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Jan 10 2012

Why we #Occupy

I realize I haven’t written about the Occupy movement in several weeks. Unfortunately I have fallen victim to the same syndrome that I criticize in the major media outlets: once the novelty wears off, it becomes more of a struggle to find interesting things to say. Of course, because I get most of my content from those same outlets, their lassitude becomes mine. In my defense, I am a blogger, not a newspaper or a cable network – I do not share the same level of responsibility in reporting what is going on in the world.

Feeble excuses aside, I have certainly not done my job in defending the Canadian incarnation of the Occupation. An Occupation, I hasten to point out, that has not disappeared simply because its camps were razed. The Occupation lives online and in small committees that periodically plan (and execute) acts of protest. While the physical occupation is gone, Occupy Canada is very much alive.

I’ve had more than a couple of discussions with people who claim not to understand why Canada needs an Occupy movement. After all, they say, many of the banking sector reforms demanded by the Wall Street Occupation are already in place here. Money doesn’t infiltrate politics to nearly the extent that it does south of the border. Unemployment is lower, our social safety net is more comprehensive, and our right-wing politicians are about where the American president (a.k.a the vanguard of creeping socialist extremism) is. What exactly do we have to complain about?

Well, maybe this for starters:

The highest paid CEOs have gained more ground in Canada, and are now making nearly 200 times the average Canadian wage, according to a new report. The 100 highest paid chief executives whose companies are listed on the S&P/TSX composite index made an average of $8.38 million in 2010, according to figures pulled from circulars by the Canadian Centre for Policy Alternatives, a left-leaning think-tank.

That’s 189 times higher than the $44,366 an average Canadian made working full time in 2010, the report says. And it’s a 27 per cent raise from the $6.6 million average compensation for the top 100 CEOs in 2009. Most Canadians, on the other hand, have seen their wages stagnate over the past few years. In 2010, after adjusting for inflation, average wages actually fell.

Now, I know the argument. Comparing what a CEO’s income to that of the average worker is not meaningful – a CEO has specialized skills that the average worker doesn’t have. Hir income, therefore, is higher because ze is more prized by the free market. Do we complain that a doctor makes more than a dock worker? No, because medicine requires expert education and training far above that of a stevedore. It’s basic capitalism, moron!

Problem is, CEOs haven’t suddenly become 27% more valuable in the past 2 years. Share prices for companies are not 27% higher than they were in 2009, the economy isn’t 27% stronger overall, productivity isn’t 27% higher – the only thing that has gone up 27% is the wages of the richest. This is decidedly anti-capitalist, insofar as income is not tied to performance or merit. Claiming that the rich get richer according to the laws of capitalism flies in the face of the evidence.

So who’s to blame? Should we just chalk it up to ‘greed’? Well, that’s one explanation:

Profitable Canadian businesses are set to reap $2.85 billion in additional income tax savings in 2012, even as Prime Minister Stephen Harper complains about all the private “money sitting on the sidelines.” The last of five annual corporate tax cuts took effect Sunday, reducing the federal rate by another 1.5 points to 15 per cent. The move comes as corporate Canada, from multinationals to midsize businesses, squirrels away hundreds of billions of dollars as it rides out a second storm of global economic turbulence in the past three years.

The latest figures from Statistics Canada through the third quarter of 2011 show Canadian business sitting on more than $583 billion in Canadian currency and deposits, and more than $276 billion in foreign currency. Those cash reserves have climbed nine per cent since last year and 27.3 per cent since 2007, when the Canadian economy was booming and new corporate tax cuts were announced.

Of course I don’t expect that anyone really puts much faith in the argument that low corporate taxes stimulate job growth. Well, nobody reading this at any rate. The relationship between corporate taxes and job creation is far more complex than the common wisdom would have you believe, as evinced by the fact that Canadian companies are not using their windfall tax savings. They’re instead sitting on them, waiting for the other segments of the economy (those that drive demand) to create the right climate for expansion.

The mantra from Ottawa is that keeping corporate taxes low is the answer to expanding the economy. Problem is, that also runs contrary to the evidence. Every dollar of corporate tax cuts, cuts that do not create jobs, is a dollar that we are not spending on social services or investing in long-term development projects. Those dollars are simply going to waste, sitting and collecting interest in bank accounts instead of being put to work. Imagine what $2.85 billion could do to bring First Nations communities into the 20th century, or to train downsized Canadian workers for a new trade, or piloting a poverty-reduction strategy program in the major cities.

The problem is not that corporations are greedy, or that CEOs are corrupt people – it’s that the system we have is set up to reward those who need no reward. It is based on an obsession with creating wealth for the wealthy, based on faulty assumptions about what a rising tide does with boats. As a result, we have skewed wage growth at the top, and tax policy that creates immobile surpluses at the expense of other, actually worthwhile, projects. The system itself is set up with a rich vein of stupidity running through it.

The purpose of the Occupation is to draw attention to the fact that the system, as it currently exists, is not serving the interests of Canadians. It is failing to address major problems, or devote resources to necessary solutions, and instead works to concentrate wealth in a small number of hands. The only way to fix such a system is to push against the status quo that brought us here. It is not a single political party or corrupt leader or greedy cabal of CEOs that is responsible for the mess we’re in – we need to change the way we think about what ‘wealth’ and ‘value’ and ‘growth’ mean, and that can only be accomplished through something as radical as Occupy.

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4 comments

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  1. 1
    Leo Buzalsky

    “Unemployment is lower, our social safety net is more comprehensive, and our right-wing politicians are about where the American president…is. What exactly do we have to complain about?”

    I was going to say, as a generalization, concern that your country is regressing into us neighbors to the south. It’s about tackling a small problem before it becomes too big.

    On that, I’m sorry us Americans have become Canada’s “It could be worse!” excuse.

  2. 2
    billygutter01

    Yup. What Crommunist said.

    I’ve found myself, of late, trying to explain to friends/family/people that should already understand, exactly what the Canadian Occupy movement was trying to accomplish. Unfortunately, many of these conversations tended to float around the “Well, I can sorta see why the Americans are pissed, but what are we bitching about?” argument. It’s been frustrating. It’s gotten to the point that any mention of Occupy earns me a smattering of eye-rolls and impatience.

    Apparently an increase in wage disparity and disproportionate taxation are not such a big concern… Really?!

    When the most recent round of corporate tax cuts was announced, I was disgusted, unsurprised and angry. Since many people in my immediate sphere are tired of hearing from me on this matter, I shall direct them here to your (infinitely more lucid) assessment of the matter.

    Maybe you’ll have better luck.

  3. 3
    Katalina

    Thanks for writing this – very interesting to get a different perspective on Occupy, both the American and Canadian versions.

    I wonder, what would a better system look like? It makes sense that jobs requiring more education and skill pay better, but I agree that it’s ridiculous to give such an exponentially higher value to one small group of people. Do you support the idea of a tax on savings, which would incentivize people to keep their money in the market, instead of sitting in the bank?

  4. 4
    Crommunist

    Well the point, as far as I’m concerned, is that there is no single policy idea or piece of legislation that will solve the problem. We have a system that is deeply entrenched in ideology, on both sides, that squeezes out the majority of people and all but ignores many minority issues. A new type of governing structure is needed – one that is participatory and responsive. One in which laypersons take an active role instead of simply voting at set intervals for one party or another – parties that stem from a common flawed understanding of democracy.

    I don’t see how money “in the market” would be preferable. The people would have less control over where their money goes (especially given the short-sighted and greedyguts way in which companies manage the money they control). I think a dramatic change in our progressive tax structure – more brackets for income tax, shifting the tax burden to individuals and groups that can more easily afford it – would be helpful but again, that doesn’t get to the root of the problem. If I were to be presented with a magic wand, tax policy changes wouldn’t be among my top wishes.

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