Julie Smyth

Capacity crowd attend income inequality panel

January 20, 2012

Ottawa  – The  gap between rich and poor is at a record high, according to a new global economic study, and the Occupy Wall Street protests were just one sign of growing unease in America, according to speakers at a Canada 2020 event last night.

Income inequality has not dominated Canadian politics in recent years but has polarized Americans to the point where it has entered the Republican race for the presidential nomination.  “Republicans are attacking someone for being rich,” Chrystia Freeland, global editor-at-large for Thomson Reuters, told a packed audience.

“It has been a pretty taboo subject,” she said, but now the disparity is front page news and dominating political debates.

Ms. Freeland, who is based in New York, was one of the speakers at the Canada 2020 event on Reducing Income Disparities and Polarization, which drew a crowd of more than 300.  She said there is a great deal of anger in the United States and a “tremendous lack of faith” in the government.

She spoke of the new super elite, who make the divide between rich and poor more complex: unlike  wealthy leaders of other generations, today’s top 1% are highly educated and work extremely hard but are also ambivalent about their communities and those they leave behind.

Ms. Freeland, who is writing a book on the super rich, has discovered a movement to create a modern day Galt’s Gulch. (Galt is the hero of Ayn Rand’s 1950s novel, Atlas Shrugged. Galt and other like-minded capitalists retreat to a refuge in the Rocky Mountains to avoid being pulled down by the less talented and lazier lower classes and live out their days in splendour as the rest of society collapses.)

She has found people who are talking about building islands in international waters where they could live with all of their wealth, disconnected from the rest of the world, she said. “I have discovered people who are actually trying to build Galt’s Gulch.”

Alessandro Goglio, of  the Organization for Economic Co-operation and Development, came from Paris to address the Canada 2020 event at Ottawa’s Château Laurier and talked about a new report showing income inequality is at a record high level among OECD countries.

In Canada, the average income of the top 10% of earners in 2008 was 10 times higher than that of the bottom 10%, he said. The report, which included data up until 2008, showed Canada was close to the middle for income inequality and came in third place in the OECD, after America and Britain, in terms of concentration of pre-tax income in the top 1%.

The OECD report, Divided We Stand: Why Inequality Keeps Rising, detailed how income equality increased during both recessions and boom times and suggested “developments in labour earnings and labour markets are a main driver.”

Mr. Goglio said the key to change was more and better jobs, what he called “smart taxes,” better training at an early age and access to employment for underrepresented groups.

Keith Neuman, Executive Director of the Environics Institute, spoke about recent data from a survey of 1,500 Canadians. Among the findings: 74% thought income inequality was a result of things such as tax breaks and government policies and 11% thought it was linked to the economy. A strong majority, 82%, agreed the government should find ways to reduce the gap between rich and poor, though this was also influenced by their political views (Conservative voters were less likely to think the government should act, compared to Liberal supporters.)

The survey did not find the same level of dissatisfaction suggested by front page headlines in the United States – 58% were happy with the direction of the country and most Canadians were fine with large company profits and optimistic about their personal finances in 2012.

The event also heard from three authors who contributed to the book The Canada We Want in 2020: Mark Cameron, a former policy advisor in the PMO, Andrew Sharpe, founder of the Ottawa-based Centre for the Study of Living Standards, and Sherri Torjman, vice-president of the Caledon Institute of Social Policy.

A panel moderated by Don Newman, chair of the Canada 2020 Advisory Board, debated the causes of income inequality and ways to reduce the gap. Among the topics: the effect on inequality of globalization and the technology revolution. Ms. Freeland said some experts she has spoken to point to technology, others to globalization and some admit they do not understand fully what is driving the widening gap.

Mr. Cameron said taxing that top 1% will not generate sufficient income to rebalance the situation and suggested that raising consumption taxes would be one way, though unpopular.

Mr. Sharpe  and Ms. Torjman spoke about the broader issues of poverty in Canada, including amongst aboriginal Canadians. Ms. Torjman said there is a need for a stronger redistribution system, greater attention to the effectiveness of social programs, such as child care benefits, and more community-based activity to build up people’s assets.

Thursday’s event was the first in a series of discussions centred on The Canada We Want in 2020.

“We want to have a national discussion,” said Mr. Newman, who encouraged the  audience and all Canadians watching the event online from home, to join the debate.

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