General · 15th May 2012
There is a photograph circulating around on Facebook. It shows a young man holding a sign. He doesn’t look particularly well off. His sign says, “We didn’t crash the economy. Why are we picking up the tab?”
We had an economic crisis in 2008, caused by a greedy financial sector that lobbied for deregulation and took reckless risks. Governments stepped in and saved the world economy from further catastrophe by providing economic stimulus packages. In other words, taxpayers bailed out the private sector. And what is government telling us today? We have to pay the price again, through cuts to the public services that we all rely on and through cuts to public sector jobs.
The crash of 2008 was only a symptom. The real cause, which has also been one of the main outcomes, is growing income inequality. And it’s not just left-wingers who are making that argument. Nobel Prize winning economists Paul Krugman and Joseph Stiglits, the International Monetary Fund, World Bank, Conference Board of Canada – even Bill Gates and Warren Buffet are saying the same thing. And, of course, the Arab Spring and the Occupy movement are bringing that message home to all of us.
Since the mid 90’s, Canada has fallen from the 14th most equal country among OECD countries to the 22nd. Between 1997 and 2007 the richest 1% in Canada took 33% of all income growth. Today income inequality is growing faster in Canada than in the U.S.
In a recent book called The Spirit Level, British researchers Wilkinson and Pickett did an exhaustive study of the economic and social costs of income inequality. Their findings included higher rates of mental illness, higher rates of crime and incarceration, higher infant mortality rates, lower literacy and math scores, and erosion of trust and social cohesion. People become divided into different social groups: public vs. private, union vs. non-union, pension vs. no pension. It is impossible to build a strong economy when the poorest workers keep falling behind and the middle class keeps shrinking. The economy can only lurch from crisis to crisis.
Inequality is also bad for democracy as we see the growing ability of the super rich to influence politicians. Consider the influence on the discussion of climate change, on collective bargaining, and on health and safety regulations. Consider tar sands companies receiving tax subsidies. Consider former Senator Leo Kolber. A former senior employee of the Bronfman’s and appointed to the Senate by Trudeau, Senator Kolber led the charge to reduce capital gains taxes. (If you work at McDonald’s, you pay tax on 100% of your income. If you make $1 million on investments, you only pay tax on $1/2 million.)
Income inequality inevitably leads to social unrest and has different effects on diverse sectors within our society.
Since 2008, most of the attention has been on workers experiencing job losses in male-dominated industries (construction, forestry, the automotive sector) and many of the economic stimulus packages introduced by governments have focussed on infrastructure projects that mostly employ men. It’s worth noting that 30% of the jobs lost in the recession have been women’s jobs, which tend to be a lot less secure than men’s jobs as they are lower paid (30% less on average) and more likely to be non-unionized and part time or temporary. Women are less likely to receive severance pay or to qualify for Employment Insurance benefits.
Unions are under attack by both the Harper and the Christy Clark governments. Unions have done a lot to advance women’s equality in the workplace, through increased wages, pay equity, paid maternity leave, harassment policies, family leave, etc. Along with the attack on unions, we are seeing the erosion of employment standards. Here in B.C., employers can now pay less than minimum wage in places where liquor is served, predominantly by women.
Since 2006, Harper’s tax cuts to corporations have equalled $14 billion per year. Can you imagine what we could do with $14 billion? We could have a national housing strategy, or a national child care program, or we could lift all seniors out of poverty.
Meanwhile, our spending on public services, as a percentage of our GDP, has been shrinking. We’re baking a bigger pie, but the slice we’re giving to public services is getting smaller. And it’s not just a question of how much governments have to spend; it’s also a question of spending priorities. Consider U.S style mega jails and fighter jets. Consider the deep impact of the cuts to services.
But, you may ask, when we give tax breaks to the wealthy and to corporations, won’t they create more jobs? (Actually, dear reader, you probably won’t ask that because hardly anyone believes that line anymore, but I’ll give you the answer anyway.) No. This is the biggest lie in politics. There isn’t a shred of evidence that cutting taxes for the wealthy and for corporations helps middle and low income families. Consider Caterpillar. They made $5 billion in profits last year, paid their CEO over $10 million, and received a $5 million tax break from the Harper and McGuinty governments. And then, when their employees refused to take a 50% cut in wages and benefits, they moved to the U.S.
Unless governments develop a strategy to develop and keep good jobs in Canada, preferably green jobs, for both men and women, income inequality will continue to grow. Cuts to public services undermine the potential success of such a strategy. We can’t compete with the U.S. or Mexico for low wages and we can’t compete with California or Mexico for weather. Our strength is a well educated, skilled workforce with access to quality health care.
We should all be worried about the problem of income inequality and by the continuing attacks on public services. Whether you write a letter to the editor, or meet with your MLA or MP, or get active with a group like Council of Canadians, or simply talk to a friend, find the place where you’re comfortable - and do something!