why occupy toronto?

Occupy Toronto has been going strong for a few weeks now, hosting protest marches on Saturdays and camping out in a park downtown, not far from Bay Street, Toronto’s financial district. Some might ask, why would Canadians want to participate in this movement? Canadian banks were subject to much stricter regulations than their American counterparts, and this meant that the subprime mortgage crisis, and the collapse of financial institutions that necessitated a more-than-major bailout stopped at the border. Canada didn’t make bad loans, our financial companies were not implicated in the mortgage-bundling schemes of Wall Street, and so our recession is not so much the product of Canadian policy as it is the result of our economy being so reliant on trade with the United States.

What is more, Canadian social policy is more generous than that of the United States, with universal health care, a much higher minimum wage, and a social safety net that resembles that of the United States before welfare “reform.” What could the Canadians possibly be complaining about? In a word, inequality.

Overall levels of inequality in Canada may be better than in the United States, but since the U.S. is such a crazy outlier on this issue, that is not saying much. Canada has lower after-tax inequality than the U.S. and UK, but more inequality than France and Germany, let alone the Nordic countries. But this, I think, is not why Canadians are upset. I think it is the recent (and rapid) increase in inequality that is very much akin to the 1% vs. 99% framing of the Occupy Wall St protests. After decades of rather steady levels of inequality, the last 20 years has seen a sharp rise in incomes of the top quintile, and even more concentrated among the top 1% and 0.1%.

While in Canada we did not experience the Bush tax cuts, which dramatically reduced the tax burdens of the wealthiest Americans, we have seen more corporate-friendly changes in the tax code, and the Conservative party has made it clear that they intend to carry on with more pro-corporate and pro-wealthy policies. In an excellent analysis (JSTOR paywall)* by Emmanuel Saez and my econ colleague here at McMaster, Mike Veall, the jump in incomes for the top 0.1% seems to be directly related to the financial opportunities of the United States. Our rich Canadians have access to the capital gains being created by the schemings of Wall Street, too. Here is a graph from that paper (hopefully fair use covers this) that shows the trend in rising income of the top 0.1%. As you can see, it is not as large a share, but the steep increase is very similar:

So, the problem of inequality is growing, and it seems to be tightly connected to the Wall Street problem. How much of this is visible to the Canadian public is an open question. In my view, stagnant wages and high unemployment (7.1%) combined with rising heating and gas costs make Canadians realize they are hurting, but the most important mechanism through which most Canadians see increasing inequality is in the political battles between parties. Conservatives, who hold the pro-corporate, debt-reduction line have gained power recently. Those elected have cut social services, threatening even public library closures and police force layoffs in Toronto. They offer a very clear view of a Canadian landscape that favors corporations to people, and with the American example so vivid in many Canadians’ minds, we can see this vision quickly becoming a reality.

So, Occupy Toronto, Occupy Vancouver, and the other protest across the country may not have exactly the same issues to address as their American counterparts, but the vast and growing inequality that Occupy Wall Street has brought into focus is an important issue for Canadians as well. I am not surprised that the Occupy Wall Street movement resonated with Canadians, who have been engaged in these debates over the last few election cycles in particular.

*Saez, Emmanuel and Michael R. Veall. 2005. “The Evolution of High Incomes in Northern America: Lessons from Canadian Evidence.” American Economic Review 95(3): 831-849.

3 thoughts on “why occupy toronto?”

  1. It’s fascinating to think that there was a moment in the 1950s when Canada was (slightly) more unequal (on this measure) than the US. Also interesting that the trajectories are so similar, albeit more muted in Canada than the US. Has Canada experienced a similar increase in CEO pay? Are there any major discrepancies among the top 1% – say less finance, more something else?

    Also, how is the Occupy movement being covered (if at all) in Canada? Here there’s a lot of explicit comparison to the Tea Party. What’s the comparison or narrative there?

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  2. The news in Canada is pretty good, I would say, and even opponents start their complaints with acknowledgements of the right to protest, etc., but I haven’t seen any deeper analyses of inequality, capitalism, etc., so I guess I would characterize it as benign but shallow.

    Your other questions are beyond me, I’m afraid. Maybe someone more Canadian than I can step up.

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  3. What is startling about this past recession (and possibly future recession) is how intertwined financial markets are, especially for the elite. While this has been true for quite some time, the depth with which the US housing market devastated the European economy to the level it did and now the sovereign crisis in Europe threatens US banks is dramatic. Policies not only favored the very wealthiest east and west of the Atlantic and north and south of the 49th parallel by creating a nearly unprecedented regime that increased both their private profit and public risk.

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