October 19, 2011

Understanding Occupy Wall Street

"We are the 99%" -- the slogan of Occupy Wall Street, a movement that has grown to hundreds of cities in dozens of countries around the world.

That slogan gets to the heart of  a serious problem -- one that even business groups and central bankers acknowledge. It is the growing inequality in incomes. Recent decades have seen the lion's share of growing income go to the richest 1% of people. That is the case not just in the US but in Canada, too.

Meanwhile, the other 99% of us have seen little or no growth in incomes -- despite working longer hours if we have work!

That is bad news.

It is bad news for all of us.

It is bad news for a host of reasons.

There is powerful evidence on the negative effects of income inequality on health, education and community safety. And not just for the poor but for everyone.

And inequality is also bad for business. Yep. You read that right -- inequality is bad for business.

Economist Armine Yalnizyan with the Canadian Centre for Policy Alternatives and an expert on Canada's growing gap, has been tapped by Canadian  Business Magazine and the Business News Network to explain why inequality is bad for business.

Here are three reasons.

1. No income growth for most households means little demand for the goods and services businesses want to sell.
2. Excessive wealth at the top leads to ever riskier investments searching for the highest rate of return. Think of the sub-prime mortgage crisis that brought the global financial system to its knees and required costly bailouts of big banks.
3. Greater household debt -- which is another financial ticking time bomb just awaiting an increase in interest rates to detonate.

It is no wonder business groups and bankers are joining the ranks of those who realize we have to do something to reduce inequality.

So how can we turn things around? How can we create greater equality and build stronger, healthier communities?

Check back for coming posts that explore solutions to the problems Occupy Wall Street has highlighted.

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