Economic inequality

Economic inequality is now recognised as a major problem in many economies, including regional economies (Arestis at al., 2011, Milanovic, 2017)). Although global inequality, as measured by the Gini coefficient on real incomes, has generally fallen over the last few decades, this is largely due to the rapid increases in incomes in China and other newly industrialised countries. Within country inequalities have generally increased, especially for the very rich compared to others. The causes are many and are inter-related, including deregulation, reductions in high rates of taxation, financialisation both international and national, tax avoidance (IMF, 2019), rent-seeking by the rich, and an intrinsic feature of capitalism (Piketty, 2014) of nominal wealth growing faster than nominal income. The effects are mostly deleterious for society and the economy (Wilkinson and Pickett, 2009). Proposed solutions are wealth taxes (Wolff, 2017), higher top-rate income taxes, reform of the taxation of international corporations on to a country-by-country basis, a financial transactions tax, and re-regulation.

Relevant papers:

James Galbraith’s Inequality Project

References:

Arestis, P., Martin, R. and Tyler, P., 2011. The persistence of inequality? Cambridge Journal of Regions, Economy and Society, v. 4, p.3-11. doi:10.1093/cjres/rsr001.

IMF The Hidden Corners of the Global Economy, Sept, 2019-09-09

Milanovic, Branko (2016) Global Inequality: A New Approach for the Age of Globalization, Harvard University Press.

Piketty, Thomas (2014) Capital in the Twenty-First Century. Belknap Press. ISBN 067443000X

Wilkinson, Richard G. and Pickett, Kate (2009). The spirit level: why more equal societies almost always do better. London: Allen Lane. ISBN 9781846140396.

Wolff, Edward N. (2017) A Century of Wealth in America, Belknap Press, ISBN 9780674495142

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