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Drifting Toward Plutocracy: Inexorable Concentration of Capital Undermines the Drive for 'Shared Prosperity'

Christopher Colford's picture

Like seismic waves rippling outward after a tectonic shift, reverberations are roiling the economic-policy landscape after the U.S. launch of the groundbreaking new analysis by Thomas Piketty, the scholar from the Paris School of Economics whose landmark tome – “Capital in the Twenty-First Century” – has newly jolted the economics profession.

Any Washingtonian or World Bank Group staffer who somehow missed the news of Piketty’s celebrated series of speeches and seminars last week – in Washington, New York and Boston – received an unmistakable signal this week about what an important intellectual breakthrough Piketty has achieved. President Jim Yong Kim on Tuesday cited Piketty while putting the issue of economic inequality at the top of his list of priorities during his review of the Spring Meetings of the Bank and the International Monetary Fund. Noting that he was already about halfway through reading Piketty’s “Capital,” President Kim sent a clear message that the skewed global distribution of wealth, as analyzed by Piketty and emphasized by many officials at the Bank and Fund's semiannual conference, should be top-of-mind for policy-watchers at the Bank and beyond – indeed, at every institution that hopes to promote shared prosperity.

Piketty’s scholarship is now receiving widespread acclaim as a landmark in economic analysis, and is being recognized both for its “exhaustive fact-based research” and its sweeping historical perspective. More of a patient dissection of hard data than a political roadmap, Piketty’s book has quickly become the subject of multiple praiseworthy reviews, notably in the New York Times and the Financial Times. One usually level-headed Bloomberg View analyst, recoiling from the “rapturous reception” accorded to the book, may have gone slightly overboard this week in asserting that Piketty's insights had been greeted by American liberals with “erotic intensity.”

Predictably, Piketty's book has also quickly become the target – “Piketty Revives [Karl] Marx,” blared a Wall Street Journal headline; “Marx Rises Again,” warned the New York Times’ lonely conservative scold – of the whack-a-mole ideological purists in laissez-faire Op-Ed columns, who forever seem tempted to equate modern-day liberalism with long-gone Leninism. Eager to publish denunciations of any idea, however modest, that might justify (heaven forfend) tax increases on stratospheric income-earners and the top-fraction-of-the-One Percent, the free-market fundamentalists on the Wall Street Journal’s editorial board – unabashed cheerleaders for plutocracy – have opened up one of their trademark barrages via their Op-Ed columns (“This book is less a work of economic analysis than a bizarre ideological screed”; “The professor ought to read ‘Animal Farm’ and ‘Darkness at Noon’ ”). The Journal's jihad clearly aims to demean or discredit anyone who might flirt with such Piketty-style notions as restoring greater progressivity to the tax code. (Egad: Progressive taxation? Next stop: Bolshevism.)

Toward Shared Prosperity, With an Urgent New Focus on Overcoming Inequality

Christopher Colford's picture

The challenge of promoting shared prosperity was one of the unifying themes throughout last week’s Spring Meetings at the World Bank Group and International Monetary Fund – the whirlwind of diplomacy and scholarship that sweeps through Washington every April and October. A remarkable new factor, however, energized this spring's event: In a vivid evolution of the policy debate, the seminars, forums and news-media coverage seemed focused, to a greater degree than ever, not just on the economic question of the creation of overall economic growth but on what has traditionally been seen as a social question: the distribution of wealth.

And in the wake of the Spring Meetings, Washington this week got a bracing reminder of how difficult it may be to build truly shared prosperity – not because our economic institutions lack the ability to achieve it, but because our political institutions may fail to summon the willpower to demand it.

A scholar whose work has taken the economics profession by storm, Thomas Piketty, captivated policy-watchers this week with the Washington launch of his landmark new work, “Capital in the Twenty-First Century.” Hailed as “the most important economics book of the year, and maybe of the decade” by Nobel Prize-winning economist Paul Krugman of the New York Times – and praised by Martin Wolf of the Financial Times as “an extraordinarily important” work “of vast historical scope, grounded in exhaustive fact-based research”– “Capital” offers vital new insights into how wealth and power are distributed in modern economies. “Piketty has transformed our economic discourse,” asserts Krugman. “We’ll never talk about wealth and inequality the same way we used to.”



Piketty’s account of “inexorably rising inequality,” according to New York Times columnist Eduardo Porter, challenges many of the economics profession’s “core beliefs about the organization of market economies” – including “the belief that inequality will eventually stabilize and subside on its own, a long-held tenet of free-market capitalism.” Instead, “the economic forces concentrating more and more wealth into the hands of the fortunate few are almost sure to prevail for a very long time.”

If You Could Help End Extreme Poverty, Would You? We Can. Let's Take It On.

Ravi Kumar's picture
#TakeOn

 
Talent is everywhere, but opportunities are not. That’s the conventional belief.

Today, after listening to some amazing young people speak about their lives at Thursday’s End Poverty event at the World Bank, I’m convinced that opportunities are omnipresent.

These youth have one thing in common: They all want to take on poverty and want everyone else to join them. For the first time in history, we can end extreme poverty, and we can do it by 2030. It’s the right thing to do.

Confucius, a Chinese philosopher who lived in the fifth century B.C., said that when we are faced with what’s right, “to leave it undone shows a lack of courage.” Today, four inspiring youth leaders were at the World Bank Group in Washington, D.C. to do what is right by helping to launch a global movement to end extreme poverty by 2030.

One of them, Chernor Bah, was born during a civil war in the slums of Freetown, the capital city of Sierra Leone. Access to basic needs such as food was a privilege for him. His mom’s resilience helped him get education, he passionately told an energetic, youthful crowd. When he grew up he took it upon himself to mobilize young people to help increase access to education. Today he serves as the chairman of the Youth Advocacy Group for the Global Education First Initiative. Its goal is “to accelerate progress towards the Education for All goals and the education-related Millennium Development Goals.”

What Can You Do to End Poverty? Take It On!

Jim Yong Kim's picture



Often, people ask me how they can get involved in a social movement to end extreme poverty. Not so long ago, I participated in a MOOC – a massive open online course – organized by Wesleyan University called “How to Change the World.”

Wesleyan President Michael Roth asked me for advice to students who wanted to get engaged in a social movement to end poverty. My response is that we’re going to need everyone – doctors, writers, engineers, lawyers, social workers, and visionaries in governments and in the private sector.

So what is it going to take to build a successful social movement to end poverty? What role can you play? Take a minute to watch the video. What I really hope is that it inspires you to get involved, to take it on. Please share this with your friends, and let me know what you think.

Want to Join the Movement to End Poverty? Take It On!

Michelle Pabalan's picture



Remember when you were a kid and everyone asked: “What do you want to become when you grow up?” What did you answer? Have you fulfilled your dreams?

Most of us aspire to live our lives to the fullest; to develop our talents; to make a difference in the world.  Sometimes we may feel lost in the great scheme of things. But as the World Bank Group’s Jim Yong Kim points out: The most successful movements to change the world started with a small group of like-minded people. Think of the movements to find a treatment for AIDS, to promote human rights or to ensure gender equality.
 

2014 Spring Meetings Guide to Webcast Events

Donna Barne's picture
The global economy and international development will be front and center April 8-13, when thousands of development leaders come to Washington for the IMF-World Bank Spring Meetings. Tune in to the conversation at 25 World Bank Live interactive webcasts on topics including digital finance, Syrian art, universal health care, and the global movement to end poverty. Several events will be in multiple languages. You can also follow the conversation on Twitter. We’ve listed some highlights below; check out the full schedule of events. 

Wednesday, April 9


How We’re Taking On Extreme Poverty

Jim Yong Kim's picture



Next week, we’ll be hosting our Spring Meetings in Washington, D.C., which will attract a few thousand leaders in development from around the world. To set the stage for these meetings, I talked this week about the fundamental issues in global development and how we’re undergoing dramatic changes inside the World Bank Group to meet those great challenges.

We live in an unequal world. The gaps between the rich and poor are as obvious here in Washington, D.C., as they are in any capital. Yet, those excluded from economic progress remain largely invisible to many of us in the rich world. In the words of Pope Francis, “That homeless people freeze to death on the street is not news. But a drop … in the stock market is a tragedy.”

While we in the rich world may be blind to the suffering of the poor, the poor throughout the world are very much aware of how the rich live. And they have shown they are willing to take action.

Growing after the Crisis: Boosting Productivity in Developing Countries

Otaviano Canuto's picture

Spring in DC draws more than just tourists. Last week, government officials, policy makers, civil society representatives and other thought leaders converged to take stock of the global economy during the IMF-World Bank spring meetings. The tone in the hallways was optimistic, but cautious. Growth in advanced economies still remains tepid, weighed down by lingering effects of the global financial crisis, demographic challenges, as well as weakening innovation and productivity growth.  At the same time, there are encouraging signs that developing countries are in good shape, thanks to fiscal buffers that helped them to weather the storm.

Nevertheless, we must be mindful of the work ahead: the IMF warned of a ‘3-speed recovery’, where emerging markets are growing rapidly, the United States is recovering faster than most other advanced industrial countries, but Europe continues to struggle. Where does this leave developing countries? At a meeting with the G24 – a group of developing countries - I had the privilege of discussing the prospects for growth, and policies needed to achieve productivity growth essential for eliminating extreme poverty and for creating shared prosperity.

Investing in Girls and Women = A More Prosperous World: Equal Futures Partnership

Donna Barne's picture

Available in Français, 中文

Gender equality is smart economics. That’s an observation that has gained wide acceptance, if not equally wide application. But for 23 countries in the Equal Futures Partnership, breaking down barriers to women’s economic and political empowerment has become a commitment.

Equal Futures Partnership Roundtable


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