While no economy can be expected to achieve a truly fair distribution of income, government-led redistribution can help. So should philanthropy, both across and within communities – an area where Japan falls short.
TOKYO – On January 1, as Japan celebrated the new year, a 7.5-magnitude earthquake struck the Noto peninsula, causing buildings to crumble, forcing mass evacuations, and leading to more than 200 deaths. But in the wake of the tragedy, something beautiful happened: an outpouring of support by philanthropic organizations and individuals, including support from beyond Japan’s borders. More than 140,000 people donated $5 million through the Nippon Foundation alone.
This was all the more remarkable because Japan lacks a strong culture of charitable giving. The country ranked 118th in the 2022 World Giving Index, with Indonesia, Kenya, the United States, and Australia taking the top spots. Charity does not matter only in the wake of disasters. It can be important for maintaining economic life. Economists have two fundamental concerns: the objectives of maximizing total income and the fair distribution of income.
While the first objective is relatively easy to pursue, the second is rather thorny. We know that if too few actors hold too large a share of the national income, the economy will eventually lack sufficient healthy workers and viable consumers. But we presumably reach the limits of fairness before that point. And achieving consensus on what amounts to a fair distribution of income is no easy feat. Difficulty arises because the relevant values are shaped significantly by individuals’ interests and biases, and the imperative of ensuring one’s own well-being often takes precedence over the common good.
TOKYO – On January 1, as Japan celebrated the new year, a 7.5-magnitude earthquake struck the Noto peninsula, causing buildings to crumble, forcing mass evacuations, and leading to more than 200 deaths. But in the wake of the tragedy, something beautiful happened: an outpouring of support by philanthropic organizations and individuals, including support from beyond Japan’s borders. More than 140,000 people donated $5 million through the Nippon Foundation alone.
This was all the more remarkable because Japan lacks a strong culture of charitable giving. The country ranked 118th in the 2022 World Giving Index, with Indonesia, Kenya, the United States, and Australia taking the top spots. Charity does not matter only in the wake of disasters. It can be important for maintaining economic life. Economists have two fundamental concerns: the objectives of maximizing total income and the fair distribution of income.
While the first objective is relatively easy to pursue, the second is rather thorny. We know that if too few actors hold too large a share of the national income, the economy will eventually lack sufficient healthy workers and viable consumers. But we presumably reach the limits of fairness before that point. And achieving consensus on what amounts to a fair distribution of income is no easy feat. Difficulty arises because the relevant values are shaped significantly by individuals’ interests and biases, and the imperative of ensuring one’s own well-being often takes precedence over the common good.