By Tavia Grant, Globe and Mail, December 5, 2011
Income inequality is a hot topic these days, as mirrored by the Occupy movement’s concerns over the growing gap between the rich and the rest. Protesters aren’t the only ones preoccupied with the disparity; prominent figures from Warren Buffett to Nobel Prize-winning economist Joseph Stiglitz have also fretted over the growing gap, exacerbated by the recession and weak recovery.
“Income inequality increased during both recessionary and boom periods, and it has increased despite employment growth,” said Stefano Scarpetto, the Organization for Economic Co-operation and Development’s deputy director of employment, labour and social affairs, during a presentation of the report.
A growing wage gap carries significant economic consequences. Countries with greater income inequality tend to see shorter, less sustained periods of economic growth, an IMF paper this fall concluded.
“Greater inequality raises economic, political and ethical challenges as it risks leaving a growing number of people behind in an ever-changing economy,” the OECD paper said.
Its 400-page analysis, entitled Divided We Stand: Why Inequality Keeps Rising, a follow-up study to one released in 2008, delves into reasons behind the growing gap.
Canada in particular has seen a widening chasm since the mid-1990s. OECD research shows the average income of the top 10 per cent of Canadians in 2008 was $103,500 – 10 times than that of the bottom 10 per cent, who had an average income of $10,260, an increase from a ratio of 8 to 1 in the early 1990s.
The richest 1 per cent of Canadians saw their share of total income rise to 13.3 per cent in 2007 from 8.1 per cent in 1980.
Moreover, the richest of the rich – the top 0.1 per cent – saw their share more than double, to 5.3 per cent from 2 per cent. At the same time, the top federal marginal income tax rates tumbled – to 29 per cent in 2010 from 43 per cent in 1981.
Two factors explain Canada’s growing gap: a widening disparity in labour earnings between high- and low-paid workers, and less redistribution.
“Taxes and benefits reduce inequality less in Canada than in most OECD countries,” the study said.
Shifts in the labour market are a key reason why the gap is widening, Mr. Scarpetto said. The prevalence of part-time and temporary contract work is eroding wages. Technological progress has been more beneficial to high-skilled workers, while the gap in men’s earnings in particular is growing ever wider.
Why is it that the Occupy Movement and the wealthiest individuals can both see the income inequality gap as serious while those in the "political class" want the movement silenced?
Well, those "without" and those who have the most are most aware of the implications...and the political class wants to preserve the status quo.
It is the political class who aspire to join the top 10% of income earners, if they have not already entered the hallowed club.
And it is the political class from whom the world has the most to fear.
They have been bought by the richest; they have sold their votes for favours for the corporations whose success is far more important to them than whether there is clean water on every First Nation Reserve in Canada.
Imagine the fagility of a city councillor who, upon listening to comments from those attending a Santa Claus parade, "tut-tutting the encampment in Confederation Square" and then running to the council meeting to put a motion on the floor to have the encampment shut down presumably because 'it does't look nice'.
In other cities, like New York, the billionaire mayor was the leading voice to remove the Occupy movement from Zucotti Park, a private park owned and operated by a Canadian corporation served by a former New Brunswick premier, Frank McKenna, once an aspirant for leadership in the Liberal Party of Canada.
The income inequality gap to which the OECD has pointed is the result, in part, of continual moves by corporations to gut workers' hours, benefits, wages, health and safety benefits, working conditions, much of it the result of moving from full-time, permanent workers to part-time, casual and even "temp" workers, in a scorched earth policy of lowering costs and thereby prices for their customers.
Technology has also played a part, given the increased deployment of high tech equipment leading to the termination of human workers who formerly performed the tasks now done by technology.
Unions, likewise, have fallen prey to the corporate guillotine in many cases without so much as a whimper of protest.
Ordinary workers and ordinary families are the victims of a highly organized and deliberately planned campaign of elimination of all of those significant enhancements (the right calls them entitlements) for which the labour movement fought so vigorously and persistently over the last century to obtain. And while entrepreneurs are welcome in the economic mix, they are at risk of losing both work and incomes, for example, if and when they are ill, disabled or suffer a family tragedy. And the number that succeed relative to the number that fail is very low, probably less than 10% who succeed, and that only after several years of "getting established".
The income gap also points to a cultural and perceptual gap between those who have and those who have not. In the first category, the "haves", the perception of those falling behind is that they are lazy and worthless, otherwise they would not be where they are. Consequently, the "haves" are also opposed to extensions of unemployment benefits, worker retraining programs, and family support programs funded by the government.
"Pick yourself up by your own bootstraps" is one of the rallying cries of the rich to the poor, if there is even a notice of these "in the underclass".
So as the income gap grows, so too does the potential for the governments in the west, in countries like Canada, to grow increasingly cold, aloof and detached from their responsibility to the poor. And, among the corporate executives, while they participate in token charity contributions, their political stance supports lower taxation for the "haves" and fewer benefits for the "have-nots".
It is not difficult to foresee a Canada where only the rich matter, where only the top 1% of the rich really matter and the rest of us a merely slaves to that top 1%...and they would have no pains to their consciences if and when that scenario plays out, unless some First Nation Chief declares a "state of emergency" and makes a messy headline of their tidy plans to continue to ignore the plight of the poor while the political class drinks from the bars and the taps of the rich.