Attitudes need changing to implement better income inequality strategy

Redistributing income and wealth doesn’t necessarily mean bigger government. In fact, it should mean less government in the long run

“I’m not being flippant, but in Cuba they don’t have any income inequality because they’re all poor.”

That was Finance Minister Kevin Falcon’s response last week when questioned in the Legislature about a recent report from BC Statistics.

Falcon might not have intended to be flippant, but his response certainly came across that way.

The report showed this province as having the largest income gap among the provinces in 2009. According to the report, the lowest 20 per cent of B.C.’s population in 2009 earned just 16.5 per cent of what the top 20 per cent earned (after taxes and transfers), down from around 22 per cent in the early 1990s.

Income inequality is an important global issue – possibly the most important one we face today.

In their book, The Spirit Level: Why Greater Equality Makes Societies Stronger, British researchers Richard Wilkinson and Kate Pickett put forward convincing scientific evidence that greater income inequality results in an increase in a long list of social problems.

These include mental health, drug use, physical health, life expectancy, obesity, educational performance, teenage births, violence, levels of imprisonment, social mobility, trust and community life, child well-being, and levels of foreign aid. Even global warming has been added to the list.

These problems affect not just the poorer groups in society, but everyone.

Implementing more efficient and just ways to redistribute income and wealth doesn’t necessarily mean bigger government. In fact, it should mean less government in the long run. Prevention is much cheaper than cure.

It is also a myth that we need to keep taxes low on the richest 20 per cent because they are the ones who create society’s wealth.

It would be more correct to say that all levels of society contribute in some way to our collective prosperity. It isn’t the few pulling strings from head office who get the work done, but the millions toiling in the factories, fields and forests.

Wilkinson and Pickett point out that there are two basic strategies to achieve greater income equality: smaller differences in pay before taxes (as in Japan), and redistribution through taxes and benefits (as in Sweden).

Before we can adopt either strategy (or a combination of both) we need a change in attitudes in both our leadership and among the general population.

 

For more information about Wilkinson and Pickett’s research, go to www.equalitytrust.org.uk on the Internet.