Monday, October 12, 2015

Nobel prize winner Angus Deaton on unwinding inequality

Inequality isn't as important as how it happens (HBR):

Whether international or domestic, inequality becomes intolerable when individuals who have gotten ahead for whatever reason use their power to pull further ahead—and even to render others worse off in absolute terms. When successful people—businessmen, lawyers, traders, doctors—use their success to change the rules in their favor, by lobbying or funding politicians, that success is no longer something to be celebrated. When they push for what they see as important without perceiving that others have different priorities—the rich have little need of public health care or public education, for example—they undermine the provision of public goods on which the rest of us depend. When they make it hard for those without wealth (or not beholden to wealth) to fully participate in society, they undermine the democratic process. Justice Louis Brandeis once said, “We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.”

This is why, even as we recognize that some inequality is “good,” we find it so troubling. It is one thing for some people to escape deprivation and leave others behind. It is quite another when the escapees use their newfound freedom to block the paths of those trying to find their own way out.
More from an interesting study on race and inequality in the US (WSJ):
This data raises tons of uncomfortable questions with no easy answers. One question that Mr. Thompson and Mr. Suarez wanted to answer was why the racial wealth gaps in the U.S. are so large. This might sound straightforward–maybe the wealthy simply earned and inherited more money. But that’s not what the data shows. Even after accounting for different incomes, inheritances, education and other factors, these gaps between families of different races remain, especially among the wealthy. It turns out that documenting the gaps is only the first step.
Denton's observations of the Indian and Chinese economies (WSJ): "China and India are the success stories; rapid growth in large countries is an engine that can make a colossal dent in world poverty."

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