One of the pleasures of each new year is the promise of the latest dissection of Canada’s 1% by Hugh Mackenzie. Mr. Mackenzie is one of Canada’s most creative economists, who regularly offers a new and depressing twist to illuminate Canada’s yawning inequality gap. Last January 1, for example, he showed that Canada’s top 100 CEOs would, by 1:11 p.m. on January 2, make as much as the average Canadian would earn in the entire year.
This year, I see Mr. Mackenzie’s research showing exactly how French economist Thomas Picketty’s theories about capitalism work in practice. Mr. Picketty, of course, wrote last year’s most unlikely bestseller, an almost-1,000 page doorstopper with the risqué title Capital in the Twenty-First Century. I don’t doubt for a moment that the millions who bought the book have read it cover to cover, as I certainly intend to do once I finish Marx’s Das Kapital and The Complete Proust.
Mr. Piketty’s message is that under the capitalist system, the rich always get richer. And not necessarily through any effort on their part. As he shows in stupefying detail, not only is inequality an inevitable consequence of modern capitalism, so is growing inequality, unless conscious steps are taken by governments to mitigate this outcome.
All of this becomes quite clear in dollar terms — well, multimillion-dollar terms — in Mr. Mackenzie’s latest report prepared for the Canadian Centre for Policy Alternatives. Canada’s top 100 CEOs — the top .01 per cent, by the way — made an average of $9.2 million in 2013, while all of Canada’s beloved hard-working average middle class earned — not “made,” earned — on average $47,358. So the Big Boys made — not necessarily earned — 195 times more than normal folk. Fifteen years earlier, CEOs made “only” 105 times as much. Way back in the dark ages, in the 1980s, executives — who seemed pretty well off then — made about 40 times more than the average worker. So there’s been an exponential increase in the disparity between them and the rest of us in a pretty short period of time.
Some CEOs naturally make more, a whole lot more, than the executive average. Gerald Schwartz, CEO of Onex Corp. (and boss of a certain Nigel Wright, the $90,000 man) heads Mr. Mackenzie’s list, with $87.9 million in 2013. That’s not his total wealth, of course; that’s just what he took home that year. Most of it was in stock options. That means you don’t necessarily have to produce anything for that money, or offer any services, or add generally to the well-being or productivity of society. CEOs are gifted with company stocks at a bargain-basement price, and they sell them when they increase in value. Not only that, but stock options get tax breaks that regular salaries and wages don’t, which means it’s a straight state subsidy to the already flush. It’s quite impossible to see how this scam can be justified, but it merrily rolls along from government to government.
Number two on the Mackenzie Dishonour Roll, though way behind Mr. Schwartz, is Nadir Mohamed, coming in at $26,769,973. Mr. Mohamed was still CEO of Rogers in 2013, which automatically explains why he did so well. My little family’s yearly contributions to Rogers would by themselves have made him one of the richest men in Canada. I met him once and he couldn’t have been more cordial, and no wonder.
And on that note, I observe that all the CEOs of Canada’s top five banks are on the Mackenzie list. I don’t want to make this story all about me, but I do take some credit here again. The interest on a two-week bridging loan my family had to take out last year between houses was little short of usurious. But it must have helped keep our bank guy in the top 100 where he surely belongs.
Life is always full of ironies. In practice, the Dishonour Roll has probably accelerated the apparently unstoppable trend to ever-growing inequality. Progressives hoped that if the 1% were named publicly, they’d be embarrassed and voluntarily agree to reduce their own bounty. It is to laugh. Hugh Mackenzie can name but these guys don’t shame. If anything, these revelations likely cause their take-home totals to rise, as those below the leaders demand even more for their indispensable services.
So I’m afraid self-sacrifice is not going to be the key to reducing inequality, with all the great damage it inflicts on society. Government needs to act, and Mr. Mackenzie offers perfectly realistic policies to any party that is seriously committed to greater equality. For example, the tax break on stock options generously provided by our government is worth a cool half-trillion to the top 100 — a nice day’s “work,” for sure. And since federal corporate taxes, an affordable 29 per cent only 15 years ago, now stand at 15 per cent, we can expect Mr. Mackenzie to report even higher rewards for his hearty band next January.
Anyone who dabbles in the field for even a moment knows there are lots of ideas for reducing inequality. Some are political non-starters but others are quite simple and workable. Knowing what to do is not the issue. The issue, as usual, is the political will to attack the problem frontally. The NDP is so far proposing a distinctly modest increase in corporate taxes, which is more than its opponents. As of now, with an election less than a year away, the big winner once again, and still champion, is inequality.
This article originally appeared in the Globe and Mail.
Image: Wikimedia Commons
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