The problem of inequality has been common for a long time. It was already in all analyzes of social unrest in the United States and Europe long before Thomas Piketty was published in 2013 capital. But if his study of the recent history of inequality has made him a roaring star in economics, it is because of the academic rigor with which he presented data and possible solutions to an issue that partly explained the re-emergence of undemocratic political formulas. The importance of the topic does not end there. It is, as Lucas Chancel says, that it is very likely that excessive inequality is not even good for the productivity of the economy. From the Global Inequality Lab, which Chancel runs jointly with Piketty, Gabriel Zucman, Emmanuel Saez and Facundo Alvardo, they collect data on the distribution of income and wealth in nearly every country in the world to investigate how they relate to macroeconomic performance. .
against those who look Inequality as a symptom of dynamic capitalism which reward innovators and entrepreneurs, the example of Scandinavia and Chancel data speak of highly innovative economies and societies, with very good economic growth, where inequality is at relatively low levels. “This is clearly the case not only when you compare different countries today, but when you look back and see what each country looked like 15, 30 or 70 years ago, when income and heritage disparities were much lower in most of the developed world than they are today,” he said. Says. According to his estimates, the income of 1% of Americans from a tenth of the country’s GDP 40 years ago has turned into a fifth today. “And the current growth data in the United States is lower than it was in the 1960s, 1970s or 1980s,” he explains.
To understand How can inequality affect productivity? Chancel cites the results of an experiment with young students selling subscriptions to NGOs. Without explaining why, the salaries of some were reduced and others the same proportion. “Those who got better salaries did not increase their productivity, but those who got worse got a clear decrease in the number of subscriptions sold because they did not like the unfair treatment,” he says.
What is the argument for innovation? Is inequality an inevitable byproduct of the incentive mechanism that rewards innovators for their contributions to society? Again, Chancel’s answer is no. “A lot of crucial innovations happened before these giant billionaires arrived now, and the inventors took advantage of their innovations, yes, but they didn’t need the reward to be that high,” he says. As the great developments of the nineteenth and twentieth centuries show, “innovative people will want to continue to advance in their own right, they need not have the prospect of becoming super-billionaires.”
According to him, in order to foster innovation, it is of great importance to use the classic mechanisms of inequality reduction (universal health and a good public education system) that give people with that talent an opportunity to develop it. Not to mention the state’s investment in infrastructure and basic research. “If it weren’t for the billions of dollars that the US government has invested in infrastructure and internet development, you wouldn’t have Bill Gates or Mark Zuckerberg, who doesn’t think about forgetting these tech entrepreneurs very easily,” he says.
The problem is Excessive focus on profits In those above, it reduces the portion available to those below. Not only because of the large facilities they have to avoid from taxes, but also because of the pressure they put on public opinion to reduce them even more, Schansel insists. In his opinion, if governments are having more and more difficulties in raising funds to invest in infrastructure, health and education, it is also due to this: it will be much better without taxes, that this is better for innovation and growth. ”
For Nobel Prize Laureate in Economics Angus Deaton, The problem of excessive inequality is serious enough to endanger the entire system, “because people get angry and can even revolt against democracy.”
To those who tell him that economists should only worry about poverty (a variable in which much of the world is remarkably better off than it was a hundred years ago), thanks to inequality we have innovators and entrepreneurs, Deaton responds with a parable about good and bad inequality, not separate from each other as it may seem. A good thing, he says, is created when the person who invented something like Tesla or Amazon becomes a millionaire because he added value to the entire community. “But when the rich start to hire thousands of lobbyists so that their interests are heard in parliament or to get special favors from governments and start to alienate the rest of the population from political decisions, they also generate economic inequality, just bad,” he says.
According to Deaton, even those who start out with good inequality often end up producing bad inequality. “Google had a ‘do no harm’ logo on their page, and they said they didn’t hire Washington lobbyists because they didn’t need them, they were a good company and it was enough for them to sell their products…Now they’re what the first lobbyists from Washington are and they’ve removed Already from their page about not doing evil.”
Economic insecurity is one area of research related to inequality because it is resolved by the same mechanism of income and benefits offered in a welfare state. According to Olga Cantu, of the University of Alcalá de Henares, the most accepted definition is “the belief that a part of economic well-being will have a negative development in the future”. According to their measurements, Spain is one of the European countries where economic insecurity has spread from the lower class to the middle class. “Insecurity hinders growth because it works the same way that inequality and poverty do,” he says. “It is a favorable variable because a decrease in income seriously affects people’s well-being, and has far greater effects than an increase in income of the same size,” Kanto explains. “That’s why I always say that taxes are not only used for redistribution but also to stabilize the income of people who may need them at specific times.”
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