Independent media needs you. Join the Tyee.

The Hook: Political news, freshly caught

VIEW: Inequality hurts BC's economy and democracy

[Editor's note: The Tyee received this unsolicited op-ed from Dr. John Peters, who teaches in the department of political science at Laurentian University. Peters is the editor of the new book Boom, Bust and Crisis: Labour, Corporate Power and Politics in Canada. Details on the book's Vancouver launch are at the bottom of this story. During the election season, we'll post various perspectives on The Tyee's Election Hook, labelled clearly as "VIEW."]

Lack of pipelines. The fiscal cliff. The slowdown in China. Greece's debt crisis.

You name it and you are likely to hear it in political conversations these days about the economic problems B.C. is facing in the run up to the provincial election.

But oddly, one critical problem you hear very little about is inequality. Commentators often talk about increasing inequality and some of its social problems. But they seldom link these to the vast economic problems that B.C., Canada, and all advanced industrial countries face. Even less frequently -- despite months of protest by the Occupy movement around the world -- do you hear about how inequality may also be our chief political problem as well.

Yet the facts are as plain as day. As in the United States, so too in Canada we have become a divided society. Today, the richest 10 per cent of Canadians and British Columbians now account for 40 per cent of all market income and own over half of the entire wealth. Over the past 30-plus years, the wealthiest one-tenth of one per cent has seen their average incomes rise by more than 300 per cent to roughly $1.4 million.

By contrast, middle-class incomes have stagnated. In B.C., the median income of working families (adjusted for inflation) actually fell by $1,569 to $52,278. As for B.C.'s working poor? The situation is even worse. The poorest of working families realized a mere $9,300 after taxes in 1990. Twenty years later, their after-tax incomes have dropped to $7,800. But they were hardly alone in trying to make ends meet.

By 2010, 1.2 million workers in B.C. earned less than $30,000 a year. A figure that, if looked at comparatively in terms of the proportion of the labour force in low-wage work, puts B.C. along with Canada among the worst in the rich industrialized world.

Unsurprisingly such inequality brings huge economic problems. Once so much income goes to the top, and the majority of British Columbia families do not have enough money to keep economic demand going, more and more have to go into debt.

And once an economy becomes reliant on the spending of the wealthy few, it is more susceptible to great booms and busts. Multinational corporations and banks invest and speculate when exports and housing prices are going up. But when profits fall -- even a little -- they pull back and blame environmentalists, the public debt racked up to bail out banks, or jittery market "sentiment."

In reality, neither B.C. nor Canada's economy can recover until the surge in inequality is reversed. Even if by some miracle the United States and China do return to reasonable levels of growth, and Canada's provincial exports and investment expand again, neither will do the trick without the majority of working families able to earn a decent living.

But the really big question is why so little has been done in the last 20 years to deal with income inequality. The American political scientists Jacob Hacker and Paul Pierson argue that in the United States the reason why their country has become so tarnished is the role of big business.

Money has given banks and multinational corporations a disproportionate amount of influence in everything from lobbying and campaign contributions to consultants writing policy and bankers running government departments. This, Hacker and Pierson claim, has led to the public policies that have allowed the economy to grow in ways that benefit those at the top, and resulted in a "winner-take-all" political system more comparable to "one dollar equals one vote" instead of "one person, one vote" that their country was founded on.

The same seems increasingly true in British Columbia as across Canada today. In provinces like B.C., Ontario, and Alberta, more than 40 per cent of all political party revenue comes from business contributions. Add in the donations by individual CEOs, and corporate giving tops 50 per cent. Today, annual business donations to the Liberal Party in B.C. are the highest in Canada, averaging over $6 million a year.

At the same time, the numbers of corporate lobbyists at the federal and provincial levels have more than tripled over the last decade (though there are no hard numbers in B.C. where the legislation does not require businesses and consultants to register). Nor does anyone bat an eye when politicians and public officials leave office to sit on corporate boards, business consultants like KPMG and PWC write public policy, or businesses run provincial ad campaigns promoting policy reforms, like undoing employment standards that now allow employers to get out of paying wages and avoid paying fines for health and safety violations.

In almost all democracies, such developments are occurring. But in Canada, they've begun to gallop along. In the wake of the financial crisis of 2008, Canada's banks were offered $114 billion -- more in one year than has ever been spent on public child care -- despite the fact that Canada's biggest banks earned profits of more than $27 billion from 2008-2010.

Yet the rich are now being tripped up by their own success. Massive corporate and personal income tax cuts directed to the rich have left governments with little room to manoeuvre. Huge investments in natural gas and tax breaks for resource companies have created a glut of commodities on the global market. Free trade has led to the layoffs of thousands of workers in forestry and manufacturing. Attacks on unions and the public sector have eroded wages and incomes.

The rich and powerful would be far better off with a smaller share of a rapidly growing economy than a larger share of one that's continuing to struggle. However, in pressing for "austerity" budgets, tax cuts, and rolling back collective bargaining rights, businesses and the wealthy simply undermine both demand and jobs and do nothing to help the vast majority of British Columbia's workers who are struggling to make ends meet.

The economy cannot recover without a strategy to revive the purchasing power of Canada's working families. This means reversing B.C.'s decades-long trend toward widening inequality, and investing in public schools, eliminating tuition fees for higher education, building more energy-saving homes, and developing efficient public transportation. It also means passing far better labour laws, increasing B.C.'s minimum wage, expanding its safety net, and protecting the environment.

Economies are not zero-sum games. They work best when everyone benefits and government does its job in keeping powerful economic interests in check. Start with fixing inequality and not only will B.C.'s economy improve, but so will its democracy.

Dr. John Peters teaches in the department of political science at Laurentian University. He is editor of the new book Boom, Bust and Crisis: Labour, Corporate Power and Politics in Canada.The book will be launched in Vancouver on Thursday, March 14 at 7 p.m. in a presentation at the Rhizome Cafe, 317 East Broadway.

The launch will include talks by two local authors who contributed chapters to the piece: David Fairey of the Trade Union Research Bureau and Tyee reporter Tom Sandborn who wrote on the problems that the Campbell government have created for B.C.'s workers. Diana Gibson, formerly of the Parkland Institute in Alberta, will also speak about how the boom in the oil sands has increased inequality and boosted company profits, while undermining good jobs in Alberta.

What have we missed? What do you think? We want to know. Comment below. Keep in mind:


  • Verify facts, debunk rumours
  • Add context and background
  • Spot typos and logical fallacies
  • Highlight reporting blind spots
  • Ignore trolls
  • Treat all with respect and curiosity
  • Connect with each other

Do not:

  • Use sexist, classist, racist or homophobic language
  • Libel or defame
  • Bully or troll
  • Troll patrol. Instead, flag suspect activity.
comments powered by Disqus