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January 2014

Inequality Isn’t Hopeless. But You Need a Plan

Jim Yong Kim's picture

DAVOS, Switzerland – When we talk about particularly difficult issues at the World Bank Group, I always ask my team a simple question: What’s the plan?

If they have a plan, the next question I ask is whether the plan is serious enough to match the scale of the problem. Here at the World Economic Forum at Davos, one of the main issues before us is an extraordinarily tough one – how do we reduce the growing income inequality around the world? Income inequality has grown to enormous proportions but my question to World Bank staff and folks here in Davos is the same: What’s the plan to lessen income inequality across the world?

Income inequality can appear to be an intractable problem. But the fact is we already know a lot about how economies can grow in a way that includes even the poorest. We need a plan to tackle inequality and we think there are at least five things that we can do right now that could help.

Why is Corruption Today Less of a Taboo than a Quarter Century Ago?

Augusto Lopez-Claros's picture

For those of us who have had an interest in corruption for much of our careers, there is little doubt that sometime in the late 1980s and early 1990s there was a shift in thinking within the development community about the role of corruption in the development process. The shift was tentative at first; continued reluctance to touch upon a subject that was seen to have a large political dimension coexisted for a while with increasing references to the importance of “good governance” in encouraging successful development. What were the factors that contributed to this shift? One that quickly comes to mind is linked to the falling of the Berlin Wall and the associated collapse of central planning as a supposedly viable alternative to the free market. It was obvious that it was not inappropriate monetary policies that led to the collapse of central planning but rather widespread institutional failings, including a lethal mix of authoritarianism (i.e., lack of accountability) and corruption.

From Davos, A Plan to Fight Income Inequality

Jim Yong Kim's picture

DAVOS — The theme of this year's World Economic Forum here involves income inequality and how to close the wide gap between rich and poor. I think this is a smart choice for the meeting, which attracts some of the most powerful and wealthiest people in the world. But to battle income inequality, you need a serious plan. Watch this video from Davos to hear what we recommend as a smart plan of action.

Big Data Diving and US Intergenerational Income Mobility Hold Vital Lessons

Vamsee Kanchi's picture

Patterns of intergenerational income mobility in the United States reveal valuable lessons for economists and policy makers not just in this country, but also for the developing world, where successful efforts to promote shared prosperity and foster create better prospects for youth and children too often meet with frustration.

Raj Chetty, Professor of Economics at Harvard University lectured on this topic recently at the World Bank. For his talk, Chetty drew on recent research by him, Nathaniel Hendren, Patrick Kline and Emmanuel Saez. Chetty and team analyzed anonymous tax records on earnings of 40 million US children and their parents to gauge a child's chances of moving up the income distribution relative to his or her parents.

How's Your Inner Autocrat Doing These Days?

Sina Odugbemi's picture

One of the things I find endlessly fascinating about human beings is the gap between our avowed values and our behavior when we come under pressure. I have come to believe that your values are the ones that shape your conduct when you are dealing with a tough, high pressure situation or a life crisis, not the values you spout when you are showing off at the dinner table. Pieties are all too easy. What do you do when the going gets tough? What values truly underpin your conduct? I notice this most often when people claim to be profoundly devout, and they want you to know it. They claim an aura of sanctity. I have learned not to argue with them. I wait until they have to deal with complexity and then see what they do. You’d be amazed what some of these people get up to. More often than not, piety flies out of the window.

Look around you today. We are all supposed to be democrats these days. We love openness, inclusiveness, and transparency— everybody counts, every voice matters. But what do we do when the going gets tough? Let’s reflect on a few current situations around the world.

Prospects Daily: Turkey’s central bank intervenes in foreign exchange markets to defend the sliding lira, U.S. weekly jobless claims inch higher but remain near recent lows, China’s manufacturing sector contracts

Global Macroeconomics Team's picture
Financial Markets… Turkey’s central bank intervened directly in foreign exchange markets on Thursday for the first time since 2012, selling U.S. dollars to support the lira. The move came after the lira fell to a fresh low of TL2.2931 against the dollar. Mid-morning the lira was trading at TL2.2660 to the dollar, down 0.24% from the previous day.
 

Anecdotes and Simple Observations are Dangerous; Words and Narratives are Not.

Heather Lanthorn's picture

In a recent blog post on stories, and following some themes from an earlier talk by Tyler Cowen, David Evans ends by suggesting: “Vivid and touching tales move us more than statistics. So let’s listen to some stories… then let’s look at some hard data and rigorous analysis before we make any big decisions.” Stories, in this sense, are potentially idiosyncratic and over-simplified and, therefore, may be misleading as well as moving. I acknowledge that this is a dangerous situation.

However, there are a couple things that are frustrating about the above quote, intentional or not.

  • First, it equates ‘hard data’ with ‘statistics,’ as though qualitative (text/word) data cannot be hard (or, by implication, rigorously analysed). Qualitative twork – even when producing ‘stories’ – should move beyond mere anecdote (or even journalistic inquiry).
  • Second, it suggests that the main role of stories (words) is to dress up and humanize statistics – or, at best, to generate hypotheses for future research. This seems both unfair and out-of-step with increasing calls for mixed-methods to take our understanding beyond ‘what works’ (average treatment effects) to ‘why’ (causal mechanisms) – with ‘why’ probably being fairly crucial to ‘decision-making’ (Paluck’s piece worth checking out in this regard).

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