Some pigs are more equal than others

TheGlobeandMail.com – news/politics/secondreading
Published Friday, Dec. 10, 2010.   Gerald Caplan

Uncle Albert, who hadn’t read Animal Farm, always wanted us to know that money was not the important thing. After all, he shrewdly pointed out, money can’t buy poverty. Meanwhile Aunty Gladys regularly reminded us that it was just as easy to fall in love with a rich person as a poor one. Alas for them, they ended up marrying each other.

But somebody paid attention. There are more filthy rich folks now than at any other moment in history and they’re leveraging their astounding wealth to make sure they get filthier at the expense of the rest of us. For about three decades after the Second World War, however halfheartedly, most countries in the Western world shared a consensus to reduce the most blatant inequalities within society. But a spectacularly successful conservative counter-revolution has reversed this brief spurt of decency, making many countries, not least the ABC gang – America, Britain and Canada – more unequal than they’ve been since the Great Depression of the 1930s.

This phenomenon, completely unanticipated by my generation, is finally being noticed in all three countries. In the United States, for example, Jacob Hacker and Paul Pierson have written Winner-Take-All-Politics: How Washington Made the Rich Richer and Turned its Back on the Middle Class. You have to admire a book whose entire thesis is encompassed by its title and you have to give thanks that at least some academics are still earning their salaries.

Profs. Hacker and Pierson wonder “how hedge fund managers who are pulling down billions sometimes pay a lower tax rate than their secretaries,” or even their chauffeurs. The answer is as obvious as a tax form. In the United States both Democrats and Republicans woo the ultra-rich with tax policies that privilege them in the most blatant ways. Just this week the Republicans in the Senate blackmailed President Barack Obama into extending the reckless Bush tax cuts for the top 2 per cent of American households. Had he refused, the Republican senators were fully prepared to hold hostage 15 million jobless Americans. A political culture where a party thrives by brazenly representing a minuscule minority defies understanding, but there it is for all to see.

Those tax cuts, by the way, undermine attempts to slash America’s deficit. Silly people thought deficit reduction was a big priority for the Tea Pot populist set and the right in general. But the further enrichment of America’s plutocracy trumps all.

Canada’s Linda McQuaig and Neil Brooks document another lurid example in their latest true-life capitalist horror story, The Trouble With Billionaires. The deregulation of Wall Street, leading directly to the economic meltdown that haunts us still, was yet another gift by politicians to the rich-as-Croesus set in exchange for lavish generosity at campaign time.

The magnitude of the present inequality is truly mind-boggling – and growing. In the United States from 1980 to 2005, more than four-fifths of the total increase in incomes went to the richest 1 per cent of the population, all of whom will benefit from the newly extended tax cuts. Canada, of course, is far more egalitarian. In a new study for the indispensable Canada Centre for Policy Alternatives, economist Armine Yalnizyan found that in the past decade only one-third of all economic growth went to the top 1 per cent.

But Canada’s doing its best in the inequality sweepstakes. The richest 20 per cent of Canadians now control fully 69 per cent of Canada’s wealth while the bottom 60 per cent controls 11 per cent. These factoids come, rather unexpectedly, from Roger Sauvé’s MoneySense Guide to Retiring Wealthy, which was excerpted in The Globe and Mail’s Report on Business. For some, growing inequality is to be celebrated, some time even publicly.

The secret behind this development is twofold: generous tax cuts for the rich and their enterprises and stratospheric remuneration for producing little the world needs.

Yet the hard times induced by the financial sector naturally means declining government incomes, although naturally not for the financial sector. So, naturally, funding for old-fashioned social programs just ain’t what it used to be. In Ontario, for example, 830,000 people can’t get by without a Scrooge-level monthly welfare check while 15 per cent of children live in poverty even though many of their parents have a full-time job. Christmas bonuses for the vast majority of workers, according to usually reliable sources, seem not to have kept pace with those on Bay and Wall Streets.

The rich are different from you and me, as Scott Fitzgerald never really said to Hemingway. Yes, Hemingway never replied, they have more money. Uncle Albert would understand. But Hemingway was wrong. Inequality has huge ramifications far beyond financial disparities. Money is just a tool.

In Britain, after all those years of New Labour and the egregious Tony Blair, Maggie Thatcherism has proved the big winner. A small billionaire class triumphs while rabid attacks on the welfare state by the new Conservative-Liberal Democrat coalition ensures an even more vulnerable majority and, like elsewhere, a declining, hurting middle class. The consequences have been spelled out in a 2009 book by Richard Wilkinson and Kate Pickett, The Spirit Level: Why More Equal Societies Almost Always Do Better. In fact they take their argument well beyond Cruel Britannia to 23 other countries including Canada and the United States.

The Spirit Level has admittedly caused much controversy, but it makes a good case for the “pernicious effects that inequality has on societies: eroding trust, increasing anxiety and illness and encouraging excessive consumption.” For each of eleven different health and social issues – physical and mental well-beingeducationimprisonmentobesitysocial mobilitytrust and community life, violenceteenage pregnancies and child well-being – greater inequality is a substantial risk factor.

The Trouble with Billionaires makes a similar point. In a chapter called “Why billionaires are bad for your health,” Ms. McQuaig and Mr. Brooks show how the extreme income inequality their book documents exacerbates crime, mental illness and infant mortality, the last of course one of Stephen Harper’s great causes, at least when it comes to poor countries. But then all these studies make you wonder what a poor country is these days. There are, after all, a lot of rich Africans and there are lots and lots of poor Canadians and Americans and even more on the very precipice of being poor. In fact when you think about it carefully, as the privileged rarely do, a deeply unequal society is bad for the physical, social, and mental health of everyone in it.

But Hemingway was wrong in a larger way too. Ms. McQuaig and Mr. Brooks have another fascinating chapter called “Why billionaires are bad for democracy.” It makes you wonder what a democratic country really is and which countries can call themselves that. Money can’t buy you poverty, but it can buy extraordinary power and privilege. It can even influence institutions like my old alma mater in ways I never dreamed possible. But that titillating story must wait till next week.

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1 Comment

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