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Pique'n'yer interest

Show us the money

Modern democracies have always been in flux, with common people caught in a never-ending tug of war with the wealthy aristocracy for the reigns power. When one group is brought to the brink, or the guillotine, the other side starts to pull back. One moment Rome’s a republic, the next it’s an empire. Communist countries become socialist, socialist countries embrace capitalism, capitalists flirt with facism, and then we go back again. As we evolve politically and democratically, the extremes to the left and right are narrowing as we set up stakes in the middle ground between people power and money power.

The job of modern governments is to act as referee in this process, raising and lowering taxes, strengthening and weakening labour laws, funding and de-funding education and social programs, regulating and deregulating industry, raising the minimum wage or letting it stagnate relative to inflation, investing in companies or investing in people. When money and governments become too cozy, the lower wage majority can be counted on to eventually vote the bums out.

I think it’s safe to say that the aristocracy is winning this latest round.

According to the Canadian Council on Social Development, the richest 20 per cent of Canadians saw their net income increase by 43 per cent between 1984 and 1999. During the same period, the bottom 20 per cent of earners actually saw their net wealth slip by about 51 per cent when inflation is taken into account.

From 1999 to 2005, Statistics Canada reports that the wealthiest 20 per cent saw their wealth grow another 19 per cent, while the bottom 20 per cent made no gains whatsoever. The rising value of housing explains part of the growing disparity, and income taxes do lower the gap somewhat.

For middle-income families, wages have more or less kept up with inflation the past 30 years and that’s about it. However, with the rising cost of housing, energy, post-secondary education, insurance, and other necessities — not to mention growing debt loads as people overspend to keep pace with a middle-income standard of living — people are having a tougher time getting ahead. Include the fact that both parents are typically working these days, and it would appear that middle incomes are actually shrinking quite drastically.

According to a report by CIBC World Markets, even a one per cent increase in interest rates — which would result in increased mortgage and loan rates — would force thousands of families already living close to the wire to declare bankruptcy. Others would have to adopt drastic cost-saving measures that would reduce consumer spending and bring about another recession, with all the accompanying job loss, wage stagnation, and loss of real estate equity.

The wealthy do pay more taxes in Canada, albeit at lower rates, but also have far more disposable income that they can use to max out their RRSP contributions, invest in stocks and bonds, pay off their mortgages and debt, and purchase second homes that will gain in value over time.

The Catch-22 of our economy, and every economy, is that it still takes money to make money. People who max out their RRSP contributions get massive tax breaks. Real estate, though expensive, is a proven way to make money over the long-term if you can ride out market fluctuations. And unless you have inside information or Warren Buffet is your broker, it’s a challenge to make money in the stock market once you factor in dividend taxes and inflation — unless you have a lot of money to invest, and those small margins of profit represent huge amounts of real money.

Wealth also tends to concentrate. While we still have stiff estate taxes in this country — thereby preventing the creation of a permanent money class where wealth is passed down from generation to generation to people who didn’t earn it — it’s still in your benefit to be born to a wealthy family.

A recent monitoring report on Whistler 2020 found that the median income in Whistler is slipping. The median income was just $18,998, down $750 from the previous year and $3,000 from 2002.

Of course Whistler has rebounded a lot since 2005, and in the past two years we’ve seen a constant shortage of employees and the influx of a lot of high-paying construction jobs with the Olympics and other projects on the horizon. No doubt that number has gone up significantly.

But it’s interesting to note that the national average income is more like $30,000, which means that Whistler has a lot of low paying jobs.

The thing is that Whistler is a service industry town, and service industry jobs don’t pay a lot. I think that’s a mistake — it results in more turnover and forces us to rely on transient workers who we’re discovering we can’t always count on. There’s just too much competition for that young, mobile workforce. We have the mountains as an extra incentive, but they’re incredibly busy. The skiing experience is not the draw it once was.

It’s time to pay staff more, and to start offering more incentives to staff such as a percentage of the sales going into the tills. Businesses have to demand lower rent, if that’s what’s keeping wages low, and renters have to demand lower taxes if that’s what’s keeping rents high.

The workers are pulling back, and will have all the power again once the baby boomers retire. A guillotine isn’t even necessary in this shift, just the ability to pack a bag and hop on a bus to somewhere else.