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Hangovers from a champagne economy

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Over a decade ago, Canada popped the champagne cork as it slowly began emerging from a recession that hit the middle and lower classes hard.

The recession of the early 1990s became known for euphemistic catch words such as ‘downsizing’ (rationale for major job layoffs), ‘golden handshakes’ (incentives for older workers to leave their public sector jobs), and ‘freedom 55’ (the fanciful promise of early retirement).

Those were bleak days wrapped up in rose-coloured cellophane.

But, eventually, the economy recovered. From the late 1990s until today, Canada’s economy has been ablaze. We have been living in a virtual champagne economy, with bubbles happily floating everywhere.

Now that several of those bubbles have popped and the party’s ending, what do we have to show for it?

Income inequality – the gap between the rich and the rest of us – got worse, not better. That, in itself, is unusual. The gap usually grows during recessions, when workers in the bottom half of the income spectrum lose their jobs.

But Canada’s got worse, in good times and in bad, over the past generation – despite the fact that more Canadians were working and putting in more hours of work.

Canada’s poverty rate remains stuck at about the same level it was at in 1989, when our Parliament decided that was bad and unanimously agreed to eliminate poverty by 2000.

Empty words. It didn’t happen. We didn’t eliminate poverty, we just ignored it.

Instead, we elected governments who dangled tax cuts in our faces, and we blinked. We took the money and ran.

Other countries did the same during what is starting to feel like a lost decade.

It wasn’t always this way.

Generations before us seized moments of prosperity and invested in the future of all Canadians. They helped grow the middle class. They created a public health care and education and social system that is the core of Canadian pride. 

Canada’s economy has grown to become the eighth largest on the planet.

We could have built roads and bridges and affordable homes.

We could have gone green.

We could have reduced income inequality and become a world leader in reducing the number of poor people in Canada.

We could have made university and college affordable to all Canadians.

We could have built that national child care program once fleetingly promised.

But we did not use our collective wealth to ensure the future prosperity of the collective. We did not do as generations before us did.

We lived in the moment, giddy with the high of a champagne economy, kidding ourselves that the party would never end.

Now that the party’s over, the hangover begins.

This blog is part of a series on Canada’s changing economy.

Recommended reading: Doug Saunder’s Globe and Mail column which inspired today's blog.

Trish Hennessy is director of the Canadian Centre for Policy Alternatives' Inequality Project www.growinggap.ca.

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