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Where has the global movement against inequality got to, and what happens next?

Duncan Green's picture

Katy Wright, Oxfam's head of Global External AffairsKaty Wright, Oxfam’s Head of Global External Affairs, stands back and assesses its campaign on inequality.

The most frequent of the Frequently Asked Questions I’ve heard in response to Even it Up, Oxfam’s inequality campaign is “how equal do you think we should be?”

It’s an interesting response to the news that just 80 people now own the same wealth as half the world’s population put together, and the best answer was that given by Joe Stiglitz to a group of UN ambassadors: “I think we have a way to go before we worry about that.”

The Inequality BusSo how far do we have to go, exactly? The good news is that inequality is no longer just the concern of a small number of economists, trades unions and social justice campaigners. It’s now on the agenda for the international elite.

That partly reflects a growing realisation that inequality may be a problem for us all, not just those at the bottom. The Spirit Level  raised questions about the impact of inequality on societies, and the rise of Occupy pointed to a growing political concern.

More recently, research papers from the IMF have demonstrated extreme inequality is at odds with stable economic growth, and that redistribution is not bad for growth. Significantly, this shift in focus from the IMF has been driven by Christine Lagarde. To the outside world, the IMF now officially cares about inequality, as do Andy Haldane at the Bank of England, Donald Kaberuka (outgoing head of the African Development Bank), and Alicia Barcena of the Economic Commission for Latin America and the Caribbean, to name a few.

Weekly wire: The global forum

Roxanne Bauer's picture
World of NewsThese are some of the views and reports relevant to our readers that caught our attention this week.

Why don’t voters demand more redistribution?
The Washington Post
If you believe economic inequality is a political problem, these are trying times. As economic inequality increases in many of the world’s wealthy democracies, so does the disproportionate political influence of the rich. As a recent Monkey Cage post explained, even though economic inequality is on the rise, politicians around the world have grown increasingly attentive to the demands of the “1 percent” — and less responsive to the less well-off.  If you believe inequality is a bad thing, this trend is worrisome. The power of the rich to mute everyone else’s political voices could push economic inequality even higher, as the wealthy erect ever-higher barriers to policies that might work to reduce poverty and/or inequality.

Why Technology Hasn’t Delivered More Democracy
Foreign Policy
The current moment confronts us with a paradox. The first fifteen years of this century have been a time of astonishing advances in communications and information technology, including digitalization, mass-accessible video platforms, smart phones, social media, billions of people gaining internet access, and much else. These revolutionary changes all imply a profound empowerment of individuals through exponentially greater access to information, tremendous ease of communication and data-sharing, and formidable tools for networking. Yet despite these changes, democracy — a political system based on the idea of the empowerment of individuals — has in these same years become stagnant in the world.

Redistribution and Growth: The MENA Perspective

Elena Ianchovichina's picture

Recently three IMF economists published a paper arguing that redistribution is in general pro-growth (Ostry et al. 2014). The paper caused a stir as it dismisses right-wing beliefs that redistribution hurts growth. However, even people sympathetic to the ideas of inclusive growth and equality of opportunity find this finding problematic. One reason is that the authors rely on a measure of redistribution that misrepresents the true cost of redistribution in an economy. Another has to do with the omission of factors that affect positively the income growth of the poor and vulnerable, such as employment.  This omission would exaggerate the importance of equality through redistribution as a source of growth and underplay the importance of structural transformation and investments directed towards sectors that use unskilled labor more intensively, and therefore have the potential to generate inclusive growth and productive employment for the poor segments of the population.

Fighting Poverty at Each Stage of Development

Martin Ravallion's picture

One size does not fit all in development policy, as World Bank President, Robert B. Zoellick, emphasized in a recent speech, “Democratizing Development Economics.” The right policies depend on the stage of economic development (amongst other things). What does that mean for the Bank’s overarching objective, a world free of poverty?

Three construction workers return from a day of work as part of the Rural Roads project to improve access to markets in Rajasthan, India. Photo: Michael Foley

The Bank’s policy dialogues in poor countries have long emphasized policies to promote economic growth as the main means of fighting income poverty. These include efforts to ensure “pro-poor growth,” such as by avoiding policy biases against labor-intensive production.  However, direct redistributive policies in favor of the poor typically get far less attention.

It is not obvious why. Even some very poor countries have high inequality—in fact, some of the highest levels of income inequality in the world are found in poor countries (see the 2006 World Development Report: Equity and Development). And developing countries have redistributive policy options through tax and spending instruments (including cash transfers). There are concerns about trade-offs between equity and efficiency, though it can also be argued that high inequality is an impediment to economic growth. So should direct redistributive interventions play a bigger role?