nequality in income is both virtue and defect. The virtue of reward providers for the effort and producing economic growth must be balanced against the defect of manifest injustice of inequality.
The riches that have resulted from good luck, good parents, or from birth in a good season is far from easy to defend it. The problem of society and governments is to establish an acceptable degree of redistribution, balancing the remaining inequality, with blunted incentives from higher taxes and benefits. Or so we thought.
In recent years the industry of academic research increasingly reject this compromise. The smallest inequality stimulates growth, argue proponents, that countries have more redistribution, a decreasing gap between rich and poor, in addition to more sustainable economic growth.
Leading change of direction towards this new consensus are two institutions that are surprising: the International Monetary Fund and the Organisation for Economic Co-operation and Development. Infuse these traditional strongholds of orthodoxy, their policies, with most current empirical evidence, or simply follow fashion?
There is no doubt that new ideas are supported strongly. The Angel Gurría, OECD chief is convinced of the new reality. "Addressing the high and growing inequality is vital to promote a strong and sustainable growth," he says, and backs with rhetoric certainty Christine Lagarde, managing director of the fund. She believes that the rich ought to please the poor. "Contrary to conventional wisdom, the benefits of higher income flowing upward, not down," he says.
For the sake of pleasure this high global elite, the results of the survey are commonplace. The economic performance varied widely over time and from country to country, but the evidence shows that inequality explains only a small part of these differences. Any impact and if the gap between rich and poor in development, other forces dominate, so should not we see redistribution as the new growth engine.
With results are almost entirely based on the correlation data of entire countries, there are also troubling inconsistencies. Ms. Lagarde and the IMF believe that the higher share of income for the rich harms economic performance while the OECD says only inequality among the poorest and middle matter. The international organization based in Paris concludes that the lack of access of poor skills is the mechanism by which the highest inequality harms growth, along with the absence of the role of skills of the equation.
If the global results are weak, offered near-zero policy options in rich countries, where these findings have caused more excitement -in the US and Britain in particular. Since there are examples of the worst excesses of capitalism, these Anglo-Saxon nations appear to IMF data as countries with relatively strong growth, low inequality and high redistribution.
The most that can be said of these global correlations is that successful economies tend to grow relatively quickly, most people have a reasonable net income and longer life, leading to a substantial redistribution. We know this for decades. They do not tell us anything about what to do about 1% at the top -the debate on the inequality that prevails in politics.
There are always potential policies that can simultaneously stimulate the economy and reduce inequality. Strict promote competition was one success of the center in the 1990s, which boosted both efficiency and justice.
Where governments have failed Tony Blair's UK and Bill Clinton in the US was that it identified gaps in the financial sector. They took advantage of the unlimited government subsidies and took a very big risk with catastrophic consequences. Further attack on selfish interests and excessive gaps would allow the few who prosper win over others, a constructive way for politics. Of course, to eliminate differences sound like boring financial handbook. There are other usual nostrums that those who formulate policies should pay more attention.
Developing countries would have to stamp out corruption and strengthen property rights. Southern Europe would have to cut the labor rights of older workers and equalize them to youth, and Britain should relax unreasonable restrictions in residential construction, which offer convenient money to existing landowners.
There is, of course, still room to focus on redistribution and if the US and others who have seen increases in inequality, would have to respond with more burdensome taxation for the rich.
But the traditional debate is a far more difficult conversation from talking about the common assumption that has appeared, that the redistribution is necessarily good for growth.
It is still, unfortunately, the appropriate public debate has to be done
The riches that have resulted from good luck, good parents, or from birth in a good season is far from easy to defend it. The problem of society and governments is to establish an acceptable degree of redistribution, balancing the remaining inequality, with blunted incentives from higher taxes and benefits. Or so we thought.
In recent years the industry of academic research increasingly reject this compromise. The smallest inequality stimulates growth, argue proponents, that countries have more redistribution, a decreasing gap between rich and poor, in addition to more sustainable economic growth.
Leading change of direction towards this new consensus are two institutions that are surprising: the International Monetary Fund and the Organisation for Economic Co-operation and Development. Infuse these traditional strongholds of orthodoxy, their policies, with most current empirical evidence, or simply follow fashion?
There is no doubt that new ideas are supported strongly. The Angel Gurría, OECD chief is convinced of the new reality. "Addressing the high and growing inequality is vital to promote a strong and sustainable growth," he says, and backs with rhetoric certainty Christine Lagarde, managing director of the fund. She believes that the rich ought to please the poor. "Contrary to conventional wisdom, the benefits of higher income flowing upward, not down," he says.
For the sake of pleasure this high global elite, the results of the survey are commonplace. The economic performance varied widely over time and from country to country, but the evidence shows that inequality explains only a small part of these differences. Any impact and if the gap between rich and poor in development, other forces dominate, so should not we see redistribution as the new growth engine.
With results are almost entirely based on the correlation data of entire countries, there are also troubling inconsistencies. Ms. Lagarde and the IMF believe that the higher share of income for the rich harms economic performance while the OECD says only inequality among the poorest and middle matter. The international organization based in Paris concludes that the lack of access of poor skills is the mechanism by which the highest inequality harms growth, along with the absence of the role of skills of the equation.
If the global results are weak, offered near-zero policy options in rich countries, where these findings have caused more excitement -in the US and Britain in particular. Since there are examples of the worst excesses of capitalism, these Anglo-Saxon nations appear to IMF data as countries with relatively strong growth, low inequality and high redistribution.
The most that can be said of these global correlations is that successful economies tend to grow relatively quickly, most people have a reasonable net income and longer life, leading to a substantial redistribution. We know this for decades. They do not tell us anything about what to do about 1% at the top -the debate on the inequality that prevails in politics.
There are always potential policies that can simultaneously stimulate the economy and reduce inequality. Strict promote competition was one success of the center in the 1990s, which boosted both efficiency and justice.
Where governments have failed Tony Blair's UK and Bill Clinton in the US was that it identified gaps in the financial sector. They took advantage of the unlimited government subsidies and took a very big risk with catastrophic consequences. Further attack on selfish interests and excessive gaps would allow the few who prosper win over others, a constructive way for politics. Of course, to eliminate differences sound like boring financial handbook. There are other usual nostrums that those who formulate policies should pay more attention.
Developing countries would have to stamp out corruption and strengthen property rights. Southern Europe would have to cut the labor rights of older workers and equalize them to youth, and Britain should relax unreasonable restrictions in residential construction, which offer convenient money to existing landowners.
There is, of course, still room to focus on redistribution and if the US and others who have seen increases in inequality, would have to respond with more burdensome taxation for the rich.
But the traditional debate is a far more difficult conversation from talking about the common assumption that has appeared, that the redistribution is necessarily good for growth.
It is still, unfortunately, the appropriate public debate has to be done
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