Ed,
The point you make about the FIRE sector is true
enough but, in my view, is not altogether
convincing. Its astonishing growth in the last 15
years or so from about 5% of GDP to approaching
15% at its maximum in 2007/8 has been almost
completely due to the vast expansion of credit
and a whole new slew of derivatives. It's not a
fundamental change in the job structure in the
same way as, say, the growth of jobs in the IT
sector in the last 50 years or in the health
sector in the last 20. Since the credit crunch,
the NICE sector has already been shrinking and
there are signs (e.g. redundancies at Goldman
Sachs announced last week) that it will continue
this way as banking practices are more carefully controlled.
As to the out-sourcing of low-skill factory
operations to Asia, yes, this has had a
considerable effect on job numbers in advanced
countries. However, the direct labour costs of
most consumer goods is only about 15% of the
end-price, so the gains from out-sourcing for
this reason are not as great as it seems. Much
more is gained by Western factories being able to
leave existing working practices behind them and
institute a new generation of automated methods.
If we (I'm thinking of the US and the UK
particularly) had had much better educated
workforces in engineering and technology (such as
in Germany) and more tolerant of change then the
exodus need not have been anywhere near as great.
Once their wage rates have approached or even
caught up with the West's, some of those
industries are now leapfrogging back again to
their original countries . Japan and Korea have
been doing so for many years, and China is just
beginning to do so in America. But,
unfortunately, they bring with them an even
higher level of automation. So this doesn't help
much! Overall, it brings me back to my original
comments that, in the subjects that really matter
as value-adders in a modern economy, our state
school systems have been badly under par.
Keith
At 23:53 20/07/2011, Ed wrote:
Education and decreasing social mobility are
certainly factors, Keith, but others would
include the growing importance of the FIRE
(finance, insurance and real estate) sector in
which salaries and bonuses are high and the
outsourcing of much of the manufacturing work
that used to be done domestically to places in
Asia where it can be done much more cheaply.
Ed
----- Original Message -----
From: <mailto:[email protected]>Keith Hudson
To:
<mailto:[email protected]>[email protected]
; <mailto:[email protected]>Ed Weick
Sent: Wednesday, July 20, 2011 2:10 PM
Subject: Re: The rich are getting richer and the poor poorer
At 17:39 20/07/2011, Ed wrote:
From today's Globe & Mail. The growing gap
between rich and poor has been a source of
much argument and concern in the US. We, in
Canada, have been reading about it but smugly
thinking that it's their problem not
ours. Well, maybe we have little to be smug about.
No, you haven't. And neither has any advanced
country. As we proceed further and further into
a more specialized world then the gap between
the rich (generally well educated) and the poor
(generally insufficiently educated) will grow
wider. Social mobility in all advanced countries
is declining. Unless and until governments shed
their educational monopoly for most children,
and maintain the legalization of protective
practices for the professions, then there's
little hope that there'll be anything like a
fairer, more gradated income society than now.
Keith
Ed
----------
Do we care that Canada is an unequal
society?<?xml:namespace prefix = o ns =
"urn:schemas-microsoft-com:office:office" />
JEFFREY SIMPSON
From Wednesday's Globe and Mail
Published Wednesday, Jul. 20, 2011 2:00AM EDT
The poor, it is said, will always be with us.
Yes, but how many poor must there be?
In Canada, there are too many poor people. The
country that often likes to congratulate itself
cant take comfort from an inescapable fact:
Were becoming a more unequal society.
Legislative committees and think tanks
sometimes work on poverty, but, for the general
public, income inequalities are consigned to
the dead-letter box in this apparently
conservative age. Even the NDP, which takes
poverty more seriously than the other parties,
has taken to talking incessantly about the
middle class, figuring thats where the
voters are and where the poor would rather be if they could
The Conference Board of Canada, hardly a
bastion of far-left thinking, just reminded
Canadians about the growing income inequalities in their society.
The richest group of Canadians, those in the
top fifth of income earners, saw their share of
national income rise from 1993 to 2008. Within
that fortunate group, the biggest gainers were
the super rich, the top 1 per cent. And they
got even richer not so much from investments
but from basic salaries of the kind paid bank presidents and company CEOs.
From 1980 to 2005, the earnings of the top
group rose by 16.4 per cent, while
middle-income Canadians incomes stagnated,
and earnings for those in the bottom group slid.
There are various ways of measuring inequality.
One is the Gini coefficent, which tracks
inequality on a scale of 0 to 1, with 0 being a
world of total equality and 1 being total inequality.
Canada, it turns out, ranks 12 among 17
comparable countries in income inequality.
Canadas Gini score is 0.32, slightly worse
than that of Australia and Germany, and far
behind Denmark (0.23), Sweden (0.23), Finland
(0.26) and Norway (0.27) The United States and
Britain, two countries against which Canada
measures itself, are the worst performers
that is, the most unequal societies of the 17.
Put another way, anglophone countries are the
most unequal, at least compared with
continental European ones, and two of them (the
U.S. and the U.K.) are also in desperate fiscal shape.
The U.S. Gini score is 0.38, reflecting the
fact that income inequality is at a record
high, greater even than during the Roaring
Twenties. During the past decade, the top 10
per cent of U.S. earners took 49.7 per cent of income gains.
In Canada, the top fifth of income earners take
39.2 per cent of total income (up from 35 per
cent in the 1980s), while the lowest quintile
takes 7.2 per cent. Vancouver has the highest
share of people in the lowest quintile of
earners among Canadian cities; Quebec City has the lowest.
So why are we a more unequal society? Thats
the subject of fierce debate. Other countries
income inequalities are also growing, albeit to
varying degrees, and the inequalities in big
developing countries such as China, India and
Brazil are much higher than anything in Canada or Europe.
Its argued that globalization rewards some of
the highly skilled (and people who can
manipulate other peoples money, as in hedge
funds, banking and financial services), while
leaving others behind. Clearly, the struggles
of manufacturing in North America and Europe
have robbed those societies of millions of
good-paying, often unionized, jobs. Some of
these have been replaced by better-paying service-sector jobs; most have not.
The Conference Board notes that government
transfer programs flatten out some
inequalities, but not as effectively as 20
years ago. Unemployment benefits go to fewer
people; welfare rates havent always kept up with the cost of living.
Many of the Harper governments tax cuts, for
example, have disproportionately benefited
those better off, since theyre not geared to
income as in all those itsy-bitsy bribes for
sports equipment, the GST cut and the child
benefit cheques than come through the mail every month.
Committees of both the House of Commons and
Senate have issued reports on poverty; neither
stirred much interest. Income inequalities are
apparently not deemed important subjects in this self-centered age.
Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/07/
Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/07/
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