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Is concern about economic inequality going mainstream?

Posted by Ted Schrecker
Ted Schrecker
Ted Schrecker is a clinical scientist at the Élisabeth Bruyère Research Institut
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on Tuesday, 19 February 2013
in CHNET-Works!

In a previous posting, I recommended a recent report on economic inequality in The Economist. In its special reports, at least, that magazine has a strong track record of ‘telling it like it is’. Back in 2006, for example, a special report on the world economy admitted that “the usual argument in favour of globalisation–that it will make most workers better off, with only a few low-skilled ones losing out–has not so far been borne out by the facts. Most workers are being squeezed.” And in 2011, The Economist pointed out that Congressional Budget Office figures from the United States support the contention “that the people at the top have made out like bandits over the past few decades, and that now everyone else must pick up the bill.” Now, more evidence suggests that concerns about economic inequality are moving into the mainstream, in Canada and elsewhere.

One of the Occupy movement’s accomplishments has been to direct attention to the growing gap between people at the very top of the income distribution in societies like Canada and the United States – the one-percenters – and the rest of the population. In January 2013, Statistics Canada released updated figures based on tax return data about Canada’s one percenters: based on income, they were those with annual personal incomes above $201,400. These figures refer to individual incomes, not family incomes; a University of Regina Study published in 2012 found that in 2009, the top one percent of “economic families” as defined by StatsCan had wage and salary income (i.e. not including interest, dividends or capital gains) of more than $271,800. The two sets of figures are not directly comparable, since they are based on two different data sets and the Regina figures are restricted to labour income. Yet another analysis, which included all forms of income, identified the top one percent of households (the definition is similar to that of economic families, but not identical) as those with incomes over $366,717 in 2010. More strikingly, the top one percent of households in this analysis accounted for 10.5 of all the income earned by Canadians. All these data refer to income and not to wealth, which most researchers agree is more unevenly distributed than income.

Considerable ideological distance separates Occupiers from the business-oriented Conference Board of Canada, yet the Conference Board has recently expressed considerable concern about Canadian inequality. In an online report card that compares Canadian social policy with that of 16 other high-income countries, it notes that Canada “is not living up to its reputation or its potential” and that “Canada’s ‘D’ grade on the poverty rate for working-age people, and its ‘C’ grades on child poverty, income inequality and gender equity are troubling for a wealthy country.”   The report offers links to more detailed information on various specific domains, such as child poverty (where Canada ranks 15th, ahead only of Italy and the United States); working-age poverty (again, we are 15th, ahead only of Japan and the United States, and not by much); poverty among the elderly (one of Canada’s social policy success stories, but now arguably imperiled by population aging and the fact that only one in four private sector workers has a pension plan); and income inequality (rising, with a “concentration of income among the super-rich”). Despite Canada’s overall “B” grade on social indicators, which cover much more than income (and do not address concentrations of wealth), the overall pattern of increasing inequality is clear. So is the fact that other countries do much more than Canada to reduce income inequality by way of taxes and transfers.  

Perhaps an even less likely source of concern about inequality is the World Economic Forum. Yet the eighth (2013) edition of a Forum report on “global risks,” based on “an annual survey of over 1,000 experts,” estimates that severe income disparity is the most likely of any of the 50 risks studied to occur over the next ten years, and that a major systemic financial failure is the risk with the highest potential impact. (The economic processes driving inequality and magnifying financial risk are of course closely connected, as we know from the events of the last five years.) The simple fact that the report’s authors consider severe income disparity as a global risk says a lot. In the global frame of reference, further gloom about prospects for reducing health inequity comes from the fact that water supply crises are rated as having both high likelihood and high impact, and food shortage crises are rated as having high impact although lower likelihood.

Almost five years after the release of the report of the Commission on Social Determinants of Health, it should not be necessary to revisit the connections of economic inequality and its consequences with health inequity. (An earlier posting, which has drawn more hits than any other in this series, addressed some of these connections.) It’s also worth emphasizing that reducing inequality is not about the ‘politics of envy’ or some similar construct. It’s about the near impossibility of healthy life near the bottom of the economic ladder even in the richest countries in the world; the ubiquity of socioeconomic gradients in health; and the fact that if societies want to invest more in policies that equalize opportunities to live a long and healthy life, the resources will have to come from somewhere. If not from those who have captured a very substantial portion of the gains from the pre-2008 period of sustained economic growth, then from whom? As US President Obama famously and correctly said, this is not class warfare; it’s math.

There is also a more subtle political point. Once economic inequalities have become sufficiently extreme, the idea of a ‘common future’ may become an illusion; the gap between the rich and the rest will simply be too wide, whether we define the rich in terms of the top one percent, five percent or even 20 percent. The problem is that we cannot locate this threshold (if it exists) in statistical terms, and will only know that we have crossed it once we have done so. Writing in the US context Robert Reich, later a cabinet secretary in the Clinton administration, raised this possibility more than 20 years ago in an article on “the secession of the successful” – at a time when economic inequalities were less extreme than they are today.   It remains to be seen whether heightened concern about those inequalities today can have an impact on social policy and reducing health inequity, or whether secession of the successful is already a fait accompli.

Related resources

“The global economy is disequalizing,” interview with The Broker (Netherlands) as part of an ongoing series on inequality.

Richard Wilkinson, “How economic inequality harms societies” (online video)

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