Where to draw the line on inequality?

Inequality has re-emerged in the public discourse after a long hiatus. Massive structural changes in the economy to a more global knowledge-based system has disrupted previous sources of prosperity and stability. The recession that gripped much of the world towards the end of the last decade provided a spark to this discontent. Manifested in such movements as ‘Occupy’ and exposed in narratives such as the ‘1 percent’ much of this emotionally charged tidal wave targets the finance industry and the superrich. Not confined to income and wealth but also encompassing the institutions, that on paper, have the ability to correct such perceived wrongs. There is a yearning for a rebalancing of power between that derived from democratic politics and that derived from largely private markets. It is not so much about poverty, whereby people struggle to meet their basic material needs (although this is certainly occurring and represents a more pressing problem), but rather about a growing sense of unfairness. To many life has become like a rigged carnival game that can only be ‘won’ if the operator of the game allows it. This post is the first of a series that will examine inequality in Canada, where it is, who it affects, and why it is happening.

Inequality exists everywhere to a degree. It always will. The extent of it is the issue. Too much of it and entire systems inevitably collapse. To some this may indeed be a welcome occurrence, but it would be folly. Market-based democracies have ushered in more genuine progress over the past century than any of the alternatives in the preceding millennia.

So how much is too much and how do we know? This is not an easy question nor is there an obvious way to address it. Inequality takes on many forms and can be measured in many ways. Income inequality is most common as it is highly tangible and thus relatively straightforward to quantify. When it comes to inequality and cities we can look at this in two basic ways. The degree of inequality that exists within cities and the inequality that exists between cities. While both are important the focus of this post (and this blog in general) is on the latter. As Richard Florida has highlighted in the US there is also a significant amount of inequality between cities in Canada. An issue since confederation, regional economic disparities are not new to this country. Resource booms and busts, currency fluctuations, trade agreements, immigration patterns, and more recently, localized knowledge assets have all contributed to shifting geographies of inequality. The figure above presents basic data on household incomes by region for 145 Canadian cities. It highlights a general east-west divide whereby most places in the east of the country are struggling while the majority of western cities are thriving. This divergence is mainly due to the strength of the oil & gas and mining industries in the west. A second divide exists between the largest cities and mid-sized and smaller cities as well as rural areas. This schism is more closely associated with the growth of knowledge-based industries which thrive in the biggest urban agglomerations. The dynamics of this growing gap will be explored in future posts.