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Inequality is increasing in Canada. Or is it? A short report on the topic released by a major Canadian bank includes the bold heading “Income inequality has been unchanged in Canada — say what?”. This apparently contrarian finding has been seized upon by at least one influential pundit in a way that only serves to obstruct constructive public policy discussion. A debate is in order, not over whether inequality has increased—because it has—but why this is important, and what could, or for that matter should, be done about it. But this sort of discussion requires the best of our public commentators, and in this post I offer three rules for good pundit behaviour.
Everything you need to know about why the rich don’t want to talk about inequality, and why the 99% do, is right here in this chart. The average income of those in the top 1% in Canada has about doubled since 1982, and for the top 0.1% it has increased by about two and a half to three-fold. But over this period the fraction of their income paid in taxes, their average tax rate, has remained about the same, and even a little lower. During the early to mid 1980s the average income of the 99% was about $33,500 (measured in 2010 dollars), and by 2010 had risen to $37,200, amounting to about a 10% increase or a bit more.
Speaker(s): Professor Joseph E Stiglitz Chair: Professor Stephen P. Jenkins Recorded on 29 June 2012 in Old Theatre, Old Building. In his new book, The Price of Inequality, which he will discuss in this lecture Joseph Stiglitz considers the causes of inequality, why is it growing so rapidly and what are its economic impacts? He explains that markets are neither efficient nor stable and will tend to accumulate money in the hands of the few rather than engender competition and considers our political system that frequently shapes markets in ways that advantage the richest over the rest. He shows how moving money from the middle and bottom of society to the top, far from stimulating entrepreneurship actually produces slower growth and lower GDP with even more instability.
By Gerald Friedman, who teaches economics at the University of Massachusetts, Amherst. He is the author, most recently, of “Reigniting the Labor Movement” (Routledge, 2007). Edited by Lynn Parramore and produced in partnership with author Douglas Smith and Econ4 . Cross posted from Alternet .
I have long wanted to collect my thoughts about some of the issues — masked in part, I believe, by the two bubbles we’ve had in the past 11 years — that are exacerbating our current crisis and will continue to forestall any semblance of a robust recovery.
How do we define inequality?
President Barack Obama’s State of the Union speech this week confirmed it: The pre-eminent political and economic challenge in the industrialized democracies is how to make capitalism work for the middle class. There is nothing mysterious about that. The most important fact about the United States in this century is that middle-class incomes are stagnating. The financial crisis has revealed an equally stark structural problem in much of Europe. Even in a relatively prosperous age — for all of today’s woes, we have left behind the dark, satanic mills and workhouses of the 19th century — this decline of the middle class is more than an economic issue. It is also a political one.
Conscious policy changes, not the uncontrollable progression of technology, are to blame for income redistribution. Photograph: Kimberly White/Reuters The people who have been the winners in the massive upward redistribution of income over the last three decades have a happy story that they like to tell themselves and the rest of us: technology did it.
Explaining rising income inequality in the US
I t’s no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year.
There was a brief debate focused on the following question: would the gains of the economy continue to accrue to the top 1% once the recovery started, or would the top 1% have a weak post-recession showing in terms of raw income growth as well as income share of the economy? The top 1% had a rough Great Recession. They absorbed 50% of the income losses, and their share of income dropped from 23.5% to 18.1% percent. Is this a new state of affairs, or would the 1% bounce back in 2010?
The Economic & social consequences of rising inequality
Reducing poverty is widely viewed as a key objective of a good society. The U.K.’s Labour government set a formal poverty reduction target in the late 1990s, and the European Union recently did so as well.
In Jason DeParle’s New York Times article today , it appears that some folks are claiming that the inequality that Occupy Wall Street has called attention to is a thing of the past and of no concern, all because income inequality declined during the recession between 2007 and 2009. Bunk! That decline is the result of the stock market decline and the very same trend occurred in the early 2000s recession only to end with inequality reestablishing and exceeding its previous heights by 2007 (as DeParle quoted Jared Bernstein saying in the article. Go Jared!). Wage and salary data show wage inequality rising from 2009 to 2010 (recovering more than a third of lost ground), suggesting that it is too early to shed crocodile tears for the top 1 percent. Regardless of last year’s trend, it remains the case that income inequality in 2009 was still substantially greater than it was in the late 1970s.
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