Inequality not growing, median incomes up

[Bonam]

Seems to me that income inequality is something that you measure year to year. Then you post a graph showing the trendline. There shouldn't really be so much argument about this measure.

Do you graph the average incomes of the five quintiles relative to a baseline year? Do you graph the Gini coefficient? Do you graph the income density distribution as it evolves over time? Do you use after tax or pre-tax income? The problem is you can find data and graph it and show a trendline that shows almost anything you want it to, you just have to pick the right way to "set up" the graph. Now, some of these measures have more validity than others, some make more sense, matter more, but most people are too stupid and/or biased to tell which are which. So for whatever argument you want to make about income inequality, you can dig up some "data" to support it. Like WIP talking about "absolute dollars".

[Canuckistani]

It should be after tax income, and my understanding is that our tax system does reduce inequality quite a bit. Personally I would like us to do more to reduce poverty, but I've got to admit that Canada seems to be doing pretty well by most measures compared to other countries. Or so I'm told.

[TimG]

I wonder how much of the difference is because people doing things that get them into the 1% frequently move to the US (e.g. movie stars, top level corporate managers, etc)? This would have the effect of reducing income inequality in Canada while increasing it in the US.

[bush_cheney2004]

This is the best part...something I have been telling you guys for years:

So again: how have we convinced ourselves it is increasing? One is forced to conclude it is the influence of the American media.

How could an entire nation become so decoupled from domestic reality in favor of the Big Show across the border ? Is "American media" so pervasive in Canada that economic data on income and wealth is overwhelmed by cross border noise and neurotic dependence?

[gunrutz]

Here's a tip to anyone reading propaganda from slavish devotees of corporate power like Andrew Coyne and the whole operation at National Post

Well of course it is.

[Bonam]

I wonder how much of the difference is because people doing things that get them into the 1% frequently move to the US (e.g. movie stars, top level corporate managers, etc)? This would have the effect of reducing income inequality in Canada while increasing it in the US.

Could be an effect. The US gets a lot of wealthy immigrants from all around the world. You can buy a Green Card easily if you have $500k USD to invest in American businesses and $10k to pay a lawyer to write up all the right paperwork.

[BC_chick]

The top marginal income tax rate is 28% actually. Though when you add provincial taxes to that it's more like 40%.

On taxable-income, not gross income. At that level if you don't have exceptional accountants reducing your taxable-income then you're doing something wrong. They rarely pay the rate they're supposed to.

Middle-class earners, on the other hand, do pay their fair rates since the benefits of hiring a good tax accountat doesn't justify the costs.

[BC_chick]

I wonder how much of the difference is because people doing things that get them into the 1% frequently move to the US (e.g. movie stars, top level corporate managers, etc)? This would have the effect of reducing income inequality in Canada while increasing it in the US.

I'm sure that plays a role but I think there are more variables. Our economy is very resource-based as opposed to relying mostly on the private sector. Our doctors and lawyers are more regulated. Salaries for top-level management are more in line with the rest of the world. And perhaps this is just anecdotal, but it seems like Canadians appreciate supporting small businesses.

[Bonam]

I'm sure that plays a role but I think there are more variables. Our economy is very resource-based as opposed to relying mostly on the private sector.

Er... almost all resource extraction, processing, transportation, export, etc, is done by private companies. Furthermore, natural resource extraction is not the major economic driver of most of Canada's biggest cities.

[BC_chick]

Er... almost all resource extraction, processing, transportation, export, etc, is done by private companies. Furthermore, natural resource extraction is not the major economic driver of most of Canada's biggest cities.

Well, I stated several criteria, resources being one of them. In spite of what goes on in urban areas, resources do make up a large percentage of our economy.

Being the fiscal-conservative that you are I'm sure you agree with the OP and Andrew Coyne about income-disparity. So if it's not growing in spite of the free-market running unregulated, then what is it? Unions?

[Bonam]

Well, I stated several criteria, resources being one of them. In spite of what goes on in urban areas, resources do make up a large percentage of our economy.

Being the fiscal-conservative that you are I'm sure you agree with the OP and Andrew Coyne about income-disparity.

Hmm? Whether I agree with an assertion or not depends on the validity of the data, not some partisan mumbojumbo.

So if it's not growing in spite of the free-market running unregulated, then what is it? Unions?

Nothing about "the free-market" implies or forces income inequality to grow. Regardless, we don't have a completely free market in Canada, nor in any other country. All Western nations are mixed market economies.

[BC_chick]

Hmm? Whether I agree with an assertion or not depends on the validity of the data, not some partisan mumbojumbo.

Nothing about "the free-market" implies or forces income inequality to grow. Regardless, we don't have a completely free market in Canada, nor in any other country. All Western nations are mixed market economies.

My post was in response to a poster who asked how much of our income disparity has to do with high-earners who leave for the US. I mentioned several reasons, one of which was to agree with the poster, which contribute to this difference.

Your implication that urban areas are not reliant on resource-industries does little to refute the fact that Canada, as a whole, makes up a huge portion of its GDP from the resource-sector. Resource-sector provides high wages for all levels of its labour in comparison to service-industries.

[Smallc]

Resources do not actually make up a huge portion of Canada's GDP. Like most advanced economies, the service sector is king.

[TimG]

Resources do not actually make up a huge portion of Canada's GDP. Like most advanced economies, the service sector is king.

That is deceptive. Most of the service sector depends on a wealth generating primary sector. Without that primary sector the service sector would collapse. The ratio between the primary sector and the service sector changes over time since efficiency gains the primary sector can support more service jobs.

[cybercoma]

Resources do not actually make up a huge portion of Canada's GDP. Like most advanced economies, the service sector is king.

I slapped this together quickly to illustrate your point. The items in blues are service industries and the items in green are resource and manufacturing.

[Smallc]

My point, Tim, was that Canada is very similar to all advanced economies in that it had become its own centre of gravity.

[Michael Hardner]

I can't find any good retorts to the OP in this thread. The idea that the top 20% are gaining in absolute terms is obvious from the nature of how percentages work. From WIP's post it seems that the lower 20% are gaining faster than the top 20%.

We in Canada need to think about such things on our own terms - not in terms of the US. We should be able to find solutions to our problems that suit us. For me, this means that liberals need to think about managing costs and conservatives need to consider government solutions as well.

If left and right work together to find 3rd way solutions, we will be able to continue leading the G8 and in fact can provide solutions for our social problems, invest in our futures and provide more for those in need.

[bush_cheney2004]

...We in Canada need to think about such things on our own terms - not in terms of the US.

Praise Jesus !! There is hope after all.

[Michael Hardner]

Praise Jesus !! There is hope after all.

This Canada/US trick is amazing. You can do it at parties.

Ask a liberal Canadian what they think of how our healthcare system performs and start quietly counting how long it takes them to mention America. I've done it 3 times and I think the longest I've gone is about 30 seconds.

[bush_cheney2004]

....Ask a liberal Canadian what they think of how our healthcare system performs and start quietly counting how long it takes them to mention America. I've done it 3 times and I think the longest I've gone is about 30 seconds.

Sure...a Godwin's Law probability scenario for Canadian health care instead of Hitler. I just find it amusing that a group in Vancouver could start the Occupy Movement based on falsely interpreted or imagined data from the U.S. applying to Canada. But I am not surprised, as even members here are quick to find and quote U.S. references for issues in Canada, either because they are just lazy, or readily available source of data don't exist (which indicates another kind of problem). Hence your zeal for open government, but not necessarily the U.S. government as a substitute in Canada.

Edited December 17, 2012 by bush_cheney2004

[Canuckistani]

It's far less simple than that. As the discussion further above shows, it depends who's doing the analysis of Canadian data, where they pick the start and end points for the analysis. It's not all about increasing or stable income inequality, but determining a good level. I would guess we're still too high. What I would like to see is just some raw data for each year, instead of somebody putting spin on whether inequality is increasing or holding steady. I see way too many people with very poor incomes, just enough to live hand to mouth - we need to do something about that. Really, you two are playing the same game you are deriding - inequality is higher and growing faster in the US, so why worry.

[bush_cheney2004]

.... Really, you two are playing the same game you are deriding - inequality is higher and growing faster in the US, so why worry.

But you just did it yourself.....not only putting spin on US circumstances, but comparing it to Canada. Is it ever possible to have such a data discussion without invoking the United States as the benchmark?

[Michael Hardner]

Hence your zeal for open government, but not necessarily the U.S. government as a substitute in Canada.

My zeal comes, in part, from the realization that people would rather fight about nothing than investigate something.

So many of these arguments are about identity, figurative arguments about who wears jeans and who wears suits, and re-fighting left vs right arguments from the 20th century. Its really about money, and in many cases all it takes is some boring research to determine that there's not that much to fight over at all.

[Argus]

This Canada/US trick is amazing. You can do it at parties.

Ask a liberal Canadian what they think of how our healthcare system performs and start quietly counting how long it takes them to mention America. I've done it 3 times and I think the longest I've gone is about 30 seconds.

I think it's only natural to use other systems for comparison. You could use the US system as a grossly inefficient and expensive one, and several in Europe as solid, efficient and effective ones, and us in the middle.

Edited December 17, 2012 by Argus

[bush_cheney2004]

My zeal comes, in part, from the realization that people would rather fight about nothing than investigate something.

Hey, I've tried myself. It is definitely more difficult to mine Canadian federal and provincial data compared to the US of A. Sometimes using American data is a secondary subtext and bias to help spin the message about Canada (e.g. American-style = BAD).