For decades, many conventional economists and politicians believed greater equality would only come at the expense of economic growth. They claimed that the only way all would benefit would be by increasing the size of the total pie, so everyone’s slice would get bigger.
It’s been a long time coming, but the accepted wisdom is finally changing.
Standard and Poors, the influential credit rating agency that holds judgment over government and corporate finances, recently issued a report unequivocally stating that high rates of income inequality and poverty are harming economic growth, joining a growing number of prominent economists, the International Monetary Fund and even a number of billionaire investors in this assessment.
The question is what to do about it. S&P focuses on the benefits of improving education, including the benefits of a high quality universal pre-school program. They suggest progressive tax reform to close loopholes for the rich, inheritance taxes and increased investments in health care, education and infrastructure, which benefit the poor, create jobs and increase incomes of the middle class.
That’s right: Wall Street’s most influential arbiter of public finance is now telling governments that to increase economic growth they should reduce poverty, reduce inequality, close tax loopholes for the rich and spend more on public services!
But there’s more that must be done. As the World Bank, OECD and the International Labour Organization have also just emphasized, to re-ignite economic growth we need stronger job creation and wage growth.
Instead of policies we’ve had that weaken wage growth, we need to improve income growth for working Canadians, reduce inequality and create good jobs with decent workplace and social benefits. CUPE has outlined measures that would help in our submission for the federal budget.