October 16, 2008
Judith Maxwell (2008-01-28), former head of the Economic Council of Canada and Canadian Policy Research Networks, claimed that the high concentration of at-risk Canadians live in highly disadvantaged neighbourhoods of poverty by postal code. In 2008 the Canadian national poverty rate remained at c. 16% where we’ve been stuck for eight years. Maxwell claims that religions, some social-minded businesses and countless volunteers who constitute civil society are revitalizing desperately poor neighbourhoods, tackling homelessness and letting governments know that the current policies prevent people from escaping poverty.
Maxwell, Judith. 2008-01-28. “Forget policy makers, civic leaders are spearheading the fight to end poverty.” Globe and Mail.
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Sala-i-Martin, Xavier. 2006.”Global Inequality Fades as the Global Economy Grows.” 2007 Index of Economic Freedom.
The report of 13th annual Heritage Foundation/Wall Street Journal Index of Economic Freedom 2007 was cited in the January 23, 2007 online version of The Economist under Business This Week. Economic Freedom of 161 countries is measured and ranked from 0 to 100 with 0 demarcating countries with the least freedom. The index designed for public policymakers and investors uses ten variables, such as tax rates, ability to do business, property rights, corruption, labour freedom and property rights. Some countries such as Iraq were excluded from the survey. Using a new formula this year liberty worldwide is on the rise compared to the entire period investigated (c.1995-2006) although slightly less in 2006(60.6%) as compared to 2005 figures. What is problematic about this index is the way in which market liberalism is confounded with a more inclusive concept of liberty.
This annual index cites Adam Smith‘s The Wealth of Nations in 1776 as its foundational theoretical framework and measures ten variables, such as the ability to do business, property rights, corruption and labour freedom. The average score (0 equals repressed, 100 equals free) was 60.6%, down slightly from last year but the second-highest since the survey began. North Korea remained rooted at the bottom (several countries, including Iraq, were not ranked).
According to Index of Economic Freedom 2007 Hong Kong, United States, Britain, Chile, Japan, Germany, Israel and Thailand are the best countries in the world to do business. North Korea, Zimbabwe, Nigeria, Russia, China, Turkey, Brazil and Italy are the worst places for free market trade.
Since the 18th century Smith’s theories have been used to explain capitalism asa means of promulgating peace since war interrupts trade between nations. In a recent article (2006) in Le monde diplomatique,sociologist Professor Alain Bihr, reveals how this concept of capitalism and freedom of the market as generator of peace, embedded in concepts of classical liberal economy, forgets the nature of production (Bihr 2006 citing Smith 1904 ). Smith’s theories continue to inform investigations of the study of liberal thought and the history of capitalism, such as the Index of Economic Freedom.
Adam Smith’s arguments are used as a rebuttal to the United Nations Development Programme’s Human Development Report (1999) which decries the widening gap between the poorest and richest countries. In 1997 the upper quintile controlled 74 times the income of the lowest quintile, whereas in 1960 the figure was 30 times the income. (The extremes of wealth and poverty in Canada are discussed in )
What is too often ignored in liberal market theories is Adam Smith’s final concluding chapter in which he clearly indicates what must be done with surplus wealth in order to prevent the extremes of wealth and poverty. There is a responsibility on the part of the super rich to not simply accumulate their wealth as is the case of the ultra rich but to redistribute their wealth with an eye to hospitality.
When neither commerce nor manufactures furnish anything for which the owner can exchange the greater part of those materials which are over and above his own consumption, he can do nothing with the surplus but feed and clothe nearly as many people as it will feed and clothe. A hospitality in which there is no luxury, and a liberality in which there is no ostentation, occasion, in this situation of things, the principal expences of the rich and the great. But these, I have likewise endeavoured to show in the same book, are expences by which people are not very apt to ruin themselves. There is not, perhaps, any selfish pleasure so frivolous of which the pursuit has not sometimes ruined even sensible men. A passion for cock-fighting has ruined many. But the instances, I believe, are not very numerous of people who have been ruined by a hospitality or liberality of this kind, though the hospitality of luxury and the liberality of ostentation have ruined many (Smith 1902 : V.3.1).
In a future world individuals may well be entrusted with doing this voluntarily. But we are far from this state of equilibrium where the market balances itself. The Index of Economic Freedom cannot therefore be relied upon as a stand-alone tool measuring freedom. Concepts of hospitality and liberty need to be measured with the more sophisticated critical tools of the 21st century not with limited readings of brilliant texts of the 17the century.
In 2001 Peter Robinson invited Bruce Bartlett, Senior Fellow, National Center for Policy Analysis and Peter Orszag, Senior Fellow, Brookings Institution to debate questions concerning income inequality such as:
“How much does the gap between rich and poor matter? In 1979, for every dollar the poorest fifth of the American population earned, the richest fifth earned nine. By 1997, that gap had increased to fifteen to one. Is this growing income inequality a serious problem? Is the size of the gap between rich and poor less important than the poor’s absolute level of income? In other words, should we focus on reducing the income gap or on fighting poverty?” See the transcript or listen to the multimedia of Robinson, Peter. 2001. “Rich Man, Poor Man: Income Inequality.” Uncommon Knowledge. Filmed July 18, 2001 hosted by the Hoover Institution and funded by John M. Olin Foundation and the Starr Foundation, all pro-business think tanks.
While Canada now has a $4.8 trillion net worth, the lower quintile of the population have seen their net worth diminish while the net worth of the Ultra rich has increased.
Bihr, Alain. 2006.“Aux origines du capitalisme: L’erreur fondamentale d’Adam Smith.” Le monde diplomatique online.November.
Flynn-Burhoe. 2007. “Rich Man Poor Man: Hospitality, Liberty and Measuring the Measurements.” Google Docs and Spreadsheets. January 24, 2007.
Heritage Foundation/Wall Street Journal Index of Economic Freedom 2007.
Robinson, Peter. 2001. “Rich Man, Poor Man: Income Inequality.” Uncommon Knowledge. Filmed July 18, 2001 hosted by the Hoover Institution.
Sala-i-Martin, Xavier. 2006.”Global Inequality Fades as the Global Economy Grows.” 2007 Index of Economic Freedom.
Smith, Adam. 1776. An Inquiry into the Nature and Causes of the Wealth of Nations. London: Methuen and Co., Ltd., ed. Edwin Cannan,1904. Fifth edition. complete online version
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January 22, 2007
Canada’s health care system is similar to most members of the Organisation for Economic Co-operation and Development (OECD). The only OECD members who do not have a public health system on par with other members are the USA and Mexico. In spite of that the United States continues to pay a higher percentage of its GNP to its health care system than Canada .
Canadians view its medicare system as “a moral enterprise, not a business venture (Romanow 2002:21)” and they overwhelmingly support the tenets of the Canada Health Act which states that need not money determines access to health care. “Canada’s Medicare system since its inception in 1966 has become one of the “most fully socialized health care systems.” In the 1960s medical systems in Canada and the US were similar. Medicare was a$100 billion enterprise in 2002, one of our Canada’s’s largest expenditures (Romanow2002:20). However, this amounts to a smaller percentage of Canada’s national net worth which was $4.8 trillion as of December 2006 (StatisticsCanada 2006) than that of in 1992. Commissioner Ray Romanow’s mandate in 2001 was to “review medicare and engage Canadians in a national dialogue on its future”(Romanow 2002:6). This was accomplished through an 18-month investigation resulting in a report that was evidence-based and values-driven making recommendations to strengthen and improve medicare’s quality and sustainability making it more truly national, more comprehensive, responsive and accountable (Romanow2002:6).” In the 1970s pharmaceutical costs accounted for a small percentage of total medicare costs. By 2002 they were among the highest costs in the systemand they continue to rise. The report did not confirm claims that user fees, medical savings accounts, de-listing services, greater privatization, a parallelprivate system, as proposed by the leaner goverment lobbyists, were the cure for the medicare system (Romanow2002:21).
More surgeries, treatments and tests are being performed, but demands often outstrip their ability to deliver the necessary services on a timely basis. As a participant in the Commission’s “Policy Dialogue on Access”at Dalhousie University put it, long waiting times are not caused by the system performing fewer diagnostic and surgical procedures but because medical advances now allow us to deliver more of these services and to a wider range of people (Romanow 2002:192)
Public and private sector care providers (including fee-for-service doctors) have been part of our health care system since the inception of medicare in Canada.
Whereas in the 1970s medicare costs consisted mainly of physican fees and hospital expenditures (Romanow2002), currently the cost of pharmaceutical expenditures is the most rapidly increasing part of medicare (Lexchin 2007). In his recent Canadian Centre for Policy Alternatives report Lexchin (2007) reveals how the cost of pharmaceuticals accounted for $18.5 billion in 2004 and $20.6 billion in 2005. Spending on physicians was c. $18 billion in 2005. It is crucial to note that shareholders in pharmaceuticals enjoyed substantially greater returns than shareholders (20.1% in 2003; 23.5% in 1996) in other forms of manufacturing (10.8% in 2003 and 12.2 % in 1996) in Canada. Canada, Mexico and the United States do not have as comprehensive public plans for pharmaceuticals as do other OECD countries where the greatest expenditures on pharmaceuticals come from the public purse. OECD governments have more control over amounts spent on pharmaceuticals.
CIHI Canadian Institute for Health Information
OECD Organisation for EconomicCo-operation and Development
PMPRB Patented Medicine Prices Review Board a part of Health Canada, sets an upper limit on how much companies can charge
for new patented medications.
 The US spent more on administrative costs. They also spent more per person $2548 (US) compared to $1886 (US) in Canada. See http://www3.who.int/whosis/core/core_select_process.cfm
 Given that pension plans returns are based on the strength of investment portfolios we find ourselves in 2006 with a moral dilemma. How do we ensure the future of pension plans with a healthy investment portfolio while calling for ethical management of that same portfolio?
Lexchin, Joel. 2007.”CanadianDrug Prices and Expenditures: Some statistical observations and policyimplications.” Ottawa, ON:CanadianCentre for Policy Alternatives. ISBN 978-0-88627-520-4.
Romanow, Ray. 2002.Buildingon Values: The Future of Health Care in Canada –Final Report. ISBN0-662-33043-9.
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January 20, 2007
The extremes of wealth and poverty threaten globalisation. North American companies lose jobs to the Chinese Special Economic Zone (SEZ) where factories often employ rural women to work in 19th century conditions to keep their costs low. Meanwhile the total pay of top managers in North America has increased from 1986 through 2006 to roughly 40 times the average and from 1966 to 110 times the average.
Globalization “refers to the current transformation of the world economy the reduction of national barriers to trade and investment, the expansion of telecommunications and information systems, the growth of off-shore financial markets, the increasing role of multinational enterprises, the explosion of mergers and acquisitions, global inter-firm networking arrangements and alliances, regional economic integration and the development of a single unified global market. The phenomenon of globalization is accompanied by increasing international mobility, the migration of workers, the growth of tourism and the increasing ease of international travel (Leary 1998:265).”
Selected Bibliography and Webliography
Leary, Virginia A. 1998. “Globalization and Human Rights.” In Symonides, Janusz (Ed.) Human Rights: New Dimensions and Challenges: Manual on Human Rights. Aldershot, UK: Ashgate Dartmouth Publishing Company Ltd. / UNESCO Publishing. pp. 265-276.
2007. “Rich man, poor man.” The Economist. Jan 18th 2007. Accessed January 18, 2007.
Filed in how to be poor in a rich country, OECD, Political Philosophy, Public Policy, Risk Management, Risk Society, social exclusion, Social Justice, vulnerability to social exclusion, wealth disparities in OECD
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January 14, 2007
Philip H. Winne, Nesbit, John C., Gress, Carmen L. Z. 2006. “Cautions about Rating BC’s Schools.” Faculty of Education. Simon Fraser University. 2006-10-31 15:44
The Issue: This is the second year The Vancouver Sun has published a special section on the academic effectiveness of BC’s elementary schools as rated by the Fraser Institute. We’re told the Institute’s ratings of elementary schools, as well as the report it released in April rating econdary schools, are widely discussed. Reportedly, families consult them when buying homes in hope of boosting educational opportunities for their children. Although it doesn’t happen in BC, in the U.S., some jurisdictions use ratings like these, along with other information, to decide how much funding schools receive.
It’s worth keeping in mind the Institute’s rating of a school is not the same thing as what students know or how competent teachers are or how effective schools are. Focusing on students, there’s more to what they know than any one rating can reveal. As well, there is evidence that ratings like these are related to socioeconomic status and wealth. For example, see Selcuk Sirin’s award winning article, “Socioeconomic status and academic achievement: A Meta-analytic review of research 1990-2000”, published in the Review of Educational Research in 2005, and the 2006 Statistics Canada study, “Income and the Outcomes of Children,” by Shelley Phipps and Lynn Lethbridge, respectively. When important decisions are at stake, it’s important to understand what these kinds of ratings are and what limits they have.
The Institute poses a very worthwhile question: “In general, how is the school doing academically?” To answer it, they calculate a rating from 0 to 10 points for each elementary and secondary school that enrolls at least 15 students. Our answer to this question would take a book.
Flynn-Burhoe, Maureen. 2007.“Think Tanks: Corporate Director Board Interlocks: Fraser Institute.”
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Flynn-Burhoe, Maureen. 2007. “Nanuq of the North II: Animal Rights vs Human Rights.” Speechless. Uploaded January 3, 2007.
Finally in December 2006 Bush blinks, but why now? The Bush administration took advantage of the way in which all eyes turn towards Santa’s North Pole, where big-eyed talking polar bears, reindeer and seals live in harmony, to announce that they would save these creatures from Nanook of the North. Is this for the environment or for votes? See story.
Nanook (nanuq Inuktitut for polar bear) was the name of the Eskimo hunter captured on film in the first documentary ever produced, Robert Flaherty’s (1922?) Nanook of the North, — still shown in film studies survey courses. Nanook the Stone Age-20the century hunter became an international legend as a lively, humourous and skillful hunter of polar bears, seals and white fox who tried to bite into the vinyl record Flaherty had brought with him. (The real “Nanook” died of tuberculosis as did countless Inuit from small communities ravaged by one of the worst epidemic’s of tuberculosis on the planet.)
On August 13, 1942 in Walt Disney studios’ canonical animated film Bambi it was revealed that many animals with cute eyes could actually talk and therefore shared human values. Nanook and his kind became the arch enemy of three generations of urban North Americans and Europeans. Hunters were bad. Cute-eyed animals that could talk were good. Today many animals’ lives have been saved from these allegedly cruel hunters by the billion dollar cute-eyed-talking-animals-industry.
The White House has once again come to the rescue of these vulnerable at-risk animals. (There was an entire West Wing episode in which a gift of moose meat was rejected by all staff since it came from a big-eyed-talking-animal. See Ejesiak and Flynn-Burhoe (2005) for more on how the urban debates pitting animal rights against human rights impacted on the Inuit.) Who would ever have suspected that the Bush administration cared so much about the environment that they would urge an end to the polar bear hunt, already a rare phenomenon to many Inuit since their own quotas protected them?
When I lived in the north the danger for polar bears did not reside in the hearts of hunters. Nanuq the polar bear who could not talk was starving. He hung out around hamlets like Churchill, Baker Lake or Iqaluit, looking for garbage since this natural habitat was unpredicatable as the climate changed. Some people even insisted that there was no danger from the polar bear who had wandered into town since he was ’skinny.’ That did not reassure me! I would have preferred to know that he was fat, fluffly and well-fed. Polar bears die from exhaustion trying to swim along their regular hunting routes as ice floes they used to be able to depend on melted into thin air literally. They die, not because there are not enough seals but because they need platform ice in the right seasons. That platform ice is disappearing. They die with ugly massive tumours in them developed from eating char, seals and other Arctic prey whose bodies are riddled with southern toxins that have invaded the pristine, vulnerable northern ecosystem. Nanuq is dying a slow painful death. Nanuq is drowning. Although he doesn’t sing he is a canary for us all.
Climate change and southern industrial toxins affect the fragile ecosystem of the Arctic first. The Inuit claimed in 2003,“Global warming is killing us too, say Inuit .”This is why Sheila Watt-Cloutier laid a law suit against the administration of the United States of America. Now the handful of Job-like Inuit who managed to survive the seal hunt fiasco of the 1980s and are still able hunt polar bear, will have yet another barrier put between them and the ecosystem they managed and protected for millennia. When I see Baroque art and read of the Enlightenment, I think Hudson’s Bay and the whalers in the north. It wasn’t the Inuit who caused the mighty leviathan to become endangered. Just how enlightened are we, the great grandchildren of the settlers today? Who is taking care of our Other grandparents?
Since the first wave of Inuit activists flooded the Canadian research landscape fueled by their frustrations with academic Fawlty Towers they morphed intergenerational keen observation of details, habits of memory, oral traditions and determination with astute use of artefacts and archives to produce focused and forceful research. When Sheila Watt-Cloutier representing the Inuit Circumpolar Conference (ICC) was acknowledged with two awards in one year for work done to protect the environment, I wondered how many cheered her on.
I don’t cheer so much anymore. I am too overwhelmed, too hopeless to speak. I myself feel toxic, perhaps another pollutant from the south — my name is despair. I don’t want to dampen the enthusiasm of those activists who still have courage to continue. For myself, I feel like the last light of the whale-oil-lit kudlik is Flicktering and there is a blizzard outside.
From wikipedia entry Sheila Watt-Cloutier
In 2002, Watt-Cloutier was elected International Chair of ICC, a position she would hold until 2006. Most recently, her work has emphasized the human face of the impacts of global climate change in the Arctic. In addition to maintaining an active speaking and media outreach schedule, she has launched the world’s first international legal action on climate change. On December 7, 2005, based on the findings of the Arctic Climate Impact Assessment, which projects that Inuit hunting culture may not survive the loss of sea ice and other changes projected over the coming decades, she filed a petition, along with 62 Inuit Hunters and Elders from communities across Canada and Alaska, to the Inter-American Commission on Human Rights, alleging that unchecked emissions of greenhouse gases from the United States have violated Inuit cultural and environmental human rights as guaranteed by the 1948 American Declaration of the Rights and Duties of Man.
Caspar David Friedrich’s (1824) The Sea of Ice
Tujjaat Resolution Island, abandoned, DEW line station DINA Northern Contaminated Sites Program (CSP) web site
My photo of ice floes in Charlottetown harbour, March 2000
A section of my acrylic painting entitled Nukara (2000)
Eilperin, Juliet. (2006). ““U.S. Wants Polar Bears Listed as Threatened.” Washington Post Staff Writer. Wednesday, December 27, 2006; Page A01
Gertz, Emily. 2005. The Snow Must Go On. Inuit fight climate change with human-rights claim against U.S. Grist: Environmental News and Commentary. 26 Jul 2005.
The Guardian. 2003. ““Inuit to launch human rights case against the Bush Administration.”
DEW line contaminated sites in Nunavut.
This will be updated from EndNote. If you require a specific reference please leave a comment on this page.
Creative Commons Canadian Copyright 2.5 BY-NC-SA.
Filed in Aboriginal Women in Canada, Chronologies, critical ethnography, critical Inuit studies, CulturalAnthropology, human rights, Memory Work, nanuq, Nunavut
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December 16, 2006
2012-01-21 “Steve Kaplan of the University of Chicago thinks finance explains much of the rise in inequality. Updating a series developed by Thomas Piketty and Emmanuel Saez, Mr Kaplan notes that the share of income going to the 1% reached an 80-year high of 23.5% in 2007, only to sink to 17.6% in 2009 as the financial markets deflated. The trend is even more pronounced for the top 0.1%, whose share of total income rose to 12.3% in 2007 but sank to a still disproportionate 8.1% in 2009 (The Economist 2012-01-21).”
2012-01-16 While the gap between rich and poor in Canada continued to increase, Canada, along with Denmark, Norway and other Scandinavian countries, is a world leader in economic mobility. Americans have less economic mobility than their peers in Canada. … “Canadians shouldn’t be complacent. Ottawa and most of the provinces are running large budget deficits, and education and health care are already targets as governments hunt for savings (McKenna 2012-01-16).”
2011-12-02 New York Gov. Andrew M. Cuomo and legislative leaders, consider raising income taxes on wealth while cutting them for the middle class as they seek ways to shore up a state budget strained by the weak economy. He was partly influenced by the Occupy movement (Kaplan 2011-12-02).
2010-03 “On average Canada is up to three times more mobile than the United States. Or another way of putting it, up to three times as much inequality is passed across the generations in the United States than in Canada. Furthermore, these differences arise from differences in the extremes of the earnings distribution: there is notably less mobility at the very top and the very bottom of the American income ladder.” . . Education is a provincial responsibility in Canada but financial resources are not linked to property taxes but to the province-wide income tax unlike the United States. Poorer neighbourhoods fare better with the Canadian method. However, as income inequality rises opportunities for upward mobility for future generations may be in jeopardy as wealthy Canadians form American-style exclusionary institutions and as cities like Toronto become increasingly polarized. In Toronto, Vancouver and Calgary neighbourhoods are becoming more sharply divided along income and ethnic lines (Corak, Curtis and Phipps 2010-03).
2006-12-16 Wealth disparities are a serious concern and will intensify in 2007 according to TD economists Drummond and Tulk. The net worth of the lowest quintile fell to a negative net worth from zero while national net worth grew 2.8% in the last quarter of 2006. Less than 10% of families who hold at least 53% of total Cdn. net worth ($4.8 trillion). read more | digg story
This is a draft is being written on line back and forth between articles, EndNote, zotero and the slow world. It is currently being updated.
OECD Record inequality between rich and poor
According to TD Bank Financial Group Economists Drummond and Tulk (2006) wealth disparities will intensify. They paint a dismal picture for Canadians excluded from the top quintile. Prospects are bright for Canada’s 22 billionaires and others in that elusive group of Ultra High Net Worth (UHNW) ie c. .004 % of Canadian families (Stenner et al., 2006), who hold more than $10,000,000 in assets. In sharp contrast to Canadians in the four lower quintiles, the UHNW benefited with large increases in wealth since 1984. Unlike real estate held by the lower quintile, these rare families saw their luxury homes, properties, businesses and collections rise in price. With these additional assets they were able to invest, many in tax-free RRSPs, so their net worth grew. “If investment returns rise the trend towards growing wealth disparities will likely intensify. This could be compounded by sluggish wage gains in the low end and the financial challenge of immigrants – the main source of growth in the younger, less affluent population (Drummond and Tulk, 2006).”
Considerable wealth was accumulated in Canada between 1999 and 2005. In 2005 net worth increased by 41.7% to nearly $1.5 trillion (US?). The most recent Statistics Canada report revealed today that the Canadian national net worth reached $4.8 trillion by the end of the third quarter. While in terms of an economist’s algorithm this translates into an average of $146,700 per person. In reality only the a tiny number of Canadian households benefited. “The gain in net worth resulted from an increase in national wealth (economy-wide non-financial assets) as well as a sharp drop in net foreign debt. National net worth grew 2.8% in the third quarter, the largest increase in more than two years (Statistics Canada 2006)”.
Drummond and Turk are concerned that in spite of the dramatic growth in Net Worth, there is a significant portion of the population with little or negative Net Worth (debts/assets ratio) in 2005. Although Drummond and Turk cite the World Institute for Development Economics Research as their source in regards to situating the seemingly overwhelming disparity between the 10% of households that are extremely wealthy and the lower quintiles. (I believe they refer to reports by Senior Researcher of the World Institute for Development Economics Research (WIDER) of the United Nations University, Mark McGillvray(2005) whose research is available only on the deep Internet — an exclusive members-only club.) For the first time however, 165 of the UNHW families accepted to be interviewed by the Stenner Group. The True Wealth Report (Stenner 2006) reveals that the most popular past times of UNHW are traveling (particularly to London, Paris, Vienna, New York and Vancouver staying in ), playing golf and taking part in other sports, collecting art and antiques, drive BMW’s, Volvo’s or Porsches. They claim their philanthropy is tied to both their religious faith and strategic money management (Stenner et al., 2006) (Morissette and Zhan, 2006). According to Stats Can economists in their recent report who refer to research by Western University Economist James B. Davies and Shorrocks, Economist with the United Nations World University, it is to measure the actual holdings of the uber-wealthy. Forty-eight percent of Canadian wealth might be held by less than 1% of the Canadian population(Davies and Shorrocks, 2000, Davies, 2003). Western University Economist and co-author of publications with Shorrocks, editor for the United Nations World University publications and Financial Post journalist (Chevreau, 2003) both cited Shillington’s C.D. Howe Insitute report (2003), revealing an unintended disincentive for the those who earn under $50,000/annual to save. “Shillington (2003) has used Statistics Canada’s 1999 Survey of Financial Security to illuminate what he calls the “futile saving” problem. He looks, first, at the savings of “near-seniors”, those households where the older spouse is aged 55 – 64. He finds that 21% of these households have no retirement saving, and in total 53% have retirement savings of less than $100,000. On the grounds that savings of $100,000 would not permit the purchase of an annuity of more than about $10,000 Shillington believes that the majority of these people will be GIS recipients in retirement. Their savings are thus “futile”, since they will be at least half confiscated by the GIS taxback.17 Turning to actual GIS recipients, Shillington reports that about 23 percent have an RRSP, with an average value of $43,000; 29 percent have an RPP, with an average value of $65,000; and about 40% have either an RRSP or RPP. In Shillington’s view this represents the result of a gigantic fraud, however unintentional.
Governments and financial institutions have advertised the importance of saving for retirement very heavily, and the annual campaign to get RRSP contributions is a vigorous one. The voices warning low-income people that this is in no sense an “investment” are tiny ones (Davies 2003:28).” Shillington concluded that, poor seniors dependent on the federal Guaranteed Income Supplement (GIS) and its means-tested provincial and municipal counterparts should not bother with RRSPs. To do so means losing GIS benefits, rent subsidies, drug benefits, provincial aid programs like Ontario’s GAINs and similar welfare programs.” Once RRSPs create income from Registered Retirement Income Funds after 69, $1 in income reduces GIS benefits by 50¢. Since half of GIS recipients pay income tax, they face an effective marginal tax rate of 75% on extra income. In some cases involving dividend gross-ups, the effective top-rate savings may pass 100%, Mr. Shillington said. For them, “RRSPs are a terrible investment. They are victims of a fraud, however unintentional.” Saving $100,000 in RRSPs may be futile if that is your target. However, it does not mean younger people with $100,000 already saved should stop, as long as they are on the way to accumulating several hundred thousand dollars by the end of their working lives. “RRSPs can be dangerous to your financial health” is the subtitle of Free Parking, a self-published book by “reformed financial planner” Alan Dickson. “I totally agree with the report,” Mr. Dickson said. Citing 2001 Statistics Canada data, Mr. Shillington said of $1-trillion in retirement assets, $600-billion is in employer pensions, $340-billion in RRSPs and $70-billion in RRIFs (Chevreau, 2003).
“National net worth reached $4.8 trillion by the end of the third quarter, or $146,700 per person. The gain in net worth resulted from an increase in national wealth (economy-wide non-financial assets) as well as a sharp drop in net foreign debt. National net worth grew 2.8% in the third quarter, the largest increase in more than two years (Statistics Canada 2006)”. Clever people like Derek Foster who know how to work the system trigger angry responses against publicly-financed assistance for the lowest quintile. (Heinzl, 2005) Foster (born c. 1961) began making astute investments while still in university. He learned from finance gurus Peter Lynch and Warren Buffett. In 2005 he continued to earn enough from his total investments (which total six digits) in Starbucks, Colgate-Palmolive, Rothmans Inc., Royal Bank of Canada, Corby Distilleries Ltd., Manulife Financial Corp., George Weston Ltd., Pembina Pipeline Income Fund, Canadian Oil Sands Trust and a dozen or so others, that he and his family of four can live modestly without ever having to work again. Their low income c. $30, 000/annual actually allows them to enjoy certain publicly-financial benefits designed for low-income earners with no assets (Heinzl, 2005). Others include Dianne Nahirny’s Stop Working, Start Living (http://www.smartmakeovers.com) and Alan Dickson’s Free Parking and Advance to Go (http://www.freemoneypress.com)(McGillivray, 2005)
With more than a billion people living on less than one dollar per day, some evidence of increasing gaps in living conditions within and between countries and the clear evidence of substantial declines in life expectancy or other health outcomes in some parts of the world, the related topics of inequality, poverty and well-being are core international issues. More is known about inequality, poverty and well-being than ever before as a result of conceptual and methodological advances and better data. Yet many debates persist and numerous important questions remain unanswered. This book examines inequality, poverty and well-being concepts and corresponding empirical measures. Attempting to push future research in new and important directions, the book has a strong analytical orientation, consisting of a mix of conceptual and empirical analyses that constitute new and innovative contributions to the research literature.Mark McGillivray is a senior researcher with the World Institute for Development Economics Research (WIDER) of the United Nations University.
Carroll, James. 2011-01-03. “Now the rich get richer quicker.” Boston Globe.
Chevreau, Jonathan (2003) RRSPs a bad option for low-income earners Financial Post.
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