When some are more equal than others

 

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It is one of Liberal Leader Justin Trudeau’s favorite yakking points. NDP Leader Thomas Mulcair bangs on about it every chance he gets. Even Canada’s esteemed Prime Minister Stephen Harper has raised the subject, albeit delicately, in public from time to time.

Now the worthy Organization for Economic Co-operation and Development has jumped into the fray in its first country report on the Great White North in two years: Canada is, indeed, a nation of unequal opportunity and in all the ways that matter.

While “Canadians enjoy high levels of well-being and social progress” and though all of the country’s “component scores exceed the OECD average,” the report also concludes that “disposable income inequality has increased by considerably more in Canada since 1995 (11 per cent) than in other countries with data (2 per cent) to a level that is now 12th highest in the OECD.” 

What’s more, “in an era of high commodity prices has created wide regional economic disparities, while much of the public revenues from non-renewable 

resource extraction are spent on current government programmes, rather than being saved for the benefit of future generations. Incomes have risen in resource-rich provinces, but the resulting currency appreciation has placed pressures on manufacturing.”

The nation’s traditional mechanism for redistributing wealth from have to have-not provinces, federal equalization transfers, “only partially offset inter-provincial disparities in fiscal capacity.”

Housing is a special concern, says the organization. Prices in major cities, especially Vancouver and Toronto, are preposterously out of sync with the asset wealth that underpins homes and condominiums there, raising the specter of a market bubble and subsequent crash. 

If that happens, only banks and other lenders will prosper, thanks to Canada’s uniquely generous mortgage insurance system which guarantees institutions 100 per cent payback in the event of loan default – a circumstance that if repeated often enough would, itself, accelerate the widening gap between the rich and the rest of us poor schlubs.

Still, whenever politicians and pundits grumble about income inequality – which U.S. President Barack Obama has termed the “greatest threat” to contemporary society – other members of the chattering class are sure to point out that sour grapes never helped anyone, rich or poor.

Unerringly, they cleave to arguments that justify, legitimize or merely accept disparity as a fact of life. 

Writing in the Washington Post earlier this year, economist Joann Weiner cited four reasons why Mr. Obama is sort of stuck. 

First, America  is a “Great Gatsby” nation where “the rich stay rich and the poor stay poor.” Second, “winning the ‘birth lottery’ is the biggest factor in determining” one’s like pay grade in life. Third, birds of a feather flock together; rich, educated, people marry other rich, educated people. And fourth, the uneducated are unlikely to reverse their fortunes because college has become too expensive to pursue. 

Ironically, though, these conditions, which hamper efforts to inject the system with greater equity, are themselves the product the widening disparity that first appeared in the late 1970s thanks to what former U.S. Labour Secretary Robert Reich and others have identified as two concurrent developments: the appearance of spectacular, new business technologies; and a wholesale assault on private unions.

The former lowered labour costs, while the latter undermined wages and job security. Consequently, as Mr. Reich notes on his blog, “We are heading back to levels of inequality not seen since the Gilded Age of the late 19th century. The pertinent question is not whether income and wealth inequality is good or bad. It is at what point do these inequalities become so great as to pose a serious threat to our economy, our ideal of equal opportunity and our democracy.”

In fact, the best practical reason why everyone, from the improbably wealthy to the grudgingly poor, should worry about disparities in wealth and income is economic. Without a sturdy middle class around to keep buying the stuff rich people’s factories make, the whole game implodes.

Progressives among us are certainly not inured to the status quo. They note with confidence various fixes, including universal early childhood education to provide economically disadvantaged kids with the same start in life as their wealthy counterparts. 

The real question is whether our collective Trudeaus, Mulcairs and Harpers will ever be ready to put their money where their mouths are.

 

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