Can politicians ‘fix’ income inequality?

Mr. Trudea&Income InequalityKenney 20130206By:Stephen Chartrand- Specialty News Editor

As we approach the 2015 federal election, it’s becoming clear that politicians are beginning to feel the pangs of election time. Radio and TV ads are well under way and the parties have already started squawking over which is best positioned to solve the social and economic dilemmas besetting the majority of Canadians.

Its politics as usual, but in the most recent public confrontation, Justin Trudeau, leader of the Liberal Party, and Employment Minister Jason Kenney, have differed in opinion lately over the growing problem of income inequality in this country.

In a recently published study by researchers at York University’s Institute for Social Research, the vast majority of Canadians believe that income inequality is a painful fact of the modern day economy.

According to David Northrup and Lesley Jacobs, the researchers who compiled the report, Canadians not only accept income inequality as a certain and growing problem of our economy but believe by a vast majority that it has worsened over the last five years.

The institute surveyed the attitudes of 1800 Canadians and discovered that “close to eight of every ten Canadians (77.7%)” believe over the last five years that income inequality has worsened while 40% of those surveyed believe it has grown “much larger.”

The findings confirm what most of us in the low and middle -income class of earners have acknowledged for years. Another recently published study of income parity in Canada has also garnered significant attention lately.

Two weeks ago Statistics Canada released a study which found that Canadian families have increased their overall wealth – adjusted for inflation – by 44.5 per cent since 2005 and 80 per cent since 1999.

Liberal Party leader Justin Trudeau took exception to StatsCan’s findings at a recent conference in Ottawa, telling reporters he thought the findings were misleading. Since becoming party leader, Mr. Trudeau has argued regularly throughout his campaign and debates with Conservative party politicians that the middle class has been for decades unduly struggling under stagnant incomes and crushing household debts.

Employment Minister Jason Kenny accused Mr. Trudeau of “making things up,” citing the 162 tax cuts the Harper government has introduced since coming to office in 2006 as partly responsible for the increase in overall net worth for middle class families in Canada.

The minister also said that the StatsCan report confirms his suspicions that income inequality is not as great a problem as many liberal and left-leaning thinkers would have us believe. But it seems apparent that Mr. Kenny hasn’t even read the report.

Oddly enough, the StatsCan report Trudeau cited from the minister’s department also said that “the Canadian dream is a myth more than a reality.” Whatever that dream is, has been, or is supposed to be is lost on this writer, but it seems apparent in any case that our politicians don’t exactly know what it is either.

When Trudeau was asked about this Statistics Canada study on Feb. 27, he said he was referring to the long-term trend that since 1981, the data reveals “very, very troubling trend lines.” “The reality is,” Mr. Trudeau said, “that anyone who has spent any time actually talking to Canadians and listening to them knows that people are really, really worried,” he said to a questioner after a speech “hosted” by the Ottawa Chamber of Commerce. “Canadians are worried that, you know what, for the first time, they’re not going to be offering to their kids greater opportunities than they had.”

Perhaps the Liberal Party leader believes he can fix income inequality, stagnant wages, and an equally stagnant economy, but does anyone really believe that our politicians can fix this problem with substance and fresh ideas?

Trudeau said Canada “must be a place where upward mobility and equality of opportunity is there for everyone,” adding that “I do believe, unlike some others, that the federal government does have a leadership role to play in making that happen.”

The StatsCan report Trudeau referenced from Kenney’s department, while it reports an increase in overall wealth for Canadian families, it also states that middle-income earners have seen their wages stagnate and their levels of debt increase between 1993 and 2007, concluding that social mobility for the middle class has neither improved nor declined but has pretty much remained still.

“It explicitly says that wages of middle income workers have stagnated and that middle-income families are increasingly vulnerable to financial shocks,” Trudeau said. “And it says finally — something that the Conservative government has so far refused to acknowledge — for far too many, [that] the Canadian dream is a myth more than a reality.”

While it is true that the net worth of middle-income earners has increased since 1999, that increase in overall wealth is almost entirely a result of the increase in house prices. It is not, as the minister would have us believe, an accurate picture of middle income wealth or prosperity, whose wages have remained stagnant as their debt levels have increased.

According to the same StatsCan study, average debt levels have risen by 41.6 per cent since 2005. But as debt levels have measurably increased and wages stagnated, which group has accumulated this supposed increase in overall wealth? The figures show that this increase in net worth, 90 per cent of it, has gone to the top 40 per cent of income earners. The other 60 per cent trudged along taking home a meager 11.1 per cent of that increase.

These figures have become common knowledge for most Canadians by now. As Oxfam recently reported in a study on global wealth, the 85 richest people in the world have accumulated since the late 1970s nearly half the world’s global wealth, owning more than the poorest three and half billion.

As politicial commentators like Peter Hitchens and Micheal Coren have repeatedly noted in their reflections on government over the last decade, the reason this problem has not been addressed with any seriousness is that politics in our day is about winning office and nothing more.

Another report cited by Mr. Trudeau during his speech in Ottawa was a study conducted by researchers at the University of British Columbia. The researchers found that since the early 1980s, around the time neo-liberalism was taking off as an economic policy of the Reagan and Thatcher governments, that nearly all of the increase in net worth and income have gone to the top ten per cent of income earners in this country.

Thomas Lemiuex and W. Craig Riddell of UBC’s School of Economics who lead the study, found that income growth from 1982-2010 has entirely gone to the top ten per cent of income earners while the bottom 90 per cent have more or less gone unrewarded by the economy.

According to their research, overall income growth in Canada since 1982 has grown by 13.5 per cent, adjusted for inflation, but nearly all of it has been concentrated in the pockets of the wealthiest ten per cent of earners – and to be more specific – it’s the top 0.01 percent who saw their incomes grow by more than 160 per cent during that time.For everyone else that growth, according to Lemiuex and Riddell, has been “negligible”.

The results and findings of these studies, as far as our politicians are conveying them in their public speeches and debates, are painting a misleading picture. If we acccept Mr. Kenny’s reasoning, Canadians have financial security and have seen their overall wealth increase since the Harper government assumed office in 2006.

However, we know that its only the top 60 per cent of earners who had a 40 per cent increase in net worth since 1999 but for the lowest 20 per cent there were almost no gains in their net worth. We also know that its only the wealthiest 0.01 per cent who’ve enjoyed the maximum fruits and benefits of this economy.

As vocal as Trudeau has been about the station of the middle class since he came to be leader of the Liberal Party last April, making it a central issue of the party’s platform, there is little substance of note or policies of note one can see in his public speeches or his party’s overall platform because, like Minister Kenney, Mr. Trudeau has no idea how to fix this growing and painful problem.

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