The Unassuming Economist

From Financial Post:

“While economies work better when entrepreneurs and others are allowed to satisfy their greed, big gaps between the richest and the rest can cause chronic problems

Our collective share of the pie shrunk last year.

You might have seen reports that the trade deficit remained an expanse of misery in January. The same day that Statistics Canada released those dreary numbers, it also published its annual report on the distribution of household wealth, or, if you prefer, “Distributions of household economic accounts for income, consumption, saving and wealth of Canadian households, 2018.”

The net worth of households was $10.7 trillion in 2018, compared with $10.9 trillion in 2017; the first decrease since at least 2010, which is when Statistics Canada began publishing this particular set of data.

Collectively, we’re 60 per cent richer than we were a decade ago, so keep that in mind before you take to Twitter to vent about Stephen Harper’s austerity or Justin Trudeau’s taxing of the rich. Still, the good times rolled a little slower last year. That’s partly because the housing bubbles in Toronto and Vancouver started to deflate. But it’s also because a group of wealth creators on which the country has relied since the Great Recession had a tough time in 2018.

Statistics Canada diced household wealth into five income segments. It also divided the aggregate data into five regions. There wasn’t a lot of change in distribution. Nationally, the richest 20 per cent of households controlled about 55 per cent of total wealth, roughly the same as 2010. One shift stood out, however.

(…) “Inequality and fragile growth may be two sides of the same coin,” Ostry, a Canadian who trained at Oxford, the London School of Economics, and the University of Chicago, says in Confronting Inequality: How Societies Can Choose Inclusive Growth, along with co-writers Prakash Loungani and Andrew Berg.

(…) The Trudeau government and the business community keep talking past each other. The latter should recognize that the federal government’s coddling of the middle class isn’t entirely about electioneering. And Trudeau and Morneau should be wary of taking the leaders of the country’s biggest companies for granted. As David Lipton, one of Ostry’s bosses at the IMF once said, “a larger slice of the pie for everyone calls for a bigger pie.”