How Long?

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In the wake of Justin Trudeau's trip to Davos, Gerry Caplan  assembles -- you'll excuse the pun -- a wealth of data on inequality in Canada and around the world:

The average full-time Canadian worker in 2014 was paid $48,636. The average minimum wage worker got $22,010. By contrast, the average top-100 CEOs had earned the average worker’s pay by 12:18 p.m. on Jan. 4, 2016 – the second paid day of the year – and the average minimum-wage worker’s pay by 2:07 p.m. on New Year’s Day itself.

In 2008, the top 100 CEOs in Canada made on average $7.3-million – 174 times more than the average full-time wage earner. By 2014, Canada’s top 100 CEOs were taking home on average $8.96-million, or 184 times the average worker.

What has happened in Canada has happened almost everywhere:

According to An Economy for the 1 per cent: How Privilege and Power in the Economy Drive Extreme Inequality and How This Can Be Stopped, the poorest half of the world’s population have seen their wealth drop by one trillion dollars, or 41 per cent, since 2010 while the richest 62 people have seen their wealth increase by half a trillion dollars. How can they even count it?

Five years ago, 388 people owned as much wealth as the poorest half of the world’s population. Now, it’s 62 people who own as much as 3.5 billion of their fellow citizens. This tiny band could fit onto a single bus, as Oxfam says, though I’m guessing super-plutocrats don’t use buses that much.

In 2015 five Canadians held the same amount of wealth as the bottom 30 per cent of Canadians, say 11 million people. The total wealth of Canada’s top five billionaires was $55-billion, the exact same amount – $55-billion – held by the bottom 30 per cent.

The wealth of those five richest Canadians has risen by $16.9-billion since 2010 – a 44-per-cent increase. Yet the bottom 10 per cent in Canada make only $2.30 more a day than they did 25 years ago. 

One wonders why Canadians haven't taken to the streets. And one wonders how long  it will be before they do take to the streets.

Stunning Inequality

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The Broadbent Institute has just released a study on the distribution of wealth in Canada. Rick Smith, the institute's director, writes:

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.

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.

When the prime minister bragged that we wouldn't recognize the country after he was through with it, he wasn't kidding. He may want to be remembered as the man who was in office when one of John Franklin's ships was discovered.

But his real legacy will be -- and is -- stunning inequality.

Sleeping Through The Drama

Thomas Picketty's new book, Capital In The 21st Century, is generating a flurry of interest south of the border. Paul Krugman has praised the book's scholarship and its conclusion that we are living in a second Gilded Age. And the central theme of the book -- economic inequality -- has the president's attention. Linda McQuaig writes:

From inside the White House, President Barack Obama has made the dramatic surge in inequality his signature issue, describing it as “the defining challenge of our time.”

The book's central thesis makes eminent sense:

Modern capitalism, left to its own devices, leads to ever-rising inequality. Piketty’s argument, backed up by a vast amount of international and historical data, goes like this: Since income from ordinary labour grows slower than the return on capital (and capital is mostly held by rich people), inequality grows over time.

The United States  leads the world in economic inequality. What Canadians don't seem to understand is that we're number two -- a distinction  which the Harper government has worked mightily to entrench:

An OECD study released this month showed that, over the past three decades, the share of income growth going to the top one per cent was largest in the United States. But Canada grabbed the silver medal with a strong second, beating out ten other advanced countries in terms of the share of income growth being snagged by its richest citizens.

In Canada, our prime minister hopes that we continue to sleep through the drama.

Inequality Keeps Them In Power

Everyone complains about public apathy. We know that democracy in Canada is in trouble. But nothing seems to change. Alex Himelfarb suggests that the reason things don't change is because we lack social trust:

By “social trust” is meant something more than whether we trust our neighbour or others in our community or in similar circumstance. It is rather the generalized belief that most people in a society can be trusted, including those quite different from ourselves.

Social trust is not the same as political trust, but where it is high people are readier to trust their democracy, more willing to give the benefit of the doubt to government when something goes wrong, and less likely to see the latest scandal as indicative of the entire class of politicians. Even when governments perform so badly as to make political trust impossible, where social trust is high, citizens still participate, still try to make things better. Because they trust the future and their ability to influence it, they are still capable of outrage rather than the indifference or fatalism of the jaded.

Himelfarb notes that recent research indicates that social trust varies with the degree of inequality:

According to the research, the most important factor in determining the degree of social trust in a society seems to be its level of equality, both economic equality and equality of opportunity. In highly unequal societies rich and poor live such fundamentally different lives that it’s impossible to develop the mutual empathy essential to building trust and a sense of shared fate. When this is coupled with lack of opportunity for economic progress we get conflict, politics as a zero-sum game and a downward spiral of distrust. Highly unequal societies are also characterized by widespread corruption, which undermines all manner of trust.

The countries with the highest social trust are the Scandanavian countries. These are also the countries with the highest taxes, and the most vibrant economies. How does Canada compare to them?

Over much of the post-war period, with some exceptions, most notably our shameful treatment of Aboriginal people, Canada did pretty well in both social trust and equality, tucked in just behind the Scandinavian countries and Netherlands. The last couple of decades, however, have seen a sharp decline in social trust and an accelerating increase in income inequality, and while mobility is still pretty high it won’t stay that way if income inequality continues to grow.

Consider what has happened during the last twenty years:

Canadians are rightly proud of our universal medicare but we are allowing it to erode. Public funding for education is in decline so more of the burden and related debt fall to students and their families. Wages are under assault – witness the attacks on collective bargaining and the abuse of the foreign workers program. Fewer than forty per cent of unemployed Canadians have access to employment insurance. Our income support system is fragmented and inadequate – and too often demeaning. Huge gaps – childcare, civil legal aid, pharma- and home-care – exacerbate inequality.

It's nothing new to say that the Harperites are leading the charge for more inequality. That's what keeps them in power.

A Striking Universe

That's the title of a recent paper by Jordan Brennan of George Brown College. Tom Walkom writes in today's Toronto Star that:

Brennan’s paper is a critique not only of the economy but of the way most of us look at the economy. He takes on the widespread, if unstated, assumption that people get what they deserve — that CEO’s or derivative traders earn their seven-figure paycheques because they are in some way uniquely productive, while the rest of us don’t because, well, we’re not.

He advances a view that is not new but that is rarely heard today — that income is not distributed through the competitive magic of the impersonal market, but through naked power struggles in institutions that are near-monopolistic. Think National Hockey League.

The central tenet of Mitt Romney's failed presidential campaign was that the rich deserve what they've earned. Brennan claims that they didn't earn it at all. Governments have simply made it easy to pick up all the chips on the table:

Free trade with the U.S. and Mexico sandbagged much of Canada’s manufacturing base. Trade with China sandbagged the rest. Investment protection deals such as NAFTA and the new Canada-China pact have weakened government’s ability to regulate. All of this has decimated unions, allowing bosses to pay their workers less and themselves more.

Non-union shops, as always, have quickly followed suit.

Our present state of affairs is not accidental. It has  been carefully planned and executed by the courtiers who have built their careers by serving their wealthy patrons.

It's No Longer a Gap, It's a Chasm

Carol Goar, in today's Toronto Star, writes that two recent reports highlight the new solitudes in Canadian society. One report comes from the Toronto Dominion Bank, the other from Food Banks Canada. TD proclaims:

“Canadian corporate balance sheets are solid as a rock,” the bank assured its clients in a special report. “Unlike households and governments, companies are less vulnerable today than they were heading into the 2007-2008 financial crisis.”

Food Banks Canada reports that:

Food bank use has increased 31 per cent since the economy plunged into recession four years ago and it continues to climb. In the past 12 months alone, an additional 20,000 Canadians turned to charity to eat.

The contrast couldn't be starker. Goar writes:

The two snapshots — one from a Bay Street office tower, one from a Mimico warehouse — depict starkly different Canadas. Not only are they separated by a yawning income chasm. Their priorities and values are so far apart that there is no common ground, no basis for conversation.

These reports have been made public as the House of Commons gets set to approve the Canada-China trade treaty which, the government admits, first and foremost protects investors from both countries. And this week Stephen Harper is in India trying to drum up the same kind of agreement. It's pretty clear whose interests Mr. Harper is promoting:

Until about a decade ago, politicians acted as a bridge between the two Canadas. They accepted their responsibility to speak for all of their constituents regardless of socio-economic class or political allegiance. Today, MPs and MPPs have abandoned that role — with a few honourable exceptions — leaving it to think-tanks, social agencies, unions, voluntary organizations, a few progressive economists and a handful of concerned public figures.

Mr. Harper claims that he is creating jobs. But the Food Banks report offers some insight into the kinds of jobs he is creating -- "18% of employed Canadians -- almost one in five -- earn less than $17,000 a year."

 No country can sustain this kind of inequality.