05 January 2011

When will the growing income gap become a major political issue?

A recent report by the Canadian Centre for Policy Alternatives, authored by Armine Yalnizyan and entitled "The Rise of Canada's richest 1%," considers an issue that, despite its very great importance to this country, receives remarkably little attention. That issue is the reversal of long-term trends toward income equality after 1980, i.e. the growing income gap. While average family incomes stagnate, the incomes of the rich rapidly rise.

The report points out that the richest one per cent of Canadians took about a third of all income growth in both the slow-growth decade 1987-1997 and the fast-growth decade 1997-2007, i.e in good times and bad. This was the largest slice in history. The share of all Canadian income that went to the richest one per cent had dropped to 7.7 per cent in 1977. It is now up to 14 per cent and increasing.

From 1998 to 2008, Canada's 100 best-paid CEOs' compensation rose from 104 times the average Canadian's to 174 times, representing a 53 per cent increase after inflation compared to the average Canadian's four per cent.

The higher up the income ladder you are, the faster your income rises. The income share of the richest .01 per cent of Canadians more than quintupled. To quote the report, "Canada's elite are breaking new frontiers in income inequality." This record-breaking growth is combined with the lowest top tax rates since the 1920s.

One thing the report clearly shows is that rewarding CEOs with ever greater incomes does not enrich the rest of us. The trickle-down theory has proven to be a fraud. A rising tide is not raising most boats.

The importance of the income gap is not simply about money and a fair share, but about the overall health of society. Inequality is a comprehensive social problem. Evidence increasingly shows that unequal societies are unhealthy societies. This is thoroughly illustrated in epidemiologists Richard Wilkinson and Kate Pickett's book The Spirit Level: Why More Equal Societies Almost Always Do Better in which they graphically show that rates of heart disease, crime, drug abuse, obesity, mental illness and other social ills depend on relative levels of wealth within societies. If we are concerned about all of these issues, we should be concerned about the growing inequality.

The need for a debate is obvious. The challenge is how to have the debate when our public forums—the mass media—are controlled by the very same one per cent who are benefiting from the inequality. The media moguls are hardly interested in a debate that might challenge their privileges.


  1. Since you asked. When progressivism returns to the Liberal Party of Canada, that's when. When we finally arrest Canada's descent into petro-statedom, that's when. When we come to see a thriving, robust middle class as a greater national treasure than corporatist riches, that's when.

    Sorry to sound angry.

  2. I hope you are angry, Mound. I am.