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Has This Happened Before?

Matthew P. Drennan

in Income Inequality: Why It Matters and Why Most Economists Didn't Notice

Has rising income inequality or rising household debt or a housing price bubble played a role in serious economic decline in the past? Did a rising average propensity to consume, and thus a falling ... More

Has rising income inequality or rising household debt or a housing price bubble played a role in serious economic decline in the past? Did a rising average propensity to consume, and thus a falling rate of saving, warn of unsustainable consumption leading to a serious economic decline before the present recession? Those are the questions considered in this chapter, and they all receive the same answer: yes.Less

Introduction

Matthew P. Drennan

in Income Inequality: Why It Matters and Why Most Economists Didn't Notice

Synopsis of book. U.S. trends in income distribution. Causes of rising income inequality. Consumers shift to massive debt. Why most economists overlooked importance of income inequality. Strong ... More

Synopsis of book. U.S. trends in income distribution. Causes of rising income inequality. Consumers shift to massive debt. Why most economists overlooked importance of income inequality. Strong parallel of run-up to Great Recession with run-up to Great Depression.Less

Education for Equality and Growth

Yue Chim Richard Wong

in Diversity and Occasional Anarchy: On Deep Economic and Social Contradictions in Hong Kong

Understanding the factors and implications of income inequality in our society is of paramount importance. It tells us what has to be done to reduce inequality and alleviate the poverty problem. This ... More

Understanding the factors and implications of income inequality in our society is of paramount importance. It tells us what has to be done to reduce inequality and alleviate the poverty problem. This chapter centres on the economic aspects of income inequality, and examines this phenomenon through the revenue perspective and the concept of positive economics. Inequality is considered the result of a race between technology and education, and in general, inequality occurs when educational changes lag far behind technological advances. Increasing the supply of skilled manpower can be achieved in four distinct ways, and they are instrumental in reducing income inequality in the long run. Education is construed by the author as an indispensable vehicle for arresting the trend of growing income inequality and promoting economic growth.Less

Labor Market Flexibility, Employment, and Inequality: Lessons from Chile

Paul W. Posner

in Labor Politics in Latin America: Democracy and Worker Organization in the Neoliberal Era

Flexibility proponents assert that rigid Latin American labor markets impede economic expansion and job growth; they advocate reforming labor codes through increased flexibility. Critics argue that ... More

Flexibility proponents assert that rigid Latin American labor markets impede economic expansion and job growth; they advocate reforming labor codes through increased flexibility. Critics argue that heightened labor flexibility exacerbates inequality without expanding employment. From this perspective, precarious employment and inequality are remedied by strengthening labor’s bargaining power. Chile’s maintenance of flexible labor reforms since the Pinochet dictatorship make it appropriate for evaluating these competing perspectives. Based on flexibility proponents’ predictions, we should expect increased formal sector employment over time, particularly among the least skilled Chilean workers, as well as reduced wage inequality. Yet the rate of unemployment among least-skilled workers in Chile remains essentially unchanged since the democratic transition, as does income inequality. These conditions persist despite a highly flexible labor market. Thus, Chile’s continued adherence to a flexibilized labor market should be understood not in terms of its capacity to reduce inequality or generate employment. Rather, it should be understood as the product of several interrelated factors: (1) the business sector’s ability to protect its interests; (2) the Concertación’s conscious limitation of threats to the business sector’s interests; and (3) the weakness of organized labor, resulting from the perpetuation of the Pinochet-era labor regime.Less

Conclusion

Matthew P. Drennan

in Income Inequality: Why It Matters and Why Most Economists Didn't Notice

Rising income inequality has had deleterious effects upon household debt and saving. The overhang of debt and revived saving by households post 2007 will be a drag on economic expansion for some ... More

Rising income inequality has had deleterious effects upon household debt and saving. The overhang of debt and revived saving by households post 2007 will be a drag on economic expansion for some years. The adverse aftereffects of the Great Recession will be much longer than those of the recent past. One thing is clear: the cause of the Great Recession is mostly not economic—it is mostly political. So the solution, if ever devised, will be mostly political. Another financial and economic crash just as bad or worse than the last might focus Congress on correcting causes of income inequality. I present a plea for a more fact-based economics than an authority-based economics. Why have today’s economists failed to jettison the mainstream theory of consumption in the face of so much evidence to the contrary?Less

Extreme Inequality in Income and Wealth

Venkat Venkatasubramanian

in How Much Inequality Is Fair?: Mathematical Principles of a Moral, Optimal, and Stable Capitalist Society

Chapter one provides a summary of the global trends in income inequality and ask what kind income distribution there ought to be, under ideal conditions, in a free market society. The chapter also ... More

Chapter one provides a summary of the global trends in income inequality and ask what kind income distribution there ought to be, under ideal conditions, in a free market society. The chapter also raises three other fundamental questions regarding the fairness, stability and optimality of such a distribution. Since these questions cannot be answered by mainstream economic theories, or by econophysics, we outline the development of our novel theory to address them.Less

Inequality, Violence, and Freedom

Martin Daly and D. B. Krupp

in On Inequality and Freedom

This chapter explores the association between income inequality and violence and how this should be seen as a reduction in people’s freedom.

The Challenge of European Inequality

Francesco Caselli, Mário Centeno, Álvaro Novo, and José Tavares

in After the Crisis: Reform, Recovery, and Growth in Europe

In this chapter, the policy consequences of inequality in the Eurozone are measured, analysed, and discussed. Market income inequality among European households is lower than in the USA, where there ... More

In this chapter, the policy consequences of inequality in the Eurozone are measured, analysed, and discussed. Market income inequality among European households is lower than in the USA, where there are relatively more households at both ends of the distribution. However, the distribution of income is more similar among US regions than among Eurozone countries. European incomes are ‘geographically clustered’, with the poor being concentrated in a few (especially Southern) countries. Furthermore, although market income inequality is high among wealthier Northern countries, their redistributive policies are effective in reducing inequality. In contrast, redistribution in Southern Europe is less far reaching, reinforcing the geographical clustering. These patterns imply that forging a common European approach to inequality and redistribution may be much more difficult than hitherto appreciated.Less

Introduction

Wiemer Salverda, Brian Nolan, Daniele Checchi, Ive Marx, Abigail McKnight, István GyörgyTóth, and Herman van de Werfhorst

in Changing Inequalities in Rich Countries: Analytical and Comparative Perspectives

This chapter provides the introduction to a collection of 11 comparative chapters and a concluding chapter which, based on 30 country studies (25 European, USA, Canada, Australia, Japan, Korea; ... More

This chapter provides the introduction to a collection of 11 comparative chapters and a concluding chapter which, based on 30 country studies (25 European, USA, Canada, Australia, Japan, Korea; reported in the companion volume Nolan et al. 2013), look at the evolution of inequalities, their social and political impacts, and national policies regarding inequality. Four chapters consider the evolution of inequalities of income and their drivers, the role of earnings and employment, the inequalities of wealth, and those of education. Four subsequent chapters address the social and political impacts in a wide range of fields, such as poverty and social exclusion, health and housing, attitudes towards inequality, trust, and political legitimacy. Next, policies of redistribution, job provision and public services are discussed in two chapters, followed by a chapter on educational policies and inequality. The chapter explains the approach and its challenges and ends with a summary overview of inequalities.Less

Education and Earnings of the Bottom 99%

Yue Chim Richard Wong

in Fixing Inequality in Hong Kong

“We are the 99%!” was the rallying cry of the short-lived Occupy Wall Street movement. It reflected concern about the finding that the share of total income enjoyed by the top 1% of earners has ... More

“We are the 99%!” was the rallying cry of the short-lived Occupy Wall Street movement. It reflected concern about the finding that the share of total income enjoyed by the top 1% of earners has increased since the 1970s, about a society seen as being divided between the very rich and the increasingly poor (at least in a relative sense), and about the wide, impassable gulf separating the two. The rise in income share of the top 1% can be explained to a large extent by the rise of superstars capable of earning vast sums in today’s globalized, digitized, networked, and financially integrated economy. That was not possible in the past. In addition, those in the English-speaking world seem to be better positioned than others to take advantage of this new environment.Less

Pre-distribution

Dimitri Batrouni

in The Battle of Ideas in the Labour Party: From Attlee to Corbyn and Brexit

The fourth chapter concentrates solely on the idea of pre-distribution. It warrants this sole focus given the considerable academic scholarship behind it and being a coherent proposal to reform the ... More

The fourth chapter concentrates solely on the idea of pre-distribution. It warrants this sole focus given the considerable academic scholarship behind it and being a coherent proposal to reform the economic system. In other words, it was a significant attempt to move beyond Keynesianism and neoliberalism.Less

Polanyi’s democratic socialist vision: Piketty through the lens of Polanyi

Margaret R. Somers and Fred Block

in Karl Polanyi and twenty-first-century capitalism

This chapter brings Karl Polanyi into dialogue with Thomas Piketty, author of Capital in the Twenty-First Century. The dialogue is intended to make visible key aspects of Polanyi’s theoretical ... More

This chapter brings Karl Polanyi into dialogue with Thomas Piketty, author of Capital in the Twenty-First Century. The dialogue is intended to make visible key aspects of Polanyi’s theoretical framework while also suggesting limitations in Piketty’s approach to political economy.  Specifically, the authors use the concept of ‘predistribution’ – implicit in Polanyi – to critique Piketty’s emphasis on redistribution as the solution to growing wealth and income inequality. Predistribution conveys the idea that the initial market distribution of income is not natural but is shaped by the systematic exercise of political and economic power.Less

Pakistan: a journey of poverty-induced shame

Sohail Choudhry

in The shame of it: Global perspectives on anti-poverty policies

This chapter begins with a discussion of the changing political discourse in Pakistan from the 1960s until today, concerning welfare that prioritized economic growth by way of creating infrastructure ... More

This chapter begins with a discussion of the changing political discourse in Pakistan from the 1960s until today, concerning welfare that prioritized economic growth by way of creating infrastructure and incentivizing an import substitution industry. Alongside a discussion of the economic causes and context of poverty and public policy, this chapter reviews the psycho-social dimensions of poverty and shame in the time period under question. Poverty in Pakistan has often been seen as a problem of inequality of income and ineffective redistribution. However, the chapter argues that poverty discourses are equally influenced by prevalent power structures which have mostly favoured policies which encourage dependence over those promoting individual agency. While these policies have generated short-term popular support, they have also worked adversely to affect the capacities of the people in the long-term and have thus reduced social mobility in Pakistan.Less

Introduction: Chinese Social Policy in a Time of Transition

Karen Baehler and Douglas J. Besharov

in Chinese Social Policy in a Time of Transition

The story of China’s spectacular economic growth is well known. Less well known is the country’s equally dramatic, though not always equally successful, social policy transition. Between the late ... More

The story of China’s spectacular economic growth is well known. Less well known is the country’s equally dramatic, though not always equally successful, social policy transition. Between the late 1990s and mid-2000s---the focal period for this book---China’s central government went a long way toward consolidating the social policy framework that had gradually emerged in piecemeal fashion during the initial phases of economic liberalization. Major policy decisions during the focal period included adopting a single national pension plan for urban areas, standardizing unemployment insurance, (re)establishing nationwide rural health care coverage, opening urban education systems to children of rural migrants, introducing trilingual education policies in ethnic minority regions, expanding college enrolment, addressing the challenge of HIV/AIDS more comprehensively, and equalizing social welfare spending across provinces, among others. Unresolved is the direction of policy in the face of longer-term industrial and demographic trends---and the possibility of a chronically weak global economy. Chinese Social Policy in a Time of Transition offers scholars, practitioners, students, and policymakers a foundation from which to explore those issues based on a composite snapshot of Chinese social policy at its point of greatest maturation prior to the 2007 global crisis.Less