The Age of Increasing Inequality
Organizing the 1%
William Carroll and JP Sapinski
My organization produces an annual Nova Scotia child and family poverty report card to help communities identify the changes that will improve the lives of our most vulnerable members. But, when communities ask what they can do to address poverty, my message is that in order to reduce poverty, indeed eliminate it, we need to address its root causes, including income inequality.
I love finding a new way to explain something, to reframe a problem, and especially being able to point to more evidence-based solutions to propose. Thanks to Lars Osberg’s The Age of Increasing Inequality: The astonishing rise of Canada’s 1%, and to William Carroll and JP Sapinski’s Organizing the 1%: how corporate power works, I can now enhance my presentation on why communities should care about income inequality and what we can do about it.
Dr. Lars Osberg, who is an economics professor at Dalhousie University, shows that “The elimination of poverty is quite within the realm of fiscally feasible policies” by doing the math: it would cost the top 90 percent $378 per year to lift as many as 5.2 million Canadians just above the poverty line.
Osberg has been studying this subject for decades, since long before it was a hot topic. He points out that in the postwar period, the top’s share was 10 times that of the bottom 20 percent, but there was not significant growth at the top and researchers were not as interested in the issue. In contrast, since the 1980s top incomes have been growing exponentially faster than those in the middle or the bottom, with no end in sight. Had somebody been listening to Osberg then, we might not be where we are today, at a tipping point certainly, particularly when considering the impact this growth is having on the state of our ecological systems.
If you are not currently concerned about income inequality, these books are a wake-up call. As Osberg shows, income inequality matters for so many reasons: because of the poverty of the disadvantaged, because of the gap between the incomes of those in poverty and the middle class, because of the growing gap between the elite and the ‘ordinary’ citizen–sometimes expressed as the 1% versus the 99%–and because of the hollowing out of the middle.
While these things all have different implications, requiring different policy solutions, we should be especially concerned about how the increasing concentration of income and wealth affects our democracy and our access to political power.
What kind of society do you want to live in, Osberg asks. As a result of the growing gap, the society we live in is one where, with escalating consumption norms, status purchases are marketed to everyone, creating envy and discontent. The social resentment, coupled with economic insecurity, means some are pining for the good old days and looking for scapegoats—including “immigrants whose cultures are somehow threatening”—which fans the flames of class conflict and racism.
While intergenerational mobility is a marker of equality of opportunity, as Osberg points out, when you are at the top the only movement for your kids is down. It therefore becomes ever more important for the kids of the rich to have a built-in and ongoing advantage to protect their status; thus, paying their fair share for an adequately funded public education is a threat to that advantage. When public education, which has always been the great equalizer, is underfunded, inequality of opportunity becomes another cost of income inequality for the 99%.
Wealth inequality is even worse than income inequality. Wealth inequality is likely underestimated, with the top 20 percent having a net worth of billions, while the bottom 20 percent averages a net worth of negative $1,000—that would be debt.
But to really understand economic power, you need to go beyond what the wealthy own, to what they control via their social status and political influence. Corporate power is so pervasive we may be unaware of its presence, or the extent of it.
Carroll and Sapinski mapped networks of individuals, corporations and key organizations to underscore and expose their influence. Included are many of SNC-Lavalin’s 312 direct and indirect subsidiaries, which are blamed for poor working conditions, while the parent company can claim it did not know. As the authors show, layers of management mediate the CEO’s control, sometimes in different countries, while workers report to supervisors who often do not know who the owners are. The production-consumption chain makes it nearly impossible for consumers to make ethical purchases.
The concentration of corporate capital has closely followed the concentration of income with an elite few. (This concentration of wealth and power has even had an impact on price-fixing; the recent bread-pricing scandal is the starkest example.)
Carroll and Sapinski map networks of elites to show just how strong the interdependence is between industry and high finance, bank loans, shareholders and governance boards. Osberg does this at the individual level, highlighting who benefits and who does not.
In order for the affluent to acquire more financial assets, somebody else has to acquire liabilities. The flip side of the overspending by the debtor (households and governments) is underspending by the creditor (corporations and the very wealthy).
One of the critical points made by Carroll and Sapinski is that labour power is not an object: workers are people. Their very existence depends on a social relationship marked by class, gender and racial inequalities.
Carroll and Sapinski trace the current economic system historically, highlighting how it is based on making someone else pay for so-called externalities (like pollution), including through colonization, the slave trade and other forms of exploitation of humans and nature. The negative impacts of this kind of corporate power are social (poverty, homelessness, food insecurity) and ecological. Minimum wage, public pensions and public healthcare are important concessions, but ultimately corporate power and state power need each other. Even our education system has adapted to the needs of capital—best seen via the corporatization of our universities, from the board of governors and the buildings they meet in to corporate funding of research.
Redistributive measures (higher wages, higher taxes on the rich, full employment), as Osberg outlines in this final chapter, would undoubtedly help constrain income and wealth concentration. However, Carroll and Sapinski argue that our solutions must enable collective strength that displaces the “antidemocratic logic that empowers and rewards those who own and control capital.” They propose that we need a fundamental restructuring of the economy, one that allows workers to have more control over their labour. They put forward co-operatives as an alternative to corporations, because they allow for democratic ownership and control by workers collaborating to meet human needs rather than simply amassing profit.
Carroll and Sapinski also point to the need for more public ownership, including of banks, which must operate differently. They propose that our governments centre participatory budgeting and economic planning. They favour initiatives such as divestment, securities tax, increasing the role of unions, moving to codetermination of boards (half workers and half investors) like in Germany and the reinvention of jobs to balance creative control and collaboration. In order to build an energy democracy, we need to shift to renewables and increase public democratic control of economic decisions.
Osberg, Carroll and Sapinski all point to honouring fundamental human rights. The latter authors recommend seeking collaborative consent by First Nations, respecting their collectivist ways and deep ties to the land. Solidarity among and between counter-movements including feminism, environmentalism and Indigenous and labour movements is important.
Do corporate owners have something to contribute to our democracy? Absolutely, say these authors, but no more so than anybody else. Protecting, indeed strengthening our democracy, requires us to restrain the influence of the corporate elite. Simple measures include banning corporate electoral donations and restricting individual electoral donations to $100.
We need to crack down on corporate lobbying, with greater transparency regarding indirect ways corporate elites lobby, such as through pro-business think tanks. Regulatory and public bodies should have very limited corporate presence, balanced out by citizens and community leaders who put the public interest first.
It is also essential to build the capacity of non-profits and community-based alternatives—like my organization—to support the democratization of civil society, including the policy planning process.
How have we gotten here? Carroll and Sapinski make clear the elite have been able to mute the contradictions and construct myths to cover the gap between what we aspire to in our democracies and the way inequality undermines those aspirations.
It is time to turn off the mute button.