Eduardo Porter, the economic science columnist for the NYT (article here), posses an interesting viewpoint on the current inequality debate.
Essentially, Porter states that the current debate revolves around partisan politics and irrelevant discussions on the size of government and the hefty sums of money doled out by welfare programs. These two points are irrelevant, as they have hardly changed (on a percentage of GDP basis) since the 1970s.
So, what should this debate hone in on? The oppressive legal framework being created around the globe. Porter mentions an example coming from Professor Joseph Stiglitz, where the Obama administration is working with Europe and Asia to pass legislation that would allow multinational corporations to sue governments if regulation is negatively affecting their profits. On this Stiglitz contends:
"We have been consistently weakening workers’ bargaining position,” he told me. “We are creating a legal framework for rules that lock in inequality.”
Moreover, Porter mentions Shi-Ling Hsu's (a law professor at FSU) critique of Piketty that concedes Piketty's economic analysis might be correct as it's very likely that inequality is aggressively spreading, because the return on capital is so much higher than wage labor. However, Hsu states that a HUGEEE piece is missing in Piketty's analysis: "the role of law in distributing wealth."
So, what are you future leaders thinking? Should inequality be discussed on a more moral (political) and legal platform, rather than tend towards economics? What is the role of economics in this debate?
I definitely think Piketty has a strong argument about capital versus wage labor; the return on capital continues to widen the gap between those with capital and those without, who are only relying on wage labor. However, I agree with Porter that there are other contributing factors. In my opinion, the political side of this debate needs to be thoroughly assessed. I think economics can prove to us (partially) why inequality continues to grow, but I think the answer to the "inequality issues" resides within the politics behind the topic.
ReplyDeleteI agree with Roni. Like we discussed in class the other day, the issue of inequality is consistently tangled up in a mess of polarized political views. So much so that at this point I don't think the discussion of wage gaps and inequality can be had with just as much politics as economics. Unfortunately, I think this means that the issue of inequality won't be solved any time soon.
ReplyDeleteI agree with both Roni and Shelby that politics and legal framework should play a major role in the debate over inequality. The legislation mentioned in the article (i.e. corporations can sue governments if certain policies are hurting profits) is currently in the TPP that Obama is trying very hard to get passed. In other countries where this type of legislation has been passed governments have been sued for raising the minimum wage and enacting environmental regulations, so a law such as this in the United States could have pretty severe repercussions. In the case of the TPP the politics is more of a gray area, with the dividing line not being clear cut between Republicans and Democrats. I think that this is similar in many ways to the overall topic of inequality where there is even a lot of variation within political parties.
ReplyDeletePolitics and economics share an interesting relationship. Like everyone else has stated, and Piketty notes in his book that politics should be heavily involved in the solution of inequality, but will be difficult to accomplish. It's interesting how Hsu thinks that the law of distributing wealth affects in equality. It does seem that the legal and political portions of this are in fact missing from Piketty's book but I'm not sure how that would change anything.
ReplyDeleteI would agree with the posters above in saying there is an interesting dichotomy between economics and politics. They both need each other, but rarely get along. There are many varying viewpoints on how to solve things and that inherently is the issue when trying to make decisions. Rarely do beliefs align that allow for fiscal policy to have the effects desired.
ReplyDeleteI would have to agree with the earlier comments above from Veronica and Shelby. This issue of inequality is constantly in the news due how politicized this issue as become in our society. Much of the discussion today focuses squarely on the current wage gap and the inequality which this wage gap has now created. Personally, I don't think that this issue will be solved any time soon because I don't think anyone in our government knows what is exactly the right course of action to help with this problem.
ReplyDeleteI agree with all of the previous posts on the complex relation that politics shares with economics. This post is interesting an relatable to Jan Tobochnik's speech yesterday on wealth inequalities and the United States taxing program. Professor Tobochnik's simplified conclusion was that the most effective method to reduce inequality is a tax on wealth and more importantly that the government should used the tax revenue effectively. Essentially, Professor Tobochnik found that the most important factor in finding a solution to inequality was the taxing method did not matter and what the revenue is used for is more important.
ReplyDeleteAs mentioned in the comments above, politics and economics go hand in hand. Inequality has been a practice in the world for years and it might stay around for a while.I agree with Piketty in that inequality is not necessarily a bad thing unless it gets out of control which is the case today.
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