The K-Shaped Economy

Millions of Canadians continue to struggle to pay the bills for the necessities of life, and with Donald Trump’s trade war and his new conflict in the Middle East, things are getting worse. Meanwhile, the stock market sets record highs and financial wealth become increasingly concentrated in the hands of a small minority. Based on income tax data, the richest 1.5% of Canadians own over half of all net financial wealth (based on distribution of capital gains).

The striking gap in economic trajectory between a lucky elite at the top, and the challenges faced by the majority of society, has given rise to the term ‘K-shaped economy.’ The term first became popular in describing the growing gap in U.S. society, but it is increasingly applicable in Canada, as well.

In this 25 minute podcast for CityNews’ In This Economy program, Centre for Future Work Director Jim Stanford spoke with host Kris McCusker about the K-shaped economy, its causes and consequences.

Narrowing the gap between the two parts of the ‘K’ requires addressing both the ‘predistribution’ of income (empowering workers to capture a larger share of value-added in the first place) and the ‘redistribution’ of income (using government taxes and transfer programs to achieve greater equality in after-tax incomes).