What the Wall Street protests mean in Canada

By Armine Yalnizyan
Globe and Mail Blog
Thursday, October 13, 2011

This is not the stuff of usual protests. Over the past month, a little idea from a Vancouver outfit has mushroomed into a cross-continent movement.

Occupy Wall Street, kicked off by Adbusters in July and coming to Toronto this weekend, has already spread to 70 American cities and is going global as protestors challenge society to rethink how the economy and the government operates, and for whom.

It’s an awakening -- a populist call for that “adult conversation” many thought would take place after the global economic calamity of 2008. It didn’t then. But it may now, thanks to Occupy Wall Street, in a city near you.

Like the Tea Party protesters, Occupy Wall Street was triggered by outrage over the fact that the very people who created the Great Recession were protected from financial pain courtesy of citizens with a lot less money who couldn’t duck the mess. Now the institutions that soaked up hundreds of billions of dollars in government assistance are vigorously gutting government attempts to reform banking and investment practices that led to the disaster.

Unlike the Tea Party protesters, the folks occupying Wall Street and elsewhere believe governments should be part of the solution.

Even without a clear ask, the protesters’ simple presence makes the point that the interests of the elite have been well-served in the run-up to and aftermath of the Great Recession. The concerns of the vast majority have been neglected.

The same government is supposed to serve them both. It’s no coincidence that the online sister movement to Occupy Wall Street is “We are the 99 Percent”. They’re drawing attention to the fact that too much inequality corrupts democracy.

As one protester put it: “It's time to get together and re-evaluate, not necessarily do away with the system, but figure out where we went wrong and figure out how we're going to do it right now."

Here’s how things go wrong, on both sides of the border. The richest 1 per cent of Canadians took a third of all income gains in the decade preceding the recession, when the economy was firing on all cylinders. Not even during the Roaring '20s did that elite group capture such a large share of the fruits of growth.

It’s often said the rich can’t do much to help the rest of us, because there really aren’t that many rich people in Canada. We may not have as many millionaires as in the U.S. but, like the Americans, Canada’s millionaires are taxed at rates last seen in the 1920s. They can afford to help out a little more.

You don’t have to be a millionaire to make a difference. Raise the top tax rate by 3 per cent on those making over $250,000 -- a round number which marks the entry gate for the fabled 1 per cent - - and, at 32 per cent, you’d still pay less than the 33 per cent rate in the U.S. at that income level. It would raise about $2-billion, the federal share of, say, a national child-care program.

A 35 per cent tax bracket for Canadians whose income is higher than $750,000 -- the U.S. top rate, except there it’s applied on incomes above $373,650 -- would yield $1.2-billion. Over a decade, that could pay for the federal share of fixing drinking-water and waste-water infrastructure across Canada.

Canada’s rich could make a difference. Our governments should ask them to step up to the plate.

But governments are increasingly tangled up in elite interests. The latest example is Finance Minister Jim Flaherty ‘s drive to marshall support to scuttle a proposed financial transactions tax, a mechanism that could help slow down the wild gyrations of the stock market we’ve witnessed of late. Flaherty and other G20 finance ministers will be meeting in Paris just as thousands of Canadians gather to Occupy Toronto on Bay Street. He will be protecting certain interests, just not those of the majority of Canadians.

Joseph Stiglitz, former chief economist for the World Bank, called this capture of public policy government “of the 1%, by the 1%, for the 1%”. Chair of the panel that oversaw the TARP bailouts of Wall Street, Elizabeth Warren, makes it clear that nobody got rich by themselves. Everyone benefits from a social contract.

When the rich say they are no longer willing to uphold their end of the social contract, it’s time to occupy Wall Street. When our governments say the same thing, it’s time to wake up.

Democracies are not supposed to produce an economic and political system that primarily benefits the 1 per cent.

Occupy Wall Street is partly about Wall Street, and Bay Street, and taxes. But it’s mostly about getting governments to serve the interests of the other 99 per cent. It’s about reclaiming democracy. It’s about demanding better results.

Armine Yalnizyan is a senior economist with the Canadian Centre for Policy Alternatives