Political Sources of Income Inequality in Canada: The Role of Organised Interests

Abstract

Market forces are often considered the principal determinants of income inequality. While this paper does not dispute the pivotal role economic forces play in generating and distributing wealth, it questions whether economic rationale alone can explain income disparities that are everywhere occurring as a result of the gross accumulation of wealth by the top percentile. In this connection, the role of politics in contributing to rising levels of inequality has received little attention. The purpose of this paper is thus to examine the role and influence of organised interests in shaping policies that promote rising levels of income inequality in Canada. It begins by tracing the resurgence of inequality across the globe and in Canada. It then questions the assertion of the median voter theorem that government policies inevitably converge to the preferences of voters located in the median of the voter distribution. It goes on to describe the ability of business and economic elites to overcome collective action problems and to utilise financial, technical and human resources to achieve policy outcomes in their favour and, finally, it attempts to discuss some of the implications for public policy.