Does income gap make the rich nervous?
(The
following article is from
the January 16-31,
2008
issue of People's Voice, Canada's leading communist newspaper. Articles
can be reprinted free if the source is credited. Subscription rates in
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ON, L8P 2H3.
By Kimball Cariou
It's not often that Canada's most
prestigious corporate newspaper expresses concerns about "the
phenomenon of extreme concentration of income among the `superstars'
and their like". But this was the theme of a commentary by Peter J.
Nicholson in the Jan. 5 Globe and Mail.
Nicholson
certainly comes with a
blue chip resume. Now the president of the Council of Canadian
Academies (essentially a taxpayer-funded body to advise governments),
Nicholson was a top gun at the Bank of Nova Scotia and BCE Inc., and
then worked as a special advisor for the Organization for Economic
Cooperation and Development before landing his current gig.
From this
lofty perch, Nicholson
has discovered that "Statistics Canada reported recently that the
earned income of the `average' Canadian - the so-called median income -
was the same in 2004 as in 1982.... Yet during that same time the
Canadian economy grew, in real per capita terms, by more than half. But
only the very well-paid - those above the 90th percentile of the income
distribution - saw any significant increase in earned income; and the
higher up the earnings ladder, the greater the growth."
Canada's
experience follows a
pattern similar to the United States - three postwar decades during
which the growth of labour incomes roughly paralleled those of the
upper crust. That changed in the mid-1970s, and the gap between "the
rich and the rest of us" has widened steadily ever since.
None of this
is surprising to
anyone who pays attention. But the figures quoted by Nicholson are
still startling. For example, the average earnings of the highest 1 per
cent of the U.S. income pyramid rose 160% between 1975 and 2005, while
the income of the top one-tenth of 1 per cent soared 350%, in real
terms, from $800,000 in 1975 to $3.6 million by 2005.
Nicholson's
article comes
complete with a graph showing the shares of total income taken by "top
earners" from 1920 through 2000 in Canada and the U.S. While the shares
of the top 1 per cent are "back to where they were in the Roaring
Twenties", he notes, "the share of the merely very well-paid - say,
those between the 90th and 95th percentiles of income - waned sharply
in the 1930s and '40s, but, unlike the top 1 per cent, their share of
the pie has increased only very little in the U.S. and not at all in
Canada."
A Marxist
analysis of these
figures would conclude that there is no big mystery here. The
underlying laws of the capitalist economy are at work, including the
concentration of wealth in fewer hands, and rising rates of
exploitation of North American workers. This trend includes the growing
immiseration of the most poverty-stricken members of the working class,
such as the homeless, many of whom have jobs which pay too little to
afford MONTHLY rent.
But for
Peter Nicholson, "these
figures challenge the central faith that has guided economic policy in
the U.S., Canada and other market economies for more than half a
century: the assumption that economic growth can be harnessed for the
benefit of all citizens, not just the rich."
Not knowing
Nicholson
personally, we can only wonder whether he actually believes this hokum.
After all, astrologers can pump out horoscopes without actually
believing that the alignments of the stars and planets affect the daily
fortunes of human beings.
Nicholson
would be better off to
sit down with some veteran labour activists to discuss the real
"general faith" guiding economic policies. He might be surprised to
find that economic growth is invariably harnessed by governments and
big business for the short and long-term benefits of the capitalist
class - the "top earners" whose contribution to society consists of
their ownership of the corporations which dominate the economy.
It is true
that governments are
sometimes forced to adjust policies in response to militant pressures
from a mobilized and powerful working class. That's what happened
during the post-war period, when unions and people's movements led by
Communists and other radicals dealt powerful blows against the bosses,
winning the right to organize, shorter work weeks, higher pay, and a
range of progressive social reforms. The ideological weapons of
anti-Communism and capitalist consumerism later weakened this drive for
working class gains, allowing the ruling class to go back on the
offensive over the past thirty years. Every federal government over
these decades has worked hand in glove with big capital, not "to
benefit all the people," but to find ways to increase profits at the
expense of working people.
To his
credit, Nicholson does
consider factors such as the shift towards highly progressive income
taxes during wartime and afterwards, and the neo-conservative movement
that later began to gut what he calls "the excesses of the welfare
state." (Only somebody who has never lived on welfare could write such
a line!)
His
conclusion is that the
neo-cons "may have created a social and political environment more
tolerant of winner-take-all behaviour," resulting in skyrocketing
compensation for CEOs. He blames "the new transparency" which puts
"pressure on boards to match or exceed the pay of executives in
competitor companies", and the media for helping to create the
"celebrity CEO." (And just who owns the mass media?)
Nicholson
wonders why the
extreme concentrations of income has not produced more outrage. Here
his explanations are hilarious: perhaps the extremely rich are so few
that the rest of us never meet them to become jealous of their wealth!
(Hello! The print and electronic media tell us more than we want to
know about the resource-guzzling "lifestyles" of these billionaires.)
Or maybe the falling prices of cellphones and flat-screen TVs make us
feel equal to the rich. (Credit card statements have a way of taking
the shine off that rosy glow.)
The finale
is Nicholson's
warning to his fellow members of the Canadian elite: "appearances are
finally starting to fade as the U.S. economy softens, the real estate
bubble deflates and the presidential campaign gets into full swing. So
expect to hear a lot more about divvying up the income pie south of the
border. Canadians - who are experiencing the same trends but just a
step behind - should definitely start paying attention."
Here the
truth emerges.
Capitalism is heading into serious crisis. Working class outrage is
beginning to build. When it explodes, to paraphrase Karl Marx, the
ruling classes will tremble. Peter Nicholson is apparently among those
who advocate mild reforms to soften the blow. Somehow, I doubt that the
George Bushes and Stephen Harpers are listening. Hang on for an
exciting ride!
Found
at:
http://www.peoplesvoice.ca/articleprint10/Does_income_gap_make_the_rich_nervous-.html