What policies should the US, UK, and EU leaders pursue to combat the problems associated with increasing inequality?
Please provide an economic argument based on the readings below, or other readings.
http://www.theguardian.com/us-news/2015/oct/14/donald-trump-working-class-americans-feel-screwed
The Oxford Dictionary of Economics defines inequality as:
“Differences in the distribution of economic stocks or flows among economic agents. For example, wealth inequality refers to the distribution of the stock of wealth, whereas income inequality refers to the distribution of the flow of income. Inequality can arise among individuals or groups within an economy, or among nations. Inequality can be graphically represented by the Lorenz curve or measured by a range of indicators including the Atkinson index and the Gini coefficient.”
Understanding Inequality
How does one measure income inequality? The OECD has found that according to a report by the Stiglitz-Sen-Fitoussi Commission (Stiglitz et al., 2009), the most comprehensive income concept is household disposable income that has been adjusted for publicly-provided in-kind transfers, such as public spending on education and health care.
The OECD has concluded that:
- Education policies matter. Policies that increase graduation rates from secondary and tertiary education and that also promote equal access to education help reduce inequality.
- Well designed labour market policies and institutions can reduce inequality. A relatively high minimum wage narrows the distribution of labour income, but if set too high it may reduce employment, which dampens its inequality-reducing effect.
Institutional arrangements that strengthen trade unions also tend to reduce labour earnings inequality by ensuring a more equal distribution of earnings. Job protection reforms that make permanent and temporary contracts more even in their provisions lower income inequality through smaller wage dispersion and also possibly via higher employment. - Removing product market regulations that stifle competition can reduce labour income inequality by boosting employment.
At this point, I should like to pause for a moment, and make clear that I’m just not sure how far I agree with the direction of this topic- I could of course go on, and list half a dozen more economic policies that have been researched by various NGOs to have proven results towards reducing wealth inequality.
But to what end? As an individual that recognises my own ambitions, both sentimental and entrepreneurial, it of course would be far easier for me to place my entrepreneurial inadequacies on the government for failing to spoon feed me the financial empowerments we all seek and claim to deserve. However, this I will not do, for the sole purpose that when I (finally) satisfy my entrepreneurial ambitions, I intend to ensure the government can take as little credit as possible for my successes (and therefore as little of my wealth from me as possible!).
Why instead can we not celebrate the brilliance and sheer bravery of the top 1% for finding entrepreneurial successes where we mere mortals wouldn’t dare delve?
I find it all together tiresome to so often find myself reading articles and publications claiming that the entrepreneurial elites should carry the remaining 95% of the worlds population.
Get out there, tighten your belt, fasten your laces, and make your God damn mark on the world!
Seth Wilkinson (TopicalMinds.org)
Bibliography:
Oxford Dictionary of Economics
OECD
TopicalMinds.org
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