Canada Class Economic theory Inequality

The lament for Canada’s middle class

I’ve been posting more sparsely lately for a number of external reasons but this should change soon I hope. For now, here is the first major piece I wrote for Ricochet. In some ways, it’s the obligatory piece on Thomas Piketty’s Capital in the Twenty-First Century, but really it’s my way of trying to think through the hand-wringing about Canada’s middle class. Below are the first couple of sections, read the rest here.

The US is in the throes of a debate about inequality: It’s the Waltons versus the Walmart workers on food stamps, the runaway rich in the 1 per cent versus everyone else. Meanwhile, Canada’s inequality discussion has been largely confined to the woes of the middle class. Even the New York Times added grist to the mill by proclaiming Canada’s middle class better off than its US equivalent.

Similarly, while the US has made a veritable rock star out of French economist Thomas Piketty, whose 600-page economics tome Capital in the Twenty-First Century has topped best-seller lists, Canadian reception has been much more muted. This is a bit surprising because Piketty, in drawing out the link between capitalism and inequality, tells the story of a new Gilded Age replacing the post-war Golden Age that saw the middle class establish itself. One reason Piketty’s book may have left less of a mark on Canadian debate is that more of a middle class has endured in Canada. But will today’s middle class survive?

What exactly is the middle class?

Hold the champagne corks and the gloating over that New York Times report — perhaps Piketty has something to say to Canada after all. Here is a passage expressing a thought rarely mentioned in discussions of his work:

Make no mistake: the growth of a true “patrimonial (or propertied) middle class” was the principal structural transformation of the distribution of wealth in the developed countries in the twentieth century.

By the mid- to late-20th century, alongside a “social wage” provided by the welfare state (insurance schemes, health care, higher education and more), a significant number of workers had gained access to some wealth, primarily in the form of houses and some private savings, including pensions. They acquired property that could be used and passed down to heirs, thereby becoming “patrimonial.”

By defining the middle class in terms of wealth (rather than income), Piketty focuses attention on long-term social position rather than more transitory changes. Today the middle class comprises the 40 per cent of the population between the poorest 50 per cent, who have never had access to wealth, and the richest 10 per cent, who are increasingly dripping in it.

In essence, this analysis in terms of wealth is what more radical economists refer to when they speak of the development of different strata in the working class. (If the language of the “working class” seems dated and quaint today, it is because we are accustomed to an industrial caricature that no longer applies to most workers in the North.) The middle class is not so much the rich neighbour who moves in next door as it is the sibling who strikes it moderately rich. Like the wealthless bottom 50 per cent, the middle class continues to earn its livelihood largely from work, not from investments in land, stocks or other assets.

Nevertheless, this partial access to wealth has kept radicalism at bay; once implicated into wealth ownership, the middle class was more easily rallied behind political and institutional changes that favour the wealthy, such as low inflation, public debt management and sustained growth in the prices of stocks and other assets (at times via bubbles)…

Parts of the middle class rose even higher, helping form a new professional, managerial and “supermanagerial” elite, which Piketty describes as increasingly moving into the top 1 per cent.

At the other end, these changes took place in a context of discrimination based on factors such as race, immigration status, gender and First Nations status. The creation of a middle class helped entrench discrimination, while further curtailing radicalization by pulling some members of marginalized groups into its ranks…

[The rest is at Ricochet here]

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