The second great turnaround proposed by the Club of Rome’s 21st Century Transformational Economics Commission in its Earth for All report is to reduce inequality within nations.
As I noted last week, there are moral, social and economic arguments in favour of reducing inequality. As the report bluntly states: “Extreme inequality is a destructive force in society,” while “countries where citizens are economically more equal function better.”
The commission notes the problems resulting from inequality include skewed political power, over-consumption among the rich and the appropriation of “the commons” through privatization — not just land, but data and knowledge, too. To this we might add that high levels of inequality lead to a sense of powerlessness and hopelessness, and the potential for heightened social conflict.
Inequality has been increasing around the world in recent decades, as it has in Canada. The World Inequality Report 2022 stated: “Income and wealth inequalities have been on the rise nearly everywhere since the 1980s following a series of deregulation and liberalization programs.” But, the report added, different countries displayed different degrees of rising inequality, indicating that “inequality is not inevitable, it is a political choice.”
Earth for All proposes three main levers to address inequality within nations: “more progressive taxation on both income and wealth for individuals and corporations; strengthening labour rights and trade unions’ negotiating power;” and innovations such as a universal basic income that can both share prosperity and provide security.
What would this mean in Canada? First, we forget we were less unequal in Canada before the advent of neoliberal ideology and economics. The inequality report points out that “inequality in Canada … was maintained at low levels from the 1950s to the 1980s,” but that “income inequality in Canada has been rising significantly over the past 40 years.” This was attributed to a combination of financialization (an increase in size and importance of the financial sector), deregulation and lower taxes since the 1980s.
Specifically, in 1980, the top 10 per cent of income earners took almost 35 per cent of national income, while the bottom half of the population took almost 20 per cent. Today, the report notes, the top 10 per cent take just over 40 per cent of national income, while the bottom half take only 15.6 per cent. This makes Canada more unequal than the EU, but less unequal than the U.S.
Wealth inequality in Canada is even more dramatic, and has remained relatively unchanged since the mid-1990s: The top 10 per cent own over 57 per cent of wealth (and the top one per cent own 25 per cent), while the bottom half own less than six per cent of wealth.
Second, we forget the workforce was more unionized 40 years ago. A 2022 Statistics Canada report notes that unionization among full-time employees dropped by almost a quarter, from 40 per cent in 1981 to 30 per cent by 2022, and remained low, at 23 per cent, among part-time employees
We also forget the reason for unions and the benefits they bring. They were and remain a way for workers — which is most of us — to resist the power of large corporations, for whom cheap labour, and low or non-existent benefits and pensions and poor working conditions are all good ways to save money and increase profits.
It has been one of the triumphs of corporate power to persuade today’s gig workers that they are better off with low paid, part-time and temporary work with few or no benefits. But the impacts in terms of low income, poverty and stress, among other costs to people and society, are significant. Moreover, a 2021 study from the Economic Policy Institute in the U.S. found that the 17 states with the highest rates of unionization “have more equitable economic structures, social structures and democracies.”
As to the third strategy, readers might recall that I argued recently that we would need to tax robots and AI so as to redistribute the wealth they create, providing the basis for a universal basic income. The Earth for All report also proposes a Citizen’s Fund to share the dividends created through (environmentally responsible) exploitation of a nation’s shared natural wealth. Ideas such as these need to be discussed if we are to reduce inequality in Canada and globally.
Dr. Trevor Hancock is a retired professor and senior scholar at the University of Victoria’s School of Public Health and Social Policy
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