"The Complexity of Inequality"

MD tviti od 4.6.2017
Enakost v socializmu=enakost v revščini. Neenakost v kapitalizmu je marsikje absurdna. Koliko neenakosti=ok=? brez https://www.project-syndicate.org/commentary/complexity-of-global-inequality-by-michael-heise-2016-12
2/Kaj je (ne)enakost? Tema, ki razdvaja svet+slo. Tema volitev, etike+material.blaginje; socializem+UTD ni rešitev za 99% : 1%. Zgodovina =uč
3/ Sistema, ki bi nadomestil tržni kapitalizem ni. Nujno je varovanje sistema pred zlorabami. Ne kapital, določeni kapitalisti so problem.
4/Slo dohodkov.neenakost=podpovpr.EU. Problem=neenakost priložnosti: kdo=lahko tajkun, kdo dobi službo, kdo=sodno procesiran, kdo=privilegir

Milton Friedman “The rise of socialism is absurd”
It’s a funny thing. After the fall of communism everybody in the world agree that socialism was a failure. Everybody in the world, more or less, agree that the capitalism was a success. And every capitalist country in the west apparently deduced from that what every country need is more socialism.  And it doesn’t matter whether you’re talking about U.S. or whether you’re talking about Germany or are you talking about Britain; or many other countries, or Japan for that matter.

Milton Friedman “Equality of opportunity”
Americans are universally committed to the idea of equality. But, in practice, that means different things. Some think equality means little without equal outcomes, while others like Milton Friedman, think it means equal treatment before the law and spoke out against the government attempts to guaranty equal outcomes. He argued that only the equality of opportunity will lead to freedom and prosperity. So what is equality?

Thomas Jefferson,
“We hold these truths to be self-evident, that all man are created equal. That they are endowed by their Creator with certain unalienable rights. That among these are life, liberty and the pursuit of happiness.” What he meant by the words equal, can be seen in the phrase “Endowed by their Creator.” To Thomas Jefferson, all men are equal in the eyes of God. They all must be treated as individuals who have, each separately, a right to life, liberty, and the pursuit of happiness. Of course practice did not conform to the ideals, in Jefferson’s life or in ours as a nation.  He agonized repeatedly during his lifetime about the conflict between the institution of slavery and the fine words of the Declaration. Yet, during his whole life, he was a slave owner.

During the 19^th century,
and especially after the Civil War and on into the 20^th century, the idea of equality, came more and more to mean that everyone should have the same opportunity to make what he could of his capacities. That all careers should be open to people on the basis of their talents, independently of the race, or religion, or belief, or social class that characterize them. This concept of equality of opportunity offers no conflict at all with the concept of freedom; on the contrary, they reinforce one another. And, it is no doubt the concept that even today is most widely held.

But in the 20^th century,
beginning especially abroad and at a later date in this country, a very different concept, a very different ideal has begun to emerge; that is the ideal that everyone should be equal in income, in level of living, in what he has. The idea that the economic race should be so arranged that everybody ends at the finish line at the same time, rather than that everyone starts at the beginning at the same time. This concept raises a very serious problem for freedom. It is clearly in conflict with it, since it requires that the freedom of some be restricted in order to provide greater benefits to others. The society that puts equality before freedom will end up with neither. The society that puts freedom before equality will end up with a great measure of both.

The Complexity of Inequality
Michael Heise, Project Syndicate, DEC 9, 2016      (Excerpt by MD)
https://www.project-syndicate.org/commentary/complexity-of-global-inequality-by-michael-heise-2016-12

MUNICH – Since 2013, when Thomas Piketty published his much-discussed study of the distribution of income and wealth, inequality has been at the forefront of public debate in most advanced economies. But inequality remains poorly defined, its effects highly variable, and its causes hotly debated.

Even the most basic question – how much inequality is too much – is virtually impossible to answer. There is no “natural rate of inequality” characterizing an economy in equilibrium, a level at which policymakers can aim. Instead, countries’ rates of inequality are measured against one another – a narrow approach that ignores differences.

At a time when everyone seems to be complaining about inequality, wealth is, at the global level, more broadly distributed than ever. In the last 16 years alone, the number of people who qualify for inclusion in the global middle class – at today’s level, people with net financial assets of €7,000-42,000 – has more than doubled, to over one billion, or about 20% of the world population.

And it is not just the middle class that is growing. At the end of last year, around 540 million people around the world could count themselves among the global wealthy, with net assets above €42,000.

The key to this progress has been the success of the emerging economies, especially China. And, indeed, many of those who have joined the high-wealth group are not from the traditional “rich” countries; on the contrary, the United States, Japan, and Western Europe now have just 66% of the world’s high-wealth households, compared with over 90% in 2000.

The global financial crisis was most painful for the advanced countries, especially in Europe. But the expansionary monetary policies that advanced-country central banks pursued after the crisis made a bad situation worse. Those policies pushed up prices of assets – especially bonds and equities – that were held largely by wealthy households. At the same time, they hurt middle-class savers, who typically rely on duller savings instruments like bank deposits.

Today, the US has the smallest middle class, holding just 22% of total net financial assets, half the average of other industrialized countries, and the highest concentration of wealth than in any other country. All of this has important implications for how to tackle inequality. Simply put, if the causes and impacts of inequality differ across countries, so should the policy prescriptions.

For some countries, such as in southern Europe, tackling unemployment is critical to enable middle- and lower-income households to save and consume. Other countries should focus on improving the conditions for long-term savings, such as through occupational pension schemes. Still others would do well to reduce the tax burden, in particular for low- and middle-wage earners.

Income Inequality, Robots and a Path to a Fairer Society
R.Shiller/J.Siegel, Knowledge Wharton, May 10, 2017    (Excerpt by MD)
http://knowledge.wharton.upenn.edu/article/income-inequality-robots-and-a-path-to-a-fairer-society/?utm_source=kw_newsletter&utm_medium=email&utm_campaign=2017-03-16

Earlier this year, Oxfam reported that the world’s eight richest people control roughly the same amount of wealth as the bottom half of the world’s population. Around the same time, the World Economic Forum identified income inequality as the most challenging problem the world faces today. It is an issue that has been discussed for decades, but in the wake of political upheaval in the U.S. and Europe from voters hurt by globalization, there is more intense interest in creating a less polarized distribution. … Shiller also notes that one of the big challenges to future income levels may be artificial intelligence and robots, and he suggests some ideas on how to prepare for that eventuality.

The topic of income and wealth inequality has gotten a lot more attention since the Great Recession began in 2008, which was followed by one of the slowest economic recoveries in modern times. The topic then seemed to go mainstream this year when the World Economic Forum at Davos noted that rising income and wealth inequality could be the most significant trend in world economic development over the next 10 years. Their report had input from 700 experts.

Professor Siegel also correctly called the top of the tech bubble in 2000, warning about high valuations in the sector. He is the author of the classic Stocks for the Long Run, which argued that stocks have been giving a real return of about 7% for almost two centuries, and thus are a solid investment over the long run. He has been consistently bullish on the equity markets since the time of the 2008 crash, and the Dow has gone from about 6,600 in March of 2009, to above 20,000 today.

I think we need to separate out several forces. One is the growth of productivity itself overall. And the other is the fact that we’ve had a tremendous falling behind of the lower-income groups relative to the upper-income groups over much more than 20 years — 30 years. … Non-farm productivity growth used to be 2.3%. Higher in expansions, somewhat higher when oil prices are going down. We had a big expansion since 2009. We had oil prices going down. And it’s 0.5%, 0.6%. We’ve never had it so low. And if we just had it normal, we would have wages

Getting Past the Globalization Bogeyman
Angus Deaton, Project Syndicate, JAN 16, 2017     (Excerpt by MD)
https://www.project-syndicate.org/onpoint/getting-past-the-globalization-bogeyman-by-angus-deaton-2017-01

According to its critics, globalization leads to an inexorable increase in income and wealth inequality: the rich get richer, and everyone else gets nothing. But the first thing we need to understand about globalization is that it has benefited an enormous number of people who are not part of the global elite.

Despite continuing population growth, the number of people who are poor worldwide has fallen by more than a billion in the last 30 years. The beneficiaries include the no-longer poor in, among other countries, India, China, Vietnam, Thailand, Malaysia, South Korea, and Mexico. In the rich world, all income groups benefit, because goods – from smartphones to clothing to children’s toys – are cheaper. Policies aimed at reversing globalization will lead only to a decrease in real income as goods become more expensive.

The call to rein in globalization reflects a belief that it has eliminated jobs in the West, sending them East and South. But the biggest threat to traditional jobs is not Chinese or Mexican; it is a robot. That is why manufacturing output in the US continues to rise, even as manufacturing employment falls.

It is true that globalization has fueled greater income inequality. But much of this increase should be welcomed, not condemned. There is nothing inherently bad about inequality.

In India and China, globalization has brought greater income inequality, because it provided new opportunities – in manufacturing, in back-office jobs, and in software development – that have benefited millions of people. But not everyone. That is just the way progress happens; while we might like it better if everyone were to prosper in tandem, such situations are incredibly rare. To decry this sort of inequality is to decry progress itself.

In rich countries, too, some of the increase in inequality reflects better opportunities, owing to the move from a national to a global market. Of course, there is a dark side to inequality. The rich have outsize political influence, and can often rewrite the rules to benefit themselves, their companies, or their friends. When the easiest way to get rich is by legalized theft, innovation and creativity are a mug’s game. The justified anger is toward a government that enriches special interests at the expense of everyone else. In a slow- or zero-growth economy, where what you get can only come at my expense, such legalized theft is intolerable.

Growth depends on globalization and on legitimate inequality. We cannot ignore those who are hurting, but we need to ensure that our “fixes” don’t make the problem worse. The true bogeymen are the rent-seekers who have captured so much of our government. The inequality that they have wrought is the inequality that needs to be eliminated.

Is Universal Basic Income a Good Idea?
Knowledge Wharton; May 14, 2017       (Excerpt by MD)
http://knowledge.wharton.upenn.edu/article/universal-basic-income-good-idea/?utm_source=kw_newsletter&utm_medium=email&utm_campaign=2017-03-14

While talk of providing a guaranteed income has been around for many years — five major experiments were conducted in the U.S. and Canada in the 1960s and 1970s that yielded mixed results — the idea has resurfaced in recent years as concerns grew that self-driving technology, artificial intelligence and robotics will destroy many jobs. There is no consensus on how big the impact will be, but one 2013 estimate out of Oxford University is that 47% of U.S. jobs are at risk of being automated in 20 years.  …However, Peter Cappelli, Wharton management professor and director of the school’s Center for Human Resources, says he has yet to see evidence that robots are going to cause massive joblessness.

Tesla CEO Elon Musk said autonomous technology will lead to high levels of unemployment and so some form of UBI is “going to be necessary.” Microsoft co-founder Bill Gates, remain unconvinced, noting that countries, even the affluent U.S., cannot afford it and so governments should focus first on helping the poor, elderly and disabled.

From the point of view of economists, a UBI is not feasible. “Thoughtful liberals and conservatives trained in economics are almost universally against the idea,” Smetters says. …Instead of a UBI to help the poor, Feldstein recommends the “negative income tax” plan advocated by two Nobel laureates, conservative economist Milton Friedman and James Tobin, a liberal Yale economist. “ …We seem to have agreed — maybe tacitly — as a nation that it’s important to not let fellow citizens starve to death or die of exposure when they fall on hard times, go through a life transition, etc.” Benjamin Lockwood, Wharton professor of business economics and public policy says.