2011/2012 Prospering Together: Addressing Inequality and Poverty to Succeed in the Knowledge-Based Economy
Task Force: Anouk Dey, Michael Marin, Philippe-Olivier Giroux, Sadia Rafiquddin, Eric Tribe, Paul M. Yeung
Advisor: Rae Hull
One might think that inequality and poverty are the proper domain of social policy, not “economic and business policy,” this year’s Action Canada fellowship theme. Canadians are trained to think about economic and social policy as separate fields. Indeed, when the Action Canada Task Force on Inequality, Poverty, and the Knowledge-Based Economy (the “Task Force”) first met to discuss our project, we had a much narrower view of “economic and business policy” than we do today. The Task Force now considers economic and social policy to be inextricably linked; in fact, we believe that addressing what are traditionally considered social issues is crucial to Canada’s long-term economic prosperity. The evolution of the Task Force’s thinking itself demonstrates why inequality and poverty are important from an economic standpoint.
The Task Force began by focusing on Canada’s lagging productivity growth, which has been attributed to this country’s poor performance in innovation. These negative trends caught our attention because, according to conventional economic theory, innovation leads to productivity growth, that in turn leads to higher wages, incomes, and living standards for everyone. But, upon further examination, the Task Force discovered that in practice things are very different. Between 1980 and 2005, while labour productivity increased substantially, median real wages of Canadians barely increased. That is to say, the majority of Canadians did not see the expected benefits of the “innovation agenda”.