A report released by the Parliamentary Budget Officer in early December 2021 showed that wealth inequality is on the rise in Canada. Equally, a new report by the Canadian Centre for Policy Alternatives released in January 2022 revealed that during the worst of the pandemic in 2020, Canadian CEOs saw their compensation rise. But this should come as no surprise: rising inequality is baked into capitalism.
The PBO reported that 40 per cent of Canadians now own merely one per cent of Canada’s wealth. At the same time, the richest families in Canada own a quarter of the country’s wealth, up from 20 per cent in 1999. At a time when half of Canadians are within $200 of not being able to pay their monthly bills, this inequality has rightfully caught the attention of many and stirred up anger.
This isn’t a problem that’s unique to Canada. In 2020 alone, billionaires worldwide grew their collective wealth to a record high of $10.2 trillion while the number of those in poverty rose by 97 million, a historically unprecedented increase. People worldwide have lost their jobs, faced increasing prices, and struggled to pay their bills while the rich continue to hoard wealth.
How the pandemic increased the wealth gap
As workers were laid off from their jobs and struggled to survive on the paltry amounts provided by CERB and EI, the wealthy have increased their wealth during the pandemic. A report from the Canadian Centre for Policy Alternatives showed that while thousands of workers lost their jobs, Canada’s top 100 CEOs saw their incomes rise throughout the pandemic. By lunchtime on Jan. 4, these CEOs had already taken home the same amount that the average worker in Canada will make this year.
Despite the bosses’ profiteering over the pandemic, the companies they headed continued to be bailed out by the Canadian government. Many of them received the Canada Emergency Wage Subsidy, which was a corporate bailout in all but name. The benefit was given under the guise of “saving jobs”, but instead, major Canadian companies laid off thousands of workers. The executives of these companies walked away with millions of dollars in extra income generously given to them by the government while thousands of workers lost their jobs and struggled to support themselves and their families.
In order to finance these unprecedented bailouts, central banks (notably the Federal Reserve in the United States) have artificially kept interest rates at all time lows while at the same time increasing money supply. These policies have served to artificially stabilize the situation. By late 2020, stock indexes reached values that had seldom been seen before, driven by e-commerce, video conferencing software, and pharmaceutical companies. However, we haven’t yet seen a “return to normal” for most working class people.
Capitalist governments and economists will justify these policies of bailouts by insisting that when companies are doing well, wealth will “trickle down” to the workers. In reality, this is far from the truth.
While corporate executives take home massive bonuses and see unprecedented increases in their income, workers continue to be laid off and face cuts. Those that haven’t been laid off often have no paid sick leave, and “hero pay” for essential workers ended almost as soon as it started. In addition, the policies enacted by governments have led to inflation soaring to a 30 year high, currently sitting at 4.7 per cent.
While the cost of living has gone up by five per cent in the last year, incomes have only risen by about half that. Food prices alone are projected to increase by between five and seven per cent this year, adding more than $1000 to the average annual grocery bill for a family of four. The brunt of this burden falls upon the working class, many of whom were living paycheque to paycheque even before the pandemic started.
All of these things have led to unheard-of wealth being accumulated at one end of the spectrum, which has now been noted by the Parliamentary budget officer. By the end of 2020, Canadian corporations had hoarded $1.58 trillion in their bank accounts, an increase of 56 per cent from the previous year. All of this is “dead money”—money that lies uninvested and unproductive, just sitting in banks as cash and collecting dust. It is clear that workers are being cheated, not because the bosses cannot afford to pay them more, but because it is unprofitable for them to do so.
However, it would be incorrect to see this rising wealth inequality as a result of the pandemic. This has in fact been happening since long before we had heard of this virus. Statistics show that while the average income in Canada has risen since the 1990s, this is due to those at the top increasing their income at the expense of the rest of the country. Only the wealthiest Canadians have increased their share of national income. All others have lost. Even mainstream economists acknowledge that capitalist governments have played a major part in ensuring the wealthy can increase their wealth while the working class suffers, citing “declines in unionization, stagnating minimum wage rates, deregulation, and national policies that favour the wealthy.” The pandemic has brought all of these issues to the forefront, and the fact that the government is in the back pocket of corporate executives has become incredibly clear.
Toward a socialist solution!
The ever-increasing inequality between the rich and the poor has rightfully angered the working class and has led many to the conclusion that the bosses must pay. However, as long as the economy is controlled by the ruling class, attempts to do so will be fangless. The capitalists will always find a way to increase their wealth, and they will use their economic power to control the government.
The only way that we can permanently solve the crisis of wealth inequality is to take the economy into our own hands. The large parasitical corporations who have scandalously increased their profits in the middle of the pandemic must be nationalized and put under democratic workers’ control. These companies can then be integrated into a democratic socialist economic plan, which would focus on meeting the needs of the entire population rather than an elite few. Wealth inequalities would be stopped at the source, and we would ensure that there are enough resources for all.
By design, capitalism cannot solve the problem of wealth inequality. What is needed is a socialist society that meets the needs of all.