A report from The Economist, considers whether professional economists are rethinking the numbers on inequality. Over a decade before thousands of protesters gathered in Zuccotti Park in New York in 2011,to Occupy Wall Street.
 |
| Source: https://upload.wikimedia.org/wikipedia/commons/thumb/5/59/Zuccotti_Park_Spring_2015.JPG/325px-Zuccotti_Park_Spring_2015.JPG |
a little-known researcher in France sat down to write about income inequality in a new way. “The focus of our study consists in comparing the evolution of the incomes of the top 10%, the top 1%, the top 0.5%, and so on,” Thomas Piketty wrote in a paper in 1998. With his long-term co-author, Emmanuel Saez, Mr Piketty pioneered the use of tax data over survey data, thereby doing a better job of capturing the incomes of the richest. He revealed that “the 1%” had made out like bandits at the expense of “the 99%”. His research gave Occupy Wall Street its vocabulary.
 |
| Owners of Capital see wealth grow |
In “Capital in the Twenty-First Century”, a bestseller first published in 2013, Mr Piketty argued that under capitalism rising inequality was the normal state of affairs. Mr Piketty’s research, and more like it, became part of the political discourse in America and much of the West. Two leading candidates for the Democratic nomination for the American presidency, Elizabeth Warren and Bernie Sanders, have proposed taxes on wealth to tackle inequality—pledges cheered on by Mr Saez and Mr Piketty’s other co-author, Gabriel Zucman. In a new book, “Capital and Ideology” (currently available only in French) Mr Piketty calls for a 90% tax on wealth, such is the scale of the inequality crisis…
New methodology introduced by Messrs Piketty, Saez and Zucman in a paper last year ranks by individuals and replaces capital gains with retained corporate earnings. But it still finds the share of pre-tax income of the top 1% to have surged from about 12% in the early 1980s to 20% in 2014. That is because they count a wide array of new income sources. The new methodology tries to trace and allocate every dollar of gdp in order to produce “distributional national accounts”—a project that Mr Zucman hopes will eventually be taken over by government statisticians. It is a tricky exercise because two-fifths of gdp does not show up on individuals’ tax returns. It is either deliberately left untaxed by government or illegally omitted from tax returns by those who file them. 1
And even if inequality has not risen by as much as many people think, the gap between rich and poor could still be dispiritingly high.
Share of national income
Economist Don Pittis writes Bernie Sanders may be just what U.S. capitalism needs. While there are plenty of economists who disdain Sanders, others who believe that capitalism is the hands-down winner in making ordinary people rich, healthy and happy are also convinced that right now U.S. capitalism needs someone like him. Perhaps none have made that clearer than the French bestselling economist Thomas Piketty, currently doing the media rounds in advance of the English version of his newest book, Capital and Ideology.
Piketty's case in that book was that unless capitalism was adjusted in favour of the poor, we should expect a nationalist backlash by those who were losing out and blamed global capitalism for all their problems.
To some critics, the movement in favour of Sanders is just a kind of populism from the other side, a sort of anti-Trumpism, to Make America Great by bringing down the evil rich.
The kind of ideology celebrated in books such as Winners Take All, by former New York Times columnist Anand Giridharadas, has become a key part of the U.S. political opposition that supports Sanders.
There are plenty of credible U.S. economists who agree with the need for capitalist reform. But for dry, intellectual analysis of why capitalism needs the kind of metamorphosis that only someone like Sanders can provide, it is hard to find a better source than Piketty.2
Hannah Muhajarine and Molly McCracken comment that it is incumbent on us, in this political moment, to reject half-measures and push for the most expansive and inclusive just transition possible. It’s time for us to get behind what people around the world are calling a Green New Deal.
As a framework for climate legislation, the Green New Deal arose in response to the environmental wreckage and growing inequality that are a direct product of fossil-fuelled capitalism. The only way to meet our climate obligations is to transform our economy—not just away from fossil fuels, but also to be more equitable and inclusive.3
 |
| Green New Deal and the economy |
Jeff McMahon, contributor to Forbes, from Chicago, writes about green technology, energy, and environment. Steve Cicala, an assistant professor in the Harris School of Public Policy, argued that the market for energy operates without accounting for its full costs — without compensating people throughout the world who experience damages caused by the emission of greenhouse gases during the production of energy. He suggests that Milton Friedman would find something unacceptable to the market economy in this scenario.
But when a third party not participating in that exchange suffers costs without compensation, the market has produced a negative externality."It is theft," Cicala said. "That's a loaded term, but if anyone can come up with a better term for taking something from people without their consent and without compensating them, I'm happy to use that term."The free market solution to this problem would be the creation of another market, Cicala and Greenstone said—a market in carbon.4
The drift of capitalism towards benefiting the privileged living on capital wealth at the expense of the wage earners paying increasing taxes on stagnant incomes is a path to a social discord that the Green New Deal may assist to correct.
References
No comments:
Post a Comment