Economic Inequality in North America: Who Should Be Paying Attention?

Anna Beukes, Max Varela
(Northern Alberta Institute of Technology, Edmonton, Alberta T5G 2R1, Canada)

Abstract: Recent awareness of how economic inequality has increased in the US and Canada, combined with the jobless recovery, poses challenges to business opportunities that have not existed since the decade of the 1930’s. These challenges are unlikely to disappear in the short run with the application of existing macroeconomic policy measures. While some inequality is integral for incentives and effectiveness of markets, too much of it can be destructive to growth. The financial crisis of 2008 confronts business with the question: should it merely wait for matters to improve or consider contributing to dealing with it—possibly by exploring new approaches to doing business. This paper will focus on the causes of growing inequality, and discuss to what degree policy responses have been successful. The paper looks at macroeconomic trends and policies leading up to the crisis of 2008. It will show that tax and monetary policies implemented by US governments during much of the 2000’s mostly exacerbated the inequality issue. The controversial bailouts of big financial institutions and the lack of economic opportunities for those in the lower income brackets compounded the problem. The paper finally raises discussion points about the implications of a depressed consumer demand for business, structural change in the US economy, what governments can do to alleviate inequality and if there is room for partnerships between business and government.

Key words: distributive; inequality; social welfare

JEL code: D630