Hello, could I get some assistance with this question? Thank you.
Read the articles and discuss the problems of Economic Inequality in the U.S.economy, summarize key points and post in the Discussions area:
3) Inequality. On important but irrelevant facts
http://www.economist.com/blogs/freeexchange/2014/01/inequality-0?zid=293&ah=e50f636873b42369614615ba3c16df4a
Here is the article:
Inequality
On important but irrelevant facts
Should we care more about global or national inequality?
Free exchange
Jan 9th, 2014
by R.A. | LONDON
WRITING on Thomas Piketty's new book, Nicolas Goetzmann notes:
I think that Piketty missed something which might be important: Capital is mobile, workers are not, and in the end, we have this: Gini is reducing on a worldwide basis since 2005.
Scott Sumner adds:
I also like Goetzmann's comment about global Gini coefficients. Liberals should care about global welfare. Are they closet nationalists?
These sorts of remarks are common responses to those pointing out that inequality is soaring across the rich world, and they strike me as very problematic.
It is true, of course, that inequality globally has been falling. And it is absolutely right to say that this trend is hugely important and is contributing to a massive rise in global welfare. We should all be ecstatic about it. But in no way does that development excuse us from caring about and worrying about national income inequality, for a few very important reasons.
The first is that it implies, without ever making an actual argument, that efforts to reduce income inequality within rich economies must necessarily slow reductions in global inequality. Why bring up the global statistic unless you are worried that expressions of concern about national inequality are likely to undermine the global trend? Some egalitarian-minded policies might, of course, but many others would not. I'm not sure why someone would want to stake out the position that subsidized pre-school for disadvantaged children is unnecessary, for example, because global inequality is falling.
Second, while we all should care about welfare globally, we should also recognize that the political salience of the issue is exclusively national. To a first approximation, America's Congress does not care in the least about the status of global inequality. There are no sitting congresspersons from Burundi. National inequality, by contrast, is highly politically relevant. Catch-up in the emerging world has a lot to do with innovation and openness in the rich world. If soaring national inequality undermines political support for policies that facilitate innovation and openness, that's a problem for everyone. It's a pretty basic political economy point that globalization will continue while national polities feel that globalization is broadly in their interest. People who like globalization should therefore be very, very concerned when it doesn't appear to be generating broad-based growth in rich countries.
The third is that inequality is growing within emerging markets. One might be inclined to argue that we shouldn't worry too much about that, since rising inequality is a classic side-effect of rapid development which should go away as emerging economies mature. But one of the most important points in Mr. Piketty's book is that the conventional wisdom that development naturally increases and then reduces inequalities is wrong: the data show that there is no systematic tendency for inequality to fall as an economy matures.
And so we should note that the backlash to globalization and development might well come from within emerging markets, and indeed one would have to be fairly cut-off from the news to miss populist expressions of dissatisfaction across the biggest emerging economies over the past couple of years. What's more, Mr. Piketty's work suggests that as the process of catch-up slows inequality trends within countries will begin to dominate inequality trends across countries, leading global inequality to rise once more.
So yes, global inequality has been falling. That is no reason for people of any ideological persuasion to ignore very worrying trends in national distributions of income and wealth.
Hello, could I get some assistance with this question? Thank you.
Read the articles and discuss the problems of Economic Inequality in the U.S.economy, summarize key points and post in the Discussions area:
3) Inequality. On important but irrelevant facts
http://www.economist.com/blogs/freeexchange/2014/01/inequality-0?zid=293&ah=e50f636873b42369614615ba3c16df4a
Here is the article:
Inequality
On important but irrelevant facts
Should we care more about global or national inequality?
Free exchange
Jan 9th, 2014
by R.A. | LONDON
WRITING on Thomas Piketty's new book, Nicolas Goetzmann notes:
I think that Piketty missed something which might be important: Capital is mobile, workers are not, and in the end, we have this: Gini is reducing on a worldwide basis since 2005.
Scott Sumner adds:
I also like Goetzmann's comment about global Gini coefficients. Liberals should care about global welfare. Are they closet nationalists?
These sorts of remarks are common responses to those pointing out that inequality is soaring across the rich world, and they strike me as very problematic.
It is true, of course, that inequality globally has been falling. And it is absolutely right to say that this trend is hugely important and is contributing to a massive rise in global welfare. We should all be ecstatic about it. But in no way does that development excuse us from caring about and worrying about national income inequality, for a few very important reasons.
The first is that it implies, without ever making an actual argument, that efforts to reduce income inequality within rich economies must necessarily slow reductions in global inequality. Why bring up the global statistic unless you are worried that expressions of concern about national inequality are likely to undermine the global trend? Some egalitarian-minded policies might, of course, but many others would not. I'm not sure why someone would want to stake out the position that subsidized pre-school for disadvantaged children is unnecessary, for example, because global inequality is falling.
Second, while we all should care about welfare globally, we should also recognize that the political salience of the issue is exclusively national. To a first approximation, America's Congress does not care in the least about the status of global inequality. There are no sitting congresspersons from Burundi. National inequality, by contrast, is highly politically relevant. Catch-up in the emerging world has a lot to do with innovation and openness in the rich world. If soaring national inequality undermines political support for policies that facilitate innovation and openness, that's a problem for everyone. It's a pretty basic political economy point that globalization will continue while national polities feel that globalization is broadly in their interest. People who like globalization should therefore be very, very concerned when it doesn't appear to be generating broad-based growth in rich countries.
The third is that inequality is growing within emerging markets. One might be inclined to argue that we shouldn't worry too much about that, since rising inequality is a classic side-effect of rapid development which should go away as emerging economies mature. But one of the most important points in Mr. Piketty's book is that the conventional wisdom that development naturally increases and then reduces inequalities is wrong: the data show that there is no systematic tendency for inequality to fall as an economy matures.
And so we should note that the backlash to globalization and development might well come from within emerging markets, and indeed one would have to be fairly cut-off from the news to miss populist expressions of dissatisfaction across the biggest emerging economies over the past couple of years. What's more, Mr. Piketty's work suggests that as the process of catch-up slows inequality trends within countries will begin to dominate inequality trends across countries, leading global inequality to rise once more.
So yes, global inequality has been falling. That is no reason for people of any ideological persuasion to ignore very worrying trends in national distributions of income and wealth.
