Prosperity needs help getting shared

Lana
Lana Payne
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A nation will not survive morally or economically when so few have so much and so many have so little. — Bernie Sanders, candidate for the Democratic nomination for president of the United States.

Lana Payne

A nation will not survive morally or economically when so few have so much and so many have so little. — Bernie Sanders, candidate for the Democratic nomination for president of the United States.

Markets alone don’t reduce income inequality, not even when the economy is chugging away at full speed. – Armine Yalnizyan, economist with the Canadian Centre for Policy Alternatives (CCPA).

Rising inequality and climate change are arguably the two greatest and most pressing issues of our generation. We will be judged by what we do, or don’t do, as societies, nations and the planet about each of them.

For weeks late last year, many world leaders were intensely focused on dealing with the latter during the Paris Climate Change Conference where 195 countries worked on a plan to curb global warming.

While the deal reached is far from perfect, some would correctly argue inadequate, it is a giant step forward. After all, there is a deal and this was far from assured.

Tackling inequality is another matter. No such global plan exists and yet it has been the subject of much hand-wringing, study and debate.

The International Monetary Fund now admits that inequality harms economic growth. In addition, many scholars and leaders have said it seriously impairs democracy when so much of the wealth our world generates is held by the few.

Redistribution measures have taken a beating, replaced with government policies that actually have made inequality worse. Decades of unfair or regressive taxation that benefit the rich, unfair trade agreements that are more about investor rights than trade and other economic policies have also contributed to the problem.

A sustained attack on the one societal institution that forces wealth to be shared — unions and collective bargaining has in no small measure contributed to inequality. Indeed the assault on the rights of workers and unions and the deterioration of the so-called middle class has been in tandem with the growth in income inequality.

The evidence is jarring.

The annual report of Canadian Centre for Policy Alternatives (CCPA) on the earnings of Canada’s top CEOs highlighted again this year that CEO pay is recession proof.

In 2014, Canada’s top 100 CEOs earn 184 times the pay of an average Canadian worker, and 400 times more than someone working full-time and earning minimum wage.

In the United States, CEOs made an astonishing 303 times more than the average American worker.

More and more of the income pie is going to the top one per cent — who are soaking up a bigger and bigger share of the benefits of productivity.

According to the Economic Policy Institute in the United States, decades of stagnant wages despite the fact that people are working more productively has become a serious economic problem for the country.

Simply, prosperity needs help getting shared.

Prosperity gets shared when forces such as strong trade unions through collective bargaining and governments through taxation and redistribution policies make it happen. Markets alone, as many economists have argued, do not do this.

For example, if markets delivered fairness and distributed productivity gains, minimum wage in Canada would have been above $16 an hour in 2012, and in the U.S. it would be standing at $18 an hour. Instead workers who toil for the lowest of wages earn substantially less than this.

Stagnant wages for workers mean there is less demand for goods and services. And this lack of demand is, according to Nobel-Prize winning economist Joseph Stiglitz, contributing to what he calls the great global malaise. “Those at the top spend far less than those at the bottom. Money moves up, demand goes down.”

Stiglitz says in addition to income inequality, fiscal austerity has also played a significant role in slumping economic growth.

Surprisingly, tackling inequality has gained champions from the most unlikely of places.

Super-rich Nick Hanauer, a U.S. tech entrepreneur, has been advocating for a $15 minimum wage since 2012.

In an interview with The Atlantic, he said: “A guy like me — a very successful capitalist, somebody who knows all the rich people — is the best face for the message of reforming capitalism, right? I’m the one who can say, ‘It doesn’t have to be that way,’  When they say that the better profits are, the better it will be for everybody, I’m the one who can say ‘That’s a lie.’ ”

He concluded that: “The other side thinks that growth produces a thriving middle class. That’s not true. That’s wrong and backwards. A thriving middle class is the source of growth in a technological, capitalist economy. Investing in the middle class is the most pro-business thing you can do.”

And yet, we have no plan in Canada or the United States to do so. No real plan to lift those living in poverty out and into the so-called middle class.  

The upside is at least the problem of inequality has been identified.  Like climate change, it has its deniers. But we must forge ahead. The next step, as with climate change, is to develop a plan to deal with it. Let’s get on with it.

Lana Payne is the Atlantic

director for Unifor. She can be reached by email at lanapaynenl@gmail.com. Twitter: @lanampayne

Organizations: Canadian Centre, International Monetary Fund, Economic Policy Institute

Geographic location: United States, Canada

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Recent comments

  • 007
    January 12, 2016 - 11:58

    @ David....you mean Lana Payneful

  • Ah
    January 11, 2016 - 13:48

    There's got to be a 'blame it ALL on Harper' dig in there somewhere.

    • Bob
      January 12, 2016 - 12:43

      I think it's Pam's turn this week to slag harper.

    • Donna J.
      January 12, 2016 - 13:18

      What intelligent and succinct arguments. You Haprerite whiners really are the pinnacle of "Conservative intellect." I guess private schools graduate anyone.

  • james
    January 11, 2016 - 10:44

    Belonged to a union for over 40 years and i am ashamed to say so,Never seen so many lazy people assembled in one place

    • leonard
      January 11, 2016 - 11:17

      ...but you were fine with the benefits, decent, salary, health and safety protection, and having a voice for those 40 years. You could have always quit and taken a job at MacDonald's and see how much THEY valued your hard work...

  • Political Watcher
    January 10, 2016 - 17:03

    The sad thing is that due to unions, the lazy and slack worker has to be paid the same amount as the had working employee. Unions force employers to pay everybody the same yet the employer is not permitted to expect the same degree of production from all employees. The lazy and slack are protected equally. I am a CEO in a company that I have built; I sacrificed a great deal family wise and financially. I put my personal finances on the line and my home and savings. Why did I do this? So I can reap some rewards from my hard work and if that means that I will make 300 times more than the average worker so be it! I took the gamble and risks. I went for almost two years making less than the minimum wage; I would like to see a unionized worker do the same for an employer during the growing years. Sure Lana, you yourself are making at least three to four time the average employee and I don't see you complaining. When you were at the Federation of labour your salary was heads and shoulders above any unionized worker you represented, why is it that YOU can do it but not anyone else?

    • Jeff
      January 11, 2016 - 08:57

      What evidence do you have that unionized workers are less productive than non-unionized workers? I rather think that you prefer non-unionized workers because you can pay them less, give them fewer, if any benefits, and dispose of them at will. You started from a privileged position, and you'll be damned if your workers get anywhere near what you had when you started out.

    • Political Watcher
      January 11, 2016 - 09:23

      Jeff, you obviously did not read my full comment. I put my personal savings and my home on the line; I worked for years at a rate far below minimum wage. The only privileged position I started from is that my spouse was working full time and we lived on one salary. I took the sacrifice unlike Unionized workers in another area of the province who refused to work for less and now they are just about out of work. IOC! Please read thoroughly before you attack me for wanting my workers to accept less.

    • Jeff
      January 11, 2016 - 10:16

      Would you be able to start your business if you lived on the wages you pay your workers, or did you have something of a head start?

  • David
    January 10, 2016 - 13:23

    Lana is being very painful as usual.

  • james
    January 10, 2016 - 10:22

    Well tell the lazies to get of their you know what, Who the hell cares what bernie sanders has to say except for dumb americans

  • Qkslvr
    January 09, 2016 - 16:02

    And if unionized workers would provide an honest day's work for a day's pay, business would be able to afford to pay more. When it takes more than one unionized workers to do the job of somebody who lives in the real world, labour costs are so high, wages must be adjusted to make payroll to get value for the work provided. IOC has a sick leave problem. Eastern Health's Central Laundry had a sick leave problem. Private non- unionized industry doesn't have a sick leave problem because private non-unionized industry can't afford it. The postal workers are whining that they are overworked, probably because they never actually knew what it was to do a day's work. It's time for the end of unions. They have destroyed themselves and the country.

  • ken kavanagh
    January 09, 2016 - 10:46

    Note: My first submission was missing an important word "NOT" in the last sentence. SORRY. Yes, I totally agree Lana that the present and ever-increasing inequality is a major issue and must be addressed. But to properly address it, there needs to be some fundamental and drastic changes to the 'free' market, capitalistic economic construct under which we now toil. And therein lies the nub of the problem. The 1% and their supporting cast who own and control the wealth and the major levers and engines of the present global (being global is actually one of the fundamental issues) economy don't want to give up that wealth and control. Just like Canadian citizens after the great depression and WWII demanded their fair share of the economic pie (which led to a raft of social programs like EI, CPP, etc,), so too will citizens of the major western economies need to stand up and demand changes that will produce a sustainable economic system that fairly and more equitably shares the wealth and prosperity. By the way, don't forget the French economist, Thomas Piketty, who in his book, "Capital in the 21st Century" reaffirms that 'free' markets and the role of capital are the cause of the present inequality we now experience. Bishop Remi De Roo had it right in 1983 in his "Ethical Reflections on the Economic Crisis" when he said the "an economy should serve people and NOT people serve the economy." Ken Kavanagh Bell Island

    • james
      January 10, 2016 - 10:26

      People have to learn to fend for themselves no depending on government now that would be the right approach

  • Ken Kavanagh
    January 09, 2016 - 10:16

    Yes, I totally agree Lana that the present and ever-increasing inequality is a major issue and must be addressed. But to properly address it, there needs to be some fundamental and drastic changes to the 'free' market, capitalistic economic construct under which we now toil. And therein lies the nub of the problem. The 1% and their supporting cast who own and control the wealth and the major levers and engines of the present global (being global is actually one of the fundamental issues) economy don't want to give up that wealth and control. Just like Canadian citizens after the great depression and WWII demanded their fair share of the economic pie (which led to a raft of social programs like EI, CPP, etc,), so too will citizens of the major western economies need to stand up and demand changes that will produce a sustainable economic system that fairly and more equitably shares the wealth and prosperity. By the way, don't forget the French economist, Thomas Piketty, who in his book, "Capital in the 21st Century" reaffirms that 'free' markets and the role of capital are the cause of the present inequality we now experience. Bishop Remi De Roo had it right in 1983 in his "Ethical Reflections on the Economic Crisis" when he said the "an economy should serve people and people serve the economy." Ken Kavanagh Bell Island

  • Fred Russell
    January 09, 2016 - 09:14

    Lana you must miss Harper. It's your first column in10 years you don't mention his name. Truth be told you do miss him. But for all the wrong reasons hey ?

  • pat
    January 09, 2016 - 07:04

    youre right lana if you make $10 an hr youcan only spend $10 if you make more youll spand more nobody making less than$20 is going is going to have much of a savings acct