Name: Inequality
ISBN: 9780674504769

Inequality

Inequality is one of our most urgent social problems. Curbed in the decades after World War II, it has recently returned with a vengeance. We all know the scale of the problem—talk about the 99% and the 1% is entrenched in public debate—but there has been little discussion of what we can do but despair. According to the distinguished economist Anthony Atkinson, however, we can do much more than skeptics imagine. Atkinson has long been at the forefront of research on inequality, and brings his theoretical and practical experience to bear on its diverse problems. He presents a comprehensive set of policies that could bring about a genuine shift in the distribution of income in developed countries. The problem, Atkinson shows, is not simply that the rich are getting richer. We are also failing to tackle poverty, and the economy is rapidly changing to leave the majority of people behind. To reduce inequality, we have to go beyond placing new taxes on the wealthy to fund existing programs. We need fresh ideas. Atkinson thus recommends ambitious new policies in five areas: technology, employment, social security, the sharing of capital, and taxation. ‎ He defends these against the common arguments and excuses for inaction: that intervention will shrink the economy, that globalization makes action impossible, and that new policies cannot be afforded.

What Hacker News says

pm90May 2017

I actually have a couple of sources for this :). Apologies for the late reply, I also have a day job ;)

I would recommend Krugman's Conscience of a Liberal for an entertaining read. He referenced another book, aptly called Inequality[1], which I'm currently going through. Its a little more academic prose so its not something I can finish quickly (in short, its not an entertaining read...not that all books have to be of course).

Both of these books examine historical precedents for income inequality and attempt to analyze the current situation as well. I think they did a fair job, although I am open to change my mind if there is a better explanation. But these and other books, such as Dark Money[2], and just general news about the scummy activities of people like the Koch brothers have made me more convinced of this viewpoint.

Now to address your comment...

> Only a minority of companies in the US even have executives that get the much maligned high pay and bonuses in the last decade or so. What about the massive percentage of wealth that didn't fall into this category? They may have gain significantly from globalism but that was hardly the result of US tax policy alone.

This is most certainly not true [0]. From [0] and from Krugman's book, you can see just how much the changes in tax policy has incentivized ballooning executive pay and created a new class of executives, who may not be as rich as the landed/inherited, but are certainly "rich". And this class has grown and become more enriched due to globalism, the opening of foreign markets and plummeting of labor costs, both due to automation and cheap foreign labor. I almost think of it as a weird form of trickle down effect, where most of the wealth goes to the very rich but a little (relatively insignificant but in absolute terms very much so) trickles down to the executive class.

> Lets not forget that democrats were in power for the last 8yrs and the state has only grown exponentially since the 1990s under both republican and democrat governments. Just because tax rates weren't the extremes of pre-1980/1970s doesn't make them low. They've been relatively consistent while the middle class income dropped.

Yes Democrats were in power for 8 years but how many of their policies could not be enacted due to obstructionism? But lets not get into that area here: 8 years is a relatively small time to create/destroy inequality. And I don't see any Democrats pushing for tax cuts on the rich, especially cutting estate taxes, which affect only the very rich.

> The complexity of the tax code and lack of competitiveness with international countries may have heavily influenced inequality. But it was hardly the result of explicit tax reduction for the rich...

Its not the complexity of the tax code but its very nature. The top tax rate for personal income is around 35% in the US whereas it is much higher in other developed economies. And the sources that I've listed point to historical trends that prove the same point: once you have a class of super wealthy, they will inevitably influence the Government to reduce their tax burden no matter how that is achieved.

> The idea that tax havens are something that were merely a matter of weak policy is naive. Even worse than the drug war hawks.

I don't think that comparison achieves anything but hyperbole so I'm not going to comment on it.

> Just because the middle class didn't keep pace with the wealthy doesn't mean only the wealthy were at fault. The fact the middle class lost wealth is hardly singularly the fault of the wealthy. I know this narrative sells well in politics but it's very short sighted.

I think you're conflating wealth with income. The middle class, by their definition, is not wealthy (at least in the same country; middle class in US is most certainly more wealthy than in India, say). The US middle class hasn't lost wealth, its their incomes that have not been growing as fast as the incomes of the wealthy. Its unfortunately not just politics: investments in people reap great benefits for society. If a country fails to invest in the health and education of its citizenry because its unable to raise the revenue to do so by the wealthy, then its most certainly the fault of the rich.

> Even if the US adjusted tax policy to redistribute a larger chunk of taxes towards the middle class it would hardly make a dent in the new reality in the fact there is hardly a middle class economy like there used to be. So you must either develop a new middle class economy or you get temporary perks of taking it from the wealthy. This is the big whale in the room that the Bernie bro guys are ignoring. The likely scenario is that the wealthy would become continually less competitive over the years, shift way more money over seas, and the middle class would be in the same situation with a little bit more money for a short period.

I don't think that is likely. Sure its a changed reality now, and I certainly don't see what other future markets will open up, but this new reality demands a healthy, educated workforce to operate it. Income redistribution is less about taking from wealthy and giving it to the poor as much as taking from the wealthy and investing in institutions/programs that can assist the most vulnerable in society. More taxation by itself won't make the wealthy less competitive... I mean, how does that even happen? On the contrary: educating a kid from Inner City Detroit might give us the next Steve Jobs.

> Gov spending under any administration that enacts those policies would largely offset most of the gains going directly to the people regardless (which is good if it results in universal health care, but little else if it's not sustainable).

You seem to imply that all Govt. spending is wasteful which is most certainly not true. Surely its not perfect, but that's another problem that needs fixing.

Also, you asked for a source but failed to provide a single one for any of the many many assertions that you have made.

[0]: https://www.amazon.com/Pay-without-Performance-Unfulfilled-C...

[1]: https://www.amazon.com/Inequality-What-Can-Be-Done/dp/067450...

[2]: https://www.amazon.com/Dark-Money-History-Billionaires-Radic...

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Spyro7Sep 2011

Since this is Hacker News, and there are a lot of really smart, numbers-oriented people here, I just thought I'd provide a link to a dataset that looks at income distributions within the US from 1913 to 2008:

http://www.econ.berkeley.edu/~saez/

Under "Income and Wealth Inequality" on that page, click the link titled "(Longer updated version published in A.B. Atkinson and T. Piketty eds., Oxford University Press, 2007)".

It is an excel file that contains a metric ton of tables, charts, and figures. If you have a few moments and want a deeper understanding of the issue, that excel file is the best place to go.

(Edit: I just wanted to note one thing. My favorite graph from the excel file is figure 1B, where you can see that we are basically returning to where we were prior to World War II. It makes you wonder what was so different about the post-war period that resulted in this shift. Personally, I wonder if the sudden subsidization of education for returning veterans had anything to do with it, but I have no data on this right now, so...)

As far as my own thoughts on the issue go, I agree with pg. For a boring, academic take on it, there is a wonderfully dry 1980s paper by Rosen outlining the superstar theory:

http://www.ppge.ufrgs.br/giacomo/arquivos/ecop72/rosen-1981....

Basically, thanks to technology and globalization the rewards to individuals that have the highest levels of abilities have been magnified. Their "reach" has increased relative to those below them, and their rewards have increased in line with this.

While interest in this seems to be popping up all over the place due to the current economic catastrophe in progress, the idea that communications infrastructure improvements lead to income inequality is an old one.

Here is Alfred Marshall (founder of neoclassical economics) in 1890 (revision from 1920):

http://www.econlib.org/library/Marshall/marP54.html#VI.XII.4...

As for myself, I have no idea about whether this is a good thing or a bad thing (or whether anything could/should be done about the growing inequality). However, it is happening now, on a grand scale, so I think that it is important for everyone to have some context on the issue.

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