Ο BRANKO MILANOVIC ΓΡΑΦΕΙ ΓΙΑ ΟΛΟΥΣ ΑΥΤΟΥΣ ΠΟΥ ΑΙΣΘΑΝΟΝΤΑΙ ΑΠΟΚΛΕΙΣΜΕΝΟΙ
As income inequality increased in the past quarter century in most parts of the world, it was strangely absent from mainstream economic discussions and publications. One would be hard-pressed, for example, to find many macroeconomic models that incorporated income or wealth inequality. Even in the run-up to and immediate aftermath of the 2007–2008 financial crisis, when income inequality returned to levels not seen since the Great Depression, it did not elicit much attention. Since then, however, the growing disparity in incomes between the rich and poor has taken a place at the top of the public agenda. From Tunisia to Egypt, from the United States to Great Britain, inequality is cited as a chief cause of revolution, economic disintegration, and unrest.
This feeling that the incomes of the rich and the poor have diverged in part reflects reality: between the 1980s and mid-2000s, income inequality rose significantly in countries as diverse as China, India, Russia, Sweden, and the United States. The Gini coefficient, a measure of economic inequality that runs from zero (everyone has the same income) to 100 (one person has the entire income of a country), has risen from around 35 to the low 40s in the United States, from 32 to 35 in India, from 30 to 37 in the United Kingdom, from less than 30 to 45 in both Russia and China, and from 22 to 29 in famously egalitarian Sweden. According to the OECD, during the same time frame, the Gini coefficient increased in 16 out of 20 rich countries. The situation was no different in the emerging market economies: in addition to in India and China, it rose in Indonesia, South Africa, and all the post-Communist countries.
For the poor, the gap has been palpable. In much of the world, the size of the economic pie has been shrinking, and the poor’s relative slice has been getting smaller. The poor’s actual income thus declined on two accounts. Despite large increase in global mean income between 1980 and 2005, excluding China, the number of people who live -- or, rather, barely subsist -- on an income below the absolute poverty line (1 dollar per day) remained constant, at 1.2 billion.
In many countries, however, it appears that perceptions of inequality outstripped even these large and very real increases. In three latest World Values Surveys (conducted in early 1980s, 1990s, and 2000s), when given the choice between more freedom and more equality, respondents around the world increasingly selected the second in later surveys. Even when controlling for the changing composition of countries over the past three decades, that result remains constant. Public perception of inequality was behind the curve for over two decades, it seems to have now leaped ahead of it.Even in countries that have not shown any significant change in the reported gap between the rich and poor, moreover, citizens believe it has grown. This could be correct; measurement problems could have led to faulty data. Commonly used household surveys, from which data on inequality are extrapolated, might have become less reliable in capturing the incomes of the rich, for example. In greater numbers than before, they are thought to decline to participate in surveys or not truthfully report their incomes.
India has become something of a cause célèbre of this problem. Since the country’s economic reform in the early 1990s, its GDP per capita has risen by an average of almost five percent per year. But per capita consumption, as calculated from household surveys, grew only slightly, at one percent per year. Some of the discrepancy is due to the declining share of personal consumption in India’s GDP, but some is thought to have been caused by the low “capture” of the incomes of the rich. In other words, the mean income rose because the rich got richer but did not report it, while the poor and the middle class earned only moderately more income, which was well reported in the surveys, and did not consume significantly more.
Perhaps the rich are undersurveyed. Have our statistical tools thus become much less reliable guides both to income distribution and for conducting policy? Probably not. Wealthy people’s evasion has been a problem since household surveys were first conducted seriously more than half a century ago, and there is no reliable evidence that the problem has become systematically worse. Moreover, statistical instruments that, in principle, should be harder to falsify -- for example, individual IRS reports -- paint the same picture as household surveys. In the United States, both agree on the extent of rising inequality since the 1980s.
Exaggerated perceptions of wealth disparity do not lie in the arcana of survey techniques or the wiliness of the rich but in a combination of domestic and global factors. As an example, consider the recent revolutions in Tunisia and Egypt, which were blamed on inequality. In fact, in neither country had economic growth slowed or inequality risen in recent years. In the last decade, Egypt’s per capita income grew at the respectable rate of 2.6 percent per year and Tunisia’s grew at 3.4 percent. The growth rate of both countries exceeded that of the eurozone (which was just under one percent) over the same period.
The fruits of this higher growth did not go exclusively to the rich. In Tunisia, inequality declined in the 1980s, increased in the 1990s, and has been constant since. In Egypt, it has been on the decline. Just before the revolutions, the level of inequality was high but not outrageous in both countries: in Tunisia, it was almost the same as in the United States, and in Egypt, it was lower. Broadly constant Gini coefficients meant that everyone’s income increased by about the same percentage -- the rising tide lifted all boats. This is not the situation typically associated with widespread disenchantment and imminent revolution
READ MORE HERE
http://www.foreignaffairs.com/articles/68031/branko-milanovic/inequality-and-its-discontents?page=show
http://www.thepressproject.gr/external.php?id=5656
ΠΡΕΖΑ TV
16-8-2011
This feeling that the incomes of the rich and the poor have diverged in part reflects reality: between the 1980s and mid-2000s, income inequality rose significantly in countries as diverse as China, India, Russia, Sweden, and the United States. The Gini coefficient, a measure of economic inequality that runs from zero (everyone has the same income) to 100 (one person has the entire income of a country), has risen from around 35 to the low 40s in the United States, from 32 to 35 in India, from 30 to 37 in the United Kingdom, from less than 30 to 45 in both Russia and China, and from 22 to 29 in famously egalitarian Sweden. According to the OECD, during the same time frame, the Gini coefficient increased in 16 out of 20 rich countries. The situation was no different in the emerging market economies: in addition to in India and China, it rose in Indonesia, South Africa, and all the post-Communist countries.
For the poor, the gap has been palpable. In much of the world, the size of the economic pie has been shrinking, and the poor’s relative slice has been getting smaller. The poor’s actual income thus declined on two accounts. Despite large increase in global mean income between 1980 and 2005, excluding China, the number of people who live -- or, rather, barely subsist -- on an income below the absolute poverty line (1 dollar per day) remained constant, at 1.2 billion.
In many countries, however, it appears that perceptions of inequality outstripped even these large and very real increases. In three latest World Values Surveys (conducted in early 1980s, 1990s, and 2000s), when given the choice between more freedom and more equality, respondents around the world increasingly selected the second in later surveys. Even when controlling for the changing composition of countries over the past three decades, that result remains constant. Public perception of inequality was behind the curve for over two decades, it seems to have now leaped ahead of it.Even in countries that have not shown any significant change in the reported gap between the rich and poor, moreover, citizens believe it has grown. This could be correct; measurement problems could have led to faulty data. Commonly used household surveys, from which data on inequality are extrapolated, might have become less reliable in capturing the incomes of the rich, for example. In greater numbers than before, they are thought to decline to participate in surveys or not truthfully report their incomes.
India has become something of a cause célèbre of this problem. Since the country’s economic reform in the early 1990s, its GDP per capita has risen by an average of almost five percent per year. But per capita consumption, as calculated from household surveys, grew only slightly, at one percent per year. Some of the discrepancy is due to the declining share of personal consumption in India’s GDP, but some is thought to have been caused by the low “capture” of the incomes of the rich. In other words, the mean income rose because the rich got richer but did not report it, while the poor and the middle class earned only moderately more income, which was well reported in the surveys, and did not consume significantly more.
Perhaps the rich are undersurveyed. Have our statistical tools thus become much less reliable guides both to income distribution and for conducting policy? Probably not. Wealthy people’s evasion has been a problem since household surveys were first conducted seriously more than half a century ago, and there is no reliable evidence that the problem has become systematically worse. Moreover, statistical instruments that, in principle, should be harder to falsify -- for example, individual IRS reports -- paint the same picture as household surveys. In the United States, both agree on the extent of rising inequality since the 1980s.
Exaggerated perceptions of wealth disparity do not lie in the arcana of survey techniques or the wiliness of the rich but in a combination of domestic and global factors. As an example, consider the recent revolutions in Tunisia and Egypt, which were blamed on inequality. In fact, in neither country had economic growth slowed or inequality risen in recent years. In the last decade, Egypt’s per capita income grew at the respectable rate of 2.6 percent per year and Tunisia’s grew at 3.4 percent. The growth rate of both countries exceeded that of the eurozone (which was just under one percent) over the same period.
The fruits of this higher growth did not go exclusively to the rich. In Tunisia, inequality declined in the 1980s, increased in the 1990s, and has been constant since. In Egypt, it has been on the decline. Just before the revolutions, the level of inequality was high but not outrageous in both countries: in Tunisia, it was almost the same as in the United States, and in Egypt, it was lower. Broadly constant Gini coefficients meant that everyone’s income increased by about the same percentage -- the rising tide lifted all boats. This is not the situation typically associated with widespread disenchantment and imminent revolution
READ MORE HERE
http://www.foreignaffairs.com/articles/68031/branko-milanovic/inequality-and-its-discontents?page=show
http://www.thepressproject.gr/external.php?id=5656
ΠΡΕΖΑ TV
16-8-2011
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