ABS201Y1 Lecture Notes - Lecture 1: Thomas Piketty, Wealth Concentration, Progressive Tax

22 views1 pages
27 Jul 2016
School
Course
Professor
Page:
of 1
Name: Abdi Mohamud
Course: SOC220H1F
Date: September 29, 2015
Reflection on the readings of September 29: Income, wealth and poverty
The readings by Grabb and Guppy (2009) and Piketty and Saez (2006) highlight the
growing income inequality and wealth concentration among the top 1% in Western countries.
Cumulatively, the two readings provide evidence and understanding of the meaning of the 99% -
1% slogan used by Occupy Toronto and other cities. Piketty and Saez (2006) demonstrate
historically how incomes of the top 1% have evolved over years in Western countries. Their study
found that in countries such as the USA, Canada and UK, the income for the top I% has increased
significantly, being highest in at the USA where its stands at 45%, and in Canada and the UK at
about 30%. However, countries like Sweden and France, which have embraced progressive
taxation, registered falling income inequality. This view is supported by Grabb and Guppy (2009),
who found that the top 1% in Sweden took home 20% of total income. Nonetheless Grabb and
Guppy document that wealth is more unequal than income partly because wealth is mostly
inherited by the privileged few, who enjoy economic power. On their part, Piketty and Saez offer
that part of growing income inequality may be explained by changes in income composition where
the top 1% in the USA, UK and Canada earn their incomes from high wages, a group they
characterize as the “working rich”, the 99% could be referred to as the working poor.
The readings demonstrate that the income of the 99% Canadians have stagnated while
compensation for the 1% mostly the highest paid CEOs has risen significantly. The result is rising
inequality. This is the case because the public and private sectors through government policies and labour
market practices have been engaged in an aggressive and highly successful income and wealth distribution
in favour of the 1%. Accordingly, the gap between the rich and poor widened, but the poor are more
numerous, and there are fewer people in the middle relative to the rich. This is income polarization. A
minority of Canadians are actually in the middle. The Canadian population is polarizing into the far ends of
the income spectrum: a few at the top and most of the bottom. Hence the slogan “we are the 99 percent”.
find more resources at oneclass.com
find more resources at oneclass.com