Inequality among Fish and Humans

The War on Poverty has been replaced by the War on Terrorism. The War on Terrorism has had the advantage of keeping people in fear and focused on security. Poverty and even more inequality are not issues that are urgent. For the more liberal minded the environment and global warming are sexier issues than poverty or inequality.
The fact is that the relative gap between rich and poor is increasing dramatically in Canada --as well as many other countries.
A rise in the minimum wage might be of marginal help but the whole capitalist system and a market economy in particular are geared towards the rich. In a market economy your needs will be met according to the number of dollars you have to spend on goods to satisfy them.
While it is true that an increase in the minimum wage does not empirically cause all the difficulties the free market ideologues claim it is nevertheless true that it may encourage technological innovation to replace labour and/ or be passed on in increased costs for products. A company will naturally attempt to keep its profit level stable or even increase it. In a global market increasing the cost of a product may eventually make a company less competitive. There are thus limits imposed on what workers can possibly gain in the system especially with increased globalisation. Those formerly well served by unions in the auto industry for example are now fighting a rearguard battle
as gains made over decades are rolled back. Of course companies will always claim
they need even more concessions to be competitive but in many cases they will at least need some.
The issue really is not one of justice. It is about the nature of the economic system. Solving the issue of poverty is not really regarded as possible. The poor will always be with us. The standard justification of a free market distribution is that it is Pareto efficient--no one could be made better off without making someone else worse off but this does not address the injustice of class relationships within the productive system that gives greater power and returns to the owner of capital (on the whole) than the seller of labor power. There are of course exceptions such as the small business owner who exploits his or her own labor and may do much worse than a unionised worker in certain industries. I have blabbed on long enough!

Inequality among fish and humans
>by Linda McQuaig
October 3, 2007
I recently saw a cartoon that captured an essential political truth. It shows a small fish thinking: “There is no justice in the world.” Next to him, a somewhat larger fish (with mouth open, ready to eat smaller fish) thinks: “There is some justice in the world.” Finally, a very large fish (with mouth open, ready to eat all other fish) thinks: “The world is just.”

This helps explain the view of many in the corporate world. Reaping handsome rewards for their labour, they see a great deal of justice in our economic system and little reason to tinker with things—like the minimum wage—that would redistribute economic rewards, even just a bit.

This contentment among members of our elite, who have considerable influence with government, also helps explain why Ontario's minimum wage is stuck at a paltry $8 an hour. This leaves a full-time minimum wage worker earning an annual income of $16,640—several thousand dollars below the poverty line, and even further below it if she's a single parent.

Given the immense difficulty of living on such a wage, let alone supporting children, this should be a much bigger issue in the current provincial election.

Premier Dalton McGuinty promises to raise the minimum wage to $10.25 an hour—but not now.

There's apparently no rush about this for McGuinty and his Liberals, who did however see some urgency (along with the Conservatives) in raising their own salaries last December—by 25 per cent.

While the NDP promises to raise the minimum wage immediately, the Liberals would let the working poor wait almost three years until 2010 for a chance to live above the poverty line.

Opponents of the raise argue it will result in job losses. But the 2006 OECD Employment Outlook concluded minimum wages at “reasonable” levels have no significant negative impact.

Right wingers also typically argue we'd all be better off if we avoided government interventions like minimum wages and left things to the “invisible hand” of the marketplace. But, in reality, the marketplace isn't a magical domain where the “natural laws” of economics automatically work things out best for all.

Rather, it's a real-life domain, governed by a set of man-made laws—laws that establish property rights, that determine workers' rights to organize, to bargain collectively and to strike, and that also set out whether strikers can be replaced or forced back to work.

The nature of these laws—or interventions in the marketplace—determines whether the overall balance favours workers or employers.

In the last few decades, the balance has shifted sharply in favour of employers. Governments, under pressure from the corporate world and its academic and media supporters, have slashed social programs and taxes —and utterly failed to defend collective bargaining and other labour rights.

Indeed, one indication of this anti-worker shift is the way minimum wages—a government intervention that favours workers—have been allowed to decline in value. (In 1976, Ontario's minimum wage was worth the equivalent today of $9.97.)

All this has contributed to the dramatic growth in inequality. A Statistics Canada report released last week showed that, while real incomes remained essentially unchanged for low income (and most other) Canadians between 1992 and 2004, those at the very top enjoyed explosive income growth. The average personal income in the top 0.01 per cent actually rose from $2.5 million to $5.9 million!

From this vantage point, it's possible to imagine how one might think “the world is just.”

Linda McQuaig's column is originally published by The Toronto Star.