The fight for income equality
The gap between executive compensation and workers pay has been rising rapidly in recent years. According to OECD data the current average ratio of CEO to average worker pay in Canada is 206 to 1, it was 84 to 1 a decade ago.
It is even greater in the U.S. at 354 to 1. However, in much of the developed world the gaps are somewhat less. i.e., 174 to 1 in Germany, 93 to 1 in Australia, 84 to 1 in the U.K. and 67 to 1 in Japan. According to a recent Globe and Mail story there is a referendum under way in Switzerland to restrict the highest pay at any Swiss firm to no more than 12 times the lowest.
These factors show an econ- omy that is functioning very well for those at the top with those in the middle and below increasingly left behind. That is so, I believe, not because those at the top are much smarter or more talented but because they make the rules.
Over the last 25 years or so we have seen free trade and deregulation lead to the globalization of the economy. This in turn has led to a fierce drive for improved efficiencies in the corporate world.
As many of us know, the drive for efficiency often leads to downward pressure on worker wages and benefits. Jobs are eliminated and those that remain frequently pay less. With increased profits top officers and shareholders are rewarded but the workers often are not, frequently told they must hold the line in order to remain competitive. It seems as though the days that a productive, loyal worker sharing in the success of the enterprise has been replaced with the corporate creed that you should be thankful to have a job.
Don’t get me wrong, I’m not suggesting that improving efficiency is not a good thing. Finding and implementing efficiencies in any organization, be it public or private, profit or not-for-profit is part of the responsibility of leadership and has to be taken seriously. What I am saying is that we need checks and balances; unbridled capitalism left to its own devices is destroying, and will continue to destroy, our way of life.
As stated earlier, free trade has played a huge role. Windsor Star guest columnist William Watson (Nov. 25) advises readers that “trade deals never are” about jobs. He goes on that the notion of job creation is just something that politicians have to say in order to sell the idea to the public. That may come to a surprise to some, but I am not at all surprised. I did not believe Brian Mulroney in the 1980s when he heralded the Free Trade Deal with the U.S. as being about “jobs, jobs, jobs” and I don’t believe Stephen Harper now.
In the decade following that deal, we witnessed the deindustrialization of Canada resulting in the loss of tens of thousands of jobs across the country. The negative impact was only somewhat mitigated by a strong auto sector that performed well, not because of the free trade deal but in spite of it. What we are left with is ever increasing concentration of wealth at the top and downward pressure on workers cre- ating this widening income gap. This concentration of wealth at the top is beneficial to the chosen few but not very good for the rest of us.
A documentary film recently released in the U.S. featured Robert Reich, Secretary of Labor in both the Clinton and Carter administrations. In the film Reich points out that the two peak periods of wealth concentration in modern times occurred in 1928 and 2007. Each of those years were followed in the next year with the two worst financial calamities since the dawn of the Industrial Revolution.
Those at the top won’t change things out of the goodness of their hearts. As I have said, they make the rules and they are doing quite well. But that does not mean they can’t change; they can, but it will take a massive movement on the part of the rest of us, the 90 per cent-plus who are being left behind by this economic model.
We have recently celebrated Remembrance Day, the time when we honour our war veterans for the sacrifices they made including fighting and in many cases dying in order to protect our democratic way of life. Now we must pick up the challenge against the forces that would sell our cherished way of life to the highest bidder. I believe it starts with holding our political leaders accountable. We can win the fight for economic equality.