In one of his many books on the history of civilization, the historian Will Durant described the gross unfairness that existed in pre-revolutionary France.
Durant notes that by the late 1700s, although serfdom had largely disappeared, most French peasants were still subject to feudal dues for use of the local lord’s grist mills, ovens, wine presses and fish ponds, over which the lord maintained a monopoly.
In addition, such landowners enclosed more of the common ground than ever before, and on which the peasant had formerly grazed his cattle and cut wood. Such lords could also “hunt his game even into the peasant’s crops,” an obvious problem when damaged. Despite this, Durant cited the French socialist, Jean Jaures, who argued that if no other abuses had existed in 18th-century France beyond feudal dues, the remnants of serfdom would have gradually withered to nothing and no revolution would have taken place.
Instead, other demands from church and state existed and made dues-paying – about 10% of the peasant’s produce or income – light by comparison. They included the ecclesiastical tithe that took another 8% to 10%.
“Add the taxes paid to the state, the market and sales taxes, and the fees paid to the parish priest for baptism, marriage and burial, and the peasant was left about half the fruit of his toil,” wrote Durant in Rousseau and Revolution.
I bring up 18th-century France because, to discuss inequality in the early 21st century in Canada, it helps to have context from ages past. For pre-1789 France, many nobles and the rich escaped taxes completely. It was the middle merchant classes and poor who paid much of the burden, and with little to show for it in terms of services. But that’s not the reality in modern-day Canada. According to an analysis from colleagues at the Fraser Institute, in 2007, the top 30% of families in Canada paid 65.9% of all taxes (while earning 60.1% of all income).
Also vastly different from the ages of inequality in the past that had real-world consequences for the bottom rung, in 21st-century Canada, much of what is taxed away from everyone returns to average- and below-average-income Canadians in the form of health care, income support, education and unemployment insurance, to name but a few.
That reality does not mean much government spending cannot be reformed to either be more effective or lighter. It does mean that attention should be paid less to modern inequality and instead to wealth creation and smarter redistribution; it is the latter focus that has lifted up entire countries from the dirt-poor state that almost all existed in previously.
Which is why recent headline claims that inequality in Canada is a problem remind me of Mark Twain’s quip about the news of his (non-) death: such news greatly exaggerates a non-problem.
For one thing, inequality has not increased in Canada as of late. Economist Chris Sarlo has looked at poverty and inequality with more precision and care than anyone and his conclusion is at odds with the headlines.
In 2009, Sarlo looked at two of the best measurements: adult equivalent incomes (which account for households of different sizes) and average equivalent consumption (which factors in government income or under-reported income).
Sarlo found inequality has barely budged in 35 years; only child poverty has risen of late, and it is that which must be targeted for remedies, not the mythical rising inequality.
Another major error is the claim that inequality (some earn more than others) leads to social problems, more crime and even sickness. That’s a correlation-equals-causation mistake.
And it fails a rudimentary test: if the rich tripled their income tomorrow while the rest of us only doubled ours, the (mistaken) cause-and-effect assertion would mean social indicators are guaranteed to rise – despite an overall increase in income and wealth. That defies what a rise in individual wealth does for social indicators. It also defies what we know empirically: Canada has one of the highest levels of intergenerational mobility in the developed world. It is consistent with Scandinavian nations and trumps even Sweden. In other words, most of us who start with low incomes don’t stay poor.
Inequality mattered in 18th-century France because the bulk of the population paid the freight while receiving little in return (while the very rich paid little). Inequality may matter in selected jurisdictions, where the bulk of the population is ripped off by those at the top (think of a banana republic). But in Canada the claim that inequality is a problem is Twain-like in its overstatement.