“The Rich are Getting Richer—The Poor are Getting Poorer”

The truckload of distorted information that is spread around every time Statistics Canada (Statscan) publishes income statistics about the incomes earned by Canadians must be challenged. The use and abuse of the figures verges on the hyped up rhetoric of insanity. "The Rich are Getting Richer and the Poor are getting Poorer" the pundits proclaim and often the cries emanate from professionals, politicians and news editors who should know better.

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The message they wish to proclaim is that our economic system is creating an intolerably unfair society because the "poor" are being left behind and therefore we (the government) should take substantial measures to change things or face some sort of social revolution. We expect such hype from the socialist NDP and their fellow travelers. We know the Toronto Star, the CBC, CTV and all of the socialist left-leaning media across Canada will dutifully pick up on the chant. They will attempt to use the statistics to persuade people that the "trickle down theory" of the market economy is leaving vast numbers of Canadians behind, barley able to feed their children, out on the streets and in all sorts of third world conditions; the old are impoverished and about to be thrown out of their homes and so on, ad nauseum. Some university professors jump on the band wagon and proclaim the same social disaster. The problem is that these statistics prove nothing of the sort. They never have and they never will. But that doesn't matter to the poverty chatterers; they will blithely accept Statscan statistics without looking at what they actually are, how they are put together and what they represent. Unfortunately for these doomsayers, Statscan statistics are constructed in such a way that none of these exaggerated claims can be supported and indeed it is doubtful that any "Rich--Poor" use can be made of these numbers, except perhaps to prove that the top ten percent of incomes of the wealthiest people are distancing themselves from the incomes of the bottom ten percent of the lowest income people. Even that uncertain evidence is not entirely without flaw or rational explanation. Statscan cannot be held responsible for the misinterpretation of the data they produce however; they have never corrected the abusers who use them. Statscan's numbers are reasonably accurate. It is very troublesome though, that those that abuse their positions by lending their credentials in support of incorrect conclusions continue to do so year after year. To put the best face on it, we could call them plain lazy in not more closely examining the evidence they cite in support of their arguments. The propagandists will, on the other hand, always use any figures to support their agenda, correct or not; they assume no responsibility whatsoever. Both should be criticized. So let's look at these statistics. Why is it the doomsayers cannot use these figures to prove the Rich are Getting Richer and the Poor are Getting Poorer? Statscan begins its study by breaking all reported incomes in Canada into ten equal sections grading from the very lowest income to the very highest. Think of these sections as a set of ten boxes of increasing and decreasing size, depending on the numbers of people in each box at each of the ten income levels. Think of the boxes as being stacked one on top of the other and increasing in size until roughly the middle of the pile and then decreasing in size until they reach the very top. The whole stack would looks something like a jagged onion, fat in the middle and increasingly smaller to each end. Most earners are in the middle portion of the pile of boxes. That is why those of us whose incomes fall in boxes below the middle of the stack are known as lower middle class earners and above the middle of the stack, upper middle class earners. None of us are personally identified. It is a matter of collective income level identification and the numbers of taxpayers at each income level. Next, imagine Statscan setting up a mythical X-ray machine and taking an X-ray of the whole pile of ten boxes. They don't take a movie, just one photo. Five years later, they erect another set of ten boxes in the same way and so on every five years (they don't re-X-ray the original set of boxes or any set more than once). The last pile erected and X-rayed was just a year ago, being the end of thirty years and seven piles of boxes. No pile of boxes contains exactly the same group of people as looked at originally, or at the end of any five-year period. So what's the problem? Simply put, the problem is that the people reporting incomes that placed them in the very first set of boxes are not exactly the same people as are in any of the next six piles of boxes, at any of the levels of income. It is as if the people in the boxes were frozen in time and there were no people moving up or down the income scales over thirty years. In effect, the many interpreters of these X-ray photographs chose to assume that these are the same people looked at every five years and that nobody had ever left the "Poor" bottom box and progressed up to a higher income box over thirty years. They also assume that nobody died, nobody lost their income, nobody just entered the work force, and nobody climbed to the very top or dropped to the very bottom. Look at it this way. When this writer started to work, it was for a barely livable wage. It took two of us working to just keep our heads above water. We were in the bottom "Poor" box. Most of us had the same experience. We started our careers in the very bottom box, income-wise. Most of us however, do progress through the various earnings levels as we grow older and our experience is worth more to our employers. Students earn more as they leave school and begin to earn steady incomes. Most people work many years before achieving management or professional status and climb to a comfortable middle class income. It is a similar story for entrepreneurial businessmen and women. The entrepreneur that starts a business usually has no or little income in the beginning and he or she may even fail in the first few attempts, becoming bottom box dwellers, perhaps for a long time. However, with luck, ambition, drive and intuition, success comes and slowly the entrepreneur wends his way up through the various income levels. The very successful may even become some of the very top "RICH." Wonderful! Such persons provide hope and role models for all of us. Do these statistics show that financial rewards provide no incentive for people to achieve and penalties (lower incomes) merely make matters worse? No! But they do show that the great bulk of the population is in the middle income class or above. We would need a mythical MRI machine to watch the movement of exactly the same people through the various income levels every five years to discern the a true statistical case for anything. Let us pray our market driven system continues because the higher the incomes, the more the government collects in taxes and the more charities receive in donations from the so-called "Rich." Actually, the great bulk of taxes and donations are collected from the middle income classes because they are by far the most numerous of taxpayers. All of which means society continues to be able to do more for the truly needy. When we hear the claim that the Rich are getting richer while the Poor are getting poorer, we should all have a drink and thank our lucky stars that our market economy continues to provide such wonderful incentives to all our creative and hard working people. Think about it. We can have the largest forests in the world and mountains of iron ore but without the brains, skill and labour of human beings, not an ounce of steel or a piece of plywood would ever be made to build our cars or construct our homes. There are of course, many families living in stressful conditions and some seniors are finding it very difficult. We also know the homeless continue to be a visible untidy presence on the streets of our major cities. Be that as it may, do not condemn our market economy. The answer is that our political masters never seem to get their act together and focus on truly helping those that need help or can be helped, and making sure everybody that is able to work or learn does so. While there is no question that we have to help the infirm, the abandoned children; the poor decision makers etc., it must never be at the cost of removing incentives. Incentive is the absolute key to encourage all of us to strive to do better. The beauty of the "free" market incentive system is that it reflects the reality of human nature and human desires and if these statistics prove anything, they tend to prove that the free market system is working as it should. We only need to look at the many classic examples of non-incentive welfare states and similar incentive based states right here in Canada. Think about our many isolated northern native reserves; reserves that have no viable economic base. The social and economic disaster of these reserves is as one must expect when few incentives exist. Then look at the many other native reserves that are involved in market economies with viable economic bases (you will seldom hear about them, it is not a popular subject when native leaders want to beat the "downtrodden native" drum to demand more and more support from the general taxpayers). Believe it or not, there are many reserves that produce proud entrepreneurs, professionals and productive workers of all types. Natives in and from these reserves are a growing successful middle class and some could be called "rich" by any standard. These latter reserves and the many native people that do well are involved in education, ambition and achievement and do not rely solely on government incomes, if at all. Incentives are the breath of life for any free and democratic people, regardless of national or ethnic identity. Recently, the big solution for all our "poor" problems according to our illusionist editors, socialist politicians and various social justice advocates is the Guaranteed Annual Wage. On the contrary, that is the way to sloth and bad choices. That is the way to certain abuse of the taxpayer and ultimately to the social balance of society itself. It has to be understood, that if we all had a couple of million dollars given to us, the price of a postage stamp would probably be $200 and a loaf of bread $1,000. Very soon the marginally able would become social basket cases and the poor would have great difficulty from getting themselves out of the "free" income trap. In summary, the leftist mass media and their varied socialist mimics everywhere are engaged in nothing more than political propaganda against an economic system that is working as it should. There may be an increasing income gap between the very lowest income bracket and the very highest but we should cheer that fact and not condemn it. The achievers and entrepreneurs are indeed moving up the income scale. Some of them will be new immigrants and many will be young smart students just about to start their earning years. Some, in the future, will become the very rich. "You" might even be one of them! Whatever we do, don't let the carping lefties and feeble minded amateur statistical propagandists mislead us. Not much of 'poor versus rich' significance can be deduced from Statscan's income statistics. As the old dictum says, "figures may not lie, but liars sure can figure!"