The middle class is good politics but a curious crusade

Posted on August 6, 2013 in Equality Debates – commentary/comment
Aug. 02 2013.   Konrad Yakabuski

The first observation to be made about expatriate Canadian journalist Chrystia Freeland’s decision to try federal politics is that she’s picked a curious riding from which to launch a crusade to save the middle class. Toronto Centre has among the lowest and highest incomes in the country. Between Moore Park and Moss Park, there’s not much middle anything.

Yet, maybe that’s Ms. Freeland’s point. The central conceit of her political calling is that the middle class is dying. She and Justin Trudeau want to resuscitate the Canadian dream. The question for voters is whether they have diagnosed a disease that doesn’t exist.

Make no mistake, Ms. Freeland’s return home to seek the Liberal nomination in Bob Rae’s old riding is a brain gain that promises to elevate the tone and substance of Canadian politics. And as anyone who’s seen her work a room knows, she’s no Iggy descending from the ivory tower to educate the masses. She’s a warm and smart Prairie gal without pretension. And she’s already lined up a gig next month as marshal of the Bloor West Village Toronto Ukrainian Festival.

Canadians might ask, however, whether Ms. Freeland is launching her political career in the right country. She has spent the past several years writing about “the devastating hollowing out of the middle class in the Western industrial democracies.” For her award-winning book on the global plutocracy, she hung out with obscenely rich people, of which Canada has precious few.

Her career has given her an invaluable perspective on income inequality in the United States and beyond. But it’s hard not to get the impression that she’s hankering to get her hands on Canadian policy levers to apply solutions to problems that don’t exist here – or at least not to the extent that they require a dramatic overhaul of our education, welfare or tax systems.

To be sure, championing the middle class is good politics. What “average Canadian” doesn’t feel financially squeezed, fearful for their job security or worried about their children’s future? As such, Mr. Trudeau and Ms. Freeland have ripped a page out of Barack Obama’s playbook. To wit, the U.S. President’s most recent State of the Union speech and its vow “to reignite the true engine of America’s economic growth – a rising, thriving middle class.” He has repeatedly used the phrase “thriving middle class” in speech after speech since, including several in the past 10 days.

“Solving the challenges facing the middle class requires a new vision of politics and what it must accomplish,” Ms. Freeland said in launching her candidacy on Wednesday. “I believe strongly in Justin Trudeau’s vision for a thriving middle class.”

Who doesn’t? But as TD Economics has shown, Canada has not experienced the same wage polarization that has led to rising income inequality south of the border. Social mobility is higher here and our tax system is more progressive. The after-tax income of the top 10 per cent of Canadians was 4.1 times that of the bottom 10 per cent in 2010. The U.S. ratio was 6 to 1.

There is no doubt that globalization and technological change have rendered thousands of middle-class Canadian jobs obsolete. But there is no reversing this trend, no matter how much would-be federal policy-makers aspire to meddle. Besides, globalization’s upsides outweigh its downsides. And Canadians, among the best-educated people on the planet, stand to benefit.

“Rewards to education, to innovation and to creativity are higher than they have ever been,” notes Princeton University economist Angus Deaton in The Great Escape, his forthcoming book on the history of inequality. “Perhaps the greatest escape in all of human history, and certainly the most rapid one [is] the reduction in global poverty since 1980 … The world has done much better than the pessimists predicted.”

None of this is to suggest that income inequality (and the corresponding divergence in health outcomes) is not a global problem – within and between countries. But as Ms. Freeland concedes, Canada gets “the big things profoundly right.” We equalize opportunity better than most countries. Our challenge is financially sustaining the policies that have served us so well.

A “thriving middle class” won’t come from new programs hatched in Ottawa. It will come from the innovators and entrepreneurs who harness Canada’s abundant human capital and natural resources to create wealth. As such, Ms. Freeland and Mr. Trudeau may be aiming too low.

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