On January 19, attended another presentation by the Canada 2020 group. A public forum for ideas, under the general theme of “The Canada We Want in 2020”. They have recently issued a book of papers on the topic.
Theme of January 19: Reducing Income Disparities and Polarization. For me, a couple of ideas from some of the speakers, to tie into others. Chrystia Freeland of Thomson Reuters, speaking about how income disparity in the United States was initially masked through borrowing against home equity. As long as you could borrow to keep up, you didn’t think you were behind. Then, when the housing market crashed and there was no more equity to borrow against, the income polarization that had been there all along became very, very real. Mark Cameron, one of the contributors to the Canada 2020 book, speaking about how the situation in Canada is different from the United States, at least at present. The income polarization is more between the middle class and the very rich. At one time, one thought that one could move from a middle class status to a higher, richer status. Now, however, the very rich are so very rich, that such a middle class aspiration is highly unrealistic. Causes its own set of resentments.
Chrytia Freeland pointing out how the very rich in the United States want to control their own contributions to general social welfare. Distributing to their own charitable foundations, but not for the general public good, in terms of deficit reduction. Pointing out how the very rich are resented across political lines: Republicans also resent the very rich. In the United States, she feels that income polarization is a key contributor to existing and future concerns for social stability.
In Canada, the same degree of polarization is not considered to exist, at present, at least in terms of the attitudes of those surveyed. Both Andrew Sharpe, also a contributor to the Canada 2020 book, and Alessandro Goglio, of the Organization for Economic Cooperation and Development, had survey results that seemed to show that Canadians are relatively satisfied with their general economic circumstances and more optimistic about financial futures.
Wondering if Canadian perspectives are situational and to be short-lived. After all, it was only last fall that Canada 2020 presented Martin Wolf, who warned that an economy that is based on residential real estate is not sustainable. Since much of the wealth positions of many in Canada are based on residential real estate equity, and borrowing against same, rather than based on income and increases to income…well, perhaps we are the U.S., with ten year lag? Martin Wolf had also pointed out that when residential real estate-based economies crash, it takes decades to recover. Pointing out that Japan, even prior to the most recent earthquakes, had still not recovered from the real estate meltdowns of the mid-1990s.
So when money remains cheap in Canada, yet Bank of Canada Governor Mark Carney warns against increased personal borrowing…