Wednesday, July 20, 2011

Income gap grows in Canada and elsewhere...who cares?

By Jeffrey Simpson, Globe and Mail, july 20, 2011
The Conference Board of Canada, hardly a bastion of far-left thinking, just reminded Canadians about the growing income inequalities in their society.

The richest group of Canadians, those in the top fifth of income earners, saw their share of national income rise from 1993 to 2008. Within that fortunate group, the biggest gainers were the super rich, the top 1 per cent. And they got even richer not so much from investments but from basic salaries of the kind paid bank presidents and company CEOs.
From 1980 to 2005, the earnings of the top group rose by 16.4 per cent, while middle-income Canadians’ incomes stagnated, and earnings for those in the bottom group slid.
There are various ways of measuring inequality. One is the Gini coefficent, which tracks inequality on a scale of 0 to 1, with 0 being a world of total equality and 1 being total inequality.
Canada, it turns out, ranks 12 among 17 comparable countries in income inequality. Canada’s Gini score is 0.32, slightly worse than that of Australia and Germany, and far behind Denmark (0.23), Sweden (0.23), Finland (0.26) and Norway (0.27) The United States and Britain, two countries against which Canada measures itself, are the worst performers – that is, the most unequal societies of the 17. Put another way, anglophone countries are the most unequal, at least compared with continental European ones, and two of them (the U.S. and the U.K.) are also in desperate fiscal shape.

The U.S. Gini score is 0.38, reflecting the fact that income inequality is at a record high, greater even than during the Roaring Twenties. During the past decade, the top 10 per cent of U.S. earners took 49.7 per cent of income gains.
In Canada, the top fifth of income earners take 39.2 per cent of total income (up from 35 per cent in the 1980s), while the lowest quintile takes 7.2 per cent. Vancouver has the highest share of people in the lowest quintile of earners among Canadian cities; Quebec City has the lowest.
So why are we a more unequal society? That’s the subject of fierce debate. Other countries’ income inequalities are also growing, albeit to varying degrees, and the inequalities in big developing countries such as China, India and Brazil are much higher than anything in Canada or Europe.
It is relatively easy to document the inequalities; it is virtually impossible to bring the issue to the forefront of any national or international debate. As the gap in incomes grows, the wringing of hands and the gnashing of teeth by some think tanks and the occasional blogger (this one, for example) continues while the politicians continue to "sleep with their wealthy supporters" in a form of political incest that defies the logic of reducing the income gap, something that all the research indicates would be a healthy move for everyone in the society.
Where income gaps are the lowest, the people are healthier, they live longer, their children are more educated and hopeful, and their governments have fewer social conflicts. However, those with power (and money) seem to be interested only in generating more power and money for themselves and their peers, while ignoring those at the bottom of the income scale. And they do so at their own peril, in the long run.

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