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Economics professor offers grossly misleading analysis of inequality in Canada

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6 minute read

From the Fraser Institute

By: Philip Cross

Dalhousie economics professor Lars Osberg’s The Scandalous Rise of Inequality in Canada was published just in time to be eligible for the always hotly-contested title of worst Canadian economics book of the year.

Osberg’s central theme is that inequality in Canada has been steadily increasing and this poses a threat to economic growth, financial stability, social mobility, limiting climate change and even democracy—at times, it seems every imaginable problem is blamed on inequality. This makes it even more important to get the facts about inequality right.

The most misleading chapter in the book concerns top-income earners. Osberg claims that “the income share of the top 1 per cent… is the aspect of inequality that has changed the most in recent years.” However, the chapter on inequality at the top of the income distribution exclusively features data for its increase in the United States, driven by the outrageous success of technology firms such as Facebook, Apple, Alphabet, Microsoft and Nvidia. Nowhere is the data for Canada cited, but in fact the 1 per cent’s share of income in Canada has fallen since 2007, which probably explains why Osberg avoided it.

The real problem with Canada’s high-income earners over the last two decades is not that they’re gobbling up more income at the expense of everyone else, but that we do not have enough of them. Nor do the top 1 per cent in Canada earn nearly as much as in the U.S. Pretending that incomes in Canada are as skewed as in the U.S. is another example of importing narratives without examining whether they are applicable here. This might be forgivable for the average person, but it’s scandalous and disingenuous for a professor specializing in income distribution.

Raising taxes on the richest 1 per cent has a “populist” appeal. However, former finance minister Bill Morneau wrote in his memoire Where To From Here: A Path to Canadian Prosperity that he came to “regret supporting the idea of a tax increase on the 1 percent” because “it began a narrative that made it difficult to have a constructive dialogue with the people prepared to invest in research and development to benefit the country… our proposal’s biggest impact was to reduce business confidence in us.” Before becoming the Trudeau government’s current finance minister, Chrystia Freeland acknowledged that “many of the ultra-high net-worth individuals flourishing in today’s global economy are admirable entrepreneurs, and we would all be poorer without them.”

Another practical consideration for Morneau was that “Canada’s personal income tax rates are not competitive with the U.S. where highly skilled labour is concerned.” Finally, Morneau acknowledged that taxing the rich in Canada will not raise much money, because “the number of taxpayers affected will be quite small… the math just doesn’t work.” I calculate that confiscating all of the income the 1 per cent earn above $200,000 would fund total government spending in Canada for a paltry 44.2 days.

Besides misrepresenting the importance of Canada’s 1 per cent, Osberg twice makes the patently false claim in his book that “income from capital… is roughly half of GDP in Canada.” Just last week,  Statistics Canada’s estimated labour income’s share of GDP was 51.3 per cent while corporate profits garnered 26.0 per cent (including profits reaped by government-owned businesses through their monopolies on utilities, gambling and alcohol sales). Another 12.6 per cent of GDP was mixed income earned by farmers and small businesses, which StatsCan cannot disentangle between labour and capital. The final 10.2 per cent of GDP went to government taxes on production and imports, which clearly is not a return on capital. I would expect undergraduate economic students to have a better grasp of the distribution of GDP than Osberg demonstrates.

Among the many evils generated by inequality, Osberg cites democracy as “threatened by the increasing concentration of wealth and economic power in Canada.” Osberg must believe Justin Trudeau’s decade-long tenure as prime minister reflects the choice of our economic elites. If so, they have much to answer for; besides steadily-degrading Canada’s economic performance and international standing, Trudeau attacked these same elites by raising income taxes on upper incomes, increasing the capital gains tax, and undercutting the fortunes of the oil and gas industry on which much wealth relies. If our economic elite really controls government, it seems they made an incredibly bad choice for prime minister.

Philip Cross

Senior Fellow, Fraser Institute

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Business

Clean energy transition price tag over $150 billion and climbing, with very little to show for it

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From the Fraser Institute

By Jake Fuss, Julio Mejía, Elmira Aliakbari, Karen Graham and Jock Finlayson

Ottawa and the four biggest provinces have spent (or foregone revenues) of at least $158 billion to create at most 68,000 “clean” jobs since 2014

Despite the hype of a “clean” economic transition, governments in Ottawa and in the four largest provinces have spent or foregone revenues of more than $150 billion (inflation-adjusted) on low-carbon initiatives since 2014/15, but have only created, at best, 68,000 clean jobs, according to two new studies published by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

“Governments, activists and special interest groups have been making a lot of claims about the opportunities of a clean economic transition, but after a decade of policy interventions and more than $150 billion in taxpayers’ money, the results are
extremely underwhelming,” said Elmira Aliakbari, director of natural resource studies and co-author of The Fiscal Cost of Canada’s Low-Carbon Economy.

The study finds that since 2014/15, the federal government and provincial governments in the country’s four largest provinces (Ontario, Quebec, Alberta and British Columbia) combined have spent and foregone revenues of $158 billion (inflation adjusted to 2024 dollars) trying to create clean jobs, as defined by Statistics Canada’s Environmental and Clean Technology Products Economic Account.

Importantly, that cost estimate is conservative since it does not account for an exhaustive list of direct government spending and it does not measure the costs from Canada’s other six provinces, municipalities, regulatory costs and other economic
costs because of the low-carbon spending and tax credits.

A second study, Sizing Canada’s Clean Economy, finds that there was very little change over the 2014 to 2023 period in terms of the share of the total economy represented by the clean economy. For instance, in 2014, the clean economy represented 3.1 per cent of GDP compared to 3.6 per cent in 2023.

“The evidence is clear—the much-hyped clean economic transition has failed to fundamentally transform Canada’s $3.3 trillion economy,” said study co-author and Fraser Institute senior fellow Jock Finlayson.

State of the Green Economy

  • The Fiscal Cost of Canada’s Low-Carbon Economy documents spending initiatives by the federal government and the governments of Ontario, British Columbia, Alberta, and Quebec since 2014 to promote the low-carbon economy, as well as how much revenue they have foregone through offering tax credits.
  • Overall, the combined cost of spending and tax credits supporting a low-carbon economy by the federal government and the four provincial governments is estimated at $143.6 billion from 2014–15 to 2024–25, in nominal terms. When adjusted for inflation, the total reaches $158 billion in 2024 dollars.
  • These estimates are based on very conservative assumptions, and they do not cover every program area or government-controlled expenditure related to the low-carbon economy and/or reducing greenhouse gas emissions.
  • Sizing Canada’s Green Economy assesses the composition, growth, share of Gross Domestic Product (GDP) output, and employment of Canada’s “clean economy” from 2014 to 2023.
  • Canada’s various environmental and clean technology industries collectively have accounted for between 3.07% and 3.62% of all-industry GDP over the 10-year period from 2014 to 2023. While it has grown, the sector as a whole has not been expanding at a pace that meaningfully exceeds the growth of the overall Canadian economy, despite significant policy attention and mounting public subsidies.
  • The clean economy represents a respectable and relatively stable share of Canada’s $3.3 trillion economy. However, it remains a small part of Canada’s broader industrial mix, it is not a major source of export earnings, and it is not about to supplant the many other industries that underpin the country’s prosperity and dominate its international exports.

 

Jake Fuss

Director, Fiscal Studies, Fraser Institute

Julio Mejía

Policy Analyst

Elmira Aliakbari

Director, Natural Resource Studies, Fraser Institute

Karen Graham

Jock Finlayson

Senior Fellow, Fraser Institute
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Agriculture

Cloned foods are coming to a grocer near you

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This article supplied by Troy Media.

Troy MediaBy Sylvain Charlebois

And you may never find out if Health Canada gets its way

Cloned-animal foods could soon enter Canada’s food supply with no labels identifying them as cloned and no warning to consumers—a move that risks public trust.

According to Health Canada’s own consultation documents, Ottawa intends to remove foods derived from cloned animals from its “novel foods” list, the process that requires a pre-market safety review and public disclosure. Health Canada defines “novel
foods” as products that haven’t been commonly consumed before or that use new production processes requiring extra safety checks.

From a regulatory standpoint, this looks like an efficiency measure. From a consumer-trust standpoint, it’s a miscalculation.

Health Canada argues that cloned animals and their offspring are indistinguishable from conventional ones, so they should be treated the same. The problem isn’t the science—it’s the silence. Canadians are not being told that the rules for a controversial technology are about to change. No press release, no public statement, just a quiet update on a government website most citizens will never read.

Cloning in agriculture means producing an exact genetic copy of an animal, usually for breeding purposes. The clones themselves rarely end up on dinner plates, but their offspring do, showing up in everyday products such as beef, milk or pork. The benefits are indirect: steadier production, fewer losses from disease or more uniform quality.

But consumers see no gain at checkout. Cloning is expensive and brings no visible improvement in taste, nutrition or price.
Shoppers could one day buy steak from the offspring of a cloned cow without any way of knowing, and still pay the same, if not more, for it.

Without labels identifying cloned origin, potential efficiencies stay hidden upstream. When products born from new technologies are mixed with conventional ones, consumers lose their ability to differentiate, reward innovation or make an informed choice. In the end, the industry keeps the savings while shoppers see none.

And it isn’t only shoppers left in the dark. Exporters could soon pay the price too. Canada exports billions in beef and pork annually, including to the EU. If cloned origin products enter the supply chain without labelling, Canadian exporters could face additional scrutiny or restrictions in markets where cloning is not accepted. A regulatory shortcut at home could quickly become a market barrier abroad.

This debate comes at a time when public trust in Canada’s food system is already fragile. A 2023 survey by the Canadian Centre for Food Integrity found that only 36 per cent of Canadians believe the food industry is “heading in the right direction,” and fewer than half trust government regulators to be transparent.

Inserting cloned foods quietly into the supply without disclosure would only deepen that skepticism.

This is exactly how Canada became trapped in the endless genetically modified organism (GMO) debate. Two decades ago, regulators and companies quietly introduced a complex technology without giving consumers the chance to understand it. By denying transparency, they also denied trust. The result was years of confusion, suspicion and polarization that persist today.

Transparency shouldn’t be optional in a democracy that prides itself on science based regulation. Even if the food is safe, and current evidence suggests it is, Canadians deserve to know how what they eat is produced.

The irony is that this change could have been handled responsibly. Small gestures like a brief notice, an explanatory Q&A or a commitment to review labelling once international consensus emerges would have shown respect for the public and preserved confidence in our food system.

Instead, Ottawa risks repeating an old mistake: mistaking regulatory efficiency for good governance. At a time when consumer trust in food pricing, corporate ethics and government oversight is already fragile, the last thing Canada needs is another quiet policy that feels like a secret.

Cloning may not change the look or taste of what’s on your plate, but how it gets there should still matter.

Dr. Sylvain Charlebois is a Canadian professor and researcher in food distribution and policy. He is senior director of the Agri-Food Analytics Lab at Dalhousie University and co-host of The Food Professor Podcast. He is frequently cited in the media for his insights on food prices, agricultural trends, and the global food supply chain.

Troy Media empowers Canadian community news outlets by providing independent, insightful analysis and commentary. Our mission is to support local media in helping Canadians stay informed and engaged by delivering reliable content that strengthens community connections and deepens understanding across the country.

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