My presentation to the All Party Anti-Poverty Caucus of the Canadian House of Commons addressed three questions: (1) has inequality increased in Canada; (2) what explains the changes; and (3) why is it important for public policy?
I pointed out to the members of the Caucus that:
- Inequality has been rising in Canada since the early 1980s, driven by stagnant and declining incomes in the middle and lower half during the 1980s and 1990s, and rising top shares throughout the last 30 years.
- The tax-transfer system plays an important role in reducing inequality, but has not kept pace after about the mid 1990s.
- Rising inequality is a global phenomenon. The change in Canada has been above average when compared to other rich countries, and particularly notable for the increase in top shares.
I also suggested that while we might be interested in these changes because of a sense of fairness or because of concerns over economic efficiency, we should also be interested because inequality shapes opportunity, and that this may be a reason why all parliamentarians—regardless of their political allegiances—should treat it as an important issue for public policy.
You can download the English version here: Understanding_inequality_and_why_it_is_important_a_presentation_to_the_All_Party_Caucus
And the French version here: Understanding_inequality_and_why_it_is_important_a_presentation_to_the_All_Party_Caucus_en_francais
On Friday Statistics Canada will release its estimates of the January job numbers, and after about 20 minutes of statistical modelling, using fuzzy data, over a small glass of red wine, I am prepared to make three predictions, albeit with different degrees of confidence.
First, I am most confident suggesting that January’s job growth will be less than the 40,000 recorded in December; second, I am confident that it will be less than 21,000, which is the average monthly change during the recent past; and third, if I had to offer a single number, I’d say the economy added only about 1,700 jobs in January.
All three ingredients—the statistics, the fuzzy data, and the red wine—were important in making my forecast, but realizing the data are fuzzy was crucial.
Everything you need to know about why the rich don’t want to talk about inequality, and why the 99% do, is right here in this chart.
The average income of those in the top 1% in Canada has about doubled since 1982, and for the top 0.1% it has increased by about two and a half to three-fold. But over this period the fraction of their income paid in taxes, their average tax rate, has remained about the same, and even a little lower.
Women now rule over almost 9 out of every ten Canadians!
Well, at least in politics. Over the weekend Ms. Wynne won the leadership of the Ontario Liberal Party and became premier of the province. Six of Canada’s 13 provinces and territories, representing about 88% of the population and including five provinces that collectively form a significant part of the national economy, now have women as their premiers.
Does this firm foothold on Canada’s political landscape mean that the women’s movement has come of age, and that the idea of gender discrimination in the workplace can be put aside? Ironically, it probably means just the opposite. Having politics transformed by women certainly illustrates that some of feminism’s rhetoric is tired and old. The broader lesson isn’t that women get paid less than men, after all Ontario’s new premier will have a salary that is the same as her predecessor. And frankly, overt wage discrimination isn’t the issue in the broader private sector either.
Rather it all has to do with having what it takes to qualify for the job. If women are increasing succeeding in the public sector, we might reasonably take that to be a signal that the most talented women in our society are bumping up against glass ceilings in the private sector.
Mr. Carney can’t push on a string. And he knows it.
His now famous comment labelling the stockpiles of retained earnings held by Canadian firms as “dead money”, while perhaps being the most memorable quote of 2012, must also have been made out of a certain frustration that even this superstar central banker faces limits in his powers to push, encourage, and otherwise jumpstart business investment.
The Governor of the Bank of Canada knows that the flip side of dead money is insecurity in the jobs market.
To some there would appear to be a debate over whether inequality has increased in Canada. My view is that it has in fact increased, but at the same time its nature has changed.
However, a recent report released by the economic analysis branch of the TD Bank has been interpreted by a columnist at one important national news paper to suggest that inequality has not been changing. Some readers of my December 16th post , which attempted to clarify this perspective, have asked for my own interpretation of the TD report. This is what I offer here.
Inequality is increasing in Canada. Or is it?
A short report on the topic released by a major Canadian bank includes the bold heading “Income inequality has been unchanged in Canada — say what?”. This apparently contrarian finding has been seized upon by at least one influential pundit in a way that only serves to obstruct constructive public policy discussion.
A debate is in order, not over whether inequality has increased—because it has—but why this is important, and what could, or for that matter should, be done about it.
But this sort of discussion requires the best of our public commentators, and in this post I offer three rules for good pundit behaviour. Economic statistics can be confusing and they can be used in confusing ways, purposely or not, and so these rules might also be a set of general guideposts for the average reader to help separate fact from fiction, since after all we can’t expect pundits to always follow them.
The Universal Declaration on Human Rights, which we celebrate every December 10th, offers both a powerful and beautiful statement of what it means to be human and the goals we should pursue as a society. But the Declaration is an incomplete guide to designing the programs to meet these goals: it offers inspiration to advocates, but not a guidebook for pragmatists.
Pragmatists and policy makers need to read the Universal Declaration through the lens of economists, rather than don the robes of lawyers.
The Center for American Progress has released a study I wrote called “How to Slide Down the Great Gatsby Curve: Inequality, Life Chances, and Public Policy in the United States”. Here is an excerpt:
The tax system is increasingly used to transfer cash benefits to families with children, but the United States accepts the trade-offs in program design very differently than other countries and gives children much less support.
In response to my July 10th testimony to the Senate Committee on Finance hearing on “Helping Young People Achieve the American Dream” I received some homework, a series of questions asking me for a good deal more detail. You can review all of the questions on my November 11th post. Child poverty is central to discussions of social mobility, and it is natural to wonder how tax policy can be designed to support the incomes of the least advantaged.
