Canada moving toward American-style inequality, U.S. economist suggests
A prominent U.S. political economist says Canada is moving toward American-style inequality, and believes austerity economics and tax cuts for corporations are making the problem worse.
Robert Reich, the secretary of labor during Bill Clinton’s presidency, now writes extensively on income equality and was in Canada this week speaking at an event for the Broadbent Institute.
“The United States economy and the Canadian economy are going on parallel courses,” Reich said in an interview on CTV Question Period.
With Japan moving into an official recession and much of Europe still mired in a slowdown, there’s still an idea that countries need to cut government spending during the recovery.
That kind of thinking, Reich says, has the effect of worsening the ratio of debt to the total economy.
“Austerity economics does not work,” Reich said. “If you slow down the economy because government is cutting down so much that there’s not enough demand to keep the economy going, then you end up with a worse ratio of debt to GDP.”
The U.S. and Canadian economies are growing too slowly, he says. And many wealthy people or corporations, he said, are putting their money in places where they can get the highest return – but that kind of investment isn’t what creates jobs.
“Without customers, businesses are not going to create jobs,” he said.