something that is regarded as particularly important in that theory.” Even extreme neo liberals such as Robert Nozick who reject the goal of distributive justice and favour a maximum role for free markets and a minimum role for democratic governments demand equality of individual rights to freely participate in an economy based upon predominantly private ownership of property and free markets. Capitalism is all about equal access to individual freedom to deploy labour and capital as individuals see fit, as opposed to pre liberal economic systems based upon slavery and serfdom.Read more
On January 16, the Macdonald-Laurier Institute published a study by former Statistics Canada analyst Philip Cross, entitled “Dutch Disease, Canadian Cure.” It argues that “after 10 years of a muscular dollar, Canadian manufacturers have adapted well to a strong currency – demonstrating that Dutch Disease is economic myth rather than reality.”
Mr. Cross argues, quite reasonably, that high commodity prices are not the only reason for the strong appreciation of the Canadian dollar after 2000. However, as Mark Carney noted in a recent speech, they are an important part of the story, explaining about one half of the exchange rate appreciation.Read more