By CHANDRAHAS CHOUDHURY
The older I get, the more I find that a good way to understand a person — a subtler approach than the details of their nationality, occupation or education — is to study their thinking on the subject of inequality.
Inequality, which pertains to the differences between ourselves and others, is one of the most salient aspects of the human condition. The existence of inequality is as pervasive a fact of life as are the attempts by individuals or institutions to change it.
It constitutes a moral challenge to each one of us, but because it has so many dimensions — political or social, natural or constructed, centuries-old or newly risen — our understanding of it is always evolving (even sometimes regressing). We are reconciled to, or even proponents of, certain kinds of inequality (say, the fact of class difference) and troubled by, or passionately committed to, erasing some others (say, racism or gender-based inequality). So how we conceptualize and act upon the idea of inequality reveals a lot about ourselves.
In the 21st century, as some long-standing forms of social inequality recede, economic inequality has increased on many counts — and has therefore emerged as the great issue of our time.
This has led to a very welcome generational shift in the priorities of economics and economists. At least since the 1980s, the support for neoliberal economics in some of the major regimes and political parties of the world (especially the US and the UK) meant economic inequality ceased to be at the top of the policy agenda. Capitalism was best, it was argued, when minimally policed; the rising tide of prosperity stemming from the free play of human ingenuity and entrepreneurship would eventually lift all boats, including the leaky rafts of the very poor. Attempts to address inequality through the use of state policy and legislation, whether by taxation, subsidies or welfare programs, were self-defeating. The underlying message was that there was no need to be overly disturbed by material inequality, which was essentially a natural fact of life. People by and large received what they deserved in line with their abilities and their willingness to work hard.
For decades, then, to be an economist protesting inequality was to invite the charge of being naive, deluded or plain incompetent. It is only in the last five years or so that, on the back of groundbreaking work by progressive economists around the world — most notably Thomas Piketty with his 2013 book “Capital in the Twenty-First Century,” but also the 2019 Nobel Prize in Economics winners Abhijit Banerjee and Esther Duflo, British economist Anthony Atkinson and South Korea’s Chang Ha-joon — mainstream economics has confronted the stark rise in inequality in our century and offered some pathways and instruments to addressing it.
“The conversation among economists has indeed changed,” write Olivier Blanchard (the International Monetary Fund’s chief economist between 2008 and 2015) and Dani Rodrik in their new book “Combating Inequality.” Reviewing a conference they hosted at the Peterson Institute for International Economics in 2019, they reported “a widespread acceptance that we need to do something about inequality and that removing government interventions or just stimulating economic growth will not do the job.” Their book contains several proposals by prominent economists to address the depressing facts of our age.
Briefly, these include the huge increase in the last four decades in the wealth of the Top 1 or 10 percent of the population in most countries, compared to the static real incomes of the bottom half of the population, who constitute the working class. Also the falling rate of intergenerational social mobility (meaning that, for most people, especially in the West, neither education nor work will allow them a path out of the social class into which they were born). And the rise of disruptive new inequality-producing forces in the form of automation and artificial intelligence in the workplace, along with corporate tax cuts and lower investments in social welfare by governments composed mainly of elites.
Between them, these trends are the very obverse of what we would understand to be a good society. How might we push back? Many interesting possibilities are mooted in Blanchard and Rodrik’s book on both the revenue and expenditure sides of the question, from the idea of a substantial wealth tax on the super-rich to a statutory minimum wage and other labor-market interventions by governments, along with international cooperation to close down tax havens so that governments can generate the revenues they need to build social and human capital.
Redressing inequality will require concerted and complementary work in several fields. –AN