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Understanding inequality and what to do about it

June 2, 2012

Inequality has been increasing in most countries, in part because top 1% are capturing a higher fraction of all earnings but also for other reasons. I made a presentation to the Occupied Ottawa conference “Take Back Democracy!” on June 2nd, 2012. The presentation explores three issues in search of intelligent conversation, and in order to accomplish something constructive: description, explanation, and prescription.

You can download it as a pdf here: Understanding inequality and what to do about it .

There are three major sources for the material summarized in this presentation: the very important OECD study released in 2011 called Divided We Stand: Why Inequality Keeps Rising; a research paper summarizing the Canadian experience by a group of prominent labour economists at the University of British Columbia described in this post; and a presentation by Mike Veall of McMaster University, the Canadian expert on top income shares, to the University of Ottawa in February 2012.

My presentation ends by suggesting two sets of policy recommendations, one addressing labour market policies and institutions, and the other tax policies. But these are also discussed in my detail in an earlier post, which was part of the series I wrote last fall on “Inequality and Occupy Wall Street”.

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3 Comments
  1. William permalink

    I had previously seen the post you linked to. I may consider myself to have been an “occupier” although I don’t because I don’t like the in group/out-group problem taking such names produces. I found your blog from the occupy ottawa fb group, and had been to the TBD conference, although was unfortunately not able to make it to your talk.

    Your plan sounds like a good one, certainly not a complete solution but it’s a lot better than what there is right now. I think we should get started implementing it immediately.

    The problem is that it is an end state. The 99% have been trying forever to implement the big picture of what your plan is about; tax the rich more, and us, who actually need that money to meet basic needs, less.

    The problem is not a lack of detailed plan for exactly in what way we should increase taxes on the rich and not take money from people that people who seriously, sorely, need the money they earn, only to for it to be wasted on useless or counterproductive junk by a bunch of politicians, or given to the 1% as subsidies.

    It’s a power problem. Even if you come up with the best plan ever we still can’t get it implemented because the 1% will use their influence to prevent it. Nice to have a plan, especially if it motivates people who don’t understand the above facts yet, but I can guarantee you that similar or even more deeply thought out plans have been put forth many, many times in the past by 99%ers. You just never heard about them because they remained in obscurity, it being impossible to actually put them to any use.

    Also please note that the excerpt from the Ottawa citizen you quote at the beginning of your article is what’s called propaganda. They are trying to put in the heads of people a certain perception of reality, a certain narrative of what was going on.

    It might help to recognize that the “occupiers” do not need to ask any economists what to do, because we have numerous economists among us, which should not be a surprise. I know of one at least that in fact ran our info tent here in Ottawa. Again, this idea that those “occupiers” are just a group of unskilled generic standard size citizens is part of the narrative they want you to buy into. We are not. We are the 99%.

    Similarly, they want people to believe that the problem is some sort of natural difficulty, that income inequality is somehow a result of it just being so darned hard to solve. I’m sure you recognize that as complete bullshit. It continues in the face of truly massive pressure from the disenfranchised only because of the back pressure exerted by the 1%. Not because we lack a nice plan to move ahead with.

    • Thank you so much for sharing your perspective.

      I wonder if the challenges you describe in changing public policy are any different from other groups. Isn’t this an incremental process involving organizing, informing public opinion, building alliances and using the channels to decision makers that are available? Part of this certainly involves a communication strategy. I also wonder what specific challenges you have faced since you mention that there have been numerous plans that have remained in obscurity. Why haven’t I heard about them, and why do they remain in obscurity? And why do you consider some of the responses of the media to be propaganda?

      It seems to me that the awareness of inequality has risen a good deal in public perception, reflecting the interplay of research and the Occupy movement.

      thanks again, Miles

  2. Joe permalink

    Miles,

    Technically speaking, isn’t the Gatsby curve simply referring to relative, not absolute income mobility? Why would relative income mobility be considered a reflection of true income mobility? Obviously higher levels of income inequality will result in lower relative mobility. But that says nothing about how much actually money anyone is actually making over time.

    For example, if you raised marginal tax rates to 90% income inequality would drop off a cliff and relative income would soar, but would anyone in the economy actually be making more physical money over time as a result? In fact, you could just take the money from the rich and burn it, since merely taxing the rich at higher levels without spending the money, would automatically cause relative income mobility to rise.

    Its just a statistical artifact. I’m genuinely trying to understand your viewpoint, but I just don’t see why anyone would worry even a 1 minute about relative income mobility. A change in relative income mobility does not reflect the actual money-making abilities of anyone individual, just their position on a statistical graph.

    Best wishes,

    Ilya

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