Greater wealth in emerging economies won’t reduce inequality by itself | Max Lawson |


For many of us, something in our guts, or in our souls, tells us that something is wrong with gross inequality: billionaires living on the same planet as others who starve, die of treatable diseases, work for .17 cents an hour, or have no access to quality education for their children. Still, there are just as many who believe that this is sound economics.

There is a persistent sense that we need the rich and the super rich. It is something of a capitalistic Darwinism: only the fittest thrive.

I came across this, from a short article on inequality: “What is now increasingly accepted is that inequality is corrosive. It can completely undermine the benefits of growth. It contributes to a broad range of social ills – from murder rates to low educational achievement. It undermines public institutions and government accountability. It is self-reinforcing, as elites act to shore up the system that created them. Moreover, a growing body of evidence demonstrates the pernicious impact of inequality on growth itself. Among other findings, recent IMF research papers have illustrated the role of inequality in driving the 2008 financial crisis, and the fact that high levels of inequality shorten the average length of periods of economic growth.”

I hope that the time soon comes when we in the US critically analyze whether gross inequality is in fact good for the economy. Many are starting to do so, and exposing and attacking inequality is the commonality to most Occupy movements. I’ve found that many of the younger Millennials kind of just get it.

But what is to be done? What are the next steps to eliminating inequality? The obvious candidate is income redistribution:

“The question of what can and should be done about this is harder, with different answers for different countries. Oxfam is undertaking a major research project to look at the impact of different policies on inequality and growth. But some obvious lessons stand out: progressive taxes and redistributive transfers make a huge difference; universal public services – particularly education and health – are both an income transfer and increase social mobility to reduce future inequality. A focus on inequalities between women and men is not only necessary in its own right but crucial in reducing income and wealthy inequality, and redistribution of land can reduce poverty and prevent growing inequality.”

I am not adverse to income redistribution, however relying on it as the primary equalizer seems to be inherently self defeating. Who, for example, does the work of redistributing? The government? But history is all too clear that the government can begin to implement its own agenda, which isn’t necessarily the good of the people (e.g., the former Soviet Union). In a more capitalistic economy, the government can simply be bought by the wealthy (e.g., the current U.S. government).

So it is a tricky question indeed. I think there are answers and good ones, but they require thinking outside of the norm.

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Jonathan Erdman

Writer. In the summers, I live and work in the incredible state of Alaska, in the bush community of McCarthy, as the Executive Director of the Wrangell Mountain Center. When not in McCarthy, you'll typically find me in the Santa Cruz Mountains of California, writing and working with local activists. My primary writing project right now is a novel set in remote bush Alaska, of the magical realism genre wherein an earnest and independent young woman finds a mysterious radio belonging to her grandmother, a device that has paranormal bandwidth and a disturbing ability to mess with one's mental stability.

Consider this post an invitation, an invitation to comment and collaborate ~ In Solidarity, JE

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