Distributions. Public Perceptions. Inequality Narratives. Social Aspects. Social Mobility. Wages. Labor Unions. Study: Income Inequality Kills Economic Growth. Corporate chieftains often claim that fixing the US economy requires signing new free trade deals, lowering government debt, and attracting lots of foreign investment.
But a major new study has found that those things matter less than an economic driver that CEOs hate talking about: equality. "Countries where income was more equally distributed tended to have longer growth spells," says economist Andrew Berg, whose study appears in the current issue of Finance & Development, the quarterly magazine of the International Monetary Fund. Comparing six major economic variables across the world's economies, Berg found that equality of incomes was the most important factor in preventing a major downturn. (See top chart.)
In their study, Berg and coauthor Jonathan Ostry were less interested in looking at how to spark economic growth than how to sustain it. So how important is equality? Berg and Ostry aren't the first economists to suggest that income inequality can torpedo the economy. 200 Countries, 200 Years, 4 Minutes. Economics focus: The beautiful and the damned. Wealth doesn't trickle down – it just floods offshore, research reveals | Business | The Observer.
The world's super-rich have taken advantage of lax tax rules to siphon off at least $21 trillion, and possibly as much as $32tn, from their home countries and hide it abroad – a sum larger than the entire American economy. James Henry, a former chief economist at consultancy McKinsey and an expert on tax havens, has conducted groundbreaking new research for the Tax Justice Network campaign group – sifting through data from the Bank for International Settlements (BIS), the International Monetary Fund (IMF) and private sector analysts to construct an alarming picture that shows capital flooding out of countries across the world and disappearing into the cracks in the financial system. Comedian Jimmy Carr became the public face of tax-dodging in the UK earlier this year when it emerged that he had made use of a Cayman Islands-based trust to slash his income tax bill. "These estimates reveal a staggering failure," says John Christensen of the Tax Justice Network.
Banks Flooded With Cash They Can’t Profitably Use. Finance & Development, September 2011 - Equality and Efficiency. Finance & Development, September 2011, Vol. 48, No. 3 Andrew G. Berg and Jonathan D. Ostry PDF version Is there a trade-off between the two or do they go hand in hand? IN his influential 1975 book Equality and Efficiency: The Big Tradeoff, Arthur Okun argued that pursuing equality can reduce efficiency (the total output produced with given resources). The late Yale University and Brookings Institution economist said that not only can more equal distribution of incomes reduce incentives to work and invest, but the efforts to redistribute—through such mechanisms as the tax code and minimum wages—can themselves be costly. Do societies inevitably face an invidious choice between efficient production and equitable wealth and income distribution? In a word, no. In recent work (Berg, Ostry, and Zettelmeyer, 2011; and Berg and Ostry, 2011), we discovered that when growth is looked at over the long term, the trade-off between efficiency and equality may not exist.
How do economies grow? References. Chance favors the concentration of wealth. UMNewsUniversity of Minnesota 612-624-5551, email@example.com July 22, 2011 Chance pushes wealth into the hands of a few, a new University of Minnesota study shows. A new model predicts that chance pushes wealth into the hands of a few By Deane Morrison Most of the wealth in our society is invested in businesses or other ventures that may or may not pan out. Thus, chance plays a role in where the wealth of a society will end up. But does chance favor the concentration of wealth in the hands of a few, or does it tend to level the playing field? "Predictions from this model about how wealth is distributed were more accurate than predictions from classic economic models," says first author Joseph Fargione, an adjunct professor of ecology, evolution and behavior. Their results have implications for economic growth, the researchers say.
How it works The model predicted that the rate at which wealth concentrates depends on the variation among individual return rates. Inequality and Unsustainable Growth: Two Sides of the Same Coin? By Andrew G. Berg and Jonathan D. Ostry; IMF Staff Discussion Note SDN/11/08; April 8, 2011. - sdn1108.pdf. Redistribution, Inequality, and Growth. Economics - "Inequality and Instability: A Study of the World Economy Just Before the Great Crisis. Inequality and Instability. Annual income of richest 100 people enough to end global poverty four times over.
Downloads “We can no longer pretend that the creation of wealth for a few will inevitably benefit the many – too often the reverse is true.” Jeremy Hobbs Executive Director, Oxfam International Published: 19 January 2013 Leaders must aim to bring down global inequality at least to 1990 levels An explosion in extreme wealth and income is exacerbating inequality and hindering the world’s ability to tackle poverty, Oxfam warned today in a briefing published ahead of the World Economic Forum in Davos next week. The $240 billion net income in 2012 of the richest 100 billionaires would be enough to make extreme poverty history four times over, according Oxfam’s report ‘The cost of inequality: how wealth and income extremes hurt us all.’ The richest one per cent has increased its income by 60 per cent in the last 20 years with the financial crisis accelerating rather than slowing the process. New global deal needed Hobbs said: “We need a global new deal to reverse decades of increasing inequality.
Report: Wealthy Thrive and Poorest Dive as Surge in US Inequality Continues. The great wealth divide in the United States has only become more exacerbated since the recession, as national policies have buoyed only the wealthiest Americans while the remainder have been left adrift. According to a new analysis (pdf) of Census Bureau data published Tuesday by the Pew Research Center, since the economy officially emerged from the recession in mid-2009, the wealthiest 7 percent of households saw soaring gains of an estimated $5.6 trillion, while the remaining 93 percent—111 million households—saw their overall wealth fall by an estimated $0.6 trillion.
“It has been a very good recovery for those at the upper end of the wealth distribution,” said Paul Taylor, executive vice president of the Pew Research Center and co-author of the report. “But there has been no recovery for the lower 93, which is nearly everybody.” Though hailed as a success by many, this pattern of the rich getting richer was predominantly fueled by the stock market rallies during that period. Rigged rules mean economic growth increasingly “winner takes all” for rich elites all over world. “Without a concerted effort to tackle inequality, the cascade of privilege and of disadvantage will continue down the generations. ” Winnie Byanyima Executive Director, Oxfam International Published: 20 January 2014 Wealth of half the world’s population now the same as that of tiny elite Wealthy elites have co-opted political power to rig the rules of the economic game, undermining democracy and creating a world where the 85 richest people own the wealth of half of the world’s population, worldwide development organization Oxfam warns in a report published today.
Working For the Few, published ahead of this week’s World Economic Forum in Davos, details the pernicious impact that widening inequality is having in both developed and developing countries, helping the richest undermine democratic processes and drive policies that promote their interests at the expense of everyone else. The report says that there is a growing global public awareness of this power-grab. Facing inequality is key. Jared Bernstein: Inequality, the Middle Class, and Growth. The following puts together a bunch of stuff I've been posting over the past few months... it's time to start thinking about these ideas in terms of new economic models to replace the old, worn out ones... The trickle-down, deregulatory agenda -- what I have called YOYO, or "you're on your own" economics -- presumes that the growth chain starts at the top of the wealth scale and "trickles down" to those at the middle and the bottom of that scale.
Problem is, that hasn't worked. Here's a better model. In the midst of the 1990s boom, which lifted the earnings and incomes of middle and low-wage workers much more so than the 1980s or 2000s cycles, Larry Mishel and I started talking about "wage-led demand growth. " We meant that a much better way to generate robust, lasting, and broadly shared growth is through an economically strengthened middle class. At the most basic level, this growth model is a function of customers interacting with employers, business owners, and producers. The Fight Over Inequality. The headline promised an article of critical importance: “Obama’s inequality argument just utterly collapsed.”
James Pethokoukis, a conservative columnist and blogger at the American Enterprise Institute, wrote on April 11 that a new academic study put the lie to Democratic claims of endemic inequality and grotesquely distorted income gains by the top 1 percent. The “tax and regulatory policies of the past three decades,” he wrote, did not lead to stagnation for the middle class at the hands of the rapacious rich. Claims to the contrary — such as those made by Obama, the Occupy movement, and many liberal economists — never really passed the sniff test of anyone who lived through the past few decades. Pethokoukis’s claim is based on the findings of three scholars: Richard V. Pethokoukis is a hard-core adversary of the current administration.
The continuing debate over social mobility and income distribution does not lend itself to facile conclusions. Congressional Budget Office Thomas B. Income inequality, the issue that won't go away. The Rise and Consequences of Inequality in the United States Alan B. Krueger Chairman, Council of Economic Advisers January 12, 2012 Edited Remarks as Prepared for Delivery The topic I will address today is inequality.
As you may know, I am a labor economist. Labor economics is the study of work and pay. Although I have done much research in my career on inequality, I used to have an aversion to using the term inequality. But the rise in income dispersion – along so many dimensions – has gotten to be so high, that I now think that inequality is a more appropriate term. My theme in this talk is that the rise in inequality in the United States over the last three decades has reached the point that inequality in incomes is causing an unhealthy division in opportunities, and is a threat to our economic growth.
These trends are well documented but worth reviewing to understand the nature of the phenomenon. You can see that the median household saw a decline in real income in the 2000s. Money and Morals. So you knew what was going to happen next. Suddenly, conservatives are telling us that it’s not really about money; it’s about morals. Never mind wage stagnation and all that, the real problem is the collapse of working-class family values, which is somehow the fault of liberals. But is it really all about morals? No, it’s mainly about money. To be fair, the new book at the heart of the conservative pushback, Charles Murray’s “Coming Apart: The State of White America, 1960-2010,” does highlight some striking trends.
But the first question one should ask is: Are things really that bad on the values front? Mr. Yet the truth is that some indicators of social dysfunction have improved dramatically even as traditional families continue to lose ground. Still, something is clearly happening to the traditional working-class family. Most of the numbers you see about income trends in America focus on households rather than individuals, which makes sense for some purposes. Special Report: The haves, the have-nots and the dreamless dead. EXTREME WEALTH AND INCOME media briefing. Krugman: Worried About Oligarchy? You Ain't Seen Nothing Yet. (Credit: Moyers & Company)In an interview with journalist Bill Moyers set to air Friday, Nobel laureate and New York Times columnist Paul Krugman celebrates both the insights and warnings of French economist Thomas Piketty whose new ground-breaking book, Capital in the Twenty-First Century, argues that modern capitalism has put the world "on the road not just to a highly unequal society, but to a society of an oligarchy—a society of inherited wealth.
" The conclusions that Piketty puts forth in the book, Krugman tells Moyers, are revelatory because they show that even people who are now employing the rhetoric of the "1% versus the 99%" do not fully appreciate the disaster that global wealth inequality is causing. "We are becoming very much the kind of society we imagine we're nothing like. " Says Krugman: Actually, a lot of what we know about inequality actually comes from him, because he's been an invisible presence behind a lot. "It's a real 'eureka' book," says Krugman. Occupy was right: capitalism has failed the world | Books | The Observer. The École d'économie de Paris (the Paris School of Economics) is actually situated in the most un-Parisian part of the city. It is on the boulevard Jourdan in the lower end of the 14th arrondissement, bordered on one side by the Parc Montsouris.
Unlike most French parks, there is a distinct lack of Gallic order here; in fact, with lakes, open spaces, and its greedy and inquisitive ducks, you could very easily be in a park in any British city. The campus of the Paris School of Economics, however, looks unmistakably and reassuringly like nearly all French university campuses.
That is to say, it is grey, dull and broken down, the corridors smelling vaguely of cabbage. This is on account of his latest work, which is called Capital in the Twenty-First Century. This is a huge book, more than 700 pages long, dense with footnotes, graphs and mathematical formulae. At first sight it is unashamedly an academic tome and seems both daunting and incomprehensible. But no matter. Dean Baker | Economic Policy in a Post-Piketty World. Thomas Piketty. (Photo: Parti Socialiste du Loiret / flickr) Thomas Piketty’s new book, Capital in the 21st Century, has done a remarkable job of focusing public attention on the growth of inequality in the last three decades and the risk that it will grow further in the decades ahead.
Piketty’s basic point on this issue is almost too simple for economists to understand: if the rate of return on wealth (r) is greater than the rate of growth (g), then wealth is likely to become ever more concentrated. This raises the obvious question of what can be done to offset this tendency towards rising inequality? If we want to counter the rise in inequality that we have seen in recent decades we are going to have to find other mechanisms for reversing this upward redistribution. Fortunately, we have a full bag of policy tools to accomplish precisely this task. In addition to this subsidy we also have the fact that finance is hugely under-taxed, a view shared by the I.M.F. Why We’re in a New Gilded Age by Paul Krugman. Capital in the Twenty-First Century by Thomas Piketty, translated from the French by Arthur Goldhammer Belknap Press/Harvard University Press, 685 pp., $39.95 Thomas Piketty, professor at the Paris School of Economics, isn’t a household name, although that may change with the English-language publication of his magnificent, sweeping meditation on inequality, Capital in the Twenty-First Century.
Yet his influence runs deep. It has become a commonplace to say that we are living in a second Gilded Age—or, as Piketty likes to put it, a second Belle Époque—defined by the incredible rise of the “one percent.” But it has only become a commonplace thanks to Piketty’s work. The result has been a revolution in our understanding of long-term trends in inequality. It therefore came as a revelation when Piketty and his colleagues showed that incomes of the now famous “one percent,” and of even narrower groups, are actually the big story in rising inequality. Exploiting these data isn’t simple. Why? Piketty's "Capital," in a Lot Less Than 696 Pages - Justin Fox. Wealth Inequality in America. Great Divergence PDF _rollovers converted to standard footnotes_.doc. Josh Bivens on Failure by Design. On fairy tales about inequality. How We Cured “the Culture of Poverty,” Not Poverty Itself.
Protest and Occupy: the promise for 2012 - On Line Opinion - 20/1/2012. How Swedes and Norwegians Broke the Power of the ‘1 Percent’ The Great Divergence In Pictures: A visual guide to income inequality. Oaktree Research. The Causes of Rising Income Inequality. Inequality.org | News, Data & Statistics on Income, Health, Social Inequality. Too Much February 13, 2012.