Category Archives: Wealth

May 13 2017
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Economy, Government, Municipal Affairs, Wealth

The ‘Big Smoke’ – Part II

IMAG0604We walk down to the municipal park, my grandkids and I, past the garbage bins and recycle containers and into the broad, well-tended expanse of splash pools and basketball courts. These recreational areas are everywhere in some parts of Toronto. In a city of this monumental size, the idea is to get the kits and pups out of their tiny, fractional backyards.

It’s a downtown development strategy no one talks about in the burg that Drake named. Here, in Moncton, maybe that’s a conversation we should have. In every other respect, though, we don’t know how lucky we have it.

Late last month, the CBC reported, “All three levels of government (will) meet Tuesday in Toronto to figure out ways to cool the red-hot real estate market in the region, where average home prices have shot up 33 per cent in a year.

Immediately after figures revealed the average home in the Greater Toronto Area cost $916,567 in March, Finance Minister Bill Morneau called for the meeting with his Ontario counterpart Charles Sousa, and Toronto Mayor John Tory.”

As Mr. Morneau fretted that he is “concerned that dramatic price increases will have long-term implications for housing affordability and housing market stability,” Mr. Sousa added that he was almost scornful of those with “deep pockets. . .crowding out families who are trying to put down roots.”

Indeed, as the Globe and Mail reported in February, “Bank of Montreal is not backing down from a call that residential real estate prices in the Toronto area are moving too fast: economists at the bank are comparing prices to a runaway train. BMO recently urged market watchers to drop the pretense and acknowledge that Toronto’s housing market is in a bubble.”

The piece continued: “Chief economist Douglas Porter explains he made the bold call to reinforce the message that the market has lost contact with economic fundamentals and has the potential to become dangerously overheated. ‘This is not a near-term call on the market,’ he stresses, “in fact, given the outlook for interest rates and an improving underlying economy, there’s nothing obvious to meaningfully slow the market at this point,’ Mr. Porter says in a note to clients.”

Of course, for big cities around the developed world, there’s nothing new in any of this. Vancouver has, for years, been hobbled by absurdly high house prices. Rental markets have also been squeezed to the point where some reasonably paid workers have been forced to bivouac – if only temporarily – in their cars and trucks.

Still, affordability is one social measure of income and labour market stability, and it speaks directly to the equitable distribution of wealth. According to a Statistics Canada report, based on 2011 data, for example, “the population of Moncton census metropolitan area (CMA) was 138,644, representing a percentage change of 9.7 per cent from 2006. This compares to the national growth of 5.9 per cent and to the average growth among all CMAs of 7.4 per cent. . . In total, there were 58,294 private dwellings occupied by usual residents in Moncton in 2011. The change in private dwellings occupied by usual residents from 2006 was 13 per cent. For Canada as a whole, the number of private dwellings occupied by usual residents increased 7.1 per cent.”

Moncton is not yet in any credible danger of travelling down Toronto’s path. But safe, affordable housing is an issue that’s becoming urgent in almost every urban area of Canada. Wise political moves and intelligent social policy should mitigate the effects of runaway market forces – if we have enough foresight.

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May 12 2017
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Government, Media, Wealth

A new feeding frenzy

DSC_0028It can’t just be my fevered imagination, but are governments practically everywhere, for their own unique and inexplicable reasons, providing major media with the most succulent red meat they’ve served in years?

Carefully measured gruel of the thinnest possible variety was once the specialty of the day in the communications departments and press offices that tend to the elected class even as they cater to the Fourth Estate. Not anymore. Chow’s up boys and girls. Come and get it.

According to a study by Harvard’s Shorenstein Center on Media, Politics and Public Policy issued late last year, coverage of Donald Trump during the election campaign that ultimately elevated him to President of the United States, “was negative from the start and never came close to entering positive territory. During his best weeks, the coverage ran 2-to-1 negative over positive. In his worst weeks, the ratio was more than 10-to-1. If there was a silver lining for Trump, it was that his two best weeks were the ones just preceding the November balloting.”

Not that any of this actually hurt the man in the final outcome. But, closer to home, what are we to make of the fortunes of certain members of New Brunswick’s government tied up in what should properly be an exquisitely boring subject: property tax assessments?

An exclusive penned for Brunswick News Inc. by Adam Huras last month reported that “a decision to fast-track the implementation of a new property assessment system was presented to the premier’s office as a move that could bring in $5.7 million in new revenue for government in 2017, according to documents obtained by the Telegraph-Journal.”

What’s more, “emails suggest that the premier’s office knew how lucrative this plan would be and agreed that it should move ahead. But an email from (the premier’s chief of staff) Jordan O’Brien to Service New Brunswick also anticipated public backlash, suggesting ‘that media be advised that people being assessed weren’t being gouged but had been getting a break in the past.’”

Apparently, that particular point failed to grab the attention of the general public as the story quickly shifted to the plight of many property owners whose annual taxes rose, in some cases, by 30, 40, even 60 per cent.

All of which prompted New Brunswick Union president Susie Proulx-Daigle to state, “Assessors had nothing to do with the development and deployment of the formula. The New Brunswick Union is deeply troubled by the statements made recently by premier Gallant in regards to the property tax situation. First and foremost, the blame for this problem does not sit with the assessors, it rests with the elected officials. They need to take responsibility for their actions in this matter.”

In fairness, the premier has indeed apologized to property owners in the province and appointed a retired judge to determine precisely how all of this happened in the first place.

Still, this is an unmitigated disaster for the spin rooms of the province. On the bright side, it fairly demonstrates the potency and social currency of a responsible press, confidence in which has been eroding in this country and others for some time. “No one needs to tell me about the importance of the free press in a democratic society or about the essential role a newspaper can play in its community.” The late Robert Kennedy said that. But the sentiment could fairly apply anywhere.

Of course, the question for government types to answer is: When did they start making the media’s jobs so easy? Ring that dinner bell. The troops are hungry.

Feb 12 2016
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Business, Economy, Wealth

Circling the jobs drain

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It’s not hard to understand why politicians vying for elected office routinely proclaim the number of people they intend to put back to work, if only the great unwashed would be so kind as to hand over the keys to the garden.

After all, job creation is the lowest-hanging fruit on the vine of campaign promises.

Who, among us, doesn’t understand the importance of a fully employed, adult citizenry? More to the prosaic point, who doesn’t want steady, reliable work for himself? And who isn’t, at least once, willing to swallow whatever sweet and succulent promise a politician offers, especially if it has to do with one’s livelihood.

Still, the problem with low-hanging fruit is that, all too often, it’s past its ‘best before’ date.

New Brunswickers witnessed this during former Progressive Conservative Premier David Alward’s term in office, in which he promised to create jobs across the broad spectrum of the provincial economy, only to preside over losses approaching 4,500.

Now, perhaps, we prepare ourselves for a repeat performance by the Liberal government of Brian Gallant (different party, same story), which, according to its own Department of Finance, appears fated to watch the provincial labour market shed hundreds, perhaps even thousands, more by 2018.

The reasons are pretty straightforward, and can apply to any government in this age of perennially straitened circumstances, regardless of ideological stripe and partisan palaver.

According to the Economic Outlook 2016-2017, which accompanied the most recent New Brunswick budget, “Weaker growth at the national and global levels, challenges in the export and manufacturing sectors, slower-than-expected growth in investment and continued weakness in the labour market contributed to subdued growth in 2015. . .Real economic growth of 1.3 per cent in 2015 (is estimated), down from 1.8 per cent projected at budget last year. This estimate is consistent with the latest consensus among private sector forecasters.”

On the other hand, “Economic activity is expected to be tempered by demographic realities, private sector investment, fiscal measures and the recently announced suspension of operations at the Picadilly mine. Private sector forecasts may not reflect the latter development, which will put downward pressure on their projections.”

In fact, “Growth conditions will be further limited by PotashCorp’s announcement that it was indefinitely suspending operations at the Picadilly mine. The economic impact will be partially mitigated in the short-term by transitional measures being offered by the company. However, the effect of the suspension will continue to be felt well into 2017.”

Add to this boiling cauldron of trouble New Brunswick’s rapidly aging population and low birth rate and you have the perfect recipe for moribund economic conditions and, at best, stagnant job prospects. Or, as the finance department’s report observes, “Looking ahead to 2017, external demand and further government capital spending will drive economic activity. However, an aging workforce, overall population decline and weak private sector investment will curb growth.”

Naturally, all this translates into job losses, not growth.

Indeed, evidence of deep-rooted rot in the province’s economic garden has been extant for several years. And, except for specifically dunderheaded moves by certain elected officials, none of it is actually any individual’s or even government’s fault.

It’s a product of decades of short-sighted policy, calcified programming, and uncompetitive and complacent private-sector players. And, don’t underestimate the effects of rolling, increasingly deep recessions on resource-based, export-oriented jurisdictions, such as New Brunswick’s.

Despite their proclamations, politicians don’t create employment in the private economy.

But when they fail to deliver the fruits of their campaign promises – jobs – perhaps it’s only right that they should lose their own.

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Jan 27 2016
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Economy, Employment, Wealth

The dread pirate “Wagegapper”

We could sell the snow. There's plenty of that

We could sell the snow. There’s plenty of that

Pity the poor rich man. In this economy, he just can’t catch a break. Oh sure his castle continues to glisten in the rising sun. His moat is pristine and his crocodiles are well fed. But can he actually accumulate money. . .you know, the way he used to?

According to a Bloomberg/HuffPost Canada post this past August 8, “The stock market rout gripping the world last week and today is bad news for just about anyone who uses money, but when the value of assets collapses, it’s the richest who lose the most.

“Take, for instance, Facebook founder Mark Zuckerberg, who lost $1.9 billion U.S. in a day’s trading on Friday; or Amazon co-founder Jeff Bezos, who was down $1.8 billion; or famed investor and Berkshire Hathaway head Warren Buffett, who lost $1.7 billion. And that was all last Friday – before Monday’s even wilder ride on the stock market.

“According to the Bloomberg Billionaires Index, the world’s richest 400 people lost $182 billion in wealth last week. It was the largest drop ever seen in the index, but it only launched last September. The recent drop in stock markets around the world means the world’s 400 wealthiest people have in total lost money this year, with their combined net worth at $3.98 trillion, down $75 billion from the start of the year.”
Under the circumstances, we in the Atlantic Maritimes should count ourselves lucky. We have managed to avoid such calamitous outcomes concerning money, as we don’t have any.

According to Environics Analytics two years ago, the median family income in New Brunswick was just about $57,300 – the second lowest in Canada, just ahead of Prince Edward Island. Since then, the numbers for both provinces have dropped by more than seven per cent (about the rate the central bank has reduced the cost of borrowing for businesses and consumers).

Meanwhile, unemployment in this region has spiked as wages have fallen. In fact, the Atlantic region has become a jurisdiction of “wagegappers”.

In economic terms, that simply means the more desperate an individual is for work to pay his or her bills, the more likely those with money will prey on his or her fears. This calculus drives down the cost of labour, and the vicious cycle of downward spirals ensues, further separating the moats of the rich from the slush puddles of the working poor (a class we once called bourgeois).

It’s not like we oughtn’t to have seen any of this coming. Back in 2013, Christine Saulnier and Jason Edwards of the Canadian Centre for Policy Alternatives had this to say in a widely circulated opinion piece:

“Statistics Canada released new data on high income trends in Canada with nary a mention of the Atlantic Provinces. From a Canadian comparative perspective, the data told a story that was more striking for most of the rest of the country and in particular, Alberta, Ontario, B.C. and Quebec where 92 per cent of the top 1 per cent of tax filers are found, with only 3.4 per cent in Atlantic Canada. These data reveal that the Atlantic Provinces are all significantly less equal today than they were in 1982. The trends are. . .not surprising.”

Indeed they were not, and they are not today in this region, where the income gap between the rich and the poor has widened.

Pity the wealthy for their losses of late? Absolutely.

After all, they may soon join the club around the burning barrel beyond the moat in the deep, dark woods along with the rest of us.

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Sep 20 2015
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Society, Trade, Wealth

An ode to our aging trades

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I sit on my front porch in the old west end of Moncton as the eastern sun threatens to set, and watch while two men who must be ten years my senior – 65 years each, if a day – rebuild the front of my neighbor’s house.

They take their time, because doing things right, plying the skills they were taught when they were young, doesn’t mean just something: It means everything.

“Now, that’s a handsome job,” I say as I gambol up the street to inspect.
“Well, thank you,” the man in the orange t-shirt replies.

“No, I mean it,” I say. “That’s a truly magnificent job.”

The man in the blue shirt looks at me as if I’ve never seen a job site before. I explain that I once worked for a master carpenter in Toronto, a long time ago, and nothing he ever did could compare to the work these guys were executing for their relatives in this time, on this street.

Would he and his partner be interested in replacing my back deck, I wondered aloud?

“Oh no,” they chime almost in unison. “We’re retired.”

More’s the pity; for as time marches on for this province, for this region of Canada, retirement seems especially poisonous to the long-term economic future of the body politic.

I long ago abandoned any notion of “retirement”. The concept seemed to me, as a small businessman and owner-operator, not only impractical, but also irresponsible. After all, if I manage to retain all the skills my particular craft demand, shouldn’t I be obligated to continue for as long as my physical and mental health support?

According to David DeLong, an American speaker and labour-force consultant, “Many executives today worry that skill shortages threaten their organization’s ability to grow and innovate. A recent survey I designed for one manufacturing sector found that almost 60 per cent of managers responding thought skill shortages were already hurting their firm’s productivity and quality.

“But, despite a seriously aging population in the U.S. and the rest of the industrialized world, only four per cent of this same group saw the aging workforce as an immediate threat to performance. Most expect the effects of aging Boomers to come 3-5 years. About 20 per cent don’t see the aging workforce as a concern at all.”

And, really, why would they?

Those of us who have survived one, two, three, four and five horrible recessions know a thing or two about surviving the sixth, seventh, eighth and ninth. In fact, in a weird and wonderful way, we relish these downturns.

We are young enough to recall what real fear feels like and old enough to remember how we overcame the daily terror.

Now, we “old folks” stand and deliver the lessons of experience – the tutorials necessary to bring a youthful, hopeful provincial government to heed the narrow truths behind its own broad rhetoric.

In truth, we will not prosper in the long range until will embrace the importance of small victories against the gathering darkness of global recession in the short range.

That means investing in the little enterprises whose owners – likely elderly folk who know a thing or two about surviving and thriving – are incapable of giving up, going dark and sending themselves into the retirement they say they crave.

“I’m really too old for this,” the man in the blue shirt says.

“Me too,” the man in the orange shirt says.

“So,” I say, “You’re done, then.”

The smiles arrive: “Oh no, we’ll be back. . .We will always be back.”

Jul 19 2015
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Culture, Employment, Society, Wealth

All hail a jobless future

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It is, perhaps, the paradox of our times: We are not happy when we work, and we are not happy when we don’t. Let’s just say we get used to both productivity and lassitude in equal measures.

We are, apparently, happiest (spoiler alert) when we do precisely as we please, which roughly breaks down as follows: Labouring a little bit, playing a little bit, goofing off a little bit, and sleeping. . .well, a lot.

Apparently, there’s actual research that backs me up and, in so doing, makes me feel far less guilty than I have for most of my adult life for the gazillion hours I have wasted in patently trivial pursuits.

Consider this month’s cover story in the Atlantic magazine (a certain tonic if anyone needed one at this time of the year, in this time of man and woman kind). In his piece, entitled, “A World Without Work”, writer Derek Thompson declares: “Futurists and science-fiction writers have at times looked forward to machines’ workplace takeover with a kind of giddy excitement, imagining the banishment of drudgery and its replacement by expansive leisure and almost limitless personal freedom.”

And, he says, “Make no mistake: if the capabilities of computers continue to multiply while the price of computing continues to decline, that will mean a great many of life’s necessities and luxuries will become ever cheaper, and it will mean great wealth – at least when aggregated up to the level of the national economy.”

But, then, of course, what do we mere humans do with ourselves? If we are, indeed, the demi-gods who invented machines to replace ourselves, to which plain of existence do we retire? Re-runs of “Happy Days?” Existentially, does this mean that God, itself, is officially dead?

Not necessarily. Says Mr. Thompson:

“One of the first things we might expect to see in a period of technological displacement is the diminishment of human labor as a driver of economic growth. In fact, signs that this is happening have been present for quite some time. The share of U.S. economic output that’s paid out in wages fell steadily in the 1980s, reversed some of its losses in the ’90s, and then continued falling after 2000, accelerating during the Great Recession. It now stands at its lowest level since the government started keeping track in the mid‑20th century.”

Moreover, he observes, “A number of theories have been advanced to explain this phenomenon, including globalization and its accompanying loss of bargaining power for some workers. But Loukas Karabarbounis and Brent Neiman, economists at the University of Chicago, have estimated that almost half of the decline is the result of businesses’ replacing workers with computers and software. In 1964, the nation’s most valuable company, AT&T, was worth $267 billion in today’s dollars and employed 758,611 people. Today’s telecommunications giant, Google, is worth $370 billion but has only about 55,000 employees – less than a tenth the size of AT&T’s workforce in its heyday.”

On the other hand, he concludes with some reason, people stripped of their workaday drudgery will find more creative pursuits to fill their time and what remains of their bank accounts.

We shall, in due course, become artists and artisans, tradesmen and craftspeople. We might even dance around the May pole, whenever winter decides to relinquish its icy grip, and plant food in the empty parking garages and vacant spaces where people once congregated to build their fateful remnant of civilization.

We may not be entirely happy with our new lot.

But, given our track record, I’m pretty sure we’ll get used to it.

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Jun 02 2015
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Politics, Society, Wealth

Tory relevance is not retiring

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For strategic brilliance and tactical cunning, look no further than the Conservative Government of Canada. In an election year, these are the days that try the souls of federal Liberals and New Democrats, alike.

Against their own advice of only a year ago, the Harper Tories have executed a stunning reversal of policy in announcing that they will, after all, allow individuals to top-up their Canada Pension Plans (just in time, naturally, for the fall general election).

Said Finance Minister Joe Oliver last week: “To build on our current world-class system, we intend to consult with experts and stakeholders during the summer on options for allowing voluntary contributions to the Canadian Pension Plan.”

“However,” he added, “our government will not force Canadians into a mandatory, job-killing, economy-destabilizing, pension-tax hike on employees and employers. We believe that Canadians are best placed to decide how to save for their retirement with voluntary options, rather than have tax hikes imposed on them.”

That said, messing with the CPP – an arrangement between the feds and the provinces – would be a remarkable example of progressive politics for a party that has despised all such connotations in everything it has done to date.

And if this is not simply another vote-getting ploy – but an actual commitment should the Tories win another majority in October – it could amount to one of the biggest advances in social policy since Tommy Douglas tread the fair earth of western Canada so many decades ago.

Now, to be clear, a “voluntary” codicil to the current fed-prov agreement is a far cry from a “mandatory” requirement that employees and employers dig deeper into their pockets to fund old-age retirement benefits. It is not, for example, even close to the system that the UK currently enjoys – a system that tops up the state-benefit program with an ancillary fund that effectively raises the post-retirement incomes of low-wage earners to 40 per cent of the median, national average.

Still, it’s a start, and not a moment too soon.

Canada is facing a demographic crisis that all evidence suggests is leading the largest population cohort (those between the ages of 53 and 55) into structural poverty within 15 years.

Late-blooming equity accounts, overspending, debt restructuring, falling wage levels, winnowing economic opportunities for adult children, the various predations on retirement savings of capital markets – all have conspired to make a minefield of a future that once looked like the Elysian Fields.

Still, not everyone is convinced of the federal government’s good intentions. According to a Globe and Mail story, the NDP’s finance critic called the move a “deathbed conversion.” Indeed, he said, “you can tell when the government’s serious about something: They ram it through an omnibus bill. When they’re not serious about it, they launch a series of consultations.”

That’s fair enough. But what if – just this time – the Tories are serious about this thing of theirs; this entirely uncharacteristic overture to protect the future of the nation’s citizenry from the neglect and impotence that present-day capital markets promise routinely?

Even the remote hope that average wage-earners might obtain a measure of control over their retirement savings by plugging into a virtually fool-proof, government-guaranteed vehicle – as opposed to a predatory, capricious financial sector where certain public administrations actually pay criminally liable investment banks to stay afloat – is a genuine comfort to those who don’t occupy the one-per cent of the income population.

That’s why, of course, Mr. Oliver’s modest proposal is also masterful politics, timed like a bank vault on Canadian election time.

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May 08 2014
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Media, Wealth

When our knowledge is unequal to our opinion

 

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Whenever a columnist, book reviewer or any other species of gum-flapper, who’s paid to pontificate windily about the world’s state of affairs, writes something like, “I don’t know much about this subject, but that’s never stopped me before,” I usually take that as a helpful invitation to stop reading.

Occasionally, though, curiosity gets the better of me. 

So it was the other morning when I stumbled across a line in Margaret Wente’s latest attempt to speak for the common man from her lofty perch, at the Globe and Mail,  as one of Canada’s best-known columnists.

In her diatribe against “liberal policy elites” who are snapping up copies of French economist Thomas Piketty’s new book about the growing divide between those who have and those who have not in western societies, Mrs. Wente declared, “I’m not qualified to analyze Mr. Piketty’s work (Capital in the Twenty-First Century), which even critics have described as ‘brilliant’. My question is why now?”

Her answer was transparently deflective: “The progressive elites have been completely captured by the declinist narrative. . .There’s just one problem with this. Although highly educated social progressives are alarmed by the scenario, hardly anybody else is.”

She then “proves” her point by quoting surveys that show that regular folk – you know, “real” people – couldn’t give a toss about so-called income inequality. In fact, what Joe and Jane Public care most about is government incompetence and waste.

Now, there’s a straw man if ever one came tumbling out of the opinion pages of Canada’s national newspaper. 

Ms. Wente may not like “policy elites”. She may have reasons to distrust them. But that doesn’t mean they’re wrong about the deleterious socio-economic effects of the ever-widening gulf between the rich and rest. 

Equally, the apparent sanguinity of the general public doesn’t automatically denote that the average man and woman on the street is right. In fact, it doesn’t even go to the root of the problem.

Has it occurred to Ms. Wente that one reason why middle earners are more ticked off with governments than rich people is that they recognize how tax policies,  which were supposed to protect the common interest, have effectively accelerated the concentration of wealth among the one per cent?   

Besides, asking someone directly whether he’s worried about income and wealth inequities is like asking a farmer whether he’s concerned about crop failure. Sure, in a general sort of way. But it’s not real until it happens, up close and personal. And in this regard, data trumps anecdote every time. 

Earlier this year, a formerly confidential government report (made public through an Access to Information request by Canadian Press) declared that “the Canadian dream is a myth more than a reality.”

In fact, its findings pointed to “a middle class that isn’t growing in the marketplace, is increasingly indebted though it has a relatively modest standard of living, and is less likely to move to higher income (i.e., the middle class is no springboard to higher incomes).”

Other findings included:

“Over 1993-2007, there has been a slight hollowing out of the middle class, and the face of the middle class has changed considerably. Couples without young children and unattached individuals now account for most middle-class families.”

Meanwhile, “although middle-income families experienced a good progression in after-tax income, the same cannot be said of their earnings. In particular, the wages of middle-income workers have stagnate. . .Although the middle class holds a relatively fair share of the ‘wealth pie’, higher-income families have far greater nest eggs. Furthermore, wealth is not equally divided among middle-income families, with those headed by younger individuals being at a disadvantage.”

Compared with other western nations, Canada actually fares pretty well. But for how long? 

The economics of rampant income inequality is not an issue of pocketbook envy. Disparities in the currency that makes everyone’s world go round generate disparities in every avenue of life, from education to health care and, eventually, to the consumer sectors that sustain all goods and service-producing industries.

Although I am one of those gum-flappers who gets paid to pontificate windily, this time you can trust me.

I actually do know a little something about these things.

 

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Apr 25 2014
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Economy, Wealth

Are things really looking up for middle-income earners?

 

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We Canadians are richer than we thought, which is a relief, because the pickle barrels increasing numbers of us are wearing to the spring fashion shows this year have begun to chafe. 

According to the New York Times on Tuesday, “The American middle class, long the most affluent in the world, has lost that distinction. While the wealthiest Americans are outpacing many of their global peers, a (Times) analysis shows that across the lower- and middle-income tiers, citizens of other advanced countries have received considerably larger raises over the last three decades.”

Drum roll, please. . .”After-tax middle-class incomes in Canada – substantially behind in 2000 – now appear to be higher than in the United States.”

The review relies on the methodology of the Luxembourg Income Study Database, which includes household and person information on market and government income, demography, employment, and expenditures, as well as intelligence from other datasets in Europe, North America, Latin America, Africa, Asia, and Australasia.

In other words, the source is unimpeachable, which means, apparently, that the findings are unassailable.

“Although economic growth in the United States continues to be as strong as in many other countries, or stronger, a small percentage of American households is fully benefiting from it,” the Times piece observes. “Median income in Canada pulled into a tie with median United States income in 2010 and has most likely surpassed it since then. Median incomes in Western European countries still trail those in the United States, but the gap in several – including Britain, the Netherlands and Sweden – is much smaller than it was a decade ago.”

What’s more, “The struggles of the poor in the United States are even starker than those of the middle class. A family at the 20th percentile of the income distribution in this country makes significantly less money than a similar family in Canada, Sweden, Norway, Finland or the Netherlands. Thirty-five years ago, the reverse was true.”

Naturally, the news of the sudden, inexplicable resuscitation of this nation’s middle class, so soon after demographic coroners pronounced it dead on arrival, have crowded the front pages and lead the broadcasts for days.

The Globe and Mail queried coyly, “Can it be true that the Canadian middle class has never had it so good? And if so, what will it mean for the Liberals and the NDP, who have focused their strategies on promoting the notion of middle-class decline under the Conservatives?”

Certainly, the Tories are letting no opportunity to crow pass them by. “This study would appear to confirm that our government’s approach to creating jobs and economic growth, while keeping taxes low, is working,” Jason MacDonald told the Globe. “We’ll continue with our low tax plan, unlike the tax-and-spend Liberals and NDP, whose approach will only cost Canadian families.”

Nice try, Mr. MacDonald, but no cigar. The study neither confirms nor denies the efficacy of the government’s “approach to creating jobs and economic growth” because that’s not what it explicitly measures. But if it did, the findings would suggest that Liberal policies in the early part of the Century were far more successful as “job-generators” than were post-recession Conservative ones. 

As for the rest of us breathlessly revising our versions of the economic universe, we might pause and consider what’s written in the space between the lines of this study.

Middle incomes in Canada have, indeed, surpassed those in the United States. But that speaks more about the desperate condition of the American economy – in which millions of jobs vanished almost overnight in the aftermath of the financial meltdown and the fiscal collapse of 2008 – than it does about stellar conditions in ours.

The study ranks percentage increases in middle incomes, placing Canada high on the list at 19.7 per cent (along with Britain), and ahead of Ireland, Netherlands, Spain, and Germany (16.2, 13.9, 4.1, and 1.4 per percent, respectively). 

In absolute terms, however, middle-class salaries and benefits in this country have not risen appreciably since the Great Recession. In fact, those in the larger percentiles of the income range (i.e., lower) have seen their levels of real wealth actually contract, despite historically low interest rates and near-zero inflation.

All of which is to say that now is probably not the time to trade in that pickle barrel for an Armani sport coat, just yet. 

 

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Apr 07 2014
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Humour, Wealth

New Brunswick for sale: Everything must go!

 

What am I bid for the Petitcodiac River

What am I bid for the Petitcodiac River?

After reading the Canadian Centre for Policy Alternatives’ (CCPA) assertion that, together, the country’s 86 wealthiest residents could buy New Brunswick, lock, stock and barrel, and still have enough in the kitty to pay for a round-trip expedition to Mars, I have but one thing to say to that estimable, left-leaning think tank: Oh, you tease.

Perhaps our good premier, David Alward, and his finance minister, Blaine Higgs, have been approaching this economic development thing all wrong from the get-go. Their much-reviled predecessors in the Graham government may have been right, after all; they just didn’t go far enough. Sure, sell NB Power for a cool $4 billion if you can. But why stop there?

“New Brunswickers held $141 billion worth of assets in 2012,” writes the CCPA’s senior economist, David Macdonald, in his new paper, Outrageous Fortune: Documenting Canada’s Wealth Gap. “Of all of the provinces, this most closely approaches the net worth of The Wealthy 86 of $178 billion, without exceeding it. 

“What this means is that The Wealthy 86 could buy up all of New Brunswickers’ 545,000 motor vehicles, all of their 314,000 houses and cottages, all of their undeveloped land, all of their stocks and bonds, all of their pension funds, all of their RRSPs, all of their jewellery, and all of their furniture. The Wealthy 86 have enough money to buy absolutely everything in the private hands of every New Brunswicker, 

with billions to spare.” ($37 billion, to be precise). 

Following the data’s release last week, and in the collective interest of the rest of us, local CBC radio host Paul Castle helpfully informed his listening audience that the per-capita haul on a bounty of 141 billion simoleons is $188,000, which isn’t bad. But, it’s nowhere near enough to propel anyone over the gates that surround the super-rich. And, of course, that’s the CCPA’s point.

“The latest Statistics Canada wealth survey reveals income in equality isn’t Canada’s only problem: wealth inequality in Canada is worse,” Mr. Macdonald observes “For instance, many gasp at the fact that Canada’s richest 20 per cent of families take almost 50 per cent of all income. But when it comes to wealth, almost 70 per cent of all Canadian wealth belongs to Canada’s wealthiest 20 per cent.”

All of which proves there’s truth in the old adage that you have to have moolah to make moolah; indeed, the more boodle you have, the more boodle you tend to generate (thanks to the miraculous effects of certain financial instruments, not least of which is  compound interest). 

 Of course, real money is also incredibly rare. If everybody had it – lots of it – who would care about concepts of fairness predicated on simple pocket-book envy?Certainly, the CCPA wouldn’t, but that’s only because it would be out of job chronicling and cataloging the rapacity of the gilded galoots and pampered plunderers among us.

“The level of wealth inequality in Canada has reached such extremes that in 2012, according to figures derived from Canadian Business magazine, the 86 wealthiest Canadian-resident individuals (and families) held the same amount of wealth as the poorest 11.4 million Canadian combined,” Mr. Macdonald writes. “To put these findings into historical perspective, in 1999, The Wealthy 86 held the same wealth as the bottom 10.1 million Canadians.”

Naturally, Mr. Macdonald and his fellow travelers want Government (big surprise, here) to fix the situation and pronto. 

Maybe it should remove some of the protections on wealth, such as the favorable capital gains tax rate (half of that levied against income), or slap new taxes on the income of the wildly wealthy on the theory is that such “progressive” moves will redistribute some of the accumulated capital to the rest of society where it can do some broad, general good. 

It’s a nice theory that rests on only two flawed assumptions: first, that higher taxes on fat incomes will have any effect on “breaking up” private pools of capital; and, second, that capital gains exclusions will only affect the super-rich, and not the majority of entrepreneurs who dutifully ply their trades somewhere in the middle of the pack of affluence.

Nope, the solution is, was and and always shall be right in front of our faces: Persuade The Wealthy 86 to buy New Brunswick. 

Make them an offer they can’t refuse: Throw in P.E.I. as a signing bonus. It won’t mind. Honest.   

 

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