Linda McQuaig: In the US and Canada, the deliberate policies that created great wealth for the top 1% and suffering for the rest is not talked about


Story Transcript

PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Toronto. As we all know, there’s been a massive shift of income from the majority to the one or two percentile minority, both in the United States and Canada. But why? So now joining us to talk about particularly the Canadian situation, but also the American situation, is Linda McQuaig. Linda is the author, with Neil Brooks, of the book The Trouble with Billionaires: Why Too Much Money at the Top Is Bad for Everyone. She’s also been a reporter at The Globe and Mail, a senior writer at Maclean’s. And she’s the author of more than seven bestsellers in Canada. Thanks for joining us again.

LINDA MCQUAIG, JOURNALIST AND AUTHOR: Nice to be here, Paul.

JAY: Okay. So–and we talked before in an earlier interview about this big shift of income to the top percentiles. But why did it take place? When does this shift start to happen and why?

MCQUAIG: Yeah, it starts to happen basically after about 1980. I mean, you can relate it to the Reagan revolution, the Thatcher revolution, in US and Britain. But what’s interesting is that it’s always sort of justified in terms of, well, this is just something that just kind of naturally happened. You know, it was the product of globalization, it was the product of technological change. And I think the truth is that globalization and technological change are actually a fairly minor contributor, that the real explanation is deliberate policy changes that brought it about–in other words, deliberately policy changes on the part of the people that benefited. And just to give you an example, you know, if you look at–one of the biggest growth areas, of course, in terms of incomes is corporate CEOs. You know. So we have CEOs today who are making, you know, on average in Canada 250 times what the average Canadian worker’s making. Thirty years ago, before this big change, the gap was much smaller–the average CEO was making about 25 times what the average Canadian worker was making. So what accounts for that difference? You know, is it that our CEOs have become wildly more productive or creative or whatever? Or is it this technological change argument? For instance, one of the biggest changes contributing to higher CEO pay is the changes in regulations governing stock options. So stock options became much more lucrative, and therefore they became much more widely used by companies as a way to compensate executives. So we have a situation now, for instance, where, you know, the value of CEO stock options is worth about 300 percent more than the value of the actual salary. But that wasn’t just something that happened. That was something that was deliberately lobbied for and changed. And the other thing that’s happened is that corporate boards have simply become much more kind of crony networks. And what’s happened with CEO pay is there’s this huge ratcheting-up effect. This is clearly a product of the fact that boards are composed of other CEOs. I mean, think about it. If you had, you know, teachers or caretakers or whatever, if their salaries were determined by boards made up of other teachers or other caretakers, they would think, well, this is–these people deserve a raise. You know, it’s this kind of old-boy effect. In general what you’ve seen is that in the last 30 years, of course, there’s just been massive changes in areas of tax law, in areas of copyright, in areas of privatization, deregulation, all this whole neoliberal agenda, you know, much weakening of labor laws, and all these things have contributed to much bigger pay to those at the top and insecurity, financial insecurity, and lower wages for those lower down.

JAY: I mean, one of the things you’re seeing in Ontario is a real push down of wages. For example, there was a big strike at Inco Vale in Sudbury, where they wound up agreeing to a kind of two-tier structure, both on pensions and wages, where new workers get paid less. I was just in a Loblaws the other day, and Loblaws workers, who are unionized and making–I think it was $18 an hour or $17 an hour, they’ve just–had been pushed into signing a contract where they’re going to have to be shifted over to a company called Loblaws Good Food or something. It’s a different corporate structure with a different contract, and they’re going to have to take $5 an hour pay cut. So these are people working at grocery store are going to lose $5 an hour.

MCQUAIG: I mean, this, of course, is the standard story. I mean, this is–we’re seeing this all the time in labor disputes is, to the extent that management will come to an agreement, it’s always they’re going to give a certain amount to the existing workers, they want a lower rate for new people coming in. I mean, think of what that is saying about our expectations about what the future’s going to be. I mean, obviously, that to me amounts to a pretty direct kind of class war against, you know, future workers. I mean, there’s a deliberate actual cut, you know, demanding actual cuts in their pay.

JAY: If you analyze what happened at that Inco strike, which is, I think, one of the more significant labor fights in Ontario in the last few years, one of the things that weakened the hand of the union there was the ability of the company to bring in scabs, to threaten to begin to start production again. And that was something that the Bob Rae government had actually outlawed and then the Harris government undid. But, again, in this current Ontario election, I haven’t–I may be missing it, but I have not seen a word about reforming the labor laws.

MCQUAIG: No, no. And reform of labor laws is actually crucial, because if you go back and look at the early postwar period, when labor was much stronger than it is today, there was a reason it was much stronger: the laws were there to protect them. I mean, starting with the Wagner Act in 1935 in the US and similar things here, there was a deliberate, you know, pattern of labor legislation designed to protect workers’ rights to organize. All that has been whittled away–in addition, of course, things like the minimum wage. So what that does is it, you know, weakens the ability of workers to organize. And, of course–and that enormously helps employers. And, of course, now we have a situation–we have a federal government in Canada that actively intervenes on behalf of the employer, even in private labor disputes.

JAY: Well, just a couple of days ago the stock exchanges around the world tanked. The world seems to be heading into a very big global recession. In fact, you’re getting a much more honest discussion about it in places like The Financial Times than you are in the sort of press that most people read. You can see that people are diving into US dollars and Treasury bills to kind of park their money to see just how bad this disaster’s going to be. Again, I don’t get a feel of that in these Ontario elections. Like, the elections are happening over here, and the real-world economy is imploding.

MCQUAIG: Of course, we know that there’s a deliberate attempt to keep–you know, keep the agenda away from these kind of broader issues. I mean, clearly the issue of inequality is just becoming a huge issue around the world, partly in the wake of the 2008 financial crash that’s, you know, plunged, I think, another 60 million people into extreme poverty, they say. And, you know, we’re seeing the same thing in Canada now, because we, to the extent that the Canadian economy survived the–you know, the downturn as well as it did, relatively, has a lot to do with its stimulus bill, which only, of course, was brought in because of the pressure–I mean, the Conservatives’ first reaction was not to bring it in. But then with the Liberals and NDP threatening to bring them down, they did bring in stimulus. Now that that stimulus package is over, there’s just huge pools of money out there. But what is going to get them invested to create jobs? There’s no clear idea how that’s going to happen.

JAY: Well, I think if the answer is higher taxation, or if one of the answers is higher taxation on the upper end, most of them–not all of them, them being the billionaires and multimillionaires–most of them, their answer is, well, I’m holding on to my money, and let the storms come.

MCQUAIG: And probably the most important negative thing about all that concentration of wealth at the top isn’t even, you know, health, social, economic, but democracy. When you have high concentrations of income at the top, what you end up with is very minimal democracy, because economic power translates into political power. And we see that. You know, that’s become so blatant. Well, in the United States now they’ve managed to actually sort of shut down the possibility of, you know, raising money through taxes instead. They’re, you know, saying it has to all come through spending cuts. That’s not the wishes of the people. The polls show that’s not what the public wants. But that is the wishes of a[n] extremely wealthy elite that’s essentially gained control of the political agenda.

JAY: Thanks very much for joining us.

MCQUAIG: Thanks, Paul.

JAY: And thank you for joining us on The Real News Network.

End of Transcript

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Linda McQuaig

Linda McQuaig is an acclaimed Canadian journalist and best-selling author. She currently writes an op-ed column for the Toronto Star and has written eight books on politics and economics, including It's the Crude, Dude, and most recently, The Trouble With Billionaires.