In a classic Christmas tale of redemption, one of Canada’s biggest banks, TD, recently released The Case for Leaning Against Income Inequality which pointed out the dangers of the widening divide, and gave some strong suggestions on how to turn the tide.
It’s a timely message, as another report, recently released by the Broadbent Institute, shows that the majority of Canadians desire action on income inequality, despite underestimating just how unbalanced the distribution actually is in this country.
Incomes and resources have become increasingly concentrated in the hands of a smaller and smaller percentage of Canadians. The Broadbent Institute reports that the richest 20 per cent now control over 67.4 per cent of all wealth in the country.
That assumption has been challenged in recent years, in particular as it has become clearer that income inequality leads to worse health outcomes - most true for those who make the least. As studies that compare life expectancy by neighbourhood, such as Code Red in Hamilton, have shown, people living in poverty often have life expectancies 20 or more years less than the wealthiest members of society.
It is perhaps discouraging that the health effects of inequality have not been of sufficient concern to drive decision-makers to change direction. But a new kind of evidence may make a greater difference: it’s not only the people in unequal countries that are sicker, it’s their markets as well.
According to the OECD, income inequality is at the highest level in 30 years, and, as a result, economic growth has been slowed by as much as 10 per cent in some countries. And a 2014 IMF study showed that redistributive policies through tax and transfers not only do no harm to the economy but can improve performance in the long-term. According to CUPE, public investments in child care and other services are far more effective in creating jobs and increasing economic growth than corporate or income tax cuts.
The TD report recommends a variety of key public investments to reduce inequality, including affordable housing, health and social services, early childhood development and decreasing barriers to all levels of higher education, from skills training to professional colleges. These are excellent recommendations as they also address key social determinants of health.
One drawback is the report’s focus on means-testing the recommended programs. While this can be a way to decrease the overall cost of social programs, it can also erode the public support needed to maintain them while at the same time failing to reach the “hidden poor” - people who are earning middles class wages but are unable to keep up with rising costs.
The most glaring gap in the TD report, however, lies in the recommendations on how to pay for the social investment required to decrease barriers to success. There is a passing and unenthusiastic reference to increasing income taxes on the top 1 per cent of Canadian earners, and a revealing omission of any mention of corporate taxation, non-salary compensation or CEO salaries.
When one of the ‘Big Five’ banks - Canada’s largest lender, in fact - comes out with a strong position on income inequality, it’s indicative of how much income inequality has moved from being a fringe concern to economic orthodoxy.
Ryan Meili is a Saskatoon-based family physician, expert advisor with EvidenceNetwork.ca and author of A Healthy Society: How a focus on health can revive democracy.
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