In his now famous book, Capital in the Twenty-First Century, Thomas Piketty argues that there is a strong tendency for wealth to become concentrated in ever fewer hands unless the economic forces promoting greater inequality are countered by deliberate political choices.
In the case of Canada, Mr. Piketty has supplied data that show that the stock of accumulated wealth has been growing relative to annual national income, from 247 per cent in 1970 to 264 per cent in 1980, to 294 per cent in 1990, then more rapidly to 365 per cent in 2000, and to 416 per cent in 2010. Thus the total stock of wealth is now more than four times as much as annual GDP.
This is important since, as wealth grows, the greater is the impact of returns on capital on the overall distribution of economic resources. If the return on capital exceeds the rate of economic growth, inequality will inexorably rise.
Canada lacks good, regular data, but the best available evidence (not provided by Mr. Piketty) shows that wealth is not only distributed very unequally among individuals and families, but also that wealth inequality has been rising since the 1970s.
A consistent series assembled by Statistics Canada researchers shows that the share of wealth (net worth, excluding pension assets) held by the top 10 per cent of Canadians rose from 51.8 per cent in 1984 to 55.7 per cent in 1999, to 58.2 per cent in 2005.
For the same years, the share of the top 1 per cent rose from 7.6 per cent to 9.1 per cent, to 9.6 per cent.
Comparable data for 2012 for the top 10 per cent and top 1 per cent are not yet available from the Survey of Financial Security.
Economists such as Lars Osberg have long noted that data from sample surveys of households significantly understate the degree of concentration of wealth since they will miss the very small number of families that hold very large quantities of wealth. Based on previous studies, he estimates that the share of wealth of the top 1 per cent may be as high as 20 per cent.
The absence of inheritance taxes means that we lack Canadian data on large fortunes. But, as did Mr. Piketty, we can look at estimates of the net worth of the very rich compiled by the business media. For Canada, we have the interesting and useful annual ranking of the 100 richest Canadians assembled by Canadian Business magazine.
According to the latest rankings, for 2013, the top 100 Canadian individuals and families now collectively have a net worth of $230-billion, or about 2.5 per cent of all Canadian wealth as reported by the Survey of Financial Security.
This elite group are all worth more than $728-million each, and will likely soon consist entirely of billionaires. The Thomson family tops the list at over $26-billion, and 38 Canadians now have more than $2-billion in net assets.
David Macdonald of the Canadian Centre for Policy Alternatives has adjusted these numbers to make them more directly comparable to the data in the Survey of Financial Security. He calculates that the richest 86 out of the top 100 who reside in Canada represent a tiny 0.002 per cent of all Canadians when including family members, but hold as much wealth as the bottom 34 per cent of Canadians combined.
The total wealth of the top 100 rose by an exceptionally high 15 per cent from the most recent year, mainly due to a booming stock market. Between 2005 and 2012, I calculate that the wealth of the top 100 rose by $59.4-billion in nominal dollars or by 24.1 per cent in inflation-adjusted terms, which is remarkable given the stock market collapse and financial crisis of 2008-09.
Striking features of the Canadian top 100 include the fact that inherited family wealth looms large at the very top of the list, and that there is relatively little turnover from year to year. Eighty-seven persons on the 2013 list were also on the list in 2006.
It is unclear whether wealth inequality will inexorably rise. Over the past decade or so, much of the broad middle class have seen their wealth boosted by rising housing prices, while the value of financial assets held mainly by the very affluent has fluctuated much more.
But the very rich in Canada are certainly in a very strong starting position given their large accumulations of financial wealth, and their share is likely to rise even higher if the housing market begins to falter.
Andrew Jackson is the Packer Professor of Social Justice at York University and senior policy adviser to the Broadbent Institute.