National Newswatch
National Opinion Centre

“The rich man in his castle, The poor man at his gate, He made them, high or lowly, And ordered their estate.” – All Things Bright and Beautiful, Childrens’ Sunday School Hymn by Mrs. Cecil Frances Humphreys Alexander, 1848.

The overt and unashamed British class system embedded in that Sunday School verse sung by generations of children around the Anglo-Saxon globe is gone in name only. Indeed, it’s benevolent compared to today’s inequality across much of the world, particularly the Anglo-Saxon world.

The influential British magazine, The Economist, recently devoted an entire issue to income inequality. While acknowledging the relative living standards of the poor are better now than they were in the 19th Century, the magazine writes: “The democratization of living standards has masked a dramatic concentration of incomes over the past 30 years on a scale that matches, or even exceeds, the first Gilded Age (in the 1880s and 1890s.)”

As proof, The Economist points out that the share of national income in the U.S., including capital gains, going to the richest one per cent of Americans has doubled since 1980 – from 10 per cent to 20 per cent, the same level it reached in the Gilded Age.

Even more telling is that the share going to the richest 0.01 per cent has quadrupled from one per cent to almost five per cent, larger than in the 1880s.

The magazine goes on to argue that the recent global financial crisis “may have resulted, in part at least, from the increase in inequality” because inequality tends to be related to financial crises. “As inequality rises, people at the bottom of the income scale borrow more to keep up, which in turn increases the risk of a major economic collapse.”

Severe inequality also drives greater social – and political – instability, reducing foreign investment.  Large income gaps diminish economic growth if they mean the country is not using the skills and capabilities of its citizens or if they undermine social cohesion creating higher social tensions.

The Conference Board of Canada released a report on income inequality in January, 1913. It shows that income inequality has exploded in Canada over the past 20 years.

In 2010, the top 20 per cent of Canadians held 39.1 per cent of total national income and were the only quintile to have seen an increase in its wealth over the past 20 years – from 36.5 per cent in 1990 to 39.1 per cent in 2010.

Meanwhile, the bottom 20 per cent of Canadians claimed a meagre 7. 3 per cent of the income pie and the second lowest, not much more,  a mere 12.8 per cent.  The two middle income quintiles saw their shares shrink: – the third quintile to 17.6 per cent and the fourth to 23.2 per cent.

Income inequality is higher in Canada than in 11 of its 17 peer countries, the Conference Board continues. The Nordic countries boast the lowest inequality scores. Although Canada’s wealth is distributed more equitably than in the U.S., “Canada’s 12th place ranking suggests it is doing a mediocre job of ensuring income equality,” the Conference Board states.

Income inequality is the extent to which income is distributed unevenly in a country. It is driven by market and institutional forces and is “an important indicator of equity in an economy and has implications for other social outcomes such as crime and life satisfaction,” the Conference Board continues.

It quotes Edward Lazear, chairman of the U.S. President’s Council of Economic Advisors. He warns that as developed countries import more low-skills intensive goods and export more skills-intensive goods, they lose more jobs.

Lazear warns that new technologies are driving up demand for the brainy and well-educated at the same time 1.5 billion emerging country workers are entering the global market economy, hitting the rich world’s less educated with unaccustomed competition.

Leading U.S. liberal economist Paul Krugman and other progressive economists say the increase in inequality is a direct result of the right-wing neo-conservative wave sweeping through the western world. It is the driving force behind declines in unionization rates, deregulation, stagnating minimum wage rates and the ongoing assault on all forms of progressive taxation and other policies favouring the wealthy and corporations

This month, the Canadian Centre for Policy Alternatives released a paper by economist David Macdonald entitled Outrageous Fortune: Documenting Canada’s Wealth Gap.

“Many gasp at the fact that Canada’s richest 20 per cent of families take almost 50 per cent of all income,” Macdonald says. “But when it comes to wealth, almost 70 per cent of all Canadian wealth belongs to Canada’s wealthiest 20 per cent.

“Over a 13-year period, there has been a pronounced increase in wealth in Canada, but that wealth has flowed into the hands of a concentrated few,” he continues.

For every new dollar of real wealth generated in Canada since 1999, 66 cents has gone to the wealthiest 20 per cent of families, 23 cents has gone to the upper middle class while the bottom 60 per cent of families has had to settle for loose change.

According to figures derived from Canadian Business Magazine, the wealthiest 86 Canadian resident individuals and families held the same amount of wealth as the poorest 11.4 million Canadians combined.

Macdonald points out that wealth inequality is always more extreme than income inequality.

Since 1999, the Wealthy 86 has increased its net worth from $120 billion to almost $180 billion. While what he calls “the Wealthy 86” represent only 0.002 per cent of Canadians, they now hold the same amount of wealth as the entire bottom 34 per cent of the population.

 

Frances Russell was born in Winnipeg and graduated from the University of Manitoba with a Bachelor of Arts degree in history and political science. A journalist since 1962, she has covered and commented on politics in Manitoba, Ontario, B.C. and Ottawa, working for The Winnipeg Tribune, United Press International, The Globe and Mail, The Vancouver Sun and The Winnipeg Free Press as well as freelanced for The Toronto Star, The Edmonton Journal, CBC Radio and TV and Time Magazine.

She is the author of two award-winning books on Manitoba history: Mistehay Sakahegan – The Great Lake: The Beauty and the Treachery of Lake Winnipeg and The Canadian Crucible – Manitoba’s Role in Canada’s Great Divide. Both won the Manitoba Historical Society Award for popular history.

She is married with one son and two grandsons and lives in Winnipeg.

The views, opinions and analyses expressed in the articles on National Newswatch are those of the contributor(s) and do not necessarily reflect the views or opinions of the publishers.
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