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Research Spotlight – Lars Osberg

Posted by Department of Economics on October 11, 2024 in News

The Scandalous Rise of Inequality in Canada, James Lorimer Publishers, Toronto, 2024, 286 pages.

In his latest book, Lars Osberg documents how unbalanced economic growth in Canada has, since the early 1980s, produced rapidly increasing income and wealth at the top, income stagnation among the middle class and greater deprivation for the disadvantaged, with implications that permeate Canadian society.

The rising income share of the top 1% has created new potential markets for luxury goods, driving the “aspirational advertising” telling the affluent how their purchases can make them “special” – and also telling the 99%, increasingly often, of their material inadequacies.

Growing income gaps have magnified the intergenerational consequences of slipping down in the income hierarchy, undermining equality of opportunity by reducing the willingness of affluent parents to pay the taxes necessary to fund a public school system that could educate the poorer children who might compete with their own kids. And rising inequality destroys the sense of fairness and the social cohesion necessary to find collective solutions to the big existential common problems facing Canadian society of recurring pandemics and ongoing climate change.

The “scandalous” part of the increasing inequality of the last 40 years is that the Covid19 Pandemic showed that inequality and poverty can be changed, quite quickly. Although most Covid transfer payments went to businesses, CERB payments to individuals were big enough to noticeably reduce poverty and inequality in Canada in 2020, but both ticked back up in 2021 as transfers were unwound. Declining real wages have since reinforced that upward trend, and artificial intelligence is both threatening previously secure, well-paid middle-class jobs and shifting national income towards capital. 

The book concludes with several policy suggestions – on inheritance taxation, full employment policy, a basic participation income, fair taxes at the top and minimum wages – that could make a difference.

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