OECD: Canada's richest get richer...

[bloodyminded]

Which is the same choice that many people living in Canada face. The only differences is the pay scales and cost of living is higher.

I am talking about Canada. I'm talking about the hypothetical canada in which there's no minimum wage, so that the decisions of what wages should be rests entirely in the hnads of employers.

Why would they continue paying eight or ten or eleven dollars an hour?

So long as there are a lot of unemployed people (and there are) they can pay whatever they like.

And even under the scenario of full employment, I see no reason--none whatsoever--that many companies wouldn't have an agreement, implciit or otherwise, to keep wages low (in direct contravention to supposed "let the market decide" empty platitudes).

And I suppose you think the magical job fairy will give it to them. Life is not like that. The Chinese middle class will emerge in due course but there is nothing we can do to speed up the process.

Not talking about China.

You are assuming there is a choice to be made here. There is not. Canada and all rich countries will find that income disparity will need to increase in order for them to complete.

Then why have the increases in disparity that have already occurred--the vastest in modern history, increases in disparity at an incredible rate--absolutely failed?

What you're saying is: what we have been doing at an accelerated pace for decades...is a complete failure.

So let's do it some more.

Who was it who pointed out that this method is a sign of insanity?

The US is already doing this with their masses of illegal workers which are outside the system. Canada will need to create similar two tier system for social benefits. We have avoided it so far because we are splitting revenue from resources among a relatively small number of people. Unfortunately, most Canadians seem hell bent on rapidly increasing the population which will dilute the resource revenue and ensure our current social programs will need to cut back drastically over the next 20-30 years.

Which current social programs?

How much cuts?

The proponents of the top-down class warfare ideology are eventually going to have start getting perfectly specific, so we can have actual debates about the nuts and bolts.

And by the way, we're a society and a federation. If the poor and the working poor are going to have to suck it up and sacrifice--so are the rich, and everybody in between.

And this is the kind of idea that immediately gets the tantrums started, which tells us somehting about the ideological extent of these austerity plans.

[eyeball]

Canada will need to create similar two tier system for social benefits. We have avoided it so far because we are splitting revenue from resources among a relatively small number of people.

I certainly do not like this future but I see no way to avoid it at this point.

The revenue split from Canada's natural resources is worse than you probably realize. The last time I fished for halibut the landed price was $3.65 per lb. The owner of the quota was paid 3.50 off the top. The .15 per lb that was left paid for the catch-monitoring and data-collection, fuel, bait, gear, food and wages for the 3 of us that actually did all the work. We were literally only a few dollars away from being given a bill instead of a paycheck.

Slowly but surely crews are being replaced with foreign workers who can afford to risk their lives at sea for next to nothing. The only way I see to avoid this future is to become a poacher or a criminal. That's why I'm so interested in adopting the Bajan way of running our economy that Morris described. I could make that work.

Edited July 22, 2011 by eyeball

[TimG]

Not talking about China.

You joined a conversation where China was part of the discussion. You should understand the context.

Then why have the increases in disparity that have already occurred--the vastest in modern history, increases in disparity at an incredible rate--absolutely failed?

Failed? Hardly. It has kept us in the game. If government had tried to aggressively level the gap you would have simply accelerated the shift of jobs to other jurisdictions. The prosperity we have today is largely thanks to resource revenue, the spending cutbacks in 90s and the tax cuts that started in 2000.

The proponents of the top-down class warfare ideology are eventually going to have start getting perfectly specific, so we can have actual debates about the nuts and bolts.

It is not ideology at all. I am talking about the cold hard facts of economics. If businesses in this country cannot produce goods and services that can be exported for a profit then we will not be able to maintain our standard of living. To make a profit, businesses must be more productive than competitors elsewhere. There is only so much productivity improvements that can be gained with technology because competitors are getting really good at imitating technological leaps.

I think the onus is on you to explain how businesses in this country are supposed to turn a profit if they are saddled with endlessly increasing wage demands and taxes to support a public service which unreasonable expectations.

Remember - resource revenue only generates so much and that is getting diluted by the massive immigration levels. Sustainable prosperity must come from private businesses making profits. So what is your plan to ensure that private businesses can make a profit while employing people in this country and competing internationally?

Frankly, I have lost track of the number of Canadian companies that I know which are doing all of their new hiring overseas because they can get the same work done for less. More taxes and regulation are not going reverse this trend.

Edited July 22, 2011 by TimG

[bloodyminded]

You joined a conversation where China was part of the discussion. You should understand the context.

Actually, it is you who are confused by the context, naturally inclining you to blame someone else.

I was responding specifically to the notion of exporting Chinese labour practices here.

Did you think when I was talking about a successful middle-class, a strong social safety net, strong labour laws, and unprecedented political stability...I was referring to China?

Failed? Hardly. It has kept us in the game. If government had tried to aggressively level the gap you would have simply accelerated the shift of jobs to other jurisdictions. The prosperity we have today is largely thanks to resource revenue, the spending cutbacks in 90s and the tax cuts that started in 2000.

It's weird then, isn't it, that the big income disparities began well before that?

But let's not let such irritants as timelines or history get in the way of your theory.

And if our prosperity is so fantastic, and funneling money up to the rich and away from everybody else has been such a rousing success...why the doom and gloom, and the demand that if we don't increase the disparities we're going to hell? Is there an endgame to all this?

And if your proposals take place, and the working poor become more of an underclass, and the moneyed minority becomes ever more wealthy...at what point does "basic econimics" [sic] become a satiated beast?

when wages drop to starvation levels?

When you have an affluent minority and a poor majority, that's what's known as a "failed state."

Further, what about the political power that naturally accrues to wealth? This is an issue underdiscussed, surely. You advocate for more political power in the hands of the wealthy, and less in the hands of everyone else.

Is this intrinsically anti-democratic future that you deem "necessary" not at all problematic?

It is not ideology at all.

I'm afraid I disagree.

I am talking about the cold hard facts of economics. If businesses in this country cannot produce goods and services that can be exported for a profit then we will not be able to maintain our standard of living. To make a profit, businesses must be more productive than competitors elsewhere. There is only so much productivity improvements that can be gained with technology because competitors are getting really good at imitating technological leaps.

Yes, so it's taken for granted that cutting labour costs is the way to go about this.

I came back to this post after reading Dre's remarks, which helped solidify what I've been edging around without sufficient articulation:

We cannot compete with labour costs in the developing world.

It's impossible.

We all know that in China, in Bangladesh, in Indonesia and elsewhere, that many labour wages are a t a dollar an hour...in certian cases, scarcely more than a dollar or two a day.

Add to that tax-free zones which are simply not feasible here, at least not at the extreme and absolute limits allowed elsewhere.

How are we going to pay Canadians a few dollars a day, in order to keep busionesses here (or, much more difficult, bring them back here)?

No one can survive on that.

They literally, and by some large measure, are far better off begging in the streets. In fact, it would be utterly irrational to work for such wages. You can't really ask anyone to do it; and you certainly can't expect them to do it.

We need some plans, no question about it. Trying to compete with labour costs in developing countires?

What a joke.

Did your "cold hard facts of economics" inform you exactly how we're supposed to compete with such near-invisible labour costs?

Why not?

I think the onus is on you to explain how businesses in this country are supposed to turn a profit if they are saddled with endlessly increasing wage demands and taxes to support a public service which unreasonable expectations.

The first part is answered above, and also in Dre's posts. The second part is a value judgment you read in the editorial section of the National Post.

Remember - resource revenue only generates so much and that is getting diluted by the massive immigration levels. Sustainable prosperity must come from private businesses making profits. So what is your plan to ensure that private businesses can make a profit while employing people in this country and competing internationally?

Oh, I never claimed to have one.

You don't have a plan either, except you pretend to have one.

Frankly, I have lost track of the number of Canadian companies that I know which are doing all of their new hiring overseas because they can get the same work done for less.

Exactly; consider how much less. Do the math.

Edited July 22, 2011 by bloodyminded

[dre]

Frankly, I have lost track of the number of Canadian companies that I know which are doing all of their new hiring overseas because they can get the same work done for less. More taxes and regulation are not going reverse this trend.

Nothing will reverse that trend. I manage these offshoring projects for a living, and I can tell you right now, that the savings in labor and facilities costs are so huge that a couple of percent difference in tax rates doesnt even make a difference.

We would still offshore even if the domestic tax rate was cut to zero, as would most other companies, because the savings in labor are just sooooo damn huge.

As for disparity in wealth, what traditionally made the west so economically successfull is that our society DIDNT concentrate wealth like it does now. Youre completely wrong in suggesting that a small handfull of people having most of the money is good for our economy in anyway. The opposite is true.

Anyhow this ship has already sailed. All jobs that CAN be offshored WILL be. No matter what we do.

[dre]

Further, what about the political power that naturally accrues to wealth? This is an issue underdiscussed, surely. You advocate for more political power in the hands of the wealthy, and less in the hands of everyone else.

People have forgotten the lessons we learned during the aristocracies and the gilded age.

Society WILL NOT stay stable if this trend continues. If you want to understand why, then put 10 people on a desert island, and give one of them all the food and water. Then see how long he lives if he tries to keep it.

The exact same thing will happen here once wealth concentration goes too far. There will either be a political revolution, or a real bloodbath.

[bloodyminded]

People have forgotten the lessons we learned during the aristocracies and the gilded age.

Society WILL NOT stay stable if this trend continues. If you want to understand why, then put 10 people on a desert island, and give one of them all the food and water. Then see how long he lives if he tries to keep it.

The exact same thing will happen here once wealth concentration goes too far. There will either be a political revolution, or a real bloodbath.

I think you're right. Certainly something big would happen, and I doubt it's the sort of thing that would make self-described capitalists especially happy.

I suppose they could always blame Trudeau, or something.

Edited July 22, 2011 by bloodyminded

[TimG]

Nothing will reverse that trend. I manage these offshoring projects for a living, and I can tell you right now, that the savings in labor and facilities costs are so huge that a couple of percent difference in tax rates doesn't even make a difference.

I agree. Which is why I say that wage expectations of Canadians have to come down. The only business that is staying here now is the higher level design and management tasks because the experienced people are here. That will not be true in 20 years because the next generation is not getting trained. We are literally burning the furniture to heat the home.

As for disparity in wealth, what traditionally made the west so economically successful is that our society DIDNT concentrate wealth like it does now.

This is where you are wrong. We have always had massive disparities in wealth. The difference was the poor people tended to be restricted to poor countries so we had the illusion that they did not exist. With globalization, wealth is now being more evenly distributed around the globe but that invariably means that differentials between rich and poor will move towards the global norms within rich countries. This is inevitable and nothing can be done to stop it. There is simply too much labour in the world for there to be any other outcome. Edited July 22, 2011 by TimG

[TimG]

People have forgotten the lessons we learned during the aristocracies and the gilded age.

The aristocracies were based on bloodlines. If you were not born into them you could not join. The key to maintaining social order is equality of opportunity - e.g. free quality education for everyone. Equality of outcome is not possible or desireable.

[bush_cheney2004]

People have forgotten the lessons we learned during the aristocracies and the gilded age.

Society WILL NOT stay stable if this trend continues....

Who says society should "stay stable"? Compared to what/when?

Unrest and "bloodbaths" certainly worked quite well in the past for political and social change.

[dre]

The aristocracies were based on bloodlines. If you were not born into them you could not join. The key to maintaining social order is equality of opportunity - e.g. free quality education for everyone. Equality of outcome is not possible or desireable.

What made them not sustainable though was that at the end of the day wealth = political power, and once you get past a certain point you get a positive feedback loop.

And we arent talking about equality of outcome. Theres always going to be rich people and poor people, but historically our society has not concentrated wealth. Systems were put in place to make sure that money was cycling back into the system. Things like progressive taxation, estate taxation, etc. This is one of the things that made us so successful.

People today have forgotten that you cannot have a political democracy if wealth concentrates.

Lots of wealthy people understand, which is why guys like Bill Gates and Warren Buffet campaign for things like estate taxation. And its not out of a sense of altruism really either. Theyre ability and their right to have private property is derived from the state. They only truly "own" stuff while theres a mechanism to stop someone from taking it away from them. If wealth concentrates beyond a certain point then the wealthy will lose their property rights, and we will face a real danger of a dramatic shift towards socialism, state ownership, etc.

Edited July 22, 2011 by dre

[dre]

Who says society should "stay stable"? Compared to what/when?

Unrest and "bloodbaths" certainly worked quite well in the past for political and social change.

Thats a good point. We could just let things continue until theres some kind of revolution, the problem is it wont be fun to live through, and it seems sorta pointless to me.

[bush_cheney2004]

Thats a good point. We could just let things continue until theres some kind of revolution, the problem is it wont be fun to live through, and it seems sorta pointless to me.

It is hardly pointless, if that how the present framework was created. Seems to me you want to have it both ways.

Just let things run their course as before, instead of locking in your version of "fun" and security.

[dre]

It is hardly pointless, if that how the present framework was created. Seems to me you want to have it both ways.

Just let things run their course as before, instead of locking in your version of "fun" and security.

Its contrary to our interests to do that... I dont want to live in socialist state, which is exactly what youll wind up with.

[bloodyminded]

It is hardly pointless, if that how the present framework was created. Seems to me you want to have it both ways.

Just let things run their course as before, instead of locking in your version of "fun" and security.

It's an interesting point, really, and takes a sort of broad historical view. However, if folks like Dre are right in their concerns (and I suspect they are), it has to be noted that the people with whom they're debating think that their favoured course is the way to avoid worse trouble...they're not embracing the idea of revolution or massive political change whatsoever, whether it leads in that direction or not.

Besides, genuine concern over potential New Orders on a grand scale (including "the new boss") are reasonable ones, I believe.

But yeah, in the end, I'd hold on to the loved ones and try for hope rather than fear, if possible. Or at least enjoy the roller coaster.

[bush_cheney2004]

Its contrary to our interests to do that... I dont want to live in socialist state, which is exactly what youll wind up with.

No...social and economic entropy would continue, just as before. Cream would still rise to the top.

[bloodyminded]

No...social and economic entropy would continue, just as before. Cream would still rise to the top.

Cream rises, huh?

Or shit floats.

[bush_cheney2004]

Cream rises, huh?

Or shit floats.

Oil floats too.

[TimG]

Systems were put in place to make sure that money was cycling back into the system.

Where is your evidence that the money is not flowing through the system now? You are simply assuming that because X% of people earn Y% of the income that the money is going into some cave and never coming out?

Things like progressive taxation, estate taxation, etc. This is one of the things that made us so successful.

Canada has estate taxation because of the way capital gains are treated.

People today have forgotten that you cannot have a political democracy if wealth concentrates.

You are obsessing about the concentration of wealth when the real issue is whether the broad middle class earns enough to be comfortable. You can have concentration of wealth and a comfortable middle class.

[dre]

No...social and economic entropy would continue, just as before. Cream would still rise to the top.

Like I said... youd get a trend towards state ownership, and drastically weakened property rights. This is not a good situation for ANYONE that wants to rise to the top.

And the history lessons we have available found the "cream" dangling from the end of a handmans noose... not "rising to the top".

This is relatively easy problem to solve without a violent revolution though. You just need to tweak the system to avoid extreme wealth concentration and the consolidation of political power that comes along with it. And this is exactly what successful countries have done. Not some of them... ALL of them.

Edited July 22, 2011 by dre

[bush_cheney2004]

Like I said... youd get a trend towards state ownership, and drastically weakened property rights. This is not a good situation for ANYONE that wants to rise to the top.

That's OK...the cycle would just repeat. Your notion of a static stability is far more unreasonable.

And the history lessons we have available found the "cream" dangling from the end of a handmans noose... not "rising to the top".

So?

This is relatively easy problem to solve with a violent revolution though. You just need to tweak the system to avoid extreme wealth concentration and the consolidation of political power that comes along with it. And this is exactly what successful countries have done. Not some of them... ALL of them.

Extreme wealth is political hyperbole. I count only one Canadian family in the top 100 for the entire world.

Edited July 22, 2011 by bush_cheney2004

[dre]

Where is your evidence that the money is not flowing through the system now? You are simply assuming that because X% of people earn Y% of the income that the money is going into some cave and never coming out?

Canada has estate taxation because of the way capital gains are treated.

You are obsessing about the concentration of wealth when the real issue is whether the broad middle class earns enough to be comfortable. You can have concentration of wealth and a comfortable middle class.

You can have concentration of wealth and a comfortable middle class.

Not for long you cant. A large middle class in the west emerged for two reasons. First of all the workers were able to get the government to help them make sure they worked in safe conditions for fair wages. Second of all there was high demand for skilled professionals.

As wealth concentrates the middle class is shrinking and fast.

Canada has estate taxation because of the way capital gains are treated.

ALL successfull modern countries have some form of graduated/progressive income taxation, estate taxation, property taxation, and a social safety net for the exact reason I mentioned.

When we moved from a colonial economy where barons and squires controlled everything to a mercantile economy, the wealthy knew that their right to private property was tenuous. They knew that they depended on the state to protect their property from the mob, and the problem was of course that in a democracy the mob gets to pick who controls the state. Modern society is basically based an unwritten agreement between the wealthy and everyone else. They accept systems that stop the concentration of wealth, in return for the state holding their right to private property as sacred.

If that balance swings too far in the other direction, then people will get fed up, and vote for a party the campaigns on siezing the assets of the rich, or worse things will get violent. A good modern day example of this is Venezuela... but the french and russian revolutions are good examples as well.

[dre]

That's OK...the cycle would just repeat. Your notion of a static stability is far more unreasonable.

So?

Extreme wealth is political hyperbole. I count only one Canadian family in the top 100 for the entire world.

Your notion of a static stability is far more unreasonable.

Its not MY notion, its actually known as western civilization. And its a fuck of a lot more reasonable, than socialism or communism which is where extreme concentration of wealth will take us.

[bush_cheney2004]

Its not MY notion, its actually known as western civilization. And its a fuck of a lot more reasonable, than socialism or communism which is where extreme concentration of wealth will take us.

No, yours is the typical zero sum gain way of thinking proven wrong in the past...and present. Bring on your commie bogeymen...and I will show you their concurrent black market of riches.

[Oleg Bach]

This is true....there are grandmas/grandpas down the street with great wealth nobody knows about until they die. Then the buzzards swoop in to get their piece of the carcass, including the government and do-gooders who never figured out how to save a dime. Jesus Oleg, I'm beginning to sound like you!

Not from my experience- The truely powerful are about maintaning the status quo - managing their and our affairs with wisdom...and believe it or not - some of our most powerful are bound by a thing called duty - they do not retire - they die on the job. B C - you have become a delightful friend - even though it is an artifical electronic communication - I am grateful to you for your cander and great wit....as long as you are alive - so is the true spirit of America...as for the rich - we have to take care of the poor bastards...........Once a number of years ago I told this investment banker that I was leaving the country to go hide and die in Mexico - I could hear him about to break in to paniced tears over the phone - these powerful men are dependent on people like us...come to think of it - It's been a long time since I had a chat- no need to be cheap - the big dogs like an honest chat on occassion - because THEY HAVE NO FRIENDS.