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Wednesday, 3 December 2014

Inequity – an economists view of the public health issue (and very supportive)

When economists speak to the need to address a central public health issue, we need to pay attention. 

A special report from TD Bank Economics discusses the implications of income inequality on economic growth and long-term prosperity.  TD economics special report November 24, 2014

The headline message to take home is the TD report references an OECD 2014 report  that shows a 1% increase in inequality results in a 0.6-1.1% reduction in GDP growth.  The TD study details further how Canada has performed internationally (and there are some positive indicators).   Both these resources will aid in future conversations.

Notable in the discussion is the debunking of the myth that global productivity growth benefits everyone and detailed analysis of who is benefiting the most and least. It further demonstrates that the Canadian misalignment of growth has actually been carried mostly by the middle-income earners.  The change in relative average income is reproduced below.

The growth by highest-income earners is punctuated graphically with the Canadian income share earned by the highest 1% having increased from 7 ½% to 12 ½% in the past thirty years, and one of the larger absolute and relative increases among developed countries. 

Our colleagues south of the border may well be interested in the report as well as it lays out the relatively poor performance of the US (and Mexico) on an international basis.   Comparisons between the US and Canada are notable as charted below in the disproportion of the distribution of wealth, however less “fair” work practices has fueled recent productivity gains in the US and stymied Canadian competitiveness in the international marketplace. 

The paper explores a variety of options to continue to support equity in Canada and draws heavily on analysis of changes in Gini coefficients arguing Canada’s relative success at holding the Gini coefficient relatively constant. (For more on the Gini coefficient September 2011  June 2012)   While negating increased taxation, the document does explore alternative approaches to ensuring income equality mostly through differential costs of services based on means (a more palatable form of taxation based on actual use and less open to taxation avoidance).  DrPHealth March 2014 discussed an International Monetary Fund report that supports redistribution of wealth as an economy improvement activity as well as reducing inequity.

A great read and an invaluable resource for those engaging with business and economists about the value of addressing a central public health issue.  The economic case for public health continues to mount. 

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