Income. Equality. Income Equality.

We all saw the marches on TV, but did everyone understand the “why” behind the marching? I must confess that I really didn’t pay much attention to the reports in the media, and didn’t worry much about the fact that I hadn’t planned on attending any of the rallies, even though Occupy Vancouver had a nice ring to it. Wow, could we really do something as big and as authoritative as to Occupy Vancouver? Impressive.

The issues are important. Very important, in fact. No doubt about that. But can we go back to the beginning? The issues actually stem from events which began in the last century. Yes, that far back. Who suspected?

During the 1980's and 1990's, the economy was chugging along quite effectively. There were a few minor issues, such as a surprise stock market meltdown in 1987. Click to enlarge.

Computer program trading was the culprit. Think of it as a buying opportunity. Many did.

A touch of inflation appeared in the late 1970s , early 1980's. But the Governor of the Bank of Canada saw to it that the inflation threat was taken care of pronto. Interest rates promptly rose to plus 20%. And you know that loan and mortgage rates build from the Bank of Canada rate. BOC Rates Check out August 1981. Put that in your mortgage payment calculator!

The high interest rate certainly killed the inflation. Unfortunately, it killed the economy too. But, then again, that’s how you kill inflation. After that, the economy rebounded and actually did reasonably well, and people made quite a bit of money. Lots of it, if you’re the kind of person who’s inclined to count. By the end of the 1980's, the economy was sizzling hot, and of course, time for the Bank of Canada to pour water on our economic dreams again. Cue the high interest rates! Of course, not as high as 1981, but high enough to kill the inflation threat again. And kill the economy, too. Rinse and repeat. You kind of get the idea.

But, we raised ourselves out of the early 1990s quagmire of economic malaise, and soon, we were making lots of money again. Life was good. Quick question for you: Who made money? Answer: That would be the baby boomers . They made all the money. Not that they didn’t deserve it, they did. They worked hard at the retail shops and auto plants and financial institutions. They even made a movie about that part of it. Remember Wall Street with Michael Douglas? Those were the good old days.

But the 1990s had a few scares, to be sure. Inflation reared its head and interest rates popped briefly in 1994 and 1996, and in 1998 the Asian Financial Crisis hit the Asian Tigers. Hit us too. Setbacks for the economy again, but nothing to worry about. Really. Nothing. The emergence of the computer sector as a major growth factor worldwide contributed greatly to the economic prosperity Canadians experienced through the mid-to-late 1990s. Shareholders made a lot of money on Microsoft, RIM, Nortel, and others. Until the Dot.com stock market crash in 2001, that is. Made a lot, lost a lot. Get ready for the next bubble.

New Century. New hope. In 2001, Canadian airports invited orphaned 9-11 passenger planes to land on our soil, the United States went to war, and plane travel changed forever. The U.S. had a brief recession in 2001, but Canada skated through this one pretty much unscathed. Three cheers for the good guys! That’s us.

World economic growth accelerated into the middle of the new decade. Nearly everyone in the world got to participate this time: people in China, India, Brazil, Iceland, Ireland, to name a few. And sadly, a few countries, mostly African, mostly war-related, went backwards economically. A lot of people made a lot of money. And I do mean a lot.

And that’s the problem. Here’s a view of incomes of the countries of the world. You’ll notice it’s pretty skewed. That means some have a lot, and some have very little.
















If you’re not convinced, here’s another image. Now, let me ask you: Who can see to take care of their goats at night, and who cannot?
















The National Bureau of Economic Research (NBER) measures economic activity in the U.S. The U.S. economy reached a peak in December 2007 and shortly thereafter slid headlong into recession. The Great Recession. Wow! Who saw that coming?

In July 2007, bond rater Standard and Poor's placed 612 subprime-backed securities on credit watch. Later that month, ex-solvent investment bank Bear Stearns liquidated two hedge funds that held mortgage-backed securities. And the Federal Open Market Committee (FOMC) issued a warning on August 17, 2007 about the financial market turmoil: Indeed, they believed that the “downside risks to growth have increased appreciably.” Funny, they all suspected it by early 2007, long before the U.S. economy peaked. Here’s the exact date all the little people figured it out too.

That’s really what people are marching about. The imbalance of advantage/disadvantage that has developed over the last few decades of our generations. The protest took a long time to get a head of steam. For a while, it seemed that everybody was getting richer, even the poor. But we know now that the rich were in a much better position to take advantage of the opportunities that each economic setback provided. For a while, no-one seemed to care that the rich got the lion’s share each time. It didn’t seem to matter. Maybe next time, its our turn. OK. I ran the treadmill as hard as I could, the good little hamster that I am. I fretted that somehow I didn’t exploit the opportunities that came my way as well as I should have. And now? Someone finally cares. Someone finally cares to speak up.