[Canada] Canadian Politics Redux

[Malthus]

What amazes me is how easy it is to get into the top percentages by income and/or wealth.

Own your own home in a major city like Toronto or Vancouver, and paid off the mortgage? Have a few bucks set aside or entitlement to a pension on top of that? You are likely to be in the top 10% or better.

Hell, accordong to the taxman at least, my small three-bedroom house is worth $1 million, and that alone puts me in the top 8% of wealth. It's a pretty modest house, though in a good neighbourhood - hardly a mansion.  The previous owner was a schoolteacher and my neighbour on one side is still also a schoolteacher. Presumably they, too, are in the top 8% or rather better - schoolteachers get a pension.

So you don't have to be a guy looking like the Monopoly logo to be in the high percentages. It's worrying, really.

[Barrister]

What amazes me is how easy it is to get into the top percentages by income and/or wealth.

Own your own home in a major city like Toronto or Vancouver, and paid off the mortgage? Have a few bucks set aside or entitlement to a pension on top of that? You are likely to be in the top 10% or better.

Hell, accordong to the taxman at least, my small three-bedroom house is worth $1 million, and that alone puts me in the top 8% of wealth. It's a pretty modest house, though in a good neighbourhood - hardly a mansion.  The previous owner was a schoolteacher and my neighbour on one side is still also a schoolteacher. Presumably they, too, are in the top 8% or rather better - schoolteachers get a pension.

So you don't have to be a guy looking like the Monopoly logo to be in the high percentages. It's worrying, really.

It's because we have gone through a massive property bubble, which has distorted the distribution of wealth.

Absolutely if you were a boomer who owned your house you have made piles and piles of money.  For people like us who caught part of that bubble we've still done well.

[Malthus]

It's because we have gone through a massive property bubble, which has distorted the distribution of wealth.

Absolutely if you were a boomer who owned your house you have made piles and piles of money.  For people like us who caught part of that bubble we've still done well.

Fair enough, though I would have thought that a rising tide would lift, as it were, more boats. We are talking percentages here - if a property boom is to blame, would that not tend to increase average wealth fairly widely? That would tend to make it harder and not easier to get into the "top 8%" or whatever.

[Barrister]

It's because we have gone through a massive property bubble, which has distorted the distribution of wealth.

Absolutely if you were a boomer who owned your house you have made piles and piles of money.  For people like us who caught part of that bubble we've still done well.

Fair enough, though I would have thought that a rising tide would lift, as it were, more boats. We are talking percentages here - if a property boom is to blame, would that not tend to increase average wealth fairly widely? That would tend to make it harder and not easier to get into the "top 8%" or whatever.

Well no - it only rises the boats of people who bought property before the boom started.

Also those who didn't then get a second mortgage and blow all the equity in their home on other stuff.

[crazy canuck]

It is kind of sad actually that people like me and Malthus are in the 1%.  What it really means is that Canada has very few corporations and investors which can drive economic growth and job creation.

So you think greater wealth disparity would be better for economy and society in general?

Personally I'd think that increasing wealth in other parts of the income continuum would drive economic growth and job creation more efficiently. I.e. if we're allocating, say, $ 3 billion of extra income amongst Canadians it would have a greater impact on the overall economy if it was distributed to the bottom 50% or the middle 50% than the top 1%.

... but I'm not economic expert, so I may well be wrong

Yi, already answered this quite well.

It always amazes me that people think that wealth disparity is necessarily a bad thing.  Canada would be much better off if it had many more wealthy people so that I did not quality as being in the top 1%.  Just think about how much more wealth the country would have to drive the economy and contribute to the cultural and social fabric of our society.  Not to mention all the extra tax revenue that would be generated to pay for all our social programs.

To put it simply, if we all earned the current median income our country would be very poor indeed.  However if we had significantly more wealthy people the median income would rise.

[Malthus]

It's because we have gone through a massive property bubble, which has distorted the distribution of wealth.

Absolutely if you were a boomer who owned your house you have made piles and piles of money.  For people like us who caught part of that bubble we've still done well.

Fair enough, though I would have thought that a rising tide would lift, as it were, more boats. We are talking percentages here - if a property boom is to blame, would that not tend to increase average wealth fairly widely? That would tend to make it harder and not easier to get into the "top 8%" or whatever.

Well no - it only rises the boats of people who bought property before the boom started.

Also those who didn't then get a second mortgage and blow all the equity in their home on other stuff.

Well, my point is that "owning a house" and "not using its equity as a piggy-bank" would apply to a fairly sizable percentage of people, and not be primarily responsible for concentrating wealth into the hands of a tiny minority.

[Malthus]

It is kind of sad actually that people like me and Malthus are in the 1%.  What it really means is that Canada has very few corporations and investors which can drive economic growth and job creation.

So you think greater wealth disparity would be better for economy and society in general?

Personally I'd think that increasing wealth in other parts of the income continuum would drive economic growth and job creation more efficiently. I.e. if we're allocating, say, $ 3 billion of extra income amongst Canadians it would have a greater impact on the overall economy if it was distributed to the bottom 50% or the middle 50% than the top 1%.

... but I'm not economic expert, so I may well be wrong

Yi, already answered this quite well.

It always amazes me that people think that wealth disparity is necessarily a bad thing.  Canada would be much better off if it had many more wealthy people so that I did not quality as being in the top 1%.  Just think about how much more wealth the country would have to drive the economy and contribute to the cultural and social fabric of our society.  Not to mention all the extra tax revenue that would be generated to pay for all our social programs.

To put it simply, if we all earned the current median income our country would be very poor indeed.  However if we had significantly more wealthy people the median income would rise.

To my mind, the major problem isn't wealth disparity per se, but social mobility - if being from a family with wealth was a necessary prerequisite for having wealth oneself. My concern is that this may be increasingly true.

[Admiral Yi]

To my mind, the major problem isn't wealth disparity per se, but social mobility - if being from a family with wealth was a necessary prerequisite for having wealth oneself. My concern is that this may be increasingly true.

I agree.  That social mobility is the concern, not that wealth is becoming a prerequisite.

In a society where people are free to spend their money how they wish, it would be impossible, and counter-productive, to deny the rich the ability to purchase higher quality education for their children.  But what is truly disturbing is the incredibly high percentage of enrollment slots at prestigious universities that are auctioned off to the highest bidder.

[Jacob]

In a society where people are free to spend their money how they wish, it would be impossible, and counter-productive, to deny the rich the ability to purchase higher quality education for their children.  But what is truly disturbing is the incredibly high percentage of enrollment slots at prestigious universities that are auctioned off to the highest bidder.

How would you address this?

[Admiral Yi]

How would you address this?

Hand out three different kinds of diplomas: graduated, open admission; graduated, legacy admission; graduated, quota admission. 

Seriously, I don't know.  These are private organizations, not public utilities. Presumably if they let in too many meat head legacies for too long their brands would lose their lustre and the market would self-correct.

[Jacob]

In real life you don't get $3 billion of extra income to allocate as you wish.  Which is why, as CC suggests, you need a dynamic entepeneurial class and/or dynamic, expanding corporations to create jobs and extra income.

Well... when you're doing tax policy apparently you do, at least according to some of the rhetoric that's being thrown around.

As for the dynamic entrepreneurial class and expanding corporations - and they're definitely good to have around - what are the best ways, in your opinion, to stimulate their health?

[Jacob]

Hand out three different kinds of diplomas: graduated, open admission; graduated, legacy admission; graduated, quota admission. 

Seriously, I don't know.  These are private organizations, not public utilities. Presumably if they let in too many meat head legacies for too long their brands would lose their lustre and the market would self-correct.

Yeah, it's a complex issue.

I don't think the market will self-correct the issue, because I don't think the market values social mobility. In fact, I expect that the market rewards the legacy students because they add lustre - they provide a valuable social network for graduates and they reinforce that status of the university as being for the moneyed elite. Both of those are attractive.

So yeah, if we care about social mobility we need to think about how to encourage it.

[Admiral Yi]

As for the dynamic entrepreneurial class and expanding corporations - and they're definitely good to have around - what are the best ways, in your opinion, to stimulate their health?

World class research universities, rock solid intellectual property laws, a pool of venture capital that understands the risk/reward tradeoff, a transparent, predictable, and fair tax regime, a pool of well-educated worker bees, an efficient equity and bond market, etc., etc.

[Admiral Yi]

Yeah, it's a complex issue.

I don't think the market will self-correct the issue, because I don't think the market values social mobility. In fact, I expect that the market rewards the legacy students because they add lustre - they provide a valuable social network for graduates and they reinforce that status of the university as being for the moneyed elite. Both of those are attractive.

So yeah, if we care about social mobility we need to think about how to encourage it.

If the market were to self-correct, and it very well may not, it would be through the mechanism of diminishing the universities' reputation for attracting and graduating top notch students.

[crazy canuck]

To my mind, the major problem isn't wealth disparity per se, but social mobility - if being from a family with wealth was a necessary prerequisite for having wealth oneself. My concern is that this may be increasingly true.

Agreed, the hallmark of a fair and just society is social mobility.  Not forcing everyone to be equally poor.