Concentration of wealth: a perfect recipe for social unrest

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Pontiac Perspective  Peter J. Gauthier


Pontiac Perspective  Peter J. Gauthier

Earlier this year, Oxfam released a report on wealth concentration that showed that the wealth of two Canadian billionaires was equal to that of about 11 million Canadians. Or, to put it another way, two Canadians have more wealth than the combined wealth of the lowest 30% of Canadians. No doubt, some wealth inequality is inevitable and, perhaps, even desirable; those who have talent, special skills and ability to innovate deserve some benefits. However, at the international level, concentration of wealth among a few has some very negative effects on the overall progress of humanity. The current global extreme concentration of wealth denies hundreds of millions of people the benefits of their talents and work.
Concentration of wealth for a particular country is usually indicated by the Gini index – a measure of income or wealth inequality. A Gini index of zero (0) represents no inequality while an index of one hundred (100) would indicate that all wealth is concentrated in one person or institution. The best estimates from the World Bank for the Gini income index give Canada a value of 33.7. As a comparison, Denmark has a value of 29.1 and the United States of America has a value of 41.1. (Remember: higher values mean more concentration among fewer people.)
However, a measure of income inequality is not the final word on the issue. Governments can adopt policies and take actions to mitigate the worst effects
of wealth concentration.  These include progressive income tax rates, public health and education systems (funded by government revenues rather than paid by the individual). 
Canadians may take modest pride that our Gini index is lower than that of the US because we have more basic services funded by government revenues than do our neighbours to the south. However, recent economic developments have increased the gap between rich and poor in Canada too. Example: the latest Frank Knight Wealth Report placed Canada as having the fastest growing population of the “super rich”, that is persons with a personal wealth of more than $30 million. By
contrast, Statistics Canada reports that 14.9% of Canadians have “low income”.
Further, the OECD has noted poverty has been steadily increasing in Canada since the mid-1990s.
The reality is that the rich are getting richer and the poor are getting poorer; a perfect recipe for social unrest, targeting minorities and foreigners and attempting economic isolation. What is needed is recognition of the problem and action by all levels of government, especially at the federal level. Better funding of basic services such as health and education, combined with a real multi-level effort to eliminate poverty is a necessity.  Perhaps, the implementation of a guaranteed minimum salary could be implemented.