Via The Globe and Mail: When business talks about inequality, it’s time to worry. Excerpt:
As nations steel themselves to provide more taxpayer-funded cash to stave off a new round of defaults while cutting supports for taxpayers, policy makers are pointing to rising income inequality as cause for concern in a climate of growing instability.
Notably, it’s not the usual voices of the left sounding the alarms, but pro-market heavyweights like the Conference Board of Canada and the International Monetary Fund.
That such groups are worried should be a signal to Canada’s private sector leaders: pay attention to the compensation gap between your lowest paid worker and that of the CEO, because those differences may tell us a lot about the mess we’re in. After all, businesses rely on the rising purchasing power of the many, not the few, to deliver growth and profits.
But income inequality has grown more rapidly in Canada than in the U.S. lately, according to the Conference Board report. Among 32 OECD nations, Canada has gone from better-than-average to worse-than-average levels of inequality since the mid 1990s, slumping from 14th to 22nd place, despite a decade of robust economic growth and record levels of job creation. Meanwhile, 15 OECD nations -- including peers like Norway and the U.K. -- were reducing income inequality.
Its earlier report noted: “[H]igh 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. Second, high inequality raises a moral question about fairness and social justice.” The links between rising inequality, halting economic growth and increasing volatility are getting harder to ignore.