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Income inequality bad for everyone, not just the poor

Alex Atamanenko
By Alex Atamanenko
September 28th, 2011

It seems that the Conference Board of Canada (CBC), the voice of the big business community, is beginning to realize what progressive economists have argued for years – that income inequality is bad for everyone, not just the poor.

”High inequality can diminish economic growth if it means that the country is not fully using the skills and capabilities of all its citizens or if it undermines social cohesion, leading to increased social tensions. High inequality raises a moral question about fairness and social justice,” says a June CBC report.

According to the report income inequality has been steadily rising in Canada and the US since the mid-1990s. That this disparity has occurred during a thirty year span of strong economic growth, brought to an end only by the recent recession, makes the statistics even more worrying.

The report also notes that since the mid 1990s, Canada slid from 14th to 22nd place out of the 32 countries belonging to the Organisation for Economic Co-operation and Development (OECD) in terms of income equality. Since 1993 the poorest and middle groups have gone home with a shrinking piece of the economic pie while the wealthiest 20 percent have increased their portion the most. Clearly we need to get more money into more hands if we are going to change the unsustainable course we are on.

A survey of 580 global decision makers at the World Economic Forum in Davos, Switzerland this year concluded that “economic disparity and global government failures both influence the evolution of many other global risks.” In other words, many of the world’s problems could be mitigated, if not solved, by government policies dedicated to reducing income inequality.

 

As I have stated before and as we have seen in the film ‘Poor No More’, we have to think we are doing something wrong when countries such as Sweden can have vibrant and stable economies with good wages, and at the same time offer free university tuition, child care and health care, along with decent pensions for all its citizens.

I agree with Armine Yalnizyan, who wrote in a September 23 National Post article, “A system that lets a small group gain more while the majority is forced to settle for less, despite ever-greater effort, is a prescription for trouble.”

In order to reduce the growing income gap between the very rich, the very poor and everyone in between, we must first have a government that makes it its goal to create conditions where such inequality cannot flourish. Fairness must be built in to the system, starting with progressive and truly fair taxation. The next generation deserves every chance to raise their children in a society where such pronounced disparity has been relegated to the dustbin of history.

Our current majority Conservative government, whose agenda revolves around reckless tax cuts for corporations, is forcing everyone else to shoulder the burden of infrastructure and program costs that create a more equal society. I can see no evidence that tackling income inequality will top their agenda anytime soon.

Alex Atamanenko is the MP for BC Southern Interior.

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