December 9, 2010

Persistent Poverty and the Rise of Canada's Richest 1%

I have been reading ISARC's latest social audit report: Persistent Poverty: voices from the margins -- Published by Between the Lines and just released this month (December 2010).

Sadly it is a familiar story echoing the four other social audits of the past twenty years. Incomes too low to live on -- whether you are working for low pay or relying on social assistance -- not enough affordable housing, hunger, lack of affordable transit. Too many of our neighbours are struggling to get by.

And we are pitching in to try to help out -- with donations to food banks and volunteering in out of the cold programs.

But it takes a toll in health and human dignity. A quote that has stuck with me:
"When you feed the poor, please ask for their forgiveness. You are giving them a bowl of soup but they give up their dignity."
You really need to read Persistent Poverty at the same time you read the latest report from the Canadian Centre for Policy Alternatives: The Rise of Canada's Richest 1% by Armine Yalnizyan.

If persistent poverty has become a hallmark of our age, it is integrally linked to what Yanizyan refers to as "the great U-turn." It is the stunning reversal in the trend toward greater equality that characterized most of the 20th century. In the past thirty years, Canada's richest one percent have reaped the lion's share of income growth. At the same time, they have seen their tax rates drop to levels not seen since before the Second World War. The trend is most pronounced for the richest 0.01 percent -- the 2,500 Canadians whose average income was more than $3.8 million in 2008.

One thing that the richest today have in common with everyone else is that most of their income comes from work. That is different from an earlier era where the wealthy received more of the income from investments.

But the wages of those at the top today far outstrip the earnings of most Canadians. So we have the reality of the people who came to the ISARC social audit and talked about their travails -- working longer and harder and not being able to make ends meet while folks at the other end of the spectrum are bringing in sums that it are hard to imagine. Can their work really be worth that much more?

Why worry about inequality?
It may offend one's sense of justice to know that the economic prosperity of the past decade has been shared so unevenly. That injustice entails social costs as well. There is compelling evidence that growing inequality is bad for societies and harms the well-being of the poor and the rich in those societies. Or in the words of Richard Wilkinson and Kate Pickett, authors of The Spirit Level, "more equal socieities work better for everyone."

This reality suggests that if we are ever going to put an end to the persistent poverty documented by ISARC's social audit, we also need to reverse the trend that has delivered incomes so disproportionately to the richest few in our society. We need to create a more equal society for the benefit of all.

1 comment:

  1. Greg,
    Thanks for your comments on the disparity of incomes and the shift from earnings from investments to salary. One way to work for change can be through investor action in those companies. Meritas (socially responsible investments) has been spearheading a "say-on-pay" movement where executive compensation is being challenged at shareholder meetings. It's definitely an uphill battle though.