Wealth inequality growing: report
OTTAWA—While politicians in Ottawa still can’t decide who is in the middle class, a new analysis suggests wealth increasingly is gravitating to the very top.
The report by the left-leaning Canadian Centre for Policy Alternatives shows the country’s 86 richest individuals and families—or 0.002 percent of the total population—are getting exponentially richer and now have accumulated as much wealth as the country’s poorest 11.4 million.
They had enough to buy up everything in New Brunswick and still have about $40 billion left over, according to the report, which was released today.
The point of the exercise, said economist and author David Macdonald, who used Statistics Canada data and research from Canadian Business magazine, is to show that if income inequality is a policy and social justice concern—wealth inequality is worse.
In fact, the super-rich list of Canadian residents has little to do with income in the traditional sense, he noted.
None of the 86 are company CEOs—often the poster children of the “Occupy” crowd for their unseemly salaries and bonuses.
Instead, the ones on the list are there by virtue of being company founders or related to company founders.
The super-rich have gotten there by creating and trading assets, whether companies, real estate, or securities.
“We often focus on income inequality but that’s a socialist paradise compared to wealth inequality,” said Macdonald.
“The top 20 percent only get half of all the income, but in terms of wealth inequality, the top 20 percent have 70 percent of all wealth,” he explained.
“It’s much more extreme and the concern is as you accumulate all this wealth, this wealth starts to buy you political power.”
Inequality, whether in income or wealth, increasingly looks like it will become a key issue in the upcoming federal election, with Liberal leader Justin Trudeau and NDP leader Thomas Mulcair seeking to make the case that Conservative policies have left the middle class behind—with little job security, higher in debt, and, in many instances, living paycheque to paycheque.
The government has pointed to the growth in net worth most recently reported by Statistics Canada in February as an indicator its policies are working for everyone.
“After-tax disposable income has increased by 10 percent across all income brackets,” Employment minister Jason Kenney noted at the time.
But Statistics Canada also showed wealth gravitating to the top.
While median net worth rose almost 80 percent since 1999 to $243,800 per family unit, the top 40 percent possessed 88.9 percent of total net worth—leaving the bottom 60 percent with a mere 11.1 percent of the pie.
Eye-opening was the data that showed the poorest 20 percent of family units had more debts than assets.
The issue flared again yesterday after Trudeau asked Prime Minister Stephen Harper if he thought that the problem of the middle class was a myth.
Harper chided Trudeau for his inability to define the middle class.
But the issue is not going away. The NDP has been especially critical of the government’s decision to severely-cut corporate tax rates—even in the middle of a recession—and getting little job creation or business investment in return.
Some economists also have argued that nations with high levels of inequality tend to under-perform more egalitarian countries in terms of overall economic growth.