Wednesday, October 23, 2013

Lots of words in throne speech, but inequality not one of them

Throne speech wordcloud
Stephen Harper’s throne speech was an amazing 7,240 words long, a modern record and three times as long as the Conservative’s first throne speech.
But not once was inequality mentioned in all those words. That’s particularly striking in a speech that tried to touch on every possible theme that might appeal to a subgroup of voters.
Conservative strategists decided not to mention an issue that 75 per cent of Canadians identified as a problem in a poll last year.
To the Conservatives, growing inequality is not an issue for government.
But it is. 
There’s a myth that increasing inequality is some natural outcome of inevitable economic forces.
That’s false. Government policy changes increase or reduce inequality.
Taxes can redistribute income. Transfer payments  like disability assistance, unemployment or training benefits or pensions, can increase the income of those at the bottom of the pile.
A 2011 Conference Board of Canada report, for example, found that between 1976 and 1994 the tax and transfer system increasingly reduced income inequality.
But after 1994, the trend reversed and the polices increased the income gap. In 1990, for example, about 83 per cent of unemployed people were eligible for EI benefits; by 2009, that was chopped to 48 per cent. That promotes inequality.
Any policy decision has to balance many costs and benefits. But governments that don’t even mention inequality in an epic throne speech aren’t likely to give the issue any real attention.
They should. 
The OECD looked at inequality around the world, and concluded it’s a serious threat. The “social contract” that ensures people accept the state’s laws and responsibilities is at risk of unravelling, the OECD report said, as economic growth enriched a tiny sector of the population. The claims that the benefits would trickle down to others had proved false, the report found.
The Conference Board report cited a study by the Canadian Centre for Policy Alternatives tracking the incomes of the richest one per cent of Canadians using tax return data. 
That group - 246,000 people with an average income was $405,000 - claimed almost one-third of all income growth during the growth years from 1998 to 2007. One per cent of the population took 33 per cent of income gains.
Government policy played a significant role in ensuring that those people would take the greatest benefit from economic growth in Canada.
Most policies could at least be examined on the basis of whether they increased or reduced inequality.
Earlier this year, the Canadian Institute of Health Information released an analysis of the effect of public health care on inequality. 
Publicly funded health care reduces income equality by 16 per cent, CIHI found.  
People in the highest income group cost the system an average $206,000 over a lifetime. People in the lowest income group, $237,500. (Poverty is the single greatest predictor of poor health.)
And people in the lowest income group paid about $740 (or six per cent of income) in taxes that went to health care/ People in the highest income group paid $7,200 (or eight per cent  of income).
End or the public health care system, and the rich get richer and the poor get poorer (and sicker). 
So when people argue for reduced public health care, they should at least have to defend the increased inequality that would result.
There is an implicit deal that keeps people participating as responsible citizens.
They pay taxes and obey the rules and rely on the political process. They expect in return that government reflects their interests and values. They know there are no guarantees of success, but they expect the game is rigged so those at the top are always the big winners.
When governments don’t even acknowledge inequality, they threaten the social contract that makes the country work.


kootcoot said...

Very well said Paul, I have nothing to add except to say you are bang on with this post!

Ian Lidster said...

Excellent, Paul. And chilling. We have become a harsh and intolerant society and I am amazed how many people in our former calling subscribe to the established government ethic. Editorial challenges are few and far between and that disgusts me more than a little bit.

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