Opinions:

peter-venton   linda-mcquaig   maude-barlow
Peter Venton

J. Peter Venton is an economist. He earned his BA in Economics from the University of Western Ontario and his MA in Economics from Queen’s University. Read the OpEd

 
Linda McQuaig

Linda McQuaig is a journalist and best selling author. She is author of eight books on politics and economics – all national bestsellers. Read the OpEd

 
Maude Barlow

Maude Barlow is the National Chairperson of The Council of Canadians and chairs the board of Washington-based Food and Water Watch. Read the OpEd


Research:

Income inequality in Canada is growing at an alarming rate. The gap between the richest 1% of Canadians and the rest is at its highest level since the 1920′s. The richest 20% are the only group to have increased their share of the national income – the shares of middle or low income earners in Canada have been stagnant or declined. Canada ranks poorly compared to many other OECD countries, and in the past two decades income inequality has grown faster here in than in any other OECD country except the United States.

Research is clear: proportional representation is strongly correlated with lower levels of income inequality. In fact, researchers have found that as proportionality in an electoral system increases, income inequality decreases. Winner-take-all systems have been found to have the opposite effect. In short, when our votes count, people have more power.

READ THE RESEARCH


peter-venton

J. Peter Venton is an economist. He earned his BA in Economics from the University of Western Ontario and his MA in Economics from Queen’s University. For 24 years he worked in the Ministry of Finance of the Government of Ontario as an economist, senior economist and senior policy advisor in the administrations of Premiers Robarts, Davis, Peterson, Rae and Harris. From 1979 to 1984, he was Vice President Administration and Finance at Wilfrid Laurier University in Waterloo. From 2001 to 2009 he was Bursar at the University of St. Michael’s College in the University of Toronto from which he retired in December 2009. Since his retirement he has been writing about economic inequality, globalization, environmental sustainability and democracy.

FVC: What do you think about Canadian democracy today?

I think it would be a good thing.

Seriously, in Canada today we do not have a real democracy owing to the fact that only about 30 percent of Canadians are effectively engaged in the democratic processes of following politics and public policy issues (Hepburn, Bob. 2012). The rest of the electorate are “too busy with the problems and pleasures of everyday life: to be bothered with these activities (Russell, Peter H. 2012). At the federal level 40 percent of the electorate have neglected their duty and responsibility to their fellow Canadians to vote in elections. The percentage of non voters in elections to provincial legislatures and local councils is much higher; this is more serious because provincial and local governments account for 60% of government sector expenditure benefits – substantially more than the federal government’s 40% share.

In this year of the 100th anniversary of World War 1 in which many Canadian soldiers died believing that they were fighting to preserve democracy in Canada this is a sad fact, particularly in light of the last lines of Lieutenant Colonel John McCrae’s famous 1915 poem, “In Flanders Fields”:

Take up our quarrel with the foe
To you from failing hands we throw
The torch: be yours to hold it high.
If ye break faith with us who die
We shall not sleep, though poppies grow
In Flanders fields

I agree with Susan Delacourt’s report that over the last 50 years there has been a transformation of much of the electorate from “democratic citizens” willing to make some sacrifice for the public good with some understanding that benefits arise from taxation to “consumer citizens” unwilling to make a sacrifice for the public good and concerned only about taxes and their individual wants. This transformation has changed the behavior of politicians and political parties. In the consumer democracy, where the customer is always right it’s not the politician’s job to change peoples’ minds or prejudice them but to confirm them to play to them to seal the deal. The consumer citizen cannot be sold on anything that increases their taxes or reduces their consumption. And political speeches are not made to educate, explain or inform the audiences but rather to serve up marketing slogans.

Political parties and politicians have lost sight of their ultimate purpose which is to serve the public good. Instead they have adopted political power as their ultimate objective. This has greatly weakened our democracy.

Most citizens are uninformed about the nature and magnitude of their government’s role in the economy

and in their personal lives. Canadian governments employ a free market capitalist system in combination with interventions to serve the public good. This mixed private-public system is evenly balanced as evidenced by the fact that the disposable annual income after taxes of the median Canadian family in 2006 was $42,845 while government sector expenditures provided that family with annual benefits of $40,716 (Venton, J. Peter. 2013, p.19).

I believe that, contrary to public opinion, most MPs start out as well intentioned representatives of their constituents. However most lack the formal education about how to play their role in Parliament. Samara Canada’s reports on their exit interviews of 65 MPs indicate that the vast majority (I would guess 95% or more) lack formal education in the well-established principles of political science (Samara # 1, 2010. p7) – not to mention economics. This is essential knowledge for MPs and their parties to effectively perform their core roles in Parliament. As a consequence many MPs are confused about their roles and many feel that they are “outsiders” in Ottawa (Samara Canada # 4, 2011, pp. 14,15). On top of that they often feel there is considerable conflict between their wish to represent their constituents and their need to represent the interests of their party leader.

FVC: Many Canadians are very concerned about Canadian democracy and growing inequality between citizens. How big of an issue is inequality? How do you see these issues fitting together?

Economic inequality is the most important issue. As Associate Chief Justice in the U.S. Supreme Court, Louis Brandeis stated way back in the 1930s, “We can have democracy or we may have wealth concentrated in the hands of a few, but we cannot have both.” Over the last forty years governments in Canada have failed to coordinate the changes to the capitalist free market system and to business corporations to avoid this present-day concentration of income and wealth. The results are as follows:

Trends in Economic Inequality in Canada
Share of After-Tax Household Income 1976 2007
Highest 20% 41.0% 44.1%
Middle 60% 54.1% 51.0%
Lowest 20% 4.9% 4.8%
All Households 100.0% 100.0%
Share of Family Wealth 1984 2005
Highest 1% 13.6% 18.6%
Highest 10% 51.8% 58.2%
Highest 20% 69.5% 75.0%
Middle 60% 31.0% 25.6%
Lowest 20% -0.4% -0.6%
All Families 100.0% 100.0%
Source: Venton, J. Peter. 2013. p. 38.

The inequality in income and wealth is unprecedented in the 147 years of the history of Canada as a nation state with the exception of the period in the 1920s that preceded the Great Depression.

Brandeis’ concern was that big business was harmful to the well being of Americans and workers in particular. Since the end of the civil war in 1865 there had been a huge growth in big business to the point that, in the early 1930s the largest 200 corporations out of several million collectively controlled half the total U.S. corporate assets. (Parker, Richard. 2006. p. 72). Fast forward to Canada in 2010 where the 60 largest corporations accounted for an estimated 48% of the total assets of Canada’s 1.3 million corporations (derived from Brennan, Jordan. 2012, pp. 19, 20, 26).

Today Canada’s political system is misaligned with the concerns and priorities of a majority of Canadians about economic inequality. Details of this misalignment are presented in the third essay in my pamphlet, Four Essays on Restoring Canada’s Democracy (Venton, J. Peter. 2013). There are five apparent causes of this political misalignment:

1. Businesses have captured the political agenda on tax and expenditure policies.

2. Most politicians from all parties appear to believe that economic inequality is a necessary evil – that it is a necessary incentive for economic growth and the well-being of Canadians as a whole. This reflects their lack of knowledge about political economy – that is how the economy actually works and which public policy and operations can make it work for the democratic majority. Instead they have accepted the several myths that make up the economic ideology of the business community and its funded think tanks. These include the hypotheses that moderate increases in tax rates on the highest income earners will reduce their incentive to innovate and work hard. They also include the hypothesis that inequality could be reduced if and only if all people pulled themselves up by their bootstraps. All these myths (or more precisely fallacies about economics that are deceptively plausible because they incorporate half truths) are outlined on pages 43 to 46 of my pamphlet, Four Essays on Restoring Canada’s Democracy (Venton, J. Peter. 2013)

3.There is substantial political disengagement among the less affluent of the Canadian electorate with the result that a majority who actually vote are the affluent – the direct and indirect benefactors of the Canadian economic system. As a consequence the political system is dominated by the “monopolistic sector” in the economy as manifested by the 60 largest of corporations whose assets represent 80% of Canadian GDP and account for 65% of the profits of Canada’s 1.3 million corporations. (Brennan, Jordan. 2012 Figure 5, p. 19).

4. Political parties compete to maximize their political power by chasing the “centre”. But the centre is dominated by the affluent because they have high voter participation rates and because the remainder of the electorate have relatively low voter participation rates. The latter include most of the poor, the vulnerable and small l liberals.

5. Canada’s first past the post electoral system fails to meet the principle of proportional representation. Lack of proportional representation combined with low voter turnout means that the current majority governing party has been elected by a base of only 24% of the electorate. Most of the base are the affluent and they are determined to keep it that way.

FVC Better democracy, fair taxation, environmental protection, improving public services in a financially sustainable way are all issues Canadian care about. How important is achieving proportional representation in all this and why?

It’s debatable whether democracy and environmental protection are priorities of the majority of Canadians. As noted earlier 70 percent of the electorate are disengaged from political discourse so there is little commitment from them for change. A Samara Canada survey of a sample of Canadians presented them with a list of 18 issues and asked the question “What is your single most important issue?” The results were as follows:

“Economy, Taxes & Government Fiscal Health” 31%
“Health Care” 25%
Social Programs (e.g. Old Age Security and Pensions) 12%
“Jobs Labour & Unemployment”. 8%
Environment 7%
Education 5%
Crime & Justice System 3%
Immigration 3%
None of the other ten issues received a response by more than 1% of the respondents  

Critics have implied that Parliament’s policies will not necessarily change under an electoral system based on the principle of proportional representation (PR system) which is likely to result in more minority governments. As evidence they note that the presence of minority governments in recent years has not helped the environmental cause or the cause of fairer taxation. The NDP did not support the 2008 Liberal minority government’s “green shift” proposal in 2008. And the Liberals and NDP allowed the minority Harper government-initiated reductions in GST tax rates to pass.

What these critics fail to understand is that PR systems tend to result in more coalition governments that involve negotiation, compromise and power sharing.

For example under a hypothetical PR electoral system in 2006, the Liberals and the NDP would have likely forced the Conservatives to withdraw the proposed GST cut of 1% by threatening a non confidence vote which would have precipitated another general election. The Conservatives would have wanted to avoid such an election because they would not likely have obtained a majority with 50% or more of the popular vote from it. By contrast under the FPTP system the Conservatives would likely have won a majority of the seats in the general election because most Canadians favored a GST cut (Himelfarb, Alex & Himelfarb, Jordan editors, 2013.p vii). This was an outcome that the Liberals and NDP would have wanted to avoid. So the Liberals and NDP allowed the budget with its GST cut to pass. The other 1% GST cut in 2007 mini budget was allowed to pass when the Liberals abstained from voting on it. Thus thestructure of the PR systems tends to steer parties to compromise so as to serve more than one party base and hence a greater percentage of voters which they can do by writing bills together. It has this effect because the political risks and rewards inherent in the PR system are different from the political risks and rewards of the FPTP system. Specifically these different risks and rewards give the opposition parties more bargaining power by reducing the rewards of the governing party for not compromising.

The difference in the electoral systems is very important because the benefits of the reduced GST taxes were substantially greater for the 20% of Canadian households with the highest incomes than for the 60% of Canadian households with middle income and the 20% of Canadian households with the lowest income. So tax fairness was reduced and (after tax) income inequality was increased as a result of the GST cuts.

In conclusion I think the policy solutions for the majority 80% of Canadians and the country’s environment are (1) greater taxation of high income and wealth (part way to the levels in the 1960s) (2) redistribution of income to reduce poverty, (3) reduced consumption of uneconomic luxury and status goods, (4) reduction in useless financial speculation in existing assets from stocks, real estate, art, collectibles etc.. and (5) a reduced rate of economic growth in exchange for a slight increase in leisure time for a better work life balance and a better balance between the supply and demand for labour and hence lower unemployment. But none of the above policies have a ghost of a chance of happening without compulsory voting combined with an electoral system based on the principle of proportional representation. With these changes we will at last have a set of government policies that are aligned with the interests and priorities of the majority of Canadians – as opposed to the 24% of the electorate who are largely affluent.

To this end the task of the several progressive think tanks in Canada is to expose the mythology of the business community and its funded think tanks and replace them with a progressive narrative and the foregoing suite of policies that actually work for the economy and for the majority of Canadians. The task of the organizations like Leadnow is to communicate the narrative and the policies to the general public and advocate them to all political parties to enable them to get up the courage to implement them. The task of the political parties is to work very hard to empower the 80% of Canadians to vote not only for their own interests but for the interests of their fellow citizens. Because, as the old saying goes “If we don’t hang together we shall hang separately”. These solutions connect the dots between the economy, tax and fiscal policies, and the restoration of the health of a very ill democracy to finally deal with climate change.

References

Brennan, Jordan. 2012. “A Shrinking Universe: How concentrated corporate power is shaping income inequality”. Paper published by the Canadian Centre for Policy Alternatives. November 2012.

Delacourt, Susan. 2013. “Why politicians always have time for Tim Hortons.” Toronto Star. September 28, 2013. This article is an excerpt from her book Shopping for Votes: How Politicians Choose Us and We Choose Them. Douglas MacIntyre, 2013.

Hepburn, Bob. 2012. “The Uphill Battle to Save Democracy”. Toronto Star, April 19, 2012.

Himelfarb, Alex and Jordan. editors. 2013. Tax is not a four letter word: A Different Take on Taxes in Canada. Waterloo: Wilfrid University Press.

Parker, Richard. 2006. John Kenneth Galbraith: His Life, His Politics, His Economics. Toronto: Harper Collins, Perennial Edition.

Russell, Peter H. 2012. Review of Political Scientist Vaughan Lyon’s book, Power Shift: From Party Elites to Informed Citizen. Canadian Public Policy. Volume 38. Number 4, December 2012. pp. 608-609.

Samara Canada #1, 2010. “The Accidental Citizen?” MP Exit Interview Report # 1. June, 2010.

Samara Canada # 2, 2010. “Welcome to Parliament: A Job With No Description” MP Exit Interview Report # 2, Fall 2010.

Samara Canada # 4, 2011. “The Outsiders’ Manifesto: Surviving and Thriving as a Member of Parliament”. MP Exit Interview Report # 4.

Venton, J. Peter. 2013. Four Essays on Restoring Canada’s Democracy. Unpublished pamphlet Toronto: JPV Associates, November 2013.


linda-mcquaig

Linda McQuaig is a journalist and best selling author. As a reporter for The Globe and Mail, she won a National Newspaper Award in 1989 for writing a series of articles which sparked a public inquiry into the activities of Ontario political lobbyist Patti Starr, and eventually led to Starr’s imprisonment. And as a Senior Writer for Maclean’s magazine, McQuaig (and Ian Austen) wrote two cover stories probing the questionable business dealings of Conrad Black in connection with a U.S. takeover bid in the early 1980s. In 1991, she was awarded an Atkinson Fellowship for Journalism in Public Policy to study the social welfare systems in Europe and North America. Since 2002, McQuaig has written an op-ed column for the Toronto Star. She is author of eight books on politics and economics – all national bestsellers – including Shooting the Hippo (short-listed for the Governor General’s Award for Non-Fiction), The Cult of Impotence, All You Can Eat, It’s the Crude, Dude: War, Big Oil and the Fight for the Planet, and Holding the Bully’s Coat: Canada and the U.S. Empire. Her most recent book, co-authored with Neil Brooks, is The Trouble With Billionaires.

FVC:  Give us your reflections on democracy in Canada today.

Democracy is in bad shape in Canada today. With income and wealth increasingly concentrated at the top, a small elite has largely taken control of the political agenda. As a result, ordinary citizens feel increasingly disempowered and disinterested in politics. This is reflected in the noticeable drop in voter turn-out in Canadian elections in the last few decades.

Many Canadians are very concerned about Canadian democracy and growing inequality between citizens. How big of an issue is inequality? How do you see these issues fitting together?

Growing inequality is central to the democratic deficit in Canada. Economic power translates into political power, so the concentration of economic resources in a small number of hands amounts to a serious restraint on meaningful democracy. As the late US Supreme Court Justice Louis Brandeis put it: “We can have democracy … or we can have great wealth concentrated in the hands of a few. We cannot have both.” Tragically, Canada has followed the US towards an extreme level of income and wealth concentration over the past few decades. Rather than being a true democracy, Canada today could be described as a plutocracy – that is, a nation effectively run by the wealthy few.

Better democracy, fair trade deals, fair taxation, environmental protection, improving public health care and public services in a financially sustainable way are all issues Canadians care about. How important is achieving proportional representation in all this, and why?

Canadians care deeply about a wide range of issues – from the environment and fair taxation to the strengthening of public services – but these issues have been ignored by governments, largely because the elite doesn’t care about them. Proportional representation would make an important difference in changing this, because it would make every vote count. This would empower citizens, making them more likely to take an active interest in politics and to vote for candidates who actually represent their views. As a result, it would be harder for governments to marginalize and ignore issues that are important to ordinary Canadians.

 


maude-barlow

Maude Barlow is the National Chairperson of The Council of Canadians and chairs the board of Washington-based Food and Water Watch. She is a board member of the San Francisco–based International Forum on Globalization and a Councillor with the Hamburg-based World Future Council.

Maude is the recipient of eleven honorary doctorates as well as many awards, including the 2005 Right Livelihood Award (known as the “Alternative Nobel”), the 2005 Lannan Foundation Cultural Freedom Fellowship Award, the Citation of Lifetime Achievement at the 2008 Canadian Environment Awards, the 2009 Earth Day Canada Outstanding Environmental Achievement Award, the 2009 Planet in Focus Eco Hero Award, and the 2011 EarthCare Award, the highest international honour of the Sierra Club (US).

In 2008/2009, she served as Senior Advisor on Water to the 63rd President of the United Nations General Assembly and was a leader in the campaign to have water recognized as a human right by the UN. She is also the author of dozens of reports, as well as 17 books, including her latest, Blue Future: Protecting Water For People And The Planet Forever.

FVC: Give us your reflections on democracy in Canada today.

I am deeply worried about the state of democracy in Canada today. The Harper government, which gained power with a small percentage of the popular vote due to our outdated election system, did not tell us in the run-up to the election that it intended to gut environmental protections for our water heritage and shut down the voices of our scientists. Nor that it would slowly remove the federal government from medicare. Nor that it would give transnational energy corporations unlimited access to our resources and the right to sue if we try to protect them. Many of us feel helpless to stop these developments in the face of the government’s “false majority.”

I am also deeply concerned that a federal court has found widespread voter fraud in the last election and that the likely source was the data base of the Conservative Party. Yet no explanation or accountability is forthcoming from the Harper government that in fact, said the judge, did everything it could to obstruct the court process. How can we trust this government to hold free and fair elections in the future?

FVC: Many Canadians are very concerned about Canadian democracy and growing inequality between citizens. How big of an issue is inequality? How do you see these issues fitting together?

We are living through the greatest gap between rich and poor in sixty years but this government continues to promote tax and economic policy that advances the interests of its big business friends over the majority of its citizens. When we have an electoral system that is not representative of the way the population actually voted, we get too much power residing in parties that are not accountable to the people and who are too tightly aligned with the interest of the wealthy.

FVC: Better democracy, preserving our water, fair trade deals, environmental sustainability, protecting and improving public health care are all issues the Council of Canadians campaigns on. How important is achieving proportional representation in all this, and why?

Proportional representation would ensure that the voices of all Canadians, not just a powerful elite, are heard when policy decisions are made.   We know from polls that Canadians support fair trade, public health care, protection for our water heritage and justice for working families but we are stuck with policies that betray these values because of this first-past-the-post system that no longer serves Canadians.

Thanks to Fair Vote Canada for keeping up the demand for a better electoral system for all.

1. The gap between the rich and the rest of us? We can close it.
2. Income inequality
3. How income inequality hurts every Canadian’s chance of building a better life

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