Wow, is it ever a great time to be wealthy. According to our annual Rich 100 list, Canada’s most affluent clan, the Thomson family, is worth an amazing $6 billion more than it was just 12 months ago. Other gilded families, such as the Westons and the Richardsons, also saw substantial gains, with the average increase in wealth for all 100 members of our list coming in at more than 15%.
Collectively, the members of our Rich 100 are now worth $230 billion. Some say that kind of wealth concentration is outrageous, but I have no problem with rich people getting richer. What is starting to concern me, though, is the growing gap between the rich and poor.
Luckily, here in Canada, the gap is nothing like it is in the States. In Canada the top 0.01% have an average income of $6 million, and collectively earn 1.5% of our total income. Sounds like a lot until you look at the U.S., where the top 0.01% earn an average of $24 million each—which adds up to a 4.5% share of the total.
Still, even in Canada the wealthy are stuffing their bank accounts faster than the rest of us. Lots of smart people have tried to figure out why, but the most convincing explanation I’ve heard comes from Mike Veall, an economics professor at McMaster University in Hamilton. He has looked at many factors, but concludes that globalization is one of the big ones.
That’s because the trend toward freer markets and a global economy affects different segments of our population in different ways. If you’re already near the top in terms of education and skills, you can command a higher wage, because you now have a global market to operate in. However, if you’re at the bottom, globalization hurts you because you’re suddenly competing with low-wage workers in Bangladesh.
This is important, because globalization is a trend that will continue for decades to come. That means the income gap will continue to grow. Each trade deal we sign makes it easier for our best and brightest to demand higher pay, and each puts those with less skills and lower incomes at risk.
The good news is we don’t have to sit here and wait for a catastrophe—there are some simple, proven measures we can take to keep the income gap under control.
The most controversial is to tax the hell out of the rich. This seems like an obvious fix, but Canada already does it. By some calculations, we’re already taxing the wealthy at the optimum rate. If we were to dramatically increase the hit on the very wealthy, we’d get a diminishing return, as they have the means to access legal tax-avoidance methods, such as moving their wealth offshore (yes, globalization again).
But that doesn’t mean we couldn’t raise their taxes a little—say by just 1%. And we don’t have to play Robin Hood and hand that money over to the poor. The money could be allocated to fund higher-quality accessible education for everyone—which, incidentally, would also be the best way to help lower income Canadians compete in a global marketplace. After all, there are plenty of low-income Canadians who have what it takes to make it in the new economy—if only they could get the schooling they need.
So if you’re concerned about inequality, there’s no need to take to the streets. Instead, elect a government that’s willing to develop an accessible national education program that works. I may not be part of Canada’s wealthy elite, but that’s a practical solution I’d be willing to pay for.