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Feb 18, 2016 Dambisa Moyo

نيويورك- لقد أصبحت قضية إنعدام المساواة في الدخل خلال العقد الماضي تصنف إلى جانب الإرهاب والتغير المناخي والأوبئة والركود الإقتصادي كواحدة من أكثر القضايا إلحاحا فيما يتعلق بإجندة السياسات على المستوى الدولي ولكن على الرغم من كل هذا الإهتمام، تم إقتراح القليل من الحلول التي يمكن أن تكون فعالة . إن تحديد أفضل السياسات لتقليص إنعدام المساواة ما يزال لغزا.

حتى نفهم لماذا تربك هذه المشكلة صناع السياسات ،فإن من المفيد أن نقارن أضخم إقتصادين بالعالم . إن الولايات المتحدة الأمريكية هي ديمقراطية ليبرالية مبنية على إقتصاد السوق وفيها عوامل الإنتاج مملوكة للقطاع الخاص وعلى النقيض من ذلك فإن الصين محكومة بطبقة سياسية تحتقر الديمقراطية وإقتصادها –على الرغم من عقود من إصلاحات السوق-يعتمد على التدخل الواسع للدولة.

لكن على الرغم من أنظمتهما السياسية والإقتصادية المختلفة تماما فإن البلدين على نفس المستوى تقريبا فيما يتعلق بإنعدام المساواة فتصنيف كل بلد طبقا لمؤشر جيني كويفيشنت – وهو المقياس الأكثر إستخداما للمساواة في الدخل –هو حوالي 0،47 .

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0 Comments on this paragraph, 38 Comments on this article

Mike Holly Apr 18, 2016

Inequality results from corruption. In the US, it originates from government regulations favoring monopolies.
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Andrew Brown Mar 11, 2016

Poverty in Africa.
"Aid" delivered to the local chieftains.
Chieftains give access to females.
Females impregnated.
Children sold as sex slaves.

I think there is a shipping aspect to the above, but I do not know all the various locations. Caribbean likely is one.
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Dorota Panczyk Mar 3, 2016

very interesting read and thank you for evidence. However, most of the studies say that inequality in China rose in the cited period, along economic growth. http://www.worldbank.org/en/topic/poverty/publication/inequality-in-focus-august-2013
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Toufic Abu Alwan Feb 25, 2016

inequality in my opinion is normal as we are being controled by magnets but can be dealt with when laws are applied in acordance with regulation created by working peoples representatives and not by oligarques
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Robbie Jena Feb 23, 2016

It happens - the key economists do not know the solution.
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Ondiappan Arivazhagan Feb 23, 2016

Inequality is God's will.
It can't be eliminated,lest the World will self-destruct.
It's the DNA of the World for its sustainability.
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Nathan W Feb 22, 2016

While early stage of rapid growth are obviously going to be associated with very high inequality (China case), inequality in the USA persists even at highly advanced stages of economic development. Moreover, China has widespread teaching of ideological preferences which are not consistent with accepting very high inequality, suggesting that they will eventually address this, whereas the ideology of free market capitalism seems not only to tolerate inequality, but to view it as a desirable feature of an efficient economy.

Very different thinking indeed.
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William Cash Feb 22, 2016

I waited to see if this was a joke. We know why inequality is getting worse in the US. Ever since Ronald Reagan the government's policies have heavily favored the rich. They pay less in taxes. They industries still get subsidies. 5 supreme court justices were totally pro corporate resulting in Citizens' United which enabled the rich to buy our government to keep tilting dthe policies in their favor. They' destroyed unions which are vey necessary if you want an kind of equality. The individual doesn't have a chance when he's going agains corporations by himself. The list goes on and on.
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Greg Hall Feb 22, 2016

Wealth inequality stems largely from property ownership and increases in capital gains via asset appreciation. The poor tend not to own any of the income producing assets, but simply rely on earned income. The key to more equality would be for things like down payment transfers to occur to groups of the poor, effectively making them shareholders in such assets like apartment buildings. How to facilitate this is a huge challenge.
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Phillip Tussing Feb 22, 2016

Normally I respect Ms. Moyo's work; this article is a puzzle. Gini coefficient in China in 1978 according to this paper (http://uschinacenter.as.nyu.edu/docs/IO/32612/Li_shi_paper.pdf) in 1978 was .16 in urban areas; .11 in rural areas. It has been steadily rising, as in the US, but more quickly. This is for different reasons. In the US it has risen in part because of international trade with China, which decreased income to workers as it raised income to owners of capital; also in part because of tax legislation favorable to the wealthy. In China income disparity has risen as part of the usual increase in disparity as countries become richer. No surprises here. In my view, there are a few ways in which "excessive" income disparity could be ameliorated: one would be to reduce the monopoly bounty for patents and copyrights, which have hugely raised windfall income for a few entrepreneurs; another would be to moderately increase income tax for the highest earners and increase estate tax; finally, these taxes should be spent on topping up income for the working poor and increasing access to education.
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Mark St. Angelo Feb 21, 2016

The author looks at too small a time period in US history. The share of US income earned by the top 1% was higher in 1928 (23.9% of overall income) than it was in 2007 (23,5%). During most of the interim period, the share of income earned by the top 1% declined, reaching a low of 8.9% in 1976.

Both the decline (after 1928) in the percentage of overall US income earned by those in the top 1% and the more recent rise (mostly after 1980) in that percentage seem to be linked to income tax rates. In 1928, the top marginal tax rate was 25%, but it went up to 63% in 1932, 79% in 1936, and it was even higher (reaching 91%) during the 40s, 50s and early 60s, before dropping down to 70% in 1965, where it remained until the Reagan administration. During this time, the percentage of income being earned by the top 1% declined to its 1976 low. Thereafter, the top tax rate dropped to 50% in 1982, and then to 28% in 1988, and that coincided with a significant upward trend in the percentage of income being earned by those in the top 1%, to the point where in 2007 it was almost as high as it had been in 1928.
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Gerry Hofman Feb 21, 2016

The root of the problem lies in the governing model where the strongest, wealthiest and most powerful people are the ones who fill the governments' ranks. They are the ones who set the rules and so the rules are set to advantage them. What the author points out is that in China where the feedback from the popupation is the smallest yet the rise of inequality is the smallest, which points to the assumption that it's the better social approach and conscience of their elites that make the difference. In the West the excesses of capitalism and extreme wealth are widely celebrated leading to a culture of greed and recklessness that already resulted in the crash of '08 and feeds further inequality in a manic out-of-control race. It's doubtful that the ruling elites will voluntary cut back their gains in any scenario at all except a collapse of society followed by worldwide restructure and change of the rules.
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Pavlos Papageorgiou Feb 21, 2016

In order for capitalism to make sense of inequality and move forward we need to disentangle personal income and wealth (the reward for work, which can be used for consumption) from capital gains (the reward for success, and the power to allocate funds to new ventures). The difference between a good professional salary and a billionaire's wealth is five orders of magnitude. The ethics of solidarity to your fellow human, not wasting food while people are hungry, etc. can't cope with these vast disparities so people either ignore inequality or decide that it's part and parcel with capitalism.

If we're going to make progress, within capitalism, we have to separate them. Inequality of income and of capital are different problems, treat them differently. Force billionaires to take a salary and live on it, keeping salary income separate from one's investment holdings. Tax income progressively to effect equality of consumption. Audit large private funds like public corporations, to prevent leakage into personal consumption and to curb their political spending. Basically treat wealth the way Warren Buffett does. If we do, billionaires will go along much more readily.
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anu bose Feb 21, 2016

This is a rehash of other people's ideas and does not contribute much to the debate on inequality. Government's make choices and solving the 'inequality problem' requires political will.
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Robert Bruce Feb 20, 2016

The solutions to inequality are not really a puzzle. Only two steps are needed.

The first is for voters to become angry enough that political elites can no longer ignore their demands. This may seem unlikely, but rising support among young voters for anti-establishment figures such as Jeremy Corbyn in UK and Bernie Sanders in USA should be a wake up call. Alternatively our economists may finally realise that sustained growth was only achieved in the post-war era (and in China today) because a large part of the new wealth created went to working families, who then spent it, reinforcing the economic cycle.

The second step is then to deal with the elephant in the room - which is a crisis of Global governance. The need to remain Globally competitive now overrides all national government policy. Any country that tries to increase marginal tax rates in isolation will simply see wealth moved off-shore to lower tax competitors. Just today Greece has been criticised in The Economist for raising corporation tax to the outrageous level of 29% ! They point out that Greece is now loosing business to neighbours such as Cyprus (12.5%) and Bulgaria (10%). We will never be able to tackle wealth inequality until we can set minimum marginal rates for taxation which must apply to any country wishing to trade in the Global single market. The best way to achieve this is through a new "Global Economic Community" with the mandate to regulate Global trade and enforce new minimum standards for the benefit of all.

Critics have described this idea as wishful thinking, and I have no illusions about how difficult it will be to achieve. But however great the challenge, there is no alternative. The people who really are engaged in wishful thinking are those who somehow believe we can make any real change to the current system without strong leadership and coordination of policy at a Global level.

Robert P Bruce - author www.TheGlobalRace.net
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John A Werneken Feb 19, 2016

I don't know anyone besides progressive Democratic activists who considers inequality important. Well being, yes. Growth, yes. Opportunity, yes. Mobility, yes. Inequality? hell no, not important.
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Petey Bee Feb 19, 2016

In comparing Gini for US vs China, I wonder what effect immigration/emigration has. As in, does the net immigrant/emigrant add or take away from gini in each country? Also, can this result in both positive or negative feedback, under different circumstances, for a pair of rich/poor countries, depending on each of their social mobility and overall growth rate?
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Brian Chirambo Feb 19, 2016

I think this vertical measure of inequality is fraud...I would prefer a horizontal one were one looks at people at same level and what they earn. For example teacher vs teacher with same education qualification but in different states within USA. The vertical analysis is more of personal hard work and luck and there is nothing one can do about it. In fact, I am of the view that rich people are the most exploited by governments through high taxes that they pay on something they have worked hard for.
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dan baur Feb 19, 2016

Why is inequality a problem?

And if it is, are you prepared to share your wealth with the poor, or just expect the rich to share with you?
The poor are better of in an unequal prospering country than in a stagnant equalization one - see the fall of communism.
- dan baur Feb 19, 2016
  
  Equalizing
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Neil Gundel Feb 19, 2016

As robots and AI displace more and more classes of workers, we need to start considering an endgame when human labor is no longer necessary at anything like we have thought of as "full employment" levels.

How will economic output be distributed when 25 or 50% of the population are contributing nothing BY DESIGN? And how do we get there from here?
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Michael Public Feb 19, 2016

I think you have incorrectly framed America and China as competing models. A better framing would be America vs. Norway. Norway have a Gini of 25 (no inequality problem) and their GDP per capita is above the USA's - best of everything. They also have massive redistribution through taxes.
- Promise Mpofu Feb 19, 2016
  
  think size matter!
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- Petey Bee Feb 19, 2016
  
  Norway had lots of oil money as well, but its safe to say they made some good choices.
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- Michael Public Feb 19, 2016
  
  What do you mean by homogeneous? Are you saying they have fewer blacks and Mexicans in Norway? Are you saying that America has an inequality problem because of the blacks and Mexicans? There is word for this and it is not a pretty one.
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- dan baur Feb 19, 2016
  
  There's no comparison between the US and a small homogeneous country like Norway or Denmark or Luxembourg. This is a huge fallacy of the leftist argument.
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Michael Public Feb 19, 2016

Inequality will be solved one way or another. The last time it was solved there was a guillotine in the public square. A better way is to increase death taxes to 98% for the super wealthy. It won't restrict their efforts and be counterproductive because they can be as rich as they won't for their entire life. I see no reason why children of billionaires should inherit the bulk of the countrie's wealth even though it was not made by them.
- Howard Johnson Feb 21, 2016
  
  But, 18th Century France was more Mercantilist while inequality today looks more like neb-feudalism. Feudal type societies seemed much less prone to revolution due to successful denial of rights making the current potential turn much more important for the vast population. Note that neo-feudalism began as a critique of the right, but is being carried by Republicans with tacit support from Democrats. It explains Bernie Sanders support and the need for elites to channel Trumpian style anger.
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- Michael Public Feb 19, 2016
  
  as rich as they 'want' - not 'won't'
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Abdella Abdou Feb 19, 2016

I may have misread, but the article in WSJ does not say that inequality declined in China between 1978 and now. It only says in recent years. My guess is that between 1978 and now inequality increased in China. It is unlikely that Chinese capitalism produces a fairer distribution than Chinese socialism.
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Francesco D'Allessandro Feb 18, 2016

Inequality has existed since the beginning of mankind. Even our earlier ancestors experienced a degree of imbalance for not every human being has an equal mindset. There were those who daily set out to scavenge for food while others preferred to be slaves to the stronger type.

In modern times, there are Brazilian children that are born in a favela and yet grow up to be a successful entrepreneur while others are nurtured in the finest home in New England yet end up as taxi drivers. This invisible natural law applies all across our planet. Some make it others don’t. There will always exist an unbalanced quota of social classes no matter how much one distributes the riches of others for there is no true path to an earthly utopia as long as every single individual has a free will to choose his lot. Whether one person lives in abject poverty or the other is raised with a silver spoon in his mouth doesn’t determine one’s fate. It is within each creature to reach his goal regardless of whether one came from a low-income household or from a well-heeled environment.

Capitalism perhaps is not the best remedy to cure the maladies afflicting modern society but so far it has proved to be a viable antidote against impoverishment. Look at the United States. Are the streets filled with beggars? Even at the lowest social rungs people have electricity, food, cable, hot water, a car, etc. Is this truly pennilessness? Compared to any hamlet around Riosucio in the department of El Choco in Colombia where the huts are composed of rotten wood, zinc roofs and starving children we would certainly agree that this is the very essence of penury and that what the media outlets expresses as the downtrodden masses in the United States and China are in reality not that bad off if compared to villages in Africa, Haiti or certain areas in Latin America.

Communism demonstrated that collectivism doesn’t function for it engenders police states and extreme hardship among the proletarian. When everyone (except of course for those ruling the rest) is equal where is the incentive to work harder? Where is freedom of choice? Millions of destitute citizens while those at the helm enjoy caviar and champagne.

Socialism, the Siamese cousin of the Marx and Engels ideology, has proven to function when married to capitalist tenets but it has never solved the inequity problem either. Which brings us back to capitalism…

As of late there is a constant propagandistic drive to parcel out wealth. Everyone points out the disparity in which 99% of the people subsists on the sparse crumbs of the 1%; in the rat race between the indigent versus the elite and so on. It seems there is a subliminal malicious message being sent that having riches is synonymous with wickedness; that unless we take away all prosperity from the affluent classes and deliver it to the less fortunate it will lead “to disaffection and radicalization among the poor”. Well it might become a reality if the powers that be persist in bombarding said message at every opportunity they get but just be careful what you wish for because the 20th and 21st centuries have progressed out of the current system we have in a place and not out of an idealistic doctrine of uniformed equality.
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Tonu Pavel Feb 18, 2016

Nice article but I think that the key to solkve inequality lais not at the macroeconomical level but on the ideological one. Question way profit is a benefice that has to be increase and salaries are costs which have to be reduced if both have the same impact on the companies development, why all the businesse are taxed in similar whay while one like production are creatin wealth and others like finance are extractin whealth, what is the role of landlords and othe capital gainers in overall structure of society, why workers that create wealth don't have a say in redistribution of it. It takes time to change the perception but it is possibile if the problem will be taken step by step. Macroeconomical policies, in my oppinion, cannot change the system because the political sphere has long been swallowed by the economical one.
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William DeWhite Jackson Feb 18, 2016

I am not an expert on China, but in 1950 the U.S Government spending was 23% of U.S. GDP which equaled at that time $300 billion. In 2015 the U.S. Government spending was 36% of U.S. GDP which equaled $17.3 trillion. In this statement is shows the U.S. Government spending is consuming the U.S. Economy which means there is less for the general population to use in order to grow and proper. So who is the general population that pays? The rich take there money off shore, the poor do not have any money, so that leaves the middle class, which by this illustration is the reason for their declining numbers, and the reason for Income inequality in America. So in my opinion, that is the answer to your inequality puzzle, at least in America. - William D. Jackson, Jr.
- William DeWhite Jackson Feb 19, 2016
  
  Mr. Florian Strahberger, with all due respect, in your response to my statement dated February 18, 2016, it seems to me, we are not discussing the same issue . Nevertheless, thank you for taking the time to respond, it was greatly appreciated. - William D. Jackson, Jr.
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- Florian Strahberger Feb 18, 2016
  
  Government spending is on the other side of the ballance-sheet in its biggest portion the income of the middle-class.
  The reason for a shrinking middle-class can be found in a) rising capital-goods (if it is "money" who makes costs and not "work", well, not the job-owners will get that money, but the money-owners)
  and b) you need a population who can deliver, every single one has to add value - and all are in competition.
  Same value, but if you have higher costs due to the fact of higher costs of living: you are out. (e.g. workforce has to carry the costs of the capital-goods, like rents for the roof above or expensive education for the kids, insurance costs ...)
  Chinese workforce benefits from a globalized market for work - US' does not.
  And a lot more of the Brain-Workers will be exchanged in the next 20-30 Years. Good time for the ones - bad times for the others. The competition-part is fair - the ownership-part is not.
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stephan Edwards Feb 18, 2016

The American Dream is deader then the trilobite. Policymakers of either party have no real interest in changing the matter. If only because their real masters the Donors who decide who gets to run don't want it to change it is to their advantage after all. When all the Republican went to get Sheldon Adelson's approval in Las Vegas before actually facing the voters that kind of says it all doesn't it. Policy is written to advantage those same big donors. Don't hold your breath waiting for it to change. The problem doesn't confound policymakers no effective policies will be allowed by their real owners.
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hari naidu Feb 18, 2016

Today China officially claims that +45 million live under poverty line on the mainland. In India it's close to +700 million. Since 1970s, China has made tremendous progress eradicating poverty compared to India - at a time when their respective per capita/GDP was more or less same. Today Indian per capita income is some fivefold below mainland China. Why?

May be *democratic centralism* allows decisions to be implemented more rapidly and/or efficiently than under the Indian bureaucratic caste-based social system. Right now Indian politics, under Modi, is paying a high price for its so-called Hindu Nationalism. Centrifugal/centripetal forces are at work in the subcontinent - which if not corrected - will inevitably hold Indian subcontinent back from developing into a modern state.

Inequality therefore is a function of domestic fiscal policy - or lack of it - more than education and/or opportunity cost of social development. But education is central to development and social progress. We see that in China & India.....

Chinese Hans civilization has a lot of social advantages; PRC leadership has now tabled next Five Year Plan to eradicate poverty from rural hinterland and modernize urbanization. I suppose villages will disappear, as they have in American south and midlands.

There is no puzzle about inequality. It's a function of state policy or political leadership or both.
- Jacob Alhadeff Feb 19, 2016
  
  Reducing inequality to public investment does little to answer the question since different types of public investment have different effects on inequality.
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