While growing social inequality is the product of a multi-pronged economic, political and cultural offensive by corporate power across the neoliberal era, the systematic weakening of trade unions looms especially large in the story. After all, unions have served as the most basic organizations for protecting and improving the wages and benefits of working people (including the unorganized). It is hard to see, therefore, how we will reverse the growing inequality gap without a considerable revitalization of the union movement.
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.
While it is now only just over a year since the Occupy Wall Street movement began to draw attention to the wide and growing gulf between the 1% and the 99%, many have been quick to dismiss its staying power. After all, it was pointed out from the very beginning that the Occupy movement really did not have much to offer in terms of concrete policy proposals. Asked by the Wall Street Journal last October about his views on OWS, Martin Feldstein, the prominent Harvard economist, could only say: “I can’t figure out what that’s all about…I haven’t seen what they’re asking for.”
But the vagueness OWS projects in terms of its policy proposals is hardly a basis for dismissing its significance.
President Barack Obama had it right Monday when he told the people of Michigan that so-called right-to-work legislation is about politics, not jobs.
Such legislation, now in place in 23 U.S. states, undermines union finances by giving members the right to withhold dues, even though they continue to enjoy the rights and benefits of a union contract.
These laws are pretty effective in undermining unions. The unionization rate in right-to-work, or RTW, states averages just 7.6 per cent, compared to 18.6 per cent in the non-RTW states.
But independent research shows that jobs, even in manufacturing, do not flow to states that pass anti-union laws.
Governments at all levels in Canada have embarked on an austerity agenda that includes reducing public sector employment and efforts to privatize public services. This policy direction will slow economic growth, harm the quality of public services, and the loss of services will have a larger impact on low-income Canadians than higher income Canadians. Along with these other impacts, this austerity agenda will increase income inequality.
This is the first section of a three-part commentary by Sheila Block on our Equality Project report. Stay tuned over the coming weeks as we release parts two and three.
The Broadbent Institute paper provides an overview of the complex range of causes of Canada’s increased income inequality. They range from changes in how economic activity is organized and located internationally to domestic policy decisions. Some, like changes in patterns of international trade and production or technological change, can make the problem seem very large and intractable. That is why it is particularly important to identify those government policies that have contributed to increased inequality. These policies that concentrated wealth and power in the hands of the few to the detriment of the many were not inevitable. The politicians who implemented them made choices, and those choices can be reversed. Reversing these policy decisions is an important step to addressing inequality in Canada.
In 2008, the collapse of financial markets around the world tipped country after country into recession. Canada was no exception. In a short eight month period, hundreds of thousands of Canadians lost their jobs and the Employment Insurance and Social Assistance rolls started to climb. The proportion of part-time and temporary jobs increased as full-time employment disappeared. Canadians had to stretch their dollars further to pay for rising food costs and shelter, many turning to food banks – and credit cards – to make ends meet.