Thank you to everyone who joined us for our latest Great Canadian Debate, "Resolved: Wealth in Canada has too much power".

Below, are the two commentary positions by our debaters, Armine Yalnizyan, senior economist at the Canadian Centre for Policy Alternatives who argues that Canada's wealthy are indeed to powerful.  Taking the opposing view is William Watson, professor of economics at McGill University who says that Canada's wealthy are actually declining in influence.  Read their arguments and decide for yourself.

Is wealth too powerful in Canada? YES

And that power in pursuit of ever-greater wealth is wrecking the game for everyone, writes Armine Yalnizyan.

BY ARMINE YALNIZYAN, OTTAWA CITIZEN MAY 10, 2013

Thursday evening at the Canadian War Museum, in a debate presented by the Macdonald-Laurier Institute, moderated by historian Jack Granatstein and sponsored by the Ottawa Citizen, economists William Watson and Armine Yalnizyan debated the motion, "Wealth has too much power in Canada".

Monarchs knew it. So did military generals and religious leaders. Wealth is power. But with power comes responsibility. The more you have, the greater the responsibility. At least, so went the theory of moral sentiment until not so long ago.
Over the course of the past generation, the wealthy have become a lot more wealthy and a lot more powerful, in Canada as around the world.

The problem is not that the wealthy are too powerful. The problem is that, with rare exception, as their power has increased, it has not been matched by an increase in their sense of responsibility. On the contrary, the wealthy have been using their power for decades to reduce their responsibilities to anyone but themselves.

The litany, en bref: Taxes are too high. Governments are too big. There are too many rules. Workers feel way too entitled. And boy is it hard to get good help these days.

Any restriction on the freedom of the wealthy is characterized as an attack on everyone's freedom. Unions — which exist only at the pleasure of a majority of workers in a workplace — are portrayed as pariahs on the productive process. Governments — which are selected by the will of the engaged voting public — are viewed as leeches on the wealth creators. For those with wealth and power, the problem with democracy is that there is too much of it.

That's not new. G.K. Chesterton said it best, 100 years ago — The poor sometimes object to being governed badly; the rich object to being governed at all.

What's new is the degree to which countervailing power and voice, far from being viewed as beneficial for preventing a naturally tilted game from tipping over, are viewed as obstacles to be overcome.

The wealthy and powerful want to pursue their interests unchecked. But they're on track for wrecking the game for everyone.

Don't take my word for it. Ask the International Monetary Fund. Their analysis shows, the greater the degree of inequality in society, the shorter the spells of economic growth. More market volatility undercuts the first rule of making money: don't lose it.

In the wake of the crisis — which, lest we forget, socialized losses and privatized gains — we have seen slow growth, volatile markets and a rise of bully capitalism. Workers get less, even as profits rise. Temporary foreign workers have more than doubled in number since 2006. That's still not good enough for some. Across Canada, well-heeled interest groups are gaining traction with some politicians willing to advance the idea of right-to-work legislation. To be clear, that's the right to work without union representation or protection. The right to work for less.

In contrast, Canada's top one per cent enjoyed 32 per cent of all income growth in the decade before the crisis. That's four times more than in the 1960s, a period of similarly robust economic expansion; and almost double what they scored during the Roaring '20s. Meanwhile, the proportion of jobs paying between $30,000 and $60,000 keeps shrinking. There are more people making over $60,000; but over half of Canadian workers earn less than $30,000, a bigger group than in the 1970s. (All figures are inflation adjusted.)

The fuel of capitalism is mass production, which depends on mass consumption. There are 2.5 million businesses in Canada. Only about 20,000 are multinational. Canadian businesses mostly rely on Canadian purchasing power. If I can't buy, you can't sell.
One hopes, of course, that the less-advantaged will stop being selfish so that the rich can continue being entitled to their entitlements, which include endlessly more.

Of course, it's tough to convince folks that it's never enough. So the necessary counterpart to pursuing an ever-bigger share of the market is pursuing an ever-bigger share of the market of ideas, too.

The wealthy get more face-time with politicians than the average voter, and hire lobbyists to influence which legislation moves through, which rules get enforced or overlooked, who wins and loses government funding.

They finance the best ideas that money can buy. Witness the bonanza in donations for business-friendly research in universities. The number and budgets of pro-business think tanks is on the rise, too.

And there is nothing like buying the medium if you want to control the message. Apparently, the wealthy don't think their voice is getting heard. See Sun TV in Canada, and plans by the Koch Brothers in the U.S.

And what's the message? The most important thing one can do is make money, at any cost, human or environmental.

Do the wealthy have too much power? The real question is not the quantum of power but, rather, how it is used. History has shown, countless times, the use of that power in the pursuit of ever-greater wealth, with little thought for the greater public good, wrecks the game for everyone.

Armine Yalnizyan is senior economist at the Canadian Centre for Policy Alternatives.

 

Is wealth too powerful in Canada? NO

If anything, the rich are declining in influence, writes William Watson

BY WILLIAM WATSON, OTTAWA CITIZEN MAY 10, 2013

Thursday evening at the Canadian War Museum, in a debate presented by the Macdonald-Laurier Institute, moderated by historian Jack Granatstein and sponsored by the Ottawa Citizen, economists William Watson and Armine Yalnizyan debated the motion, "Wealth has too much power in Canada."

What is John A. Macdonald's second most famous saying? Everyone knows about "As for myself ... a British subject I was born. A British subject I will die." Or everyone did know when history was compulsory and dealt in important dates and famous people. But what's second on the list?

My bet is: "I must have another $10,000. Will be the last time of calling. Do not fail me. Answer today." That was from his telegram to railwayman Sir Hugh Allan just before the 1872 election.

Some historians say it was a Liberal forgery, but all agree Macdonald's campaign received big cash injections from the railway syndicate his government favoured for fulfilling the National Dream.

When I learned Canadian history, just as Marxism crested in the universities, there was even a view that Confederation itself was mainly for the convenience of British bond holders, for whom a larger political entity would reduce the risk of owning colonial debt.
If wealth did have such power in those days, well, bully for wealth! Both Confederation and the CPR were very good things.

In the interests of bipartisanship, recall that in 1930, when Liberal prime minister Mackenzie King lost that July's federal election and discovered the office of leader of the opposition did not come with a car, Sam McLaughlin, president of General Motors of Canada, simply sent him a Cadillac. King could afford his own Cadillac.

In the 1920s a business group headed by the president of the Salada Tea Company had put together a fund of $225,000 — $2.9 million in today's money — to enable him to pursue politics. There was also the famous case of the senator/head of a power company building dams for the government who picked up the tab for a vacation he and King spent in Bermuda and New York — and then stupidly billed it to his company. Cost in today's dollars: $10,999.

Such easy contact with prominent politicians must have given wealthy Canadians great influence over government policy, not to mention that in Canada's first decades there were still property requirements for voting.

Things are very different today. Politicians may yet spend more time with people at the top than the bottom of the income ladder, if only because the employees, consultants, lobbyists and media people they deal with daily are from the upper ranges.

But we are much more fastidious about money and contact. People who want to pitch policy to the government must register as lobbyists and record all contacts.

At the Lobbyist Registration website you can search by public official to find out who's been seeing whom. I'm happy to report that last year my own industrious university was 12th by number of contacts with "Flaherty, James."

The Canadian Auto Workers, no friend of wealth, has 22 registrants, including well-known commentator Jim Stanford.
Election finance is similarly transparent and there are strict limits on both contributions and party spending. Elections Canada's search engine lets you see who contributes how much to which federal parties. No one named Yalnizyan has given in the last five years. A "William Watson" does contribute regularly to the Liberal party, including $390.84 on my birthday last year, but be assured it's not me.

It's true traditional media are owned either by big, rich companies (though less rich than they used to be, alas) or by government.

But traditional media are so, well, traditional. In the Internet age, does anyone seriously worry about blocked entry to the opinion market? The same is true for political fundraising.

Politicians' lifeblood is votes and voters are mainly middle class. Even the NDP worries less about "working Canadians" and now focuses on the middle class, as does Justin Trudeau, as does Stephen Harper, who, as Toronto elites keep reminding us, is as middle-class as you get. These days, parties identified with wealth are going to lose. (Even in America. Right, Mitt Romney?)

Of course, in 2013 the whole idea that anyone has power seems a little dated, as former Foreign Policy editor-in-chief Moisés Naím argues in a new book only slightly longer than its title: "The End of Power: From Boardrooms to Battlefields and Churches to States, Why Being in Charge Isn't What It Used to Be."

Sir John A. eventually got his railway. Today's Canadian power elite wants a pipeline to the Pacific. Does anybody believe that's going to happen?

William Watson teaches economics at McGill University.