Chocolate, Strawberry and Vanilla: Which Flavour does the Middle Class like?

October 8, 2015 at 5:16 pm (Uncategorized)

Interesting piece published in Monday’s National Post. The opener being the most interesting, that contrary to received wisdom, there is very little to separate the parties. Of course, with the Conservatives you get a little more overt racism (quite a lot more these days as the Niqab takes centre-stage in the conservatives’ campaign);  with the Liberals and the NDP you get a little sugar, but not a great deal of difference from the Conservatives.


Apart from being the longest federal campaign in living memory, this has to be the most chaotically confused; not because of the great variety of ideologies on offer, but rather the lack of them.

For if you cut past the partisan babble, you will discern a striking unanimity among Conservatives, New Democrats and Liberals — whether it be legal restrictions on smoking pot (all contemplate reform to one degree or another), or climate change (the provinces will lead, no matter the election result), or the federal share of sales tax (which will not budge even if tax-and-spenders storm the castle Oct. 19).

The middle class, all major parties agree, is the holy of holies. The only serious discord, on economic matters, is over which of them can most credibly lay claim to loving “everyday Canadians” best and rewarding them most, through the sundry goodies of tax cuts, spending and benefits.

But the “middle class,” as it turns out, is actually a proxy in a more elemental struggle, not over social inequality, but over power. The class distinction is code: it represents the demographic fulcrum, perhaps no more than 10 per cent of eligible voters who in Canada determine the outcome of elections.

All policy-making in the three main parties now appears aimed at assimilating this cohort, likely numbering fewer than one million swing voters in key ridings. The result has been a transformative populism, which began not with Justin Trudeau or Tom Mulcair, but with Preston Manning’s Reform Party in the early 1990s and got seriously rolling in 2005, before Stephen Harper’s first victory.

When Trudeau emerged from his post-boxing-match triumph in 2012 to gallop to the head of the Liberal party, he did so with rhetoric about the middle class already fully formed.

“The great economic success stories of the recent past are really stories of middle class growth,” he said in his launch speech. “China, India, South Korea and Brazil, to name a few, are growing rapidly because they have added hundreds of millions of people to the global middle class.”

Then more darkly: “The news on that front is not so good at home; I don’t need to tell you that. You, like our fellow Canadians all over the country, live it every day. Canadian families have seen their incomes stagnate, their costs go up, and their debts explode over the past 30 years.”

It was a message repeated in countless of his speeches thereafter; it was soon picked up by Mulcair’s New Democrats. The following year, now Liberal leader, Trudeau recruited journalist Chrystia Freeland, who would become the MP for Toronto-Centre; Freeland was the author of Plutocrats, a best-selling work of popular economics that explored the global phenomenon of rising inequality and income stagnation among the middle class. The NDP found its own inequality specialist, crusading left-wing journalist Linda McQuaig, who published a book with Neil Brooks in 2010 drawing on similar themes, The Trouble With Billionaires.

Though McQuaig and Freeland reached quite different conclusions, both books beat the drum about the spectre of a new “gilded age.” Soon, Liberal and New Democrat MPs could be seen hurrying around Parliament Hill with one book or the other under their arms; papers by the leading researchers in this field — Miles Corak at the University of Ottawa, Mike Veall at McMaster, Kevin Milligan at UBC, Mike Moffat at Western, Stephen Gordon at Laval, David Autor at the Massachusetts Institute of Technology — became required reading for Canadian politicos.

The data revealed, in a nutshell, that inequality has, indeed, been in a long-term rising trend, since the early 1980s. In examining tax filings going back to the 1920s, Veall found the top one per cent of earners’ share of total income spiked above 15 per cent just before the Great Depression and just before the Second World War, after which it dropped steadily for the next 40 years, reaching a nadir of about eight per cent in the early 1980s, Then, it began to steadily rise, helped by a neo-liberal policy wave across the Western world.

Canadian after-tax household incomes, critics of the middle-class mantra have often pointed out, have risen steadily over the past 30 years and have never been higher than they are today — but this is only because of a prolonged upward spike in the numbers of women working outside the home and a corresponding increase in women’s wages. Median full-year earnings among men, adjusted for inflation, are flat or down since 1980.

 This, then, provided the emotional nub of the case for a downtrodden middle class: Your family may be taking home more than it ever has before, but you’re working twice as hard. Moreover, the entry of women into the workforce is mainly done, now. From where will growth come in future? The key forces underlying polarization, which essentially is the hollowing out of traditional middle-class work, are automation and globalization, neither of which is reversible.

It’s a legitimate long-term policy concern. And it might make a compelling case for a sea change in federal tax policy, were it not for this: according to all the data, Canada has been bucking the long-term trend for the past 10 years — since the Conservatives took office. Veall’s data show the sharpest upward spike in inequality of modern times occurred in the 1990s under the Liberals, and topped out in 2005, with about 14 per cent of income in the hands of the top one per cent. That share has since declined to about 12 per cent.

Lest anyone think this is purely coincidental, along came the Parliamentary Budget Officer in May 2014, with a 57-page analysis of the combined effect of federal tax policy changes in 2005-13: “Cumulative tax changes since 2005 have been progressive overall and most greatly impact low-middle income earners … effectively resulting in a four per cent increase in after-tax income.”

Then there’s this: by global measures, Canada’s middle class is doing fine. In April 2014, The New York Times published a study, based on the Luxembourg Income Study database, showing median incomes in Canada had moved ahead of those in the United States and other leading economies. The federal Conservatives, predictably, did cartwheels. The loonie’s recent slump has made us poorer once again, relative to our American cousins. But Canada remains among the world’s wealthiest countries and also among the most equal. Redistributive taxation, implemented by nominal conservatives, is one main cause.

 So the question becomes, why? Why would these Conservatives be as solicitous of the middle and working class as they’ve been, given they’re supposed to be the party of fat cats? And why would the Liberals and New Democrats stage a five-alarm rescue for a cohort that’s already being rescued, to a quite considerable degree?

The answer lies in the groundbreaking work of a former Conservative strategist, Patrick Muttart, and the two smart political operatives who’ve adopted his data-driven methods — Brad Lavigne of the NDP and Gerald Butts of the Liberals. It is no surprise, given the three major parties’ strategies are built around market information gathered from the same populace, that their platforms now look similar. What’s remarkable is that there remain any variances at all.

Readers of Susan Delacourt’s superb 2013 book, Shopping for Votes, will be familiar with Muttart’s story. In the lead-up to the 2005-06 campaign, he determined the Tories could make inroads by micro-segmenting their appeal to the “Tim Hortons” crowd, shorthand for middle-and working-class voters. He  further discovered that elections often turn on the decisions of a relatively small cohort of swing voters who are apolitical, not interested in process and liable to vote their family’s economic interest first.

Delacourt refers to an article by Henry Olsen, written for the American Enterprise Institute in January 2011, in which Muttart is cited as “perhaps the leading authority on working-class voters in the English-speaking world.”

 John Howard in Australia and Margaret Thatcher in Britain relied on working-class voters to build their coalitions. Muttart’s singular achievement was to persuade Harper to do the same.

In Political Marketing in Canada (UBS Press 2012, edited by Alex Marland, Thierry Giasson and Jennifer Lees-Marshment), contributor André Turcotte writes: “The party’s polling program was designed to first understand the composition of the political marketplace and then to identify the values and policy positions of certain segments of the electorate that would maximize their electoral market share.”

After a disappointing result in 2008, as the NDP’s Lavigne recounts in his 2013 book, Building the Orange Wave, the party also embarked on micro-segmented analysis of target voters, resulting in its first concerted move to the centre under Jack Layton and laying the foundation for its breakout in 2011.

The humiliation of that experience for Michael Ignatieff’s Liberals, in turn, caused a fundamental re-assessment of that party’s policy-making, led primarily by Butts. The Liberals’ signature economic platform, which lowers the marginal tax rate for earnings of $44,701-$89,401 and boosts child benefits for middle-income families, is classic Muttartian thinking. It’s a wonder the Tories didn’t propose it themselves, or the NDP for that matter. Each seeks to capture the same voter, after all.

Some will lament this as the end of leadership; others will celebrate it as a great democratizing trend. Either way, it means Canadians will not only get the government they deserve, but also the policies they want — regardless of who wins, by and large. The Oct. 19 vote is not primarily about setting a direction for the nation. It’s about picking a leader. In 2015, that’s the only big decision left.

National Post



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