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As a nation, we are richer than most. Ours is the ninth-largest economy on the planet. The last decade has been one of the strongest, most sustained periods of economic expansion in our history.

Canadian government interventions traditionally offset these trends, particularly in bad times. But in the past 10 to 15 years governments backed away from investing in public benefits that help the majority of Canadians and replaced them with tax cuts that most benefit the richest 10 per cent -- exacerbating income inequality in the country.

It says the income gap between Canada's rich and poor is growing faster than in most other 30 developed nations in the world, and that our governments need to stop that trend.

Compare that to the last 10 years, when governments and markets alike have focused on building up systems that reward the rich and ask everyone else to wait for the drops of prosperity to trickle down.

In the meantime, the rich got richer and drove up housing prices and the cost of living soared for the rest of us. Our paycheques didn't keep up.

Governments are being asked to bail out banks and investors. They can also be asked to keep purchasing power among the jobless, speed up investments in badly needed infrastructure projects and engage in counter-cyclical investments like housing to maintain jobs in the middle of the income spectrum.

Anything less means Canada will continue down the troubling path of continuously growing income inequality, instability and economic weakness. It's time to heed the warnings and change our course of action.

One: Historians won out over economists. No single group of professionals took a worse battering during the economic slump than economists. Not even bankers.

Two: Hedge funds over bankers. If Lehman Brothers Holdings Inc. had a dollar for every time someone warned that hedge funds would bring the financial system to its knees, the bank wouldn’t have gone bust. While hedge funds took plenty of criticism, and are still facing calls or more regulation, the simple fact remains that they didn’t blow up the way many predicted.

It was the mainstream banks that caused the crisis. That will influence regulators and investors for many years. Whatever people say now, it’s the banks that will face more scrutiny, not hedge funds. The result? The lightly regulated, cash-rich hedge funds will grow in importance, while the tightly controlled, capital- constrained banks stagnate.

Baseless Fears Three: Germany over Britain. For much of the past decade, the fast-growing U.K. was gaining on Germany for the role of Europe’s most influential nation. Almost 20 years after reunification, fears of a resurgent Germany turned out to be baseless. It was Britain, with its financial center, that was emerging as the leading European nation. The credit crunch will throw that into reverse.

Four: The right over the left. The credit crunch was probably the perfect moment for left-wing, anti-capitalist and anti-globalization movements to make their mark. After all, if this wasn’t a failure of capitalism, it is hard to imagine what might be. Vladimir Lenin would have led the overthrow of a dozen governments presented with an opportunity like this. But his heirs on the left failed to advance any cogent arguments. Nor did they develop any alternatives to free-market, finance-led capitalism. The plate was empty, but the anti-globalization movement failed to step up to it.

Five: Frugality over extravagance: The nub of the credit crunch was an attempt to load more and more debt onto people -- mainly in the U.S. and U.K. -- whose real wages were stagnant or growing very modestly. That will be thrown into reverse, and for the next decade, people will be paying down debt rather than accumulating it. House prices will be subdued as finance remains scarce, and household budgets will be tight. The result will be that companies will thrive if they offer value, drive down costs, and make themselves the lowest-cost supplier.

The Great Depression of the 1930s dominated the way people thought about the economy for the next 50 years. The great recession of 2008 and 2009 may not have such a long-lasting impact. But in those five ways, it will dominate policy for at least a decade.

Hedge fund manager Kyle Bass was anything but blind.

Lehman Rocks Wall Street, Declares Bankruptcy

The Treasury Department and Federal Reserve watched Lehman implode, unable to predict the scope of the global financial damage that would follow.

While Lehman Brothers failed to find a buyer, Merrill Lynch succeeded

Merrill’s CEO Stan O’Neal was so fixated on the revenue generated by the mortgage business, he didn’t just want to securitize them, he wanted to originate them, too. So, in 2007, Merrill bought mortgage lender First Franklin.

Bank Of America Rescues Merrill From ExtinctionBy September 2008, Merrill Lynch was suffering huge mortgage-related losses.

Although Bank of America’s purchase of Merrill ultimately saved the company, the transaction later came under intense scrutiny because of larger-than-expected losses and controversial year-end bonuses paid to Merrill executives.

Fed Accused Of 'Cover Up' In BofA, Merrill Deal

“Too Big To Fail,” Feds Take Control Of AIG

Paulson And Bernanke Issue Dire Warning

Paulson requested $700 Billion from Congress for a program intended to buy toxic assets from banks and infuse financial institutions with capital

contained no rules and standards for oversight. Infuriated politicians

Washington Mutual, weighed down by mortgage-related losses, was seized by federal regulators and sold to JPMorgan Chase.

largest bank failure in U.S. history, caused by an old fashioned, Depression-like run on WaMu’s deposits, following rumors about the bank’s ability to survive. 

Dow Jones Industrial Average plunged a record 778 points, its biggest drop in history.

Congress acted again. This time, lawmakers  approved the package, known as the Troubled Asset Relief Program. It included significantly greater oversight of the $700 Billion and more specific details on how it would be used to bolster the U.S. banking system.

Paulson’s “tough love” was a bitter pill for some bank bosses to swallow.

The CCPA report demonstrates that the gap between the earned incomes of the wealthiest 10 percent of Canadian families and the poorest 10 percent has almost tripled in the three decades since 1976, the ratio rising from 31 to 1 in 1976 to 82 to 1 in 2004.

In the late 1970s the poorest 20 percent of all Canadian families earned 4.5 percent of total family earnings. By the first years of the 21st century their share had shrunk to just 2.6 percent.

The report demonstrates that while Canada’s economy has experienced significant growth over the past quarter century—real economic output almost doubled between 1981 and 2005—the poorer half of Canadian families “either earned less” in inflation-adjusted terms “or just the same as their predecessors almost 30 years ago.”

The average Canadian worker made just over $38,000 in 2005, a 15 percent increase over average earnings in 1998 of just over $33,000. But during the same period, the Consumer Price Index (CPI) rose 17.85 percent, meaning that, after adjusting for inflation, the average worker actually lost purchasing power.

Saez and Veall note that incomes trends in Canada are almost identical to those in the US: “Over the last 20 years, top income shares in Canada have increased dramatically, almost as much as in the United States. This change has largely remained unnoticed because it is concentrated within the top percentile of the Canadian income distribution and thus can be detected only with tax return data covering very high incomes.”

While the real wages of most Canadians have stagnated or even fallen in recent years, they are actually working longer hours.

They warn that growing social inequality threatens to produce social turbulence that will make Canadian capitalism unsustainable: “We ignore these trends at our collective peril.”

study found 76 percent of Canadians believe the gap between the rich and poor is growing and that 67 percent of the population do not believe that the majority is benefiting from the country’s economic growth.

Not for the vast majority of Canadians whose real incomes, as the CCPA has documented, have stagnated or fallen even as they work longer hours. But certainly for the Globe’s proprietors, the Thomson family. In 1998, the Thomson fortune was estimated at US$14.4 billion, a total that surpassed the collective wealth of the poorest third of all Canadian households. Today, Ken Thomson is said to be worth a staggering $US24.4 billion, making him, according to Forbes magazine, one of the 10 richest people in the world.