The Logic of Occupy Wall Street for Canada
The Occupy Wall St. Movement and the Occupy Together movements that are inspired by it actually have a simple premise: society shouldn’t be run for the unrestricted benefit of the wealthiest. The immediate grievance is the 2008 banking crisis, in which the US banks engaged in fraudulent and criminal activity and were subsequently rewarded for doing so with trillions in government funds, while their victims reaped evictions and foreclosures.
Canada did not have a crisis of the same severity, for a few reasons. Canada has a different banking system with a differently-regulated mortgage authority (although there are important similarities in the way the government takes risks and the private banks profit, and the Canadian system is far from invulnerable to crisis). The government is in the mortgage-backed securities business, but not in the totally unregulated way that the business ran in the US. Social democratic politics are a little bit stronger in Canada than in the US. Because the Conservatives were in a minority government at the time, the other parties were able to wring a stimulus out of the federal government that blunted the recession (the Bank of Canada also provided emergency funds and lowered interest rates to help the banks). But the overall problem, and direction of society, is the same, and the Occupy Together movement should find fertile ground in Canada.
The slogan of Occupy Wall Street is “We are the 99%”. So, who are the 1% in Canada? (1). A 2010 report by the Canadian Centre for Policy Alternatives (CCPA) by Armine Yalnizyan documents “The Rise of Canada’s Richest 1%”. There are 246,000 of them and their average income is $403,000. They hold 13.8% of incomes, and pay some of the lowest taxes that the top 1% have ever paid, historically.
To look within this 1% (at a tiny fraction of it, 0.0002%) economist Jim Stanford pulled some figures about Canadian billionaires from Canadian Business magazine for the Progressive Economics Forum (2). There are 61 Canadian billionaires, with a combined wealth of $162 billion (5 times the size of the federal government’s budget deficit). This is 6% of all personal net worth in Canada – they own twice as much wealth as the bottom 17 million Canadians. Their wealth increased by 8.4% last year (while average hourly earnings in Canada grew by 2.5%). On average, they added $100 million per household, while the average household added $524.
Through a few historical accidents, Canada has been spared the most spectacular aspects of the US financial crisis, but it is hard to dispute that Canadian society is organized to benefit private corporations, and especially finance. The economics of this favouritism has been documented extremely well over the years by the CCPA. A 2010 report by the CCPA’s Toby Sanger, for example (3), shows how the financial sector has had a 23% profit margin during the past decade, compared to 7% for non-financial industries. Sanger quotes “a leading bank analyst” who estimates that Canada’s top banks will have $40 billion in excess cash by the end of 2012, the sum of all federal and provincial deficits projected for 2012-13. Corporate income rates have been cut from an average of 42.6% in 2000 to 28% by 2011, with more tax cuts coming. The tax cuts in this sector, and the tax havens for the fraction of the 1%, have helped bring about the revenue shortages that are then called “deficit crises”, which governments then use as pretexts for austerity budgets.
In a society based on layers of inequality, the 99% is itself differentiated. Another 2010 CCPA report by Daniel Wilson and David McDonald (4) reveals one of these inequalities. The median income for Canadians in 2006 was $27,097; for aboriginal peoples, $18,962, or 30% lower. Scholar Grace-Edward Galabuzi has documented social exclusion based on race and gender (5). And a recent report by the Conference Board of Canada shows that income inequality in Canada is growing faster even than in the US (6). All of these inequalities are within the 99%, which highlights the need for a more equal society in general. The extremes of inequality are glaring, but these grinding inequalities are no picnic either.
One comparison, made frequently in the media, that seems to drives progressives crazy is the one between Occupy Wall Street and the Tea Party movement, which is based on the magical idea that society should be able to afford things (from roads to wars) without paying taxes. When Tea Party politics got to Canada they helped elect Toronto’s current mayor and helped give the Conservatives a boost to a majority government (7). The Occupy Wall Street movement’s arrival in Canada could help discredit the austerity that the Conservative government will be putting forward in their next budget, and could help in resisting their plans to deepen inequalities and destroy what economic, social, and environmental fabric is left.
3. Toby Sanger, “Fair Shares: How Banks, Brokers, and the Financial Industry can Pay Fairer Taxes.” http://www.policyalternatives.ca/publications/reports/fair-shares
4. Daniel Wilson and David McDonald, “The Income Gap Between Aboriginal Peoples and the Rest of Canada”. http://www.policyalternatives.ca/publications/reports/income-gap-between-aboriginal-peoples-and-rest-canada.
5. Grace-Edward Galabuzi. Canada’s Economic Apartheid: The Social Exclusion of Racialized Groups in the New Century. Toronto: Canadian Scholars’ Press, 2006.
6. The Globe and Mail reported this in the business section on September 13, 2011: http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/income-inequality-rising-quickly-in-canada/article2163938/
7. I don’t want to exaggerate this – Canada has always had these politics and there are “home-grown” explanations for these electoral results.