Why aren’t we talking about income inequality?

Posted on October 29, 2011 in Equality Debates

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TheGlobeandMail.com – /news/opinions/jeffrey-simpson
Published Saturday, Oct. 29, 2011.   Jeffrey Simpson

Equality is fitfully in the news. Demonstrators demand higher taxes on the “rich.” Would-be NDP leader Brian Topp says the “rich” should pay more. In the U.S., a smattering of economists and business people – even Warren Buffett – insists the very wealthy should pony up.

Deficits are large, social programs need to be funded, the poor are growing. Ergo, the rich should pay more. So goes the simplistic argument.

In Canada, we have fussed a great deal about equality, but not of the income kind. Instead, we’ve spent much money and changed laws to deal with equality of regions and equality (or equity) of ethnicity and gender.

In 2011-2012, the federal government will spread $14.7-billion around Canada under the equalization program, which is enshrined in the Constitution. Quebec will receive $7.8-billion, Ontario $2.2-billion, Manitoba $1.6-billion, New Brunswick $1.4-billion, Nova Scotia $1.1-billion and Prince Edward Island $329-million. (Newfoundland and Saskatchewan no longer qualify, but bedraggled Ontario now does.)

It’s a jerry-rigged system based on a formula no mere mortal can understand, and it produces bizarre results (as in Manitoba, with a very low unemployment rate, getting $1.6-billion). But the program shows that Canada does pay attention and big money (almost $15-billion) to one kind of equality – regional equality – so all provinces can provide roughly comparable levels of public services.

Alongside equalization in the Constitution is the “equality rights” section, a Canadian legal innovation that outlaws discrimination based on “race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.” Public debates, to say nothing of certain legal cases, are infused with arguments about equal treatment of men and women, whether people “of colour” are discriminated against, and whether disabled people are treated fairly.

There seems to be a near consensus in Canada that equalization among provinces’ ability to deliver services is a public good. And there also seems to be widespread agreement that equality of persons’ rights, or at the very least the elimination of discrimination, is a public good, although one sometimes more sought after than achieved.

The strides that women have made and the inclusion of multicultural groups in Canadian life in the past generation have been noteworthy, even remarkable. No country in the world has been more successful with its multicultural experiment than Canada, testimony to which is the number of delegations from other countries arriving here to study how it works.

Income inequality, however, seems to be the kind of inequality that Canadians don’t talk about much. Even the NDP seems to have changed its pitch in recent elections, appealing incessantly to the “middle class.”

In the past 20 years, according to the Conference Board of Canada, income inequality in Canada has increased. During that period, only the top 20 per cent of income earners increased their share of national income, with the “super rich,” or the top 1 per cent, doing best of all.

The U.S. is the most unequal Western democracy according to the Gini coefficient, a measure of income inequality. Britain is also quite unequal. Canada stands between these anglosphere countries and the more equal continental Europeans.

Why Canada and other societies have become more unequal in an income sense is a complicated business, and taxing the “rich” won’t do much to turn the trends around. Figuring out who qualifies as “rich” is somewhat subjective after we include the top 2 per cent or 3 per cent. And taxing them more doesn’t actually raise all that much money; to get real dollops of cash, governments have to tax people who consider themselves “middle class.” That’s when things get politically awkward.

Nonetheless, it’s worth talking about income inequality – the cause of its widening, the consequences of that widening, solutions. Canadians apparently feel more comfortable talking about, and acting on, the other kinds of equality rather than more equality of income.

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