The price of inequality
January 22nd, 2015 - 4:37pm
An Oxfam report this week showed that one percent of the world’s population will control half of the world’s wealth by 2016. It also explained how the world’s richest 80 individuals have as much wealth as the poorest 3.5 billion people combined. While this may sound inevitable, given other reports in recent years, it is profoundly bad news for our economy, our democracy, and the opportunity afforded to those seeking upward mobility.
There is also the small matter of what has happened in the past when wealth is so tightly concentrated. According to highly regarded economist, Joseph Stiglitz we are approaching the same conditions that lead to the great depression. That was set off when the stock market crashed in 1929 and wealth was similarly concentrated. At that time the American government was attempting to reign in social spending by pursuing austerity measures – much like we are today in Canada. That failed miserably and the consumer economy sank along with the public expenditures, shattering confidence, and effectively killing growth for a decade. Are we doomed to repeat the pattern?
Another feature of such inequality is the political imbalance it creates. It is no secret that the countries that are facing the greatest growth in wealth disparity are also ones run by right wing governments. Those governments are supported by big money and Oxfam tells us that the world’s wealthiest devote a great amount of money for lobbying efforts designed to protect what they have and ensure it can grow.
While things are worse in the United States on this front, Canada is moving steadily in the same direction. The phenomenon, according to Stiglitz, took root in the economic policies of Ronald Reagan which were mirrored in Canada under the governments of Brian Mulroney and Jean Chretien. The main features of these economic policies are deregulation, the weakening of social protection measures, and the weakening of institutions like unions which are designed to create a balance of social power.
Oxfam is calling on governments to stop companies and rich individuals from avoiding taxes and also to shift taxes from labour and consumption to wealth and income. Without these changes the notion of social mobility is in danger of becoming more of a pipe-dream than a concept rooted in reality. In addition to that, the generational price tag is huge.
In Canada we rely heavily on resources for our economy. Without proper regulations – especially environmental ones – we are creating a legacy of environmental debt for our children and for generations to come. Additionally we are not using the wealth created from natural resources to invest in human resources which makes it difficult to properly diversify our economy to include and benefit more people.
What is clear is that our government has no intention of doing any of these things. Their record alone suggests more of the same which will amount to more people fighting over less and less of the proverbial pie. That doesn’t end well, but it doesn’t have to. What is required is a government that is not beholden to the interests of the wealthiest among us and is more interested in creating the conditions where more people can work hard and share in the bounty.