Ed Broadbent on rising inequality and the threat to the Canadian dream
TheStar.com – opinion/editorialopinion
December 26, 2012. Ed Broadbent
In the 1940s and ’50s in my hometown of Oshawa, boys growing up in a working class family rarely went to university. For a girl in the same family, it was even less likely.
The situation changed fundamentally in the 1960s and ’70s, and not just because of economic growth. While unions continued to improve wages and working conditions, government invested massively in education at all levels, as well as in other public domains, with the clear goal of equalizing opportunities. Post-secondary education of all kinds became an affordable reality — and with all these changes came increased expectations for parents and kids from all families.
South of the border, the political language is different but the goals have often been similar. President Barack Obama said his recent campaign was based on the view that “we are all in this together.” In the postwar years when we were making basic changes, Canadians were more likely to say “we’re a sharing and caring society.” But in both cases there was an explicit rejection of Mitt Romney’s and Stephen Harper’s “you’re on your own” view of politics and society.
The political decisions and investments we made decades ago not only in public education but in health care, pensions, employment insurance and progressive income taxes made all the difference. By reducing real inequalities in life we laid the foundations for a society with genuine equality of opportunity — one where it didn’t matter that much on which side of the tracks you were born.
But we have recently been moving in the opposite direction, toward a less equal society. We are moving away from equality-promoting public services and social programs and toward tax cuts most beneficial to the affluent. This important shift in public policy came as middle-class jobs were disappearing and as earnings in the market place were becoming more unequal.
The Broadbent Institute recently issued a major discussion paper, “Towards a More Equal Canada,” which argues that the marked increase in income and wealth inequality over the past 20 years erodes genuine equality of opportunity.
In a commentary on that paper which we have just published, University of Ottawa economist Miles Corak emphasizes that Canada used to have much more modest gaps in income between families and that this helped support an enviable degree of income mobility between generations.
Corak points out that Canadian boys born in the 1960s had a very significant chance of ending up in a higher income group than their fathers, and that equality of opportunity here in Canada was much greater than in the United States, while still somewhat less than in many European countries.
We do not yet know just how much rising inequality in the 1980s and 1990s will ultimately affect longer-term life chances. But we do know that in recent decades we have become more unequal more rapidly than most other OECD countries. We also know that today’s university students must pay thousands more in fees than students did in the 1960s and 1970s. And their multi-thousand-dollar debts upon graduation vastly exceed those of my generation.
We know that children from low-income families start at a significant disadvantage in life, partly because of poor access to food and housing and partly because their parents lack time and resources. This disadvantage can be partially offset by high-quality child care and early learning programs, but these are thin on the ground in much of Canada despite the fact that the proportion of children living in poverty is much higher than it was in the 1960s and 1970s.
The Fraser Institute recently argued that we should not worry about rising inequality because individuals move up and down the income ladder over their working lives. While this is superficially true in the sense that earnings fluctuate from year to year and tend to increase with age and experience, this hardly means that we live in a society of equal opportunity.
The vast majority of middle- and lower-income working Canadians have a minimal chance of suddenly vaulting into the layer of corporate executives and leading professionals who comprise most of the top 1 per cent. Michael Veall, past president of the Canadian Economics Association, tells us in a recent paper that 70 per cent of this elite group stay where they are from year to year. In fact, turnover at the top is lower than it used to be. But at the other end of the ladder there has been a great deal of movement in recent years — in both directions: not just out of poverty but into it. According to Statistics Canada, almost one in five Canadians (17.3 per cent) lived in poverty in at least one year between 2005 and 2010.
It’s bad enough that there are so many poor Canadians at any given time, but these figures show working people move in and out of poverty. Some will lose their jobs. Some may be lucky enough to find good and steady work. But even many of those who have a job stay among the working poor and many will remain well short of a middle-class standard of living for their entire lives. While this is particularly true of many aboriginal people, recent immigrants, single parents and people with disabilities, it’s also true of many others. This is why we need strong public programs that reduce inequalities at birth and preserve a real equality of opportunity.
Economists tell us the chances of finding and keeping a good job today depend more than ever on a high level of education and skills required by new technologies in the marketplace and the loss of unskilled jobs to developing countries. But we have largely failed to equip the unemployed and precariously employed with the skills they need to survive in a new economy. Nor have we adequately increased income supports like the Working Income Tax Benefit for those who work hard but still cannot get ahead.
We cannot dismiss growing inequality by pretending, as the Fraser Institute does, that all Canadians are still getting the equal chances that existed a generation ago. Gross income inequalities destroy equality of opportunity, and even the advantages of any rising incomes for the poor can be wiped out by a less progressive system of taxation or cuts in public investment. The gap between the rich and the poor, and the eating away of the middle class, are cementing the privileges of the most affluent and undermining the legitimate hopes of those who want to do much better.
Canadian values demand that we do something about rising inequality before we turn into a winner-take-all society with a permanent underclass. We are in this together, and that means we must once again care and share.
Ed Broadbent, leader of the federal New Democratic Party from 1975 to 1989, is chair of the Broadbent Institute.
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