Dear Arjan
Thank you for your comments. I may indeed have over-simplified my position in summarising my three blogs, which hopefully present a somewhat more nuanced view (though still inevitably subject to the limitations of tight
constraints on length).
Clearly there has been an increase in attention to inequality in recent years, and of course this is very welcome. However, to my mind, a number of serious concerns remain, and have not as yet been adequately addressed.
1. Most of the attention to inequality focuses (implicitly or explicitly) on inequality within countries. In the context of climate change, global carbon emissions and economic
globalisation, the real problem is inequality among the global population as a whole. This issue, I would argue, has not received anything like the attention it deserves (or at least not beyond the level of general hand-wringing).
2. At the national level, growth and distribution are still seen as separable. To my mind, this seems conceptually incoherent: policies affect individual incomes, and growth
and distribution are summary merely measures of the set of individual incomes. It makes no more sense to pursue growth-oriented policies without taking account of the implications for distribution than to pursue redistribution without considering the implications for growth.
3. While distribution now receives greater attention, it is still generally considered as secondary to growth. In a relatively equal society with no environmental constraints, this might be a valid assumption – but with extreme inequality and increasingly binding environmental constraints, it is not. Distribution is an issue, not only
of equity, but also of the efficiency with which a given level of income is translated into well-being. And, while not readily quantifiable, the loss of well-being (given global income) due to extreme global inequality and diminishing marginal utility is clearly very considerable; and global growth which overwhelmingly benefits those whose needs are already amply met makes little sense in a carbon-constrained world.
4. There is a tendency (explicit or implicit) to equate distribution with redistribution –that is, taxes (or similar) levied on the rich to finance transfers to the poor– or more
generally to approach it with limited add-ons (eg social safety nets) to a growth-focused overall policy approach. This is no substitute for taking account of distributional impacts in the overall design of policies. Social safety nets
only make sense if they cover a minority of the overall population; and a substantial majority of the world population is below any credible poverty line (ie a level of income which might reasonable considered to meet basic needs adequately).
5. These problems are embodied in, and perpetuated by the prevalence of “XXX growth”terminology in development programmes – starting with “growth-oriented adjustment”, through “sustainable growth” and “pro-poor growth” to “green growth”, “inclusive growth” and now “inclusive green growth”. This skews the way we look at development policy towards growth and away from distribution (and
non-material aspects of well-being). (I have a further blog on this at http://www.worldwewant2015.org/node/340200, but it doesn’t add much to the three Broker blogs.)
Re China: I would totally agree. Part of the reason for my
scepticism about the benefits of the North-South shift in power is precisely that the BRICS and other emerging market economies who have gained in this process have done so by reaching the point at which they too have a stronger interest in global growth than in reducing global inequality. The low-income and least developed countries remain totally excluded.
David Woodward
Economist
Thank you for your comments. I may indeed have over-simplified my position in summarising my three blogs, which hopefully present a somewhat more nuanced view (though still inevitably subject to the limitations of tight
constraints on length).
Clearly there has been an increase in attention to inequality in recent years, and of course this is very welcome. However, to my mind, a number of serious concerns remain, and have not as yet been adequately addressed.
1. Most of the attention to inequality focuses (implicitly or explicitly) on inequality within countries. In the context of climate change, global carbon emissions and economic
globalisation, the real problem is inequality among the global population as a whole. This issue, I would argue, has not received anything like the attention it deserves (or at least not beyond the level of general hand-wringing).
2. At the national level, growth and distribution are still seen as separable. To my mind, this seems conceptually incoherent: policies affect individual incomes, and growth
and distribution are summary merely measures of the set of individual incomes. It makes no more sense to pursue growth-oriented policies without taking account of the implications for distribution than to pursue redistribution without considering the implications for growth.
3. While distribution now receives greater attention, it is still generally considered as secondary to growth. In a relatively equal society with no environmental constraints, this might be a valid assumption – but with extreme inequality and increasingly binding environmental constraints, it is not. Distribution is an issue, not only
of equity, but also of the efficiency with which a given level of income is translated into well-being. And, while not readily quantifiable, the loss of well-being (given global income) due to extreme global inequality and diminishing marginal utility is clearly very considerable; and global growth which overwhelmingly benefits those whose needs are already amply met makes little sense in a carbon-constrained world.
4. There is a tendency (explicit or implicit) to equate distribution with redistribution –that is, taxes (or similar) levied on the rich to finance transfers to the poor– or more
generally to approach it with limited add-ons (eg social safety nets) to a growth-focused overall policy approach. This is no substitute for taking account of distributional impacts in the overall design of policies. Social safety nets
only make sense if they cover a minority of the overall population; and a substantial majority of the world population is below any credible poverty line (ie a level of income which might reasonable considered to meet basic needs adequately).
5. These problems are embodied in, and perpetuated by the prevalence of “XXX growth”terminology in development programmes – starting with “growth-oriented adjustment”, through “sustainable growth” and “pro-poor growth” to “green growth”, “inclusive growth” and now “inclusive green growth”. This skews the way we look at development policy towards growth and away from distribution (and
non-material aspects of well-being). (I have a further blog on this at http://www.worldwewant2015.org/node/340200, but it doesn’t add much to the three Broker blogs.)
Re China: I would totally agree. Part of the reason for my
scepticism about the benefits of the North-South shift in power is precisely that the BRICS and other emerging market economies who have gained in this process have done so by reaching the point at which they too have a stronger interest in global growth than in reducing global inequality. The low-income and least developed countries remain totally excluded.
David Woodward
Economist
