Is the real message of the HST vote that people wanted to stop the flow of wealth from the bottom to the top, from business to consumers?
There was obviously a mix of motivations to vote against it, but that reason would explain why the vote split so clearly along income lines.
Economist Iglika Ivanova from the Centre for Policy Alternatives discovered that in Vancouver, the poorer the electoral district, the higher the voters’ opposition, while the richer electoral districts were the strongest supporters.
This is just the latest example of how business interests are being hurt by the growing split between rich and poor in Vancouver, B.C. and Canada. British researchers Richard Wilkinson and Kate Pickett (Equalitytrust.org) make an irresistible argument that the vast majority of people in any developed country would be better off not by raising GDP, but by reducing the gap between the top and bottom income earners, even with the same level of overall GDP.
“Greater equality improves health and life expectancy and dramatically reduces the frequency of a wide range of social problems, including violence, incarceration, illiteracy, mental illness, drug addiction and obesity,” they write.
Ironically, social mobility, the measure most often celebrated as an available path to prosperity in countries with less equality, is lowest in unequal countries, and highest in the more equal countries. It is far easier to get ahead in Norway than it is in the U.S.
“Many people worry about what has gone wrong with modern societies without recognizing how many of the problems originate in the effects of low social status and status competition which are exacerbated by greater inequality,” says Wilkinson.
Aside from the obvious moral issues that tend to divide people on this topic, Wilkinson points out that “high inequality can diminish economic growth if it means that the country is not fully using the skills and capabilities of all its citizens or if it undermines social cohesion, leading to increased social tensions.”
The Conference Board of Canada has been hot on this topic over the last year, noting that changes in relative income have a much larger impact on happiness than changes in absolute income. Their data shows a disturbing growth in income inequality in our country – especially in Vancouver. It notes that the gap between the real average income of the richest 20% of Canadians and the poorest 20% grew to $117,500 in 2009 from $92,300 in 1976.
“Thus, while the poor are minimally better off in an absolute sense, they are significantly worse off in a relative sense,” their study pointed out.
By contrast, the richest 1% of the population (average income $405,000) took home almost a third of all the growth in incomes in Canada from 1998-2007, mostly due to lavish corporate compensation packages. Extreme case: Jim Shaw retired from Shaw Cable with a $6-million-a-year pension. In 17 hours he will collect the maximum yearly retirement benefit for the Canada Pension Plan ($11,520).
Last week the conference board reported that the gap between the rich and the rest has been growing faster in Canada than in the U.S. since the mid-1990s – especially in B.C.
Within Canada, low-income rates rose higher in B.C. than in any province except Alberta in the latest recession. Between 2008 and 2009, Vancouver had the highest share of its population in low income of any city in Canada.
This growing rift is unsustainable and damaging to individuals, our community and the province’s economy. Low-income voters pushing back against the HST cared more about inequality than helping the economy. That hurts everyone.
Next week I’ll talk about what can be done about it. •
